2007 Supreme(Mad) 4119
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE S.J. MUKHOPADHAYA & THE HONOURABLE MR. JUSTICE M. VENUGOPAL
Bharat Petroleum Corporation Ltd., & Another
Versus
Sree Venkateswara Service Station
O.S.A.Nos.67 and 68 of 2001 and 132 to 136 of 2003 and W.A.Nos.2002 and 2005 of 2003
Decided On : 11-12-2007
For the Appellants:O.R. Santhanakrishnan, Advocate. For the Respondent:R. Thiagarajan, Advocate.
The central legal point established in the judgment is the application of natural justice principles in the termination of the dealership agreement.
Headnote:
Petroleum Corporation - Dealership Agreement - DPSL Agreement, dated 05.07.1984 - Summary: The court discussed the termination of dealership agreement between the dealer and the Petroleum Corporation. The court analyzed the conditions stipulated in the interim order, the irregularities found, the show cause notices, and the termination order. The court highlighted the legal provisions of the DPSL Agreement, dated 05.07.1984, and emphasized the application of natural justice principles by the Petroleum Corporation in terminating the dealership agreement.
Fact of the Case:
The dealer entered into a dealership agreement with the Petroleum Corporation for two retail outlets. The Petroleum Corporation issued show cause notices and suspended the dealership, leading to multiple suits and applications. The court heard the appeals and Writ Petitions challenging the interim orders and the termination of the dealership agreement.
Finding of the Court:
The court found that the dealership agreement had come to an end by efflux of time and was no longer in force. It analyzed the irregularities found at the retail outlets and the show cause notices issued by the Petroleum Corporation. The court emphasized the application of natural justice principles in the termination of the dealership agreement.
Issues: The issues involved the suspension and termination of the dealership agreement, the irregularities found at the retail outlets, and the application of natural justice principles by the Petroleum Corporation.
Ratio Decidendi: The court's decision was influenced by the fact that the dealership agreement had come to an end, the irregularities found at the retail outlets, and the application of natural justice principles in the termination of the dealership agreement.
Final Decision: The court allowed the Writ Appeal preferred by the Petroleum Corporation and dismissed the Writ Petition preferred by the dealer. The court also dismissed the appeals challenging the interim orders, as they had become infructuous.
(S.J. Mukhopadhaya, J.)
In all these appeals, as there are common parties and almost similar questions are involved, they were heard together and disposed of by this common judgment.
2. Sree Venkateswara Service Station (hereinafter referred to as the dealer) entered into an agreement for dealership with Bharat Petroleum Corporation Limited (hereinafter referred to as the Petroleum Corporation) for two retail outlets, one at Thiruvottiyur, Chennai and the other at Sathangadu, Manali, Chennai. Having served with show cause notice and order of suspension, the dealer preferred three suits in C.S.Nos.880 and 881 of 2000 and 703 of 2002.
3. Original Applications in O.A.Nos.1080 and 1081 of 2000 in C.S.No.881 of 2000 and Original Applications in O.A.Nos.1082 and 1083 of 2000 in C.S.No.880 of 2000 were filed by the dealer, for grant of interim injunction. Separate applications were also preferred by the dealer in O.A.Nos.701 and 702 of 2002 and Application Nos.4205, 4206 and 4720 of 2002, in C.S.No.703 of 2002, for certain other reliefs, such as conducting test and for submitting report and to allow the plaintiff (dealer) to effect sale of petroleum products etc.
4. Learned single Judge, by the common impugned order dated 112. 2000 in O.A.Nos.1080 to 1083 of 2000, passed the interim order with the following conditions:
"23. For the reasons stated above, the defendants are directed to supply petroleum products to the plaintiff in both cases subject to the following conditions:
.(i) The plaintiffs are directed to remove the petroleum products stored in the underground tanks and make them suitable for receiving the new petroleum products from the defendants.
.(ii) The plaintiffs are directed to make the necessary payments before getting supply of the petroleum products.
(iii) The plaintiffs should file an affidavit of undertaking before this Court that they would sell the petroleum products in the condition in which it was received by them and they would not indulge in any other illegal acts.
(iv) The defendants are restrained from cancelling the dealership of the plaintiffs till the disposal of the suit, but, however, this will not be a bar if and when the plaintiff in future violates the terms and conditions of the agreement.
These applications are ordered accordingly."
5. The aforesaid common order dated 112. 2000 is under challenge in O.S.A.No.Nos.67 and 68 of 2001 preferred by the Petroleum Corporation.
6. So far as the other applications in O.A.Nos.701 and 702 of 2002 and Application Nos.4205, 4206 and 4720 of 2002, are concerned, the learned single Judge rejected the same by common order dated 23. 2003, against which, the dealer has preferred O.S.A.No.132 to 136 of 2003.
7. During the pendency of the above said three suits, the Petroleum Corporation, vide order dated 23. 2003, terminated the aforesaid dealership so far as the petroleum outlet at No.403, Thiruvottiyur High Road, Thiruvottiyur, Chennai-19, is concerned, and the said order dated 23. 2003 was challenged by the dealer in Writ Petition— W.P.No.13754 of 2003. On receipt of notice in the said Writ Petition, the Petroleum Corporation appeared and brought to the notice of the learned single Judge that only after giving notice to the dealer and taking into consideration the show cause reply submitted by it, the dealership has been terminated in terms of the agreement. The learned single Judge, by order dated 5. 2003, though noticed that different applications were made in the show cause notice by the Petroleum Corporation against the dealership, set aside the order of termination of dealership dated 23. 2003 on the ground that no reasons have been given in the order of termination of dealership and remitted the matter, providing stop-gap arrangement. Liberty was given to the Petroleum Corporation to enquire into the matter and pass fresh order, but it was observed that in the meanwhile, the Petroleum Corporation can carry on business by themselves witho