w w w . L a w y e r S e r v i c e s . i n

S.K. Talim Ali v/s Hindustan Petroleum Corporation Ltd. & Others

Company & Directors' Information:- HINDUSTAN PETROLEUM CORPORATION LIMITED [Active] CIN = L23201MH1952GOI008858

Company & Directors' Information:- A R C INDIA PETROLEUM PRIVATE LIMITED [Active] CIN = U11202TG2009PTC063249

Company & Directors' Information:- S R PETROLEUM PRIVATE LIMITED [Strike Off] CIN = U23200MH1999PTC122909

Company & Directors' Information:- N. P. PETROLEUM LIMITED [Strike Off] CIN = U23201UP1995PLC018153

Company & Directors' Information:- R H PETROLEUM PRIVATE LIMITED [Active] CIN = U23209MH1996PTC101701

Company & Directors' Information:- K S M PETROLEUM PRIVATE LIMITED [Active] CIN = U01120TZ1978PTC000800

Company & Directors' Information:- A. M. PETROLEUM PRIVATE LIMITED [Strike Off] CIN = U51524MH2014PTC255581

Company & Directors' Information:- S V S PETROLEUM PRIVATE LIMITED [Active] CIN = U51909DL2002PTC116940

Company & Directors' Information:- HINDUSTAN CORPORATION PRIVATE LIMITED [Dissolved] CIN = U74900KL1901PTC000424

Company & Directors' Information:- HINDUSTAN LTD. [Active] CIN = U99999MH1917PTC000472

Company & Directors' Information:- INDIA PETROLEUM COMPANY LIMITED [Dissolved] CIN = U99999MH1936PTC002453

Company & Directors' Information:- HINDUSTAN CORPORATION LIMITED [Dissolved] CIN = U99999MH1949PLC007790

    Writ Petition (Civil) No. 6639 of 2020

    Decided On, 24 April 2020

    At, High Court of Orissa


    For the Appearing Parties: Chandrakanta Nayak, S.C. Tripathy, R.K. Nayak, R.N. Swain, M. Balakrishna Rao, Manoj Kumar Khuntia, Prafulla Kumar Rath, A. Behera, S.K. Behera, P. Nayak, S. Das, Advocates.

Judgment Text

1. The instant writ petition challenges the termination letter dated 17.02.2020 issued by the opposite party no.1/ Hindustan Petroleum Corporation Ltd. (in short 'the HPCL') to the petitioner herein vide reference No.BLRO/DKB on the ground of violation of natural justice. The petitioner herein assails the termination of H.P. Gas (LPG) Distributorship Agreement dated 28.10.2013 which was further renewed vide Agreement dated 09.03.2019.

2. The facts in nutshell, the petitioner was appointed as Distributor of LPG under Rajiv Gandhi Gramin LPG Vitarak (RGGLV) in respect of the advertised RGGLV location called Brahmabarada through a Selection Process by way of an open advertisement issued by HPCL. In the said selection process, the petitioner was one of the applicants for the RGGLV location named Brahmabarada Kalan coming under Rasulpur Block, District-Jajpur (Odisha). The core issue surrounding the present dispute is the submission of "Residence Certificate" of the advertised location though it constitutes one of the essential eligibility criteria for awarding the distributorship as per Clause 3(b) read with Clause-7 of the advertisement issued by HPCL. Accordingly, he submitted a "Residence Certificate" issued in his favour by the Tahasildar, Dharmasala vide Misc. Case No.1958 of 2011. During the currency of the said advertisement, the Dharmashala Tahasil underwent a bifurcation namely Dharashala Tahasil and Rasulpur Tahasil. It is pertinent to note that the village Brahmabarada comes under Rasulpur Tahasil after the bifurcation exercise. In the meantime, the HPCL authority, during the Field Verification of Credential (FVC), asked the petitioner to submit Residential Certificate issued by the Tahasildar, Rasulpur since the new jurisdictional Tahasil is Rasulpur. Accordingly, the petitioner submitted another "Residence Certificate" dated 30.01.2013 issued by the Tahasildar, Rasulpur certified to be a resident of Brahmabarada. On the strength of the said document, he was issued Letter of Intent. Finally, he was found suitable for final award of distributorship for the advertised location-Brahmabarada. However, upon a complaint made by one of the unsuccessful complainants i.e. the Opposite Party No.6 herein, it was discovered that the furnished "Residential Certificate" mentioned him to be the resident of Brahmabarada alleged to be false and incorrect as he is not an ordinary resident of advertised location "Brahmabarada" which is under Rasulpur Block.

