Dismissal Of Suit For Default Doesn't Bar Fresh Partition Suit As Cause Of Action Is Recurring; Second Rejection Of Plaint Application Barred By Res Judicata: Telangana High Court Married Daughter Entitled To Appointment As Fair Price Shop Dealer On Compassionate Grounds; Marital Status No Bar: Allahabad High Court Finding Of Title Cannot Be Recorded In Injunction Simpliciter Suit Absent Specific Pleadings & Issues: Andhra Pradesh High Court Conviction Not A Condition Precedent For Confiscation Of Vehicle Used In Forest Offence: Bombay High Court Advocate’s Professional Call To Client No Proof Of Conspiracy; Sterling Evidence Like CCTV Can Justify Quashing FIR: Gujarat High Court Revenue Entries Changed Without Notifying Affected Parties Are Void; High Court Can Upset Perverse Findings In Second Appeal: Himachal Pradesh HC Mandatory Injunction For Removing Sunshades Or Closing Windows Cannot Be Granted If No Encroachment Is Proved: Karnataka High Court Employer Cannot Resume Work Through Third Parties Until 30-Day Period For Contractor’s Post-Termination Compliance Expires: Madras High Court Circumstantial Chain Fails If Prosecution Doesn't Rule Out Accidental Death: Madhya Pradesh High Court Acquits Two In Murder Case Wife’s Status As Practicing Lawyer Or Professional Qualification No Absolute Bar To Grant Of Interim Maintenance: Orissa High Court Legally Wedded Wife And Second Wife Entitled To Equal Share In Family Pension If Second Wife Was Nominated & Cared For Deceased: Andhra Pradesh High Court Specific Performance Suit Filed At The Fag End Of Limitation Reflects Lack Of Readiness And Willingness: Supreme Court Specific Performance Cannot Be Granted If Plaintiff Fails To Prove Financial Readiness At Relevant Time Of Transaction: Supreme Court MACT |Just Compensation For Deceased Professional Students Must Reflect Future Career Trajectory: Supreme Court Stationary Vehicle Parked At Night Without Warning Signs Poses Evident Hazard; SC Refuses To Reduce Compensation For CA Student’s Death Motor Accident Claims: 100% Loss Of Earning Capacity To Be Considered If Amputation Prevents Manual Worker From Pursuing Sole Avocation: Supreme Court Substantive Amendments Rendering Land Transfers 'Void' Are Prospective; Cannot Invalidate Decades-Old Sale Deeds: Supreme Court Registered Sale Deed Carries Formidable Presumption Of Genuineness; Minor Witness Discrepancies Cannot Invalidate Decades-Old Document: Supreme Court Mere Breach Of Sale Agreement Not Cheating Unless Dishonest Intent Existed From Inception: Telangana High Court Mining Lease Applications For First Schedule Minerals Deemed 'Disposed Of' Once Recommended & Approved Prior To 2015: Supreme Court Prolonged Incarceration Under NDPS Act Militates Against Article 21; Conditional Liberty Must Override Section 37 Embargo: Supreme Court Perpetual Minor Status Of Deity Does Not Exempt It From Limitation Laws; Condonation Requires 'Sufficient Cause': Orissa High Court State Cannot 'Approbate And Reprobate' Bravery: MP High Court Mandates Out-Of-Turn Promotion For Cop Who Rescued Truck From 200-Foot Gorge Drugs Controller Can Regulate Misleading Discount Boards In Medical Shops; Right To Business Not A Shield For Deception: Kerala High Court Courts Cannot Direct Parliament To Adopt Rotational Reservation For Assembly Seats; Section 9(1)(c) Delimitation Act Valid: Allahabad High Court Official To Pay Rs 20,000 Costs From Own Pocket: Andhra Pradesh High Court Holds Municipal Commissioner Liable For Failing To Take Court Orders To 'Logical End' IPC Sections 406 & 420 Cannot Co-exist On Same Set Of Facts; Substantial Compliance Enough For Section 156(3) CrPC Affidavit: Kerala High Court Family Courts Duty-Bound To Declare Marital Status In Mutual Consent Muslim Divorces Even If Wife Admits Divorce: Gujarat High Court Allottee’s Right To Interest For Delayed Possession Under Section 18 RERA Is Absolute; Not Fettered By Section 55 Contract Act: Bombay High Court Sentencing Not A Purely Retributive Exercise Divorced From Factual Matrix: Supreme Court Reduces Jail Term Of Man Who Forged Bail Documents

