THE HON'BLE SRI JUSTICE A.V. SESHA SAI
WRIT PETITION No.20858 of 2009
Between:
Durga Pujari Suri Babu PETITIONER AND
1. The Indian Oil Corporation Limited, A.P. State Office: 3-6-436 to 438, III Floor, Narsapur House, Himayathnagar, Hyderabad, rep. by its Executive Director, A.P.S.O., and others.
RESPONDENTS ORDER:
This writ petition, filed under Article 226 of the Constitution of India, challenges the order dated 27.08.2009 passed by the Executive Director, A.P.S.O., the 1st respondent herein, terminating the petitioner from the distributorship.
2. The facts, in nutshell, which are essential for adjudication of the issue and resolution of the controversy in the present writ petition, are as under:
The petitioner is a graduate and belongs to Scheduled Tribe Community. He got selection as a Distributor for Liquified Petroleum Gas of the respondent Indian Oil Corporation at Anakapalle of Visakhapatnam District in the year 1985. The respondent-Corporation vide Ref:APSO/L/S/2020, dated 30.04.2009 issued a show cause notice, calling upon the petitioner to show cause as to why the Distributorship Agreements dated 30.01.1985 and 19.05.2004 should not be terminated while alleging violation of Clause Nos.23-C (i to iv) of the Distributorship Agreement. In response to the said show cause notice, the petitioner submitted an explanation dated 29.05.2009. Thereafter, the 1st respondent passed an order dated 27.08.2009, terminating the distributorship of the petitioner.
3. Assailing the order of termination dated 27.08.2009 as illegal, arbitrary, without jurisdiction, discriminatory and in violation of the principles of natural justice and contrary to the terms and conditions of the Agreement, the present writ petition has been filed.
4. This Court issued Rule Nisi on 25.09.2009 and responding to the same, counter affidavit has been filed by the respondents, denying the averments in the writ affidavit and in the direction of justifying the impugned action.
5. Heard Sri M.S. Prasad, learned Senior Counsel, representing Sri K. Rajanna, learned counsel, appearing for the petitioner and Sri T. Vinod Kumar, learned Standing Counsel for the respondent-Indian Oil Corporation, apart from perusing the material available on record.
6. Contentions advanced by Sri M.S. Prasad, learned Senior Counsel, representing Sri K. Rajanna, learned counsel for the petitioner –
i) The impugned order, terminating the distributorship is illegal, arbitrary, without jurisdiction, discriminatory, violative of the principles of natural justice and contrary to the terms and conditions of the Agreement.
ii) There have been neither any complaints nor any remarks from the customers on the product offering service, quality and safety matters, and the petitioner was adjudged as the best distributor in the year 1997.
iii) Petitioner neither violated any statutory rules nor any directions that govern the LPG business and he managed the distributorship effectively, safely and to the best satisfaction of the customers and corporation officials.
iv) The 1st respondent did not properly consider the explanation of the petitioner while exercising the power under Clause Nos.23 (C) (i to iv) of the Agreement.
v) The impugned order is not in conformity with Clause No.27 (a) of the agreement.
vi) The respondents ought to have extended the revised policy issued by the Ministry of Petroleum and Natural Gas on 01.12.2008.
vii) The allegations are not tenable in view of the letter dated 9.02.1988 and in view of the explanation submitted in response to the show cause notice.
7. Contentions of Sri T. Vinod Kumar, learned Standing Counsel for the respondents -
i) In view of Clause No.37 (a) of the Agreement dated 19.05.2004, which stipulates resolution of disputes by way of Arbitration, the present writ petition is not maintainable.
ii) The order of termination is strictly in conformity with the clauses of Agreement and since the petitioner contravened the clauses of Agreement the respondents are perfectly justified in terminating the distributorship of the petitioner.
In support of his contentions, the learned counsel for the petitioner placed reliance on the judgment of Delhi High Court in W.P. (C).No.7587 of 2010, dated 20.04.2012.
