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Judgment
Rajesh H. Shukla, J.—Rule. Learned counsel, Shri Bijal Chhatrapati for the respondents waives service of notice of rule. The present
petition has been filed by the petitioner under Articles 14, 19 and 226 of the Constitution of India as well as in respect of the policy known as
NDG 2005 regarding the penalty in case of irregularity and misconduct at the petrol pump of allottee by the respondent-Corporation.
The facts of the case briefly stated are that:-
2.1 In response to the advertisement issued by the respondent-Company in a daily newspaper Sandesh dated 21.05.2005 inviting applications for
the allotment of retail outlet for the sale of petrol, diesel and other petroleum products, the petitioner had made applications, however, one of the
sides which were to be allotted for such dealership was Harij, which was reserved for the woman of scheduled caste. It is stated that the petitioner
had applied for such dealership of petrol at Harij in reserved category of woman of scheduled caste and was selected by the respondent-Company
for the allotment of the dealership at Harji. As per the scheme of the Government of India, the respondent-Company was required to obtain land
and put necessary construction and infrastructure for the petroleum pump. The petitioner made arrangement for the land on lease, made
construction and other infrastructure at her own expenses and, thereafter, she has been running petrol pump at Harji Since March, 2008. It is
stated that necessary license from the various authorities including the Civil Supply Department, Gujarat State and the competent authority under
the Explosive Act has also been obtained and, thereafter, an agreement for the dealership came to be executed on 15.03.2008 and supplementary
agreement was also executed between the petitioner and the respondent-Company.
2.2 However on 22.07.2009, the officer of the Quality Control Cell of the respondent-Company came for checking and inspecting the petrol
pump. The stock was also checked and it was found in order. Thereafter, density was checked, which was found in order. Thereafter they had
checked the delivery of petrol and diesel for dispensing unit, which was found to be correct and again when it was checked, there was some
shortage of 210 ml. It is contended that on normal mode, short delivery found was 10 ml only, which is within the permissible limit. It is therefore
contended that inspite of this, show cause notice at Annexure-E was issued dated 14.09.2009 regarding the termination of the dealership on the
ground of short delivery by manipulating, altering and changing the original chip in delivery unit of M.I.T.CO. for diesel. The petitioner had replied
to the show cause notice by letter dated 30.09.2009 at Annexure-F and, thereafter, the impugned order dated 28.08.2010 came to be passed
terminating ""the dealership, which is a subject matter of this petition challenging the same order on the grounds set out in the memo of petition.
In the present petition, affidavit-in-reply has also been filed by the respondent-Corporation.
Heard learned senior counsel, Shri B.B. Naik appearing with learned counsel, Shri Parthiv Bhatt for the petitioner and learned counsel, Shri
Bijal Chhatrapati for the respondent-Corporation.
Learned senior counsel, Shri B.B. Naik appearing with learned counsel, Shri Parthiv Bhatt for the petitioner referred to the papers and
submitted that as per the policy, the dealership was given and the petitioner had purchased the land by her own resources and also made
construction thereon. Learned senior counsel, Shri Naik pointedly referred to the papers and submitted that the allegation qua the irregularity is for
the manipulation of dispensing unit manufactured by M.I.T.CO. However, learned senior counsel, Shri Naik submitted that during the inspection,
there was no complaint regarding stock or quality of diesel. Learned senior counsel, Shri Naik referred to Annexure-D, which is a joint
observations report at page no. 82 and submitted that as could be seen from this, when it was observed by the team member, the dispensing unit
was giving delivery within permissible limit and upon testing on flash mode to check for any tampering in dispensing unit, it was giving 210 ml. short,
for which, it was switched off and again switched on and, thereafter, when it was again checked, it was within the permissible limit. Therefore,
learned senior counsel, Shri Naik submitted that if there was any tampering by the petitioner with delivery unit or any chip then, as soon as it is
switched on again, chip will have some bearing and, therefore, it could not have recorded delivery within permissible limit. He therefore submitted
that when more than once or twice, it was switched on and switched, it was within the permissible limit and, hence, there was no tampering with
delivery unit or there was no additional fitting. Therefore, learned senior counsel, Shri Naik submitted that show cause notice, which has been
purported to have been issued regarding malpractice is without any basis. He referred to the show cause notice produced at Annexure-E and
submitted that reply to the show cause notice has already been given by the petitioner, which has not been considered at all. He pointedly referred
to the dealership and the communication dated 20.08.2010 regarding the termination of the dealership agreement and submitted that as per clause
in the contract, according to the policy of the respondent, such step of termination is not taken. Learned senior counsel, Shri Naik referred to
Annexure-I for that purpose, which provides penal action and payment of fine for such irregularity. He therefore submitted that the termination of
agreement of dealership is without any basis or foundation. He emphasized and submitted that what has been stated is as under:-
The chip is affixed inside ERA which is not covered by seal of Department of Metrology there fore your contention that seal of Department of
Metrology was intact is of no avail.
