Madhya Pradesh High Court

Abhishek Jain vs Hindustan Petroleum Corporation ... on 13 August, 2021

Author: Gurpal Singh Ahluwalia

                              1
        THE HIGH COURT OF MADHYA PRADESH
                       WP-4020-2021
 Abhishek Jain Vs. Hindustan Petroleum Corporation Ltd. And
                            anr.

Gwalior, Dated : 13-08-2021

      Shri N.K.Gupta, Senior Advocate with Shri Ravi Shankar

Gupta, Counsel for the petitioner.

      Shri Harish Kumar Dixit, Counsel for the respondents.

This petition under Article 226 of the Constitution of India has

been filed seeking the following relief:-

"(i) That, the order impugned Annexure P/1 dated 22.01.2021 passed by Respondent No. 1 may kindly be quashed.

(ii) That, the Respondents be directed to proceed further as per the letter of intent issued to the petitioner dated 17.06.2019 Annexure P/6 with regard to establishment of retail outlet as per location no.116 as advertised in the publication dated 14.12.2018.

(iii) Any other writ, order or direction as this Hon'ble Court may deems fit in the facts and circumstances of the case be granted to the petitioner. Costs be awarded."

It is submitted by the counsel for the petitioner that on

13/12/2018 (Annexure P-2), a notice for appointment of

Regular/Rural Retail Outlet (Petrol Pump) Dealerships was issued.

The petitioner was one of the aspirant for the Rural Retail Outlet

(Petrol Pump) Dealership "within 1.5 kilometers from Dabra-

Pichhore Tiraha towards Pichhore" and accordingly, he submitted his

application. By order dated 17/06/2019, a Letter of Intent was issued

to the petitioner. All the paper requirements sought by the

respondents/corporation were completed. The security amount was

THE HIGH COURT OF MADHYA PRADESH WP-4020-2021 Abhishek Jain Vs. Hindustan Petroleum Corporation Ltd. And anr.

also deposited. However, by the impugned order dated 22/01/2021,

the advertisement in respect of "Rural Retail Outlet (Petrol Pump)

Dealership within 1.5 kilometers from Dabra-Pichhore Tiraha

towards Pichhore" has been cancelled on the ground that earlier the

advertisement in respect of location No.116 "within 1.5 kilometers

from Dabra-Pichhore Tiraha towards Pichhore LHS" was issued in

ignorance of fact that the said area is already having a State Highway,

therefore the location does not come within the definition of "Rural

Retail Outlet".

Challenging the impugned order dated 22/01/2021, it is

submitted by Shri Gupta that it is true that location, which was

advertised for Rural Retail Outlet is having State Highway and,

therefore, the area would not come within the definition of Rural

ROs. However, it is submitted that the only difference between Rural

RO and Regular RO is that the security amount is slightly higher.

Since, only two persons had applied for allotment of Rural Retail

Outlet (Petrol Pump) Dealership and the petitioner was successful

and he has also invested huge amount, therefore, he is ready and

willing to deposit difference in the security amount.

Per contra, the petition is vehemently opposed by the counsel

for the State. It is submitted that mere issuance of Letter of Intent

THE HIGH COURT OF MADHYA PRADESH WP-4020-2021 Abhishek Jain Vs. Hindustan Petroleum Corporation Ltd. And anr.

does not confer any indefeasible right on the petitioner and when the

respondents came to know that the advertisement was issued by

wrongly showing location within the rural area, and in fact, it would

fall within Regular RO, then the respondent instead of perpetuating

the mistake,decided to cancel the advertisement and accordingly, it

cannot be said that the action of the respondents is bad in law.

Heard the learned counsel for the parties.

