Dismissed

Indian Oil Corporation Ltd., v. M/S C B Bramhasuraiah

Karnataka HC12 Sept 2024RSA/2045/2018

Case brief

AI extract

What is this about?

Regular second appeal against a decree confirming a dealership agreement with Indian Oil Corporation. The appellant challenged the First Appellate Court's reliance on Marketing Discipline Guidelines. This court dismissed the appeal, holding the High Court was correct that termination requires a third instance of violation.

What did the court decide?

Regular second appeal dismissed; Judgment and Decree dated 30.06.2018 confirmed; Suit of the plaintiff decreed.

Indian Oil Corporation Ltd., Vs M/S C B Bramhasuraiah — Specific Performance | Karnataka HC (2024)

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1 - NC: 2024:KHC:37458 RSA No. 2045 of 2018

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 12^TH DAY OF SEPTEMBER, 2024

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BEFORE

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THE HON'BLE MR JUSTICE E.S.INDIRESH REGULAR SECOND APPEAL NO. 2045 OF 2018 (DEC/INJ)

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BETWEEN:

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INDIAN OIL CORPORATION LTD., REGIONAL OFFICE, NO.139 NUNGAMBAKAM HIGH ROAD CHENNAI-600 034 TAMIL NADU REPRESENTED BY ITS REGIONAL MANAGER

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SENIOR DIVISIONAL MANAGER INDIAN OIL CORPORATION LTD DIVISIONAL OFFICE NO.29, P.KALINGA RAO ROAD MISSION ROAD BENGALURU-560 027

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…APPELLANTS

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(BY SRI. AMBRISH B.N, ADVOCATE FOR SRI. SANTOSH S. NAGARALE, ADVOCATE)

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Digitally signed by SHARMA ANAND CHAYA

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Location: High Court of Karnataka

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AND:

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M/S C.B. BRAMHASURAIAH NOW CHANGED AS M/S N.S. PETROLEUM AGENCIES A PARTNERSHIP FIRM, BANUMAIAH STREET, MYSURU PIN CODE-570 001 REPRESENTED BY ITS PARTNER C.B. ASHWIN

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…RESPONDENT

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(BY SRI. SUBRAMANYA R, ADVOCATE)

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NC: 2024:KHC:37458 RSA No. 2045 of 2018

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THIS RSA IS FILED UNDER SEC.100 OF CPC 1908 AGAINST THE JUDGMENT AND DECREE DATED 30.06.2018 PASSED IN RA.NO 141/2014 ON THE FILE OF THE II ADDITIONAL DISTRICT JUDGE, MYSURU ALLOWING THE APPEAL AND SETTING ASIDE THE JUDGMENT AND DECREE DATED 22.02.2013 PASSED IN OS.NO.83/2002 ON THE FILE OF THE C/CHARGE OF V ADDITIONAL I CIVIL JUDGE AND JMFC, MYSORE.

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THIS APPEAL, COMING ON FOR FINAL HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE E.S.INDIRESH

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ORAL JUDGMENT

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This Regular Second Appeal is preferred by the defendants, challenging the judgment and decree dated 30.06.2018 passed in R.A.No.141/2014 on the file of the II Additional District Judge at Mysuru, allowing the appeal and setting aside the judgment and decree dated 22.02.2013 passed in O.S.No.83/2002 on the file of the V Additional First Civil Judge & JMFC., at Mysuru, dismissing the suit of the plaintiff.

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For the sake of convenience the parties are referred to as per their rank before the Trial Court.

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It is the case of the plaintiff that the plaintiff

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and the defendant No.1, have entered into a dealership

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3 - NC: 2024:KHC:37458 RSA No. 2045 of 2018

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agreement dated 01.04.2000 to run the business in sale of petrol, diesel and other petroleum products as a dealer under the defendants. It is further stated in the plaint that there were certain family disputes between the partners of the plaintiff's partnership Firm, that is between C.B. Ashwin and his father - C.B. Bramhasuraiah. It is also stated in the plaint that the father of C.B. Ashwin, had lodged a criminal case against his son on 08.05.2000 alleging that, his son had procured a tanker containing Naptha Resin for adulterating the petrol to be sold in the petrol bunk. In this regard, the jurisdictional police have registered criminal case in Crime No.67/2000. On the basis of the said criminal action, the 2^nd respondent had issued show-cause notice dated 09.05.2000, seeking explanation from the plaintiff. It is also stated in the plaint that the defendant has sought for explanation in respect of the termination of the dealership in furtherance