Learned senior counsel, Shri Naik submitted that in fact this dispensing unit is manufactured by the Company and by the said company, it is
admittedly found to be intact. He therefore submitted that the question of chip being replaced referring to in report by the manufacturer
(M.I.T.CO.) that it is not original, cannot be a ground for presumption regarding the irregularity for termination of agreement of dealership.
Learned senior counsel, Shri Naik submitted that the report of the manufacturer that the chip is not original may not attribute any kind of motive or
irregularity on the part of the petitioner as the unit is supplied by the respondent-Company and whatever is there inside cannot be changed at the
instance of the petitioner nor is there any evidence with regard to any such tampering. Therefore learned senior counsel, Shri Naik submitted that
only on the basis of such report that chip is not original, which is evident from the delivery unit, the presumption to be made for the malpractice
cannot be made. He submitted that that is the only basis and foundation which has led to this termination agreement, which is illegal. Learned senior
counsel, Shri Naik further submitted that in fact no opportunity of hearing has been given to the petitioner that when the unit has been taken in
sealed condition, it was sent for checking at the laboratory and manufacturer after a lapse of six months and what happened during this period,
whether seal was intact when it was sent to laboratory is not clear. Further there is nothing on the record to suggest about any measure taken for
sending unit promptly for the test by the manufacturer. Again no opportunity has been given to the petitioner that test is carried out in his presence
or his representative where it could have been pointed out about any kind of manufacturing defect with some technical experts. Learned senior
counsel, Shri Naik submitted that the test is carried out in 2010 for which there is no evidence whether the chip was in proper condition and
whether the unit was in safe custody. Further there is no report or details as to how the test is carried out, which could lead to an opinion by the
manufacturer that the chip is duplicate where it could be changed or replaced by any other individual without opening the unit. He emphasized and
submitted that there is no dispute that the seal of the dispensing unit has not been disturbed. Further, learned senior counsel, Shri Naik submitted
that opportunity ought to have been made available for individual test before any individual laboratory to the petitioner to prove his case or
innocence.
Learned senior counsel, Shri Naik has referred to and relied upon the judgment of the Hon''ble Apex Court in case of Mahabir Auto Stores and
others Vs. Indian Oil Corporation and others, and submitted that when the said action is arbitrary and illegal, Article 14 of the Constitution of India
would be attracted and writ would be maintainable. He emphasized that the observations have been made that the test of reasonableness and fair
play is required to be considered even in contractual matter. Learned senior counsel, Shri Naik submitted that even in contractual matter, it is
subject to judicial review and, therefore, merely because it is a dealership agreement, it cannot be said that petition under Article 226 of the
Constitution of India is not maintainable.
Learned senior counsel, Shri Naik submitted that suit was filed, however, as the contention was raised with regard to the arbitration clause, it
was disposed of. He submitted that arbitrator would not have the jurisdiction to grant the relief, which is claimed in this petition regarding the
restoration of the dealership and, therefore, the present petition has been filed. He has referred to and relied upon the judgment in case of E.
Venkatakrishna Vs. Indian Oil Corporation and Another, , Para No. 728. Similarly, he has relied upon the judgment in case of Harbanslal Sahnia
and Another Vs. Indian Oil Corpn. Ltd. and Others, (Para No. 4, 6 and 7).
