Amrita Sinha, J.
The impugned order dated 26th March, 2014 terminating the liquefied petroleum gas (LPG for short) distributorship of the petitioners by the
respondent Indian Oil Corporation Limited (IOCL for short) is the subject matter of challenge in the instant writ petition. All the parties have been
served. An affidavit of service is on record. None appears on behalf of the respondent no. 6 in spite of service.
The facts of the case are as follows:
Hiralal Sarkar the petitioner no. 3 as sole proprietor of M/s. Bimala Gas Service applied for obtaining LPG distributorship at Dhupguri, district
Jalpaiguri sometimes in 1996. A letter of intent was issued in his favour by IOCL on 2nd April, 1996. As per Clause 1.2 of the said letter of intent the
distributor was debarred from inducting any partner during the continuation of the distributorship. The said letter of intent was thereafter cancelled by
IOCL vide letter dated 6th February, 1997 and was again revived vide letter dated 3rd August, 2000. A formal letter of appointment of the petitioner
No.3 as distributor was issued by IOCL on 15th February, 2001. An agreement of distributorship was executed by and between the said Hiralal
Sarkar proprietor of M/s. Bimala Gas Service and IOCL on 20th March, 2001. The petitioner No.3 continued with the business for a considerable
period of time.
Due to ill health Hiralal Sarkar was unable to manage his business effectively. With prior intimation to IOCL he entered into a deed of partnership
with his wife the petitioner no. 2 Smt. Sumita Sarkar on 21st May, 2012 for effective management of his business. The deed of partnership was duly
registered before the District Sub-Registrar, Jalpaiguri on 24th May, 2012. The reconstitution of the distributorship from proprietorship to partnership
was communicated to IOCL who approved the same. On 28th June, 2012 a fresh memorandum of agreement was entered in between the partnership
firm of M/s. Bimala Gas Service and IOCL.
One Sujit Guha the respondent No. 6 herein filed a title suit being T.S No. 399 of 2012 in the Court of the learned Civil Judge (junior division) at
Alipore against IOCL and all the petitioners herein praying for a decree of declaration that the deed of partnership dated 26th December, 2000
entered in between the plaintiff (Sujit Guha) and defendant no. 2 (Hiralal Sarkar) was valid and in the alternative to cancel the distributorship license
issued by IOCL in favour of Hiralal Sarkar. In the plaint the primary allegation was that the said Sujit Guha invested a considerable sum of money in
setting up the LPG distributorship business of Hiralal Sarkar and the entire business of Hiralal Sarkar was managed and looked after by the plaintiff.
Hiralal Sarkar assured the plaintiff that a proper deed of partnership would be executed and Sujit Guha will be made one of the partners of the
distributorship business. Instead of executing the deed of partnership with Sujit Guha Hiralal Sarkar executed the deed of partnership with his wife
Sumita Sarkar. Both Hiralal Sarkar and Sumita Sarkar played fraud upon the plaintiff and deprived the plaintiff from his legitimate share of profit from
the distributorship business. The petitioners herein contested the said Suit and the same was ultimately dismissed for default on 14th September, 2017.
The said Sujit Guha also lodged a complaint before the area manager, IOCL on 19th October, 2012 alleging that he had invested huge sum of money
in the business of Hiralal Sarkar and he was the person who conducted the day to day business of Hiralal Sarkar. In the said letter it was also alleged
that he (Sujit Guha) was forcefully restrained from entering into the office of the distributor due to which he had to suffer financial hardship.
Pursuant to the aforesaid complaint lodged by Sujit Guha the respondent No. 6 herein IOCL issued a show cause notice in favour of the petitioner no.
2 on 15th April, 2013. In the said show cause notice the petitioner no. 2 was described as proprietor of M/s. Bimala Gas Service. It was mentioned
that as per the terms and conditions of Clause 1.2 of the distributorship agreement dated 20th March, 2001 it was mandated upon the distributorship
not to induct any partner. As the petitioner no. 2 inducted the respondent No. 6 as a partner of the said distributorship business the petitioner no. 2
have deliberately and intentionally suppressed the said fact and violated the conditions of the letter of intent. The petitioner no. 2 was directed to show
cause as to why the distributorship agreement shall not be terminated for violation of the terms and conditions of the letter of intent.
