Calcutta High Court (Appellete Side)
Wp 13269 (W) Of 2019 vs Indian Oil Corporation Ltd & Ors on 16 April, 2025
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IN THE HIGH COURT AT CALCUTTA
Constitutional Writ Jurisdiction
Appellate Side
Present: - Hon'ble Mr. Justice Subhendu Samanta.
IN THE MATTER OF
WP 13269 (W) of 2019
M/s Roy & Company & Ors.
Vs.
Indian Oil Corporation Ltd & Ors.
For the Petitioners : Mr. Ram Anand Agarwala, Adv.,
Ms. Nibedita Pal Adv.
For the IOCL : Mr. Manwendra Singh, Adv.,
Ms. Saswati Chatterjee Adv.
Reserved on : 05.03.2025
Judgment on : 16.04.2025
Subhendu Samanta, J.
1. One Smt. Siya Ray was carrying on business under dealership
agreement with M/s. Indian Oil Corporation Limited (IOCL) as
proprietress of the said dealership and had obtained necessary
permissions including the Kerosene agents licence under West Bengal
Kerosene Control Order, 1968. Due to old age, Siya Ray inducted her
son Binay Ray, (petitioner No. 2) as a partner in the said business.
The partnership of Siya Ray and petitioner No. 2 was duly approved by
the IOCL. Thereafter petitioner No. 3 (wife of petitioner No. 2) further
incorporated in the said partnership business which was duly
approved by the IOCL again and thereby re-constitution of the
partnership farm was made and a dealership was accepted with IOCL
on 29.07.2009. Since then all three partners are performing the
business.
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2. On 30th September 2009 Siya Ray expired. Surviving partners
(petitioner No. 2 and 3) submitted proposal to IOCL for re-constitution
of the farm amongst themselves as partners and also submitted no
objection of all other legal heirs of Late Siya Ray, except one married
daughter of Siya Ray namely Sushila Ray, who refuse to give her no
objection.
3. The proposal of the petitioners was turned down; accordingly,
they approached this court vide writ petition No. WPA 1240 of 2010. A
Co-ordinate Bench of this Court vide its judgment dated 1st September
2011, allowed the writ petition directing IOCL to allow re-constitution
of partnership farm of the petitioners and give liberty to Sushila Ray to
approach Civil Court to get her rights declared and title perfected.
4. IOCL proceeded to the Hon’ble Division Bench in an appeal
being APO No. 43 of 2013. The Hon’ble Division Bench vide order
dated 7th December 2017 disposed of the appeal by allowing the
respondents therein (petitioners herein) to continue the dealership on
temporary basis and IOCL was directed to take a reasoned decision
whether they will renew the dealership of petitioner on permanent
basis or not. In terms of the direction of Hon’ble Division Bench, the
concerned authority has passed a reasoned decision (impugned) which
was communicated through a letter dated 9th September 2019.
5. Hence this Writ.
6. Mr. Ramananda Agarwal, Learned Senior Counsel appearing on
behalf of the petitioner submits that impugned order is illegal and
arbitrary. He further submits that the Hon’ble Division Bench has
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made a specific direction to re-constitute the firm but the said
direction was not followed.
7. It is the further contention of the petitioners that the petitioners
are faithfully and diligently performed and carried out directions,
instructions, guidelines and orders given by the corporation from time
to time. Thus the impugned order has no effects in terms of allegation
for violation of Clause 42. It is the further contention of Mr. Agarwal
that the Hon’ble Division Bench has properly interpreted the terms of
Clause 46 of the agreement, the respondent authority is debarred to
take different stand at the time of passing the reasoned order.
8. Mr. Agarwal further argued that the Hon’ble Division Bench has
specifically observed that IOCL being a statutory authority should not
be interfered with themselves in the private disputes but the conduct
of the IOCL proved that they have influenced by the half sister
Petitioner No. 2 whose right was finally determined by the Hon’ble
Single Bench of this Court.
9. Mr. Agarwal further argued the impugned order is unreasonable
and violative to the specific direction of the Hon’ble Division Bench of
this Court and thus the said order is liable to be set aside.
10. In support of his contention Mr. Agarwal has submitted the
decisions of Hon’ble Supreme Court as follows:-
i) Indian IOCL Vs. Nilofer Siddqui and Ors (2015) 16 SCC 125
ii) Harabanshlal Ashnia and Anr. Vs. IOCL and Ors (2003) 2 SCC
107
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iii) Union of India and Ors Vs. Tantia Construction Private Ltd.
