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PETITIONER: HINDUSTAN PETROLEUM CORPORATION LTD.  LTD.

       Vs.

RESPONDENT: MAYZUR ISLAM MALLICK AND ORS.

DATE OF JUDGMENT:       31/05/1999

BENCH: Sujata V.Manohar, R.C. Lahoti,

JUDGMENT:

Mrs.  Sujata V.  Manohar, J.

     M/s.Caltex  (India) Ltd., the  predecessor-in-interest of  the appellant M/s.Hindustan Petroleum Corporation  Ltd., entered  into  two agreements both dated 30th  of  November, 1975 with respondent no.5 as the sole proprietor carrying on business  in the name and style of M/s.National Oil  Trading Co.,  granting respondent no.5 dealership in kerosene at two places of business ?  Bagnan and Kolaghat.  These agreements were replaced by two agreements both dated 6th of July, 1984 entered  into  by the appellant with respondent no.5 as  the sole proprietor carrying on business under the firm name and style   of  M/s.National  Oil   Trading  Co.   granting  him dealership in kerosene at Bagnan and Kolaghat.  The material parts  of  Clauses  14  and 17 of these  agreements  are  as follows:

     "14.   The dealer shall not sell, assign, mortgage  or part  with  or  otherwise  transfer   his  interest  in  the dealership  or  the right, interest or benefit conferred  on him  by  this agreement to any person.  In the event of  the dealer   being  a  partnership  firm   any  change  in   the constitution   of   the  firm,    whether   by   retirement, introduction of new partners or otherwise howsoever will not be  permitted  without the previous written approval of  the corporation  notwithstanding  that the corporation may  have dealings with such reconstituted firm or impliedly waived or condoned  the breach or default mentioned hereinabove by the dealer.   In the event of the death of any of the  partners, the  dealer shall immediately inform the corporation  giving the   necessary   particulars  of   the  heirs   and   legal representatives  of the deceased partner and it shall be the option  of the corporation either to continue the dealership with  the  said  firm  or  to  have  a  fresh  agreement  of dealership  with any reconstituted firms or to terminate the dealership  agreement and the decision of the corporation in that  behalf  shall be final and binding on all the  parties concerned.    No   claim  on   premature   termination   for compensation  or  otherwise  will  be  made  or  sustainable against the corporation on account of such termination.

     17.  A.  ...........

     B.  It shall be a paramount condition of the agreement

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that the dealer himself (if he be an individual) or both the partners  of the dealer-firm (if the dealer is a partnership firm consisting of two partners only) or the majority of the partners  of  the  dealer  firm (if the  dealer  is  a  firm consisting of more than two partners) or the majority of the members  of the dealer’s co-operative society (if the dealer is  a co-operative society), as the case may be, shall  take active  part in the management and running of the dealership and  shall personally supervise the same and shall not under any  circumstances  do so through any other person, firm  or body.

     C.   Except  with the previous written consent of  the corporation.   (i)  The  dealer  shall not  enter  into  any arrangement,   contract   or   understanding   whereby   the operations  of the dealer hereunder are or may be controlled carried  out  and/or  financed by any other person  firm  or company, whether directly or indirectly and whether in whole or in part:

     ............................"

     Respondent  no.1 who is the nephew (brother’s son)  of respondent  no.5 contends that there was a family settlement of  13th  of  May, 1980 under which it was agreed  that  the kerosene  dealership  at Bagnan would come to the  share  of respondent  no.1  while the kerosene dealership at  Kolaghat would remain with respondent no.5.  There is a dispute about this family settlement and a separate litigation between the parties is pending.  By a registered deed of cancellation of 3rd  of  April,  1990, the family settlement is said  to  be cancelled.   Respondent  no.5  also   executed  a  power  of attorney  dated  26th of July, 1984  authorising  respondent no.1  to  conduct  the business of  kerosene  dealership  at Bagnan.   Thereafter it seems that the Senior Sales Officer, Calcutta Regional Office of the appellant submitted a report dated  5.2.1990 to the appellant stating that it had come to its notice that respondent no.5 who was the dealer at Bagnan and  Kolaghat  had entered into a partnership agreement  and had  also  executed  a  power  of  attorney  in  favour   of respondent  no.1 to conduct the said dealership business  at Bagnan.  Thereupon the appellant wrote a letter of 19.2.1990 to  respondent  no.5  pointing  out   that  the  action   of respondent  no.5 was contrary to the terms of the  agreement of  6.7.1984 and that he could not reconstitute his firm  or appoint  any  partner without approval from  the  appellant. Respondent no.5 cancelled the power of attorney in favour of respondent no.1 on 27.3.1990.