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of the pending case in Crime No.67/2000. It is pleaded in the plaint that the plaintiff had suitably replied to the show cause notice issued by the defendants, however, without

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NC: 2024:KHC:37458 RSA No. 2045 of 2018

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considering the same, the defendants have terminated the Dealership Agreement with the plaintiff on 24.01.2001. Feeling aggrieved by the same, the plaintiff has presented suit to declare that the letter dated 08.05.2000 directing the plaintiff to suspend the sale of petrol, diesel, etc., in the suit schedule property as void; inter alia sought for direction to the defendants to resume the supply of petrol, diesel, etc., in terms of the Dealership Agreement dated 01.04.2000.

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After service of summons, the defendants entered appearance and filed detailed written statement and took up a contention that the jurisdictional police have raided the petrol bunk and registered a case against the plaintiff for the offence punishable under Section 3 of the Essential Commodities Act, 1955; Motor Spirit and High Speed Diesel (Prevention of Malpractices in Supply and

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Distribution) Order 1996; Section 23 of the Petroleum Act 1934; and Section 420 of IPC. It is also stated in the written statement that the order of termination is in

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NC: 2024:KHC:37458 RSA No. 2045 of 2018

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accordance with law and same is in terms of the Dealership Agreement and accordingly, sought for dismissal of the suit.

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On the basis of the pleadings on record, the

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Trial Court has framed the issues for its consideration. In order to establish their case, plaintiff had examined one witness as PW.1 and produced 9 documents and same were marked as Exs.P1 to P9. Defendants have examined one of their officials as DW.1 and got marked 10 documents as Exs.D1 to D10. The Trial Court, after considering the material on record, dismissed the suit by judgment and decree dated 22.02.2013. Feeling aggrieved by the same, the plaintiff has preferred R.A.No.141/2014 before First Appellate Court and same was resisted by the defendants. The First Appellate Court after re-appreciating the material on record, by judgment and decree dated 30.06.2018, allowed the appeal and consequently, decreed the suit. Felling aggrieved by the

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6 - NC: 2024:KHC:37458 RSA No. 2045 of 2018

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same, the defendants have preferred this Regular Second Appeal.

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This Court by order 09.08.2021, formulated the following substantial question of law:

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"1. Whether the First Appellate Court has committed an error while considering the reasons assigned by the trial Court on Issue No.3 with regard to dealership agreement dated 01.04.2000?"

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Heard Sri.Ambrish B.N., learned counsel on behalf of Sri. Santosh.S.Nagarale, learned counsel appearing for the appellant and Sri Subramanya.R., learned counsel appearing for Caveator-respondent.

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It is submitted by Sri. Ambrish B.N., learned counsel appearing for the appellants that the trial Court having taken note of the factual aspects on record that the criminal case has been lodged against the plaintiff insofar as the adulteration of the petroleum products is concerned, had rightly dismissed the suit of the plaintiff. He further contended that, clause 56(a) to (l) of this aspect provides for the termination of the Dealership

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7 - NC: 2024:KHC:37458 RSA No. 2045 of 2018

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Agreement with the plaintiff and by exercising the said power by the defendant-Corporation has issued the order of termination by way of letter dated 08.05.2000, and therefore, the finding recorded by the First Appellate Court requires to be interfered with in this appeal. It is also the contention raised by the learned counsel appearing for the appellants that the Trial Court has exercised the discretion by appreciating the material on record, however, the First Appellate Court, in the absence of any perversity in the judgment and decree passed by the trial Court interfered with the same and therefore, the finding recorded by the First Appellate Court requires to be interfered with in this appeal. Finally, it is contended by the learned counsel appearing for appellants that the Marketing Discipline Guidelines as produced by the plaintiff before the First Appellate Court is not a part of the record and therefore, the First Appellate Court ought not to have followed the same and as such, sought for interference of this Court.

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8 - NC: 2024:KHC:37458 RSA No. 2045 of 2018

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Per contra, learned counsel Sri. Subramanya R.,

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appearing for the plaintiff /respondent argued that the criminal case hoisted against the plaintiff at the instance of the father of the plaintiff, was ended in filing of the 'B' report as per Ex.P.1 and therefore, he contended that the trial Court has committed an error in considering the evidence of DW.1 without appreciating the material on record. He submitted that the First Appellate Court after re-appreciating the material on record, by following the Marketing Discipline Guidelines, arrived at a conclusion to decree the suit of the plaintiff, which does not call for interference in this appeal.