The controversy involved in the present case evolves in a very

narrow compass. In notice for appointment of Regular/Rural Retail

Outlet (Petrol Pump) Dealership (Annexure P-2), the location No.116

was described as "within 1.5 kilometers from Dabra-Pichhore Tiraha

towards Pichhore on LHS". The Regular RO and Rural RO have been

defined in brochure for selection of dealers (Annexure P-10), which

reads as under:-

"1. IDENTIFICATION OF LOCATIONS Locations for setting up Retail Outlets are identified by the respective oil company based on commercial/minimum volume considerations. Accordingly, Regular and Rural outlets are set up by Oil Marketing Companies (OMC) as under:-

i) Regular ROs: Locations on Highways (National Highways/State Highways etc.) & Urban/Semi-urban areas (Within Municipal Limits of a town).

ii) Rural ROs: Locations in rural areas but not on Highways (NH/SH etc.) and outside Municipal Limits of a town"

THE HIGH COURT OF MADHYA PRADESH WP-4020-2021 Abhishek Jain Vs. Hindustan Petroleum Corporation Ltd. And anr.

Thus, it is clear that if a location is situated on Highway

(National Highway / State Highway etc.) and urban / semi-urban

within the municipal limits of a town, then the said location would be

treated as a Regular RO and the locations in rural areas but not on

Highways (NH/SH etc.) and outside the Municipal Limits of a town

they shall be treated as Rural ROs.

It is submitted by the counsel for the petitioner that so far as

the respondent is concerned, the only difference in Rural RO and

Regular RO is the amount of security and since the petitioner is ready

to deposit the same, therefore, no financial loss would be caused to

the respondent, appears to be very attractive but on deeper scrutiny,

the same is found to be violative of Article 19 of the Constitution of

India and accordingly, it cannot be accepted. It is next contended by

the counsel for the petitioner that even if a mistake was committed by

the Corporation in issuing the advertisement by showing the location

No.116 for Rural RO, then it was merely an irregularity and should

not have cancelled the advertisement qua the said location.

Considered the submissions of the learned Counsel for the

petitioner.

Rational behind classification of location as Regular RO and

Rural RO is the amount of business which a petrol pump is expected

THE HIGH COURT OF MADHYA PRADESH WP-4020-2021 Abhishek Jain Vs. Hindustan Petroleum Corporation Ltd. And anr.

to fetch. If the location is situated on highway or in urban and semi

urban area, footfall would be much greater than the location situated

in Rural RO. On the National Highway or the State Highway, there is

continuous plying of long distance trucks and similarly if, a location

is situated in urban and semi urban area, then considering the

population as well as number of vehicles, the business would be

more.

So far as the rural location are concerned, looking to the

limited number of villagers, coupled with the fact that there would

not be any heavy traffic, amount of business would be much less.

Whenever an advertisement is issued for Rural RO, aspirants by

keeping the low prospective business in mind, would not show any

interest but they may certainly participate for allotment of Regular

Retail Outlet (Petrol Pump) Dealership as their business would be

more.

It is not a case of difference in security amount only. It is a case

of giving full opportunity to all and each aspirant in the Country.

Article 19 of the Constitution of India confers a fundamental right on

every citizen of India and every citizen of India has a freedom to

practice any profession or to carry on any occupation, trade or

business.

THE HIGH COURT OF MADHYA PRADESH WP-4020-2021 Abhishek Jain Vs. Hindustan Petroleum Corporation Ltd. And anr.

Since the location in question was advertised as Rural RO,

therefore, there were only two candidates. Had it been advertised as

Regular RO, then every aspirant would have got an opportunity to

participate if, they were interested in doing so. Thus, if the contention

of the petitioner that the only difference between the Regular RO and

Rural RO is the security amount and the petitioner is ready to deposit

the difference in security amount is accepted, then it would be

violative of Article 19 of the Constitution of India.

The next question is as to whether by issuing the impugned

order dated 22/01/2021 (Annexure P-1) the respondents have

violated any substantive right of the petitioner or not ?