An Agreement is Not Voidable if the Party Could Discover the Truth with Ordinary Diligence: Calcutta High Court Quashes Termination of LPG Distributorship License

19 September 2024 2:53 PM

By: sayum


Calcutta High Court in the case of Sri Sajal Mandal vs. The Indian Oil Corporation Ltd. & Ors. quashed the termination of the petitioner's LPG distributorship license. The court held that the termination by Indian Oil Corporation Ltd. (IOCL) was arbitrary and unsustainable, emphasizing that an agreement cannot be voided if the truth could have been discovered with ordinary diligence.

The Indian Oil Corporation Ltd. (IOCL) issued a public notice for the selection of an LPG distributor under the Rajiv Gandhi Gramin Liquid Petroleum Gas Vitark (RGGLV) scheme. Sajal Mandal, the petitioner, was selected through a lottery and offered a plot of land measuring 14 decimals for the construction of a godown and showroom. The land was purchased through a registered deed from Bimal Chandra Nandi, who was believed to be the sole owner. Later, it was revealed that Bimal Chandra Nandi had a sister who had a 50% share in the land, raising questions about the petitioner's title to the entire plot. The petitioner subsequently acquired an additional 7 decimals from the sister, Taralika Shit, to rectify the issue.

IOCL initially granted a license to the petitioner but later issued show-cause notices alleging that he provided false information about land ownership at the time of the application. Despite the petitioner's explanations and further compliance, IOCL terminated the license on November 14, 2018. The petitioner filed a writ petition challenging this termination.

The primary legal issues were whether the writ petition was maintainable despite the arbitration clause in the agreement and whether the termination of the distributorship license by IOCL was arbitrary and illegal.

Maintainability of Writ Petition: IOCL argued that the petitioner should have sought arbitration as per the agreement clause. The petitioner contended that the termination violated his fundamental rights and was arbitrary, thus justifying the invocation of Article 226 of the Constitution. The court cited precedents, including Prabir Kumar Baidy vs. Union of India and Godrej Sara Lee Ltd. vs. Excise and Taxation Officer, establishing that the presence of an arbitration clause does not bar the High Court’s jurisdiction under Article 226 when fundamental rights are violated or when the action is arbitrary.

Alleged Misrepresentation: The court examined whether the alleged misrepresentation by the petitioner constituted a breach under Section 18 of the Indian Contract Act, 1872. It was found that the petitioner had acted in good faith based on the vendor's declarations and that IOCL had conducted its own field verification before entering into the agreement. The court noted that both parties were mistaken about the land's title at the time of the contract. It referenced Section 19 of the Indian Contract Act, which states that an agreement is not voidable if the party had the means to discover the truth with ordinary diligence.

The court held that IOCL had failed to exercise due diligence in verifying the land title during its field verification process. It observed:

"The misrepresentation must be made with the intention that it shall be acted by the other party. It has not been proved that the petitioner ever tried to induce the IOCL to enter into the contract."

The court noted that the petitioner had cured the defect by purchasing the remaining share of the land from Taralika Shit and had been allowed to continue his distributorship even after the issue came to light. The court concluded that the termination of the distributorship license was not justified, as the petitioner was not solely at fault and had rectified the mistake. It further stated:

"The conduct of the respondent [IOCL] itself proves that they are not in a position to repudiate the agreement but they actually allowed the petitioner to carry the business."

The Calcutta High Court quashed the termination order, directing IOCL to allow the petitioner to continue with the LPG distributorship license. The decision underscores the importance of reasonable diligence and fairness in contractual matters, especially when the alleged misrepresentation was not intended to deceive.

Date of Decision: September 17, 2024

Sri Sajal Mandal vs. The Indian Oil Corporation Ltd. & Ors.

Latest Legal News