9911796707
TMI Blog1990 (3) TMI 346X X X X Extracts X X X X X X X X Extracts X X X X ..... consider this aspect after taking the appellant firm into confidence on this aspect. Nothing further need be stated or required to be done and we give no 'directions as to whether reasons should be recorded or hereinafter should be given. In the facts and circumstances, it is not necessary to give oral hearing or record the reasons as such for the decision. The decision should be based on fair play, equity and consideration by an institution like IOC. X X X X Extracts X X X X X X X X Extracts X X X X ..... of lubricants/goods such lifted had gone up to the extent of 1, 11,34,854 litres or kgs. The appellants claimed that the said firm is one of the respondent company's Lube Distributor in Northern India. It was the case of the appellants before the High Court and also before this Court that the said firm had been carrying on business as the Lube distributor of the respondent company and had been selling all kinds of lubricants. The appellants contend that the respondent company had recognised the appellant firm during all this period as authorised dealer and a distributor and an agent. It was the case of the appellants before the High Court and they had tried to demonstrate with reference to the various documents, annexures etc. filed by them that the firm had been always carrying business as Lube Distributor of the Company, and has been selling all kinds of lubricants. The appellants further contended that the Company had recognised the firm during all this period as authorised dealer, distributor and agent. Certain letters were written by the company directing various customers to contact the firm as an authorised Lube Distributor. This contention was stated before the High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed various objections to the maintainability of the Writ Petition, namely, inter alia, that the Company was not State within the meaning of Article 12 of the Constitution as the Company is registered under the Companies Act, 1956, the Writ Petition was not maintainable as no writ to enforce alleged supply, according to the respondent company, was maintainable and the appropriate remedy for the appellants was to claim damages for breach of contract or relief for specific performance of contract, if any. It was submitted, further, that the firm had not any contract and was seeking to rely on an irregular course of conduct and on an ad hoc arrangement which the company cannot perpetuate in view of the prevailing guidelines and/or directions received from the Ministry of Energy in the Department of Petroleum. Where in fact there was an actual written agreement the Company's contractual relationship with its distributors was also capable of termination forthwith and was only subject to the normal contractual laws and decisions in the realm of contract could not be the subject matter of proceedings under article 226 of the Constitution, it was submitted. The appellants case, it was urge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellants were seeking to invoke the fight flowing from an utter irregularity specially when the company had been made publically accountable especially when the Company does not act unless through a written contract as also when only authorised. It was further the case of the respondent that the company was subjected to distribution policies and guidelines of the Department of Petroleum in the Ministry of Energy, Government of India. They are also bound by the directives to the effect that lubricants are to be sold only to consumers, to those parties who will not sell directly or indirectly to foreign oil companies and no sale should take place to old agents or distributor of foreign oil companies. All sales of lubricants must take place to actual consumers or to such small parties who will sell actually to consumers and not to foreign oil company. Besides this, the Ministry of Energy by the letter beating reference No. P-17011/7/82SUP dated 21st December, 1982 under policy number 201 had communicated to all oil companies that no new distributor was to be appointed for distribution of lubricating oils and there is a ban on such appointments. In the facts and the circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no corresponding legal duty was imposed on the respondent to supply, the Writ of mandamus was not maintainable. In those circumstances the Writ Application was dismissed as not maintainable. Aggrieved thereby the appellants have come up to this Court, as mentioned hereinbefore. We have heard learned counsel Dr. L.M. Singhvi as well as Mr. Salve exhaustively. Further affidavits were filed and documents produced before us. It was sought to be urged by Dr. Singhvi that the respondent was an instrumentality of State and as such the question involved was whether an instrumentality of State can suddenly, arbitrarily, unreasonably, without any relevant factors and without any notice and determination or proceeding stop supplies of products which, according to him, had been supplied more than-1 crore 11 lacs litres/kg of product continuously and uninterruptedly over a period of more than 18 years. Dr. Singhvi suggested that the respondent IOC is an instrumentality of State under Article 12 of the Constitution. From the nature of the business carried on by the appellants, it was manifest to us that the supply of the lubricants of the type with which the respondent had a monopoly, could b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifold activities by stating reasons for such actions. In a situation of this nature certain activities of the respondent company which constituted State under Article 12 of the Constitution may be in certain circumstances subject to Article 14 of the Constitution in entering or not entering into contracts and must be reasonable and taken only upon lawful and relevant consideration, it depends upon facts and circumstances of a particular transaction whether heating is necessary and reasons have to be stated. In case any right conferred on the citizens which is sought to be interfered, such action is subject to Article 14 of the Constitution, and must be reasonable and can be taken only upon lawful and relevant grounds of public interest. Where there is arbitrariness in State action of this type of entering or not entering into contracts, Article 14 springs up and judicial review strikes such an action down. Every action of the State executive authority must be subject to rule of law and must be informed by reason. So, whatever be the activity of the public authority, in such monopoly or semi-monopoly dealings, it should meet the test of Article 14 of the Constitution. If a Governmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellants were selling IOC products without written contract. It was further asserted that the IOC has sought to change its stand and say that it does not deal with person without contract but according to the appellants, has issued letters of appointment to some of them and these persons, according to the appellants, sell lubes. It was submitted that this change of stand was an afterthought. It was further stated that letters, in some cases, cannot lead to an exclusion of all others to whom letters of appointment had not been issued. It is submitted that in the fairness IOC could have and should have issued such letter of appointment to appellant No. 1 also and should have considered the case of the appellant-firm. It was submitted that IOC has always treated lube and non lube products on the same basis, without distinction. This distinction which was sought to be urged before us, it was submitted, was an after thought and not justified. The appellant contended that the IOC's purported reliance upon the guidelines, was not justified. Furthermore, the guidelines were not mandatory or binding. These use directory words like "may". More importantly, these exclude all those who are pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between rights and remedies cannot be obliterated by any straight jacket formula. It has to be examined in each particular case. Mr. Salve sought to urge that there are certain cases under Article 14 of arbitrary exercise of such "power" and not cases of exercise of a "right" arising either under a contract or under a Statute. We are of the opinion that that would depend upon the factual matrix. Having considered the facts and circumstances of the case and the nature of the contentions and the dealings between the parties and in view of the present state of law, we are of the opinion that decision of the State/public authority under Article 298 of the Constitution, is an administrative decision and can be impeached on the ground that the decision is arbitrary or violative of Article 14 of the Constitution of India on any of the grounds available in public law field. It appears to us that in respect of Corporation like IOC when without informing the parties concerned, as in the case of the appellant firm herein on alleged change of policy and on that basis action to seek to bring to an end the course of transaction over 18 years involving large amounts of money is not fair action, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the respondent be put to the appellants, and let the respondent authorities consider afresh the submissions made by the appellant firm, namely, that the existing arrangement amounts to a contract by which the distributorship was continued in case of the appellant firm without any formal contract and further that the new policy of the Government introduced in December, 1982 would not cover the appellant firm and as such the appellant should continue. It will be sufficient, having regard to the nature of the claims, for the respondent authority to consider this aspect after taking the appellant firm into confidence on this aspect. Nothing further need be stated or required to be done and we give no 'directions as to whether reasons should be recorded or hereinafter should be given. In the facts and circumstances, it is not necessary to give oral hearing or record the reasons as such for the decision. The decision should be based on fair play, equity and consideration by an institution like IOC. It must act fairly. We direct accordingly that the present arrangement to continue until the respondent company gives the consideration on the lines indicated above and makes the decision. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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