The petitioner no. 2 replied to the said show cause notice vide his letter dated 8th May, 2013 and denied all the allegations made therein along with
supporting documents in his favour. Vide a letter dated 26th September, 2013 IOCL issued a further show cause notice to all the petitioners containing
the selfsame allegations made in the earlier show cause notice. The petitioners duly replied to the said show cause vide letter dated 23rd October,
2013. A personal hearing was given to the petitioners on 22nd January, 2014 and by a letter dated 26th March, 2014 IOCL terminated the
distributorship of the petitioners.
The said termination is impugned in the instant writ petition. The main contention of the petitioners is that their distributorship had been cancelled on
the charge of violation of the terms and conditions of the letter of intent amounting to fraud upon IOCL and for violation of clauses 21, 23(b) and 23(c)
(i) of the distributorship agreement.
The petitioners submit that initially the petitioner no. 3 as an individual applied for the distributorship in the year 1996 and the letter of intent was issued
in favour of the petitioner no. 3 as sole proprietor on 2nd April, 1996 which was subsequently cancelled on 6th February, 1997 and again revived on
3rd August, 2000. The petitioner no. 3 was appointed as distributor on 15th February, 2001 and the distributorship agreement was entered in between
the petitioner no. 3 and IOCL on 20th March, 2001. Thereafter the petitioner no. 3 with the prior permission of IOCL inducted his wife as a partner to
assist him in his business and executed a proper deed of partnership with his wife. The said deed of partnership was duly registered and the registered
deed was forwarded to IOCL. IOCL accepted the proposal for reconstitution of the proprietorship firm to partnership and recorded the name of
Sumita Sarkar the petitioner no. 2 herein as one of the partners of the distributorship. A formal memorandum of agreement was also entered in
between the partnership firm and IOCL on 28th June, 2012. The petitioners claim that the entire process of reconstitution of the business from
proprietorship to partnership was made known to IOCL and it is only after the IOCL approved of the change of constitution of the business fresh
memorandum of agreement was entered in between the petitioners and the respondent no. 1.
It is strenuously contended that there had been no violation of any of the terms and conditions of the agreement entered in between the parties. It is
further submitted that IOCL ought not to interfere in the private dispute raised by the respondent no. 6 against the petitioners. Moreover, the title suit
filed by the respondent no. 6 in the learned Court below had also been dismissed for default. The said private respondent is not taking any steps before
any of the legal forums including the High Court. He submits that the private respondent is intentionally and deliberately avoiding the legal proceedings
as he does not have any valid reason to stop the business of the petitioners. Had he been really interested to contest the proceeding then he would
have definitely taken steps before the court of law. The private respondent has conspicuously maintained his silence before this Court, the learned
Civil Court as well as before IOCL.
He also submits that the petitioners have forwarded all the relevant documents including the bank account details, income tax returns, balance sheet
etc. wherein all the transactions relating to the business had been recorded and wherefrom it could be understood that the private respondent did not
invest any money in the business of the petitioners. As regards admission of the fact that the petitioner no. 3 had executed a deed of partnership with
the respondent no. 6 it has been submitted that though the deed was executed but the same was never given effect to and the same was never acted
upon in between the parties. The alleged deed of partnership entered in between Hiralal Sarkar the petitioner no. 3 and Sujit Guha the respondent no.
6 herein was a mere proposal which ultimately did not materialize.
The petitioners submit that in the first show cause notice issued in the name of Hiralal Sarkar IOCL had referred to the distributorship agreement
dated 20th March, 2001. He submits that the agreement dated 20th  March, 2001 lost its force immediately upon execution of the subsequent
distributorship agreement dated 28th June, 2012. On the date of issuance of the show cause notice i.e. 15th April, 2013 the agreement dated 20th
March, 2001 was no longer in existence and accordingly no steps could have been taken relying on the said agreement. He submits that any action
taken in connection with a non-existent agreement is non est in the eye of law.
It has also been submitted that IOCL issued a second show cause notice on 26th September, 2013 in order to rectify the mistake that IOCL had
committed in issuing the first show cause notice dated 15th April, 2013. In the second show cause notice also IOCL referred to their earlier show
cause notice dated 15th April, 2013. It is contended that in the second show cause notice IOCL admitted that they had accepted the proposal of the
petitioner no. 3 for reconstitution of the business from proprietorship to partnership.
