Altamas Kabir, J. - (1.) This Special Leave Petition involves the question as to whether the dealership of the Respondent No. 1 had been validly terminated in accordance with Clause 58 of the Dealership Agreement executed between the parties on 30th August, 2003. In addition, it would also have to be considered as to whether the termination of the Agreement was in keeping with the procedure/ guidelines in conducting Marker Test in retail outlets.
(2.) By virtue of the aforesaid Agreement, the petitioner Corporation entered into an Agreement with the Respondent No. 1 for the retail sale or supply of petrol, diesel, motor oils, grease and such other products as might be specified by the Corporation from time to time, at the premises in question. The Agreement was to remain in force for 15 years with effect from 30th August, 2003. However, both the parties would be at liberty to determine the Agreement without assigning any reason by giving three months' notice in writing to the other of its intention to terminate the Agreement and upon expiration of such notice, the Agreement would stand cancelled and revoked, without prejudice to the rights of either party against the other in respect of any matter or thing antecedent to such termination. It was also indicated that such liberty would not prejudice the rights of the Corporation to terminate the Agreement earlier on the happening of any of the events mentioned in Clause 58 of the Agreement. Clause 4 of the Agreement provided that the licence and permission granted for the use of the outfit would terminate immediately on the termination of the Agreement or on any breach of any of the terms thereof. The relevant portion of Clause 58 of the Agreement is reproduced herein below: 58. Notwithstanding anything to the contrary herein contained, the Corporation shall also be at liberty to terminate this agreement forthwith upon or at any time after the happening of any of the following events, namely: (a) If the dealer shall commit a breach of any of the covenants and stipulation contained in the agreement, and fail to remedy such breach within four days of the receipt of a written notice from the corporation in that regard. (b) ... (c) ... (d) ... (e) ... (f) ... (g) ... (h) ... (i) If the dealer shall contaminate or tamper with the quality of any of the products supplied by the Corporation. (j) ... (k) ... (l) ... (m) If the dealer shall either himself or by his servants or agents commit or suffer to be committed by any act which in the opinion of the Chief Senior Regional Manager of the Corporation of the time being at Patna whose decision shall be final, is prejudicial to the interest or good name of the Corporation or its products the Chief Senior Regional Manager shall not be bound to give reason for such decision.
(3.) On 26th May, 2008, a check was conducted at the outlet of the Respondent No. 1 Company, where a sample of High Speed Diesel (HSD) failed the Marker Test, which indicated that the same had been contaminated. On the same day, the petitioner Corporation's authorized representative, SGS India Pvt. Ltd. submitted its report on the Marker Test indicating such contamination. Accordingly, in terms of the Marketing Disciplinary Guidelines, referred to hereinabove, on 27th May, 2008, sales and supplies of all the products from its outlet were suspended by the petitioner Corporation to the Respondent No. 1 because of the sample failure. According to the petitioner Corporation, on the very next day on 28th May, 2008, the Respondent No. 1 was given notice that a Nozzle Test of HSD was to be conducted at the Barauni Terminal on 29th May, 2008. According to the petitioner Corporation, the Respondent No. 1's representative refused to acknowledge the notice. However, the Area Sales Manager of the petitioner Corporation is alleged to have informed the Respondent No. 1 telephonically of the Nozzle Test to be conducted on 29th May, 2008, at its Barauni Terminal. Despite having been given notice, no one appeared on behalf of the said respondent when the comparison test was conducted in Barauni and the same was held at the Barauni Terminal on 29th May, 2008, in the presence of the representative of SGS India Pvt. Ltd. (the agent of the petitioner), the Manager, Barauni Terminal, Transporter's representative and the petitioner's Area Sales Manager. Further to the result of the test, the Respondent No. 1 was served with a notice dated 14th July, 2008, asking it to show cause as to why its dealership should not be cancelled on account of the failed Marker Test. According to the petitioner Corporation, the reply sent by the Respondent No. 1 on 21st July, 2008, was entirely vague. Immediately thereafter, the respondent No. 1 filed a Writ Petition, being CWJC No. 11172 of 2008, in the Patna High Court praying for issuance of appropriate writs to quash the entire proceedings arising out of the Marker Test. On 9th September, 2008, the petitioner Corporation, upon consideration of the reply sent by the Respondent No. 1 to the Show Cause Notice, terminated the Dealership Agreement of the Respondent No. 1 under Clause 58(1) thereof.;