Sri Sajal Mandal vs The Indian Oil Corporation Ltd. & Ors
2024 Latest Caselaw 4769 Cal

Calcutta High Court (Appellete Side)

Sri Sajal Mandal vs The Indian Oil Corporation Ltd. & Ors on 17 September, 2024

                                       1

              IN THE HIGH COURT AT CALCUTTA
               Constitutional Writ Jurisdiction
                          Appellate Side

Present: -        Hon'ble Mr. Justice Subhendu Samanta.

                        WPA 22927 of 2018
                       IN THE MATTER OF

                         Sri Sajal Mandal.
                                Vs.
                   The Indian Oil Corporation Ltd. & Ors.

For the Petitioners            :       Mr. Kallol Kumar Basu, Adv.,
                                       Mr. Atreya Chakraborty, Adv.,
                                       Mr. Subrata Ghosh, Adv.,
                                       Mr. Sudipto Panda Adv.


For the IOCL                   : Mr. M.S. Yadav, Adv.,
                                 Ms. Saswati Chatterjee , Adv.,
                                 Ms. Satabdi Naskar (kundu) Adv.



Reserved on                        :    13.08.2024

Judgment on                        :   17.09.2024


Subhendu Samanta, J.

1. The Indian Oil Corporation Limited (shall be referred

to as "IOCL", hereinafter) issued a public notice for selection of

distribution of Liquid Petroleum Gas (LPG) under Rajiv Gandhi

Gramin Liquid Petroleum Gas Vitark (RGGLV) distributorship

under IOCL at Panchmora, PS- Taldangra Dist- Bankura.

2. The petitioner applied for the said distributorship and

in pursuance a lottery held by IOCL, petitioner was selected for

the distributorship for the said area. The petitioner offered a

land measuring 14 decimal for construction of godown and

showroom which he purchased vide a registered deed of sale

dated 24.11.2010 being No. 4561 of 2010 from one Sri. Bimal

Chandra Nandi, while purchasing the said land the petitioner

made search and also obtained heirship certificate from the

Pradhan of the concern Panchyaet certifying the sole ownership

of Bimal Chandra Nandi over the land. Thereafter his name

was duly recorded in the record of right by the office of the

Block Land & Land Reforms Officer. Initially, letter of intent

(LOI) was issued by the IOCL in favour of the petitioner and

afterwards in compliance of necessary formalities by the

petitioner with the IOCL and its allied organisations, the IOCL

entered into an agreement with the petitioner. By way of such

agreement dated 27th February, 2012, petitioner granted

license of PGGLV at Panchmura and received a letter of

appointment.

3. It is also the case of the petitioner that after issuance

of such license it came to the notice of the petitioner that the

title of the Bimal Chandra Nandi over the offered land was

defective; on query, it appears that Bimal Chandra Nandi have

one full blooded sister, who have 50% share over the land

purchased by the petitioner. At the time of execution of the

deed Bimal Chandra Nandi never disclosed the fact to the

petitioner in pursuance of the advice of some officers of IOCL

he purchased 07 decimals of land from said Taralika Shit, vide

registered deed dated 13.03.2012. The said deeds executed by

Taralika Shit was also produced with the office of IOCL.

Thereafter the RGGLV distributorship was converted to Gramin

Vitark by way of agreement entered into by IOCL and the

petitioner dated 26th September 2016.

4. The IOCL served a show-cause upon the petitioner on

16.11.2016 alleging some irregularities detected in respect of

purchase of land of 07 decimal from Taralika Shit and 04

decimal from another person. The present petitioner replied the

said show cause on 05.12.2016 denying all allegation also

denied the fact of misrepresentation.

5. Thereafter, the IOCL entered into a further agreement

with the petitioner on 27th February 2017 for renewal of the

said distributorship license for another 05 years.

6. Thereafter, IOCL again served a show cause upon the

petitioner on 24th April 2018 asking the petitioner as to why his

license should not be terminated due to the fact that on the

last date of application of such distributorship dated

26.11.2010. he was not the owner over entire 14 decimals of

land which proves the subsequent registered deed with

Taralika Shit, dated 13.03.2012; which implies that the

petitioner has given a false information regarding ownership of

land as well as the undertaking dated 16.02.2012. The

petitioner answered the show cause notice. After hearing the

petitioner the IOCL has passed the impugned order dated

14.11.2018 by terminating the LPG distributorship license of

the petitioner.