It is the specific case of the petitioners that according to clause 21 of the agreement a distributor was restrained from selling, assigning, mortgaging or
parting with or otherwise transferring his interest in the distributorship or the right, interest or benefit conferred on him by the agreement to any other
person. It has been submitted that the terms and conditions of the said agreement are prospective in operation and are effective on and from the date
of entering into the agreement on 28th June, 2012. The petitioners never entered into any agreement regarding change of constitution of the
partnership business after 28th. June 2012. He submits that the allegation of entering into a partnership business with the private respondent no. 6
dated back to the year 2000 and the last memorandum of agreement was entered by and between the petitioners and IOCL in 2012, accordingly the
fact of entering into agreement in the year 2000 cannot and should not lead to cancellation of the distributorship which had been entered in the year
2012.
The learned Advocate for the petitioners relies on the following judgments in support of his case: Â
(1) (2010) 13 SCC 427 Oryx Fisheries Pvt. Ltd. vs. Union of India & Ors. on the proposition that the show cause notice hinted of alleged guilt instead
of telling the charges, that is, the initiation of the proceeding was made with a closed mind set. The show cause notice and the hearing thereafter was
an empty ceremony as the authorities had already prejudged the issue and had formed an opinion. Accordingly the proceeding was not fair and the
same is liable to be set aside.
(2) (2009) 9 SCC 466 Commissioner of Central Excise, Bhubaneswar-I vs. Champdany Industries Ltd. on the proposition that since the foundation of
the case i.e. the issuance of the show cause notice was not proper accordingly the entire proceeding is liable to fall through.
(3) (2011) 5 SCC 697 Union of India & Ors. Vs. Tatia Construction Pvt. Ltd. on the proposition that availability of alternative remedy is not an
absolute bar for invocation of the writ jurisdiction.
(4) (2003) 2 SCC 107 Harbanslal Sahnia & Anr. vs. Indian Oil Corporation Ltd. & Ors. wherein it was held that as the petitioner’s dealership
being their bread and butter came to be terminated for an irrelevant and non existent cause the High Court should have allowed relief instead of
driving them to the need of initiating arbitration proceedings.
(5) (2007) 9 SCC 593 Popcorn Entertainment & Anr. vs. City Industrial Development Corporation & Anr. on the proposition that writ petitions can be
entertained in contractual matters and the same need not be necessarily dismissed on the ground of availability of alternative remedy. Â
(6) AIR 2006 SC 871 Dresser Rand S.A vs M/s. Bindal Agro Chem Ltd. & Anr. on the proposition that a letter of intent merely indicates a
party’s intention to enter into a contract with the other party in future. A letter of intent is not intended to bind other party ultimately to enter into
any contract.
IOCL has filed opposition in the writ petition. The learned Advocate appearing for IOCL raises a preliminary objection as regards the maintainability
of the writ petition. He submits that the dispute arose in connection with the distributorship agreement which contained an arbitration clause. As per
the said clause disputes and differences in relation to the said agreement were liable to be referred to the sole arbitrator. He prays for dismissal of the
writ petition on the ground of availability of alternative remedy.
He further submits that at the time of execution of the memorandum of agreement on 28th June, 2012 the petitioners have suppressed the fact of
entering into a partnership business with Sujit Guha on 26th December, 2000. He submits that the petitioner no. 3 initially applied for the distributorship
in his individual capacity but thereafter he inducted his wife as a partner. He submitted that IOCL had approved the partnership between the petitioner
no. 2 and petitioner no. 3 but the petitioner no. 3 had surreptitiously kept the IOCL in the dark with regards to the partnership agreement which he had
entered with the private respondent in the year 2000. He submits that the petitioner no. 3 was illegally transferring the benefit of the business in favour
of the private respondent which was not disclosed to IOCL. It is submitted that IOCL being a public limited company cannot shut its eyes and allow
illegal activities to perpetuate. He submits that the petitioners are bound by the terms and conditions mentioned in the deed of agreement entered in
between the parties and the distributorship of the petitioners had been rightly terminated due to violation of several conditions mentioned in the
distributorship agreement. The learned Advocate for the respondent further submits that there was no public law element involved in the matter and
the dispute in between the private parties is not amenable under the high prerogative writ jurisdiction of this Hon’ble Court. He submits that the
same can be effectively resolved in a domestic forum and accordingly the writ petition is liable to be rejected.