(2011) 5 SCC 697
iv) Magadh Sugar and Energy Limited Vs. State of Bihar and Ors
(2022) 16 SCC 428
11. Mr. Manawendra Singh Learned Counsel appearing on behalf of
the IOCL submits that the impugned order passed by the competent
authority properly discussed the reasons for rejection of the prayer of
the petitioners for re-constitution of the partnership farms. The
application of the petitioners are violative in Clause 42 and 46 of
agreement. The petitioners are to strictly follow the re-constitution
policy of the IOCL as mentioned in Clause 1.5 of the Re-constitution
policy. The petitioners have failed to provide no objection from all the
legal heirs of deceased partner Siya Ray, hence, their prayer was
correctly turned down. Mr. Singh further argued that policy guideline
for re-constitution of retail outlet dealership made provisions that in
the event of death of a partner in case of partnership business, re-
constitution may be allowed with the legal heirs of deceased partner
and surviving partners; however, if there is no legal heir or legal heirs
have expressed unwillingness, then the dealership/distributorship
shall be re-constituted with surviving partners. He submits that in the
present case the petitioners could not place the no objection of one of
the daughters of Smt. Siya Ray namely Sushila Ray. Thus the re-
constitution policy of the concerned authority debarred the petitioner.
Sushila Ray had expressed her unwillingness. Thus the competent
authority has correctly passed the impugned order.
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12. Mr. Singh, further argued that there is specific arbitration
Clause in the agreement between the partners and IOCL. If the
petitioners are aggrieved, they may approach to the arbitrator for
settle out the dispute. When there is an efficacious remedy available to
the parties before an alternative forum, this writ court shall not
entertain the petitioner.
13. Mr. Singh further argued that dealership agreement is a
commercial contract to run the business between IOCL and the
petitioners. In case of Commercial Contract, the Hon’ble Supreme
Court has categorically observed that the contract of such a nature
has to be dealt with strictly and no fairness can be judged in
interpreting such contract.
14. In support of his contentions, Mr. Singh, has placed reliance
upon the decision of Hon’ble Supreme Court as follows:-
i) Vishal Tewari Vs. Union of India (2024) 4 SCC 115
ii) Mary Vs. State of Kerala (2014) 14 SCC 272
iii) West Bengal State Electricity Board Vs. Patel Engineering
Company Limited and Ors. (2021) 2 SCC 451
iv) Assistant Excise Commissioner and Ors. Vs. Issac Peter and
Ors. (1994) 4 SCC 104
v) Sanjana M. WIG (Ms) Vs. Hindustan Petroleum Corp. Ltd. (2005)
8 SCC 242
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vi) Ramana Dayaram Shetty Vs. International Airport Authority of
India and Ors. (1979) 3 SCC 489
vii) Indian Oil Corporation Ltd. and Ors. Vs. Abhijit Kar Modak
(FMA 1716 of 2018), (judgment pronounced by Division Bench of this
Court on 18.04.2024)
15. In Vishal Tewari (supra) Hon’ble Supreme Court dealt with
power of the Court under judicial review for SEBIs regulatory domain,
and has held for
15. In a consistent line of precedent, this
Court has held that when technical
questions arise particularly in the financial
or economic realm; experts with domain
knowledge in the field have expressed
their views; and such views are duty
considered by the expert regulator in
designing policies and implementing them
in the exercise of its power to frame
subordinate legislation, the court ought
not to substitute its own view by
supplanting the role of the expert. Courts
do not act as appellate authorities over
policies framed by the statutory regulator
and may interfere only when it is found
that the actions are arbitrary or violative
of constitutional or statutory mandates.
The court cannot examine the correctness,
suitability, or appropriateness of the
policy, particularly when it is framed by a
specialised regulatory agency in
collaboration with experts. The court
cannot interfere merely because in its
opinion a better alternative is available.