Learned counsel, Shri Bijal Chhatrapati has referred to affidavit in reply and raised preliminary objection with regard to the maintainability of the
petition on the ground that Regular Civil Suit No. 6/2010 challenging the said termination order dated 20.08.2010 is filed and thereafter, it was
dismissed on the ground of jurisdiction in view of the arbitration clause contained in the dealership agreement. He therefore submitted that the
petition is not maintainable when the suit was filed and same was disposed of in view of the arbitration clause in the agreement. He further
submitted that remedy for breach of contract was purely in the realm of contract, which could be dealt with by the Civil Court and, therefore, the
petition is not maintainable. Learned counsel, Shri Chhatrapati submitted that plea of Article 14 of the Constitution of India may be available within
the meaning of Article 12 of the Constitution of India but once the contract has been made and executed, the remedy is by way of suit or
arbitration and the petition under Article 226 of the Constitution of India would not be maintainable. He submitted that in view of the provisions of
the Specific Relief Act, particularly, Sections 14(1)(c) and 14(1)(e) of the said Act, no injunction could be granted. He therefore submitted that
relief sought for in the present petition is of a mandatory nature and, therefore, it cannot be entertained. Learned counsel, Shri Chhatrapati has
referred to affidavit-in-reply and submitted that reference is made to the alleged irregularity with regard to the shortfall that the dispensing unit was
switched off and restarted and checked in normal mode and at that time, the dispensing unit was found delivery short for 10 ml. Again when it was
checked on a flash mode, it was found that the dispensing unit was delivering short by 210 ml. per 5 litre and, therefore, the alleged irregularity has
been committed by tampering with the dispensing unit and, therefore after the notice, the dealership agreement has been terminated for which the
present petition may not be entertained. Reference is made to the Quality Control Cell as well as electronic display assembly of dispensing unit with
regard to the alleged irregularity and the termination of the agreement.
Learned counsel, Shri Chhatrapati has submitted that as it involves the disputed questions of fact, this Court may not entertain the petition. He
submitted that as it involves disputed questions of fact, which could be considered on the basis of the evidence at the trial, this Court may not
entertain the petition. He submitted that in fact suit has been filed, which has been disposed of in view of the arbitration clause. Therefore learned
counsel, Shri Chhatrapati submitted that the matter is arising out of the contract of dealership governed by the agreement between the parties, for
that purpose, he referred to the dealership agreement and submitted that one of the clauses provides for the arbitration and in fact, Civil Court had
declined to interfere referring to the matter to the arbitration and, therefore, the petitioner could have at the most availed of that remedy of
arbitration instead of filing the present petition. He pointedly referred to clause 19 of the agreement and submitted that it provides for the arbitration
and, therefore also, the petition is not maintainable.
Learned counsel, Shri Chhatrapati submitted that writ petition could be maintainable even in a contractual matter where the State or
instrumentality is involved. However, he emphasized and submitted that Article 14 of the Constitution of India would be attracted at the pre
contract stage when it is a matter with regard to an equal opportunity and fair play. However, once the party has entered into contract even if it is
an instrumentality, it would be governed by the contract and, therefore, civil suit would be the remedy. Learned counsel, Shri Chhatrapati has
referred to and relied upon the judgment of the Hon''ble Apex Court in case of Indian Oil Corporation Ltd. Vs. Amritsar Gas Service and Others,
and submitted that the observations made in Para No. 11 of the said judgment, which reads as under:-
We may at the outset mention that it is not necessary in the present case to go into the constitutional limitations of Article 14 of the Constitution
to which the appellant-Corporation as an instrumentality of the State would be subject particularly in view of the recent decisions of this Court in
Dwarkadas Marfatia and Sons v. Board of Trustees of the Port of Bombay, Mahabir Auto Stores v. Indian Oil Corporation and Shrilekha
Vidyarthi v. State of U.P. This is on account of the fact that the suit was based only on breach of contract and remedies flowing therefrom and it is
on this basis alone that the arbitrator has given his award. Shri Salve is, therefore, right in contending that the further questions of public law based
on Article 14 of the Constitution do not arise for decision in the present case and the matter must be decided strictly in the realm of private aw
rights governed by the general law relating to contracts with reference to the provisions of the Specific Relief Act providing for non-enforceability
of certain types of contracts. It is, therefore, in this background that we proceed to consider and decide the contentions raised before us.
