Natural justice principles mandate that parties should be afforded opportunity to explain before termination; disputes under contracts with arbitration clauses should not be resolved in writ petitions.

JUDGMENT :

G. JAYACHANDRAN, J.

Indian Oil Corporation (IOC) represented by its Executive Director and General Manager is the Appellant and its distributor, M/s Mugavai Indian Gas Agency, Ramanadapuram is the Respondent in this writ appeal.

2.This writ appeal is directed against the judgement passed by the learned Single Judge in W.P(MD)No.21160 of 2025 filed by M/s Mugavi Indian Gas Agency, seeking for a writ of certiorari to quash the order passed by the Executive Director and State Head of IOC, dated 29.07.2025 cancelling the distribution-ship given to the M/s.Mugavai Indian Gas Agency.

3.In the affidavit filed along with the writ petition, it is contended that in violation of the principles of natural justice, the distribution-ship of LPG cylinders to public, was cancelled by IOC without proper enquiry and without affording due opportunity, alleging that by availing finance from third parties and entering into a partnership agreement with third parties without prior consent of IOC, the distributor has violated the terms and conditions of the agreement dated 15.03.2019.

4.The case of the appellant is that, the Learned Single Judge allowed the writ petition by erroneously holding that the impugned order was passed based on the report of the Committee constituted by IOC, however, the copy of the report was not furnished to the writ petitioner. Hence, the principles of natural justice is violated. Though there is a provision in the contract that dispute between the parties must be resolved through Arbitration, since there is a violation of natural justice in passing the impugned proceedings, the writ petition is maintainable.

5.Aggrieved by the above findings, IOC had preferred the intra Court appeal on the ground that the violation of agreement condition is admitted by the practitioner. Therefore, non-furnishing of the committee report has not prejudiced the writ petitioner in any manner. Secondly, it is contended that as distributor and supplier the relationship between the writ petitioner and the Appellant is purely a contractual. Hence, the writ petition is not maintainable. More so, when there is a specific provision in the contract for arbitral remedy. Thirdly, M/s.Mugavai Indian Gas Agency is a proprietary concern. It is not an legal entity. It has no legal personality to sue or to be sued. The writ petition is filed in the name of the proprietorship concern, which is not a natural or legal person. The Writ Court, on that score, ought to have rejected the writ petition.

6.The reason for termination of the dealership is for getting financial assistance to run the distributorship without prior permission from IOC. The agreement says, before availing financial assistance, prior written permission from IOC is required. In this case, the writ petitioner without intimation or permission has availed finance and entered into a written agreement. The allegation is that, he got finance giving them promise to induct them as partners in the business. In this regard, a civil suit between the writ petitioner and his financiers is pending. The writ petitioner admits that he had received financial assistance. However, he denies execution of partnership agreement with them. This is now the subject matter of the civil suit. Receipt of financial assistance from any person for the purpose of LPG distribution business must be only with prior permission of IOC. In the explanation to the show cause notice as well as in the plaint, which is instituted by the writ petitioner before the civil court, he concedes receiving financial assistance for the establishment and administration of the business. In such circum