Name: Indian Oil Corporation Ltd vs Niloufer Siddiqui & Ors
Citation: CIVIL APPEAL NO. 7266 OF 2009
Date of Judgement: December 01, 2015
Appellant: Indian Oil Corporation Ltd
Respondents: Niloufer Siddiqui & Ors
Bench: Hon’ble Justice V. Gopala Gowda and Hon’ble Justice Amitava Roy
Facts:
1. The Respondent 2 and Respondent 3 applied for the distributorship of LPG in Appellant company. It allotted distributorship of Indane Gas to respondents subject to the terms and conditions. Conditions state that, “This appointment is subject to the conditions contained in standard agreement which will be sent to applicants in due course for their signature and they shall sign and return the same to the company.”
2. Respondent 2 wrote a letter to Directorate General of Resettlement, Ministry of Defence with a copy of the same to the Minister of Defence and the Minister of Petroleum requesting either to split the partnership business into two or to permit him to transfer his share in the partnership in the name of his wife, Respondent 1. Respondent 2 expressed his desire to branch manager for transferring his share in the partnership in the name of either his wife or his father.
3. Respondent 3 confirmed his oral consent by writing a letter, addressed to the Branch Manager, IOCL. Respondent 2 joined Bihar Government Services as Deputy Superintendent of Police.
4. The Appellant company vide its letter terminated the distributorship on the ground that no-one will take up any other business or employment during the continuation of the aforesaid distributorship. Respondents filed a suit in session court, challenging their termination. The court vides its judgment and order dismissed the said suit.
5. The High court allowed the appeal by setting aside the judgments and orders passed by the courts below. It declared that the letter of termination issued by Appellant company in terminating distributorship of Respondent 2 to be illegal, arbitrary. Appellant company approached Supreme Court questioning the correctness of the impugned judgment and order.
Issue involved:
- Whether Appellant company had the right to terminate the distributorship of Respondent 2 and 3?
Obiter Dicta:
“The Constitution was enacted to secure to all the citizens of this country social and economic justice. Article 14 of the Constitution guarantees to all people’s equality before the law and the equal protection of the laws.”
Section 14 of specific relief act states that,
Contracts not specifically enforceable.—
“(1) the following contracts cannot be specifically enforced, namely:—
(a) A contract for the non-performance of which compensation in money is an adequate relief;
(b) a contract which runs into such minute or numerous details or which is so dependent on the personal qualifications or volition of the parties, or otherwise from its nature is such, that the court cannot enforce specific performance of its material terms;
(c) A contract which is in its nature determinable;
(d) A contract the performance of which involves the performance of a continuous duty which the court cannot supervise.”
Rationale:
1. The Respondents have fulfilled all the terms and conditions of the agreement of distributorship which was given to them by Appellant. It is Appellant company which has violated the said terms and conditions by not sending a copy of the standard agreement despite repeated demands made by Respondent 2 to Appellant. Therefore, the terms and conditions of the standard agreement cannot be made binding upon them as they have not executed the same.
2. It was further observed that as per conditions of the letter of allotment, Appellant reserved the right to terminate the distributorship without giving any reason by 30 days notice in writing. The purpose of the said 30 days notice was to afford time to both the respondents to provide their explanation against such intended termination made by the Appellant, further submitted that company itself has completely violated the terms enumerated in condition. It has arbitrarily terminated the distributorship by issuing a letter without giving any notice to them by giving irrelevant reasons which is in Violation of the principles of natural justice as well.
Judgement:
This Civil Appeal is dismissed. The order granting stay shall stand vacated.
The court direct the Appellant-IOCL to restore the LPG distributorship in favour of Respondents and submit a compliance report to this court.
Conclusion:
A contract of distributorship of LPG was offered to Respondents by the Appellant. The company further terminated the contract.
The High court passed a judgement in favour of respondents on the ground that the termination was unreasonable as terms and conditions of the standard agreement cannot be made binding upon respondents as they have not executed the same.
The Appellant than appealed in Supreme Court, which upheld the decision of the High Court stating that, the letter of termination issued by Appellant company in terminating distributorship of Respondent no.2 to be illegal, arbitrary and not on the basis of the terms and conditions of the said agreement.
Drafted By: Param Mansinghka
Edited By: Tanvi Mahajan, Publisher, Law Insider
Published On: February 14, 2022 at 21:00 IST