The learned Advocate relies upon the following judgments in support of his aforesaid contentions:
(1) (1996) 6 SCC 22 State of UP & Ors. vs. Bridge and Roof Co. (India) Ltd. on the proposition of dismissal of writ petition on the ground of
availability of effective alternative remedy wherein it has been held that the contract between the parties not being a statutory contract is in the realm
of private law. It is governed by the provisions of the Contract Act. The writ petition praying for issuance of a writ of mandamus was wholly
misconceived and not maintainable in law. It further held that when a contract itself provides for a mode of settlement for a dispute arising from the
contract, there is no reason why the parties should not follow and adopt that remedy and invoke the extraordinary jurisdiction of the High Court under
Article 226. The existence of an effective alternative remedy provided in the contract itself is a good ground for the Court to decline to exercise its
extraordinary jurisdiction under Article 226.
(2) (2007) 14 SCC 680 Empire Jute Co. Ltd. & Ors. Vs Jute Corporation of India Ltd. & Anr. wherein the Hon’ble Supreme Court held that the
power of judicial review vested in the superior Courts undoubtedly has wide amplitude but the same should not be exercised when there exists an
arbitration clause. Â
(3) (2008) 8 SCC 172 Pimpri Chinchwad Municipal Corporation & Ors. Vs. Gayatri Construction Co. & Anr. wherein it was held that disputes
relating to contracts cannot be agitated under Article 226 of the Constitution of India. It is a matter for adjudication by a civil court or in arbitration if
provided for in the contract.
(4) (2016) SCC online DEL 2501 Shivan Auto Centre vs. Indian Oil Corporation Ltd. & Anr. wherein it was held that running of business by a third
party for the last several years is contrary to the policy of the Corporation. Though the respondent had provided all the facilities and granted dealership
to the appellant who is a widow, yet a third party is enjoying the profits and benefits to an extent of 98% and such an act is an irreversible act.
(5) (2015) 7 SCC 728 Joshi Technologies International Inc. vs. Union of India & Ors. wherein it was held that in pure contractual matters the
extraordinary remedy of writ under Article 226 or Article 32 of the Constitution cannot be invoked. However, in a limited sphere such remedies are
available only when the non-Government contracting party is able to demonstrate that it is a public law remedy which such party seeks to invoke, in
contradistinction to the private law remedy simpliciter under the contract.
In reply to the submissions made by the learned Advocate appearing for IOCL the petitioners submit that there in an element of public law involved in
the issue in question as the matter relates to distribution of LPG cylinders to the general public. The petitioners supplied gas cylinders to the public
which were used by the public for their daily use and accordingly the general public had to suffer due to termination of the distributorship of the
petitioners. Apart from the above the petitioners further submit that the distributorship was their source of livelihood. Their bread and butter depended
upon the running of the distributorship business. Fundamental right of the petitioners were being infringed by the respondent company and accordingly
the writ petition is liable to be entertained and necessary directions be issued upon the respondent authority to restore the distributorship business of
the petitioners.
After hearing the rival contentions made on behalf of both the parties and upon perusal of the documents annexed to the writ petition it appears that a
letter of intent was issued in the name of Hiralal Sarkar the petitioner no.3 on 2nd April, 1996 which stood cancelled on 6th February, 1997 and
thereafter again revived vide letter dated 3rd August, 2000. Pursuant to the letter of intent an agreement was entered on 20th March, 2001 between
IOCL and Hiralal Sarkar, proprietor M/s. Bimala Gas Service. There was a restriction in the agreement to the effect that the distributor without
previous written consent of the Corporation shall not enter into any arrangement, contract or understanding whereby the operation of distributor may
be controlled/carried out and/or financed by any other person, firm or company and a further restriction that the distributor shall not effect any change
in its constitution whether in the identity of his partners or appointment of whole-time officer bearers. Accordingly the distributor Hiralal Sarkar made
a proposal before IOCL praying for permission to reconstitute his business from proprietorship to partnership. IOCL accepted the proposal of Hiralal
Sarkar and vide letter dated 28th June, 2012 permitted Hiralal Sarkar proprietor M/s. Bimala Gas Service to reconstitute his proprietorship firm to a
partnership business. Hiralal incorporated the name of his wife as his partner and executed and registered a deed of partnership. IOCL executed a
fresh distributorship agreement with the partnership firm on 28th June, 2012.
