Madras High Court
M/S.Mugavai Indane Gas Agency vs The General Manager (Lpg-S) on 26 May, 2021
W.P.(MD)No.9838 of 2021
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
RESERVED ON : 09.12.2021
PRONOUNCED ON : 03.01.2022
CORAM
THE HONOURABLE MR.JUSTICE C.V.KARTHIKEYAN
W.P.(MD)No.9838 of 2021
and
W.M.P.(MD)Nos.7562, 8214 and 11062 of 2021
M/s.Mugavai Indane Gas Agency,
represented by its Proprietor,
K.Gurumoorthy Kamaraj,
Ramanathapuram District. ... Petitioner
vs.
The General Manager (LPG-s),
Indian Oil Corporation Limited,
Indane Area Office,
No.2, Race Course Road,
Chokkikulam, Madurai, Madurai District. ... Respondent
PRAYER: Writ Petition filed under Article 226 of the Constitution of
India for issuance of Writ of Certiorari, to call for the records of the
impugned order, passed by the respondent vide his proceedings in
Ref.TNSO/LPG/MDU AO/MUGAVAI, dated 26.05.2021 and quash the
same as illegal.
1/25
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W.P.(MD)No.9838 of 2021
For Petitioner :Mr.M.Ajmal Khan
Senior Counsel
for M/s.Ajmal Associates
For Respondent :Mr.K.Muraleedharan
For Petitioner :Mr.J.Bharathan
(in W.M.P.(MD)No.11062 of 2021)
*****
ORDER
This Writ Petition has been filed in the nature of Certiorarified
Mandamus seeking interference with the impugned order, which actually
is a show cause notice issued by the respondent/General Manager (LPG-
s), Indian Oil Corporation Limited, Madurai, dated 26.05.2021 to the
petitioner/Mugavai Indane Gas Agency, represented by its Proprietor,
K.Gurumoorthy Kamaraj, Ramanathapuram District and to quash the
same.
2.The sole proprietor/petitioner gas agency had been declared and
selected for LPG distributorship at Ramanathapuram District by the
respondent by order, dated 08.08.2016. As part of distributorship, it was
necessary that the petitioner had lands for construction of godown for
storing the LPG cylinders and independently, further lands for
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construction of a show room, where the gas cylinders can be actually
exhibited and sold to customers. The petitioner did not have either of the
two lands.
3.In the affidavit, the petitioner had stated that he had entered into
lease deeds, dated 12.08.2016 and 17.08.2016 with his relatives
Mr.Muniyandi and Mrs.Subbulakshmi, respectively with respect to their
lands to be utilised for the aforesaid purposes. The lease deeds were also
registered in the office of the Joint Registrar, Ramanathapuram. He was
permitted to put up a construction in the aforesaid lands. He had also
obtained financial assistance from other relatives with condition that he
would repay the monies borrowed in instalments.
4.The petitioner claimed in his affidavit that he was therefore
compelled to affix his signatures in blank papers. It is claimed that on
the basis of such signed blank papers, two of his relatives,
G.Praveenkumar son of Ganesh and Mrs.C.Vanithamani wife of
Chidambaram, had prepared a partnership deed, in which, the petitioner
was shown as first party/Managing Director and the other two were
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shown as second and third parties and that they had commenced the
partnership firm calling “Mugavai Indane Gas Agency”. The nature of
the business of the partnership firm was to issue new domestic LPG
connections and generally do all other related activities with respect to
providing LPG connections to various customers and also to maintain
show room and godown with all safety norms in the place. A perusal of
the partnership deed also shows that disputes should be referred to
arbitration.
5.The petitioner claiming that the the said partnership deed was the
result of fraud being committed owing to his signatures in blank papers
being utilised unauthorisedly, had filed O.S.No.81 of 2020 on the file of
the District Munsif Court, Ramanathapuram District, seeking a
declaration that the said partnership deed, which is incidentally
unregistered and dated 22.05.2019, as null and void. The relief was
sought against the parties to the partnership deed. A further relief was
also sought against the other two individuals, namely, M.Muniyandi and
G.Subbulakshmi, with whom he had entered into lease deeds, seeking to
restrain them from interfering with his possession of the properties,
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which had been leased out to him, except by due process of law and a
further permanent injunction was also sought against the signatories in
the partnership deed, restraining them from interfering with the business,
“Mugavai Indane Gas Agency”. The said suit is pending.
