SUMAN GUPTA (PROPRIETOR BAKSON GAS SERVICE) vs INDIAN OIL CORPORATION LIMITED

2024-06-29 Information

$~5 * IN THE HIGH COURT OF DELHI AT NEW DELHI % Date of decision: 29th JUNE, 2024 + O.M.P.(I) (COMM.) 209/2024 SUMAN GUPTA (PROPRIETOR BAKSON GAS SERVICE) ….. Petitioner Through Mr. Jatan Singh and Mr. Daman Yadav, Advocates. versus INDIAN OIL CORPORATION LIMITED ….. Respondent Through Mr. Sidhant Kumar and Mr. Sarthak Sareen, Advocates. CORAM: HON’BLE MR. JUSTICE DHARMESH SHARMA DHARMESH SHARMA, J. (ORAL) I.A. 31801/2024
1. Allowed, subject to all just exceptions.

2. The application shall stand disposed of.

O.M.P.(I) (COMM.) 209/2024
3. This is a petition preferred under Section 9 of the Arbitration and Conciliation Act, 1996 by the petitioner.

4. Mr. Sidhant Kumar, learned counsel for the respondent is present on advance notice.

5. Briefly stated, admittedly the petitioner entered into a Distributorship Agreement dated 02.06.2023 with the respondent for the sale of Liquified Petroleum Gas/LPG, known as Indane, for household domestic consumers in the area of Jhandewalan, Karol

Bagh, Anand Parbat and Paharganj and nearby areas.

6. It appears that an incident of fire had occurred on 24.05.2024 at the godown of the petitioner. It is stated that although the damage or loss occurred, the Deputy Chief Controller of Explosives, Petroleum & Explosive Safety Organization (PESO) were informed; and the petitioner vide email on 25.05.2024, was informed that a committee has been nominated that would be visiting the godown in the morning hours of 26.05.2024 and they were asked to keep all the documents ready. Simultaneously, another e-mail dated 25.05.2024 was received thereby, requesting the petitioner to suspend the LPG Godown Operation till further advise.

7. It is the case of the petitioner that the Committee visited the premises and on conducting field inquiries, they were unable to point out any shortcomings and even the letter dated 25.05.2024 brought out that the fire incident had taken place outside the godown. Resultantly, the petitioner had received an e-mail on 01.06.2024 whereby, he was called upon to resume the godown operations temporarily and to liquidate the filled stock and ensure that minimum 50 filled gas cylinders are available. It appears that consequent thereto, the supplies were resumed from the respondent on 1st, 2nd and 3rd June, 2024 in the ordinary course of business.

8. The grievance of the petitioner is that it was shocked to receive a letter dated 05.06.2024, whereby, it was alleged that the petitioner has been found in serious violation of the terms and condition of performance of the contract and allegedly deviating from the Distributorship Agreement, and calling upon her to submit certain

information within a day only; and though the petitioner submitted a short reply on 07.06.2024, she also sought some more time to file a detailed reply.

9. The grievance of the petitioner that he was shocked to receive a letter dated 24.06.2024, whereby, the Chief General Manager (LPG) has proceeded to suspend the supplies and LPG distributorship to the petitioner without sharing any documents with regard to any inquiry into the fire incident and without affording any opportunity of hearing.

10. Learned counsel for the petitioner has alluded to the Marketing Discipline Guidelines 2022 for LPG distributorship w.e.f. 01.05.2022, which govern the performance of the distributorship agreement between the parties, that provides detailed guidelines vide Chapter (2) of enumerating the Type of Irregularities by the LPG Distributors and thereby inter-alia providing for matters which fall under major as well as minor irregularities thereby warranting suitable disciplinary action by the respondent including termimation of the contract. Learned counsel in particular has been taken the Court through Clause 3.6 which provides for the process of imposition of action and it was urged that 15 clear day notice had not been given to the petitioner so as to reply to the Show Cause Notice.

11. Learned counsel for the petitioner has also taken this Court through the contents of the letter dated 24.06.2024 and it is pointed out that the same is based on surmises and conjunctures inasmuch as certain assumptions have been made without any iota of evidence to the effect that the petitioner was allegedly filling up gas from big cylinders into small cylinders. It is also pointed out that the letter

dated 24.06.2024 has alleged certain other violations with regard to contravention of working hours, working on off days and supply of LPG to to bogus customers besides challenging the extent of damages due to the fire incident on 24.04.2024. It is emphasized that the fire, which allegedly occurred outside the godown, was brought under control in no time and there was caused no harm to any human life and/or property.

12. Per contra, learned counsel for the respondent has urged that the Marketing Discipline Guidelines 2022, which has been relied upon by the learned counsel for the petitioner, are not applicable and action has been taken pursuant to the guidelines relating to Grant of suspension and termination of distributorship dated 03.06.2023 by the Department and the Court has been taken through such guidelines as well. It is also vehemently urged that this Court cannot pass any interim order as it would be putting life back to the conduct of distribution which can be terminated at any time by the respondent. It is also urged that the petitioner is not entitled to be afforded any opportunity of hearing in respect of matters arising out of the contract between the parties.

13. I am afraid this Court is not impressed. The referred guidelines alluded by the learned counsel for the respondent are for the internal compliance regulating the functioning of the officials of the respondent/department while taking disciplinary action. In any case, the same have be read and applied in conjunction with the Marketing Discipline Guidelines 2022 that govern the subject distributorship

contract.

14. Be that as it may, what stares on the face of record is that neither any documents with regard to any inquiry has been shared with the petitioner nor any opportunity of hearing has been afforded to the petitioner to present its case. Although the plea canvassed by the learned counsel for the respondent that the issue is such which involves public safety impacting life and liberty of the people, in the face of the fact that the petitioner has been an approved distributor with the respondent since 1974, the petitioner deserves to be treated in a fair and lawful manner. The suspension of its distributorship in the manner that has been done, shall entail irreparable losses to him losing a base of about twenty thousand consumers besides inconvenience to the consumers too in the absence of any provision for stop-gap arraignment.

15. The issues raised by learned counsels for the parties require deeper examination.

16. Issue notice. Notice of the application is accepted by learned counsel for the respondent

17. Let detailed reply be filed by the respondent within four weeks from today.

18. In the meanwhile, by way of an ad-interim measure the respondent is directed to continue with the supply of gas cylinders to the petitioner in terms of Distributorship Agreement dated 02.06.2023 till the end of the month of July i.e., 31.07.2024 without prejudice. The respondent shall be at liberty to initiate any further inquiry against the petitioner and a decision may be reached in accordance with law.

19. Re-notify the matter before the learned Roster Bench on 31.07.2024.

DHARMESH SHARMA, J. (VACATION JUDGE) JUNE 29, 2024 sp