17. From the above exposition of law, the
following principles emerge:
(a) Courts do not and cannot act as
appellate authorities examining the
correctness, suitability, and
appropriateness of a policy, nor are
7courts advisors to expert regulatory
agencies on matters of policy which
they are entitled to formulate;
(b) The scope of judicial review, when
examining a policy framed by a
specialised regulator, is to scrutinise
whether it: (i) violates the
fundamental rights of the citizens;
(ii) is contrary to the provisions of
the Constitution; (iii) is opposed to a
statutory provision; or (iv) is
manifestly arbitrary. The legality of
the policy, and not the wisdom or
soundness of the policy, is the
subject of judicial review;
(c) When technical questions arise
particularly in the domain of
economic or financial matters and
experts in the field have expressed
their views and such views are duly
considered by the statutory
regulator, the resultant policies or
subordinate legislative framework
ought not to be Interfered with;
(d) SEBI’s wide powers, coupled with
its expertise and robust information-
gathering mechanism, lend a high
level of credibility to its decisions as
a regulatory, adjudicatory and
prosecuting agency; and (e) This
Court must be mindful of the public
interest that guides the functioning
of SEBI and refrains from
substituting its own wisdom in place
of the actions of SEBI.
(e) This Court must be mindful of the
public interest that guides the
functioning of SEBI and refrains
from subsisting its own wisdom in
place of the actions of SEBI.
We have made a conscious effort to
keep the above principles in mind
while adjudicating the petitions,
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which contain several prayers that
require the Court to enter SEBI’s
domain.
16. In Mary (supra) the Hon’ble Supreme Court had dealt with
doctrine of fairness and reasonableness in a statutory contract; and
has held that
24. We have given our most anxious
consideration to the submission
advanced and we do not find any
substance in the submission of the
learned counsel for the appellant and
the decision relied on by her, in fact,
carves out an exception in case of a
commercial transaction. The duty to
act fairly is g sought to be imported
into the statutory contract to avoid
forfeiture of the bid amount. The
doctrine of fairness is nothing but a
duty to act fairly and reasonably. It
is a doctrine developed in the
administrative law field to ensure
the rule of law and to prevent failure
of justice where an action is
administrative in nature. Where the
function is quasi-judicial, the
doctrine of fairness is evolved to
ensure fair action. But, in our
opinion, it certainly cannot be
invoked to amend, alter, or vary an
express term of the contract between
the parties. This is so even if the
contract is governed by a statutory
provision i.e. where it is a statutory
contract.
25. It is one thing to say that a
statutory contract or for that matter,
every contract must be construed
reasonably, having regard to its
language. But to strike down the
terms of a statutory contract on the
ground of unfairness is entirely
different. Viewed from this angle, we
are of the opinion that Rule 5(15) of
the Rules cannot be struck down on
the ground urged by the appellant
and a statutory contract cannot be
varied, added or altered by importing
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the doctrine of fairness. In a
contract of the present nature, the
licensee takes a calculated risk.
Maybe the appellant was not wise
enough but in law, she can not be
relieved of the obligations
undertaken by her under the
contract. Issac Peters supports this
view and says so eloquently in the
following words: (SCC p. 124, para
26) C
“26. In short, the duty to act
fairly is sought to be imported
into the contract to modify and
alter its terms and to create an
obligation upon the State
which is not there in the
contract. We must confess, we
are not aware of any such
doctrine of fairness or
reasonableness. Nor could the
learned counsel bring to our
notice any decision laying
down such a proposition.
Doctrine of fairness or the duty
to act fairly and reasonably is a
doctrine developed in the
administrative law field to
ensure the rule of law and to
prevent failure of justice where
the action is administrative in
nature. Just as principles of
natural justice ensure fair
decision where the function is
quasi-judicial, the doctrine of
fairness is evolved to ensure
fair action where the function
is administrative. But it can
certainly not be invoked to
amend, alter or vary the
express terms of the contract
between the parties. This is so,
even if the contract is
governed by statutory
provisions i.e. where it is a
statutory contract or rather
more so. It is one thing to say
that a contract every contract-
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must be construed reasonably
having regard to its language.”
17. In State West Bengal Electricity Board (supra) Hon’ble
Supreme Court has held that the statutory authority shall not allow
inclusion mistake in tender document to be corrected
24. The controversy in this
case has arisen at the
threshold. It cannot be
disputed that this is an
international competitive
bidding which postulates keen
competition and high
efficiency. The bidders have or
should have assistance of
technical experts. The degree
of care required in such a
bidding is greater than in
ordinary local bids for small
works. It is essential to
maintain the sanctity and
integrity of process of
tender/bid and also award of a
contract. The appellant,
Respondents 1 to 4 and
Respondents 10 and 11 are all
bound by the ITB which should
be complied with scrupulously.
