Indian Oil Corporation Ltd & Anr. vs Sushila Kumar & Anr
2012 Latest Caselaw 683 Del

          *IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                 Date of decision: 1st February, 2012

+                       LPA.No. 1301/2007

INDIAN OIL CORPORATION LTD & ANR.             ..... Appellants
                 Through: Mr. Abhinav Vashisht, Sr. Advocate
                          with Mr. Rajat Naved, Ms. Prachi V.
                          Sharma, Advocates

                                 Versus

SUSHILA KUMAR & ANR.                                    ..... Respondents
                 Through:            Mr. Anil K. Kher, Sr. Advocate with
                                     Mr. D.R.Bhatia, Mr. Ankur Bansal
                                     and Mr. Siddhartha Jain, Advocates.

CORAM :-
HON'BLE THE ACTING CHIEF JUSTICE
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

                              JUDGMENT

RAJIV SAHAI ENDLAW, J.

1. This Intra-Court Appeal impugns the judgment dated 31 st August,

2007 of the learned Single Judge allowing WP(C) No. 469/2005 preferred

by the respondent no.1 and directing the appellant to restore the LPG

distributorship to the respondent no.1 and to also attach back to the said

distributorship the customers who had been distributed to other dealers.

Notice of this appeal was issued. It appears that the respondent no.1 had

initiated contempt proceedings owing to non compliance of the direction

issued by the learned Single Judge. However, on 11 th February, 2008 the

counsel for the respondent no.1 stated that he would not press the contempt

till the disposal of this appeal. The appeal was vide order dated 25 th August,

2008 admitted for hearing. The counsels have been heard.

2. The appellant on 27th November, 1989 / 20th March, 1990 issued a

letter to the respondent no.1 of its intent to allot rights of distributorship of

LPG at Noida to the respondent no.1 on compassionate grounds, the

respondent no.1 being a war widow. Ultimately a Distributorship Agreement

dated 7th July, 1994 was signed between the appellant and the respondent

no.1 whereunder the appellant appointed the respondent no.1 as Distributor

of LPG in the distribution area of Kondli, New Kondli and adjacent areas.

The respondent no.1 commenced operations under the said agreement.

3. A notice dated 27 th April, 2001 was issued by the appellant to the

respondent no.1 averring that respondent no.1 was not supervising the day to

day operations of distributorship, as was required under the Agreement and

asking the respondent no.1 to show cause as to why action against her be not

taken therefor. The respondent no.1 vide her reply dated 2 nd May, 2001

denied any breach of the agreement on her part and furnished certificate of

the bank to the effect that she was personally operating the bank account of

the distributorship as proprietor and also filed her income tax and sales tax

returns and other documents showing her day to day involvement with

respect to the said distributorship business. The appellant vide its letter

dated 5th June, 2001 informed the respondent no.1 that in view of her reply,

further action pursuant to the show cause notice had been deferred and

"warned" the respondent no.1 that in case at any later date it was found that

she was in breach of any term of the agreement, further action including of

termination of distributorship shall be taken.

4. The respondent no.1 claims that her daughter was settled in New

Zealand and was in the family way and needed respondent no.1‟s help; the

respondent no.1 thus approached the appellant for permission to go abroad.

It was further the case of the respondent no. 1 that on 13th July, 2001 the

Area Sales Officer of the appellant inspected the distributorship and noted

on the inspection report that the respondent no.1 had authorized one Mr.

Tarun Kumar to look after the functioning of the distributorship. The

respondent no.1 contends that the same amounted to the consent by the

appellant to the respondent no.1 proceeding abroad. The respondent no.1

further claims to have confirmed the said fact vide her letter dated 15 th June,

2001 to the appellant. The respondent no.1 thereafter on 17th June, 2001 left

for New Zealand. The appellant, vide its letter dated 30 th July, 2001

terminated the distributorship inter alia on the ground that the respondent

no.1 was not available during inspections on 19 th June, 2001, 2nd July, 2001

and 18th July, 2001 and the aforesaid Mr. Tarun Kumar was managing the

day to day affairs of the business and which was in breach of the

distributorship agreement.

