M/S. HINDUSTAN PETROLEUM CORPN. LTD. & ORS.versusM/S. SUPER HIGHWAY SERVICES & ANR.

                      [2010] 2 S.C.R. 1053


   M/S. HINDUSTAN PETROLEUM CORPN. LTD. & ORS.                        A
                                 v.
         MIS. SUPER HIGHWAY SERVICES & ANR.
         (Special Leave Petition (C) No.104 of 2009)
                      FEBRUARY 19, 2010
                                                                      B
      [ALTAMAS KABIR AND CYRIAC JOSEPH, JJ.]

       Contract - Dealership Agreement for retail sale/supply
  of petrol and diesel - Termination of, by Petitioner
  Corporation - On basis of findings of a sample laboratory test      C
  - Validity - Held: Not valid - Petitioner did not adhere to the
  relevant Guidelines inasmuch as respondent-dealer was not
  seNed upon with proper notice regarding such test - Test was
; conducted behind the back of respondent - This caused
  severe prejudice to it - Termination of the dealership              D
  agreement was thus arbitrary, illegal and in violation of the
  principles of. natural justice - Natural justice.

      Constitution of India, 1950 - Art. 136 - New Plea -
  Termination of dealership agreement - Writ petition by dealer       E
 - Allowed by High Court - Order challenged by Petitioner-
 Corporation - Plea raised by it that in view of a specific clause
 in the dealership agreement, the dealer was barred from
 seeking remedy before the writ court (High Court) -
 Maintainability of - Held: Not maintainable - Petitioner ought       F
 to have raised the plea before High Court - In any event; by
 challenging the order of High Court, the Petitioner also
 submitted to the jurisdiction of the writ Court, without objecting
 to the same.

     The Petitioner Corporation entered into an                       G
 Agreement with Respondent No.1 for the retail sale/
 supply of petrol, diesel etc.. Both parties were at liberty
 to terminate the ·Agreement by giving three months'
 notice in writing. The agreement also- granted rights to
                            1053                                      H
           1054   SUPREME COURT REPORTS           (2010] 2 S.C.R. --
 .....t,




A the Petitioner Corporation to terminate the Agreement
  earlier, on the happening of any of the events mentioned
  in Clause 58 of the Agreement.

         A check was conducted at the outlet of the
    Respondent No.1 Company, where a sample of High
8
    Speed Diesel (HSD) failed the Marker Test, whi·ch
    indicated that the same had been contaminated.
    Subsequently a Nozzle Test of HSD was conducted ....
    Further to the result of the test, Respondent No.1 was
C. ;served with a notice, asking it to show cause as to why
    its dealership should not be cancelled on account of the
    failed Marker Test.

       Respondent No.1 filed Writ Petition in the High Court
  praying for issuance of appropriate writs to quash the
D entire proceedings arising out of the Marker Test.
  Meanwhile, the petitioner Corporation, upon
  consideration of the reply sent by Respondent No.1 to the
  show cause notice, terminated the Dealership Agreement
  of Respondent No.1 under Clause 58(1) thereof.
E
       A Single Judge of the High Court allowed the writ
  petition holding, that the retesting had been done without
  proper notice to the Respondent No.1, hence, as per the
  Marketing Discipline Guidelines, the same had caused
  severe prejudice to the Respondent No.1 and the order
F of termination of the Dealership Agreement, could not,
  therefore, be sustained. Hence the present Special Leave
  Petition.