3. Upon perusal of records, the petitioner was found to be the resident of village Chandapur and not Brahmabarada. In fact, Residential Certificate issued to the petitioner by the Tahasildar, Rasulpur vide Misc. Certificate Case No. 357 of 2013 was challenged by the opposite Party No.6 before the Sub-Collector, Jajpur by way of an Appeal bearing Misc. Appeal No.20 of 2013. After hearing the parties, the Sub- Collector, Jajpur vide order dated 27.01.2015 allowed the Appeal and concluded that the petitioner is a resident of village "Chandapur" and not "Brahamabarada". Being aggrieved by the said order dated 27.01.2015 of the Sub-Collector, Jajpur, the petitioner herein, approached to this Court in W.P.(C) No.2582 of 2015 which was dismissed vide judgment and order dated 11.09.2017 confirming the order passed by the Sub-Collector, Jajpur and held that the petitioner herein is a resident of "Chandapur" and not "Brahmabarada". He further invoked the provisions of intra-court Appeal assailing the dismissal order dated 11.09.2017 by Hon'ble Single Judge, by way of Writ Appeal No.340 of 2017. The Division Bench vide order dated 05.02.2018 took the confirmatory view taken by the Single Judge and concluded that the petitioner is a resident of village "Chandapur" and not "Brahmabarada". The order of the Division Bench, was unsuccessfully challenged by the petitioner before the Hon'ble Supreme Court of India by way of Special Leave Petition being SLP (C) No.13004 of 2019. Thus, the findings of Appellate Authority-cum-Sub-Collector, Jajpur have attained finality.

4. Heard learned Counsels for the parties in detail:

5. Mr. S.C. Tripathy, learned counsel for the petitioner submits that village Brahmabarada falls under Rasulpur Tahasil and the requirement of HPCL is that the petitioner is to submit the Residential Certificate issued by the jurisdictional Tehsildar of village Brahmabarada. Accordingly, the petitioner obtained the certificate from the Tahasil, Rasulpur wherein his residential status is shown to be resident of village Brahmabarada.

6. Proprio vigore, Mr Tripathy's submission revolves around the principles of natural justice which got crystalized on the facts that the opposite party no.1 did not showcause him before issuing the impugned letter of termination dated 17.02.2020.

Accordingly, the absence of show-cause notice tantamount to absence of the opportunity of being heard. The impugned termination hits the soul of justice violating Article 14 of the Constitution of India and on this ground alone the said termination letter deserves to be quashed. He heavily relied on the decisions of Ashis Gupta vs. IBP Ltd. & ors, (2005) 125 DLT 298 and Joshi Technologies International INC vs. Union of India and others, (2015) 7 SCC 728 ; to buttress his points.

7. He further contended that the Residential Certificate insisted upon by the Opposite Party No.1/HPCL was not in conformity with the terms of the agreement dated 28.10.2013 which was renewed on 9.03.2019 for another period of five years. Had the Residential Certificate been so important or had he furnished fraudulent Residential Certificate, the authority could not have renewed the agreement further. He harped on the principle of estoppel and strenuously tried to convince this Court that the issue of Residential Certificate is irrelevant especially in the aftermath of renewal of the agreement. The written submission filed by the petitioner also succinctly echoes the same sentiment of the court room argument and points out that the agreement dated 28.10.2013 stood concluded after five years, hence the show cause issued by the opposite party No.1 rendered infructuous. It further agitates that that Clause-29 of the Agreement expressly stipulates that a 30 days prior notice is mandatory before initiating the process of termination. Since the renewal of the agreement tantamount to a fresh agreement, hence a fresh cause of action. He, further poignantly submits, the act of termination qua the old Agreement is nugatory and hits the principle of promissory estoppel.