In a work of this nature and
magnitude where bidders who
fulfil prequalification alone are
invited to bid, adherence to the
instructions cannot be given a
go-by by branding it as a
pedantic approach, otherwise it
will encourage and provide
scope for discrimination,
arbitrariness and favouritism
which are totally opposed to
the rule of law and our
constitutional values. The very
purpose of issuing
rules/instructions is to ensure
their enforcement Test the rule
of law should be a casualty.
Relaxation or waiver of a rule
or condition, unless so
provided under the ITB, by the
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State or its agencies (the
appellant) in favour of one
bidder would create justifiable
doubts in the minds of other
bidders, would impair the rule
of transparency and fairness
and provide room for
manipulation to suit the whims
of the State agencies in picking
and choosing a bidder for
awarding contracts as in the
case of distributing bounty or
charity. In our view such
approach should always be
avoided. Where power to relax
or waive a rule or a condition
exists under the rules, it has to
be done strictly in compliance
with the rules. We have,
therefore, no hesitation in
concluding that adherence to
the ITB or rules is the best
principle to be followed, which
is also in the best public
interest.
18. In Issac Peter the Hon’ble Supreme Court has also dealt with
doctrine and fairness and reasonableness in tender document as
follows:-
26. Learned counsel for respondents
then submitted that doctrine of
fairness and reasonableness must be
read into contracts to which State is
a party. It is submitted that the
State cannot act unreasonably or
unfairly even while acting under a
contract involving State power. Now,
let us see, what is the purpose for
which this argument is addressed
and what is the implication? The
purpose, as we can see, is that
though the contract says that supply
of additional quota is discretionary,
it must be read as obligatory at least
to the extent of previous year’s
supplies by applying the said
doctrine. It is submitted that if this
is not done, the licensees would
12suffer monetarily. The other purpose
is to say that if the State is not able
to so supply, it would be
unreasonable on its part to demand
the full amount due to it under the
contract. In short, the duty to act
fairly is sought to be imported into
the contract to modify and alter its
terms and to create an obligation
upon the State which is not there in
the contract. We must confess, we
are not aware of any such doctrine of
fairness or reasonableness. Nor could
the learned counsel bring to our
notice any decision laying down such
a proposition. Doctrine of fairness or
the duty to act fairly and reasonably
is a doctrine developed in the
administrative law field to ensure
the rule of law and to prevent failure
of justice where the action is
administrative in nature. Just as
principles of natural justice ensure
fair decision where the function is
quasi-judicial, the doctrine of
fairness is d evolved to ensure fair
action where the function is
administrative. But it can certainly
not be invoked to amend, alter or
vary the express terms of the
contract between the parties. This is
so, even if the contract is governed
by statutory provisions, i.e., where it
is a statutory contractor rather more
so. It is one thing to say that a
contract every contract must be
construed reasonably having regard
to its language. But this is not what
the licensees e say. They seek to
create an obligation on the other
party to the contract, just because it
happens to be the State. They are
not prepared to apply the very same
rule in converse case, i.e., where the
State has abundant supplies and
wants the licensees to lift all the
stocks. The licensees will undertake
no obligation to lift all those stocks
even if the State suffers loss. This
one-sided obligation, in modification
of express terms of the contract, in
the name of f duty to act fairly, is
13what we are unable to appreciate.
The decisions cited by the learned
counsel for the licensees do not
support their proposition. In
Dwarkadas Marfatia v. Board of
Trustees of the Port of Bombay it
was held that where a public
authority is exempted from the
operation of a statute like Rent
Control Act, it must be presumed
that such exemption from the
statute is coupled with the duty to
act fairly and reasonably. The
decision does not 9 say that the
terms and conditions of contract can
be varied, added or altered by
importing the said doctrine. It may
be noted that though the said
principle was affirmed, no relief was
given to the appellant in that case.
Shrilekha Vidyarthi v. State of U.P.
was a case of mass termination of
District Government Counsel in the
State of U.P. It was a case of
termination from a post involving
public element. It was a case of non-
government servant a holding a
public office, on account of which it
was held to be a matter within the
public law field. This decision too
does not affirm the principle now
canvassed by the learned counsel.