6.The petitioner, to continue with his licence with the respondent,
had submitted an application on 02.12.2020 to shift the show room to
some other place. He also sought to shift the godown to another place
and had submitted an application in this regard on 30.03.2021. The
petitioner filed W.P.(MD)No.7785 of 2021 seeking a direction to dispose
of the aforesaid two applications. In the Writ Petition, the respondent
herein had stated that actions are being initiated against the petitioner for
irregularities and therefore, shifting or re-location of the show room and
godown cannot be considered. That information rendered the Writ
Petition infructuous. The petitioner had not disclosed whether the Writ
Petition is pending or not as on date.
7.The impugned order, dated 26.05.2021 had been then issued by
the respondent calling for explanation from the petitioner as to why the
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distributorship should not be terminated for violation of a specific clause,
namely, that the distributorship was granted to the petitioner in his
individual capacity as proprietor, but that he had entered into a
partnership deed sharing profits and losses and it was the partnership,
which in effect was the distributor/licensee and this was a violation of the
terms of the agreement originally entered into since the licence was
granted only to the petitioner.
8.The petitioner claims that this Court should interfere with the
impugned order on the ground that a reading of the impugned order
would show that the respondent had already formed an opinion that there
has been violation of the terms and condition of the distributorship
agreement and it was therefore, urged that giving an answer or
explanation to the same would only be an exercise of futility. It was
under these circumstances that the petitioner had come to Court seeking
the reliefs as stated above.
9.A counter had been filed on behalf of the respondent questioning
their description in the cause title. It was stated that the sole proprietor
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of the petitioner, K.Gurumoorthy Kamaraj was declared as a successful
candidate for LPG distributorship. However, the respondent had
received complaints from G.Subbulakshmi claiming that the petitioner
had constructed the show room for the distributorship in a land not
owned by him. A similar complaint was received from M.Muniyandi
again complaining that the petitioner had constructed godown for the
distributorship in a part of land, which was not leased to him. Further,
the access road to the godown was not owned by the petitioner. These
complaints compelled the respondent to examine whether the petitioner
had violated the terms of the distributorship agreement. The petitioner
was not permitted to re-locate the show room and the LPG godown and
action was contemplated against the petitioner for violation of the terms
of the distributorship agreement.
10.It was also claimed in the counter that the petitioner in his
explanation to the two complaints by G.Subbulakshmi and M.Muniyandi
had admitted that some part of the godown had been constructed by him
in an area which was not leased to him. He also admitted that the truck
parking area and the show room was also partially on lands which were
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not leased to him.
11.It was also claimed that the Notary Public who had attested the
partnership deed stated that the other two parties, G.Praveen Kumar and
C.Vanithamani who were shown as signatories in the partnership deed
had actually visited his office and had signed in his presence on
11.07.2019. It was therefore, claimed that the petitioner had violated the
distributorship terms and his own declaration which he had given at the
time when he was granted LPG distributorship licence. It was stated that
an obligation had been placed on the petitioner not to transfer his interest
by an agreement to any other persons/entity.
12.It was stated that by entering into a partnership and agreeing to
share the profit and loss of the distributorship business, the petitioner had
directly violated such condition. It was also stated that the Notary Public
had also confirmed that the three signatories to the partnership appeared
in his office and signed the partnership deed in his presence. It was,
therefore, stated that the impugned show cause notice had been issued
after coming to a prima facie opinion and that it had been issued in
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accordance with law. It was categorically stated that there was no pre
determination.
13.It was also claimed that the interim order of stay granted on
07.06.2021 should be vacated. In this connection, the respondent had
filed W.M.P.(MD)No.8214 of 2021 seeking to vacate the order of interim
stay.
14.One of the lessess, Subbulakshmi wife of Ganesh had also filed
W.M.P.(MD)No.11062 of 2021 seeking permission to implead her as
second respondent in the Writ Petition.
