Indian Oil Corporation Limited vs Verma Oil House and Others

Mahesh Grover, J.—This appeal is by defendant i.e. Indian Oil Corporation Limited against the judgment of the learned Trial Court dated 13.3.2002 and First Appellate Court dated 7.4.2004.

From the pleadings of the parties, the case as set up by the plaintiffs-respondents can be summed up as below.

The plaintiffs-respondents is a partnership Firm operating under the name and style of Verma Oil House, Spatu Road, Ambala City and in the year 1970 when the partnership was conceived they were four partners namely Nand Lal, Hari Chand, Om Parkash and Vijay Kumar. A suit was filed by Sh.O.P.Verma, one of the partners. This partnership deed was dated 1st January, 1970. A memorandum of agreement was entered into between the Firm and the appellant on 3rd April, 1970. Hari Chand, one of the partners died on 8th March, 1984. His share in the partnership was transferred in the name of Bharat Bhushan Verma, his son. On 1st April, 1984 Nand Lal, one of the original partners left the partnership Firm, transferring his share in name of his son Nirmal Verma. Accordingly, after re-constitution on 11th April, 1984, the list of partners constituted of O.P.Verma, Vijay Verma, Bharat Bhushan Verma and Nirmal Verma. A dispute arose between Vijay Kumar and other partners of the Firm. Vijay Kumar is son of Nand Lal Verma. The dispute was regarding settlement of accounts. Arbitrators Sh. Anup Singh Manchanda, Prem Kumar Soni and Rajinder Kumar were appointed to resolve the grievance and award was given by them on 3rd December, 1984 upon which Vijay Kumar (who was arrayed as defendant No. 4) voluntarily retired from the Firm. The award of the Arbitrators was made rule of the Court on 15th February, 1985 and a decree was passed by the Senior Sub Judge, Ambala. Upon the retirement of Vijay Kumar Verma he ceased to be a partner of the Firm. He also gave an affidavit that he has no objection if his name is deleted from the list of partners of the partnership deed dated 11th April, 1984. This revised list was given to the Indian Oil Corporation. Vijay Kumar Verma duly informed the appellant about the re-constitution of the Firm and an inspection report by the appellant-Company was carried out on 29th March, 1986 and the names of the newly constituted partners Sh. O.P.Verma, Sudhir Verma, Nirmal Verma and Bharat Bhushan Verma were recorded in this report. The plaintiffs-respondents were receiving supply of kerosene oil from the appellant on the indents signed by Sh.O.P.Verma, any one of the partners from the plaintiff-Firm. Despite the fact that all these changes had taken place in the constitution of the Firm yet another partnership deed was executed on 2nd April, 1990. Same was also intimated to the appellant. Another inspection report was held on 30th January, 1988 which was noticed in the technical audit report of the appellant on 16th February, 1988. The plaintiffs-respondents and the all the partners had also signed indemnity bonds.

The appellant issued a letter dated 28th August, 1990 vide which the Senior Divisional Manager of the Indian Oil Corporation required the plaintiffs-respondents to submit all the requisite documents on 10th September, 1990 and it was stipulated in the letter that action would be taken against the Firm. The appellants felt threatened that their supplies are likely to discontinue and filed the instant suit seeking a declaration that the letter dated 28th August, 1990 be declared as illegal, null and void and that the appellant be restrained from discontinuing the supply of oil and petroleum products to them. The appellant in their written statement admitted that the memorandum of agreement had been signed on 3rd April, 1970 with Verma Oil House of Ambala City which was executed by Nand Lal, Hari Chand, Om Parkash and Vijay Kumar as partners of the Firm. It was pleaded that Hari Chand, one of the partners having died on 8th March, 1984, no intimation with regard to the dissolution of partnership was given and no further intimation regarding the re-constitution of the Firm was ever given to them. It was denied that the partnership deed dated 11th April, 1984 and 3rd December, 1984 was ever given to them. Reliance was placed on stipulation in the agreement according to which no change in partnership could be made without the prior consent of the Indian Oil Corporation. It was thus pleaded that all these changes having been made without the consent of the appellant were contrary to the terms of the agreement and therefore the appellant was very well within his rights to issue letter dated 28th August, 1990 proposing to take action against them. Broadly on these pleadings, both the parties sent to trial on the following issues:

Whether Defendant No. 4 Vijay Kumar had retired from the partnership firm and due intimation of his retirement and the names of the new partners were intimated to the Corporation in time? OPP.