     Respondent  no.1  filed  a writ  petition  being  C.O. No.20144  (W) of 1993 praying, inter alia, for  substitution of  his name for the dealership of kerosene at Bagnan.   The High  Court,  however,  directed the  Director  of  Consumer Goods,  Department of Food and Supply to decide the question after  hearing the parties.  The Director of Consumer  Goods by  his  order dated 12.6.1996 rejected the  application  of respondent  no.1  for  the substitution of his name  as  the dealer of the appellant at Bagnan, since respondent no.1 was not   an  agent  of  the   appellant  for  the  supply   and distribution of kerosene at Bagnan.

     Thereupon  respondent no.1 filed another writ petition being  C.O.No.10363 (W) of 1996 challenging the order of the

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Director of Consumer Goods dated 12.6.1996.  Respondent no.1 prayed  for  a stay of the Director’s order which  the  High Court  refused.  However, on appeal to the Division Bench of the  High  Court,  the  Division Bench by  its  order  dated 10.10.1996 directed the Director of Consumer Goods to decide the question afresh.  While deciding the interim application the  High Court commented on various provisions of the  West Bengal  Kerosene Control Order of 1968.  On the basis of the findings  so  given  by the Division Bench in its  order  of 10.10.1996  the  Director of Consumer Goods passed an  order dated  24.1.1997  granting a licence to respondent no.1  for dealership  at Bagnan.  A special leave petition against the order  of  10.10.1996  was dismissed without notice  to  the appellant.   The  appellant,  however,  declined  to  supply kerosene  to  respondent no.1 whereupon a contempt  petition was  filed  by respondent no.1 against the  appellant.   The Division  Bench  of  the  High  Court  by  its  order  dated 16.5.1997  directed the appellant to supply the kerosene  to respondent  no.1.   All  these orders in  the  interlocutory proceedings  in the second writ petition are under challenge here at the instance of the appellant.

     The  supply and distribution of kerosene in the  State of  West  Bengal  is governed by the  West  Bengal  Kerosene Control  Order  of  1968  issued  under  Section  3  of  the Essential Commodities Act read with Section 7(1) of the said Act  and  the Order No.26(11)-Com.  Genl./66 dated  18th  of June, 1966 of the Government of India, Ministry of Commerce. Under  the West Bengal Kerosene Control Order of 1968, there are  specific provisions which govern the purchase and  sale of  kerosene.   The Order provides for the grant of  various kinds of licences.  Among them, paragraph 5 provides for the grant  of  a licence to an agent;  and paragraph 6  provides for  the grant of a licence to a dealer.  In paragraph 3  an "agent" is defined as follows:

     "3(a).   ’agent’ means a person who has been appointed as  an agent of an Oil Distributing Company by such  company and  has  been granted a licence under paragraph 5  of  this Order;"

     While a "dealer" is defined as follows:

     "3(c).  ’dealer’ means a person who has been granted a licence  under paragraph 6 of this Order authorising him  to carry on trade in kerosene oil;"

     An  "oil distributing company" is defined in paragraph 3(h)  to  mean "a company specified in Schedule II  of  this Order."  The  appellant  is  one  of  the  oil  distributing companies  so  included in Schedule II.  Under paragraph  4, there is a ban on trading in kerosene without a licence.  It provides  that  no  person other than  an  oil  distributing company  shall  carry on trade in kerosene unless he  is  in possession  of  a  valid licence issued  under  this  Order. Paragraph 5 provides for the grant of a licence to an agent. The  Director  of  Consumer Goods is authorised to  grant  a licence to any agent in West Bengal authorising him to carry on  trading in kerosene as such agent.  Under  sub-paragraph (2) of paragraph 5 a licence granted under sub-paragraph (1) shall  be in Form A and shall be subject to such  conditions as  are specified therein.  Sub-paragraph (3) of paragraph 5

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is as follows:

     "5(3).  No agent shall, supply or transfer kerosene to any person other than a dealer duly licensed under paragraph 6  of this Order, or a holder of a permit or delivery  order issued under paragraph II of this Order."