15.Heard arguments advanced by Mr.M.Ajmal Khan, learned
Senior Counsel for the Writ Petitioner, Mr.K.Muraleedharan, learned
Counsel for the respondent. Mr.J.Bharathan, learned Counsel also
sought to advance his arguments in W.M.P.(MD)No.11062 of 2021, but
since an order had not been passed and it was stated that the impleading
petition will be considered along with the Writ Petition, it was so
informed to the learned Counsel.
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16.The issue, which arises for consideration in this Writ Petition, is
whether this Court can interfere with a show cause notice issued to the
petitioner.
17.The learned Senior Counsel for the petitioner insists that in the
peculiar circumstances of the case, interference is warranted, particularly,
because, a reading of the show cause notice would clearly indicate that
the respondent had come to a conclusion that the petitioner had actually
violated the terms of the distributorship agreement and therefore, any
explanation given would be only rejected.
18.In this connection, the learned Senior Counsel placed reliance
on a judgment of the Honourable Supreme Court in the case of Siemens
Limited vs State of Maharastra and others, reported in (2006) 12 SCC
33, wherein, the Honourable Supreme Court had taking into
consideration the facts of that particular case and held as follows:
“9.Although ordinarily a writ court may not exercise its
discretionary jurisdiction in entertaining a writ petition questioning a
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notice to show cause unless the same inter alia appears to have been
without jurisdiction as has been held by this Court in some decisions
including State of U.P. v. Brahm Datt Sharma [(1987) 2 SCC 179 :
(1987) 3 ATC 319 : AIR 1987 SC 943] , Special Director v. Mohd.
Ghulam Ghouse [(2004) 3 SCC 440 : 2004 SCC (Cri) 826] and Union
of India v. Kunisetty Satyanarayana [(2006) 12 SCC 28 : (2006) 12
Scale 262] , but the question herein has to be considered from a
different angle viz. when a notice is issued with premeditation, a writ
petition would be maintainable. In such an event, even if the court
directs the statutory authority to hear the matter afresh, ordinarily
such hearing would not yield any fruitful purpose. (See K.I.
Shephard v. Union of India [(1987) 4 SCC 431 : 1987 SCC (L&S)
438 : AIR 1988 SC 686] .) It is evident in the instant case that the
respondent has clearly made up its mind. It explicitly said so both in
the counter-affidavit as also in its purported show-cause notice.
10. The said principle has been followed by this Court in V.C.,
Banaras Hindu University v. Shrikant [(2006) 11 SCC 42 : (2006) 6
Scale 66] , stating: (SCC p. 60, paras 48-49)
“48. The Vice-Chancellor appears to have made up his mind to impose
the punishment of dismissal on the respondent herein. A post-
decisional hearing given by the High Court was illusory in this case.
49. In K.I. Shephard v. Union of India [(1987) 4 SCC 431 : 1987 SCC
(L&S) 438 : AIR 1988 SC 686] this Court held: (SCC p. 449, para 16)
‘It is common experience that once a decision has been taken, there is a
tendency to uphold it and a representation may not really yield any
fruitful purpose.’ ”
19.The learned Senior Counsel took the Court through the show
cause notice, wherein, the allegations against the petitioner raised by
Mr.M.Muniyandi, G.Subbulakshmi and G.Praveenkumar, by complaint
dated 05.10.2020 had been mentioned and thereafter, it had been further
stated that after enquiry and also after examining the petitioner and the
complainants, it was found that the petitioner had committed
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irregularities and that they had sought for an explanation and that the
petitioner had given his explanation also and that the petitioner, in view
of such arrangement between the petitioner and his relatives, had violated
various conditions of distributorship. It had been finally stated that a
reply should be given to the show cause notice as to why the
distributorship should not be terminated.
20.Mr.M.Ajmal Khan, learned Senior Counsel stated that the
respondent had actually given a termination notice in the form of show
cause notice. He pointed out that that the petitioner had instituted a suit
stating that the partnership deed, which is the basis on which the show
cause notice issued, was a result of fraud. The learned Senior Counsel
therefore stated that the Writ Petition should be allowed and further
proceedings with respect to the show cause notice should be quashed.
