Supreme Court- Court can’t Interfere in Administrative Decision taken by IOC

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August 20, 2018

In this recent case, the Supreme Court has categorically stated that the High Court cannot interfere in the administrative decision taken by the Indian Oil Corporation.

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Case name: Indian Oil Corporation Ltd. & ANR. Vs. T. Natarajan

In this recent case, the IOC (Indian Oil Corporation), the bone of contention was the termination of dealership agreement between IOC and the Respondent, IOC’s retail dealer for sale of petroleum products. Later on, on conduct of inspection, it was discovered that the respondent had violated terms of the dealership agreement. Subsequently, show cause notice was issued to the Respondent.  The Respondent filed reply, however IOC terminated the agreement on not being satisfied with the reply.

Aggrieved by the termination of agreement, the Respondent invoked arbitration clause, whereby the Arbitrator noted that the respondent had already suffered substantial loss for the closed status of the retail outlets. Therefore, a lenient view may be considered by the respondent, bearing in mind the element of benefit of doubt.

Aggrieved by the award, IOC filed application for setting aside the award. The High Court dismissed the application and upheld the award. The respondent thereafter filed a representation to the IOC requesting them for resumption of the supply of fuel to pursuant to the directions of the award. However, the IOC rejected the respondent’s representation.

Bench’s Verdict

The Supreme Court in the case while passing an order in favour of IOC, observed that:

It was solely within the discretion of the IOC, being the principal to decide as to whether the respondent’s dealership should be restored or not and, if so, on what grounds. The IOC considered the case of the respondent and after taking into account all the facts and circumstances appearing in the respondent’s working, came to a conclusion that it was not possible for them to restore his dealership.

That the High Court cannot interfere in the administrative decision of IOC and nor it can substitute its decision by acting as an Appellate Court over such decision in exercise of writ jurisdiction. It is more so when such decision is based on reasons involving no arbitrariness of any nature therein which may call for any interference by the High Court.

The entire case can be accessed here.