APHC010297322007 IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI (Special Original Jurisdiction) [3459] WEDNESDAY,THE TENTH DAY OF SEPTEMBER TWO THOUSAND AND TWENTY FIVE PRESENT THE HONOURABLE SMT JUSTICE SUMATHI JAGADAM WRIT PETITION NO: 23768/2007 Between: 1. M/S.GENERAL AUTO SERVICE, DEALERS OF HINDUSTAN PETROLEUM, CORPORATION LTD., AT STADIUM ROAD, ELURU, WEST GODAVARI DISTRICT, REPRESENTED BY ITS MANAGING PARTNER, MOHD.HUSSAIN SHARIEF ...PETITIONER AND 1. HINDUSTAN PETROLEUM CORPORATION LTD, REGD.OFFICE AT 17, JAMSHEDJI TATA ROAD, MUMBAI- 400 020 REPRESENTED BYITS CHIEF REGIONAL MANAGER & DULY CONSTITUTED ATTORNEY, VISAKHA REGIONAL OFFICE, PETRO NILAYAM, POST BOX NO.135, 2. INTIYAZ BEGUM W/O GALIB SHARIFF, AGED 83 YEARS, OCC BUSINESS, R/O. APIVARAPUPETA,ELURU, WEST GODAVARI DISTRICT. 3. MOHD IRAN SHARIFF S/O GALIB SHARIFF, AGED 31 YEARS, OCC BUSINESS, R/O. APIVARAPUPETA,ELURU, WEST GODAVARI DISTRICT. RR 2 AND 3 ARE IMPLEADED AS PER C.O.DT.21/1/2020 IN IA.NO.1/2018. ...FIRST RESPONDENT(S): Counsel for the Petitioner: 1. N SIVA REDDY Counsel for the First respondent(S): 1. B V KRISHNA RAO 2. G VASANTHA RAYUDU The Court made the following: 2 JS,J W.P.No.23768 of 2007 ORDER: This Writ Petition, under Article 226 of the Constitution of India, is filed by the petitioner seeking the following relief: “……to issue a Writ, order or direction more particularly one in the nature of Writ of Mandamus or any other appropriate Writ, declaring the order bearing No.Ref.VRO/TAK/LVR/RET, dated 05-11-2007 issued by the Chief Regional Manager and Duly Constituted Attorney at Visakhapatnam of the respondent Corporation as illegal, arbitrary and void and consequently direct the respondent to continue the petitioner as its Dealer ….” 2. Heard the arguments of learned counsel for the petitioner and learned counsel for the respondents, and perused the material available on record. 3. Hindustan Petroleum Corporation Limited entered into a Memorandum of Agreement dated 03.04.2003 with the petitioner herein for operating its outlet at Stadium Road, Eluru, West Godavari District. Followed by random inspection on 18.12.2006 undertaken by the Executive Officer, Quality Control Wing (SZ) of the first respondent Organisation, the inspecting officer submitted his report on 18.12.2006. Thereafter, the first 3 JS,J W.P.No.23768 of 2007 respondent Organisation, basing on the said inspection report, issued a notice on 12.2.2007, calling upon the petitioner to submit explanation within (7) days. On 20.2.2007, the petitioner submitted his explanation to the said notice. 4. Thereafter, the first respondent Organisation issued a show cause notice dated 09.08.2007, calling upon the petitioner to show cause as to why action as deemed fit including termination of dealership agreement should not be taken against the petitioner as provided under Clauses 15, 16, 22, 42 and 55(K) of the Dealership Agreement. In response to the said show cause notice, petitioner submitted explanation on 17.08.2007. Thereafter, by way of an order vide Ref.No.VRO/TAK/LVR/RET dated 05.11.2007, the first respondent terminated the dealership agreement on the ground that the petitioner violated Clauses 15, 16, 22, 42 and 55(K) of the Dealership Agreement dated 03.04.2003. This writ petition challenges the validity and legal sustainability of the said order passed by the first respondent herein. 5. This Court on 07.11.2007, while ordering notice before admission, granted interim suspension of the said order. 4 JS,J W.P.No.23768 of 2007 Responding to the notice issued by this Court, a counter affidavit is filed by the first respondent. It is contended by the learned counsel for the petitioner that the reasons assigned in the impugned order of termination are different from that of the allegations levelled against the petitioner in the show cause notice and on non-existent grounds, the first respondent terminated the dealership agreement. It is further contended by the learned counsel for the petitioner that even as per the two show cause notices dated 12.02.2007 and 09.08.2007, the totaliser seals were intact, but the first respondent passed the order under challenge on the ground that the petitioner used hexagonal nuts instead of rectangular nuts for tightening the totaliser to the dispensing unit and the first respondent did not issue any show cause notice to the said effect. It is further submitted by the learned counsel that the stand taken by the first respondent herein that the present Writ Petition is not maintainable under Article 226 of the Constitution of India in view of availability of arbitration clause cannot be sustained. It is eventually submitted by the learned counsel for the petitioner that the impugned action, which culminated in the termination of 5 JS,J W.P.No.23768 of 2007 dealership agreement is illegal, arbitrary and unreasonable and violative of Articles 14 and 19(1)(g) of the Constitution of India. In support of his submissions and contentions, the learned counsel places reliance on the following judgments. 1. Harbanslal Sahnia and another v. Indian Oil Corporation Ltd., and others1. 2. Union of India and others v. Tantia Construction Private Limited.22 3. Order of this Court in W.P.No.12355 of 2007 dated 6.2.2013, as confirmed in W.A.No.517 of 2013 dated 24.4.2013. 