Full Judgment Text
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 5
PETITIONER:
HINDUSTAN PETROLEUM CORPORATION LTD. LTD.
Vs.
RESPONDENT:
MAYZUR ISLAM MALLICK AND ORS.
DATE OF JUDGMENT: 31/05/1999
BENCH:
Sujata V.Manohar, R.C. Lahoti,
JUDGMENT:
Mrs. Sujata V. Manohar, J.
M/s.Caltex (India) Ltd., the predecessor-in-interest
of the appellant M/s.Hindustan Petroleum Corporation Ltd.,
entered into two agreements both dated 30th of November,
1975 with respondent no.5 as the sole proprietor carrying on
business in the name and style of M/s.National Oil Trading
Co., granting respondent no.5 dealership in kerosene at two
places of business ? Bagnan and Kolaghat. These agreements
were replaced by two agreements both dated 6th of July, 1984
entered into by the appellant with respondent no.5 as the
sole proprietor carrying on business under the firm name and
style of M/s.National Oil Trading Co. granting him
dealership in kerosene at Bagnan and Kolaghat. The material
parts of Clauses 14 and 17 of these agreements are as
follows:
"14. The dealer shall not sell, assign, mortgage or
part with or otherwise transfer his interest in the
dealership or the right, interest or benefit conferred on
him by this agreement to any person. In the event of the
dealer being a partnership firm any change in the
constitution of the firm, whether by retirement,
introduction of new partners or otherwise howsoever will not
be permitted without the previous written approval of the
corporation notwithstanding that the corporation may have
dealings with such reconstituted firm or impliedly waived or
condoned the breach or default mentioned hereinabove by the
dealer. In the event of the death of any of the partners,
the dealer shall immediately inform the corporation giving
the necessary particulars of the heirs and legal
representatives of the deceased partner and it shall be the
option of the corporation either to continue the dealership
with the said firm or to have a fresh agreement of
dealership with any reconstituted firms or to terminate the
dealership agreement and the decision of the corporation in
that behalf shall be final and binding on all the parties
concerned. No claim on premature termination for
compensation or otherwise will be made or sustainable
against the corporation on account of such termination.
17. A. ...........
B. It shall be a paramount condition of the agreement
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 5
that the dealer himself (if he be an individual) or both the
partners of the dealer-firm (if the dealer is a partnership
firm consisting of two partners only) or the majority of the
partners of the dealer firm (if the dealer is a firm
consisting of more than two partners) or the majority of the
members of the dealer’s co-operative society (if the dealer
is a co-operative society), as the case may be, shall take
active part in the management and running of the dealership
and shall personally supervise the same and shall not under
any circumstances do so through any other person, firm or
body.
C. Except with the previous written consent of the
corporation. (i) The dealer shall not enter into any
arrangement, contract or 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:
............................"
Respondent no.1 who is the nephew (brother’s son) of
respondent no.5 contends that there was a family settlement
of 13th of May, 1980 under which it was agreed that the
kerosene dealership at Bagnan would come to the share of
respondent no.1 while the kerosene dealership at Kolaghat
would remain with respondent no.5. There is a dispute about
this family settlement and a separate litigation between the
parties is pending. By a registered deed of cancellation of
3rd of April, 1990, the family settlement is said to be
cancelled. Respondent no.5 also executed a power of
attorney dated 26th of July, 1984 authorising respondent
no.1 to conduct the business of kerosene dealership at
Bagnan. Thereafter it seems that the Senior Sales Officer,
Calcutta Regional Office of the appellant submitted a report
dated 5.2.1990 to the appellant stating that it had come to
its notice that respondent no.5 who was the dealer at Bagnan
and Kolaghat had entered into a partnership agreement and
had also executed a power of attorney in favour of
respondent no.1 to conduct the said dealership business at
Bagnan. Thereupon the appellant wrote a letter of 19.2.1990
to respondent no.5 pointing out that the action of
respondent no.5 was contrary to the terms of the agreement
of 6.7.1984 and that he could not reconstitute his firm or
appoint any partner without approval from the appellant.
Respondent no.5 cancelled the power of attorney in favour of
respondent no.1 on 27.3.1990.
Respondent no.1 filed a writ petition being C.O.
No.20144 (W) of 1993 praying, inter alia, for substitution
of his name for the dealership of kerosene at Bagnan. The
High Court, however, directed the Director of Consumer
Goods, Department of Food and Supply to decide the question
after hearing the parties. The Director of Consumer Goods
by his order dated 12.6.1996 rejected the application of
respondent no.1 for the substitution of his name as the
dealer of the appellant at Bagnan, since respondent no.1 was
not an agent of the appellant for the supply and
distribution of kerosene at Bagnan.
Thereupon respondent no.1 filed another writ petition
being C.O.No.10363 (W) of 1996 challenging the order of the
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 5
Director of Consumer Goods dated 12.6.1996. Respondent no.1
prayed for a stay of the Director’s order which the High
Court refused. However, on appeal to the Division Bench of
the High Court, the Division Bench by its order dated
10.10.1996 directed the Director of Consumer Goods to decide
the question afresh. While deciding the interim application
the High Court commented on various provisions of the West
Bengal Kerosene Control Order of 1968. On the basis of the
findings so given by the Division Bench in its order of
10.10.1996 the Director of Consumer Goods passed an order
dated 24.1.1997 granting a licence to respondent no.1 for
dealership at Bagnan. A special leave petition against the
order of 10.10.1996 was dismissed without notice to the
appellant. The appellant, however, declined to supply
kerosene to respondent no.1 whereupon a contempt petition
was filed by respondent no.1 against the appellant. The
Division Bench of the High Court by its order dated
16.5.1997 directed the appellant to supply the kerosene to
respondent no.1. All these orders in the interlocutory
proceedings in the second writ petition are under challenge
here at the instance of the appellant.