              Dismissing the Special Leave Petition, the Court
G
       HELD: 1.1. The facts and circumstances of the
   present case did not give rise to a presumption that
   service had been effected on Respondent No.1, in the
   absence of any proof in that regard. Except for the
-H endorsemen't on the hand-written notice said to have
 HINDUSTAN PETROLEUM CORPN. LTD. & ORS. v. 1055
         SUPER HIGHWAY SERVICES

been given by one 'D', there is nothing else on record to     A
even suggest that notice had been sent to the
Respondent No.1 and that the same had been refused.
Nothing has been shown by the petitioner to disprove
the allegation made on behalf of the Respondent No.1
that the notice alleged to have been tendered to the          B
representative of the Respondent No.1 was not in the
manner and the form in which such notice is required to
be given to a dealer. It is obvious that the same had been
made out in haste to indicate that service had been
attempted on the Respondent No.1. [Para 16] [1067-A-F]        c
     1.2. The cancellation of dealership agreement of a
party is a serious business and cannot be taken lightly.
In order to justify the action taken to terminate such an
agreernent, the concerned authority has to act fairly and
in complete adherence to the rules/guidelines framed for      D
the said purpose. The non-service of notice to the
aggrieved person· before termination of his dealership
agreement also offends the well-established principle that
no person should be condemned unheard. It was the
duty of the petitioner to ensure that the Respondent No.1     E
was given a hearing or at least serious attempts were
made to serve him with notice of the proceedings before
terminating his agreement. [Para 17] [1067-G-H; 1068-A]

    1.3. In the instant case, the High Court did not commit   F
any error in allowing the writ petition filed by Respondent
No.1, upon holding that notice of the Laboratory Test to
be conducted had not been served upon the
Respondent No.1, which caused severe prejudice to the
said respondent since its dealership agreement was            G
terminated on the basis of the findings of such Test.
Admittedly the dealership agreement was terminated on
the ground that the product supplied by the petitioner
corporation was contaminated by the respondent. Such
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    1056    SUPREME COURT REPORTS                [2010] 2 S.C.R.


A contamination was sought to be proved by testing the
   T.T. retention sample in the laboratory. The Guidelines
   being followed by the Corporation require that the dealer
   should be given prior notice regarding the test so that he
   or his representative also can be present when the test
B is conducted. The said requirement is in accordance with
   the principles of natural justice and the need for fairness
   in the matter of terminating the dealership agreement and
   it cannot be made an empty formality. Notice should be
   served on the dealer sufficiently early so as to give him
c adequate time and opportunity to arrange for his
   presence during the test and there should be admissible
   evidence for such service of notice on the dealer. Strict
  .·adherence to the above requirement is essential, in view
   of the possibility of manipulation in the conduct of the
   test, if it is conducted behind the back of the dealer. [Para
0
   18] [1068-8-F]

       1.4. In the present case, there is no admissible
  evidence to prove service of notice on the respondent or
  refusal of notice by the respondent. Further, the notice
E dated 28.05.2008 which was allegedly refused by
  respondent, did not give him adequate time to arrange for
  the presence of himself or his representative during the
  test to be conducted at 3.00 PM on 29.05.2008. It is also
  to be noted that the endorsement regarding the alleged
F refusal is dated 29.05.2008 itself. Thus, the termination of
  the dealership agreement of the respondent was
  arbitrary, illegal and in violation of the principles of natural
  justice. [Para 18] [1168-G-H; 1169-A]

G       Indian Oil Corporation Ltd. v. Amritsar Gas Service & Ors.
    (1991) 1 SCC 533; Mrs. Sanjana M. Wig v. Hindustan Petro
    Corporation Ltd. AIR 2005 SC 3454 and State of Himachal
    Pradesh & Ors. v. Gujarat Ambuja Cement Ltd. & Anr. (2005)
    6 sec 499, referred to.
 HINDUSTAN PETROLEUM CORPN. LTD. & ORS. v. 1057
         SUPER HIGHWAY SERVICES
     2. Although, Clause 68 of the Dealership Agreement           A
refers to arbitration, the said question was not raised
before the High Court. It is now too late in the day for the
petitioner Corporation to contend that in view of Clause
68 of the Dealership Agreement, the Respondent No.1
was not entitled to seek its remedy before the writ Court.        B
In any event, by filing appeal against the order of the
Single Judge, the Petitioner also submitted to the
jurisdiction of the writ Court, without objecting to the
same. [Para 19] [1069-B-C]
                      Case Law Reference:                         c
     (1991) 1 sec 533            referred to          Para 8
     AIR 2005 SC 3454            referred to          Para 9
     c2oos) 6 sec 499            referred to          Para 10     D
     CIVIL APPELLATE JURISDICTION : SLP (Civil) No. 14
of 2009.