7. Hence this writ petition.

8. Learned Counsel, for the parties has argued both on

the point of fact and law; and has filed written notes of

argument. After hearing the parties the issues which are raised

before this court are as follows:-

Firstly, whether the writ petitioner is maintainable.

Secondly, whether the order impugned passed by the

IOCL arbitrary and illegal and required to be quashed.

9. i) Point of maintainability- Mr. Manabendra Singh

Yadav, Learned Counsel, appearing on behalf of the IOCL

submits that the agreement entered into by the petitioner and

IOCL incorporated one clause of arbitration. The petitioner has

every opportunity to refer the matter before the arbitrator as

enumerated in Clause 37 of the said agreement. Without

exhausting the said procedure, the petitioner cannot

approached a writ court under Article 226 of the Constitution

of India.

10. Mr. Kallol Basu, Learned Counsel, appearing on

behalf of the petitioner submits that the petitioner has

challenged the arbitrary action of respondent in terminating

the license of the petitioner which is violation of a fundamental

rights of the petitioner. He submits that the scope of judicial

review of High Court under Article 226 of the Constitution of

India cannot be restrained when there is glaring instance of

unreasonable arbitrary and perverse decision of the respondent

authority. He further submits that by virtue of decision of this

court in Prabir Kumar Baidy Vs. Union of India (2022) SCC

Online CAL 4478 the issue has been specifically dealt with.

Mr. Basu further argued that the observation of this court in

Prabir Kr. Baidya (Supra) was upheld by the Hon'ble Supreme

Court in an appeal preferred by the Oil Company.

11. Mr. Basu also cited decision of the Hon'ble Supreme

Court in Gadrej Sara Lee Ltd. Vs. Excise and Taxation

Officer-cum Assistant Authority (2023 SCC Online SC 95)

wherein the Hon'ble Division Bench of the Supreme Court has

discussed about the scope of judicial review of the High Court.

12. Heard the Learned Counsel. The Co-ordinate Bench

of this Court in Prabir Kr. Baidya (Supra) has held that--

6. The consistent view of the Supreme Court has been that there cannot be an absolute bar to the maintainability of a writ petition even where there are disputed questions of fact or the dispute arises from contractual matters. The Supreme Court has opined that the distinction between public law and private law cannot be demarcated with precision and that each case has to be examined on its facts to ascertain whether the contractual relations between the parties bear the insignia of public element, (Joshi Technologies). Radha Krishan Industries reinforced this principle by holding that an alternative remedy by itself does not divest the High Court of its power under Article 226 in an appropriate case although a writ petition should not be entertained when an efficacious alternative remedy is provided by law. The exceptions to the rule of alternative

remedy were also enumerated in the said judgment, namely a writ petition being filed for the enforcement of a fundamental right; or the violation of the principle of natural justice; or where the order is without jurisdiction and a challenge made to the vires of a legislation. Recently the Supreme Court in Unitech Limited v. Telangana State Industrial Infrastructure Corporation (TSIIC), 2021 SCC OnLine SC 99 held that presence of an arbitration clause in a contract between a State instrumentality and a private party will not act as an absolute bar to availing remedies under Article 226 if the State instrumentality violates its constitutional mandate under Article 14 to act fairly and reasonably.

13. In Gadrej Sara Lee the Division Bench has held that

8. That apart, we may also usefully refer to the decisions of this Court reported in (1977) 2 SCC 724 (State of U. P. v. Indian Hume Pipe Co. Ltd.)** and (2000) 10 SCC 482 (Union of India v.

State of Haryana). What appears on a plain reading of the former decision is that whether a certain item falls within an entry in a sales tax statute, raises a pure question of law and if investigation into facts is unnecessary, the High Court could entertain a writ petition in its discretion even though the alternative remedy was not availed of; and, unless exercise of discretion is shown to be unreasonable or perverse, this Court would not interfere. In the latter decision, this court found the issue raised by the appellant to be pristinely legal requiring determination by the High Court without putting the appellant through the mill of statutory appeals in the hierarchy. What follows from the said decisions is that where the controversy is a purely legal one and it does not

(2021) 93 GSTR 1 (SC).