Whether the impugned letter alleged to have been written by Vijay Kumar Defendant to the Defendant Corporation is illegal, written without any authority and not binding upon the rights of the Plaintiff? OPP.

Whether the Defendant are legally obliged to continue the supply of oil etc. to the Plaintiff as alleged? OPP.

Whether this Court lacks jurisdiction to try the suit? OPD.

Whether the suit is bad for non joinder of necessary parties? OPD.

Whether the suit is not maintainable in the present form? OPD.

Whether Sh O.P.Verma is a locus standi to file the present suit? OPD.

Refief.

Learned Trial Court on appraisal of the evidence before it came to the conclusion that the suit of the plaintiffs-respondents deserve to succeed and decreed the same and directed the appellant to supply petroleum products to the respondents on the indent without insisting on signatures of defendant No. 4 (Vijay Kumar).

An appeal was preferred by the appellant and the findings recorded by the learned Trial Court were affirmed and the appeal was dismissed.

In Regular Second Appeal, it was contended by the learned Counsel for the appellant that Clause No. 13 of the agreement (Ex. P.3) provides that dealer shall not at any time without the consent in writing of the Corporation assign, transfer or in any other manner make over this present contract or agreement to any other person or persons whomsoever. It was contended that according to this Clause once an agreement had been entered into between the partnership Firm constituting of Hari Chand, Nand Lal, Om Parkash and Vijay Kumar, no other change could have been effected without the prior consent/approval of the appellant and considering the facts of the case, all these changes which were made in the partnership were without the consent of the appellant and therefore, they were merely within their rights to propose action against the respondents.

It was next contended by the learned Counsel for the appellant that even assuming that the aforesaid change could be effected yet no injunction could be granted against the appellant as has been done by both the Courts below. The appellant could not be directed to supply the oil and petroleum products. If there was a violation of the contract or agreement, the only remedy was to claim damages by filing a suit u/s 14 of the Specific Relief Act. Reliance was placed on 1991 SCC(1) 533 wherein Hon''ble Apex Court has observed as below:

Sub section (1) of Section 14 of the Specific Relief Act specifies the contracts which cannot be specifically enforced, one of which is a contract which is in its nature determinable. In the present case, it is not necessary to refer to the other clauses of sub section (1) of Section 14 which also may be attracted in the present case since Clause (c) clearly applies on the finding read with reasons given in the award itself that the contractr by its nature is determinable. This being so granting the relief of restoration of the distributorship even on the finding that the breach was committed by the appellant- Corporation is is contrary to the mandate in Section 14(1) of the Specific Relief Act and there is an error of law apparent on the face of the awrd which is stated to be made according to the law governing such cases. The grant of this relief in the award cannot, therefore, be sustained.

It was next contended with reference to the facts on record that even if it is assumed that intimation had been given by the plaintiffs respondents regarding the change of ownership yet it could not be said that the appellant has waived his right which stemmed from the agreement. It was contended that such a right could not be waived. Reliance was placed on case titled as ''Vaishakhi Ram and Ors. v. Sanjeev Kumar Bhatiani'' 2008(1) HRR 616.