Pursuant to a complaint lodged by the respondent no. 6 herein on 19th October, 2012 a show cause notice was issued upon Hiralal Sarkar proprietor
of M/s. Bimala Gas Service. Hiralal Sarkar replied to the show cause. A second show cause notice in continuation to the earlier show cause was
issued on 26th September, 2013 in the name of the partnership firm as well as both its partners. The petitioners replied to the show cause notice. A
notice to appear for hearing was issued upon the petitioners as well as the respondent no. 6. Though the petitioners appeared and produced documents
in support of their case at the time of hearing the private respondent abstained and did not appear in the hearing. IOCL terminated the LPG
distributorship on the ground of violation of the terms and conditions mentioned in the letter of intent as well as the distributorship agreement.
It appears that the private respondent also preferred a title suit in the Court of the learned Civil Judge (Junior Division) at Alipore against IOCL as
well as the petitioners. The said suit was dismissed for default on 14th September, 2017. The private respondent did not take any steps to contest the
instant writ petition either.
From the conduct of the private respondent it appears that apart from lodging a complaint before IOCL he did not take any further steps to proceed
with his case. The said private respondent also did not take any steps to pursue the title suit which he had filed before the learned Court below. The
conduct of the private respondent clearly indicates that he is no longer interested to proceed with his complaint. In the absence of any testimony from
the side of the private respondent IOCL could not have come to a definite conclusion with regards to the veracity of the allegations made in his letter
of complaint. On the contrary the petitioners all along took steps to defend their case. The petitioners have also annexed copies of the income tax
returns as well as the audited accounts in respect of the proprietorship concern as well as the partnership business to disprove the allegations that had
been made against them.
In the letter of termination the grounds mentioned are violation of clauses 21, 23(b) and 23(c)(i) of the distributorship agreement. Clauses 21, 23 (b)
and 23 (c) (i) of the distributorship agreement dated 28th June, 2012 are set out herein below:
21. The Distributor shall not sell, assign, mortgage or part with or otherwise transfer his interest in the distributorship or the right, interest or benefit
conferred on him by this agreement to any person. In the event of the Distributor being a partnership firm any change in the constitution of the firm,
whether by retirement, introduction of new partners or otherwise howsoever will not be permitted without the previous written approval of the
Corporation notwithstanding that the Corporation may have dealings with such reconstituted firm or impliedly waived or condoned the breach or
default mentioned hereinabove by the Distributor. In the event of death of any of the partners, the Distributor shall immediately inform the Corporation
giving the necessary particulars of the heirs and legal representatives of the deceased partner and it shall be the option of the Corporation either to
continue the distributorship with the said firm or to have a fresh agreement of distributorship with any reconstituted firm or to terminate the
distributorship agreement and the decision of the Corporation in that behalf shall be final and binding on all the parties concerned. No claim on
premature termination for compensation or otherwise will be made or sustainable against the Corporation on account of such termination.
23. (b) It shall be a paramount condition of the agreement that the Distributor himself (if he be an individual) or both the partners of the
distributor’s firm (if the Distributor is a partnership firm consisting of two partners only) or the majority of the partners of the Distributor’s
firm (if the Distributor is a firm consisting of more than two partners) or the majority of the office Bearers/Elected Members of the Distributors Co-
operative Society (if the Distributor is a Co-operative Society) Managing/Whole time or Elected Directors (if the Distributor is a private limited
company) as the case may be shall take active part in the management and running of the Distributorship and shall personally supervise the same and
shall not under any circumstances do so through any other person, firm or body.
(c) Except with the previous written consent of the Corporation:-
(i) The Distributor shall not enter into any arrangement, contract or understanding whereby the operations of the Distributor hereunder are or may be
controlled/carried out and/or financed by any other person, firm or Company, whether directly or indirectly and whether in whole or in part.
