Kerala High Court
Key Systems vs The Chief General Manager on 10 September, 2021
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE P.B.SURESH KUMAR
FRIDAY, THE 10TH DAY OF SEPTEMBER 2021 / 19TH BHADRA, 1943
WP(C) NO. 16010 OF 2021
PETITIONERS:
1 M/S KEY SYSTEMS,
REPRESENTED BY ITS MANAGING PARTNER,
NIKHIL JOSEPH, 1ST FLOOR, MADEENA COMPLEX,
ALAPPUZHA-688 013.
2 K.C.JOSEPH,
CHOOLAYIL HOUSE, AVALOOKUNNU P.O.,
PUNNAMADA, ALAPPUZHA, PIN-688 006.
BY ADVS.
ABRAHAM VAKKANAL (SR.)
PAUL ABRAHAM VAKKANAL
VINEETHA SUSAN THOMAS
ROHITH C.
RESPONDENTS:
1 THE CHIEF GENERAL MANAGER,
BHARAT SANCHAR NIGAM LTD., O/O. THE CHIEF GENERAL
MANAGER, BSNL, KERALA CIRCLE, DOOR SANCHAR
BHAWAN, PMG JUNCTION, THIRUVANANTHAPURAM-695033.
2 THE PRINCIPAL GENERAL MANAGER (S&M-CM),
BHARAT SANCHAR NIGAM LTD., O/O. THE CHIEF GENERAL
MANAGER, BSNL, KERALA CIRCLE, DOOR SANCHAR
BHAWAN, PMG JUNCTION, THIRUVANANTHAPURAM-695033.
3 THE DEPUTY GENERAL MANAGER (S&M -CM),
BHARAT SANCHAR NIGAM LTD., O/O. THE CHIEF GENERAL
MANAGER, BSNL, KERALA CIRCLE, DOOR SANCHAR
BHAWAN, PMG JUNCTION, THIRUVANANTHAPURAM-695033.
4 THE PRINCIPAL GENERAL MANAGER,
BHARAT SANCHAR NIGAM LTD., BSNL BHAVAN,
W.P.(C) No.16010 of 2021 2
KALATHIPARAMBIL ROAD, ERNAKULAM, KOCHI-682016.
5 THE GENERAL MANAGER,
BHARAT SANCHAR NIGAM LTD., O/O. THE GENERAL
MANAGER TELECOM, THIRUVALLA, PATHANAMTHITTA
TELECOM DISTRICT, SH 1, THIRUVALLA, KERALA-
689101.
ADV PREMJIT NAGENDRAN
SRI.MATHEWS K PHILIP SC
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR
ADMISSION ON 10.09.2021, THE COURT ON THE SAME DAY
DELIVERED THE FOLLOWING:
W.P.(C) No.16010 of 2021 3
P.B.SURESH KUMAR, J.
---------------------------------------
W.P.(C) No.16010 of 2021
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Dated this the 10th day of September, 2021.
JUDGMENT
The first petitioner is a partnership firm doing
business as the franchisee of Bharat Sanchar Nigam
Limited(BSNL) in its two business territories namely Vyttila in
Ernakulam District and Thiruvalla in Pathanamthitta District. The
second petitioner was the Managing Partner of the first
petitioner firm. A proprietary concern run by the second
petitioner namely Mega Trading Corporation is also conducting
business as the franchisee of BSNL in one business territory of
BSNL. Similarly, a company namely, Key Systems India Private
ltd., of which the second petitioner is a director, is doing
business as a franchisee of BSNL in yet another business
territory of BSNL. Ext.P5 is the Sales and Distribution Policy of
BSNL published in the year 2018 and the said policy is still in
force. In Ext.P5, it is provided that the number of territories
permissible for a franchisee in a circle shall be restricted
normally to three. On 09.07.2021, the second petitioner was
issued Ext.P7 communication by the third respondent stating
that he is running business as franchisee of BSNL in four
territories; that he is not entitled to run business in more than
three territories in the light of the 2018 policy and that he should
therefore forego the business in one of the four territories. In
terms of the said communication, the third respondent directed
the second petitioner to exercise his option to continue business
in three among the four territories. Ext.P8 is the reply sent by
the second petitioner to Ext.P7 communication. The stand taken
by the second petitioner in Ext.P8 reply is that the first petitioner
firm has been reconstituted with effect from 30.6.2021 and he is
no longer a partner of the first petitioner firm. In other words,
according to the second petitioner, he is running business as
franchisee of BSNL only in two territories. The stand aforesaid of
the second petitioner was not accepted by BSNL. Consequently,
the second respondent issued Ext.P11 communication
terminating the franchisee-ship of the first petitioner firm in both
the territories where they were doing business. Ext.P11
communication is under challenge in the writ petition.