    From the Judgment & Order dated 2.12.2008 of the High
Court of Judicature at Patna in LPA No. 890 of 2008.              E

    U.U. Lalit, Sanjay Kapur, Rajiv Kapur, Shubhra Kapur, Arti
Singh for the Petitioners.

    Ramesh P. Bhatt, Ravi Bhushan, Mohit Kumar Shah for the
                                                                  F
Respondents.

    The Judgment of the Court was delivered by

     ALTAMAS KABIR, J. 1. This Special Leave Petition
involves the question as to whether the dealership of the         G
Respondent No.1 had been validly terminated in accordance
with· Clause 58 of the Dealership Agreement executed
between the parties on 30th August, 2003. In addition, it would
also have to be considered as to whether the termination of the
Agreement was in keeping with the procedure/ guidelines in        H
    1058         SUPREME COURT REPORTS                [201 O] 2 S.C.R.


A   conducting Marker Test in retail outlets.

        2. By virtue of the aforesaid Agreement, the petitioner
  Corporation entered into an Agreement with the Respondent
  No.1 for the retail sale or supply of petrol, diesel, motor oils,
8 grease and such other products as might be specified by the
  Corporation from time to time, at the premises in question. The
  Agreement was to remain in force for 15 years with effect from
  30th August, 2003. However, both the parties would be at
  liberty to determine the Agreement without assigning any
  reason by giving three months' notice in writing to the other of
C its intention to terminate the Agreement and upon expiration of
  such notice, the Agreement would stand cancelled and revoked,
  without prejudice to the rights of either party against the other .
  in respect of any matter or thing antecedent to such termination.
  It was also indicated that such liberty would not prejudice the
D rights of the Corporation to terminate the Agreement earlier on
  the happening of any of the events mentioned in Clause 58 of
  the Agreement. Clause 4 of the Agreement provided that the
  licence and permission granted for the use of the outfit would
  terminate immediately on the termination of the Agreement or
E on any breach of any of the terms thereof. The relevant portion
  of Clause 58 of the Agreement is reproduced hereinbelow :-

        "58. Notwithstanding anything to the contrary herein
        contained, the Corporation shall also be at liberty to
F       terminate this agreement forthwith upon or at any time after
        the happening of any of the following events, namely:-

           <a)     If the dealer shall commit a breach of any of the
                   covenants and stipulation contained in the
                   agreement, and fail to remedy such breach within
G                  four days of the receipt of a written notice from the
                   corporation in that regard.

           (b)

           (c)
H
 HINDUSTAN PETROLEUM CORPN. LTD. & --~S. v. 1059
 SUPER HIGHWAY SERVICES : ,,_TAMAS KABIR, J.]

      (d)                                                            A

      (e)

      (f)

      (g)                                                            B

      (h)

      (i)   If the dealer shall contaminate or tamper with the
            quality of any of the products supplied by the
            Corporation.                                             C·

      G)

      (k)

      (I)                                                            D

      (m)   If the dealer shall either himself or by his servants
            or agents commit or suffer to be committed by any
            act which in the opinion of the Chief Senior
            Regional Manager of the Corporation of the time          E
            being at Patna whose decision shall be final, is
            prejudicial to the interest or good name of the
            Corporation or its products the Chief Senior
            Regional Manager shall not be bound to give
            reason for such decision."                               F
      3. On 26th May, 2008, a check was conducted at the outlet
of the Respondent No.1 Company, where a sa:nple of High
Speed Diesel (HSD) failed the Marker Test, which indicated
that the same had been contaminated. On the same day, the
petitioner Corporation's authorized representative, SGS India        G
Pvt. Ltd. submitted its report on the Marker Test indicating such
contamination. Accordingly, in terms of the Marketing
Disciplinary Guidelines, referred to hereinabove, on 27th May,
2008, sales and supplies of all the products from its outlet were1
suspended by the petitioner Corporation to the Respondent            H
     1060    SUPREME COURT REPORTS                 [2010]. 2 S.C.R.