8. On the last limb of his written submission, the petitioner brushed aside the argument of ouster of writ jurisdiction. The availability of efficacious remedies like Arbitration which is provided in the agreement does not prevent him to invoke the Writ jurisdiction of this Court especially when there is a purported violation of the principles of natural justice.

9. Per contra, Mr. M. Balakrishna Rao, learned counsel for the opposite party No.1/HPCL submits that the petitioner is not a resident of the advertised RGGLV location Brahmabarada, but a resident of village "Chandapur". In fact, village Brahmabarada falls under Rasulpur Tehsil which is the competent authority to issue "Residential Certificate" to the petitioner.

10. He further contended that following dismissal of W.P. (C) No.2582 of 2015 and Writ Appeal No.340 of 2017(supra), show-cause notices were issued by the opposite party No.1/HPCL for cancellation of the distributorship Agreement of the petitioner on the ground of furnishing false and incorrect Residence Certificate. It is further contended that the Corporation has issued two show-cause notices dated 22.11.2017 and 11.01.2018 respectively prior to the termination. Hence, the Opposite Party No.1 has not breached the principles of natural justice as averred by the petitioner herein. He endeavored to take this Court through some relevant clauses of the agreement (Annexure-6) which are quoted hereunder:

"28.B. Notwithstanding anything to the contrary herein contained, the corporation shall also be at liberty at its entire discretion to terminate this Agreement forthwith upon or at any time after the happening of any of the following event, namely:-


b(l) If any information given by the Dealer in his/her application for appointment as a Dealer shall be found to be untrue or incorrect in any materials particular.


b(n) If the Dealer shall either by himself/herself or by his/her servants or agents commit or suffer to be committed any act which, in the opinion of the General Manager of the Corporation for the time being at Kolkata whose decision in that behalf shall be final, is prejudicial to the interest or good name of the Corporation or its products; the General Manager shall not be bound to give reasons for such decision."

In view of the above, show cause notice is an empty formality in the instant case, yet the Opposite Party No.1 has taken care to serve two notices. Hence, harping on the Principles of natural justice and approaching the writ court is nothing but abuse of judicial process.

11. He further submits that the petitioner once again invoked the Writ Jurisdiction of this Court by challenging the Show Cause Notices dated 22.11.2017 and 11.01.2018 in W.P.(C) No.4257 of 2018. Having heard the petitioner, this Court passed an interim order dated 27.03.2018 directing the General Manager, HPCL not to proceed further in pursuance of the show-cause notice. In the meantime, the employer/HPCL resorted to renewal of the agreement on 09.03.2019. He further contended that LPG being an essential commodity and it requires uninterrupted supply, the distributorship could not be left in vacuum hence the renewal was done. He, however, admitted that the factum of the fraudulent residential certificate did not surface at the time of renewal since the continuity of uninterrupted LPG supply was paramount, at that point of time, to accommodate the interest of the public.

12. However, the petitioner abruptly withdrew the W.P.(C) No.4257 of 2018 vide order dated 06.01.2020 but all issues contained in the show-cause notice were kept open. At this factual back drop, the distributorship agreement dated 09.03.2019 was terminated on the ground of misrepresentation and falsehood qua his residential status.

13. Mr. P.K. Rath, learned counsel for the Opposite Party No.6 endeavored to shed light on some of the important aspects which failed to capture the content of the instant Writ Petition. He submitted that his client/Opposite Party No.6 had also filed a Writ petition bearing W.P.(C) No.3615 of 2020 seeking action against the petitioner by HPCL on the back drop of the dismissal of the Special Leave Petition confirming the finding of Sub-Collector,Jajpur. It is relevant to point out that in view of the cancellation order of the Agreement dated 17.02.2020, the writ petition being W.P.(C) No.3615 of 2020 filed by the Opposite Party No.6 rendered infructuous.