     Therefore, an agent who is appointed as an agent by an oil  distributing  company  requires a licence  in  Form  A. Condition  1  of  the licence in Form A, prescribes  that  a licensee  may sell kerosene to any licensed dealer or hawker or  to the holder of any permit or delivery order issued  by the  Director [vide paragraph 5(3)].  Under Condition 2, the licensee  shall  submit  to  the Director  or  the  District Magistrate,  as the case may be, a monthly statement showing the  amount  of  kerosene  released   monthly  by  the   Oil Distributing  Companies  for  sale  in  each  of  the  areas mentioned  on this licence, and shall be bound to report  at once  to the office any change in these quantities which  he may have to make by order of the Oil Distributing Companies. An  agent  thus  gets his supply of kerosene  from  the  Oil Distributing  Company  and he, in turn, can supply  kerosene only  to  a  dealer,  a hawker or a holder of  a  permit  or delivery order.

     Paragraph  6  deals with the grant of a licence  to  a dealer.   This licence has to be in Form B.  Under the terms and  conditions of a licence granted to a dealer in Form  B, Condition  1  states that a licensee may  purchase  kerosene from  any agent, or subject to the approval of the licensing authority, from any other dealer holding a licence under the provisions  of  this Order.  A dealer, therefore,  gets  his supply  of  kerosene  either from an agent or  from  another licensed dealer.  Under Condition 2 he, in turn, is entitled to  sell kerosene to a consumer or, subject to the  approval of  the licensing authority, to another dealer duly licensed and  shall not sell it to any agent.  The two licences, that is, the licence to an agent and the licence to a dealer, are different in character.  An agent has to be appointed by the Oil Distributing Company as its agent.  Thereafter the agent is  required  to  obtain  a licence under  paragraph  5.   A dealer,  however, does not have any connection with the  Oil Distributing  Company.  He can get a dealer’s licence  under paragraph  6 which entitles him to purchase kerosene from an agent  or  another dealer as specified in paragraph 6;   and he,  in turn, is entitled to sell kerosene to a consumer  or to another dealer subject to the conditions specified in the said paragraph and the terms and conditions of his licence.

     In  the  present case, respondent no.5 is an agent  of the  appellant  Oil  Distributing Company and  he  holds  an agent’s licence in Form A.  This licence, inter alia, is for the  area of Bagnan.  If respondent no.1 wants this  licence to  be  transferred  to his name, he must first  of  all  be appointed  as  an  agent  by the  appellant  company.   Only thereafter will he be entitled to obtain an agent’s licence. The  Director  of  Consumer Goods  had,  therefore,  rightly rejected  respondent  no.1’s application by his order  dated 12.6.1996  since respondent no.1 had not been appointed  its agent  by  the appellant company for kerosene dealership  in the  area  of  Bagnan.  The High Court  while  granting  the interim order of 10.10.1996 has wrongly come to a conclusion that the grant of a licence to an agent does not depend upon the party being appointed an agent, and that the Director of

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Consumer Goods can grant a licence under paragraph 5 in Form A  to a person before he is appointed as an agent by an  Oil Distributing  Company.   Possibly there was a misreading  of paragraphs 5 and 6.  Therefore, the order dated 24.1.1997 of the  Director  of  Consumer  Goods  to  give  a  licence  to respondent  no.1  as  an agent without the  respondent  no.1 having  been appointed as an agent by the appellant, as also interim  direction of the High Court of 16.5.1997  directing the  appellant  to  supply kerosene to respondent  no.1  for distribution  in Bagnan, are based on a misconception of the West Bengal Kerosene Control Order of 1968.

     The  appeals are, therefore, allowed and the  impugned orders  dated 24.1.1997 and 16.5.1997 are set aside and  the interim  order  of  the Single Judge of the  High  Court  is restored.   Respondent no.1 shall pay to the appellant costs of the appeals.