THE HON’BLE SRI JUSTICE VENKATESWARLU NIMMAGADDA WRIT PETITION No.21412 OF 2024 ORDER:- 1. The writ petition is filed under Article 226 of the Constitution of India, challenging the action of Respondent Nos.2 to 5 in terminating the dealership of M/s. Sri Satya Sai Oil Filling Station, SAP Code:127841 at Survey No.335/B and 336 Chillakuru Village & Mandal, SPSR Nellore, AP -524412 by issuing Notice dated 16.09.25024 in Ref.No.TDO/R/Termination/127841 with immediate effect as illegal, arbitrary and consequently to set aside the termination of dealership vide notice dated 16.09.2024. 2. Originally, IOCL entered into an agreement with Respondent No.6 appointing him as a dealer for retail sales and supply of Petroleum products on certain terms and conditions under the name and style of M/s. Sri Satya Sai Oil Filling Station. The agreement shall remain in force for 15 years from 17.07.2001. As per the terms of agreement, Respondent No.6 continued business for a period of 5 years. On 28.04.2006, Respondent No.6 entered into partnership agreement with the petitioner and thereafter, Respondent No.6 is not able to continue the business. Thereafter, the petitioner carried on the business under the same name and style as dealer of Respondent Nos.2 to 5. 2 NV,J W.P.No.21412 of 2024 3. While the things stood thus, Respondent No.5 addressed a letter dated 19.09.2018 stating that there was deviation in the dealership set up and suggested one time option to regularize. Thereafter, on 09.02.2019 and 17.03.2021, reminders were given by the same authority advising to submit reconstitution proposal to regularize the dealership. Petitioner submitted application for reconstitution of the dealership on 04.09.2023 duly paying the requisite fee. Respondent No.4 issued Show Cause Notice dated 11.05.2024 for termination of dealership. In reply, the petitioner offered explanation and requested to withdraw the show cause notice by granting three months time for the purpose of proceeding with the reconstitution of the dealership. However, Respondent No.5 issued Termination Notice dated 16.09.2024, terminating the dealership of the petitioner. Challenging the Termination Notice dated 16.09.2024, the present writ petition is filed. 4. On behalf of Respondent Nos.2 to 5 – Corporation, Respondent No.3, Divisional Retail Head, Tirupati Divisional Office, IOCL filed counter affidavit. The main allegations are as follows:\ i. The petitioner is not the authorized dealer with whom the corporation has entered into an agreement and the termination proceedings are also not addressed to the petitioner. A person 3 NV,J W.P.No.21412 of 2024 who is a stranger to the dispute cannot be allowed to interfere into the dispute. The petitioner has no right in the said retail outlet without there being any agreement with the respondent Corporation, as such it is an abuse of process of law. Since the retail outlet was being operated by an unauthorized third party i.e. the writ petitioner without the consent of the Corporation, the petitioner lacks locus standi and the writ petition is not maintainable. ii. Though the authorized dealer has to submit the Dealer Annual Return (DAR) to the Corporation every two years, DAR’s for the Financial Year 2019-17 were submitted to the Corporation on 12.04.2018 wherein the name of the petitioner was shown as authorized dealer instead of the 6th respondent. Further, the balance sheet for the Financial Year 2016-17 shown the petitioner and 6th respondent as partners without there being any prior approval from the respondent corporation, in violation of the terms of the dealership agreement. The alleged partnership between the petitioner and 6th respondent came to light when the petitioner was shown as partner in the said balance sheet. 4 NV,J W.P.No.21412 of 2024 iii. Upon observing that the petitioner was shown as partner of the 6th respondent proprietorship firm, the Corporation issued letter to the 6th respondent but not the petitioner, informing about the deviation in dealership and the 6th respondent was advised to regularize the same as one time option. The corporation issued reminders dated 19.02.2019, 11.05.2020, 07.12.2020, 17.03.2021 & 23.02.2022 to regularize the dealership. The 6th respondent being the authorized dealer did not respond to any of the communications addressed by the corporation, as such show cause notice dated 16.08.2022 was issued for entering into unauthorized dealership. iv. No explanation to the show cause notice was received from the 6th respondent even though an opportunity of personal hearing was granted by the corporation on 30.08.2023. But, the petitioner submitted a reconstitution application which was rejected by the Corporation, since the proposal to reconstitute the dealership firm was not in consonance with the policy guidelines of the corporation as DAR for FY 2022-23 shown that another unuauthorized person i.e Ms. Divya Teja Reddy, was added as partner without the approval of the Corporation. Thus, the 5 NV,J W.P.No.21412 of 2024 dealership changed its set up multiple times without prior permission of the Corporation. v. When the termination notice was issued by the Corporation to the 6th respondent to submit an explanation for violating Clauses 35, 45, 46 & 54 of the Dealership Agreement dated 27.07.2001, the petitioner who is not an authorized dealer submitted explanation dated 12.06.2024 demonstrating that the 6th respondent is not operating the said dealership and it is being operated by an unauthorized third party. vi. The Corporation granted personal hearing to the 6th respondent on 28.06.2024 to explain the deviations, making it clear that the 6th respondent who is the authorized delaer shall appear in person and the Corporation does not recognize the petitioner as the partner of the said dealership. Since the 6th respondent did not appear in person, Termination proceedings dated 16.09.2024 were issued terminating the dealership agreement and requested to dismiss the writ petition. 