2. A statement has been filed by BSNL reiterating
the stand of the third respondent in Ext.P7 communication that
one person cannot run business as franchisee of BSNL in more
than three territories. In addition, it is stated in the statement
that the reconstitution of the first petitioner is contrary to the
specific provision in the franchisee-ship agreement entered into
by the first petitioner with BSNL which precludes the franchisees
from changing their constitution without previous approval of
BSNL.
3. Heard the learned Senior Counsel for the
petitioner as also the learned Standing Counsel for the BSNL.
4. The learned Senior Counsel for the petitioner
argued, placing reliance on Ext.P9 Deed of Reconstitution of the
first petitioner firm that the second petitioner is no longer a
partner of the first petitioner firm. Alternatively, it was argued
by the learned Senior Counsel that the provision in the 2018
policy relied on by the BSNL to terminate the franchisee-ship of
the first petitioner does not apply to franchisee-ships which are
migrated to 2018 policy and the same is only a provision
restraining grant of franchisee-ships through Expression of
Interest (EoI) in terms of 2018 policy. Alternatively, it was also
argued by the learned Senior Counsel that even assuming that
the second petitioner is a partner of the first petitioner firm and
that the provision in the 2018 policy relied on applies to the
franchisee-ships which are migrated to 2018 policy as well,
BSNL is not justified in terminating the franchisee-ship of the
first petitioner, for the first petitioner and the Company of which
the second petitioner is a Director are separate entities and the
business run by them in their legal capacity cannot be
considered as business run by the second petitioner himself.
The learned Senior Counsel has attempted to reinforce the said
argument pointing out that even going by the 2018 policy, for
the purpose of granting franchisee-ship on EoI basis, what is
taken note of is only the experience of partnership firm or
company, as the case may be, and not the experience of the
individual partners of the firm or the Directors of the company.
5. Ext.P14 is the franchisee-ship agreement stated
to have been executed by the first petitioner with BSNL on
30.06.2021. Admittedly, the said document is one signed by the
second petitioner as the authorised representative of the first
petitioner firm for doing business in the territory Thiruvalla in
Pathanamthitta District. According to the petitioners, the
reconstitution of the first petitioner firm was made later on the
same day. Clause 27.1 of Ext.P14 reads thus :
"27.1 In the event of the death or retirement of any
director or change of shareholders of the Franchisee the
appointment of a replacement or the transfer to another
shareholder shall be subject to the prior approval of BSNL
which shall not be unreasonably withheld and such
replacement or transferee shall enter into each agreement
to abide by the terms and conditions of this agreement as
may be required by BSNL. However the decision of BSNL
shall be final in this regard."
Going by the extracted provision in the agreement,
reconstitution of a franchisee firm is possible only with the prior
approval of BSNL. The petitioners do not have a case that the
reconstitution of the first petitioner firm was made with the prior
approval of BSNL. In other words, BSNL cannot be found fault
with for having treated the second petitioner as a partner of the
first petitioner firm in the matter of issuing Ext.P7
communication.
6. Clause 2D(c) of 2018 policy relied on by the
third respondent for terminating the franchisee-ships given to
the first petitioner firm read thus :
"Number of territories permissible to a franchisee in a circle
is restricted to normally three through EoI/Migration."
