Personal hearing is mandatory before dealership termination; a show-cause reply alone does not satisfy natural justice.

The petitioner’s dealership agreement with Bharat Petroleum Corporation Ltd. was terminated by order dated 28.03.2012.

The petitioner’s statutory appeal against the termination was dismissed on 06.12.2012.

In proceedings under Articles 226/227 of the Constitution, the petitioner challenged both orders, contending principally that the termination was passed without the approval required under Clause 8.8 of the Marketing Discipline Guidelines and without granting a personal hearing as mandated by Clause 8.6.

During the writ proceedings, the Corporation produced a file noting dated 06.03.2012 purporting to record approval by the Director (Marketing), Headquarters.

1. Whether the termination order was passed without the approval of the competent authority in violation of Clause 8.8 of the Marketing Discipline Guidelines.

2. Whether issuance of a show-cause notice and consideration of the petitioner’s written reply satisfied the requirement of a personal hearing under Clause 8.6 before termination of the dealership.

3. Whether the petitioner’s ancillary objection regarding delayed service of the show-cause notice rendered the termination proceedings invalid.

The Court applied Articles 226/227 of the Constitution and Clauses 8.6 and 8.8 of the Marketing Discipline Guidelines.

Clause 8.8 requires termination for critical irregularities to be approved by the competent senior authority of the concerned oil company; in the case of SC/ST dealerships, approval is required from the Director (Marketing), Headquarters.

Clause 8.6 requires that, before recommending or approving termination, the concerned authority or its nominee provide the dealership signatories or their nominee an opportunity of personal hearing; if they fail to attend, a further opportunity must be given before proceeding ex parte.

The Court held that a personal hearing is a mandatory component of the prescribed procedure and cannot be equated with merely issuing a show-cause notice and considering a written reply.

On the Clause 8.8 challenge, the Court examined the record and found that the proceedings had passed through the relevant authorities and that approval had ultimately been accorded by the Director (Marketing) on 06.03.2012.

There was no sufficient material to establish that the file noting had been fabricated.

The fact that the approval was not specifically mentioned in the Appellate Authority’s order did not invalidate the approval, particularly since the alleged fabrication had not been raised before that authority.

However, the record contained no evidence that the petitioner or its authorised representative had been granted a personal hearing before termination.

The Corporation’s submission that the show-cause notice and written reply amounted to compliance with Clause 8.6 was rejected because the Guidelines independently required an oral/personal hearing.

The subsequent statutory appeal also did not cure the failure to provide the required pre-termination hearing.

The appellate order dated 06.12.2012 was consequently also set aside.

The matter was remitted to the concerned Territory Manager (Retail) to reconsider the termination and pass a speaking order after affording adequate personal hearing to an authorised representative of the petitioner.

The remaining ancillary issues, including the objection concerning delayed service of the show-cause notice, were left open for determination by the competent authority.

The proceedings, including the connected review application, were disposed of accordingly.