The supply and distribution of kerosene in the State
of West Bengal is governed by the West Bengal Kerosene
Control Order of 1968 issued under Section 3 of the
Essential Commodities Act read with Section 7(1) of the said
Act and the Order No.26(11)-Com. Genl./66 dated 18th of
June, 1966 of the Government of India, Ministry of Commerce.
Under the West Bengal Kerosene Control Order of 1968, there
are specific provisions which govern the purchase and sale
of kerosene. The Order provides for the grant of various
kinds of licences. Among them, paragraph 5 provides for the
grant of a licence to an agent; and paragraph 6 provides
for the grant of a licence to a dealer. In paragraph 3 an
"agent" is defined as follows:
"3(a). ’agent’ means a person who has been appointed
as an agent of an Oil Distributing Company by such company
and has been granted a licence under paragraph 5 of this
Order;"
While a "dealer" is defined as follows:
"3(c). ’dealer’ means a person who has been granted a
licence under paragraph 6 of this Order authorising him to
carry on trade in kerosene oil;"
An "oil distributing company" is defined in paragraph
3(h) to mean "a company specified in Schedule II of this
Order." The appellant is one of the oil distributing
companies so included in Schedule II. Under paragraph 4,
there is a ban on trading in kerosene without a licence. It
provides that no person other than an oil distributing
company shall carry on trade in kerosene unless he is in
possession of a valid licence issued under this Order.
Paragraph 5 provides for the grant of a licence to an agent.
The Director of Consumer Goods is authorised to grant a
licence to any agent in West Bengal authorising him to carry
on trading in kerosene as such agent. Under sub-paragraph
(2) of paragraph 5 a licence granted under sub-paragraph (1)
shall be in Form A and shall be subject to such conditions
as are specified therein. Sub-paragraph (3) of paragraph 5
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 5
is as follows:
"5(3). No agent shall, supply or transfer kerosene to
any person other than a dealer duly licensed under paragraph
6 of this Order, or a holder of a permit or delivery order
issued under paragraph II of this Order."
Therefore, an agent who is appointed as an agent by an
oil distributing company requires a licence in Form A.
Condition 1 of the licence in Form A, prescribes that a
licensee may sell kerosene to any licensed dealer or hawker
or to the holder of any permit or delivery order issued by
the Director [vide paragraph 5(3)]. Under Condition 2, the
licensee shall submit to the Director or the District
Magistrate, as the case may be, a monthly statement showing
the amount of kerosene released monthly by the Oil
Distributing Companies for sale in each of the areas
mentioned on this licence, and shall be bound to report at
once to the office any change in these quantities which he
may have to make by order of the Oil Distributing Companies.
An agent thus gets his supply of kerosene from the Oil
Distributing Company and he, in turn, can supply kerosene
only to a dealer, a hawker or a holder of a permit or
delivery order.
Paragraph 6 deals with the grant of a licence to a
dealer. This licence has to be in Form B. Under the terms
and conditions of a licence granted to a dealer in Form B,
Condition 1 states that a licensee may purchase kerosene
from any agent, or subject to the approval of the licensing
authority, from any other dealer holding a licence under the
provisions of this Order. A dealer, therefore, gets his
supply of kerosene either from an agent or from another
licensed dealer. Under Condition 2 he, in turn, is entitled
to sell kerosene to a consumer or, subject to the approval
of the licensing authority, to another dealer duly licensed
and shall not sell it to any agent. The two licences, that
is, the licence to an agent and the licence to a dealer, are
different in character. An agent has to be appointed by the
Oil Distributing Company as its agent. Thereafter the agent
is required to obtain a licence under paragraph 5. A
dealer, however, does not have any connection with the Oil
Distributing Company. He can get a dealer’s licence under
paragraph 6 which entitles him to purchase kerosene from an
agent or another dealer as specified in paragraph 6; and
he, in turn, is entitled to sell kerosene to a consumer or
to another dealer subject to the conditions specified in the
said paragraph and the terms and conditions of his licence.
In the present case, respondent no.5 is an agent of
the appellant Oil Distributing Company and he holds an
agent’s licence in Form A. This licence, inter alia, is for
the area of Bagnan. If respondent no.1 wants this licence
to be transferred to his name, he must first of all be
appointed as an agent by the appellant company. Only
thereafter will he be entitled to obtain an agent’s licence.
The Director of Consumer Goods had, therefore, rightly
rejected respondent no.1’s application by his order dated
12.6.1996 since respondent no.1 had not been appointed its
agent by the appellant company for kerosene dealership in
the area of Bagnan. The High Court while granting the
interim order of 10.10.1996 has wrongly come to a conclusion
that the grant of a licence to an agent does not depend upon
the party being appointed an agent, and that the Director of
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 5
Consumer Goods can grant a licence under paragraph 5 in Form
A to a person before he is appointed as an agent by an Oil
Distributing Company. Possibly there was a misreading of
paragraphs 5 and 6. Therefore, the order dated 24.1.1997 of
the Director of Consumer Goods to give a licence to
respondent no.1 as an agent without the respondent no.1
having been appointed as an agent by the appellant, as also
interim direction of the High Court of 16.5.1997 directing
the appellant to supply kerosene to respondent no.1 for
distribution in Bagnan, are based on a misconception of the
West Bengal Kerosene Control Order of 1968.
The appeals are, therefore, allowed and the impugned
orders dated 24.1.1997 and 16.5.1997 are set aside and the
interim order of the Single Judge of the High Court is
restored. Respondent no.1 shall pay to the appellant costs
of the appeals.