Learned counsel, Shri Chhatrapati has also referred to and relied upon the judgment of the High Court of Gujarat in case of Indian Oil
Corporation Ltd. Vs. Parmar Jadavji Dhanjibhai and Others, . He emphasized the observations made in para no. 16, where it has been quoted,
which reads as under:-
..The State, in exercise of its various functions, is governed by the mandate of Article 14 of the Constitution which excludes arbitrariness in State
action and requires the State to act fairly and reasonably. The action of the State in the matter of award of a contract has to satisfy this criterion.
Moreover, a contract would either involve expenditure from the State exchequer or augmentation of public revenue and consequently the
discretion in the matter of selection of the person for award of the contract has to be exercised keeping in view the public interest involved in such
selection...
Learned counsel, Shri Chhatrapati has also referred to and relied upon the judgment of Patna High Court in case of I.B.P. Company Ltd. and
Others and Amarnath Singh Vs. Ramashish Prasad Singh and Others and also judgment of the High Court of Gujarat in case of Aventis Pasteur
S.A. Vs. Cadila Pharmaceuticals Ltd., .
Learned counsel, Shri Chhatrapati has submitted that alternative remedy is provided and, therefore also, the petition under Article 226 of the
Constitution of India would not be maintainable. In support of this submission, he has referred to and relied upon the judgment of the Hon''ble
Apex Court in case of State of Bihar and Others Vs. Jain Plastics and Chemicals Ltd., and submitted that as observed in this judgment that even if
it is an instrumentality of the State but disputed questions of facts arising out of breach of contract are required to be considered and determined
then, writ petition may not be entertained. He has also referred to and relied upon the judgment in case of State of U.P. and others Vs. Bridge and
Roof Co. (India) Ltd., and referred to the observations made in para nos. 15 and 16 about the maintainability of the writ petition. He again
emphasized that once the contract is made between the parties, it is in the realm of private law and, therefore, any dispute has to be considered on
the basis of interpretation of terms and conditions of the contract. He has also referred to and relied upon the judgment in case of Bareilly
Development Authority and Another Vs. Ajay Pal Singh and Others, He emphasized the observations made in para no. 20. Learned counsel, Shri
Chhatrapati has also referred to and relied upon other judgments including the judgment in case of Hindustan Petroleum Corpn. Ltd. and Others
Vs. Super Highway Services and Another, . He has also referred to and relied upon the judgment of this Court in case of Natvarlal and Sons Vs.
Bharat Petroleum Corporation Ltd. and Another, and strenuously submitted that in an identical facts with regard to similar irregularity, where the
dispensing unit was manipulated, the petition was dismissed as observed in detail.
In rejoinder, learned senior counsel, Shri Naik submitted that some of the judgments, which have been referred with regard to the scope of
High Court under Article 226 of the Constitution of India would not be applicable as subsequent judgments have made observations that even in
contractual matter where State or instrumentality is involved, the petition is maintainable. Learned senior counsel, Shri Naik submitted that what is
required to be considered is whether the equal opportunity was given and whether a fair opportunity has been given before termination of lease
agreement by giving opportunity for the proper test by independent authority or laboratory He therefore submitted that the present petition may be
entertained.
In view of the rival submissions, it is required to be considered whether the present petition can be entertained or not.
As could be seen from the above facts, there is no dispute that the petitioner was having dealership agreement and there is mutual obligation
under the said dealership agreement. At the same time, the respondent is an authority or instrumentality or public corporation, which is obliged to
have a fair play in any of its action. Therefore, the moot question, which is required to be considered, is whether the termination of the dealership
agreement could be sustained on the grounds stated in the impugned decision/communication. For that purpose, few relevant facts are required to
be noted. The joint inspection was carried out on 22nd July, 2009 at Annexure-D. It clearly refers to ""Dispensing unit (D.U.) bearing Sr. No.