(1977) 39 STC 355 (SC).

involve disputed questions of fact but only questions of law, then it should be decided by the High Court instead of dismissing the writ petition on the ground of an alternative remedy being available.

14. From the above observation of Hon'ble Apex Court as

well as the Co-ordinate Bench of this court it appears to me

that the petitioner has challenged the termination of license by

the respondent authority, in his view the act is illegal

unreasonable arbitrary action. The writ court under Article 226

of the constitution of India has ample power to enter into the

merit of any allegation against the said instrumentality of State

where the injustice has alleged to have been caused. According

to the observation of Hon'ble Apex Court in Prabir Kumar

Baidya (2023) SCC Online Cal 1132, this court has ample

opportunity and scope to entertain the writ petitioner. In my

view writ petition is maintainable. Accordingly, this point

decided in favour of the petitioner.

15. Point No. 2 Mr. Basu submits that the license of

the petitioner was terminated for the ground that petitioner

purportedly misrepresented and had given false information

regarding the ownership of land in the application submitted

by the petitioner at the time of entering into the agreement with

IOCL.

16. Mr Basu submits that the petitioner has purchased

the land through a registered deed of sale dated 25.11.2012

from Bimal Chandra Nandy measuring 14 decimal.

17. Before the purchasing the said land he diligently

searched the ownership of Bimal Chandra Nandi over the said

plot of land from the local Pradhan of the Panchayet. The

registered deed itself disclosed the declaration of Bimal

Chandra Nandi regarding his title over the land measuring 14

decimals Mr. Basu further argued that the petitioner believed

upon the declaration of Bimal Chandra Nandi and have

purchased the entire property, though afterwards it appears

that he had one full blooded sister namely Taralika Shit had

ownership over 50% of the land. Mr. Basu Further argued that

the entire fact was promptly intimated to the respondent

company and according to their instruction, the petitioner

purchased reset 07 decimals of land from sad Taralika Shit.

Mr. Basu further argued that the petitioner himself is a victim

of misrepresentation and fraud at the hands of Bimal Chandra

Nandy. However, such defect was cured under the instruction

of officers of IOCL. Mr. Basu further pointed out the provision

of exception u/s 19 of Indian Contract Act regarding the cause

of misrepresentation within the meaning of Section 17 of

Indian Contract Act 1872. It is the further argument of Mr.

Basu that since prior to entered into the agreement for RGGLV

in the year 2012, the respondent corporation had conducted

field verification, the suitability of offered land and ownership

of the petitioner was verified by the respondent corporation

with ordinary diligent. On the basis of such field verification

the petitioner appears to be fit and suitable person thus licence

was issued in his favour, now by issuing the letter of

termination the IOCL cannot plead misrepresentation.

18. Mr. Yadav Learned Counsel, argued that in the

selection manual in Clause 4, common eligibility criteria for all

categories has been laid down. Clause 4 (g) has enumerated--

candidate applying should own a suitable land minimum

dimension to 20 Meter X 24 Meter at advertised RGGLV

location for construction of LPG storage godown. To meet such

requirements the petitioner cited the sale deed dated

24.11.2010 claiming thereby he owns a plot of land having

dimensions of 26 Meter X 22.8 Meter in plot No. 876. The

sale deed dated 24.11.2010 mentioned he has purchased 14

decimals in plot No. 876. At the end of said form there is

undertaking of the applicant wherein it has been mentioned--

"on verification of the Oil Corporation if it is found that the

information given by the applicant is

incorrect/false/misrepresented then, his candidature will be

stand cancelled."

19. Mr. Yadav further argued that one Smt. Aparna

Mandal, lodged a complaint wherein she alleged that the

vendor of petitioner had only 07 decimal of land and it has

been alleged that the petitioner has misrepresented the IOCL to

get the license. Mr. Yadav also argued that the said Bimal

Chandra Nandy also lodged a complaint with the BL&LRO

stating inter alia that writ petitioner manipulated the deed in

respect of 14 decimal. Mr. Yadav argued that on the basis of

such complaint and preliminary inquiry and show cause notice

dated 16.11.2016 was served upon the petitioner and the

petitioner replied the said show cause notice, wherein admitted

the position. On receiving such reply, it was not found

satisfactory thus, the IOCL serve a show cause notice for

termination. The notice was under challenge before this court

but this court did not entertain the petitioner and directed the

respondent to take decision. The petitioner was given a

personal hearing and thereafter his license was terminated by

passing a reason order. Mr. Yadav further argued that writ

petitioner was not at all eligible candidate on the last date of

application and failed to satisfied the mandatory criterias. He

also signed the declaration in his application thus the

termination of his distributorship is lawful and valid.