21.Mr.K.Muraleedharan, learned Counsel for the respondent
however pointed that the petitioner was a beneficiery of the agreement
and there was an obligation that he should not transfer his rights or
interest or even share the profits with anybody else. It had been on the
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basis of his application that distributorship was granted and if he had not
been possessed of necessary lands, or financial capacity, then the
distributorship could have been granted to some other deserving
individual.
22.Mr.K.Muraleedharan, learned Counsel also relied on a
judgment of Honourable Supreme Court in the case of State of Orissa
and others vs Mesco Steels Limited and another, reported in (2013) 4
SCC 340. In that particular case, in the face of status-quo having been
granted by the Supreme Court in earlier proceedings, the Government
had issued a show cause notice calling for an explanation with respect to
a mining lease. The Supreme Court had framed the following three
questions for consideration:
“17.We have given our anxious consideration to the
submissions made at the Bar. The following questions, in our
opinion, arise for determination:
“17.1.Whether the writ petition filed by the respondent
Company was pre-mature, the same having been filed against an
inter-departmental communication that did not finally determine
any right or obligation of the parties?
17.2.Whether the show-cause notice could be ignored by
the High Court simply because, it had been issued in violation of
the interim order passed by it requiring the parties to maintain
status quo?
17.3.Whether the show-cause notice was without
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jurisdiction and could, therefore, be quashed?”
23.The Hon'ble Supreme Court held with respect to the first
question that since the Writ Petition had been filed before the High Court
not against the show cause notice, but against an inter-departmental
communication, the Writ Petition was pre-mature and answered the
question in the affirmative. With respect to the second question, they
stated that the High Court should have taken the show cause notice as a
reason to relegate the parties to a procedure, which was just and fair and
answered the question in the negative. With respect to the third question,
they stated that the respondent should answer the allegations in the show
cause notice and a reasoned order should then follow. The reasonings of
the Honourable Supreme Court with respect to the questions 2 and 3 are
as follows:
“Re: Question 2
21.In the light of what we have said while deciding Question 1
above, this question should not hold us for long. It is true that the
High Court had by an interlocutory order directed the parties to
maintain status quo, but whether the said order had the effect of
preventing the State Government from issuing a show-cause
notice was arguable. The issue of show-cause notice did not
interfere with the status quo. It simply enabled the respondent
Company to respond to the proposed action. Be that as it may,
once the show-cause notice was issued, the High Court could
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have directed the respondent Company to respond to the same
and disposed of the writ petition reserving liberty to it to take
recourse to such remedy as may have been considered suitable by
it depending upon the final order that the Government passed on
the said notice. What was significant was that the respondent
Company had not assailed the validity of the show-cause notice
on the ground of jurisdiction or otherwise. If the validity of the
show-cause notice was itself in question on the ground that the
Government had no jurisdiction to issue the same, nothing
prevented the Company from maintaining a writ petition and
challenging the notice on that ground. The High Court would in
that event have had an opportunity to examine the validity of the
notice. In the absence of any such challenge the High Court
could not simply ignore the notice even if it was issued in breach
of the order passed by the Court. It was one thing to prevent
further steps being taken pursuant to the notice issued by the
Government but an entirely different thing to consider the notice
to be non est in the eye of the law. The High Court could have
taken the show-cause notice as a reason to relegate the parties to
a procedure which was just and fair and in which the respondent
could urge all its contentions whether on facts or in law. Our
answer to Question 2 is, therefore, in the negative.
Re: Question 3
22.Although it is not necessary for us now to examine the
question of validity of the show-cause notice as the same was not
questioned before the High Court in the writ petition filed by the
respondent Company, we may to the credit of Mr Dwivedi,
learned Senior Counsel appearing for the respondent Company,
mention that he did not seriously challenge the validity of the
notice on the ground of jurisdiction. Mr Dwivedi fairly conceded
that the State Government could, in appropriate situations,
exercise the option of recalling or modifying its recommendations
but contended that the present case did not present a situation
that could justify such a recall.”
