LexM/S. HINDUSTAN PETROLEUM CORPN. LTD. & ORS. versus M/S. SUPER HIGHWAY SERVICES & ANR.
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[2010] 2 S.C.R. 1053 M/S. HINDUSTAN PETROLEUM CORPN. LTD. & ORS. A v. MIS. SUPER HIGHWAY SERVICES & ANR. (Special Leave Petition (C) No.104 of 2009) FEBRUARY 19, 2010 B [ALTAMAS KABIR AND CYRIAC JOSEPH, JJ.] Contract - Dealership Agreement for retail sale/supply of petrol and diesel - Termination of, by Petitioner Corporation - On basis of findings of a sample laboratory test C - Validity - Held: Not valid - Petitioner did not adhere to the relevant Guidelines inasmuch as respondent-dealer was not seNed upon with proper notice regarding such test - Test was ; conducted behind the back of respondent - This caused severe prejudice to it - Termination of the dealership D agreement was thus arbitrary, illegal and in violation of the principles of. natural justice - Natural justice. Constitution of India, 1950 - Art. 136 - New Plea - Termination of dealership agreement - Writ petition by dealer E - Allowed by High Court - Order challenged by Petitioner- Corporation - Plea raised by it that in view of a specific clause in the dealership agreement, the dealer was barred from seeking remedy before the writ court (High Court) - Maintainability of - Held: Not maintainable - Petitioner ought F to have raised the plea before High Court - In any event; by challenging the order of High Court, the Petitioner also submitted to the jurisdiction of the writ Court, without objecting to the same. The Petitioner Corporation entered into an G Agreement with Respondent No.1 for the retail sale/ supply of petrol, diesel etc.. Both parties were at liberty to terminate the ·Agreement by giving three months' notice in writing. The agreement also- granted rights to 1053 H 1054 SUPREME COURT REPORTS (2010] 2 S.C.R. -- .... .t, A the Petitioner Corporation to terminate the Agreement earlier, on the happening of any of the events mentioned in Clause 58 of the Agreement. A check was conducted at the outlet of the 8 Respondent No.1 Company, where a sample of High Speed Diesel (HSD) failed the Marker Test, whi·ch indicated that the same had been contaminated. Subsequently a Nozzle Test of HSD was conducted .... Further to the result of the test, Respondent No.1 was C. ;served with a notice, asking it to show cause as to why its dealership should not be cancelled on account of the failed Marker Test. Respondent No.1 filed Writ Petition in the High Court praying for issuance of appropriate writs to quash the D entire proceedings arising out of the Marker Test. E Meanwhile, the petitioner Corporation, upon consideration of the reply sent by Respondent No.1 to the show cause notice, terminated the Dealership Agreement of Respondent No.1 under Clause 58(1) thereof. A Single Judge of the High Court allowed the writ petition holding, that the retesting had been done without proper notice to the Respondent No.1, hence, as per the Marketing Discipline Guidelines, the same had caused severe prejudice to the Respondent No.1 and the order F of termination of the Dealership Agreement, could not, therefore, be sustained. Hence the present Special Leave Petition. G Dismissing the Special Leave Petition, the Court HELD: 1.1. The facts and circumstances of the present case did not give rise to a presumption that service had been effected on Respondent No.1, in the absence of any proof in that regard. Except for the -H endorsemen't on the hand-written notice said to have HINDUSTAN PETROLEUM CORPN. LTD. & ORS. v. 1055 SUPER HIGHWAY SERVICES been given by one 'D', there is nothing else on record to A even suggest that notice had been sent to the Respondent No.1 and that the same had been refused. Nothing has been shown by the petitioner to disprove the allegation made on behalf of the Respondent No.1 that the notice alleged to have been tendered to the B representative of the Respondent No.1 was not in the manner and the form in which such notice is required to be given to a dealer. It is obvious that the same had been made out in haste to indicate that service had been attempted on the Respondent No.1. [Para 16] [1067-A-F] c 1.2. The cancellation of dealership agreement of a party is a serious business and cannot be taken lightly. In order to justify the action taken to terminate such an agreernent, the concerned authority has to act fairly and in complete adherence to the rules/guidelines framed for D the said purpose. The non-service of notice to the aggrieved perso
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