 A  No.1 because of the sample failure. According to the petitioner
    Corporation, on the very next day on 28th May, 2008, the
    Respondent No.1 was given notice that a Nozzle Test of HSD
    was to be conducted at the Barauni Terminal on 29th May,
    2008. According to the petitioner Corporation, the Respondent
. B No.1 's representative refused to acknowledge the notice.
    However, the Area Sales Manager of the petitioner Corporation
    is alleged to have informed the Respondent No.1 telephonically
    of the Nozzle Test to be conducted on 29th May, 2008, at its
    Barauni Terminal. Despite having been given notice, no one
  c appeared on behalf of the said respondent when the
    comparison test was conducted in Barauni and the same was
    held at the Barauni Terminal on 29th May, 2008, in the presence
    of the representative of SGS India Pvt. Ltd. (the agent of the
    petitioner), the Manager, Barauni Terminal, Transporter's
    representative and the petitioner's Area Sales Manager.
  0
    Further lo the result of the test, the Respondent No.1 was served
    with a notice dated 14th July, 2008, asking it to show cause
    as to why its dealership should not be cancelled on account of
    the failed Marker Test. According to the petitioner Corporation,
    the reply sent by the Respondent No.1 on 21st July, 2008, was
  E entirely vague. Immediately thereafter, the respondent No.1 filed
    a Writ Petition, being CWJC No.11172 of 2008, in the Patna
    High Court praying for issuance of appropriate writs to quash
    the entire proceedings arising out of the Marker Test. On 9th
    September, 2008, the petitioner Corporation, upon
  F consideration of the reply sent by the Respondent No.1 to the
    Show Cause Notice, terminated the Dealership Agreement of
    the R:-spondent No.1 under Clause 58(1) thereof.

        4. On 25th September, 2008, a counter affidavit was filed
 G on behalf of the petitioner Corporation in the Writ Petition
   mentioning the refusal on the part of the Respondent No.1 to
   acknowledge the notice dated 28th May, 2008, informing it of
   the Nozzle Sample and TIT Retention Sample Test which was
   to be conducted at the Barauni Terminal on 29th May, 2008.
 H
   HINDUSTAN PETROLEUM CORPN. LTD. & ORS. v. 1061
   SUPER HIGHWAY SERVICES [ALTAMAS KABIR, J.]

        5. On 15th October, 2008, the learned Single Judge A
  allowed the Respondent No.1 's writ petition, upon holding, inter
  alia, that mere statement on affidavit that an unsuccessful
  attempt had been made to serve the Respondent No.1, was
  insufficient for taking such a drastic step such as termination
  of the Dealership Agreement. The learned Single Judge held B
  that even if the Respondent No.1 had refused to acknowledge
  the letter, the same could have been sent to it by registered
  post and the testing could have been delayed, as there was
  no urgency involved, as, i.n any event, the pump of the
  Respondent No.1 had been sealed. Apart from the above, the c
  learned Single Judge took note of the fact that as per the
  version of the Respondent No.1, no information had been given
  to it about the testing to be conducted at the Barauni Terminal
  on 29th May, 2008. What also weighed with the learned Single
  Judge was that on behalf of the Respondent No.1 it was D
  asserted that the person who is supposed to have served the
  letter on the Respondent No.1, was not in Barauni on 29th May,,
  2008, when the same is supposed to have been refused by the '
  representative of the Respondent No.1. The learned Single
  Judge was of the view that since the retesting had been done E
  without proper notice to the Respondent No.1, as per the
  Marketing Discipline Guidelines, the same had caused severe
  prejudice to the Respondent No.1 and the order of termination
.-of the Dealership Agreement dated 9th September, 2008,
  could not, therefore, be sustained.
                                                                     F
        6. Appearing for the petitioner Corporation, Mr. U.U. Lalit,
   learned Senior Advocate, submitted that the Nozzle Test had
   been conducted at site in the presence of the representative
   of the Respondent No.1 and also the transporter and samples
   had been drawn for testing at site and also for future testing, in G ·
.. the presence of the parties. Since the Respondent No.1 failed
   the Marker Test during the Nozzle Test, the samples taken
   earlier were sent to the Forensic Laboratory at Barauni for
   cross-checking. Mr. Lalit submitted that notice had been duly .
   given to both the Respondent No.1 and the transporter, but that H
    1062     SUPREME COURT REPORTS                   [2010] 2 S.C.R -