6. On the contrary, it is contended by the learned Standing Counsel for the first respondent Organisation that there is no illegality nor there is any procedural infirmity in the impugned order and in the absence of the same, the impugned order is not amenable for any judicial review under Article 226 of the Constitution of India. It is further contended by the learned counsel that even as per the inspection report, seals were not intact, as such, the impugned action cannot be faulted. It is further contended by the learned Standing Counsel that the 1 (2003) 2 SCC 107 2 (2011) 5 SCC 697 6 JS,J W.P.No.23768 of 2007 present writ petition is not maintainable in view of availability of arbitration clause in the dealership agreement. 7. In the above background, the issues that emerge for consideration of this Court are (1) Whether the present writ petition is maintainable? and (2) Whether the impugned order of termination is sustainable and tenable? 8. Issue No.1: (1) The principal contention of the learned Standing Counsel for the first respondent Corporation is that in view of the availability of alternative remedy of arbitration as provided under clause 66 of the Dealership Agreement, the present writ petition is not maintainable. On the other hand, it is the contention of the learned counsel for the petitioner that the present writ petition is maintainable under Article 226 of the Constitution of India and at this length of time, this writ petition cannot be rejected on the ground of existence of arbitration clause. In support of the said submissions, the learned counsel places reliance on 7 JS,J W.P.No.23768 of 2007 the judgments referred supra. (2) In the judgments referred to by the learned counsel for the petitioner supra-in Harbanslal Sahnia and another v. Indian Oil Corporation Ltd., (1 supra), Union of India and others v. Tantia Construction Private Limited (2 supra) and Order of this Court in W.P.No.12355 of 2007 dated 6.2.2013, as confirmed in W.A.No.517 of 2013 dated 24.4.2013, the Hon’ble Apex Court and this Court held in favour of maintainability of the writ petition when the impugned action is based on non-existing grounds. (3) It is to be noted that the present writ petition was entertained and this Court granted interim suspension of the impugned order on 07.11.2007 and admitted the writ petition as long back as on 08.06.2009 and the matter is pending since then. (4) A perusal of the inspection report dated 18.12.2006, which is placed on record, does not disclose anything with regard to usage of hexagonal nuts instead of 8 JS,J W.P.No.23768 of 2007 rectangular nuts for tightening the totaliser to the dispensing unit. Therefore, in the considered opinion of this Court, the first respondent passed the order of termination on a non-existent ground. Therefore, the order passed by this Court in W.P.No.12355 of 2007 is clearly applicable to the facts of the present case. Therefore, this Court is not inclined to consider the contention of the learned counsel for the first respondent that in view of availability of alternative remedy, the present writ petition is not maintainable. In fact, in Dr.Balkrishna Agarwal v. State of U.P. and others3, the Hon'ble Apex Court considered the said issue and held that the High Court should not have non- suited the applicant on the said ground of availability of alternative remedy and decided the matter on merits. Therefore, Issue No.1 is answered in favour of the petitioner and against the first respondent. 9 JS,J W.P.No.23768 of 2007 9. Issue No.2: (1) It is not the case of the first respondent Organisation that there is variation of stock and there is manipulation. In the show cause notice dated 12.02.2007 the first respondent mentioned that the totaliser seals were intact. In the show cause notice dated 09.08.2007, the first respondent stated that the totaliser seals were found to be not intact. Coming to the impugned order, the first respondent authority passed the said order on the ground that the petitioner herein used hexagonal nuts instead of rectangular nuts for tightening the totaliser to the dispensing unit. In fact, the said ground was not mentioned in the notice dated 12.02.2007 or in the notice dated 09.08.2007. In this context, it may be appropriate to refer to the order passed by this Court in W.P.No.12355 of 2007 dated 06.02.2013, in which, this Court held as under: 10 JS,J W.P.No.23768 of 2007 “Moreover, when there is no allegation in this regard in the inspection report, there is no justification on the part of the first respondents to charge the petitioner with the said allegation and this amounts to violation of principles of natural justice and on this ground, the impugned termination is liable to be set aside”. 10. In view of the above, Issue No.2 is also answered in favour of the petitioner and against the first respondent. 11. For the aforesaid reasons, the Writ Petition is allowed, setting aside the order passed by the first respondent herein vide Ref.No.VRO/TAK/LVR/RET dated 05.11.2007. There shall be no order as to costs. As a sequel, miscellaneous petitions pending, if any, shall stand closed. __________________________ JUSTICE SUMATHI JAGADAM Date: 10.09.2025 Ivd 3(1995)1 SCC 614 THE HONOURABLE SMT JUSTICE SUMATHI JAGADAM WRIT PETITION No.23768 of 2007 Dated: 10.09.2025 Ivd