On the other hand, learned Counsel for the respondents contended with reference to the facts that the partnership Firm was constituted in the year 1970 with Nand Lal, Hari Chand, Om Parkash and Vijay Kumar as the partners. Hari Chand expired on 8th March, 1984 and Bharat Bhushan Verma his son was inducted as the partner. On 1st April, 1984 Nand Lal , original partner left the partnership and Nirmal Verma, his son joined. The partnership was thereafter reconstituted on 11th April, 1984 with O.P. Verma, Vijay Kumar, Nirmal Verma and Bharat Bhushan Verma as the partners. Thereafter, Vijay Kumar is said to have retired after the dispute arose and the award of Arbitrators have come into existence and even as per the re-constituted Firm there was no outsider inducted in the Firm and it continued to be constituted of the children of the original partners. The intimation of this was given to the appellant and their inspection and audit report bare out this fact. The inspection report is on record as Ex. P.3 which was carried out on 29th March, 1986. Their own official recommended the acceptance of change of partnership vide Annexure P-13. Reliance was made to Clause 23 and 30 of the agreement and Ex. P.1 letter written by the appellant on 28th August, 1990. It is also pleaded that in the written statement the appellant had admitted that the matter regarding re-constitution of the Firm and the approval thereof was pending before them since 1985. It was pleaded that in Clause 30 of the agreement the dealer of Firm has been described to mean and include all the present members of the Firm and the survivors of them and the Legal Representatives of such of them may die and also all future members and the legal representatives.

I have heard learned Counsel for the parties at some length and have perused the impugned judgments. The foremost question that has to be considered is as to whether the change in the partnership was of such a nature as to be considered as a violation of Clause 13 of the same. Clause 13 of the agreement is reproduced below:

The Dealer shall not at any time without the consent in writing of the Corporation assign, transfer or in any other manner make over this present contract or agreement to any other person or persons whosmsoever.

A perusal of the above reveals that the aforesaid Clause is unambiguous and means that the dealer shall not at any time without the consent in writing of the Corporation assign, transfer or in any other manner make over the contract or agreement to any person or persons under whomsoever. The facts of the case reveal that the partnership Firm had to undergo changes either because one of the constituent partners died or left partnership but the replacement was strictly within the family itself. For Example when Hari Chand died on 8th March, 1984 his son Bharat Bhushan was inducted as partner, on 1st April, 1984, Nand Lal left the partnership transferring his share in the name of his son Nirmal Verma and on 3rd December, 1984 Vijay Kumar retired, implying thereby that only the Legal Representatives of the original constituent partners were included in the partnership and there was no outsider involved in the change. Clause 30 of the agreement is also relevant, which is extracted hereunder:

Where the Dealer is a firm that term shall mean and include all the present members of the firm and the survivors of them and the legal representatives of such of them as may die and also all future members and the legal representatives.

If the facts of the case are to be tested on the touchstone of the terms of Section 30 then it is clear that the term dealer in the case of a Firm is very wide. It means and includes all the present members of the Firm and survivors of them and Legal Representatives of such of them as may die and also the future members of the legal representatives. It is therefore clear that because of the reason that the change in the partnership was only within the legal representatives of the earlier constituent members they were protected by the terms of Clause 30 and Clause 13 of the agreement was not attracted. It was not the case where the dealership either had been assigned or transferred in any manner to any other person so as to attract the conditions of Section 13 of the agreement.

That apart even if the worst case is to be considered against the plaintiffs-respondents then also they had in a bona fide manner given the intimation regarding the change of partnership at the earliest point of time in 1984 itself. The appellant in turn had filed an inspection report in the year 1986 and then in 1988. It was inspection and audit report under which it was affirmed that the respondents had given the intimation to them and further their own officer had recommended the grant of approval of the change of partnership vide letter dated 28th August, 1990 which is on record as Ex. P.1. It is the appellant who themselves had been sleeping over the matter and had not cared to respond to the communications of the respondents. The appellant is a public authority and is expected to act fairly and not arbitrarily or whimsically. If they sleep over the matter by not responding to the communications of the respondents who have at the first instance intimated them regarding the change of partnership then the plaintiffs-respondents cannot be held to be responsible for the same. In so far as the contention of the learned Counsel for the appellant regarding only remedy for filing of a suit for damages in the case of violation of any term of the agreement is concerned, I am afraid this contention is mis-placed. Concededly, no order was passed and it was only a letter written to the respondents proposing an action in the event certain requirements were not made. It is not necessary for a person to wait for the axe to fall on him before he take recourse to his legal remedy. The only grievance of the appellant appears to be that the change of the constituents of the partnership Firm was in violation of Clause 13 which in any case could not be for the reason that Clause 30 of the agreement is of wide amplitude and takes into its fold, the existing members are also the successors of the original constituent partners.

For the reasons stated above, the appeal is without any merit and the same is dismissed.