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2024 Supreme(Online)(GAU) 7896
HIGH COURT OF GAUHATI
MR. JUSTICE ARUN DEV CHOUDHURY, J
M/S. SARMA AND CO. AND ANR. – Appellant
Versus
THE UNION OF INDIA AND 4 ORS. – Respondent
WP(C) / 9468 / 2019
MR. B P BORAH, MR J. B. CHOUDHURY, G. GOSWAMI, MR R S RONGHANG, A KALITA, MR P J DUTTA, ASSTT.S.G.I., SC, I O C, MR. A CHOUDHURY, MR. A GOYAL
Suspension of a retail outlet under the 'Holiday Scheme' requires evidence of non-performance or low sales; mere disputes among legal heirs do not suffice.
Headnote:(A) Constitution of India - Article 226 - Petition challenging suspension of retail outlet and SKO agency - Dispute among legal heirs of original distributor - IOCL's decision to suspend sales under 'Holiday Scheme' contested - Court found no evidence of non-performance or low sales due to dispute - Suspension deemed arbitrary. (Paras 2, 5, 12)
(B) Holiday Scheme - Conditions for applying 'Holiday Scheme' require evidence of non-performance or low sales - Dispute alone does not justify suspension - Guidelines empower action only if performance metrics are not met. (Paras 9, 10)
Facts of the case:
The petitioner challenged a letter from IOCL suspending sales due to unresolved disputes among legal heirs of the original distributor. No allegations of non-performance or fall in sales were made. (Paras 2, 5)
Findings of Court:
The court determined that the decision to suspend was arbitrary as it lacked evidence of non-performance, thus violating the stipulations of the 'Holiday Scheme'. (Paras 12)
Issues: The main issue was whether the suspension of the dealership was justified under the 'Holiday Scheme' in the absence of evidence of non-performance. (Paras 10)
Ratio Decidendi: The court held that a mere dispute among legal heirs does not constitute grounds for suspension unless it is shown to affect performance metrics. (Paras 12)
Result: The impugned order was quashed, but the court clarified that the corporation retains rights under the contract and applicable laws.
ORDER
Date : 03-09-2024
1. Heard Ms. G Goswami learned counsel for the petitioner. Also heard Mr. M.K. Choudhury, learned senior counsel assisted by Mr. P Bhardwaj, learned counsel for the respondent IOCL and Mr. A Goyal learned counsel for the respondent No.4.
2. The present application under article 226 of the Constitution of India is filed assailing a letter dated 20.11.2019 issued by the Chief Divisional Retail Sales Manager, IOCL inter-alia suspending the sales and supply of the retail outlet and SKO agency belonging to the petitioner.
3. The impugned communication dated 20.11.2019 reflects that there has been a dispute between the legal heirs of the original distributor namely, Lt. B.N. Singh as regards their shares in the dealership firm. Accordingly for an amicable settlement, a meeting was held and in the said meeting a proposal was put by the IOCL that the legal heirs should resolve their dispute amicably and in the event there is no resolution or settlement between the legal heirs of the said proprietor, the dealership of Retail Outlet/SKO Agency Dealership shall be put into “Holiday Scheme”. It is apposite to record here that a period of six months was given for resolution of such dispute.
4. The record also reveals that a meeting was held on held on 21.05.2019, however, no resolution was arrived at during the six months period granted. Accordingly, the sale and supply to M/s Sharma and Co. Silchar (Retail Outlet & SKO Dealership Agency) and M/s Sharma & Co. Kalain (Retail Outlet & SKO Agency Dealership) was suspended with immediate effect. It was also decided that the supply of the quota will be diverted to the nearest SKO agencies and accordingly the petitioner was requested to peacefully handover operations of the business outlets of M/s Sarma and Co. Silchar and M/s Sharma and Co. Kalain to Indian Oil Corporation Ltd with all the assets therein. It was further asserted by way of the impugned order that such order was passed in line with the provision of Clause G (9) of MOP & NG Reconstitution guidelines.
5. Ms. Goswami learned counsel for the petitioner referring to the “Holiday Scheme”, which is part of the records, submits that a Retail Outlet or a proprietorship firm can be put under “Holiday Scheme” only when there is Non Performance and fall in sale. According to her admittedly the agencies were put under “Holiday Scheme” only for the reasons of failure to resolve the dispute between the shareholders and admittedly there is no allegation that there is either non performance or fall in sale and therefore, the impugned orders are liable to be interfered with being arbitrary and being not in conformity with the “Holiday Scheme”.
6. Per contra, Mr. Choudhury, learned senior counsel appearing for the IOCL submits that even if it is assumed that non performance or nil sales is a condition for putting an agency/dealer under “Holiday Scheme”, the Corporation will not be powerless to suspend the supply when there is dispute among the legal heirs affecting the business.
7. Mr. Choudhury further contends that there is already a guideline and resolution/notification for reconstitution of dealerships and in terms of said notification also, the Corporation will be within its competent to suspend and/ or to cancel such dealerships when such dispute is not resolved. He further contends that in fact the agreement between the Corporation and the dealers also empowers the Corporation to terminate such license by following the due procedure as prescribed under such guidelines as well as under the terms of the contract.
8. This Court has given anxious consideration to the submissions advanced by the learned counsel for the parties. Also perused the materials available on record.
9. From the reading of the “Holiday Scheme”, dated 21.12.2016, it is seen that “Holiday Scheme”, prescribes the ground and procedure for termination of dealership and under such scheme when performance of the retail outlet is found to be Non Performing for the r
