HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH AFR Reserved on 7.12.2015 Delivered on 9.12.2015 Court No. - 4 Case :- MISC. BENCH No. - 8467 of 2013 Petitioner :- Manoj Agarwal Respondent :- Union Of India Thr.Secy.Ministry Of Petroleum,New Delhi &Ors Counsel for Petitioner :- Mudit Agarwal,Nidhi Agarwal Counsel for Respondent :- A.S.G.,Shikhar Anand Hon'ble Amreshwar Pratap Sahi,J.
Hon'ble Attau Rahman Masoodi,J.
This writ petition has been filed praying for quashing of the order dated 27th August, 2013 (Annexure 7 to the writ petition) whereby the Hindustan Petroleum Corporation has not approved the request of the petitioner offering a reconstitution of the dealership and has also not resumed the supplies of kerosene for which the outlet was awarded.
Sri Agarwal, learned counsel for the petitioner submits that admittedly a firm in the name of M/s Janki Prasad Agarwal & Sons was constituted and the dealership agreement with the respondent Corporation was entered into on 27th February, 1981. The firm had four partners, namely Radhey Raman Agarwal, Radhey Krishna Agarwal, Smt. Beena Agarwal and the petitioner Manoj Agarwal.
According to the petitioner the said firm was reconstituted in terms of a family settlement between the partners of the firm and two of the partners Radhey Krishna Agarwal and Smt. Beena Agarwal retired from the firm through a registered deed of agreement on 31st July, 1982. Consequently, under the terms of the said deed their remained only two partners, namely Radhey Raman Agarwal and the petitioner Manoj Agarwal who are father and son respectively. The business of the firm was being carried out by these two partners and a fresh partnership is alleged to have been constituted under the deed dated 31st July, 1982. Thereafter the other two partners Sri Radhey Krishna Agarwal and Smt. Beena Agarwal had no right or interest left in the firm. Sri Radhey Krishna Agarwal also died in 1997 which fact was brought to the notice of the respondent Corporation. On such information the Corporation wrote a letter that since the dealership agreement would come to an end due to the said contingency, the supplies would be withheld but on a representation made by the reconstituted firm, the supplies were resumed on temporary basis. The transactions continued since 1997 onwards without any objection by the respondent Corporation and according to the petitioner such conduct on the part of the Corporation clearly shows that the Corporation had accepted the reconstituted firm with two partners, namely Radhey Raman Agarwal and the petitioner.
In 2013, Sri Radhey Raman Agrawal died on 12.6.2013 leaving behind a registered will deed in favour of the petitioner with regard to the share of partnership firm and business as well. The will is a registered will dated 24th April, 2013.
On this happening, the petitioner again moved before the respondent corporation for reconstitution of the firm through an application copy whereof has been filed as Annexure 6 to the writ petition. The said application also included the no objection certificates from the two married sisters of the petitioner.
It is this application which has now been returned unapproved on the ground that since there is a variation in the present shareholding of the firm as compared with the status of partners in the firm which had entered into the agreement dated 27.2.1981, therefore it was not being approved. It is this order which has been assailed by the petitioner contending that there is no legal bar or any impediment in executing an agreement with the petitioner now representing the reconstituted sole proprietorship firm and therefore the impugned order be set aside with a direction to the corporation to take appropriate steps in the matter.
The contention therefore of the petitioner is that after the departure of the other three partners of the firm that had entered into the agreement on 27.2.1981, it is only the petitioner who survives and has therefore tendered the proposal for agreement with the reconstituted proprietorship firm and has requested for executing a fresh agreement. In this background, it is urged that in the absence of any legal bar, the disapproval by the respondent corporation is unjust and is not founded on any rational basis.
Sri Shikhar Anand, learned counsel for the Petroleum Corporation has vehemently opposed the petition contending that according to Clause 14 of the agreement, the petitioner or the other partners were under a legal obligation to inform the corporation about the reconstitution of the firm which was not done, nor the manner in which the other partners departed was known to the corporation, and consequently the corporation has the option not to have any further dealings with the petitioner. He further submits that any interregnum permission to temporarily continue with the supplies would not amount to creation of any rights in favour of the petitioner to claim a right of continuing the agreement with the respondent.
His second objection is that according to Clause 29 of the agreement such a dispute has to be sent for arbitration and the writ petition should not be entertained.
To support his contention, he further relies on the Supreme Court decision in the case of the Rajasthan State Industrial Development and Investment Corporation and another Vs. Diamond and Gem Development Corporation Ltd. And another, AIR 2013 SC 1241 to urge that this being a pure contractual matter in the realm of private law no interference is called for in the exercise of jurisdiction under Article 226 of the Constitution of India.
We have considered the aforesaid submissions raised on the facts brought on record. This is established that the respondent Petroleum Corporation for the first time took steps for discontinuing supplies in the year 1997 which was resumed and then again on 21st June, 2013 whereby on a compassionate view the suspension of sales and supplies was resumed on temporary basis. It is at that stage that the petitioner filed the present writ petition.