5. During hearing, Sri D. Koteswara Rao, learned counsel for the petitioner, while reiterating the contentions urged in the affidavit, would submit 6 NV,J W.P.No.21412 of 2024 that, following Respondent No.6’s departure from the business due to personal reasons, the petitioner has been independently managing the retail outlet as the dealer, submitting returns, Daily Activity Reports (DARs), and balance sheets. The bank accounts further demonstrate that the petitioner is the individual acting as the dealer and continuing to manage the dealership. Additionally, letters sent to the respondents on 19.09.2018, 19.02.2019, and 11.03.2020 clearly establish that the petitioner is the party with a vested interest in the dealership. He contends that the explanation provided by the petitioner in response to the show cause notice was rejected by the respondent corporation, resulting in the petitioner being deprived of a fair and reasonable opportunity. Furthermore, given that the petitioner has consistently corresponded with the respondent corporation, was permitted to issue public notices for objections on behalf of the corporation, and has been allowed to operate the retail outlet for over 17 years, the petitioner qualifies as an aggrieved party. 6. The counsel argues that terminating the dealership, despite the original agreement being with Respondent Nos. 5 & 6, would significantly impair the petitioner. Thus, it is contended on behalf of the petitioner that the entire action by the Corporation is arbitrary, mala fide and executed with ill 7 NV,J W.P.No.21412 of 2024 motive. Therefore, the writ petition is maintainable and the impugned proceedings are liable to be set-aside. 7. On the other hand, Sri Pasala Ponna Rao, learned Deputy Solicitor General appearing for Respondent Nos.1 to 5 would submit that, the petitioner is not the authorized dealer with whom the corporation has entered into agreement, as such, the petitioner does not have locus standi to approach this Court. Moreover, a stranger to the dispute cannot be allowed to be interfered. He submits that, when the Corporation sought for personal appearance of the 6th respondent, he was absent and unauthorized persons were operating the dealership without proper reconstitution. After the reconstitution application was rejected, the dealership did not relegate to its original approved set up and continued to be operated by the unauthorized persons. He further asserts that, the petitioner on one hand claims that he entered into a partnership agreement with the 6th respondent and on the other hand alleges that the 6th respondent walked out of the business in 2006 itself, which is clear contradiction to his own statements made in the affidavit, showing that the retail outlet is being operated by unauthorized persons. He submits that, the petitioner is operating the retail outlet for the last 17 years unauthorizedly without any prior consent of the respondent corporation which is in clear violation of the dealership agreement. 8 NV,J W.P.No.21412 of 2024 8. He submits that, the reconstitution proposal if any, should be made by Respondent No.6, the original dealer, but not by any third party like the petitioner, who does not have any locus standi or right to submit such application. The respondent corporation followed due procedure as contemplated under the guidelines of the Dealership Agreement without any deviation while issuing show cause notice. Even after receipt of the same, Respondent No.6 did not respond to the application. Having no other option, the corporation issued impugned termination proceedings, terminating the dealership agreement. Therefore, the petitioner has no locus standi either to file the writ petition or to challenge the order of termination of the respondent, as such, the writ petition is liable to be dismissed. 9. He further submits that, Clauses 35, 45 & 46 of the Dealership Agreement permanently restrains a dealer from transferring his interest in the dealership and not to allow any other person, firm or company to use the premises or the outlet or any part thereof, except with the prior permission of the Corporation in writing. Therefore, Respondent No.6 is debarred from transferring his interest by entering into arrangement of contract of understanding to any third person/petitioner herein. Clause 54 empowers the corporation to terminate the dealership agreement upon breach of the covenants of the dealership agreement by the dealer i.e. Respondent No.6. 9 NV,J W.P.No.21412 of 2024 Thus, it is contended by the learned Deputy Solicitor General that, the Corporation has terminated the dealership agreement after the above clauses are violated by the original dealer/Respondent No.6. 