- (1.) HEARD Sri Alok Singh, learned Sen ior Counsel assisted by Sri Ram Ji Srivastava, learned counsel for the pe titioners and Sri Vipul Sharma, learned counsel for the respondents.
(2.) THE present writ petition has been filed challenging the order of can cellation of retail outlet dealership Agreement executed between the peti tioners and respondents passed by Gen eral Manager, Indian Oil Corporation Ltd. , Kapoorthala Complex/respondent no. 2 vide its order dated 2/- 02- 2006 (annexure no. 16 to the writ petition ). Brief facts, as narrated in the writ petition, are that the petitioner's firm was established for sale and supply of petroleum products. Several Agreements were executed between the petitioners and Indian Oil Corporation Ltd. time to time. The last dealership Agreement was executed on 28-01-2002 between the parties by which a retail outlet dealer ship was assigned to the petitioner, through which the petitioner started sale of petrol and diesel from his outlet firm. It is significant to quote the termination order, which reads as follows : "sub : Termination of retail outlet dealership M/s Singh Filling Station Kathgodam, Distt. Nainital: You have been operating as our RO dealer at Kathgodam, Distt. Nainital in the name and style of M/s Singh Filling Station on the terms and conditions, contained in our standard dealership Agreement dated 28-01 -2002, executed between yourself and M/s Indian Oil Corporation Ltd. The dealership was awarded to you under open category. A show cause notice dated 1/- 12-2005 was issued to you seeking your reply within 30 days time. However, your delayed reply was received on 30-01-2006, vide your letter dated 25-01-2006. We have fully considered your reply to the show cause notice as referred herein above. The follow ing mal- practices/irregularities were observed as stated in our above re ferred show cause notice. (1) Your RO was inspected on 18-06-2004 and sample of HSD were drawn on account of den sity variation. The samples failed in lab test and RO was closed for a period of one month. (2) An explanation was called, vide letter dated 19-01-2004, under the clause 9 of the dealership Agreement, but you failed to re ply the said letter. (3) An explanation was called again, vide our letter dated 20-05-2005 under the clause 9 of the deal ership Agreement. This letter was also not replied by you. (4) A letter dated 28-09-2005 was issued to you under clause 8 of the dealership Agreement and again you have decided not to reply this letter too. (5) The RO is being kept dry since 29-09-2005. You have stated in your reply that you have replied all the letters, through sales Manager to the Corporation. You have also stated that due to your internal family problems, you could not take the supplies properly. We have considered your reply dated 25-01 -2006 and the same has been found unsatisfactory. Therefore, in line with clause no. 56 (a) of the dealership Agree ment, executed between you and M/s Indian Oil Corporation Ltd. on 28-01-2002, the RO dealer ship is terminated with immedi ate effect. This is, however, without preju dice to our other rights and con tentions in the matter. " The petitioners were given oppor tunities by issuing show cause notice the last notice is of dated 1/- 12-2005 be fore cancellation of the dealership re quiring them to show cause within 30 days as to why action including termi nation of dealership should not be taken. The contentions of the show cause notice dated 1/- 12-2005 are as follows : "sub. : Show Cause Notice : Dear Sir, You have been operating as our RO dealer at Kathgodam, Distt. Nainital in the name and style of M/s Singh Filling Station on the terms and conditions of the dealership Agreement dated 28 Janu ary 2002. The said dealership was awarded to you under "open" Category. During past 3 years your sales performance is below the desired level and showing declining trend each year. Your sales figure is much below than the av erage of other Ros in your trading area. During the inspections of your dealer ship, following irregularities/malpractices were observed : (1) Your RO was inspected on 18-06-2004 and sample of HSD were drawn on account of den sity variation. The samples failed in lab test and RO was closed for a period of one month. (2) An explanation was called, vide letter dated 19-01-2004, under the clause 9 of the dealership Agreement, but you failed to re ply the said letter. (3) An explanation was called again, vide our letter dated 20-05-2005 under the clause 9 of the deal ership Agreement. This letter was also not replied by you. (4) A letter dated 28-09-2005 was issued to you under clause 8 of the dealership Agreement and again you have decided not to reply this letter too. (5) The RO is being kept dry since 29-09-2005. Thus you failed to comply with the terms and conditions of the Dealership Agreement (Clause-9 ). Under the above circumstances, we hereby call upon you to show cause within 30 days from the date of receipt of this notice as to why action including termination of your Dealership should not be taken against you in accordance with relevant clause of the Marketing Discipline Guidelines as stated herein above. In case, you fail to submit your re ply within the stipulated time or the ex planation given by you is not satisfactory, Corporation will forthwith terminate your Dealership Agreement without any further Notice to you, and/or take such further steps against you as deem fit in exercise of any of the rights of the Cor poration under the Marketing Discipline Guidelines and/or under law. This is, however, without prejudice to our other rights and contentions in the matter. "
(3.) IN the first reply dated 25-01-2006 of the show cause notice dated 1/- 12-2005 the petitioners have admit ted that due to family problems which arose on account of the death of two partners, the petitioner could not lift the petrol and diesel supply and in future they will be capable to lift the required supply. Thereafter, the petitioners have filed a detailed reply on the same day which reads as under : "subject: Reply to letter no. Rl Bareilly/singh/05 dated 1/- 12-05 Dear Sir, Kindly take reference of your show cause notice dated 1/- 12-05 which was received on 30-12-05. IN reply to your show cause notice, I have to state that because of construction/ renovation work being carried our by the Corpora tion, sales had fallen down drastically, hence, density variation was found on 18-06-04 in the H. S. D. for which we have already been penalized by suspend ing the sales for one month. IN reply to point no. 2, 3 and 4 we have to state that because of shifting of underground tank, construction of ap proach road, platform, building and public utility service are being carried out by the corporation in slow speed, we are controlling the R. O. while sitting in an open place and because of the con struction activities, vehicles are not eas ily coming to dispensing units, hence, sale of product was fallen down drasti cally for which we have already submit ted our explanation in the office of Sales Manager Sri Sachin Jain. IN reply to clause no. 5, we have to submit that despite of submission of ap plication and necessary documents on 29-03-05 for constitution of the firm, it was not finalized at your end, and be cause of various constructions, renova tion activities being carried out by the corporation at the site, we could not lift desired quantity of product and there after, because of non issuance of diesel license by the district Supply Officer, we are not in a position to lift and sell H. S. D. IN the above circumstances your goodself is requested to revoke the let ter dated 1/- 12-2005 and further to permit reconstitution of the firm at the earliest and further to complete entire renovation/reconstruction work at the earliest so that we may restore sales tar get up to the satisfaction. " After considering the replies filed by the petitioners, the respondents found the replies to be unsatisfactory, therefore, the impugned order of termination of the Agreement has been passed finally that there was violation of Clause IX of the Agreement, the petitioners failed to com ply with the terms and conditions stipu lated in Clause IX of the Agreement.;