0E310 Make MIDCO Mode 1981 - On HSD service was subjected to test for accuracy in delivery against 5 Litre calibrated measure and found
that DU was giving delivery within permissible limit Display showing 5%. Further, it also states in para no. 9 ""WSMDeals of both the dispensing
units found intact and there was no additional... fitting.
The termination of the dealership agreement by communication dated August 20, 2010 at Annexure-G clearly suggests that the inspection and
the inspection report is not disputed. The said report suggests that delivery is beyond permissible limit of 15 ml. per five litres measures. It is
therefore established that dispensing unit was delivering short measure. Further it is recorded that as per the dealership agreement, Company is at
liberty to terminate the dealership agreement if the licensees are guilty of a breach of any of the convenants and stipulations on their part contained
in the dealership agreement. Thus basis for termination of agreement is so called alleged irregularity with the dispensing unit. However, there is no
specific evidence or technical report suggesting about any malpractice or irregularity by the petitioner. In other words, there is no evidence or a
report, by which, it can be said that the irregularity or malpractice at the instance of the petitioner is established. The malfunctioning of the
dispensing unit resulted into short delivery is one aspect but to allege any irregularity that at the instance of the petitioner, there is manipulation with
the dispensing unit resulting into malpractice is another aspect. There has to be some kind of evidence or material, by which, it could be established
about such malpractice by the petitioner. The short delivery in a particular mode (flash mode) is one thing, which need not necessarily to lead to
any inference about any malpractice by the petitioner, particularly, when whole unit is intact and there is no tampering with the unit. Further in this
very report, it is also observed that there was a specific contentions regarding non-detection of the short delivery by the Company official in the
previous inspection that no short delivery was found in a flash mode. The report itself says ""Your contention as to non detection of short delivery
by company official or officials of Department of Metrology in their previous inspections and no short delivery was found in flash mode of ""O"" is of
no avail"". Thus it is a specific contention that in previous inspection even in flash mode, there was no short delivery. Therefore, there has to be a
some kind of evidence or material to suggest about any kind of tampering with the dispensing unit, which is not there. Therefore merely because
there is short delivery, inference is drawn about malpractice. Moreover admittedly, the report of the manufacturer-MIDCO, which is referred to, is
required to be considered. The said report of the manufacturer-MIDCO is dated 8th September, 2010 i.e. after the communication/ termination of
the dealership agreement in August, 2010. In other words, when the decision of the termination of the dealership agreement was taken, it was not
based on any such report as such report was not available at that point of time. Therefore without any report including even the report of the
manufacturer, the dealership agreement is terminated merely on the basis of the inference drawn for the short delivery by the dispensing unit. The
said letter produced with the affidavit-in-reply at Annexure-A by the manufacturer refers to letter by the respondent dated 30th August, 2010
suggesting that unit was sent for the test on 30th August, 2010 i.e. after the dealership agreement was terminated. Therefore on the date when the
decision was taken regarding the termination of the dealership dated August 20, 2010, there was no such material like test report by the
manufacturer-MIDCO was available as the unit itself was sent on 30th August, 2010 for the test and the report was sent by the manufacturer on
8th September, 2010 at Annexure-A. Therefore very basis or foundation for arriving at conclusion is only an inference drawn about the
malpractice based on short delivery by the unit. It is well accepted that the inference could be made provided there is some material laying the
foundation for the inference to be drawn based on such material, however fact remains that there is no such material or evidence. It is in this
background when there is no material, the decision of the termination of dealership requires closer scrutiny as to whether there was any justification
or material available with the respondent, the answer has to be in negative. If there was no material exist, the short delivery at the time of inspection
by itself would not be sufficient for an inference about the malpractice in as much as there could be other technical reasons including malfunctioning
of the unit itself without any irregularity or malpractice adopted by the petitioner. Therefore before taking such action for termination of the
dealership agreement, which could have a consequence, at-least there has to be material and the petitioner ought to have been given an opportunity
to meet with such material. Admittedly, there is no such opportunity given to the petitioner. The test carried out by MIDCO (manufacturer) is not
informed to the petitioner. The test has been carried out after the termination of the agreement as and by way of an afterthought for justification of
the action. There is nothing to say that said unit cannot have a malfunctioning because of some defect without any tampering. Therefore, what is the
basis or foundation to draw inference about malpractice or irregularity is not available and, therefore, the decision requires a scrutiny as to whether
it is in violation of Rules of natural justice and/or whether it is arbitrary or not. It is well accepted that it is not a decision but decision making
process, which is relevant for the purpose of deciding or arriving at conclusion about the decision. It is well accepted that the requirement of
recording the reasons is part of the principles of natural justice, which reflect the decision making process for the purpose of judicial scrutiny. It is
not the decision but it is the decision making process, which has to appear fair and reasonable inconsonance with the established principles or law.