5. The respondent no.1, after more than three years of the said

cancellation of her distributorship filed WP(C) No.469/2005 (supra)

impugning the said cancellation and seeking mandamus for restoration

thereof. Of course, the respondent no.1 in the writ petition pleaded having

immediately (after cancellation of distributorship on 30 th July, 2001) sent a

letter dated 1st August, 2001 clarifying that she had proceeded abroad with

the permission of the appellant and thus the appellant could not have

cancelled the distributorship on the ground of her absence. Representations

are also stated to have been made in the said period of three years to the

various other authorities against cancellation of distributorship. The

appellant contested the said writ petition pleading that the respondent no.1

had transferred her rights and interest of the distributorship without

permission of the appellant to some other person and was thus in breach of

the terms and conditions of the Agreement; that the respondent no.1 had left

the country without permission of the appellant; that the writ petition was

highly belated; that the writ petition was not maintainable owing to the

arbitration clause in the Agreement and otherwise justifying the cancellation.

6. The learned Single Judge allowed the writ petition observing/holding:

(i) that Article 226 is not regulated by any period of limitation,

though relief can be denied if the litigant approaches after lapse of

considerable time; considering that the husband of the respondent

no.1 was a high ranking Army Officer and was killed in extremist

violence and the respondent no.1 herself had to wait for more than

five years before the distributorship was allotted to her and that she

was single and dependent on her employees to carry on her business,

the petition could not be dismissed as barred by laches;

(ii) that the inspection report shortly before the departure of the

respondent no.1 showed that the respondent no.1 had informed the

appellant of her impending foreign visit; that the appellant had not

been able to show any rule or condition in the agreement compelling

the distributor to seek leave from the appellant;

(iii) that as long as the distributor is in overall control and supervises the

outlet efficiently, the distributorship could not be terminated;

(iv) that the circumstances clearly showed a biased attitude and utter non

application of mind on the part of the appellant in cancelling the

distributorship of the respondent no.1.

Accordingly the said cancellation was held to be arbitrary and

unreasonable and was set aside.

7. During the pendency of this appeal, the counsel for the respondent

no.1 was on 13th May, 2008 asked to verify whether the respondent no.1 was

then residing in India and to also produce her passport or photocopy thereof.

The said direction was reiterated on 19 th August, 2008 and 4th February,

2010. Thereafter on 23rd March, 2010 the respondent no.1 was directed to

file an affidavit indicating the dates when she left India and the dates when

she was in India from the year 2000 onwards.

8. In compliance of the directions aforesaid, a copy of the Indian

passport, a copy of the New Zealand passport and a copy of the Certificate

of Registration of the respondent no.1 as an Overseas Citizen of India were

produced. In the affidavit, the respondent no.1 stated that she had been

staying in New Zealand with her daughter as after the cancellation of

distributorship she had no source of income and she "had no other children

in India to take care of her and to look after her in her old age". The

following dates of travel into India and departure from India were given.

             "ARRIVALS                             DEPARTURES

             11.03.1997                            24.02.1997

             06.11.1997                            16.10.1997

             16.09.1999                            19.08.1999

             20.03.2001                            06.03.2001

             29.04.2001                            29.03.2001

             Not known                             17.06.2001

             28.01.2002                            18.04.2002

             05.11.2003                            26.01.2004

             19.11.2004                            02.01.2005

             01.11.2005                            31.01.2005

             01.11.2006                            31.01.2007


              06.11.2007                             15.01.2008

             22.11.2008                             07.01.2009

             28.11.2009                             17.01.2010"

9. The senior counsel for the appellant in the circumstances, without

adverting to the order of the learned Single Judge has contended that from

the documents so produced it is borne out that the appellant is holder of a

New Zealand passport since the year 2007; that she has since the year 2001

or so been residing in New Zealand; that all this shows that she had no

intention of coming back and this alone constitutes a ground for holding that

she is now not entitled to restoration of distributorship. Considerable

emphasis is also laid on the long delay of over three years after cancellation

in filing the writ petition. Reference is made to: (i) State of UP Vs. Bridge &

Roof Company (India) Ltd. (1996) 6 SCC 22 to buttress the argument of

non maintainability of writ petition owing to the existence of the arbitration

clause in the distributorship agreement; (ii) Mrs Sanjana M. Wig Vs.