8. In the light of the above pleadings, submissions and contentions, now the issues, which arise for consideration and which emanate for determination by this Court are –
1. Whether the present writ petition, questioning the order of termination of distributorship, is maintainable under Article 226 of the Constitution of India in view of the arbitration clause in the Agreement? and
2. Whether the impugned order of termination is sustainable and tenable in the facts and circumstances of the case?
9. Therefore, the first and foremost aspect, which needs to be considered, is with regard to the maintainability of the writ petition under Article 226 of the Constitution of India. The order impugned in the present writ petition is an order of termination of distributorship of the petitioner. The very basis or foundation for the said contention is Clause 37(a) of the Agreement dated 19.05.2004, which reads as under.
“37 (a):- All questions, disputes and differences arising under or in relation to this Agreement shall be referred to the sole arbitration of the Director (Marketing) of the Corporation. If such Director (Marketing) is unable or unwilling to act as the sole arbitrator, the matter shall be referred to the sole arbitration or some other officer of the Corporation by such Director (Marketing) in the place, who is willing to act as such sole arbitrator. It is known to the parties herein that the Arbitrator appointed hereunder is an employee of the Corporation and may be Shareholder of the corporation. The arbitrator to whom the matter is originally referred, whether the Director (Marketing) or Officer, as the case may be, on his being transferred or vacating his office or being unable to act, for any reason, the Director (Marketing) shall designate any other person to act as arbitrator in accordance with the terms of the Agreement and such person shall be entitled to proceed with the reference from the stage at which it was left by his predecessor. It is also the term of this Agreement that no person other than the Director (Marketing) or the person designated by the Director (Marketing) as aforesaid shall act as arbitrator. The award of the Arbitrator so appointed shall be final, conclusive and binding on all the parties to the Agreement and provisions of the Arbitration & Conciliation Act, 1996 or any statutory modification or re-enactment thereof and the Rules made thereunder and for the time being in force shall apply to the arbitration proceedings under the clause.”
10. The learned counsel for the petitioner, for sustaining the maintainability of writ petition placed reliance on the decision of the Hon’bel Apex Court in the case of ABL International Ltd., v. Export
[1]
Credit Guarantee Corpn. Of India Ltd., . In the said decision the Hon’ble Apex Court at paragraph Nos.27 & 28 held as under.
“From the above discussion of ours, the following legal principles emerge as to the maintainability of a writ petition:
(a) In an appropriate case, a writ petition as against a State or an instrumentality of a State arising out of a contractual obligation is maintainable.
(b) Merely because some disputed questions of fact arise for consideration, same cannot be a ground to refuse to entertain a writ petition in all cases as a matter of rule.
(c) A writ petition involving a consequential relief of monetary claim is also maintainable.
28. However, while entertaining an objection as to the maintainability of a writ petition under Article 226 of the Constitution of India, the court should bear in mind the fact that the power to issue prerogative writes under Article 226 of the Constitution is plenary in nature and is not limited by ay other provisions of the Constitution. The High Court having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. The Court has imposed upon itself certain restrictions in the exercise of this power. (See Whirlpool Corpn. V. Registrar of Trade [2] Marks ). And this plenary right of the High court to issue a prerogative writ will not normally be exercised by the court to the exclusion of other available remedies unless such action of the State or its instrumentality is arbitrary and unreasonable so as to violate the constitutional mandate of Article 14 or for other valid and legitimate reasons, for which the Court thinks it necessary to exercise the said jurisdiction.”
11. While dealing with an identical question this Court in the case of Ram Lal Agarwal v. Indian Oil Corporation Ltd., New Delhi
[3]
and ors. , while referring to ABL International Limited case (1 supra) at paragraph Nos.20, 21 & 22 held as follows.