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In the light of the submissions made by the learned counsel appearing for the parties, it is not in dispute that the Dealership Agreement dated 01.04.2000 was extended to the plaintiff by the defendantCorporation. The sole ground on which the termination letter dated 08.05.2000 issued by the defendantCorporation is that the plaintiff has illegally adulterated the

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NC: 2024:KHC:37458 RSA No. 2045 of 2018

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fuel and the said aspect has been taken into consideration by the jurisdictional Police while raiding the petrol bunk being run at the schedule property. Accordingly, it is the case of the defendants that the plaintiff has violated the terms and conditions in the Dealership Agreement. On the backdrop of these aspect, on careful examination of Ex.D1, wherein, the police authorities, after conducting investigation had filed 'B' report before the competent Criminal Court and accordingly, criminal case launched against the plaintiff was closed. It is also forthcoming from the report of the Regional Lab, Chennai-21 with regard to the Quality Control Test for Motor Gasoline that there is no adulteration of the fuel by the plaintiff. The terms and conditions of the Dealership Agreement under Clause 56(a), 56(b)(i) & (ii) and 56(k) reads as under:

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"56. Notwithstanding anything to the contrary herein contained, the Corporation shall be at liberty to terminate this Agreement forthwith upon or at any time after the happening of any of the following events, namely:-

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10 -

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NC: 2024:KHC:37458 RSA No. 2045 of 2018

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(a) If the Dealer shall commit a breach of any of the covenants and stipulations contained in the Agreement, and fall to remedy such breach within four days of the receipt of a written notice from the Corporation in that regard.

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(b) Upon

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(i) the death or adjudication as insolvent of the Dealer, if he be an individual.

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(ii) the dissolution of the partnership of the Dealer's firm or the death or adjudication as insolvent of any partner of the firm, if the Dealer be a firm;

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(k) If the Dealer shall either by himself or by his servants or Agents commit or suffer to be committed any act with, in the opinion of the Executive Director of the Corporation for the time being in Madras whose decision shall be final is prejudicial to the interest or good name of the Corporation or its products' the Executive Director shall not be bound to give reasons for such decision."

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In the backdrop of the terms and conditions

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sated in Ex.D3, I have carefully examined the clause 6 of chapter VII of Marketing Discipline Guidelines which reads as under:

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"6. If a dealer is found stocking/Selling LVI Lubes at / through the outlet, a show-cause notice would be issued to the concerned dealer, if the explanation from the dealer in response to the show-cause notice is found to be satisfactory, no further action is to be

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11 - NC: 2024:KHC:37458 RSA No. 2045 of 2018

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taken. In case, however, the explanation from the dealer is not satisfactory:

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i) Suspension of sales and supplies of all products for 15 days alongwith a fine of Rs.20,000/- in the first instance.

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ii) Suspension of sales and supplies of all products for 30 days alongwith a fine of Rs. 50,000/- in the second instance.

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iii) Termination in the third instance."

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Though the learned counsel appearing for the appellants contended that the said Marketing Discipline Guidelines have not been marked before the Trial Court, the said submission cannot be accepted as the Marketing Discipline Guidelines has been issued by the defendantCorporation and such other Corporations to be followed insofar as terminating the Dealership Agreement. In that view of the matter, taking into consideration the fact that

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the termination order has to be made at third party instance in the event, and not at the instance of the plaintiff having committed the violation at first and second instances and as such I find force in the submission made

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by the learned counsel appearing for the respondent.

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12 -

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NC: 2024:KHC:37458 RSA No. 2045 of 2018

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Therefore, taking into consideration as the finding recorded by the First Appellate Court particularly, with regard to paragraph Nos.22 and 24, I am of the view that the appellants have not made out a case for interference in this appeal. Accordingly, the substantial question of law framed above favours the plaintiff. In the result, I pass the following:

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ORDER

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(i) Regular Second Appeal is dismissed;

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(ii) Judgment and Decree dated 30.06.2018 passed in R.A.No.141/2014 by II Additional District Judge, Mysuru is confirmed;

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(iii) Suit of the plaintiff is decreed.

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SD/(E.S.INDIRESH) JUDGE

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PSJ

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List No.: 1 Sl No.: 52

Indian Oil Corporation Ltd., v. M/S C B Bramhasuraiah

Case brief

What is this about?

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Indian Oil Corporation Ltd., v. M/S C B Bramhasuraiah

Case brief

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