Hindustan Petro Corporation Ltd AIR 2005 SCC 3454 to contend that the

questions whether the respondent no.1 was herself operating the

distributorship or not was a disputed question of fact requiring evidence and

which cannot be adjudicated in writ jurisdiction; (iii) U.P. Jal Nigam Vs.

Jaswant Singh (2006) 11 SCC 464 to contend that after delay of more than

three years the writ petition ought to have been dismissed on that ground

alone; and (iv) Samant Vs. Bombay Stock Exchange (2001) 5 SCC 323 to

contend that mere making of repeated representations cannot extend the

period of limitation and cannot explain the delay.

10. Per contra, the senior counsel for the respondent no.1 has invited

attention to the facts as set out hereinabove to contend that there are no

disputed questions of fact requiring any evidence to be led; that the appellant

in the counter affidavit in the writ petition had sought to justify the

cancellation on the ground of sale by the appellant of the distributorship

rights to another but it was not the ground taken in the termination letter

dated 30th July, 2001 (supra). It is contended that the husband of the

respondent no.1 was killed by terrorists on 7th November, 1988; that inspite

of recommendation for allotment of an LPG distributorship to her in the year

1989 it was finally allotted after five years in 1994; that from 1994 till 2001

there was not a single complaint against the respondent no.1; that the entire

facts and circumstances show that some officers of the appellant had decided

to terminate the distributorship by hook or by crook to benefit somebody

else and the grounds had been concocted therefor. It is further argued that

no document whatsoever had been produced to allege that the respondent

no.1 was not signing the day-to-day documents of the business. It is further

shown that the respondent no.1 even though not required to, had vide her

letter dated 8th June, 2001 informed the appellant of her need to travel

abroad. Attention is also invited to the inspection report of 13 th July, 2001

which also records that the respondent no.1 was out of India and of which

she had already informed and had authorized Shri Tarun Kumar to look after

functioning of the distributorship It is thus contended that the notice of

termination is contrary to the inspection report itself. It is also argued that

no further notice to show cause was issued to the respondent no.1 and

termination could not have been done on the basis of the earlier show cause

notice and upon receipt of reply whereto the appellant had decided not to

take any further action. Attention is yet further invited to various documents

filed by the respondent no.1 alongwith the response to the show cause notice

earlier issued all of which show the personal day-to-day involvement of the

respondent no.1 in the business of distributorship. Reliance is placed on

Shallmar Gas Vs. Indian Oil Corporation Ltd MANU/SC/1164/2010 in

which case in the face of the war widow continuing to hold majority share,

her non involvement in day to day affairs owing to old age was held to be

not in breach of the agreement and on Harbanslal Sahnia Vs. Indian Oil

Corporation Ltd (2003) 2 SCC 107 in which the alternative remedy

available of arbitration was held to be not precluding the maintainability of

the writ petition. Reliance is also placed on Indian Oil Corporation Vs.

Dharam Chand Gutpa MANU/DE/9416/2006 where termination of

distributorship agreement found to be not in accordance with the principles

of natural justice was set aside. The senior counsel for the respondent no.1

has, during the hearing, also handed over a reply dated 12 th September, 2008

of the appellant to an RTI query, stating that there was no specific policy on

LPG distributor subsequently acquiring status of NRI and that no LPG

distributorship had been terminated on the ground of distributor having

subsequently acquired the status of NRI.

11. We have considered the rival contentions. While we do not find any

blemish in the order of the learned Single Judge and are thus not inclined to

set aside the same on the ground of any error therein but the events which

have subsequently unfolded, in our opinion do require consideration for the

outcome of this appeal. The respondent no.1 has been out of the

distributorship business now for the last 12 years. In the said 12 years her

customer base has eroded and the said customers were transferred to other

distributors. It can safely be assumed that depending upon the total number

of customers, additional distributors may have been introduced.

