P.KALYANASUNDARAVALLI vs INDIAN OIL CORPORATION LTD

2026:MHC:1861
W.A.No.2073 of 2025
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON : 01.06.2026
DELIVERED ON: 03.06.2026
CORAM :
THE HONOURABLE MR. SUSHRUT ARVIND DHARMADHIKARI,
CHIEF JUSTICE
AND
THE HONOURABLE MR.JUSTICE G.ARUL MURUGAN
WA No.2073 of 2025
and CMP N o .15729 of 2025
P.Kalyanasundaravalli
Proprietrix of M/s.K.T.Bakthavatchalam
Naidu Agency, Indian Oil Dealers,
No.186/2A2, Kalavakkam, Thiruporur,
Chennai - 603 110.
Appellant(s)
Vs
1. Indian Oil Corporation Ltd
Rep by its Divisional Retail Sales Head,
Marketing Division, Chennai Divisional
Office, No.550, Anna Salai, Teynampet,
Chennai - 600 018.
2. The Executive Director and State Head
Indian Oil Corporation Ltd, Tamil Nadu
State Office, Marketing Division,
No.139, Nungambakkam High Road,
Chennai – 600 034.
Respondent(s)
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W.A.No.2073 of 2025
PRAYER : Appeal under Clause 15 of the Letters Patent to set aside
the order passed in W.P.No.13687 of 2025, dated 03.07.2025 by the
learned Single Judge.
For Appellant(s): Mr.N.L.Rajah, Senior Counsel
for Mr.M.R.Jothimanian
For Respondent(s): Mr.Mohammed Fayaz Ali
JUDGMENT
THE CHIEF JUSTICE
This appeal has been preferred against the order dated
03.07.2025 passed in W.P.No.13687 of 2025, whereby the learned
Single Judge dismissed the writ petition and upheld the second
respondent's order dated 07.04.2025 to terminate the appellant's
petroleum dealership.
2.1. The nub of the matter runs thus: The appellant was
selected for the allotment of a retail petroleum outlet and pursuant
thereto a Letter of Intent (LOI) was issued on 29.02.2016, followed
by a Letter of Appointment (LOA) dated 29.03.2018. A formal
Dealership Agreement was subsequently executed between the
parties on 31.03.2018.
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2026:MHC:1861
W.A.No.2073 of 2025
2.2. The controversy arose when the respondent Corporation
received a complaint from the appellant’s husband containing
statutory tax records, specifically Form-16, which conclusively
demonstrated that the appellant was drawing regular financial
remuneration from a private corporate entity, Fisher Chennai
Engineering Center, well after the issuance and execution of her
dealership. Following a show-cause notice and the recording of
written explanations, the second respondent terminated the
dealership on 07.04.2025, invoking Clause 28(b) and Clause 45 of
the Dealership Agreement on grounds of deliberate suppression of
material facts and engaging in parallel gainful employment.
3. Learned Senior Counsel appearing for the appellant
vigorously assailed the judgment of the learned Single Judge on the
following grounds:
(a) The appellant’s engagement with Fisher Chennai
Engineering Center was strictly that of a "Freelance
Online Support Consultant" compensated on a
commission basis. It is argued that freelance
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2026:MHC:1861
W.A.No.2073 of 2025
consultancy is distinct from regular employment; it
does not establish a master-servant relationship, and
therefore cannot be construed as a breach of the
dealership terms. In support of the said submission,
reliance is placed on a decision of the Delhi High
Court in Kaushal Kishor Singh v. Sita Kuoni World
1
Travel India Ltd .
(b) The impugned termination order dated
07.04.2025 is an unreasoned and non-speaking
order. It is argued that the terminating authority
failed to independently evaluate the explanation
offered by the appellant, thereby violating the
principles of administrative fair play.
(c) The availability of arbitration clause in the
contract, by itself, cannot be a bar to maintain the
writ petition.
4. Per contra, learned counsel appearing for the respondents
submitted thus:
1 2022 SCC OnLine Delhi 3215
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W.A.No.2073 of 2025
(a) A declaration of non-employment was an
indispensable precondition for the allotment and
survival of the public utility dealership. The appellant
explicitly suppressed her active employment status
at the time of executing the contract, which amounts
to fraudulent misrepresentation.
(b) The respondents place heavy reliance on the
Income Tax Returns and corresponding Form 16
statements of the appellant. These statutory
disclosures establish that the appellant sequentially
drew a fixed salary during the financial years 2018–
19 through 2020–21.
(c) During the initial selection process in 2016, the
appellant gave a formal undertaking that she had
severed ties with outside employers. However, her
own documentation reveals that her resignation was
tendered and accepted only in the year 2021. This
multi-year overlap reveals that she was fully
operating as an employee, completely defeating the
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W.A.No.2073 of 2025
contractual mandate of personal, undivided
management of the retail outlet.
(d) The Dealership Agreement provides a structured,
bilateral mechanism for dispute resolution, and the
appellant is at liberty to invoke the arbitration clause,
if so advised, rather than seeking to agitate
contractual infractions under Article 226 of the
Constitution.
5. We have given our anxious consideration to the rival
submissions advanced by the learned counsel on both sides and
have carefully scrutinized the material available on record.
6. At the outset, it needs to be noted that a Division Bench of
this Court, vide order 7.7.2025, granted an order of status quo and
the same continues to operate till date.
7. The semantic distinction drawn by learned Senior Counsel
appearing on behalf of the appellant between a "freelance online
consultant" and a "regular salaried employee" is a distinction
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W.A.No.2073 of 2025
without a legal difference under the stringent terms of this public
utility agreement.