Law does not permit exercise of power keeping reasons for the exercise of power undisclosed, which may lead to arbitrariness.
Further, another facet of submission made by learned counsel, Shri Chhatrapati that since it is a matter of contractual obligation between the
parties arising out of a contract, the petition may not be entertained under Article 226 of the Constitution of India, particularly, when there is an
alternative remedy by way of suit is required to be considered. It is again well accepted that it is not a matter of total lack of jurisdiction but rather
a matter of self restraint. Even in the matter of contract between the parties i.e. private individual or State or instrumentality of the State, the
element of equity and fair play has to be there. The Hon''ble Apex Court in a similar case regarding termination of dealership agreement has made
observations in a judgment in case of Hindustan Petroleum Corporation Ltd. (supra), wherein it has already been observed that ""cancellation of
dealership agreement is a serious business and cannot be taken lightly and the authority concerned has to act fairly in complete adherence to
rules/guidelines framed. - No person should be condemned unheard-Corporation guidelines require dealer be given prior notice when the test is
conducted"". In the facts of the case, the test of the dispensing unit is conducted after the termination of the dealership agreement as discussed
hereinabove. In this case before the Hon''ble Apex Court also, at the outlet of the Company, the inspection was made and dealership agreement
was terminated on the ground of breach of conditions. In the present case, there is no show cause notice issued before the termination of the
dealerships agreement providing an opportunity to the petitioner. There was no report or test report available, on the basis of which, the decision
could have been taken about so called irregularity. Therefore in the complete absence of any material merely because there was a short delivery by
the dispensing unit, the inference was drawn about the malpractice leading to the termination of the dealership agreement. As stated above before
such inference of termination of the dealership agreement, no opportunity has been given to the petitioner. In fact for drawing inference about
malpractice, the foundation has to be led by material, which is not there. Therefore the submission made by learned senior counsel, Shri Naik
about the arbitrariness deserves consideration. Therefore even in contractual matter, the State or its instrumentality are expected to have a fair play
and if there is any element of arbitrariness or non-observance of Rules of natural justice or guidelines, writ petition would be maintainable and
discretion under Article 226 of the Constitution of India would be justified. There is no lake of inherent jurisdiction but normally it is mere a matter
of prudence and self restraint that in such matters of contractual obligations, the Court would be slow in exercising the discretion. At the same time,
though it could be a matter of contract between private individual and State or its instrumentality, again State or its instrumentality can be subjected
to judicial scrutiny on touch stone of Article 14 of the Constitution of India as to whether there was any justification or not. It could also be
considered about the action which has been taken dehors the Rules of natural justice as well as guidelines. Therefore, the submissions made by
learned counsel, Shri Chhatrapati that since it is a contractual matter within the realm of contract and contractual obligation, the Court should not
be exercised its discretion under Article 226 of the Constitution of India cannot be accepted.
A useful reference can also be made observation made by the Hon''ble Apex Court in a judgment in case of Harbanslal Sahnia & Anr. (supra),
wherein again the observation has been made with regard to the termination of the dealership and similar contention about misuse of writ petition
was considered. It has been observed as under:-
The rule of exclusion of writ jurisdiction by availability of an alternative remedy is a rule of discretion and not one of compulsion. In an appropriate
case, in spite of availability of the alternative remedy, the High Court may still exercise its writ jurisdiction in at lease three contingencies;
(i) where the writ petition seeks enforcement of any of the fundamental rights;
(ii) where there is failure of principles of natural justice; or
(iii) where the orders or proceedings are wholly without jurisdiction or the vires of an Act is challenged.