A while the representative of the transporter was present, the
  Respondent No.1 chose to be absent during the Marker Test
  in the laboratory. Mr. Lalit submitted that the Show Cause
  Notice issued to the Respondent No.1 on 14th July, 2008,
  categorically indicated that the representative of the
B Respondent No.1 had refused to acknowledge the receipt of
  the notice dated 28th May, 2008, and that the petitioner
  Corporation had no alternative but to proceed with the Marker
  Test at Barauni in the presence of the representative of the
  transporter. Mr. Lalit submitted that when the Respondent No.1
c failed the Marker Test even iri the laboratory, the petitioner
  Corporation had no option but to terminate the agreement with
  the Respondent No.1. Mr. Lalit also emphasized the fact that
                                                                  /
  all the samples had been drawn/collected not by the employees
  of the petitioner Corporation themselves, but by its authorized
D agent, Mis SGS India Pvt. Ltd.

        7. Mr. Lalit then contended that the proceedings before the
  High Court in its writ jurisdiction stood vitiated in view of C~ause
  68 of the Agreement between the petitioner Corporation and ·
  the Respondent No.1 which provided for arbitration in respect
E of disputes or difference of any nature whatsoever or relating
  to any right, liability, act or omission between any of the parties
  arising out of or in relation to the agreement and the same were
  to be referred to the sole arbitration of the Managing Director
  of the Corporation or of some officer of the Corporation who
F might be nominated by the Managing Director. Mr. Lalit
  submitted that without taking recourse to the arbitration clause,
  the Respondent No.1 was not entitled in law to move the writ
  Court against the order terminating its agreement with regard
  to operation of the retail outlet.
G
        8. In support of his submissions, Mr. Lalit firstly referred to
    and relied upon the decision of this Court in Indian Oil
    Corporation Ltd. vs. Amritsar Gas Service & Ors. [(1991) 1
    SCC 533], wherein an Award made under the Arbitration Act,
    1940, was under challenge and it was held that even if the
H
 HINDUSTAN PETROLEUM CORPN. LTD. & ORS. v. 1063
 SUPER HIGHWAY SERVICES [ALTAMAS KABIR, J.]

clause providing for termination of the agreement for sale of        A
LPG by Indian Oil Corporation was not available, the agreement
was terminable by either party under Clause 8 and hence, the
only relief which could be granted was award of compensation
for loss of earning for the period of notice and not restoration
of the distributorship.                                              B

     9. Reference was also made to the decision of this Court
in Mrs. Sanjana M. Wig vs. Hindustan Petro Corporation Ltd.
[AIR 2005 SC 3454], in which this Court was dealing with the
termination of a petrol pump dealership. In the said case, one
                                                                    c~
of the objections taken to the writ petition was that the said
jurisdiction had been wrongly invoked since an alternative
remedy was available and questions relating to the termination
gave rise to serious questions of fact arising out of the contract
between the parties~ which, ordinarily the writ Court would not
be entitled to go into. The Supreme Court went on further to .
                                                                    D/
hold that in such circumstances the writ petition was not the
proper remedy and the refusal of the High Court to entertain
the writ petition on the ground of existence of an alternative
remedy should not be interfered with. Several decisions on the
same lines, including that of Amritsar Gas Service's case, were E
taken into consideration while arriving at the said decision on
being fully conscious of the fact that only if a question of public
law character was involved, could a writ petition be entertained
in the existing circumstances.
                                                                     F
     10. Mr. Lalit, however, pointed out that a differing view had
been taken by this Court in State of Himachal Pradesh & Ors.
vs. Gujarat Ambuja Cement Ltd. & Anr. [(2005) 6 SCC 499]
in which the question as to whether the High Court should
interfere under Article 226 of the Constitution, when an             G
alternative remedy was available, fell for consideration and it
was held th at the power relating to alternative remedy is a rule
of self-imposed limitation. It is essentially a rule of policy,
convenience and discretion and never a rule of law. It was also
held that d·aspite the existence of an alternative remedy it is
                                                                     H
    1064     SUPREME COURT REPORTS                  [2010] 2 S.C.R.


