A contractual requirement for 'prior permission' before undertaking secondary employment or inducting partners in a distributorship does not constitute an absolute prohibition, and a party must be afforded a mandatory opportunity to remedy such a breach as stipulated in the contract prior to termination.

JUDGMENT :

Challa Gunaranjan, J.

Present intra-court appeal under Section 15 of Letters Patent assails order dated 14.07.2014 passed by learned Single Judge in W.P. No.20858 of 2009, by which the prayer in the writ petition came to be allowed.

2. Brief facts in filing the appeal are stated as follows:

(a) The respondent writ petitioner came to be appointed as a Distributor for Liquefied Petroleum Gas (LPG) at Anakapalle, Visakhapatnam District, by virtue of the Distributor Agreement (herein after, for short ‘DA’), dated 30.01.1985. The selection and appointment of LPG dealership was under the category of social objective category (SOC) meant to accommodate the marginalized sections of schedule tribe community personnel. In order to run the distributorship, 1st respondent stated to have entered into a financial arrangement with two persons belonging to other than schedule tribe community. Though respondent sought for inclusion of one of the aforesaid persons as GPA holder, vide application dated 24.11.1987, for the purpose of running the distributorship, the appellant Corporation rejected the same request on 21.03.1988. Nevertheless, respondent continued with dealership.

(b) Later, respondent stated to have got selected as Secondary Grade Teacher on 31.03.1988 and he was simultaneously operating the distributorship as well. The appellant Corporation issued show-cause notice dated 30.04.2009 pointing out that the respondent since was working as Secondary Grade Teacher at Tribal Welfare Ashram School, Narrasayyapet, Visakhapatnam District, the same constituted violation and breach of the terms of DA and further that though Corporation rejected the request for inclusion of Sri Vuppala Lakshmi Narayana as GPA holder way back on 21.03.1988, since it has come to their knowledge that the said person, along with Sri Satyanarayana have been roped in as partners under partnership deed dated 01.04.1986 for the purpose of running distributorship, without prior approval of the Corporation, also constituted breach of terms and conditions of the distributorship agreement, in particular, clause 23 (c) (ii) and (iii). Hence, 1st respondent was called upon to explain why necessary action, including the termination of dealership should not be made.

(c) The respondent submitted explanation dated 29.05.2009 admitting to the factum of working as Secondary Grade Teacher and also induction of partners to run the business, however, tried to explain the circumstances and reasons for resorting to such measures. It was also further pleaded that the respondent writ petitioner was willing to give up his employment as Secondary Grade Teacher besides pleading that the relationship between him and the persons who have financially supported in establishing and running the distributorship was merely a financial arrangement but cannot be construed to be a partnership as such and that at any rate, he was willing to remedy the breach or violation of terms and conditions of DA.

(d) Being not satisfied with the reasons so offered, the Corporation, by proceedings dated 27.08.2009, passed orders of termination. Assailing the same, respondent writ petitioner preferred W.P. No.20858 of 2009 before this Court.

(e) In the writ petition, it was mainly contended that the order of termination was not in conformity with clause 27(a) of DA, inasmuch as writ petitioner was not given opportunity to remedy the breach on account of which proposed action of termination contemplated. Furthe