10. None appeared on behalf of Respondent No.6 and no counter affidavit is filed. 11. Heard Sri D. Koteswara Rao, learned counsel for the petitioner and Sri Pasala Ponna Rao, learned Deputy Solicitor General for the Respondent Nos.1 to 5 – Corporation. 12. Upon perusing the material available on record, the points that arise for consideration are as follows:\ i. Whether the petitioner is a party to the contract. If so, is the petitioner entitled to enforce the terms of contract? ii. Whether the petitioner has locus standi to seek Writ of Mandamus? iii. Whether the termination proceedings dated 16.09.2024 issued by the respondents are in consonance with the terms and conditions of the Delaership Agreement? 10 NV,J W.P.No.21412 of 2024 P O I N T No.1 13. Undisputedly, the respondent Corporation entered into Dealership Agreement with the sole proprietor of M/s. Sri Satya Sai Oil Filling Station - Respondent No.6 on 27.07.2001 for running retail outlet at Chillakur, Gudur for a period of 15 years from the date of the agreement. The said Dealership is continuing in favour of Respondent No.6 till the date of termination i.e. 16.09.2024. Admittedly, after completion of initial period of 15 years, as per Clause 3 of the Dealership Agreement, the agreement shall continue thereafter for successive periods of five years until it is determined by either party. 14. In the present case, after completion of initial period of 15 years, there is no express renewal of dealership for successive periods of five years in compliance of Clause 3 of the Dealership Agreement, but operations have been permitted till date of termination in the name of the 6th respondent. 15. The existence of alleged partnership deed between the petitioner and the 6th respondent came to light on 12.04.2018 when the name of the petitioner was included in the balance sheet of the firm submitted with the DAR for the FY 2016-17 and shown as authorized dealer/operator instead of the 6th respondent. The same is contradicted by the petitioner by filing 11 NV,J W.P.No.21412 of 2024 evidence that the petitioner has been running the said retail outlet since 2006 by virtue of current account in the name and style of Sri Satya Sai Oil Filling Station has been operating as represented by the petitioner, through which the firm and the respondent corporation transacted all these years. 16. After coming to know about the deviations with regard to Clauses 3 & 35 of the Dealership Agreement, the respondent corporation issued letters to Respondent No.6. However, the fact remains that Respondent No. 6 neither submitted any proposal to regularize the firm nor requested the respondent corporation to accept the petitioner's proposal for its recognition as his proprietary concern. In the absence of any written consent or application from the 6th respondent for the reconstitution of the dealership, the petitioner's proposal for reconstitution was rightly rejected by the respondent corporation, as it constitutes a third-party application. 17. The existence of a partnership deed between the petitioner and the 6th respondent and the firm along with the petitioner being allowed to operate the retail outlet from 2006 to 2018, and subsequently demanding the reconstitution of the firm, is in contradiction with the terms of the dealership agreement. Merely continuing the dealership agreement after its expiration, without any explicit proceedings for renewal in the public interest, does not 12 NV,J W.P.No.21412 of 2024 constitute a renewal in favor of the petitioner. Instead, it is done solely for the convenience of the public. 18. Privity of Contract is a common law doctrine that states that only the parties to a contract can either enforce the benefit or be held liable for any obligation under the contract. No rights can be conferred or obligations can be imposed by a contract on anyone who is not a party to it. Hence, any third party or a stranger who is not a party to a contract cannot enforce the contract on itself, unless it is expressly provided for in the contract or purports to confer such benefit. Only those persons who have an interest in the contract have the recognition in law to protect them. Privity of Contract has three broad effects. (1) A third party cannot receive a benefit if he is not a party to that contract; (2) A third party cannot be held liable under a contract if he is not a party to that contract; (3) A third party cannot enforce a contract if he is not a party to that contract 19. In Tweddle vs. Atkinson1, the importance of contractual privity and consideration is emphasized by the Queen’s Bench Division. It clarified that a 1 [1861] EWHC QB J57 13 NV,J W.P.No.21412 of 2024 third party cannot enforce a contract to which they are not a party, even if they were beneficieiares of the promises made. 20. In Dunlop Pneumatic Tyre Co. Ltd vs. Selfridge Ltd2, the House of Lords decision hinged on the principles of contract law and the concept of privity of contract. In the said case, the Court held that Dunlop, despite being the manufacturer of the tyres supplied to Dew, could not claim damages from Selfridge because Dunlop was not a party to the contract between Dew and Selfridge. The Court reasoned that a contract is a legally binding agreement between two or more parties, and Dunlop was not privity to the contract between Dew and Selfridge, as such, Dunlop had no legal standing to enforce the terms of contract or seek compensation for any alleged breach. 