Writ Petition For Restoration Of Dealership Maintainable, No Alternate Remedy Available: Allahabad High Court Distinguishes From Tata Cellular Case

The Allahabad High court has recently upheld the maintainability of a writ petition challenging cancellation of dealership, citing to lack of alternate remedies available to the aggrieved.

A bench comprising of Justice Piyush Agrawal held that regarding termination of dealership, there is neither a remedy of civil suit nor any other efficacious alternate remedy available to the aggrieved party. Hence, a writ petition challenging the termination of dealership would be maintainable.

Further, the Court distinguished the judgment in Tata Cellular Vs. Union of India to hold that the Supreme Court had only laid down the law with respect to judicial review in the process and award of tenders. However, in absence of any alternate remedy against termination/ cancellation of dealership, aggrieved could approach the High Court in its extra ordinary jurisdiction, HC said.

Petitioners were appointed as a retail outlet dealer of the Indian Oil Corporation in Kisan Seva Kendra, a rural area and a letter of intent was issued in their favour. Thereafter, the dealership agreement was executed. Two dispensing units were installed at the retail outlet, one for petrol and other for diesel, by IOC. Inspection was done by the Weights and Measurement Department of the Uttar Pradesh Government put its seal. No discrepancies were found. Subsequently, on survey made by IOC, alleged discrepancies were found in one of the dispensing unit.

After exchange of communications, dealership was terminated. An arbitral award was passed pursuant to arbitration agreement between the parties which was challenged under Section 34 of the Arbitration & Conciliation Act, 1996. During its pendency, a settlement was arrived at to withdraw all pending litigation, however, IOC reiterated the same order of termination. After several rounds of back and forth, the IOC upheld the termination in view of Clauses 16, 44, 58(m) of the agreement.

A preliminary objection was raised by the Respondent regarding maintainability of the writ petition against the order of termination of dealership. Reliance was placed by the Respondent on the decision of the Supreme Court in Tata Cellular Vs. Union of India, wherein it was held that the scope of judicial review in contractual matters is very limited. It was contended that the Court can only review the decision-making process or commission of any error of law and breach of rule of natural justice.

The Court, however, observed that the decision of Apex Court in Tata Cellular Vs. Union of India will be inapplicable to facts of the present case. In Tata Cellular, judicial review had been sought for the allotment of a retail outlet, however, in the present case, dispute is regarding the termination of agreement of retail outlet based on certain inspections by IOC.

“So far as the judgement passed in the case of Tata Cellular (supra) is concerned, the Apex Court considered that the tender invited to issue the cellular mobile operating services and on that ground the Apex Court has made certain observations with regard to the allotment of contractual services whether judicial review can be made or not and on that aspect the matter was decided and it was held that the terms of the invitation to tender as well as allotment cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. The decision to accept the tender or award the contract is reached by the process of negotiations through several tiers and such decisions are made qualitatively by experts.”

Relying on the decision of the Allahabad High Court in M/s Kamalkant Automobiles & Another Vs. Hindustan Petroleum Corporation Limited & Others and M/s Chaudhary Filling Point, Kazipur & Another Vs. State of U.P. & Others, the Court upheld the maintainability of the writ petition challenging the cancellation of dealership on the ground that there is no remedy of civil suit nor any other alternate remedy was available to the petitioner against the same.

“In view of the aforesaid legal proposition, this Court is of the view that the instant writ petition is maintainable and the same is being entertained as neither any civil suit, nor other effective and efficacious remedy, as suggested by the learned counsel for the respondent – Corporation, for the relief sought in the petition, particularly, restoration of the dealership of the petitioner, is available to the petitioners.”

Proceeding on the merits of the case, the Court found that since there was no allegation regarding any kind of tampering with the sealing placed by IOC as well as the Weight & Measurement Department, termination/ cancellation of dealership was unsustainable.

Accordingly, the Court quashed the order passed by Executive Director (Retail Sales N & E), Indian Oil Corporation Limited, Mumbai and directed that supply to petitioner’s retail outlet be restored.

Case Title: M/S Aliganj Kisan Seva Kendra, Aliganj And Another v. Indian Oil Corporation Ltd. And 3 Others [WRIT - C No. - 16998 of 2023]

Citaiton: 2023 LiveLaw (AB) 331

Counsel for Petitioner: Yash Padia

Counsel for Respondent: Anand Tiwari

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