IN THE HIGH COURT OF MADHYA PRADESH
Mohammad Rafiq, CJ, and Vijay Kumar Shukla, J.
Indian Oil Corporation Ltd. & Others v. M/s Krishna
Gas Agency
Writ Appeal No. 380 of 2021 (Jabalpur): against the order dated 7.1.2021passed in Writ Petition No. 18913/2013;
Decided on 17.8.2021
(1) Natural Justice -- termination of distributorship -- show cause notice -- mandatory requirement -- to mention that action of blacklisting is proposed, or it should be possible to draw clear inference to this effect from notice -- show cause notice lacks substantial material to propose termination of dealership -- vague -- resulted in denial of proper opportunity to defend -- rightly held that decision -- making process adopted by appellants was violative of principle of natural justice. (2014) 9 SCC 105 and (2021) 2 SCC 551 followed. [Paras 22, 24 & 25
(2) Specific Relief Act, 1963 -- S.14 (c) -- termination of distributorship -- appellants allowed respondent to run distributorship/firm initially allotted to her husband -- stand taken by appellants that in absence of NOC of mother-in-law of respondent, she is not entitled to claim renewal of licence -- unsustainable -- no merit in contention that direction to continue distributorship could not have been granted inview of S. 14(c) -- aforesaid reliefis ancillary to main relief as order of termination of dealership was set aside. [Paras 25 & 26
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JUDGMENT
Shukla, J. -- 1. The present intra-Court appeal has been filed under section 2(1) of the Madhya Pradesh Uchcha Nyayalaya (Khand Nyaypeeth ko Appeal) Adhiniyam, 2005, being aggrieved by the order dated 07-01-2021 passed by the learned Single Judge in WP- 18913-2013 [M/s Krishna Gas Agency v. Indian Oil Corporation Ltd. and others], whereby the writ petitioner filed by the respondent/writ-petitioner [hereinafter referred to as “the petitioner”] has been allowed. The petitioner has challenged the order dated 26.12.2011 passed by the appellants, whereby the distributorship of LPG Gas cylinders granted in the name of M/s Krishna Gas Agency has been terminated.
2. The facts leading to filing of the present appeal as putforth by the petitioner are that Late Manish Yadav was awarded Indane Distributorship at Gadarwara, District Narsinghpur under Physically Handicapped (PH) category in the year 1994 and the distributorship was commissioned under the name and style of M/s Krishna Gas Agency, Gadarwara. Thereafter, Shri Manish Yadav died on 28.8.2007 and, therefore, his wife started taking care of the firm and applied for reconstitution of the firm.
3. The appellants vide letter dated 12.11.2007 approved the proposal of the petitioner and directed her to submit the requisite documents for the reconstitution of the firm. In the meantime, the mother-in-law, namely, Smt. Heera Devi Yadav of the petitioner preferred a writ petition (WP-8014-2008) before this Court claiming her right to be inducted in the firm as a Partner under the provisions of the Hindu Succession Act and, therefore, intimation in that regard was sent on 15.3.2010 to the petitioner and No Objection Certificates (NOCs) of legal heirs of Late Manish Yadav were also sought from her within fifteen days therefrom. The said writ petition was dismissed on 21.3.2013 having rendered infructuous.
4. The appellants by letter dated 17.9.2009 directed the petitioner to submit the NOC of legal heir, mother-in-law along with an application for reconstitution as per new policy. The petitioner was further directed to make adequate infrastructural arrangements and she was advised to ensure home delivery to the customers and also to ensure that those customers who take re-filled gas cylinders from the godown of the petitioner, are given cash and carry rebate of Rs.8 through INDSOFT. Thereafter, counselling of the petitioner was conducted and vide letter dated 8.9.2010 the appellants proposed to terminate the distributorship of the petitioner owing to irregularities caused by the petitioner-firm. The reply submitted by the petitioner was rejected by the appellants and distributorship of the petitioner was terminated on 26.12.2011 holding that the irregularities found out by the inspecting officers of the appellants were major irregularities and as per Marketing Discipline Guidelines 2001 [for brevity, “MDG-2001] and penal action was taken. It was also held that the firm was not running in terms of the legal agreement with the appellants and that was also one of the reasons for terminating the distributorship of the petitioner.
5. A detailed reply was submitted by the appellants in the writ petition contending inter alia, that Late Manish Yadav was awarded Indane Distributorship at Gadarwara, District Narsinghpur under “PH” category in 1994 and the same was commissioned under the name and style of M/s Krishna Gas Agency, Gadarwara. It was putforth that Late Manish Yadav expired on 28.8.2007 and, therefore, reconstitution proposal was received from the wife of the deceased, Smt. Keerti Yadav on 19.10.2007. The reconstitution proposal was approved subject to furnishing of the NOCs of the legal heirs of the deceased. The appellants refuted that Smt. Keerti Yadav was competent to file the writ petition on behalf of the petitionerfirm, as no NOC was provided by her and besides that, no succession documents establishing that she was the only legal heir of the deceased was furnished by her.
6.
The main legal point established in the judgment is that the decision-making process must adhere to the principles of natural justice, and any order carrying civil consequences must be made consisten....
The court emphasized that termination of business agreements requires adherence to principles of natural justice, including the right to a personal hearing, and that mere allegations without substant....
There is no rule in the Corporation which allows renewal of terminated Distributorship on sympathetic grounds, especially in cases where Distributorship has been terminated on account of malpractices....
Termination of distributorship upheld as no violation of natural justice occurred; allegations were clearly stated, and double jeopardy claim rejected due to serious defalcations.
The court established that termination of a distributorship must adhere to due process and contractual obligations, emphasizing the need for prior consent in partnership arrangements.
Termination of dealership without adhering to procedural guidelines and principles of natural justice is unlawful.
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