The termination clause of the agreement reads as follows:
27. 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 events, namely:-
(a) If the Distributor shall commit a delay, breach or default of any of the terms, conditions, covenants and stipulations 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.
A plain reading of clause 21 clearly indicates that the same refers to a future incident. It debars the distributors from selling, assigning, mortgaging or
parting with or otherwise transferring interest in the distributor or the right, interest or benefit conferred on him by “this agreement†i.e. after
execution of the distributorship agreement. In the instant case the distributorship agreement was entered between the proprietorship firm and IOCL on
20th March, 2001 and between the partnership firm and IOCL on 28th June, 2012. There is no indication in the letter of termination that the petitioners
have sold, assigned, mortgaged, parted with or transferred their interest in the distributorship or the right, interest or benefit conferred on them after
entering into the agreement. Accordingly invocation of clause 21 is not a valid ground for termination of the distributorship of the petitioners.
Clause 23(b) mentions that the distributor shall take active part in the management and running of the distributorship and shall personally supervise the
same and shall not under any circumstances do so through any other person, firm or body. Though the complaint made by the private respondent
alleged that he had invested a lot of money in the distributorship and he used to run the distributorship but the said private respondent did not come
forward to substantiate and prove the allegations made in his complaint. On the contrary the petitioners produced all the necessary documents relating
to the financial transactions including the bank details, balance sheets as well as the income tax returns to show that all the payments had been made
from their own account. Accordingly it was not proper on the part of IOCL to arrive at a contrary conclusion and terminate the distributorship on the
basis of unfounded and unproved allegations made by the private respondent by invoking clause 23(b) of the agreement.
Clause 23(c) mentioned that the distributor shall not enter into agreement, contract or understanding whereby the distributor may be controlled/carried
out/financed by any other person. In the instant case Hiralal Sarkar the sole proprietor changed the constitution of his business from proprietorship to
partnership only after taking proper permission from IOCL. The alleged partnership agreement between Hiralal Sarkar and the private respondent
was entered on 26th December, 2000 whereas the first distributorship agreement was entered in between Hiralal Sarkar as proprietor and IOCL on
20th March, 2001 and the second distributorship agreement was entered between M/s. Bimala Gas Service the partnership firm of Hiralal Sarkar and
his wife Sumita Sarkar and IOCL on 28th June, 2012. Complaint was lodged by the private respondent on 19th October, 2012. Had the private
respondent been genuinely aggrieved by any act of omission and/or commission on the part of Hiralal Sarkar he would have lodged a complaint long
before. Lodging the complaint after a period of nearly 12 years from the date of execution of the alleged partnership deed/agreement cannot be made
a ground for termination of distributorship.
IOCL contended that Hiralal Sarkar had changed the constitution of the business after execution of the distributorship agreement. The fact that IOCL
had permitted the proprietor Hiralal Sarkar to reconstitute his business and induct his wife as a partner indicates that IOCL did not have any objection
in the reconstitution of the proprietorship business to a partnership. There has not been any complaint from any consumer that the distributor was not
providing services to them satisfactorily. Even after reconstitution of the business the petitioners maintained the services properly up to the satisfaction
of the consumers. As IOCL had themselves allowed the petitioner No.3 to reconstitute his business accordingly they are estopped from raising the
plea of reconstitution and further terminate the license of the petitioners on the said ground. An alleged private dispute in between one of the partners
of a partnership business with a third party ought not to be a ground for termination of the distributorship of the petitioners. No element of fraud and
suppression of fact can be proved from the documents placed before this Court. Â
The question of recalling the letter of intent also does not arise in the facts and circumstances of the instant case in as much as the letter of intent had
already been acted upon and a proper distributorship agreement had been entered between IOCL and the partnership firm. Admission of the fact of
entering into a partnership business with the respondent no. 6 also does not have any consequence as the person making the complaint never appeared
or participated in any of the proceedings either at the time of hearing before IOCL, or before the learned Court below to defend his title suit or before
this High Court in the present proceeding. Accordingly all the steps taken by IOCL in response to the complaint made by the respondent no. 6 on
allegations not being proved are liable to be set aside.