The contention of the petitioners that the clause aforesaid does
not apply to franchisee-ships migrated to 2018 policy cannot be
accepted in the light of the unambiguous provision in the clause.
True, registered partnerships and incorporated companies
cannot be equated with the individual partners in the firm and
individual directors in the company. It is seen from the
statement filed by BSNL that when complaints have been
received alleging that the conduct of the second petitioner in
running business as franchisee of BSNL in more than three
territories is violative of 2018 policy, it appears, on account of
the said reason, the third respondent has sought a clarification
from the corporate office of BSNL as to whether different
entities run by one person could be permitted to do business as
franchisee of BSNL in more than three territories and it has been
clarified by the corporate office of BSNL that if a person or entity
applies for franchisee-ship in different forms, it shall be treated
as multiple applications of the same person. It is seen that the
provision relied on for the purpose of terminating the franchisee-
ship of the first petitioner firm is not worded unambiguously to
justify an action based on the same against the first petitioner
firm, for the allegation is only that the business is being run by
the second petitioner in the name of a registered partnership of
which he is a partner and an incorporated company of which he
is a director. But, as noted, the corporate office of BSNL has
interpreted the clause to mean that if one person or entity
applies for franchisee-ship in different forms, it shall be treated
as multiple applications of the same person. No doubt, such an
interpretation of the clause aforesaid may not be justified in law.
The question, therefore, is whether this Court would be justified
in interfering with Ext.P11 decision on that ground. According to
me, the answer to the question shall be in a negative. The
reason is that BSNL, though a public sector company engaged
in commercial activities, shall have the freedom to form its own
policies. Unlike other public sector companies, BSNL is
publishing its policy for maintaining transparency in its
functions. No doubt, public bodies who proclaim that they would
follow a particular norm for a particular purpose have to
scrupulously follow the said norms. However, in case of any
doubt, it is for the author of the policy to explain as to the scope
of the policy and if the policy is not found unreasonable, the
courts are bound to accept the explanation offered by its author.
In the context of resolving identical and similar disputes relating
to the interpretation of a clause in a tender document, it has
been held by the Apex Court in Silppi Constructions
Contractors v. Union of India, (2020) 16 SCC 489 that the
authority which floats a tender is the best Judge to clarify the
scope of every clause in the tender. The proposition aforesaid
though not laid in the context of interpreting the provisions in a
policy, I do not find any reason why the same shall not be
extended to a case dealing with the scope of the terms of a
policy of the public sector body as well. In other words, insofar
as it is clarified by BSNL that its policy is that one person shall
not permitted to do business as its franchisee in more than three
territories, the court cannot say otherwise especially when the
policy is in relation to the commercial activity undertaken by the
body. That apart, I do not find any unreasonableness also in the
said policy, for in the absence of such a policy, one can
monopolize the franchisee business of BSNL by constituting
several partnerships and incorporated companies. In other
words, the arguments advanced by the learned Senior Counsel
for the petitioner for impugning Ext.P11 decision of the second
respondent are all unsustainable.
7. It is seen from the materials that though the
third respondent refers only to the business of the second
petitioner in four territories in Ext.P7 communication, even while
business of one person is permissible in three territories, the
third respondent chose to terminate the business of the first
petitioner in both the territories in which it was carrying on
business. When a query was raised by the Court as to the
reason for such a decision, the learned Standing Counsel for the
BSNL has replied that the company of which the second
petitioner was a director was permitted to run business as
franchisee of BSNL in another territory namely Cherthala in
Alappuzha District on a provisional basis until alternative
arrangements are made for conducting business in that territory
and it is on account of the said reason that the franchisee-ship of
the first petitioner in both the territories have been terminated. I
do not find any justification for terminating the franchisee-ship
of the first petitioner in both the territories in which it was
carrying on business, for the policy permits one person to carry
on business in three territories.
