SC Upholds Termination of A Dealership Agreement by HPCL Based on Contravention Of Its Terms By Dealer
The Supreme Court upheld the termination of a dealership agreement by Hindustan Petroleum Corporation Limited observing that such termination was based on contravention of the terms of the said agreement by the dealer.
The Bench observed that for a party to be prosecuted for violating the search and seizure provisions of an agreement clause, the party must be held accountable, particularly for breaching the Control Order, as established in Indian Oil Corporation Ltd. v. R.M. Service Centre, (2019) 19 SCC 662.
Justice J.K. Maheshwari and Justice Sanjay Karol observed, “Any person who contravenes the Control Order is liable to be punished by the Court. Therefore, for a person to be prosecuted for violating the provisions relating to search and seizure contained in Clause (7) thereof, such a person will have to be brought to the book, particularly, for having violated the said Control Order.”
ASG N. Venkataraman represented the appellants, while AOR Rajat Joseph appeared for the respondents.
After the parties entered into a dealership agreement, SGS India (agency) took samples of High Speed Diesel (HSD) and Motor Spirit (MS) from the respondent’s petrol pump. The alleged Preliminary Test Report suggested irregularities, pursuant to which HPCL issued a show-cause notice against the respondent and ultimately ordered the suspension of supply.
Hindustan Petroleum Corporation Limited (HPCL) submitted that the Agreement provided that the license was terminable immediately based on the termination of the Agreement or breach of any of the terms thereof.
The Apex Court referred to its decision in Hindustan Petroleum Corporation Limited v. Super Highway Services (2010) 3 SCC 321 which established that when a dealership agreement was to be cancelled, it had to be done strictly in consonance with Rules/Guidelines framed in that regard.
“In the present facts, the respondents have taken issue with the process of collection of samples, being aggrieved by the fact that a third party, namely, SGS India was appointed to take samples and not with the lack of service of notice or any other such non-compliance of the principles of natural justice as discussed in the said judgment,” the Court remarked.
Consequently, the Court held, “The termination of the agreement inter se the parties was only based on the contravention of the terms of the dealership agreement.”
Accordingly, the Supreme Court allowed the appeal.
Cause Title: M/S. Hindustan Petroleum Corporation Limited & Ors v. Dharamnath Singh & Ors. (Neutral Citation: 2024 INSC 449)
Appearance:
Appellants: ASG N. Venkataraman; AOR Sanjay Kapur; Advocates Surya Prakash, Devesh Dubey, Divya Singh Pundir, Mahima Kapur, Arjun Bhatia, Isha Virmani and Shubhra Kapur
Respondents: AOR Rajat Joseph, Chanchal Kumar Ganguli, Kaushal Yadav, Dipak Kumar Jena and Abhijit Sengupta; Advocates Prasanna Kumar Parhi, Vinod Kumar, R.k. Poswal, Pradeep Kumar Verma, Ranjita Dhal, Sandhya Mishra, Sunil Kumar Mund and Raj Shekhar Jena