We are, therefore, of the opinion that
in case of contracts freely entered
into with the State, like the present
ones, there is no room for invoking
the doctrine of fairness and
reasonableness against one party to
the contract (State), for the purpose
of altering or adding b to the terms
and conditions of the contract,
merely because it happens to be the
State. In such cases, the mutual
rights and liabilities of the parties
are governed by the terms of the
contracts (which may be statutory in
some cases) and the laws relating to
contracts. It must be remembered
that these contracts are entered into
pursuant to public auction, floating
of tenders or by negotiation. There is
no compulsion on anyone to enter
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into these contracts. It is voluntary
on both sides. There can be no
question of the State power being
involved in such contracts. It bears
repetition to say that the State does
not guarantee profit to the licensees
in such contracts. There is no
warranty against incurring losses. It
is a business for the licensees.
Whether they make profit or incur
loss is no concern of the State. In
law, it is entitled to its money under
the contract. It is not as if the
licensees are going to pay more d to
the State in case they make
substantial profits. We reiterate that
what we have said hereinabove is in
the context of contracts entered into
between the State and its citizens
pursuant to public auction, floating
of tenders or by negotiation. It is not
necessary to say more than this for
the purpose of these cases. What
would be the position in the case of
contracts entered into otherwise
than by public auction, floating of
tenders or negotiation, we need not
express any opinion herein.
19. The Hon’ble Division Bench in Abhijit Kar and ors (FMA 1716
of 2018) has held that
7.1 Coming to the second question, it is trite law that
reconstitution of commercial dealership or distributorship under
Clause 3.4 of the 2013 guidelines shall be personal and privy to
the appellants/oil company and the writ petitioner/respondent
no. 1 and it shall not amount to novation of the contract of the
deceased father of the petitioner who was also a LPG
distributor. Coming to the 3rd question, it is beneficial to
reproduce Clause 3.4 of the 2013 guidelines which reads thus:
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“3.4 In cases of death of the sole dealer/distributor,
reconstitution may be made in favour of the legal heir. However,
if there is no legal heir(s) or legal heir(s) has expressed
unwillingness, dealership/distributorship shall be terminated”.
7.2 Cursory reading of the aforesaid Clause makes it clear that
in case of death of a distributor/dealer, reconstitution may be
made in favour of the legal heir(s). However, in case of non-
existence of any legal heir(s) and legal heir(s) has/have expressed
unwillingness, the dealership/distributorship of the deceased
shall be terminated. The aforesaid provision made it obligatory
on the part of the oil company to consider the application of the
respondent/writ petitioner in accordance with the guidelines of
the company or any superceding guidelines by the Petroleum
Ministry. Though we cannot read this provision as a provision
for compassionate appointment/engagement as
dealer/distributor, this provision vests discretion in the
appellants/oil company to consider reconstitution of the
dealership/distributorship of the deceased in favour of his legal
heir(s) if he or they are willing.
20. In Magadh Sugar and Energy Limited (supra) The Hon’ble
Apex Court following the several decisions of the Supreme Court has
given to the conclusion that it is now well established that an
alternative remedy is not an absolute bar to the writ jurisdiction of
High Court or Supreme Court and formed without exhausting such
alternative remedy of writ petition could not maintainable.
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21. The Hon’ble Supreme Court has discussed the issue as follows.
20. While a High Court would
normally not exercise its writ
jurisdiction under Article 226 of the
Constitution if an effective and
efficacious alternative remedy is
available, the existence of an
alternative remedy does not by itself
bar the High Court from exercising
its jurisdiction in certain
contingencies. This principle has
been crystallised by this Court in
Whirlpool Corpn. v. Registrar of
Trade Marks 22 and Harbanslal
Sahnia v. Indian Oil Corpn. Ltd. 23
Recently. in Radha Krishan
Industries v. State of H.P.21 a two-
Judge Bench of this Court of which
one of us was a part of (D.Y.
Chandrachud, J.) has summarised
the principles governing the exercise
of writ jurisdiction by the High Court
in the presence of an alternative
remedy. This Court has observed:
(Radha Krishan Industries case21,
SCC p. 795, para 27)
27. The principles of law which
emerge are that:
27.1. The power under Article 226 of
the Constitution to issue writs can
be exercised not only for the
enforcement of fundamental rights,
but for any other purpose as well.
27.2. The High Court has the
discretion not to entertain a writ
petition. One of the restrictions
placed on the power of the High
Court is where an effective
alternative remedy is available to the
aggrieved person.