A within the discretion of the High Court to grant relief under Article
  226 of the Constitution, though, it should not interfere if an
  adequate efficacious alternative remedy was available. Mr. Lalit
  also pointed out that since the Gujarat Ambuja Cement's case
  was rendered by a three Judge Bench, in the case of Mis.
B Ankur Filling Station vs. Hindustan Petroleum Corp. Ltd. &
  Anr. being SLP(C)No.11193/2009, a Bench consisting of two .
  Judges of this Court was of the opinion that the question
  regarding the jurisdiction of the High Court to entertain a writ
  petition in a similar situation and to direct restoration of supply
c by itself, may not be a ground to entertain a writ application,
  particularly when the remedy of the petition in such an event
  may also lie by filing a civil suit. Accordingly, while issuing notice
  on the basis of the earlier view taken by this Court, it was felt
  that the matter should be considered by a larger Bench. The
  Special Leave Petition was, therefore, directed to be placed
0
  before the Hon'ble the Chief Justice of India for appropriate
  orders. We are informed by Mr. Lalit that the same is still
  pending.

         11. Mr. Lalit submitted that in view of the failure of the
E Respondent No.1 to avail of the alternative remedy available
  to it, the writ petition should have been dismissed at the initial
  stage.

           12. Mr. Lalit's submissions were vehemently opposed by
F Mr. Ramesh P. Bhatt, learned Senior counsel, who pointed out
    that the entire procedure adopted by the petitioner had been
    vitiated on account of the fact that the notice dated 25th ·
    December, 2008, which was alleged to have been sent by the .
    petitioner to the Respondent No.1 regarding the test conducted ··
G·. at the Barauni Terminal·had not been served on the Respondent
    No.1 and it was, therefore, completely unaware of the fact that
    such a test was to be conducted. Mr. Bhatt also submitted that
    it was the stand of the Respondent No.1 that no Marker Test
    had, in fact, been held on 26th May, 2008, at the retail outlet
    itself. The learned counsel pointed out that by letter dated 30th
H
 HINDUSTAN PETROLEUM CORPN. LTD. & ORS. v. 1065
 SUPER HIGHWAY SERVICES [ALTAMAS KABIR, J.]

May, 2008, the Respondent No.1 informed the Senior Regional            A
Manager of the petitioner that although the representative of
S.G.S. India Pvt. Ltd. had come to the retail outlet on 26th May,
2008 in order to conduct a marker test of the nozzle sample of
MS and HSD from the dispensing unit, such a test could not
be conducted since the retail outlet was dry in respect of both        B
MS and HSD, which made it impossible for samples to be
drawn from the nozzles of the dispensing units of the said
produ~ts. Similarly, the underground tanks were also dry and
there was hardly any MS or HSD available in tank Nos.1 and
2 from which samples could be extracted through the nozzle.            c
Mr. Bhatt a.Isa pointed out several other letters of protest written
on behalf of the Respondent No.1 against the termination of
supply of petroleum products to the said Respondent and
requesting that the same may be restored immediately.