20. Heard the Learned Counsel. Perused the impugned

order of termination in the show cause notice for termination

letter dated 24.04.2018. The authority concern has mentioned

two (2) clauses which was alleged to have been violated by the

petitioner they are clause 20 of the Manuals and clause 27(1)

of the distributorship agreement.

They are set out as follows:-

Clause 20 of the Manual for selection of RGGLV (2009)- If any information furnished by the applicant is found to be false at any point of time before or after appointment as RGGLV, the allotment shall be cancelled forthwith and RGGLV terminated in case commissioned.

Clause 27(1) of the distributorship agreement- if any information given by the distributer in his application for appointment as a Distributor shall be found to be untrue or incorrect in any material particular, the Corporation shall be at liberty at its entire discretion to terminate the Agreement forthwith.

21. The ground of termination in impugned letter dated

14.11.2018 is enumerated as follows:-

The above implies that you have given false information regarding ownership of land in your application and undertaking dated 16. 5.02.2012. The same amounts to misrepresentation and is a ground for termination as per provisions of Clause 20 of the Manual for selection of RGGLV (2009) and the distributorship agreement dated 27.02.2017 So, in the order of termination, it has been mentioned that

there are a violation of Clause 20 of the Manual by the

petitioner by declaring the fact that he is the owner of 14

decimal of land. It has been alleged by the authority that the

act of the petitioner is unlawful and fraudulent. It is also the

ground of termination that such act of the petitioner amounts

to misrepresentation.

The misrepresentation has been defined u/s 18 of the

Indian Contract Act as follows:-

"Misrepresentation" defined. -- "Misrepresentation" means includes-

(1) the positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true;

(2) any breach of duty which, without an intent to deceive, gains an advantage to the person committing it, or any one claiming under him, by misleading another to his prejudice, or to the prejudice of any one claiming under him;

(3) causing, however innocently, a party to an agreement, to make a mistake as to the substance of the thing which is the subject of the agreement.

22. Let me consider whether the term used as

misrepresentation in the letter of termination whether actually

come under the purview of the definition u/s 18 of Contract

Act. section 18(1) and Section 18(2) does not come under the

purview of the alleged act of the petitioner. Section 18(3) of the

Contract Act enumerated "mistake about subject matter

causing, however innocently, a party to an agreement to make

mistake as to substance of thing which is the subject of the

agreement"-- is also misrepresentation.

23. Let me consider whether the conduct of the present

petitioner is come under the purview of misrepresentation. The

petitioner purchased a land measuring 14 decimal. The deed

itself declared the version of vendor namely Bimal Chandra

Nandi, regarding the fact that he is the owner of 14 decimal of

land. It is further fact that after such purchase the name of the

petitioner was entered into the record of right by the office of

the concern BL&LRO. Before entering the name of petition in

the record of right, the authority concern (BLSLRO) is duty

bound, not only to act upon the deed itself, but also to cause

an enquiry regarding the alienable right of the erstwhile owner

(Bimal Chandra Nandi). The petitioner placed the deed with the

respondent, the respondent has made a filed verification after

the petitioner was successful in draw of lot. The concern officer

visited the spot and they are generally experienced to verify the

ownership and particulars of the land so offer as construction

of show room/godown. After the enquiry, the team of IOCL

certified regarding the suitability of the candidature of

petitioner; the IOCL must have acted not only upon the

declaration of Petitioner but also upon the report of the officers.

It is true after the license was granted it appears to the

petitioner as well as the respondent authority that the

ownership was defective; but for that reason the petitioner only

cannot be held liable. Thus the mistake was held by both the

petitioner as well respondent/IOCL before entering into the

agreement. The definition of mistake and its effect upon a

contract has been specifically dealt with in the Contract Act in

Section 20, 21, 22.

20. Agreement void where both parties are under mistake as to matter of fact. -

Where both the parties to an agreement are under a mistake as to a matter of fact essential to the agreement, the agreement is void.