21. Applying the principle laid down in the above judgments to the present facts of the case, the petitioner herein is a stranger to the contract between the Corporation and Respondent No.6/Original Dealer. There is no contractual relationship between the petitioner and the respondent Corporation. Furthermore, no document is produced to establish the contractual relationship between the petitioner and the respondent Corporation. Therefore, when there is no contractual relationship between the petitioner and the Corporation, the question of reconstitution does not arise. Hence, the 2 [1915] AC 847 14 NV,J W.P.No.21412 of 2024 petitioner being the third party cannot enforce a contract to which he is not a party, as such, he has no legal right to enforce the terms of contract. Accordingly, Point No.1 is answered against the petitioner and in favour of the respondents. P O I N T No.2: 22. Learned counsel for the petitioner argued that the petitioner, as the aggrieved party, has locus standi and is entitled to seek a writ of mandamus and petitioner also provided with material evidence as to how he became an aggrieved party, as stated above. However, as contended by the respondent that, since the petitioner is a third party to the dispute and there is no contractual relationship between the petitioner and Corporation, the respondent corporation never transacted with the petitioner. Therefore, the petitioner lacks locus standi to seek a writ of mandamus under the extraordinary jurisdiction of this Court is contrary to the facts narrated hereunder. The petitioner being a third party to the agreement not entitled to expose any personal grievance in respect of an agreement executed between the Corporation and Respondent No.6, but having allowed to continue the operations of the subject retail outlet on behalf of Respondent No.6 , which is supported by ample evidence i.e. existence of an express Partnership Deed 15 NV,J W.P.No.21412 of 2024 between the petitioner and Respondent No. 6, and the petitioner has been operating the retail outlet and the current account in the name of Sri Satya Sai Filling Station, which indicates that the petitioner has been running the outlet in violation of the Dealership Agreement. Therefore, the petitioner is indeed an aggrieved party and thus entitled to invoke the jurisdiction of this Court, hnce the writ petition is maintainable and the petitioner has locus and he is an aggrieved party. Accordingly, the point is answered. P O I N T No.3 23. One of the contentions raised by the petitioner is that, the petitioner entered into Partnership Deed with Respondent No.6 on 28.04.2006 and carrying on the business of the retail outlet without presence/participation of Respondent No.6. In Paragraph No.4, the petitioner stated that a letter was addressed to him by Respondent No.5 on 19.09.2018 stating that there was a deviation in the dealership set up and suggested one time option to regularize the firm as permitted/required. But the firm as permitted/required. But, the respondent Corporation in Paragraph No.6 of the counter affidavit categorically stated that, the Corporation has no knowledge about any partnership agreement dated 28.04.2006 between the petitioner and the 6th respondent and the alleged partnership came to light when the petitioner was 16 NV,J W.P.No.21412 of 2024 shown as partner in the balance sheet submitted with DAR for the FY 2016- 2017. 24. At this juncture, it is apposite to refer to Clause 35 of the Dealership Agreement and it reads as follows: “The Dealer shall not sell, assign, mortgage, charge or part with or otherwise transfer his interest in the dealership or any light or interest or benefit conferred by this Agreement of grant any license in connection with the said premises and/or outfil or any part thereof to any person firm or company nor allow any other person, firm or company to use the premises or the outlet or any part thereof except to the extent necessary under the terms of Agreement and specifically permitted in writing by the Corporation” 25. From Clause 35, it is evident that the original Dealer/Respondent No.6 shall not sell, assign or transfer his interest in the dealership to any person, except with the prior permission of the corporation. The respondent corporation correctly rejected the reconstitution proposal submitted by the petitioner, asserting that the 6th respondent is the original dealer, not the petitioner, and therefore the petitioner has no authority to initiate the reconstitution proposal or act on behalf of the retail outlet firm. The respondent corporation never permitted the petitioner to act as the dealer or entertained the reconstitution proposal. In accordance with the Dealership Agreement, the 17 NV,J W.P.No.21412 of 2024 respondent corporation corresponded exclusively with the 6th respondent, not with the petitioner. However, the petitioner showed excessive eagerness and responded to every letter from the corporation. Further, the DAR for FY 2022- 23 showed another unauthorized person by name Ms. Divya Teja Reddy has been added as a partner without the approval of the corporation. 