       13~ Mr. Bhatt then referred to the reply given on behalf of     D
 the ,Respondent No.1 on 25th June, 2008, to the show cause
 notice whe.rein again the above facts were reiterated and it was
 also asser.ted in no uncertain terms that the notice regarding
 the conducting of laboratory test at the Barauni Refinery of the
 petitioner had not been served upon the respondent. Referring         E
 in particular to the alleged notice dated 28th May, 2008,
 informing tile Respondent No.1 that the Marker Test was to be
 held at the~ Barauni Terminal on 29th May, 2008, Mr. Bhatt
pointed out that the alleged refusal to acknowledge receipt by
an employee of the Respondent No.1 was dated 29th May,                 F
2008 itself :and it was highly doubtful as to whether such notice
was at all meant to be served on the Respondent No.1 to
enable its representative to be present at the Marker Test at
Barauni on the same day. It was also pointed out that upon
information which had been taken by the Respondent No.1, Mr.           G
Dilip Kumar Dash, the Area Sales Manager of the petitioner
Corporatiorn, who was said to have tendered notice to the
representative of the Respondent No.1, was not even present
in Barauni .an 29th May, 2008.
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                1066       SUPREME COURT REPORTS                [2010] 2 S.C.R.


            A      14. Mr. Bhatt submitted that in failing to serve notice on
              the Respondent No.1 regarding the conducting of the laboratory
              test at the Barauni Terminal, the entire process of decision
              making culminating in the termination of the petitioner's
              agreement, stood completely vitiated and the said decision had
            B been correctly set aside by the learned Single Judge whose
              decision was not interfered with by the Division Bench in
              appeal.

                     15. Mr. Bhatt submitted that even if the case sought to be
            C made out on behalf of the petitioner Corporation regarding
                refusal of acceptance of notice by the representative of the
                Respondent No.1 is accepted, the same could have been sent
                by registered post with acknowledgement due and the Marker
                Test could have been postponed for some time for the said
                purpose as there was no immediate threat to the TIT Samples
            D or the samples at site becoming contaminated in any way. It
                was pointed out that even the ordinary norms relating to service
                of notice were not followed in the instant case and in that regard
                reference was made to a similar notice issued to another retail
j.
;\
                dealer, made Annexure A-4 to the additional affidavit on behalf
I
!l j        E of the Respondent No.1. It was pointed out that the said letter
'               dated 23rd December, 2008, not only had a reference number,
?:-
    I .~·       but was printed and sent to the dealer concerned, whereas in
r~
                the instant case the notice alleged to have been given to the
                Respondent No.1 by Shri D.K. Dash was in hand written script.
            F   In addition, the same did not have any reference number and
              · though dated 28th May, 2008, was alleged to have been
                tendered on 29th May, 2008, the very date on which the Marker
                Test was to be held in the Barauni Terminal at 3.00 p.m. Mr.
                Bhatt urged that the said notice was obviously manufactured
            G for the purpose of termination of the dealership of the
                Respondent No.1.

                     16~ Ha~ing   carefully considered the submissions made on
                behalf tjf the respective parties and also having considered the
                various/decisions referred to by learned counsel, we are of the
            H          I                     .
                       I
 HINDUSTAN PETROLEUM CORPN. LTD. & ORS. v. 1067
 SUPER HIGHWAY SERVICES [ALTAMAS KABIR, J.]

view that tt1e case made out on behalf of the Respondent No.1         A
is more probable. Although, the transporter's representative
was present at the terminal at the stipulated time on 29th May,
2008, that by itself cannot give rise to a presumption that
service had been effected also on the Respondent No.1, in the
absence of any proof in that regard. Except for the endorsement       B
on the hand-written notice said to have been given by Mr. Dash,
there is nothing else on record to even suggest that notice had
been sent to the Respondent No.1 and that the same had been
refused. It is also rather difficult to accept that in respect of a
test to be conducted on 29th May, 2008, at 3.00 p.m., an              c
attempt was made to serve the said notice on the
representative of the Respondent No.1 on the date of the
proposed test itself. Although, the notice is dated 28th May,
2008, the endorsement alleged to have been made by the
representative of the Respondent No.1 is dated 29th May,              D
2008, and we would be justified in assuming that the
Respondent No.1 could not have arranged for being
represented at the laboratory in the Barauni Terminal of the
petitioner Corporation on such short notice. Nothing has been
shown by the petitioner to disprove the allegation made on            E
behalf of the Respondent No.1 that the notice alleged to have
been tendE~red to the representative of the Respondent No.1
was not in the manner and the form in which such notice is
required to be given to a dealer. It is obvious that the same had
been made out in haste to indicate that service had been
attempted on the Respondent No.1.                                     F