The Supreme Court in the case of South Eastern Coalfields

Ltd. & Ors. Vs. M/s S. Kumar's Associates AKM (JV) by order

dated 23.07.2021 passed in Civil Appeal No.4358/2016 has held as

under:-

"11. In Dresser Rand S.A., the contract was to come into force upon receipt of the LoI by the supplier. The Supreme Court recognized the well settled principles of law that a LoI merely indicates party's intention to enter into a contract with the other party in future and is not intended to bind either party ultimately to enter into a contract. In this behalf observations in an earlier judgment in Rajasthan Coop. Dairy Federation Ltd. v. Maha Laxmi Mingrate Marketing Service (P) Ltd. were referred to at page 773 para 39, which reads as under:

"The letter of intent merely expressed an intention

THE HIGH COURT OF MADHYA PRADESH WP-4020-2021 Abhishek Jain Vs. Hindustan Petroleum Corporation Ltd. And anr.

to enter into a contract. ....There was no binding legal relationship between the appellant and respondent No.1 at this stage and the appellant was entitled to look at the totality of circumstances in deciding whether to enter into a binding contract with respondent No.1 or not."

This was, however, followed by a caveat that it could also not be disputed that a letter of intent may be construed as a letter of acceptance if such intention is evident from its terms. It is not uncommon in contracts involving detailed procedure, that in order to save time, a letter of intent communicating the acceptance of the offer is issued asking the contractor to start the work with a stipulation that the detailed contract would be drawn up later. Though such a letter may be termed as a letter of intent, it may amount to acceptance of the offer resulting in a concluded contract between the parties. This is a matter to be decided with "reference to the terms of the letter." It was further observed that where the parties to a transaction exchanged letters of intent, the terms of such letters may have negative contractual intention but where the language does not have negative contractual intention, it is open to the courts to hold that the parties are bound by the document and the courts would be inclined to do so where the parties have acted on the document for a long period of time or have expended considerable sums of money in reliance on it.

12. The terms of LoI were adverted to, more specifically clause (L) therein, which stated that "this contract will come into force upon receipt of this letter of intent by supplier." In the different clauses the LoI were referred to as "this order" and "this contract" and it was, thus, argued to that the LoI be treated as purchase orders. The Court harmoniously construed the terms of the LoI to find that the effect of the LoI was that if the purchase orders were placed and LCs were opened the supplier was bound to effect supplies within the stipulated time at the prices stated in the LoI. It was not interpreted as a work order despite the wording utilized in the LoI.

THE HIGH COURT OF MADHYA PRADESH WP-4020-2021 Abhishek Jain Vs. Hindustan Petroleum Corporation Ltd. And anr.

20. We would like to state the issue whether a concluded contract had been arrived at inter se the parties is in turn dependent on the terms and conditions of the NIT, the LoI and the conduct of the parties. The judicial views before us leave little doubt over the proposition that an LoI merely indicates a party's intention to enter into a contract with the other party in future.12 No binding relationship between the parties at this stage emerges and the totality of the circumstances have to be considered in each case. It is no doubt possible to construe a letter of intent as a binding contract if such an intention is evident from its terms. But then the intention to do so must be clear and unambiguous as it takes a deviation from how normally a letter of intent has to be understood. This Court did consider in Dresser Rand S.A. case that there are cases where a detailed contract is drawn up later on account of anxiety to start work on an urgent basis. In that case it was clearly stated that the contract will come into force upon receipt of letter by the supplier, and yet on a holistic analysis - it was held that the LoI could not be interpreted as a work order.

21. Similarly if we construe the documents as discussed in the judgment of this Court in Jawahar Lal Burman case it is unequivocally mentioned that "contract is concluded by this acceptance and formal acceptance of tender will follow immediately on receipt of treasury receipt." Thus, once again, it has been stipulated as to at what time a contract would stand concluded even though it was later subject to deposit of the security amount. It was in these circumstances that the requirement of security deposit was treated not as a condition precedent but as a condition subsequent. We have to also appreciate the nature of contract which was for immediate requirement of the full quantity of coconut oil to be supplied within 21 days. It was also explicitly mentioned in the LoI itself that any failure to deposit the stipulated amount would be treated as a breach of contact. This is not the case here, where the consequence was simply forfeiture of the bid security amount, and cancellation of the 'award' and not the

THE HIGH COURT OF MADHYA PRADESH WP-4020-2021 Abhishek Jain Vs. Hindustan Petroleum Corporation Ltd. And anr.