14. Mr. Rath, further placed on record, some intriguing facts especially with respect to filing of C.S. No.268 of 2019 in the Court of Civil Judge (Senior Division), Chandikhole by this petitioner. The said Civil Suit was still pending at the time of filing of the present Writ Petition with identical relief sought. He further urged that the petitioner has deliberately not filed a copy of the said Plaint of the Suit, nor has he taken any averment to that effect. According to him, out of all other prayers, prayer No.(II) and (IV) are identical with the present Writ Petition which may be reproduced below:-

"Prayer-(II): Let the Defendant No.1 to 3 be directed to declare the plantiff as the permanent resident of Brahmabarada basing upon the Addhar Card, Voter ID Card and electricity bill. (IV) Let the Defendant no.4 & 5 be directed not to cancel the dealership agreement entered between the plaintiff and defendant no.4 and 5 on dated 09.03.2019 basing upon the residential certificate."

At this point, he strongly relied on the case of Jai Singh vrs. Union of India & Ors, (1977) 1 SCC 1 which reads thus:

xx xx xx xx xx

"It has also been brought to our notice that after the dismissal of the writ petition by the High Court, the appellant has filed a suit, in which he has agitated the same question which is the subject matter of the writ petition. In our opinion, the appellant cannot pursue two parallel remedies in respect of the same matter at the same time."

15. He further contended that the petitioner has suppressed the fact before this Court regarding filing of Suit before the learned Civil Judge (Sr. Division), Chandikhole in C.S. No.268 of 2019. Hence, the petitioner is guilty of suppression. He relied heavily on S.P. Chengalveraya Naidu (dead) by Lrs. v. Jagannath (dead) by Lrs. and Others, (1994) 1 SCC 1 ; which reads thus:

xx xx xx

"A litigant, who approaches the court, is bound to produce all the documents executed by him which are relevant to the litigation. If he withholds a vital document in order to gain advantage on the other side then he would be guilty of playing fraud on the court as well as on the opposite party".

This Court's attention was also drawn to the case of Bhaskar Laxman Jadhav and Others vrs Karambeer Kakasahed Wagh Education Society and Others, (2013) 11 SCC 531, Pr-44 :

" .It is not for a litigant to decide that what is material for adjudicating a case and what is not material. It is the obligation of a litigant to disclose all the facts of cases and leave the decisionmaking to the court."

He further adverted to the decision of the Apex Court in A.P. Public Service Commission vrs. Koneti Venkateswarulu and others, (2005) 7 SCC 177, para-7 ; which may be quoted below:-

xx xx

In our view, the appellant was justified in relying upon the ratio of Kendriya Vidyalaya Sangathan1 and contending that a person who indulges in such suppressio veri and suggestion falsi and obtains employment by false pretence does not deserve any public employment. We completely endorse this view."

He strongly articulated that suppression of a material document would also amount to a fraud on the court. Therefore, the Writ Petition deserves to be dismissed on this ground alone and cancellation of dealership is only consequential.

16. On the aforesaid factual backdrop, Mr. Rath took a stand that the petitioner has played fraud in the selection process by submitting fraudulent documents; hence his distributorship has been rightly cancelled. He further states that the agreement dated 09.03.2019 being a continuation of original selection by virtue of agreement dated 28.10.2013; hence no fresh right has been created in favour of the petitioner. The cancellation order is sequel to order passed by the Hon'ble Apex Court which disapproves the petitioner's residential certificate. The issue of fraud, misrepresentation made by the petitioner in the selection process is quite obvious and patently evident.

17. Considering the arguments advanced by the parties and perusal of the records of the case, this Court is faced with the question, as to whether the termination is justified or not. In addition to assessing the rival submissions, it is pertinent to refer to Para-28(B) read with sub-clause (b) (l) and b (n) of the Dealership Agreement dated 28.10.2013 which gives unfettered power to the Opposite Party No.1 for termination, in case, any information found to be untrue or incorrect. A Contract is like a written form of the law or like a private legislation that legally binds the parties, hence the aforementioned clause derives utmost sanctity from the agreement.