The present case attracts applicability of the first two contingencies. Moreover the petitioners'' dealership, which is their bread and butter, came to
be terminated for an irrelevant and non-existent cause. In such circumstances, the appellants should have been allowed relief by the High Court
itself instead of driving them to the need of initiating arbitration proceedings.
Another facet of argument that at pre-contract stage when it is a matter of providing an opportunity or equal opportunity, the Court may
examine with reference to Article 14 of the Constitution of India but at post contract i.e. after the parties have entered into an agreement or the
contract, it would be governed by the mutual obligation under the contract is required to be considered in background of a case or the facts of the
case. In the facts of the present case, it is merely a violation or breach of the agreement or a clause in the agreement but it is a matter with regard to
the termination of the dealership agreement, which is arbitrarily in violation of natural justice without any basis or material and, therefore, such
decision as discussed above could be examined in a judicial review. Again it is not a decision but decision making process, which is required to be
considered in order to decide whether there is any element of fair play or not. It is in this context, when the contentions have been raised, it cannot
be said that it is a matter purely within the realm of contract and there is an alternative remedy. In a given set of facts with regard to the claim for
money or counter claim or other issues, there might be a disputed questions of fact and/or there might be a purely dispute with regard to mutual
obligations, which are required to be fulfilled. The Court may decline to exercise the discretion under Article 226 of the Constitution of India. In the
facts of the case, it is not specifically stated that there is any breach or a particular breach of agreement or clause in the agreement but focus is on
the malpractice or irregularity, which is inferred on the basis of the fact that there is a short delivery by the dispensing unit. Again at the cost of
repetition, the inference is not based on any material and is not supported by any report or scientific test, which could lead to a conclusion or prima
facie conclusion about the alleged irregularity. Therefore, when there is no foundation led for the inference, any such inference cannot be sustained.
A useful reference can be made to a judgment of the Hon''ble Apex Court in case of ABL International Ltd. and Another Vs. Export Credit
Guarantee Corporation of India Ltd. and Others, , more particularly in para no. 27, where the observations have been made with regard to the
maintainability of writ petition. Similarly in a judgment of the Hon''ble Apex Court in case of Allied Motors Ltd. Vs. Bharat Petroleum Corporation
Ltd., , the observations have been made by the Hon''ble Apex Court quoting earlier judgment of the Hon''ble Apex Court in case of Karnataka
State Forest Industries Corpn. Vs. Indian Rocks as under:-
Although ordinarily a (superior court in exercise of its writ jurisdiction would not enforce the terms of a contract qua contract, it is trite that when an
action of the State is arbitrary or discriminatory and, thus, violative of Article 14 of the Constitution of India, a writ petition would be maintainable.
In this case also, issue which was addressed was with regarding the termination of the dealership agreement without notice.