“20. The principle deducible from the decisions cited by learned standing counsel are, that if an arbitration clause is incorporated in contract the same should be treated as an effective alternative remedy; that in matters which do not involve public law element, writ petition should not be entertained; and that when there are some disputed questions of fact involved, writ petition under Article 226 of the Constitution of India is not the effective remedy as writ court cannot go into disputed questions of fact. However, in all those decisions it is also held that there are no fetters imposed on a writ court under Article 226 of the Constitution of India and writ court is vested with wide discretion and entertaining the writ petition even on disputed questions of fact, in contract matters and even when alternative remedy is available depends on facts in each case. In the facts of this case, the decisions relied on by the learned standing counsel do not come to his aid to through the writ petition at the threshold on the ground of maintainability.
21. The petitioner challenges the termination of dealership on the grounds of violation of procedural safeguards and relevancy of the existence of double gear in the dispensing unit. The contentions urged are based on settled principles of law. Consideration of facts of the case are only to analyse the contentions. There are no serious disputed questions of fact requiring consideration of the contentions.
22. Thus, in the facts of this case, petitioner cannot be non-suited on the ground of availability of alternative remedy of arbitration and that there are disputed questions of fact. Following the principles enunciated in the precedents referred to above, the objection on maintainability of writ petition is rejected and the point is answered in favour of petitioner.
12. It is also relevant to note at this juncture that in the case of
[4]
K. Harinath v. Hindusthan Petroleum Corporation Ltd., a Division Bench of this Court by relying upon the judgments of the Hon'ble Apex Court in Indion Oil Corporation Ltd., v. Amritsar Gas
[5] [6]
Service and E. Venkatakrishna v. Indian Oil Corporation disapproved the contention against maintainability of the writ petition.
In the judgments reported in Harbanslal Sahnia & anr. v. Indian Oil
[7]
Corporation Ltd., and ors., and Union of India and ors., v. Tantia Constructions Private Limited[8] the Hon'ble Apex Court held in favour of maintainability. Therefore, the contention of the respondents that the writ petition is not maintainable has no legs to stand in view of the principles laid down in the above judgments and this Court has no hesitation to hold that the writ petition is maintainable and the petitioner cannot be non-suited in the name of alternative remedy at this length of time.
13. This Court ordered Rule Nisi in the present writ petition as long back as on 25.09.2009. It is also to be noted that there are also no serious factual controversies in the writ petition.
14. Since this Court is of the view that the writ petition is maintainable, this Court is inclined to deal Point No.2, which touches the validity of the impugned order. As evident from the pleadings on record, petitioner is a graduate belonging to a disadvantageous section of the Society, who got selection as distributor in the year 1995 and who was adjudged as a Best Distributor in 1997. The material available on record also does not speak of any earlier complaints or remarks against the petitioner from the customers. As per the show cause notice dated 30.04.2009 the following are the alleged violations under Clause NOs.23 (C) (i to iv) against the petitioner.
“You are working as secondary Grade teacher (SGT) in a Tribal Welfare Ashram School at Narrasayyapet in Viskhapatnam District under DEO, Integrated tribal development Authority, Government. Of A.P. (Paderu Division).
You have inducted Shri Lakshmi Narayana & Shri Satyanarayana as partners by a Partnership Deed dated 01.04.1986 without approval of the Corporation. Further from the Income Tax Returns filed you for the Assessment Year 2008-09, it is observed that M/s. Pakasasana Enterprises is declared as partnership firm with 2 other partners.”
15. In response to the said show cause notice, dated 30.04.2009, the petitioner submitted explanation dated 29.05.2009 and in the said explanation responding to the first alleged violation, the petitioner stated as under.
“1. Taking up Teaching Job:-
It is a known fact that during 1985 and, beyond, i.e., till late nineties there was total ban or embargo on enrolment of customers and release of new connections. There was no policy unlike today, for the transfer of customers from one distributor to the other within or from other oil companies. In other words, Distributorships, Social objective category (SOC) or otherwise at that time had a disadvantage compared to the present day distributors. Consequently most of the distributorships established during the eighties were unviable. However, Distributors with financial backing survived while distributors like me dependent on borrowed finances were put to difficulties.