The contention of the respondent that this should be sent to the arbitration has to be examined in the light of what has been said in the impugned order by the respondent. The impugned order recites only one reason, namely that the details of the present shareholding vary with the actual constitution of the firm in 1981 and therefore the proposal is being returned as unapproved.
The Hindustan Petroleum Corporation is a Government of India Enterprise and therefore is subject to the law of the land and any action taken by it is also subject to scrutiny in terms of Part III of the Constitution of India particularly Article 14 and 19 thereof. The impugned order nowhere indicates as to what is the legal impediment or bar in accepting the proposal except for the variation in the shareholding of the firm. To our mind the variation in the shareholding was quite obvious with the departure of the two of the earlier partners way back in 1982 and the death of the third partner in the 2013. No other partner or any heirs of the partner have raised any dispute or objected to the reconstitution of the firm as a sole proprietorship firm by the petitioner. The respondent Corporation has not been able to point out even in the counter affidavit as to how such reconstitution of the petitioner firm is perse unlawful or not in accordance with law so as to disapprove the proposal of the petitioner.
The fact of variation of the shareholding is an obvious consequence of the departure of the other partners and the succession by the petitioner to the assets of the firm. It is not the case of the corporation that the petitioner does not have the right to hold all the shares of the firm or there is any legal impediment in respect thereof. There is also no indication about the ineligibility of the petitioner to continue to hold the shares of the sole proprietorship firm. In the absence of any such legal infirmity in the reconstituted sole proprietorship firm being pointed out by the respondents we find the recital in the impugned order to be not a valid reason for disapproving the proposal.
Learned counsel for the Corporation has therefore submitted that even this issue should be subjected to arbitration and a writ petition should not be entertained on this ground.
As noted above, in the absence of a valid reason the impugned order cannot be sustained on any lawful reasoning and therefore can be termed as being arbitrary and violative of Article 14 of the Constitution. Once this is the position then to relegate the petitioner to the ordinary law remedy and not maintain the writ petition in our opinion would not be the correct approach in the exercise of jurisdiction Article 226 of the Constitution of India at least on the facts of the present case. Consequently the judgment relied upon by the learned counsel for the respondent would not come to his aid nor deny the discretionary relief to the petitioner in writ jurisdiction. On the other hand in matters of award of Petroleum dealership, the apex court has ruled that a writ petition can be entertained if the action of the petroleum corporation is not in accordance with guidelines or is otherwise not fair. Reference be had to the decisions in the case of Hindustan Petroleum Corporation Limited and others Vs. Super Highway Services and another, 2010 (3) SCC 321 and Bharat Petroleum Corporation Limited Vs. Jagannath and Company and others, 2013 (12) SCC 278.
As would be evident from the findings recorded by us, we have not found the action of the respondent Corporation to be in consonance with law and unjust resulting in unfairness. It is therefore not necessary to invoke the arbitration clause as suggested to non-suit the petitioner.
The contention of the learned counsel for the respondent that Clause 14 of the agreement is an omnibus power of the petroleum corporation to be utilized on their sole optional discretion to refuse the acceptance of the reconstitution, does not appear to be an argument framed on any rational basis. The option has to be exercised by the respondent corporation in refusing to accept the constitution on a rational basis or on any lawful ground, and the same cannot be whimsical or merely because there is any variation in the shareholding of the reconstituted firm as explained above. The reconstitution was a natural consequence due to the departure of the other partners in the manner indicated above. No other legal heir or any person claiming succession has come forward disputing the claim of the petitioner for reconstituting the firm as a sole proprietorship firm. In such a situation, the contention of the learned counsel for the corporation that the corporation has the option to refuse the request of the petitioner does not appear to be in consonance with law.
In the aforesaid background, this may be recorded that the petitioner or his late father may have not acted promptly in informing the Corporation appropriately with regard to the departure of the other partners and the reasons therefore, but at the same time the respondent corporation also does not appear to have terminated the agreement of the petitioner on any such ground. To the contrary, since 1982 till 2013, they maintained their relationship with the petitioner and also the supplies. This conduct of the respondent corporation therefore reflects that the corporation did not intend to terminate the dealership of the petitioner and was rather insisting upon the information about the reconstitution of the firm. This is also evident from a perusal of the impugned order. It is only the reconstitution which has been objected to but that too on an invalid criteria. The respondent corporation ought to have pointed out any deficiency that would have been legally understandable in order to non-suit the petitioner on the ground of an incorrect reconstitution or unlawful constitution of the firm. This does not appear to be a reason given in the impugned order. In the absence of any such infirmity or reason given by the respondents we find the decision to disapprove the proposal of the petitioner to be not founded on any valid criteria and thus unsustainable.
Consequently, for all the reasons hereinabove, we quash the order dated 27th August, 2013 with a direction to the respondent corporation to reconsider the request of the petitioner and in the event there is any infirmity the same should be pointed out to the petitioner for removal thereof in case it is lawfully permissible.
The writ petition is allowed with the aforesaid directions.
Order Date :- 9.12.2015 sahu