One more aspect which is required to be considered is that if this submission made by learned counsel, Shri Chhatrapati has to be accepted on
the face value that the unit was installed in the premises of the petitioner and there is short delivery by itself would lead to an inference about the
tampering with it, it could be a situation where a person like the petitioner is held guilty without affording any opportunity. The short delivery by
dispensing unit as stated above does not necessarily lead to irresistible conclusion about the tampering or irregularity as there is no technical report,
by which, it could be inferred that there has been tampering with the unit. The report which is sought to be subsequently relied upon and which is
given by the manufacturer-MIDCO as discussed above cannot be considered as it was not available at the time of taking impugned decision
regarding the termination. Therefore, it could not be basis or foundation for such a termination of agreement. Therefore, if such a report was not
available and was not base or foundation, there was no other material, by which, such decision could have been taken for termination of the
dealership agreement or mere ipse dixit about tampering with the unit or malpractice. Again even this report by manufacturer, which is sent
subsequently after the decision for termination of agreement, does not satisfy as to whether it was properly maintained in a sealed condition and it
was in a proper or safe custody where the unit is kept lying with proper care, which would lead to any such result. The submission about the chip
that it was not original again does not necessarily suggest that it was duplicate or it was replaced by the petitioner in as much as the unit itself is
sealed and there is no evidence that it may have been opened for replacing the microchip. It is the only manufacturer, who could have stated or
who could have clarified that whether such a chip could be tampered with when the unit is intact. Moreover again, it has to be considered with
reference to whether the unit has been kept in a sealed condition and whether it was received in same condition when it was tested by the
manufacturer. Time lag during which it was kept idle by the respondent would also give rise to a question about whether it was properly maintained
in a sealed condition. There is no mentioned about the application of seal at the time of joint inspection and taking away unit by the respondent. On
the other hand, the report of the manufacturer relied upon by the respondent themselves with the photographs of the unit referred to seal number,
meaning thereby, there is some system of applying seal number and there is no evidence with regard to the exact identification of the unit taken
from the petitioner, which could be said to have matched with the report. It is in this background, the submissions made by learned counsel, Shri
Chhatrapati cannot be accepted. Reliance placed by learned counsel, Shri Chhatrapati upon the judgment of the High Court in case of Natvarlal &
Sons Through Partner (supra) also has to be considered in background of the facts. Again the judgment in case of G.B. Mahajan and others Vs.
The Jalgaon Municipal Council and others, referring to the contractual matter with two aspects like public law element and private law has to be
considered with reference to each individual case. In other words, though the dealership agreement entered into between the private individual and
corporation is contractual matter, it cannot be said that it is purely a matter of private law element where the parties have voluntarily agreed to
abide by terms and conditions stipulated regarding the mutual obligation. It again depends upon the facts and the controversy or issue involved in
each case like in the present case i.e. though it is a matter of contract, the termination is claimed to be arbitrary in violation of Rules of natural
justice as well as their own guidelines with regard to providing of opportunity or show cause notice. It is in these circumstances even though it is a
matter of contract, the concept of quality and fair play in action by the State or its instrumentality would come into play which requires a judicial
scrutiny on touch stone of Article 14 of the Constitution of India. A useful reference can also be made to the judgment of the Hon''ble Apex Court
in case of Kumari Shrilekha Vidyarthi and Others Vs. State of U.P. and Others, , where it has been observed by the Hon''ble Apex Court as
under:-
Even assuming that it is necessary to import the concept of presence of some public element in a State action to attract Article 14 and permit
judicial review, we have no hesitation in saying that the ultimate impact of all actions of the State or a public body being undoubtedly on public
interest, the requisite public element for this purpose is present also in contractual matters. We, therefore, find it difficult and unrealistic to exclude
the State actions in contractual matters, after the contract has been made, for the purview of judicial review to test its validity on the anvil of Article
14.
Another facet of arguments referring to the provisions of the Specific Relief Act would not have any application in the facts of the present case.
A useful reference can also be made to the observation made by the Hon''ble Apex Court Mahabir Auto Stores & Ors. (supra) wherein it has
been observed that ""Even though the rights of the citizens are in the nature of contractual rights, the manner, the method and motive of a decision of
entering or not entering into a contract, are subject to judicial review on the touchstone of relevant and reasonableness, fair play, natural justice,
equality and non-discrimination"". Therefore in light of the aforesaid discussion made hereinabove, the present petition deserves to be allowed and
accordingly stands allowed in terms of Para No. 25(B). The impunged order dated 20th August, 2010 passed by the respondent no. 2 at
Annexure-G is hereby quashed and set aside on the grounds stated hereinabove. Rule is made absolute to the aforesaid extent. No order as to
costs.
FURTHER ORDER
After the order was pronounced, learned counsel, Shri Chhatrapati for the respondents has requested for stay of the operation of the order to
enable his client to approach higher forum, which is objected by the learned counsel, Shri Parthiv Bhatt for the petitioner. The stay of the operation
of this order is granted till 24.06.2013 since the petrol pump in question has not been function since 2010.