The doctrine of 'Pacta sunt servinda' governs the contractual relationship and the clauses of the contract are the law between the parties. This doctrine presupposes strict compliance of the terms enumerated in the termination clauses of the agreement, otherwise it destroys the sanctity of the contract and eludes the future performance. This Court also took pain in relooking the plenary clause of 28-B read with sub-clauses-b (l) and b (n) which empowers the employer to terminate the Agreement in case any information furnished found to be untrue or incorrect. In the instant case, the petitioner has given blatant disregard to the above mentioned provision which derives its legal validity from Sections 19 read with Sections 14 & 18 of the Indian Contract Act, 1872 which govern voidability of contracts/agreements without free consent. It is not open for the Petitioner to plead ignorance of law as per settled legal maxim - ignorantia juris non excusat.

18. In fact, the petitioner's plea of breach of natural justice is nothing but an unnatural expansion of natural justice. The natural justice argument can neither be final nor is it fanatical, rather dependent upon the transaction or action of the parties. It is held in Dharampal Satyapal Ltd. Vrs. Deputy Commissioner of Central Excise, Gauhati and Others, Civil Appeal Nos. 4458-4459 of 2015 , that:-

"39. We are not concerned with these aspects in the present case as the issue relates to giving a notice before taking action. While emphasizing that the principles of natural justice cannot be applied in strait-jacket formula, the aforesaid instances are given. We have highlighted the jurisprudential basis of adhering to the principles of natural justice which are grounded on the doctrine of procedural fairness, accuracy of outcome leading to general special goals, etc."

The validity of the Termination order has to be examined on the touchstone of prejudice which is absent in the instant case.

19. The rival submissions made by the parties and perusal of the case record, it is evident that the Petitioner has secured the distributorship by means of an illegal Residential Certificate. The petitioner, thereby, brazenly violated the terms of the Distributorship Agreement. Further, the issue of his residential status has been already set to rest in an earlier round wherein he has already travelled up to the Supreme Court of India and suffered dismissal. Without delving on the said round of litigation, it can safely be concluded that there is sufficient convolution in the instant lis making it a clear case of forum shopping at the behest of the petitioner, who, having lost in the earlier round of litigation which attained finality, has sought similar remedy in the instant proceedings. This Court has time and again deprecated the practice of forum shopping by litigants and viewed it as an abuse of law.

20. In so far as the issue of show cause notice is concerned, the petitioner was served with two notices dated 22.11.2017 and 11.01.2018 respectively. However, the selection alleged to have been done through Residence Certificate shrouded with doubts and smacks a fraudulent behavior on the part of the Petitioner. Fraud and justice cannot go together. It is a settled law that "Fraud" vitiates every solemn act. In Lazarus Estate Ltd. v. Beasley, (1956) 1 QB 702 Lord Denning observed "No judgment of a Court, no order of a Minister can be allowed to stand if it has been obtained by fraud. Fraud unravels everything." In the same judgment Lord Parker LJ observed that fraud "vitiates all transactions known to the law of however high a degree of solemnity. This principle has been reiterated in State of A.P. vs. T. Suryachandra Rao, (2005) 6 SCC 149 , Behari Kunj Sahkari Avas Samiti vs. State of U.P, (2008) 12 SCC 306 ., Andhra Pradesh State Financial Corporation v. GAR Re-Rolling Mills and Anr, (1994) AIR SC 2151: State of Maharashtra and Ors. v. Prabhu, (1994) 2 SCC 481: and so on. The underlined philosophy of the above cited judgments clearly radiates the idea that once a fraud is proved or advantaged taken by wrong means, all advantages gained by playing fraud or wrong means can be taken away. Hence, the termination of the Distributorship Agreement is the consequence.