In the result, the writ petition is disposed of
confirming Ext.P11 decision, but clarifying that the first
petitioner shall be permitted to run business as franchisee of
BSNL in one of their territories, if an option to that effect has
been exercised by the first petitioner within three days from the
date of receipt of a copy of this judgment.
Sd/-
P.B.SURESH KUMAR, JUDGE.
YKB
APPENDIX OF WP(C) 16010/2021
PETITIONER EXHIBITS
Exhibit P1 A TRUE COPY OF THE PARTNERSHIP DEED
DATED 31.1.2005.
Exhibit P1(A) A TRUE COPY OF THE ACKNOWLEDGEMENT OF
REGISTRATION OF FIRM DATED 11.9.2007
ISSUED FROM THE REGISTRAR OF FIRMS,
KERALA.
Exhibit P2 TRUE COPIES OF THE EXPRESSION OF
INTEREST ISSUED IN 2011.
Exhibit P3 TRUE COPIES OF THE CM SALES AND
DISTRIBUTION POLICY, 2012.
Exhibit P4 TRUE COPY OF THE 2014 AMENDMENT TO
EXT.P3 POLICY DATED 13.10.2014.
Exhibit P5 TRUE COPY OF THE CM SALES AND
DISTRIBUTION POLICY, 2018.
Exhibit P6 A TRUE COPY OF THE LETTER DATED
22.2.2021 GRANTING EXTENSION OF
FRANCHISEE SHIP TILL 22.2.2021.
Exhibit P7 TRUE COPY OF THE EMAIL DATED 9.7.2021
ALONG WITH THE ATTACHED LETTER.
Exhibit P8 TRUE COPY OF THE REPLY DATED 13.7.2021
GIVEN BY K.C.JOSEPH.
Exhibit P9 TRUE COPY OF THE NOTARIZED COPY OF THE
PARTNERSHIP DEED DATED 30.6.2021.
Exhibit P9(A) TRUE COPY OF THE ACKNOWLEDGEMENT
RECEIPT DATED 16.7.2021 FROM THE OFFICE
OF THE REGISTRATION INSPECTOR GENERAL,
THIRUVANANTHAPURAM.
Exhibit P10 TRUE COPY OF THE FRANCHISEE SHIP
TERMINATION NOTICE DATED 29.7.2021
ISSUED BY THE 2ND RESPONDENT TO THE 1ST
PETITIONER.
Exhibit P11 TRUE COPY OF THE LETTER DATED 30.7.2021
ISSUED BY THE 2ND RESPONDENT TO THE 2ND
PETITIONER.
Exhibit P12 TRUE COPY OF THE LETTER FROM THE AGM
(EB & MKTG), PATHANANAMTHITTA BA
Exhibit P13 TRUE COPY OF THE RELEVANT PAGES OF THE
AGREEMENT (IE.FOR DISTRIBUTION OF
PRODUCT AND ORIGINALLY GIVEN BY 2ND
PETITIONER ON 30/6/2021)
Exhibit P14 TRUE COPY OF THE RELEVANT PAGES OF
AGREEMENT FOR PROVISION OF SERVICES OF
BSNL (ORIGINALLY GIVEN BY 2ND
PETITIONER ON 30/6/2021)
Exhibit P15 TRUE COPY OF THE EMAIL EVIDENCING
RECEIPT OF THE FRANCHISEE SHIP
AGREEMENT
RESPONDENT EXHIBITS
ANNEXURE R1(A) A PHOTOCOPY OF THE FIRST AND LAST
PAGE OF THE AGREEMENT FOR EXTENSION
WITH BSNL THIRUVALLA TERRITORY FOR A
PERIOD FROM 01.01.2021 TO
31.12.2021 DATED 07.07.2021
ANNEXURE R1(B) A TRUE COPY OF THE RELEVANT PAGE
CONTAINING CLAUSE 27 OF THE
AGREEMENT BETWEEN THE FIRST
PETITIONER AND BSNL DATED 6.03.2018.