8. At this juncture, it is seemly to reproduce Clauses 21 and
28(b) of the agreement hereunder:
“21. It shall be a paramount condition of this
Agreement that the Dealer himself (if he be an
individual) or both 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 office
bearers/elected members of the Dealer Co-operative
Society (if the Dealer is a Co-operative Society) or
the Managing/Whole time Directors (if the Dealer is a
private limited company) as the case may be shall
ordinarily be resident in India and shall take an
active part in the management and running of
the Dealership and shall personally supervise
the same and shall not tinder any
circumstances do so through any other person
firm or body either as ‘Benami’ or through any
‘Power of Attorney’ or otherwise .
...
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28. Except with the previous written consent of the
Corporation (which consent the Corporation may in
its sole and absolute discretion withhold)
(a) ...
(b) The dealer himself (if he is an individual) or the
partners themselves (if the dealer is a partnership
firm) or the whole time office bearers/elected
members (if the dealer is a Co-operative society)
shall not take up any other employment or
engage in any other business and/or profession
apart from the operation of the dealership
which is the subject matter of this agreement ."
[emphasis supplied]
9. Learned Senior Counsel for the appellant, referring to
Clause 28 of the agreement, submitted that in as much as no public
harm has been caused by the appellant, the dealership ought not to
have been terminated. In support of the said submission, reliance
is placed on a decision of the Supreme Court in K.Raheja Corp
2
Private Limited v. State of Maharashtra and others , wherein it was
held as under:
“23. A Court must weigh not only the wrong that has
been committed but also the reality as it now stands.
2 2026 SCC OnLine SC 945
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W.A.No.2073 of 2025
The doctrine of proportionality, deeply embedded in
constitutional jurisprudence, demands that the
severity of a remedial measure must bear a rational
and proportionate relationship to the nature and
magnitude of the wrong sought to be remedied. A
remedy that causes public harm disproportionate to
the public benefit it achieves is not a remedy that
law ought to countenance.”
10. Clauses 21 and 28(b) of the Agreement impose an
absolute, unqualified embargo, stipulating that a dealer shall not
take up any other employment or engage in any other business,
profession, or avocation apart from the exclusive, personal
administration of the retail outlet. This restrictive covenant is
explicitly designed to ensure public safety, operational vigilance,
and uncompromised regulatory compliance in managing highly
inflammable petroleum products.
11. The Form-16 under the Income Tax Act from 2018 to 2021
constitutes unassailable statutory proof of active financial
enrichment from an external employer. Labeling this parallel income
as "freelance commission" cannot dilute the stark reality that the
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2026:MHC:1861
W.A.No.2073 of 2025
appellant divided her attention and violated the very core of her
allotment criteria. Therefore, the submission of learned Senior
Counsel for the appellant that there is no public harm caused does
not merit consideration.
12. The appellant’s grievance that the termination order is
non-speaking and devoid of reasoning is factually incorrect and
legally unsustainable. A plain reading of the impugned termination
order demonstrates that the second respondent systematically
outlined the nature of the breach, explicitly recorded the
chronological sequence of the appellant's explanations, analyzed the
assertions made during the personal hearing, and rightly applied
Clause 28(b) and Clause 45 of the contract.
13. It is a settled position of law that administrative and
commercial orders are not expected to be structured like exhaustive
judgments of a civil court. When the foundational facts, namely,
the receipt of parallel income and acceptance of appellant’s
resignation on 21.9.2021, stand admitted based on the documents
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2026:MHC:1861
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filed by the appellant, the reasons supporting the termination are
clear, conspicuous, and rooted in reality.
14. We find that the challenge to the arbitration clause is
purely academic in the present context. The learned Single Judge
did not summarily dismiss the writ petition on the ground of an
alternative remedy, rather, the writ court rightly elected to test the
validity of the termination order on its legal and factual merits
under Article 226 of the Constitution of India.
15. Since the termination has been scrutinized and found to
be legally robust, the submission of learned Senior Counsel for the
appellant that the arbitration clause is unilateral does not alter the
fate of this appeal. However, as rightly conceded by the
respondents, the appellant may invoke the contractual arbitration
clause, if so advised.
16. It is a foundational principle of equity and law that fraud
and deliberate suppression of material facts completely vitiate a
contract from its inception. The appellant secured a public utility
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2026:MHC:1861
W.A.No.2073 of 2025
dealership by executing a false undertaking affidavit in 2016,
pretending to be unencumbered by outside employment, while
sequentially receiving salary until 2021.
17. The reasoning adopted by the learned Single Judge is
legally sound and suffers from no perversity or infirmity. No ground
has been made out warranting appellate interference.
For the reasons aforegiven, the appeal stands dismissed and
the interim order granted earlier stands vacated. The order passed
by the learned Single Judge dated 03.07.2025 is hereby affirmed.
There shall be no order as to costs. Consequently, interim
application is closed.
(SUSHRUT ARVIND DHARMADHIKARI,CJ) (G.ARUL MURUGAN,J)
03.06.2026
Index : Yes
Neutral Citation : Yes
sasi
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2026:MHC:1861
W.A.No.2073 of 2025
To:
1. The Divisional Retail Sales Head,
Indian Oil Corporation Ltd
Marketing Division, Chennai Divisional
Office, No.550, Anna Salai, Teynampet,
Chennai - 600 018.
2. The Executive Director and State Head
Indian Oil Corporation Ltd, Tamil Nadu
State Office, Marketing Division,
No.139, Nungambakkam High Road,
Chennai – 600 034.
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2026:MHC:1861
W.A.No.2073 of 2025
THE HON'BLE CHIEF JUSTICE
AND
G.ARUL MURUGAN,J.
(sasi)
WA No.2073 of 2025

03.06.2026
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