26. Clause 46 of the Dealership Agreement reads as follows: “Except with the previous written consent of the Corporation (i) The Dealer shall not enter into any arrangement contract of understanding whereby the operations of the dealer hereunder are or may be controlled carried out and/or financed by any other person firm or company whether directly or indirectly and whether in whole or in part. (ii) The Dealer himself (if he be an individual) or partners/members or any of them of the Dealer (if the Dealer is a firm/co-operative society) shall not take up any other employment or engage in any other business apart from the running of the retail outlet which is the subject matter of this Agreement. (iii) The Dealer (if it be a firm or a cooperative society) shall not effect any change in its constitution whether in the identity of its partners/members or in the share/share holding of any of them, or in the terms of the Deed of Partnership or of the Bye-laws as the case may be in the 18 NV,J W.P.No.21412 of 2024 event of the death of any partners/member of a firm/cooperative socieity which has been appointed as a Dealer hereunder the surviving partners/members hereby agree to indemnity and keep indemnified the Corporation against any claims or demands which may be made by the heirs of the deceased partner/member.” 27. From the above, it is clear that the Corporation has to give its written consent to the original dealer/Respondent No.6 either to enter into any contract with any person or to effect change in the constitution. But, no consent is given to Respondent No.6 to enter into agreement/partnership deed with the petitioner or to effect change in the constitution of the Dealership Agreement, by including unauthorized persons. Therefore, in view of non-compliance of Clauses 35 & 46 of the Dealership Agreement by the petitioner and Respondent No.6, neither the petitioner nor Respondent No.6 is entitled for any relief in this writ petition against the Corporation. 28. Another argument put forth by the learned counsel for the petitioner is that, despite receiving the application for reconstitution of the dealership and the explanation to the show cause notice submitted by the petitioner, the respondent corporation failed to consider them, which is in violation of the principles of natural justice and constitutes a failure to ensure fair play by the 19 NV,J W.P.No.21412 of 2024 corporation. In issuing the termination order, at no point did the petitioner’s claim was considered either to be a partner or a proprietor until the letters for regularization of the firm were issued by the corporation. Therefore, the petitioner is running the subject retail outlet appears to be as an agent on behalf of Respondent No.6, even though the alleged Partnership Deed was executed between the petitioner and Respondent No.6. 29. Undoubtedly, the respondent issued reminder letters dated 09.02.2019, 11.05.2020, 07.12.2020, 17.03.201 & 23.02.2022 to regularize the dealership and show cause notice dated 16.08.2022 for entering into an unauthorized dealership set up, without following due procedure as contemplated under the guidelines, terms and conditions of the Dealership Agreement. But, Respondent No.6 never submitted any application for reconstitution proposal nor submitted any explanation to the show cause notice. Hence, issuance of termination of dealership agreement cannot be found fault with. More so, the petitioner neither passes nor vested with enforceable rights to entitle any relief to set-aside the order of termination dated 16.09.2024, in view of non- compliance of Clauses 35 & 46 of the Dealership Agreement. Accordingly, the point is answered against the petitioner and in favour of Respondent Nos.1 to 5. 20 NV,J W.P.No.21412 of 2024 30. In view of my foregoing discussion, this Court is of the view that the petitioner is not entitled to any relief of setting aside the order of termination of dealership, in view of that he does not possess any right or claim regarding the infringement of fundamental rights guaranteed under the Constitution of India, nor any claim for the violation of the terms of the Dealership Agreement, since the petitioner being the third party the subject contract. As such, he is not entitled to enforce the terms of contract on his own without cooperation or coordination of Respondent No.6, thereby, the petitioner is disentitled to main relief as prayed Article 226 of the Constitution of India. Hence, termination proceedings dated 16.09.2024 issued by the respondents are in consonance with the terms and conditions of the Dealership Agreement. However, if the petitioner and the 6th respondent come forward to alter the name of firm as instructed by the respondent corporation, in terms of the dealership agreement and guidelines for alteration/constitution of the firm, the respondent corporation shall consider the same in accordance with law. 31. In view of the reasons stated above, writ petition is disposed of, directing the respondent Corporation to consider the application of the petitioner and Respondent No.6 if jointly come forward with the petitioner to revive and reconstitute the Dealership Firm, in accordance with law. No costs. 21 NV,J W.P.No.21412 of 2024 32. Consequently, miscellaneous applications pending if any, shall also stand dismissed. _____________________________________ JUSTICE VENKATESWARLU NIMMAGADDA Date:04.04.2025 SP 22 NV,J W.P.No.21412 of 2024 THE HON’BLE SRI JUSTICE VENKATESWARLU NIMMAGADDA WRIT PETITION No.21412 OF 2024 Date: 04.04.2025 W SP