27.3. Exceptions to the rule of
alternative remedy arise where: (a)
the writ petition has been filed for
the enforcement of a fundamental
17right protected by Part III of the
Constitution;
(b) there has been a violation of the
principles of natural justice; (c) the
order or proceedings are wholly
without jurisdiction; or (d) the vires
of a legislation is challenged.
27.4. An alternative remedy by itself
does not divest the High Court of its
powers under Article 226 of the
Constitution in an appropriate case
though ordinarily, a writ petition
should not be entertained when an
efficacious alternative remedy is
provided by law.
27.5. When a right is created by a
statute, which itself prescribes the
remedy or procedure for enforcing
the right or liability, resort must be
had to that particular statutory
remedy before invoking the
discretionary remedy under Article
226 of the Constitution. This rule of
exhaustion of statutory remedies is a
rule of policy, convenience and
discretion.
27.6. In cases where there are
disputed questions of fact, the High
Court may decide to decline
jurisdiction in a writ petition.
However, if the High Court is
objectively of the view that the
nature of the controversy requires
the exercise of its writ jurisdiction,
such a view would not readily be
interfered with.”
21. The principle of alternate
remedies and its exceptions was also
reiterated recently in the decision in
Commr. of State Tax v. Commercial
Steel Lid.24 In State of H.P. v.
Gujarat Ambuja Cement Ltd. 25 this
Court has held that a writ petition is
maintainable before the High Court if
the Taxing Authorities have acted
beyond the scope of their
18
jurisdiction. This Court observed:
(Gujarat Ambuja Cement case 25,
SCC pp. 517-18. para 23)“23. Where under a statute there is
an allegation of infringement of
fundamental rights or when on the
undisputed facts the Taxing
Authorities are shown to have
assumed jurisdiction which they do
not possess can be the grounds on
which the writ petitions can be
entertained. But normally the High
Court should not entertain writ
petitions unless it is shown that
there is something more in a case,
something going to the root of the
jurisdiction of the officer, something
which would show that it would be a
case of palpable injustice to the writ
petitioner to force him to adopt the
remedies provided by the statute. It
was noted by this Court in L. Hirday
Narain v. CIT26 that if the High
Court had entertained a petition
despite availability of alternative
remedy and heard the parties on
merits it would be ordinarily
unjustifiable for the High Court to
dismiss the same on the ground of
non-exhaustion of statutory
remedies; unless the High Court
finds that factual disputes are
involved and it would not be
desirable to deal with them in a writ
petition.”
22. Having heard the Learned Counsels for the parties and
considering the materials as well as the observation of Hon’ble
Supreme Court as cited by both the parties, let me consider the issues
involved in the instant writ petition.
23. The petitioner initially approached the respondent authority for
re-constitution of the firm amongst themselves to continue the
dealership business, said proposals were refused by the IOCL; so
19
petitioner approached this court in a writ petition. Married daughter
of erstwhile dealer namely Sushila Ray, who refused to give “no
objection”was the respondent before the Single Bench. The single
Bench has disposed of the writ petition with a direction to the
authority to re-constitute the firm consisting of the petitioners and
give liberty to Sushila Ray to approach Civil Court for declaration of
right and title perfected; against the said judgment an appeal is
preferred by the respondent authority (IOCL). In the appeal a specific
direction was made by the Hon’ble Division Bench upon the authority
concern to take a decision. The authority concern has taken the
decision which is impugned before this court. The relevant portion of
the decision of the authority is required to be set out for proper
appreciation of the fact
From the foregoing, it is observed that after the death of Smt Siya Roy,
the original surviving partners as per dealership agreement dated
29.07.2009, Shri Binoy Kumar Roy and Smt Nisha Roy, have failed to
submit a proper reconstitution proposals complying with the extant
reconstitution policy guidelines of the Corporation even after giving just
and sufficient time for doing so, which is a violation of clause 42 and 46
of the dealership agreement dated 29.07.2009, wherein it is clearly
stated and we quote:
QUOTE
42. The Dealer shall at all times faithfully, promptly and diligently
observe and perform and carry out at all times all directions,
instructions, guidelines and orders given or as may be given from time
to time by the Corporation or its representative(s) on safe practices and
marketing discipline and/or for the proper carrying on the Dealership of
the Corporation. The Dealer shall scrupulously observe and comply with
all laws, rules, regulations and requisitions of the Central/State
Government and of all authorities appointed by them or either of them
including in particular the Chief Controller of Explosives, Government of
India and/or any other local authority with regard to the safe practices.
