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1999 Supreme(Mad) 914
High Court of Judicature at Madras
P.D. DINAKARAN
B. Jenarathanan, Balaji Service Station, Coimbatore
Versus
The Senior Regional Managger, Hindustan Petroleum Corporation, Coimbatore Regional Office, Coimbatore
W.P. No. 11476 of 1999
Decided On :Decided On : 09-09-1999
For the Petitioner:T.R. Rajagopalan, S.C. for C. Prakasam, Advocate.
For the Respondent: K. Kumar, A.C.G.S.C.
A Writ Petition under Art. 226 of the Constitution of India is not maintainable to challenge an order arising under a non-statutory contract, and disputes arising under such contracts should be resolved through arbitration as per the agreed terms.
Headnote:
MOTOR SPIRIT AND HIGH SPEED DIESEL (PREVENTION OF MALPRACTICES IN SUPPLY AND DISTRIBUTION) ORDER, 1990 - DEALERSHIP AGREEMENT - ADULTERATION - MALPRACTICE - SUSPENSION OF DEALERSHIP LICENCE - JUDICIAL REVIEW - ARBITRATION - WRIT PETITION - MAINTAINABILITY - INTERPRETATION OF CONTROL ORDER AND DEALERSHIP AGREEMENT.
Fact of the Case:
Petitioner, a retail outlet dealer appointed by the respondent Corporation under the Dealership Agreement dated 29.12.1985, challenged the impugned order of suspension of his dealership license for 45 days due to alleged adulteration of petroleum products. The dealership was governed by the Motor Spirit and High Speed Diesel (Prevention of Malpractices in Supply and Distribution) Order, 1990 (Control Order) and the Dealership Agreement.
Finding of the Court:
The Court held that the Writ Petition was not maintainable as the impugned order arose under a non-statutory contract and the Dealership Agreement provided for resolving disputes through arbitration. The Court also found that the petitioner had indulged in malpractice by adulterating the petroleum product, as evidenced by the laboratory analysis report showing a final boiling point higher than the permissible limit specified in Schedule I of the Control Order.
Issues: 1. Whether the Writ Petition is maintainable in law on the grounds that the impugned order arises under a non-statutory contract and the Dealership Agreement provides for arbitration? 2. Whether the impugned order of suspension is liable to be quashed?
Ratio Decidendi: 1. The Court relied on the settled principles that the right of parties inter se of a non-statutory contract cannot be challenged in a Writ Petition under Art. 226 of the Constitution of India and that disputes arising under such contracts should be resolved through arbitration as per the agreed terms. 2. The Court interpreted the Control Order and the Dealership Agreement to conclude that the petitioner had committed malpractice by adulterating the petroleum product, as evidenced by the laboratory analysis report. The Court held that the impugned order of suspension was not arbitrary, unreasonable, or illegal and did not violate Arts. 14 and 21 of the Constitution.
Final Decision: The Writ Petition was dismissed, and the connected Writ Miscellaneous Petitions were rejected.
Petitioner, who is the Managing partner of Balaji Service Station, who is appointed as retail outlet dealer by the respondent Corporation under the Dealership Agreement dated 29.12.1985. The dealership of the petitioner is admittedly governed by the provisions of the Motor Spirit and High Speed Diesel (Prevention of Malpractices in Supply and Distribution) Order, 1990, an order framed by the Central Government in exercise of the powers conferred by Sec. 3 of the Essential Commodities Act, 1955.
2. Following clauses of the agreement dated 29.12.1985 are relevant to be mentioned.
“24. The quantities of petroleum and other allied products stated to be delivered by the Corporation as measured by the Corporations measuring; devices or means shall be final and binding upon the parties hereto. The property in the product shall pass from the Corporation to the Dealer at the time of delivery of the product to the dealer of his representative and the Corporation not in any way be responsible for loss or shortage thereafter. A receipt signed by or on behalf of the dealer at the time of delivery of petroleum products by the Corporation will be conclusive evidence that the petroleum products mentioned therein where in fact delivered to the dealer, that such products were in accordance with the specifications there for mentioned hereunder and that the quantities of such products mentioned in the receipts are correct, and the dealer shall thereafter be precluded from making any claim against the Corporation for compensation or otherwise on the ground of short delivery or contamination of such products.
25. The dealer shall be responsible for all loss, contamination, damage or shortage of or to the products to the whether partial or entire, and no claim will be entertained by the Corporation therefore under any circumstances except in cases where the Corporation is satisfied that loss arose from leakage from underground tanks or pipes which the dealer could not reasonably have discovered and of which the dealer gave immediate notice in writing to the Corporation on discovery. The Corporation will consider compensation only from the date of receipt of notice till leakage is rectified.
26. All the products supplied by the Corporation to the dealer hereunder shall be in accordance with the specification laid down by the Corporation from time to time. The dealer shall take every possible the recaution against contamination of the Corporations product by water, dirt or other things injurious to the quality and shall not in any way directly or indirectly alter the specifications of the said product as delivered. The Corporation shall have the right to exercise at its discretion at any time and from time to time quality control measures for products marketed by the Corporation and lying with the dealer the opinion of the Regional Manager for the time being at the Corporation Regional Office at Ernakulam as to whether any product of the Corporation has been contaminated shall be final and binding upon the dealer. In the event of the said Regional Managing Director finding that the contamination has been due to any act or default of the dealer or of its servants or agents, the Corporation shall have the right without being bound to do so, to remove the contaminated product and to destroy or otherwise deal with the same without making any payment therefore to the dealer and without prejudice to the Corporation right to terminate this agreement forthwith.
42. The dealer undertakes faithfully and promptly to carry out, observe and perform all directions or rules given or made from time to time by the Corporation for the proper carrying on of the dealership of the Corporation. The dealer shall scrupulously observe and comply with all laws, rules and regulations and requisitions of the all Central/State Governments and of all “all authorities” appointed by them or either of them including in particular the Chief Controller of explosives, Government