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24.Pointing out the reasons above stated, Mr.Muraleedharan,
learned Counsel insisted that the petitioner must be directed to answer
the show cause notice issued and also stated that the respondent had not
taken any decision and that it was also stated so in the counter affidavit.
In the counter affidavit, it had been very categorically stated as follows:
“16..... The show cause notice issued by the General
Manager LPG of IOC Tamil Nadu Sate Office, Chennai is legal
and is in accordance with law. There is no predetermination.
Hence this writ petition is liable to be dismissed.”
25.Mr.J.Bharathan, learned Counsel appearing for the party, who
wanted to implead herself in the Writ Petition, also wanted to advance
arguments. But, since it would clearly take the focus away from the core
issue raised whether the petitioner should be directed to reply to the show
cause notice or not, the Court held that it would be prudent that the
learned Counsel advances his arguments in the suit, which is pending
between the Writ Petitioner and proposed party and therefore, did not
regrettably give that opportunity to the learned Counsel.
26.I have given careful consideration to the arguments advanced
and the documents available on records.
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27.The petitioner, Mugavai Indane Gas Agency, which is said to be
a sole proprietor firm had been selected for LPD distributorship of the
respondent for Ramanathapuram District. Subsequently, complaints had
been received with respect to misuse of the lands which had leased out
by Mr.Muniyandi and G.Subbulakshmi for construction of godown and
show room. A complaint had been received that the show room and
godown had been constructed in a part of land, which had not actually
been leased. It had also transpired that the sole proprietor had entered
into a partnership deed with two other individuals G.Praveenkumar and
C.Vanithamani and they had decided to share the profits. It is the
contention of the respondent that this violates the condition of
distributorship. It is the contention of the Writ Petitioner that the
partnership deed was a result of a fraud utilising signed blank papers
available with G.Praveenkumar and C.Vanithamani from whom the Writ
Petitioner had borrowed monies. The Writ Petitioner has also contended
that he had instituted a suit seeking a declaration that the partnership
deed is null and void.
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28.The petitioner appears to have got himself entangled with four
of his relatives and raising a dispute against them and he had instituted
O.S.No.81 of 2020 before the District Munsif Court, Ramanathapuram.
This suit had been instituted in October 2020. The complaint from
M.Muniyandi, G.Subbulakshmi and G.Praveenkumar had emanated on
05.10.2020. The proximity between the date of the complaint and the
date of the suit is quite glaring. Whether the suit had been
instituted bona fide or not is a question and that can be determined only
on the conduct of the parties during the course of trial. Having granted
distributorship, the respondent has a predominant right to examine the
bona fide of the person to whom distributorship was granted. If
complaints are received then they have duty to examine such complaints
and put the licensee on notice of such complaints and seek explanation.
29.It is categorically stated by the respondent herein in their
counter affidavit that the partnership deed had been signed in the
presence of a Notary Public who confirmed to the respondent that the
signatories to the partnership deed signed the deed in his presence. This
is a significant fact stated by the respondent. It is quite damaging to the
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contention of the petitioner that he had signed in blank papers. Quite
strangely, the petitioner had not issued any response to the said statement
in the counter affidavit by filing any reply. This leaves us with a
situation where an oath is stated against an oath. The fact can be
resolved only during the enquiry or during the course of trial.
30.The larger interest, reputation and goodwill of the respondent is
also at stake and the Court cannot turn a blind eye to that factor. While
balancing the relevant rights and duties of the petitioner and the
respondent, the scale certainly falls in favour of the respondent with
respect to their right to seek explanation from the petitioner. The burden
is heavily on the petitioner to give necessary explanation. He cannot
continue to function as a licensee, when there is a cloud or suspicion
raised by parties who are indirectly connected with his business venture.
This can be cleared only by the petitioner by giving necessary
explanations to the respondent.