In view of the said ban, my distributorship was also unviable. Though I commissioned within the stipulated period, the customer strength, refill sales and the distributor margin was so poor that I was unable to meet both ends. Interest on borrowings, unavoidable was fixed expenditure lack of reasonable return on the investment etc., has caused tremendous mental strain on me since the business was established with borrowed funds. Income from the business was not enough even to pay the interest on the borrowings. As I had no other source of income to support my large family, I had to supplement my income through whatever means or source that was available.
The official records at that time would substantiate my submission on economic viability of the distributorship. Having made me to invest huge funds beyond my limit for establishing the business, I submit that as SOC category (ST) distributor, there should have been some relaxation of the ban or special consideration to release new connections so that I could get some returns at least to survive. I submit that no such consideration was extended to me. It was at that point of time, and need; I had an offer of temporary school teacher post at the Tribunal Welfare Ashram School.
It is a fact that I had accepted the offer in desperation. The reasons for taking up the job were, (i) ban on new enrolment and consequent lack of full time work at the distributorship, (ii) need to supplement my meagre income from business. (iii) Tremendous pressure from debtors.
I personally conveyed these facts to the ten concerned officials and submitted a proposal for inducting my wife into partnership during Feb.88 to satisfy the covenants of the DSA. There was no communication to me whether the proposal was accepted or otherwise. I was under the impression that management of the business by my wife during my few hours of absence was acceptable to the corporation as there was no communication to the contrary.
While my wife was looking after the business I was scuttling between the school and the distributorship daily. I submit that it takes only few hours to reach the school and back. I was only a temporary teacher and not a head master. Therefore there was no need for my presence throughout the day at the school. Thus my absence from the distributorship if any was negligible. Living at Anakapally, I and my wife had personally looked after the distributorship.
Thus the root cause for the alleged violation was the ban, embargo and or control on customer enrolment, the basic requirement of the distributorship business. You are kindly aware of the fact that inter- alia the distributorship is a business proposition where, liquefied petroleum gas packed in cylinders is received, stored and distributed to consumers under the superintendence direction, and control of the corporation. Business starts with enrolment of consumers. When the enrolment it self was banned, there will not be any business to operate. In other wards existence of business itself was at stake. Thus the said ban, control or embargo created hurdle for clause NO.1b (v) of the Distributorship Agreement. All other covenants being contingent and consequential to this primary objective of business, the alleged violation of the covenants by me was incidental to the breach of the said clause by the corporation.
Therefore, in the said circumstances, I humbly submit that the onus for my alleged violation of the DSA lies on the corporation and its policy of ban on customer enrolment.
Now that the distributorship business is well established and economically viable consequent on adequate customer strength and refill sales, I would no longer need the teacher job. I would therefore propose resign the job that satisfied the covenants of the distributorship agreement. I would therefore humbly request you to set aside the charge as the alleged violation was for survival of my family in view of the then prevailing business environment and contingent on policy of the corporation. The said violation was due to unavoidable compelling reasons beyond my control as explained herein.
16. In answer to the 2nd alleged violation, the petitioner stated as under -
“2. Induction of partners As submitted above, the distributorship under social object category (ST) was granted to me in the year 1985. There was no difference in conditions between general Letter of intent and Social objective category distributorships. The conditions stipulate that I had to provide complete infrastructure as may be required at my own cost within the stipulated time. Otherwise the offer would be withdrawn.
You would appreciate that as a tribal candidate I had no funds and financial support. The distributorship was awarded purely based on my merit. As a poor tribal man hailing from remote village in Viakhapatnam district, I could not generate the required finances either from banks or from any other source(s). As the corporation stipulated a time frame for commissioning; I was desperate to arrange funds fro the development of infrastructure and working capital. I sought financial help from banks, friends and from all known people without any success.