20
46. Notwithstanding anything to the contrary herein contained, in the
event of the dealer being a partnership firm, the Agreement shall
automatically come to an end and stand terminated upon any change in
the constitution of the firm, whether by retirement or death of any
partner(s), introduction of new partner(s) or otherwise howsoever unless
after receipt of a written notice from the original surviving partner(s) of
the Dealer firm of such death or retirement or induction. The Corporation
shall have expressly agreed in writing to continue the Dealership with
the surviving partner(s) or with the re-constituted firm. Any supplies of
the products made by the Corporation. subsequent to the death or
retirement of a partner or the induction of new partner(s), with or
without the knowledge of death or retirement or induction of any other
action on the part of the Corporation under or in pursuance of this
Agreement subsequent to such death or retirement or induction in
favour of or in relation to the surviving partner(s) and/or the
reconstituted firm shall not and shall not be deemed to confer any
dealership or other rights in favour of the surviving partner(s) and/or
the reconstituted farm unless and until the Corporation conveys in
writing its specific approval or assents to confer any dealership or other
rights upon the surviving partner(s) and/or the reconstituted firm as the
case may be and the Corporation shall always be at liberty, without
any previous notice to discontinue, withhold or stop any such supplies
or perform any such act as it deems fit at its discretion.
UNQUOTE
In view of your failure to submit a proper reconstitution proposal in
accordance with the extant policy circular functioning under the name
and style of M/s Roy and Co. is terminated with immediate effect.
You are hereby advised to handover all equipments of the Corporation,
if any, immediately and reconcile your accounts. For this purpose you
may, upon prior appointment, meet our Manager (Retail Sales). Bolpur
RSA.
This letter is being issued without prejudice to any and all other rights,
claims and remedies available to the Corporation under the Law and
the Dealership Agreement.
24. It is sole contention of the reasoned order that the petitioners
were given sufficient opportunity to produce the required documents
(no objection certificate from all the legal heirs of Siya Ray). It is
further contention in the reasoned order that as they have failed to
21
produce the required documents. They have violated the Clause 42
and 46 of dealership agreement. Hence they failed to submit to
provide re-constitution proposal in accordance with the extent
circular/policy, thus their dealership was terminated with immediate
effect.
25. It is pertinent to mention herein that before passing the
impugned order the present petitioners were running the business by
the strength of an interim order passed by the Hon’ble Division Bench.
26. Let me consider whether the impugned order is passed in
accordance with the terms of direction of the Hon’ble Division Bench
passed in APO No. 43 of 2013. Operative portion of the direction of the
Hon’ble Division Bench is set out as follows:-
“The stipulation in the dealership agreement that on the death of a
partner the agreement between the appellant and the dealer would
stand terminated is not a very fair clause. It is not illegal because in our
opinion any person can choose to do business with a firm with a
particular constitution. It is true that upon the death of a partner, a
partnership firm may be dissolved or it may be re-constituted. There is a
state of uncertainty in it. Any person doing business with it is unable to
ascertain, in case of its re-constitution, the credentials of the future
partners of the firm. A firm is not a juristic entity. So an agreement of
dealership with a firm is an agreement to do business with individual
partners of the firm jointly and severally. Therefore, when a partner
dies the person doing business with it may or may not be willing to do
business with the partners of the re-constituted firm. The appellant is a
22statutory body. It is enjoined with a duty to act fairly and reasonably in
contractual matters. It should not act arbitrarily. On the contrary its
actions should be rational and just for the appellant to insist that the
agreement would permanently stand terminated on the death of a
partner is an extreme step. It would be reasonable if for the time being it
was terminated. Thereafter the partners of the re-constituted firm and
the appellant should have been given an option of entering into a fresh
agreement.
In this case there is no complaint regarding the service rendered before
or after the death Siya Roy. The appellant has permitted the firm to re-
constitute itself from time to time. It has renewed licences of the re-
constituted firms for a long period of time.
After the death of Siya Roy the firm has been re-constituted with the
second and third respondents as partners. The appellant should not be
concerned as to the dispute between the second respondent and his
half sister. The appellant ought to have examined the past and present
performance of the firm with regard to its business of a licensee under
it, while considering grant of a new licence.
In those circumstances, this court upholds the decision of the appellant
to terminate the agreement. By virtue of the status quo order in this writ
the respondent firm continues to be a dealer of the appellant. It shall
continue to do so on a temporary basis. The appellant is to take a
decision as to whether it will renew the dealership with the
reconstituted first respondent on a permanent basis, on the basis of the
23above observations and after taking all relevant factors into
consideration within one year from date.