31.The learned Senior Counsel for the petitioner placing reliance
on a judgment in the case of Siemens (referred to supra) and stated that
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the respondent had already come to a conclusion that the petitioner had
violated the terms of the distributorship and therefore, contended that
giving an explanation would only be an empty formality, as the fate of
the petitioner had already been decided. Whether it had already been
decided or not itself is an issue to be taken and that can be determined
only on the basis of the nature of enquiry proposed to be conducted by
the respondent. That itself will depend on the nature of explanation
which the petitioner gives. This takes us back to the fact that the burden
is heavily on the petitioner, in the first place, to give an explanation. He
can seek an opportunity of personal hearing. He can even seek an
opportunity of documents being presented. He can even seek statements
to be obtained from other individuals directly or indirectly connected
with the enquiry proceedings. The respondent only seeks to ensure that
the license, which they had granted, had been granted to a bona fide
person and not to somebody, who had taken advantage of that licence to
the detriment of other bona fide applicants. This is a duty cast on the
respondent.
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32.In Siemens (referred supra), the Government directed payment
of cess and had issued a show cause notice. It had been observed by the
Honourable Supreme Court as follows:
“5.By reason of a purported show cause notice, the
appellant was directed to make payment of cess with interest
immediately in respect of the purported supplies made to Navi
Mumbai parties right from 1-6-1996.”
33.It is thus seen that even though it had been termed as “Show
Cause Notice”, it was actually a demand for payment of cess. It was
under those circumstances that the Honourable Supreme Court interfered
with such a Show Cause Notice, claiming that it was actually a demand
and therefore, that the issue had been pre-determined. There was no
other option. The only option was to pay the cess demanded.
34.In the instant case, after indicating that the petitioner had re-
constituted the proprietorship into a partnership without approval from
the respondent, the petitioner was still given an opportunity to answer as
to why the distributorship should not be terminated. The petitioner must
give his explanation. He can even plead ignorance of the partnership
deed. He can even say that the partnership deed was a result of fraud.
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He can even confirm the partnership deed and seek that it was borne out
of necessity. He can even plead ignorance of necessity to obtain consent
of the respondent and then seek consent. There are various options
opened to the petitioner. The petitioner may even make a bona fide
declaration of facts and circumstances before the respondent. Therefore,
the judgment in Siemens (referred supra) may not be directly applicable
to the facts of this case.
35.The learned Counsel for the respondent had stated that a
decision would be taken only based on the explanation given by the
respondent herein.
36.Having entered into a contractual relationship with the
respondent, an obligation is placed on the petitioner to answer any
queries raised by the respondent. It must be kept in mind that the
respondent is not a third party stranger, but has a direct existing juridical
relationship with the petitioner and therefore, has every right to question
the petitioner, if the respondent is of the opinion that the petitioner has
violated the terms of the agreement. This is an issue entirely between the
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petitioner and the respondent and this Court can never enter into a
discussion of the same. It would be extremely inappropriate on the part
of this Court to interfere when anyone of the two parties have a right to
question any act of the other contracting parties.
37.The right to seek explanation is inbuilt in the very fact that the
agreement had been entered into with consensus ad idem. When an
agreement is entered into agreeing to do a particular act in a particular
manner, and if it is suggested that there is act performed in any other
manner, then one of the contracting parties, has every right to question
the other and put the other on notice about the violation and seek for
explanation. This is a right inbuilt in the terms of the agreement directly
and implicitly.
38.In view of these facts, let me not enter into any further
discussion on the relationship between the petitioner with his lessors or
with those from whom he had borrowed money or with respect to the suit
which had instituted, but rather confine myself to the show cause notice,
which had been issued by the respondent and direct the petitioner to
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answer the show cause notice. In the show cause notice, it is mentioned
that 15 days time is granted to the petitioner. The same time line is now
confirmed by this Court and the petitioner is directed to give his
explanation to the show cause notice within a period of fifteen days from
the date on which a copy of this order is uploaded in the High Court
website.
39.In view of all the reasons, the Writ Petition is dismissed. No
costs. The application to vacate state, W.M.P.(MD)No.8214 of 2021
need not be considered and therefore, the same is closed. The application
to implead in W.M.P(MD)No.11062 of 2021 is dismissed. Consequently,
connected miscellaneous petition is also closed.
Index :Yes / No 03.01.2022
Internet :Yes
cmr
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W.P.(MD)No.9838 of 2021
C.V.KARTHIKEYAN, J.
cmr
Pre Delivery Order made in
W.P.(MD)No.9838 of 2021
03.01.2022
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