Explanation.-- An erroneous opinion as to the value of the thing which forms the subject- matter of the agreement, is not to be deemed a mistake as to a matter of fact.

21. Effect of mistakes as to law. - A contract is not voidable because it was caused by a mistake as to any law in force in India; but a mistake as to a law not in force in India has the same effect as a mistake of fact.

22. Contract caused by mistake of one party as to matter of fact. - A contract is not voidable merely because it was caused by one of the parties to it being under a mistake as to a matter of fact.

In dealing with true nature of misrepresentation, it is

necessary that misrepresentation must be caused to induce other

party to gain an advantage, in the sense that but for the

misrepresentation the consent would not have been given.

Section 19 of Indian Contract Act 1872 enumerates the

provision of voidability of agreements. Let us consider whether in this

case respondent authority actually had any option to declare the

agreement be void.

Section 19-- Voidability of agreements without free consent.

When consent to an agreement is caused by coercion. 1 fraud

or misrepresentation, the agreement is a contract voidable at the

option of the party whose consent was so caused.

A party to a contract whose consent was caused by fraud or

misrepresentation, may. if he thinks fit. insist that the contract shall

be performed, and that he shall be put in the position in which he

would have been if the representations made had been true.

Exception. If such consent was caused by misrepresentation or

by silence, fraudulent within the meaning of section 17. the contract,

nevertheless, is not voidable, if the party whose consent was so

caused had the means of discovering the truth with ordinary diligence.

Explanation.-- A fraud ог misrepresentation which did not

cause the consent to a contract of the party on whom such fraud was

practised, or to whom such misrepresentation was made, does not

render a contract voidable.

24. So it is true that the agreement is not voidable if the party

whose consent was so caused at the means of discovering the truth

with ordinary diligence.

25. The misrepresentation must be made with the intention

that it shall be acted by the other party. It has not proved that the

petitioner ever had tried to induce the IOCL to enter into the contract.

In the present case the respondent authority during the course of pre

-contractual negotiation had enquired the suitability of the

candidature of the petitioner. The respondent authority had a special

knowledge and expertise concerning subject matter of the

negotiations, and should have made specific report with the intention

that the candidate is suitable. They have must ended in the finding

that petitioner is fit to enter into a contract. Every person who forms

an advice information and opinion of this kind, is under a duty of

reasonable care to see that it is true, this duty is not limited to person

carrying profession of business of giving advice but it is legally binding

upon parties to contracts. It must be borne in mind that there is often

a gap of time between the representation of fact and the ultimate

conclusion of the agreement. Any change to circumstances in the

mean time affecting the fact represented, must be brought to the

knowledge to the other party. In this case it is a difficult question

about the matter that where a person has means of discovering the

truth, but does not use that; an agreement in reliance upon the

statement made to respondent by its designated enquiry team,

reasons thereby, such agreement is not at all voidable.

26. Under the above observation in my view the respondent

authority concern can not blame the petitioner himself for the placing

of land having disputed title at the time of entering into the agreement

with the respondent No. 1. However after such information has been

received by the respondent, the respondent cannot enter into an a

fresh agreement with the petitioner. The conduct of the respondent

itself proves that they are not in position to repudiate the agreement

but they actually allowed the petitioner to carry the business. Thus, at

the initial stage though it appears that the representation of petitioner

regarding his title over the land in question was imperfect which was,

perfected later on. Hence the respondent authority allowed the

petitioner to continue such business by renewing the agreement for

further period of 05 years. The act of the respondent authority after

such knowledge imperfect title of the petitioner itself stopped them to

declare the agreement invalid.

27. Moreover the petitioner is performing the business in

unblemished manner which is the only means of his livelihood.

Admittedly, the alleged misrepresentation by the present petitioner is

not tenable in the eye of law. Thus he cannot be deprived of his

smooth livelihood by terminating his license.

28. Under the above observation I am of a view that the

impugned order of a termination passed by the respondent authority

is unsustainable. Hence the same is quashed.

29. Thus, this issue decided in favour of the petitioner.

30. The instant writ petition is disposed of. The respondent

authority is directed to allow the petitioner to continue with the

license by making a specific order within a period of 08 weeks from

date.

31. Under the above observations the writ petition is disposed

of.

32. 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.)