This appeal is disposed of accordingly.
Certified photocopy of this Judgment and order, if applied for, be
supplied to the parties upon compliance with all requisite formalities”.
27. For better appreciation of the issue involves in this writ petition
it is required to set out the specific portion of re-constitution policy of
IOCL
Reconstitution of Commissioned dealerships/distributorships
1.5 In cases od death of one of the partner(s) , the partnership
shall be reconstituted with the legal heir(s) of the deceased
partner(s) and surviving partner(s). However, if there is no legal
heir(s) or the legal heir(s) has expressed unwillingness, the
dealerships/distributorships shall be reconstitute with the
surviving partner(s)
28. Entire over view of this matter makes it clear that a Co-ordinate
Bench of this Court while dealing with the matter at the first instance
in Writ Petition No. WPA 1240 of 2010, has set out the issue regarding
right scope, and opportunity of Sushila Roay to use no objection
certificate before IOCL, and has given her liberty to approach the Civil
Court. Sushila Ray did not file any appeal against the order rather
when respondent authority preferred the appeal, this issue was not
agitated. By the strength of judicial pronouncement of a Co-ordinate
Bench, it appears that, the issue has been settled and finally decided
24
in that particular case regarding right of approach of Sushila Ray and
effect her of non-giving of no objection certificate to the authority
concern. The same issue has never been raised before the Hon’ble
Division Bench by the concerned respondent authority though the
division Bench has specifically pointed out that issue in the judgment
regarding the finding of the Co-ordinate Bench.
29. The Division Bench has clearly discussed about the duty of
respondent being the statutory authority to dealt with this matter. It
appears that as the respondent authority did not raise the issue
regarding non-giving of no objection certificate by Sushila Ray, before
the Hon’ble Division Bench. Thus at this juncture such issue cannot
be agitated again.
30. At the time of passing the reasoned order the concerned
authority has put their reliance upon Clause 42 and 46 of dealership
agreement dated 29.07.2009. It is surprising to note that the said
agreement dated 29.07.2009 has been declared to be terminated not
only by the respondent authority themselves but also by the
observation of the Hon’ble Division Bench which was determined on
the death of Siya Ray. The authority concerned cannot again agitate
those clauses of an agreement which has no existence at the time of
passing impugned order.
31. The Hon’ble Division bench has unequivocally observed
In this case there is no complaint regarding the service rendered
before or after the death Siya Roy. The appellant has permitted
the firm to re-constitute itself from time to time. It has renewed
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licences of the re-constituted firms for a long period of time.
After the death of Siya Roy the firm has been re-constituted with
the second and third respondents as partners. The appellant
should not be concerned as to the dispute between the second
respondent and his half sister. The appellant ought to have
examined the past and present performance of the firm with
regard to its business of a licensee under it, while considering
grant of a new licence.
32. This portion of the observation by the Division Bench makes it
abundantly clear that the farm can be re-constituted on the basis of
past and present performance with regard to its business. There are
no instances of complaint or illegalities on behalf of the petitioners in
regard to the performance of the business of the petitioners with the
respondent authority. Thus the observation of the authority in the
impugned order is itself unreasonable and arbitrary. Moreover, it is
purely unjust and unreasonable for the respondent authorities to
quote clause No. 42 and 46 of dealership agreement dated 29.07.2009
which at present, has no existence at all.
33. Under the above observation I find no justification and
reasoning in the impugned order dated 9th July 2019 passed by the
competent officer of the respondent authority.
34. Hence the same is set aside.
35. As the respondent authority has not passed the reason order in
terms of the direction of the Hon’ble Division Bench of this court in its
true letter and spirit, thus, they are hereby directed to allow the re-
26
constitution of the petitioner No. 1 with surviving partners (petitioner
No. 2 and 3) by passing a reasoned order within 03 weeks from the
date of communicate of this order.
36. The reasoned order should follow the directives by Hon’ble
Division Bench of this Court in APO 43 of 2013 as well as direction
passed by this Court in its true letter and spirit.
37. Under the above observation, writ petition is disposed of.
38. Parties to act upon the server copy and urgent certified copy of
the judgment be received from the concerned Dept. on usual terms
and conditions.
(Subhendu Samanta, J.)