The only point remaining for consideration is the maintainability of the writ petition on the ground of availability of alternative remedy. Admittedly the
distributorship agreement contains an arbitration clause.
The arbitration clause mentioned in the agreement under reference is set out herein below:
37. (a) All question, disputes and differences arising under or in relation to this Agreement shall be referred to the sole arbitration of the Director
(Marketing) of the Corporation. If such Director (Marketing) is unable or unwilling to act as the sole arbitrator, the matter shall be referred to the sale
arbitration or some other officer of the Corporation by such Director (Marketing) in his place, who is willing to act as such sole arbitrator. It is known
to the parties herein that the Arbitrator appointed hereunder is an employee of the Corporation and may be Shareholder of the Corporation. The
arbitrator to whom the matter is originally referred, whether the Director (Marketing) or Office, as the case may be, on his being transferred or
vacating his office or being unable to act, for any reason, the Director (Marketing) shall designate any other person to act as arbitrator in accordance
with the terms of the Agreement and such person shall be entitled to proceed with the reference from the stage at which it was left by his
predecessor. It is also the term of this Agreement that no person other than the Director (Marketing) of the person designated by the Director
(Marketing) as aforesaid shall act as arbitrator. The award of the Arbitrator so appointed shall be final, conclusive and binding on all the parties to the
Agreement and provisions of the Arbitration & Conciliation Act, 1996 or any statutory modification or re-enactment thereof and the Rules made
thereunder and for the time being in force shall apply to the arbitration proceedings under this clause.
It is settled law that availability of alternative remedy is not an absolute bar to entertain a writ petition. In the instant case the cause of action arose
when the distributorship agreement was terminated by IOCL on 26th March, 2014. The writ petition had been filed immediately thereafter. Admittedly
it took more than four years to consider the said writ petition, hear out and decide the same. Adequate opportunities were given to the private
respondent to defend his case. The private respondent chose not to appear. Prior to passing the order of termination an opportunity of hearing was
given to all the parties. Even then the private respondent chose to remain silent. Remanding the matter back to arbitration would not in my opinion
serve the ends of justice. The same will again be sheer wastage of time, energy and money and it would stand in the way of providing substantial
justice to an aggrieved party. In my considered opinion remanding the matter for arbitration would be a futile exercise and in any case the same will
not amount to effective and efficacious remedy. Moreover as livelihood of the petitioners has been taken away relying on an irrelevant and non
existent cause, the fundamental right of the petitioners to carry on trade and earn their living had been illegally infringed by the respondent authorities.
The impugned order of termination is not tenable in the eye of law. The Hon’ble Supreme Court in the case of Harbanslal Sahania (supra)
clearly held that where the petitioner’s dealership, which was their bread and butter, came to be terminated for an irrelevant and non existent
cause relief should have been allowed by the High Court itself instead of driving them to the need of initiating arbitration proceedings.
In fact in Joshi Technologies (supra) the Hon’ble Supreme Court held that writ remedy may be invoked in a limited sphere which means that
availability of alternative remedy is not an absolute bar in filing writ petitions. In Shivan Auto and Pimpri Chinchwad (supra) the Hon’ble Supreme
Court held that where the contract itself provides for a mode of settlement of dispute “in between the parties†there is no reason to approach the
writ court.
In the instant case there is no dispute between the parties to the contract. A dispute has been sought to be raised by a third party against one of the
parties to the contract. The so called aggrieved party i.e. the respondent No. 6 filed a title suit before the Civil Court that stood dismissed for default,
which indicates that he was/is not interested to proceed with his complaint. Relegating the petitioners to arbitration proceedings on such facts would be
an empty formality and will be sheer injustice to the petitioners.
In the absence of any proved default on the part of the petitioners the impugned order of termination of the distributorship license of the petitioners
dated 26th March, 2014 is bad and not sustainable in law. The same is hereby set aside. The respondent authorities are directed to restore the
distributorship license of the petitioners without any delay and preferably within a period of eight weeks but not later than twelve weeks from the date
of receipt of a copy of this order. WP No. 12206 (W) of 2014 is disposed of accordingly. No order as to costs. Urgent certified photocopy of this
judgment, if applied for, be supplied to the parties on compliance of usual legal formalities.
