TaxTMI 
TaxTMI 
1990 (3) TMI 346
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....mus against the respondent directing it to desist from denying or discontinuing the supply of all kinds of lubricants to the appellant No. 1 and from ousting, black-listing, coercing or pressurising the appellant No. 1 from the business of dealing with all kinds of lubricants supplied by the respondent company to have and to continue to supply all kinds of lubricants to the appellant firm as was done in the past and for the maintenance of status quo existing on the 27th May, 1953 and for payment of necessary damages for the period from 28th May, 1983 till the date of the filing of the writ petition before the High Court or till the decision of the writ petition. The appellant No. 1, herein referred to as the firm, is a partnership firm duly registered with the Registrar of Firms, Delhi. The said firm had been carrying on the distribution and sale of all kinds of lubricants and was registered under Sales Tax Act vide Registration no. 1636 dated 22nd October, 195 1 and has a goodwill of its own, according to the said appellants, in the entire region of Northern India with expertise and knowledge in the distribution and sale of all kinds of lubricants. The appellants contend that i....
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....e firm as an authorised Lube Distributor. Annexure A-15 is an advertisement issued in a specially published souvenir on the occasion of All India Highway Motor Rally held in 1972 sponsored by the Company in which the firm was referred to as the Company's authorised Lube Distributor. Annexures A16 to A-35 are copies of the letters written by the Company to the appellants in relation to the dealing of the appellants as Lube Distributor. There are several other documents on which reliance was placed on behalf of the appellants. The firm was treated as authorised dealer and agent of the respondentcompany. It was contended that there was a change of policy by the respondent company, and certain documents of the year 1972 were relied upon to indicate that the supply of lubricants was stopped to those Associations and Dealers to whom ad hoc supplies were given, who were merely re-sellers, traders and who did not have written contracts with the Company. That was the case of the appellant's firm. However, the appellants asserted, that the supply was continued to the appellant firm being a dealer and distributor of the Company. Reliance was placed on Annexures P-28 to P-34 which are the Prod....
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.... in a mala fide, or capricious or arbitrary manner or on any extraneous, or oblique or irrelevant consideration. There was no commitment, it was suggested, to supply a fixed quantity regularly, made to the appellant firm at any stage. It appears that the procedure adopted for the supply of lube oil products was that the party requiring supply would write a letter to the Company 'whereupon the Divisional Office through the Lube section would process the same and would intimate as to how much supply was possible. Thereupon the requisition slip would be processed and a delivery challan/order would be made out. The conditions of the Proluct Indent-cum-Delivery Order, inter alia, categorically provided that "IOC also reserves the right to cancel your order without any intimation or assigning any reason". It further provided that "IOC took no responsibility of despatches/releases of stocks shall be on the basis of availability of stocks." There was no other contract in the facts and circumstances of the case, it was urged. The letters making the requisitions, the Product Indent-cum-Delivery Orders, the Delivery Challans as also the payment are the only documents constituting the dealing ....
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....point new dealers and distributors or to formalise any agreement constituting the dealership or distributorship. In fact, right since 1972, 24 parties who had ad hoc arrangement of supply of lube oils were discontinued, according to the respondent. There was no assurance, whatsoever, nor any promise nor any contract or nor any prescribed schedule to supply any quantity of lubricants, as alleged, to the appellant or to anybody else. It was further asserted in the present case that in view of the ban imposed, no fresh distributors could be appointed nor the oil companies empowered to regularise and contract afresh for dealers/distributors in lubricant oils. It was further the case of the respondent that the customer code number is given to authorised distributors/dealers only. The position was explained that the mode and manner of computerisation of accounts set out in Annexure P-25 and the allotment of customer code number is only for the purpose of identification and not for any other purpose nor to designate the firm as an authorised Lube distributor. The Company had denied that the Code 01 was allotted only to dealers/agents as alleged. The Code 01 was applicable to all re-seller....
