Scope Of Judicial Review In Contractual Matters Involving Technical Issues Is Limited: Gujarat High Court Reiterates

The brief facts of the case were that the Petitioner and the Respondent Corporation had entered into a dealership to run a retail outlet for selling high-speed diesel and petrol at a village for 15 years in 2013. Subsequently, the Weight and Measures Department carried out calibration work of the Petitioner's outlet and issued a certificate. The Anti-Adulteration Cell of the Respondent also inspected the Petitioner's dispensing unit.

Pursuant to the observation report, show cause notices were issued to the Petitioner to explain about e-calibration work qua the Nozzle-A and subsequently, for providing a dissatisfactory justification for the wrong calibration, the Corporation warned against action as under the dealership agreement.

The High Court allowed the Petitioner to respond to the show cause notice vide an SCA order. The Respondent, subsequently, terminated the dealership agreement which was challenged by the Petitioner vide two SCAs. The appeal of the Petitioner was also rejected hence the current petition.

The Petitioner contested that the dispensing units were inspected by the Respondent and the seals were intact, there was no short delivery, no stock variation and all parameters were found to be adequate. The AAC had sealed Nozzle-A but had permitted the Petitioner to continue through Nozzle-B even as the show cause notice was issued. Further, the Petitioner had no knowledge of the mechanism of the electronics of the Dispensing Unit and any occurrence of such anomaly was purely coincidental. It was contended that once the seal is found intact, the dealer cannot be penalised for any fault or defect. Reference was placed on HPCL V/s. Super Highway Service, Bharat Petroleum Corporation Limited V/s. Jagannath and Company and other and other precedents to bolster this contention.

Per contra, the Respondents submitted that the DRP had 'threadbare' considered all contentions by the Petitioner and therefore, it was unwarranted for the Petitioner to invoke the extraordinary jurisdiction of the Court under Article 226. Further, reliance was placed on Marketing Discipline Guidelines to argue that any adversarial order which results in the stoppage of sale affects the Respondents only. In the interest of the public, the termination order for violation of the MDG was issued.

Justice Vaibhavi Nanavati while noting the various technical facts of the case averred that all authorities had concurrently held against the Petitioner. Further, there was 'critical irregularity' under MDG per the inspection reports. Further, the contention that the e-calibration was a technical defect was rejected since the calibration was done by the Petitioner and the 'K-factor' was changed.

Concerning the legal factors, the Single Judge quoted M/s. N.G. Projects Limited v. M/s. Vinod Kumar Jain & Ors., "In contracts involving technical issues, the Courts should be even more reluctant because most of us in judges' robes do not have the necessary expertise to adjudicate upon technical issues beyond our domain."

Further, the Supreme Court in a precedent with similar facts had exercised jurisdiction considering that the Civil Court has refused to exercise its power due to lack of jurisdiction. However, in the instant case, the Petitioner had also approached the Civil Court in 2014. The parties were also governed by MDG and the same was introduced to maintain high customer service benchmarks. Significantly, the Bench remarked:

"The scope of judicial review for interference in contractual matters is very limited. In the facts of the present case, the impugned orders passed by the respondent authorities are based on the expert opinion and the expertise in the field. Both the impugned orders are passed by the experts in the field, further, the appellate authority i.e. DRP included a High Court Judge and two technical members examined the said issue and accordingly while passing the impugned orders, the issue involved came to be tested by the judicial expert as well as technical expert."

Accordingly, the petition was dismissed.

Case Title: SANDIP DALPATBHAI KIKANI v/s Indian Oil Corporation

Case No.: C/SCA/10455/202

Citation: 2022 LiveLaw (Guj) 205

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