12. It is also undisputed that the respondent no.1 has spent most of the last

12 years abroad. So much so that for the last 5 years she is also a foreign

citizen. The reason given in her affidavit for such absence from India is,

"absence of any children in India to look after her in her old age". We have

thus wondered whether the relief granted by the learned Single Judge is

today justified. In our opinion no. It cannot be lost sight of that the said

distributorship was given to her by way of largesse and on compassionate

ground and was not by way of any right. It is also sufficiently borne out that

the said distributorship has served the respondent no.1 well; it had helped

her in rehabilitating herself and her children. Now, when the grounds for

which compassion was then shown to the respondent no.1 have disappeared,

we have wondered whether any case for restoration of the distributorship

when the respondent no.1 in the interregnum has settled herself elsewhere,

is justified. Our answer again is no. In fact the long delay of over three

years on the part of the respondent no.1 in approaching the Court itself

shows that the need/requirement by the respondent no.1 for the said

distributorship had disappeared then only. It is not as if the respondent no.1

between the date of cancellation and the date of filing of the writ petition did

not visit India. The dates aforesaid disclosed by her reveal three visits to

India between that time. The petitioner still did not file any proceedings.

The only inference can be that she was then not in a position, neither to

remain in India nor to recommence business. The respondent no.1 though

may be justified in feeling hurt at the treatment meted out to her on the part

of the appellant but the said hurt would still not justify the restoration of

distributorship. It is a well known fact that such distributorships are

awarded even today on compassionate ground and we are of the view that

restoration of distributorship in today‟s date and time to the respondent no.1

would definitely be at the cost of some other deserving person. We are

conscious that the said distributorship was not limited in point of time.

However at the same time it did not create any right in favour of the

respondent no.1; it was a terminable contract. Even though the appellant is

found to have acted unfairly and unjustly in effecting such termination but

that alone would not lead to the restoration.

13. It is a settled proposition in law that this Court, in exercise of power

of judicial review as we are exercising now, is entitled to mould the relief

according to the facts and circumstances and to deny relief even though

finding any error in the action of which judicial review is sought. The

powers of this Court while exercising jurisdiction under Article 226 are

wide. This Court, to do substantial justice between the parties, can decline

relief even where entitlement in law is made out (see Chandra Singh Vs.

State of Rajasthan (2003) 6 SCC 545 and ONGC Ltd. Vs. Sendhabhai

Vastram Patel (2005) 6 SCC 454) and similarly grant relief inspite technical

violation. Similarly, in Taherakhatoon Vs. Salambin Mohammad (1999) 2

SCC 635 even at the time of dealing with the appeal after grant of special

leave, it was held that the Court was not bound to go into the merits and

even if entering into the merits and finding an error, was not bound to

interfere if the justice of the case on facts does not require interference or if

the relief could be moulded in a different fashion. This Court has echoed the

same views in Filmistan Exhibitors Ltd. v. N.C.T., thr. Secy. Labour 131

(2006) DLT 648 by holding that even if there is a violation of law, this Court

is not bound to exercise discretionary jurisdiction and in Babu Ram Sagar

Vs. Presiding Officer, Labour Court MANU/DE/9235/2006 by refusing to

interfere in exercise of discretionary powers inspite of holding the reasons

given by the Labour Court to be not convincing. We find the present case

to be one such case where inspite of finding error in the action of the

appellant of cancellation of distributorship, we still do not find a case for

restoration of distributorship to be made out. Such restoration would require

the respondent no.1 to again shift to India and for which she has as aforesaid

expressed incapability in the absence of anyone to help her. It cannot also

be lost sight of that as part and parcel of the said business, the respondent

no.1 was required to arrange space etc. and all of which in all probability

would have dissipated in the last so many years.

14. The present status of the respondent no.1, as a citizen of a foreign land

cannot also be ignored. The same shows an intent to permanently remain

away from India. Foreign citizenship is entirely different from non

residency. There are a large number of restrictions on foreign citizens

establishing/carrying on business in India. However since the counsels have

not addressed on the said aspect, we do not foray into it further. Suffice it is

to say that such changed status also comes in the way of restoration of the

largesse earlier bestowed on the respondent no.1.

15. For the reasons aforesaid we allow this appeal and set aside the order

of the learned Single Judge insofar granting the relief to the respondent no.1.

However, having found fault with the actions of the appellant and which

have led to the respondent no.1 litigating with the appellant, we award to the

respondent no.1 legal costs of `50,000/- payable by the appellant within four

weeks of today.

RAJIV SAHAI ENDLAW, J

ACTING CHIEF JUSTICE

FEBRUARY 1, 2012 „M‟