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....ly in that respect. This aspect is important. The respondent firm was supplying from 1965 to 1983 large quantities of lubricant oil and from 1983 onwards till 1989 supplies were continued on the interim order of the High Court of Delhi. Supplies were stopped suddenly on 27th May, 1983. There is no dispute that no intimation was given, no notice was given, no query or clarification sought for and there was no adjudication as such. It was held that the appellant firm was not entitled to supply, the stoppage of supply in May 1983 was, therefore, bad. The appellant further contended that the case of the respondent-company IOC was never made known or revealed prior to the Counter Affidavit in the High Court of the appellants. The contention urged on behalf of the appellants was that this is patent violation of all canons of natural justice, fair play and reasonableness. It is submitted that natural justice and reasonableness of the procedure are enshrined under Article 14 of the Constitution. It is well settled that every action of the State or an instrumentality of the State in exercise of its executive power, must be informed by reason. In appropriate cases, actions uninformed by r....
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.... unreasonable. In this connection reference may be made to E.P. Royappa v. State of Tamil Nadu & Anr., [1974] 4 SCC 3; Maneka Gandhi v. Union of India & Anr., [1976] 1 SCC 248; Ajay Hasia & Ors. v. Khalid Mujib Sehravardi & Ors., [1981] 1 SCC 722; R.D. Shetry v. International Airport Authority of India & Ors., [1979] 3 SCC 1 and also Dwarkadas Marlaria and sons v. Board of Trustees of the Port of Bombay, [1989] 3 SCC 293. It appears to us that rule of reason and rule against arbitrariness and discrimination, rules of fair play and natural justice are part of the rule of law applicable in situation or action by State instrumentality in dealing with citizens in a situation like the present one. Even though the rights of the citizens are in the nature of contractual rights, the manner, the method and motive of a decision of entering or not entering into a contract, are subject to judicial review on the touchstone of relevance and reasonableness, fair play, natural justice, equality and non-discrimination in the type of the transactions and nature of the dealing as in the present case. The existence of the power of judicial review however depends upon the nature and right involved in t....
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....not to be inducted as a new distributor and the appellant-firm falls within the existing network and has always been so treated continuously and uninterruptedly from 1965 to 1983, it was the case of the appellants. It was contended that the appellant-firm was entitled to relief, inter alia, on grounds of promissory estoppels, unreasonable and arbitrary exclusion, and discriminatory treatment under Article 14 of the Constitution. Mr. Salve on behalf of the appellants sought to urge that the appellant firm had never been appointed as a Lube Distributor. There is no letter of intent, letter of appointment, much less letter at all. Ad-hoc supplies of Lube products alone had been made to the appellant from 1965 onwards. The procedure adopted for the supply of lube products was that the appellant would write a letter to the company whereupon the Divisional Office, Lube Section would process the same. The policy decision in December, 1982 indicated that no new Distributor for Lube products would be appointed and no new products would be distributed either through the existing net-work, of existing Lube Distributors or to authorised dealers of other products such as, petrol, SKO, LDO an....
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.... that even in the field of public law, the relevant persons concerned or to be affected, should be taken into confidence. Whether and in what circumstances that confidence should be taken into consideration cannot be laid down on any straight jacket basis. It depends on the nature of the fight involved and nature of the power sought to be exercised in a particular situation. It is true that there is discrimination between power and fight but whether the State or the instrumentality of a State has the right to functign in public field or private field is a matter which,in our opinion, depends upon the facts and circumstances of the situation, but such exercise Of power cannot be dealt with by the State or the instrumentality of the State without informing and taking into confidence, the party whose fights and powers affected or sought to be affected, into confidence. In such situations most often people feel aggrieved by exclusion of knowledge if not being taken into confidence. Such transaction should continue as an administrative decision with the organ of the State. It may be contractual or statutory but in a situation of transaction between the parties for nearly two decades,....