21. Arguendo, the petitioner's articulation regarding High Court's jurisdiction transcending the arbitraral forum deserves to receive some attention. The Dealership Agreement dated 28.10.2013 and dated 09.03.2019 provides an Arbitration Clause in Clause-38. It is well settled law that if the petitioner has an efficacious alternate remedy, he is not permitted to approach this Court invoking extraordinary Writ jurisdiction under Article 226 of the Constitution. Time and again, it has been reiterated by the Hon'ble Apex Court that the contract between private party and the State or instrumentality of State is under the realm of a private law and there is no element of public law, the normal course for the aggrieved party, is to invoke the remedies available under ordinary civil law rather than approaching the High Court. This Court has also consistently maintained the position that Writ Petition is not maintainable in such cases. But, once the set of facts of a particular case is found to be in the nature such controversy involving public law element, then the matter can be examined by the High Court under the Writ jurisdiction to examine whether action of the State and/or instrumentality of the State is fair, just and equitable or not. Indian law journals have digested thousands of pages on this issues, the Supreme Court of India has lent its aid while dealing with this issue in Harbanslal Sahnia & Anr. vs. Indian Oil Corpn. Ltd. And Ors, (2003) 2 SCC 107 , held that :

"In an appropriate case, in spite of availability of the alternative remedy, the High Court may still exercise its writ jurisdiction in at least three contingencies:

a. where the writ petition seeks enforcement of any of the Fundamental Rights;

b. where there is failure of principles of natural justice ,

c. where the orders or proceedings are wholly without jurisdiction or the vires of an Act and is challenged"

22. In addition to the aforesaid aspect, if the nature of dispute like the present one, the Apex Court has succinctly answers in Ayyasamy vs. A. Paramasivam & Ors, (2016) 10 SCC 386 which emphasized that a judge must distinguish between 'fraud simpliciter' (simple allegations of fraud) and 'complex fraud' (serious/complex allegations of fraud). It held that disputes involving fraud simpliciter would be arbitrable, while the disputes that involve complex fraud are non-arbitrable. Similarly, in Abdul Kadir Shamsuddin Bubere v. Madhav Prabhakar Oak, (1962) 3 SCR 702, serious allegations of fraud were held to be a sufficient ground for not making a reference to arbitration. Reliance in that regard was placed by the Court on a

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decision of the Chancery Division in Russell v. Russell,1880 14 ChD 471 which delved on a case where a notice for the dissolution of a partnership was issued by one of the partners, upon which the other partner brought an action alleging various charges of fraud, and sought a declaration that the notice of dissolution was void. The partner who was charged with fraud sought reference of the disputes to arbitration. The Court held that in a case where fraud is charged, the Court will in general refuse to send the dispute to arbitration. But where the objection to arbitration is by a party charging the fraud, the Court will not necessarily accede to it and would never do so unless a prima facie case of fraud is proved. Similarly, Rashid Raza v. Sadaf Akhtar, (2019) 8 SCC 710 also follows the above principles. In light of the above discussion, it would not be correct to opine that under no circumstances a writ will lie only because it involves a contractual matter. 23. Uncontrovertibly, the procedural formalities for the termination of contract need to be performed in fairness and good faith. Non-compliance of the formalities, puts the employer in bad light, so does it put a scar on the contractor. However, there is no legal requirement to observe the rule of natural justice while terminating the contract if there is a prima facie case of adoption of fraudulent means or misrepresentation, as in the present case. In the instant case, the employer has faithfully attempted to observe the principle of natural justice vide its show-cause letter dated 22.11.2017 and dated 11.01.2018; hence the plea of violating the principles of natural justice is ill-founded. 24. Since it is a dispute involving the laws of Contract, this court cannot proscribe an appropriate behavior to the parties but the Court can levy a sanction if a party mutilates the sacred spirit of a Contract or agreement. Further, the instant issue has sufficiently occupied the time of this Court and there have been attempts to circumvent the spirit of litigation by using different forums, hence no substantial miscarriage of justice shall be caused if the instant Writ Petition is dismissed. Having considered the matter in the aforesaid perspective and guided by the judgments cited hereinabove, this Court comes to an irresistible conclusion that the petitioner is not entitled to the relief claimed. 25. For the aforesaid reasons, the Writ Petition is dismissed with no order as to costs. Pending Application(s), if any, stand(s) disposed of.