      17. The cancellation of deal~rship agreement of a party
is a serious business and cannot be taken lightly. In order to
justify the i~Ction taken to terminate such an agreement, the
concerned 13uthority has to act fairly and in complete adherence      G
to the ruies/guidelines framed for the said purpose. The non-
service of notice to the aggrieved person before termination
of his dealE.~rship agreement also offends the well-established
principle th;3t no person should be condemned unheard. It was
the duty of the petitioner to ensure that the Respondent No.1         H
    1068     SUPREME COURT REPORTS                   [2010] 2 S.C.R.


A was given a hearing or at least serious attempts were made
  to serve him with notice of the proceedings before terminating
  his agreement.                       ·

          18. In the instant case, we are inclined to agree with Mr.
    Bhatt's submissions that the High Court did not commit any
8
    error in allowing the writ petition filed by the Respondent No.1
    herein, upon holding that notice of the Laboratory Test to be
    conducted at the Barauni Terminal had not been served upon
    the Respondent No.1, which has caused severe prejudice to
    the s_aid respondent since its dealership agreement was
C   terminated on the ·basis of the findings of such Test. Admittedly
    the dealership agreement was terminated on the ground that
    the product supplied by the petitioner corporation was
    contaminated by the respondent. Such contamination was
    sought to be proved by testing the T. T. retention sample in the
D   laboratory at Barauni Terminal. The Guidelines being followed
    by the Corporation require that the dealer should be given prior       j

    notice regarding the test so that he or his .representative also       I
    can be present when the test is conducted. The said
    requirement is in accordance with the principles of natural
E   justice and the need for fairness in the matter of terminating the
    dealership agreement and it cannot be made an empty
    formality. Notice should be served on the dealer sufficiently
    early so as to give him adequate time and opportunity to
    arrange for his presence during the test and there should be
F   admissible evidence for such service of notice on the dealer.
    Strict adherence to the above requirement is essential, in view
    of the possibility of manipulation in the conduct of the test, if it
    is conducted behind the back of the dealer. In the present case,
    there is no admissible evidence to prove service of notice on
G   the respondent or refusal of notice by the respondent. Further,
    the notice dated 28.05.2008 which was allegedly refused by
    respondent, did not give him adequate time to arrange for the
    presence of himself or his representative during the test to be
    conducted at 3.00 PM on 29.05.2008. It is also to be noted that
H   the endorsement regarding the alleged refusal is dated
 HINDUSTAN PETROLEUM CORPN. LTD. & ORS. v. 1069
 SUPER HIGHWAY SERVICES [ALTAMAS KABIR, J.]
29.05.2008 itself. Thus, the termination of the dealership             A
agreement of the respondent was arbitrary, illegal and in
violation of the principles of natural justice.

      19. Although, Clause 68 of the Dealership Agreement
refers to arbitration, it is unfortunate that the said question was    8
not raised before the High Court. It is now too late in the day
for the petitioner Corporation to contend that in view of Clause
68 of the Dealership Agreement, the Respondent No.1 was not
entitled to seek its- remedy before the writ Court. In any event,
by filing appeal against the order of the learned Single Judge,
the Petitioner herein also submitted to the jurisdiction of the writ   C
Court, without objecting to the same.

    20. In the aforesaid circumstances, we are not inclined to
admit the Special Leave Petition, which is, accordingly,
dismissed, without, however, any order as to costs.                    D

8.8.8.                       Special Leave Petition dismissed.