'contract'.

Even the deposit of security amount would not create any

indefeasible right in favour of the petitioner. Thus, mere issuance of

Letter of Intent would not create any right in favor of the successful

bidder.

It is next contended by the counsel for the petitioner that since

the petitioner has already invested a substantial amount, therefore,

the respondents should not have cancelled the advertisement.

It is well established principle of law that a writ petition for

enforcement of contractual rights is not maintainable. The Supreme

Court in the case of LIC of India Vs. Asha Goel reported in (2001) 2

SCC 167 has held as under :

10. Article 226 of the Constitution confers extraordinary jurisdiction on the High Court to issue high prerogative writs for enforcement of the fundamental rights or for any other purpose. It is wide and expansive. The Constitution does not place any fetter on exercise of the extraordinary jurisdiction. It is left to the discretion of the High Court.

Therefore, it cannot be laid down as a general proposition of law that in no case the High Court can entertain a writ petition under Article 226 of the Constitution to enforce a claim under a life insurance policy. It is neither possible nor proper to enumerate exhaustively the circumstances in which such a claim can or cannot be enforced by filing a writ petition. The determination of the question depends on consideration of several factors like, whether a writ petitioner is merely attempting to enforce his/her contractual rights or the case raises important questions of law and constitutional issues, the nature of the dispute raised; the nature of inquiry necessary for determination of

THE HIGH COURT OF MADHYA PRADESH WP-4020-2021 Abhishek Jain Vs. Hindustan Petroleum Corporation Ltd. And anr.

the dispute etc. The matter is to be considered in the facts and circumstances of each case. While the jurisdiction of the High Court to entertain a writ petition under Article 226 of the Constitution cannot be denied altogether, courts must bear in mind the self-imposed restriction consistently followed by High Courts all these years after the constitutional power came into existence in not entertaining writ petitions filed for enforcement of purely contractual rights and obligations which involve disputed questions of facts. The courts have consistently taken the view that in a case where for determination of the dispute raised, it is necessary to inquire into facts for determination of which it may become necessary to record oral evidence a proceeding under Article 226 of the Constitution, is not the appropriate forum. The position is also well settled that if the contract entered between the parties provide an alternate forum for resolution of disputes arising from the contract, then the parties should approach the forum agreed by them and the High Court in writ jurisdiction should not permit them to bypass the agreed forum of dispute resolution. At the cost of repetition it may be stated that in the above discussions we have only indicated some of the circumstances in which the High Court have declined to entertain petitions filed under Article 226 of the Constitution for enforcement of contractual rights and obligation; the discussions are not intended to be exhaustive. This Court from time to time disapproved of a High Court entertaining a petition under Article 226 of the Constitution in matters of enforcement of contractual rights and obligation particularly where the claim by one party is contested by the other and adjudication of the dispute requires inquiry into facts. We may notice a few such cases; Mohd. Hanif v. State of Assam; Banchhanidhi Rath v. State of Orissa; Rukmanibai Gupta v. Collector, Jabalpur; Food Corpn. of India v. Jagannath Dutta and State of H.P. v. Raja Mahendra Pal.

Further, in the present case, even an agreement has not been

executed. In fact at present, there is no contract between the

petitioner and the respondent.

THE HIGH COURT OF MADHYA PRADESH WP-4020-2021 Abhishek Jain Vs. Hindustan Petroleum Corporation Ltd. And anr.

Thus, this Court cannot perpetuate the mistake which has been

committed by the respondent thereby violating the fundamental rights

of the persons, who were deprived from participating in the selection

process.

So far as the investment done by the petitioner is concerned, he

has a remedy to seek damages from the respondent Corporation by

availing a remedy provided under the civil law.

With aforesaid liberty, the petition fails and is hereby