That was the situation prevailing at that time for all the social objective category (SOC) distributorships. It is learnt that most of the (SOC) LOI holders had opted for private financing since the public sector banks barring a few did not extend the necessary funding despite government policy as we were unable to provide the required security. As a tribal candidate, neither I had the money nor land to offer as security. The corporation had given me the distributorship but for the funds required to establish the distributorship I had to fend my self.
I am given to understand that as a corrective policy, the corporation is now providing complete infrastructure including working capital for the present social objective category distributors. Where as, such facility was not available then. Thus you would appreciate the fact that I had to perforce seek financial support from others / source primarily to establish the distributorship with in the specified timeframe.
Observing my plight, Sri V. lakshminarayana and Sri N. Satyanarayana who were known to me for a long time, have come forward to extend necessary finances. They offered financial support purely based on my integrity and word of honour. Except for verbal understanding, there was no other agreement between us for the said financing.
The said persons who have come forward to extend finance wanted to establish some sort of security cover for their funds. Since I did not have any immovable property towards security, it is fact that I requested the corporation for a GPA in their favour which was turned down.
There is general apprehension that financial support or loan extended to tribals without any security or at least a documentary support may lead to complications and that it would be difficult to recover the funds from them. Though my intentions are honest and sincere for repayment, being a tribal I had to bear the general stigma.
Initially the financiers were contented with a GPA. As the proposal was not accepted by the corporation, and in view of the prejudice and stigma aforesaid, the financiers got worried and insisted for a partnership. Though said to be for taxation and other statutory requirements, they apparently felt it as a form of security for their funds. It is a fact that in the then prevailing circumstances; I had to perforce concede to their request under pressure for the partnership.
It is submitted that the alleged partnership deed was a security and to meet the technicalities of statutory requirements. It is no way binding either on me or on the corporation as the parties to the partnership had absolute and unambiguous understanding of the fact that I cannot induct them into a partnership without express approval of the corporation. Therefore, the alleged partnership was unofficial, purely a private document and has no legal sanction whatsoever.
One of the parties to the alleged partnership namely Sri V. Lakshmi narayana had been seriously ill and bed ridden since the last 8 years. Similarly, Sri N. Satyanarayana is missing since 2000. Thus it is amply clear and evident that I and my wife are looking after the business and the said V. Lakshminarayana and N. Satyanarayana had no role whatsoever in the operation and management of my business. It is also a fact that I had not entered into any lawful agreement with the said parties. The document produced to the concerned authorities is primarily to satisfy the financiers need for a document as security cover and to satisfy statutory obligations. The said parties have also not made any claim on the distributorship against the corporation.
Your officers have visited and inspected my distributorship periodically. At no point of time the said parties to the partnership were either present or signatories to any one of the documents concerned with the inspections, operation and management of the distributorship. Thus it cannot be said that I had not taken active part in the business.
I submit that the alleged partnership; had not created any loss or liability on the corporation. I am willing to execute and indemnity letter for such loss or liability and to safeguard the interests of the corporation if so required.
It is a fact that though the distributorship was under SOC, the LOI conditions are like an open category distributorship, i.e., the distributor select had to develop infrastructure and Working capital on his own. Except, grant of distributorship, the corporation did not extend any support / consideration financial or otherwise. It also did not relax the ban or embargo on customer enrolment. It is pertinent to submit here that Open Category distributors do get approval for GPA or induction of partners where as it is not permitted in my case.
Thus, the root cause for the alleged violation of DSA is (i) establishment of the distributorship with borrowed funds. (ii) ban on customer enrolment during that time.
