Rule of fair play and natural justice are part of rule of law applicable to actions taken by State Instrumentality

Calcutta High Court: A Division Bench comprising I.P. Mukerjee and Amrita Sinha, JJ. decided an appeal filed against the order of learned Single Judge directing the appellant- Indian Oil Corpn. to renew the license and continue the supply of kerosene oil to the respondent firm.

The respondent was a partnership firm that entered into an agreement for kerosene oil dealership with the appellant. According to the agreement in the event of the death of a partner, the firm was to be reconstituted and the dealership agreement was to be renewed on the decision of the appellant-Corporation. One of the partners of the firm died; however, the firm could not be reconstituted due to feud and rivalry among his heirs. Consequently, the appellant refused to renew the license of the respondent. The respondent filed a writ petition which was heard by the Single Judge who passed the impugned direction as mentioned above. Aggrieved thus, the appellant preferred the instant appeal.

The High Court perused the record and found that no interference was required with the order passed by the Single Judge. Considering the issue, the Court noted that the appellant Corpn. was a State Instrumentality, as was held by the Supreme Court in Mahabir Auto Stores v. Indian oil Corpn., (1990) 3 SCC 752. The Court was of the view that if the appellant discontinues the supply of kerosene oil to the respondent, it would cause suffering to the consumers. It was observed that the policy decision of the appellant ought not to be exercised in an unreasonable and unfair manner so as to create a hardship for the public at large. Further, rule of reason, rule against arbitrariness and discrimination, rules of fair play and natural justice are part of the rule of law applicable on actions taken by State Instrumentality in dealing with citizens. Holding that in the event of discontinuance of kerosene oil supply, the ultimate sufferer would be common people, the Court upheld the order of Single Judge and directed the appellants to continue the supply of kerosene oil to the respondent. The appeal was disposed of if in above terms. [Indian Oil Corpn. v. Shree Niwas Rammgopal,  2018 SCC OnLine Cal 4383,  dated 04-07-2018]

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