Court emphasized the interpretation of clauses within a dealership agreement, highlighting compliance with contractual provisions for partner induction.

Sushrut Arvind Dharmadhikari, J.

JUDGMENT

This intra court appeal filed under Section 5 of the Kerala High Court Act , 1958, challenges the judgment dated 02.08.2023 passed in W.P(C)No.15737 of 2015, whereby the learned Single Judge had allowed the writ petition. Being aggrieved, the respondents therein have filed the writ appeal. The original petitioner is the respondent herein.

2. The respondent had filed the writ petition praying for the following reliefs:

“(i) a writ, order or direction in the nature of certiorari calling for the records of the case and quashing Exht. P11 order of the 2nd respondent;

(ii) a writ, order or direction in the nature of mandamus to the 2nd respondent to allow Exht.P6 application to approve the induction as per Exht.P5 as the reason stated in the impugned order is arbitrary and unsustainable;

(iii) a writ, order or direction in the nature of mandamus directing the respondents not to take any action to discontinue Exht.P2 Dealership in any manner for the reason stated in the impugned order;

(iv) any other writ, direction or order as this Hon' Court may deem fit and proper on the facts and circumstances of the case and to allow this Writ Petition with the petitioner's costs.”

3. The brief facts of the case are that the 1st appellant commissioned a Petroleum retail outlet in the year 1963 as a sole proprietorship concern with Mr.K.C.Oommen as its proprietor. In the year 1992, the retail outlet dealership was reconstituted as a partnership firm by Mr.K.C.Oommen by inducting his son, Mr.Cherian Kovoor as a partner in the ratio 51:49. In the year 2003, the dealership was further reconstituted by inducting Mr.M.C.Josen (who was an outsider) as a minority partner in the firm along with the existing partners, Mr.K.C.Oommen and Mr.Cherian Kovoor, in the ratio 50:25:25. The aforesaid instances of reconstitution of the dealership was done with the prior permission of the Appellants and a dealership agreement was also executed on 17.10.2003 between the 1st appellant and the above mentioned three partners.

4. Thereafter, pursuant to the death of Mr.K.C.Oommen in the year 2005, Ext.P2 dealership agreement was executed on 10.07.2006 between the 1st appellant and the respondent for a period of 15 years from 21.05.2005 and thereafter the same would continue for a successive period of one year until determined by either party. Thereafter on application of the respondent, the Registrar of Firms accorded approval on 08.01.2014 for induction of Mr.Shalom Emmanuel Josen, the only son of Managing Partner Mr.M.C.Josen as the third partner. Then the respondent submitted a notice to continue the dealership by the ‘reconstituted firm’ to the appellants on 13.01.2014 as per clause 46 of Ext.P2 dealership agreement. The 2nd appellant served a notice dated 31.12.2014 to show cause against termination of the dealership alleging that “such induction is done without getting prior approval from Indian oil Corporation Ltd.” The respondent filed W.P(C)No.1424 of 2015 against the show cause notice which came to be disposed of with the following directions:-

“5. After hearing both the sides, this Court finds that the matter has to be finalised by the respondents with proper application of mind as to the circumstances under which, induction of the partner has been effected and as to the extent of prejudice that has been resulted. An opportunity of hearing shall be given to the petitioner in this regard and appropriate order shall be passed in accordance with law, at the earliest, at any rate, within ‘one month’ from the date of receipt of a copy of this judgment. It is also made clear that, if a