In this context I humbly submit and state that my distributorship is in operation since the last 23 years. During this period it is a fact that,
1. I was adjudged as the best distributor in the year 1997.
2. I have not violated any rules directions statutory or otherwise that govern the LPG Business.
3. There was no complaint or remark from my customers either on product offering service quality and safety matters.
4. There was never any remark from the customers, the corporation officials and the state Government authorities.
5. There was no malpractice in operation of the distributorship.
The said facts presented above confirm that the distributorship had been managed effectively, safely and to the fullest satisfaction of customers, corporation and the statutory agencies.”
17. The 1st respondent while turning down the explanation, passed the impugned order dated 27.08.2009, terminating the distributorship of the petitioner on the ground that petitioner contravened Clause 23(C) of the Distributorship Agreement dated 19.05.2004 and the said clause reads as under.
Clause 23 (C): Except with the previous written consent of the Corporation –
i) The Distributor shall not enter into any arrangement, contract or understanding whereby the operations of the Distributor hereunder are or may be controlled / carried out and / of financed by any other person firm or Company, whether directly or indirectly and whether in whole or in part.
ii) The Distributor himself (if he is an individual) or the partners themselves (if the Distributor is a partnership firm) or the whole time Office Bearers / Elected Members (if the Distributor is a Co- operative Society) shall not, (without prior permission in writing of the Corporation) take up any other employment or engage in any other business apart from the operation of the distributorship which is the subject matter of this agreement.
iii) The Distributor (if it be a firm or a Co-operative Society) shall not effect any change in its constitution whether in the identity of its partners or appointment of whole time Office Bearers or Elected Members or in the terms of the Deed of Partnership or of the Bye-laws as the case may be.
iv) The Distributor (if it be a private limited company) shall not cause or permit any group transfers of substantial change in its shareholding (transmission by death etc., excluded).
24. A reading of the said clause manifestly shows that there is no absolute prohibition on employment or partnership and in fact the same are permissible with the consent of the respondent-corporation. It is pertinent to refer to the letter dated 9.02.1988 of the petitioner addressed to the Area Manager of the Respondent-Corporation wherein the petitioner referred to his employment. On the aspect of alleged violation, touching partnership apart from reiterating the contents of explanation, the revised guidelines dated 1.12.2008 issued by the Indian Oil Corporation are also placed on record by the petitioner and the said guidelines 2.4 and 4, which were in force on the date of show cause notice, are as follows.
2.4 Induction of minority partner in SC/ST dealership in cases where land is required by the Corporation for development of Retail Outlet.
Where RO dealerships have been allotted under SC/ST category, induction of minority partner from the same category will be allowed only in cases where land is required by the Corporation for development of Retail Outlet. The incoming partner shall meet all the following conditions.
(i) To bring in the suitable land for setting up of subject RO
(ii) Should be the owner of the land with clear title in his / her name and in physical possession of the subject land.
(iii) In case land is jointly held by him/her with other family members then he/she shall have to submit the “No Objection Certificate” from all the joint holders of the land. Family for this purpose is defined as consisting of father, mother, spouse, son(s) and daughter(s) and
(iv) Should be agreeable to lease/sell the land to the concerned OMC.
Following steps will be taken in such cases:
(i) Based on request from LOI holder and application for dealership from proposed incoming partner for dealership, the application will be scrutinized to confirm the eligibility of incoming partner for the dealership as per prevailing dealer selection criteria like age, education, multiple dealership norms, caste certificate etc. Being SC/ST location, evaluation under head “capability to arrange finance” will not be required.
(ii) The land will be evaluated by the designated committee as per dealer selection policy.
(iii) If land is found suitable, the negotiation should be conducted as per prevailing policy for procurement of land.
(iv) After successful negotiations, the incoming partner will be interviewed by the committee. The purpose of interview will be to establish the suitability of the candidate with respect to eligibility criteria for the subject dealership. No separate document based evaluation or interview based evaluation will be required in such cases.
