The court affirmed that a corporation cannot charge a dealer for equipment installation not agreed upon in the dealership contract, emphasizing the importance of mutual consent in contractual obligations.

Dt: .06.2024 (per Hon’ble Sri Justice R.Raghunandan Rao) Heard Sri O. Manohar Reddy, learned senior counsel appearing for Sri S.V.S.S. Siva Ram, learned counsel appearing for the appellants and Ms. AvanijaInuganti, learned counsel appearing for the 1st respondent.

2. The appellant-Corporation (all the appellants are part of the same corporation and are being referred collectively as the appellant) is a public sector Oil Corporation, which is involved in the business of production, refining, distribution and sale of petroleum products in India. The appellant appointed dealers to sell the petroleum products of the appellant through various retail outlets. The 1st respondent is one such retail outlet dealer who has been appointed for running Aditya Filling Station in Koduru, Krishna District. The terms and conditions of the dealer are in the form of a Dealership Agreement, which was executed between the appellant and the 1st respondent.

3. The 1st respondent has been running the said filling station from 21.08.2014 onwards. The appellant, in order to ensure proper service to the customers and to ensure prevention of pilferage and adulteration, had been making various changes in the manner in which the petroleum products are delivered to the retail outlets and the manner in which they are sold. As part of this exercise, the appellanthad introduced a digital e-locking system. In this system, the transport vehicles, which transport the petroleum products from the terminal of the appellant to the retail outlet of the dealers, are fixed with an electronic locking system which will ensure that the said petroleum product in the tank truck cannot be pilfered or adulterated as the tank can be opened only upon the truck arriving at the retail outlet of the dealer.

4. The appellant also set up a mechanism known as Very Small Aperture Terminal (VSAT) in all the retail outlets including the retail outlet of the 1st respondent. This installation was made to ensure stable and better connectivity of Wifi to every retail outlet for the purpose of monitoring and verifying, without any interruption or disturbance.

5. The appellant, after installing these two mechanisms / systems started collecting rentals in relation to the digital e-locking system at the rate of Rs.1479/- every month from 13.05.2020 and Rs.14,200/- per annum from 22.04.2019 in relation to the VSAT mechanism.

6. The 1st respondent had approached this Court by way of W.P.No.7719 of 2023 contending that these two charges were being levied on the 1st respondent without his consent and that the said charges are not covered under the Dealership Agreement executed between the appellant and the 1st respondent.

7. The appellant resisted the said writ petition on the ground that the clauses in the Agreement provide for such charges being collected from the 1st respondent and that in any event, the terms of the agreement itself permitted the appellants to issue such directions to the 1st respondent and that the 1st respondent was bound to follow such directions including the payment of charges. Apart from this, the appellant also contend that the writ petition was not maintainable as there is an alternative remedy of arbitration provided under the Dealership Agreement and that the writ court would not go into complicated questions of law and fact arising out of a contract.

8. The 1st respondent, in response to these contentions, submitted that none of the terms of the contract permit the appellantto charge fees and that any such charge would have to be with the consent of the 1st respondent. It is