4. Induction of outside category partner in SC/ST dealership/ distributorship.
4.1 For dealerships/ distributorships belonging to SC/ST category, depending upon the requirement of the finance/ expertise in order to meet the Competition/growth, the dealer / distributor may require to induct a minority partner from outside his category. In such cases, the SC/ST dealer/ distributor may induct a minority partner(s) from outside the category. However at any point of time i.e. before or after re-constitution, the shareholding of persons belonging to the category under which the subject dealership/ distributorship was allotted should be at least 75% of the total shares. If non SC/ST spouse of SC/ST dealer/distributor is inducted as partner in the dealership/distributorship, his/her share in the dealership / distributorship shall be counted as SC/ST share.
4.2 Following steps will be taken in such cases:
(i) Based on request from dealer / distributor and application for dealership/distributorship from proposed incoming partner for dealership, the application will be scrutinized to confirm the eligibility of dealership/distributorship for such reconstitution and the eligibility of incoming partner for the dealership / distributorship as per prevailing dealer selection criteria like age, education, multiple dealership norms, etc.
(ii) An interview committee will evaluate the incoming partner on prevailing dealer selection criteria (the evaluation will be done on all parameters except land and infrastructure to confirm the suitability of proposal)
(iii) The proposal will be further processed for approval in caeses where incoming partner secures minimum 60% marks in finance and also minimum 60% of the total.”
25. Evidently, only with an intention of encouraging the entrepreneurs from the disadvantageous section of the society the corporation brought in the said guidelines, which enable them to withstand the business by taking the help of the others. This is made obviously keeping in view the socio economic conditions of the said deprived classes and the same is in conformity with the spirit behind achieving the goal and constitutional mandate as enshrined under Part-III of the Constitution. Therefore, the authorities are required to deal with the issues in the said background only. In fact in the explanation submitted by the petitioner in response to the show cause notice, he categorically said that he is ready to resign the job and also explained clearly the circumstances under which he sought the assistance of certain individuals for development of the business. Therefore, the circumstances in the present case, in the considered opinion of this Court, do not warrant the extreme action of termination of distributorship.
26. The facts and circumstances of the case, unhesitatingly and undoubtedly drive this Court towards an irresistible conclusion that there is absolutely no justification and rationale on the part of the respondents in resorting to the extreme action of ordering cessation of distributorship. This action also frustrates the very object and intention behind providing certain exemptions to disadvantageous section of people in the society and this action, if tested on the touch stone of the Article 14 of the Constitution, in the considered opinion of this Court, cannot be sustained. It is also significant to note at this juncture that Clause 27 of the Distributorship Agreement clearly mandates and imposes an obligation on the respondents to grant time in the event of there being any breach or default.
27. In the instant case, the respondent did not give such opportunity to the petitioner. Instead of pressing into service Clause 27 of the Distributorship Agreement, which enables the distributor from correcting himself, the respondent resorted to the extreme action of terminating the distributorship and in the considered opinion of this Court, the said action on the part of the respondents cannot be sustained.
28. The judgment relied upon by the counsel for the respondent would not render any assistance to the respondents in view of the principles laid down in the above referred cases.
29. For the aforesaid reasons, and having regard to the nature of controversy and keeping in view the principles laid down by the Hon’ble Apex Court and this Court in the above referred judgments, this writ petition is allowed and the impugned order dated 27.08.2009 passed by the 1st respondent is set aside. The respondents are directed to restore the distributorship of the petitioner within a period of one month from the date of receipt of a copy of this order.
JUSTICE A.V. SESHA SAI.
14th July, 2014 Js.
Note: Issue CC in one week.
[1] (2004) 3 SCC 553
[2] (1998) 8 SCC 1
[3] 2014 (4) ALD 139
[4] 2013 (4) ALD 518 (DB)
[5] (1991) 1 SCC 533
[6] (2000) 7 SCC 764
[7] (2003) 2 SCC 107
[8] (2011) 5 SCC 697