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NON-REPORTABLE IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.  4595    OF 2014 [Arising out of Special Leave Petition (Civil) No.482 of  2014]

Bharat Petroleum Corp. Ltd. ..           Appellant(s)

-vs-

B.M. Motors  & Ors. ..             Respondent(s)

J U D G M E N T C. NAGAPPAN, J.

1. Leave granted.

2. This appeal is preferred against the judgment dated  

30.5.2013  of  the  Division  Bench  of  the  High  Court  of  

Judicature at Allahabad in Writ Petition (Civil) No.59450 of  

2012.  Respondent No.1 therein viz. M/s Bharat Petroleum  

Corporation  Limited is the appellant herein.

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3. Briefly  the  facts  leading  to  the  filing  of  the  writ  

petition  are  as  follows:    Respondent  No.1  herein,  

partnership firm was constituted on 26.6.1973 consisting of  

four partners with the following profit sharing ratio:

(1) Subhash Chandra  1%

        (2)    Brijrani 33%

        (3)    Ramesh Kumar Tandon    33% and

        (4)    Roop Rani Tandon  33%

A licence agreement was executed on  12.8.1975 between  

the said firm and the then M/s Burmah Shell Oil Storage &  

Distribution Company of India Ltd. to run a retail outlet and  

the  business  was  carried  on.   Subsequently   another  

agreement was entered between all  the four partners on  

3.5.1984 under which the partner nos.1 and 2 referred to  

above demanded 100 litres of petrol per month, to which  

the partner nos. 3 and 4 agreed and partner nos. 1 and 2  

further  agreed  that  with  effect  from  the  said  date  the  

business of the petrol pump in the name of firm will be run

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by partner nos. 3 and 4 and partner nos. 1 and 2 shall have  

no right,  share or interest in the running of the business  

and also in the assets or the liabilities of the firm.  As per  

the Agreement the outlet was run in the firm’s name by  

partner nos.3 and 4.   

4. As agreed upon, partner nos.3 and 4 referred above  

supplied 100 litres of petrol  per month to partner nos. 1  

and 2 and dispute arose in the year 1993  and partner nos.  

3 and 4 filed a civil suit in Civil Suit No.368 of 1995 on the  

file  of  Civil  Judge Senior  Division  Kannauj  for  permanent  

injunction to restrain partner nos. 1 and 2 from interfering  

in the management and working of the retail outlet.  The  

said suit was decreed ex-parte on 14.1.2004.  Partner nos.  

1 and 2 who are respondent nos. 2 and 3 herein, have filed  

an application  to set aside the ex-parte decree and the  

said  application  is  said  to  be  pending.   The  appellant  –

Corporation  stopped  supply  of  petrol  to  the  outlet  and  

respondent No.1 herein namely the firm filed another civil  

suit  in  Suit  No.582  of  1998  against  the  Corporation  to  

restore supply.  In the said suit respondent Nos. 2 and 3

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herein namely partner nos.1 and 2 referred to supra filed  

an application  to implead themselves  as defendants and  

the said application was dismissed by the trial court and  

challenging that order a writ petition came to be filed by  

respondent  nos.  2  and  3  herein  and  that  also  was  

dismissed.   

5. Partner no.4 Roop Rani Tandon  expired on 11.6.2011  

and  a  letter  was  sent  by  the  firm  on  22.3.2012  to  the  

Corporation  intimating  the  death  of  the  partner.   The  

Corporation stopped supply on 30.3.2012 and directed to  

apply  for  a  temporary  dealership.   The  firm  filed  Writ  

Petition No.19606 of  2012 to restore the supply and the  

High  Court  after  hearing  both  sides  by  its  order  dated  

3.9.2012  directed  the  Corporation  to  dispose  of  the  

representation.  The Corporation by order dated 31.10.2012  

rejected the representation of the firm.  Aggrieved by the  

same the firm  filed Writ Petition © No.59450 of 2012 to  

quash  the  impugned   order  dated  31.10.2012  and  for  

direction to restore supply.    Partner no.3 Ramesh Kumar  

Tandon  also  died  during  pendency  of  the  writ  petition

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leaving his widow and son as legal heirs.  The legal heirs  

impleaded themselves as partners of the firm in the writ  

petition.   The  High  Court  after  hearing  both  sides  by  

impugned  judgment  dated  30.5.2013  directed  the  firm  

namely  the  writ  petitioner,  to  make payment  of  amount  

equivalent to 100 litres of petrol per month from July 1993  

to the date of the judgment and on such payment directed  

partner nos.1 and 2 referred to supra to give No Objection  

Certificate  for  reconstitution   of  the  firm  and  further  

directed the Corporation to take a decision regarding the  

reconstitution of the firm.  It was further observed in the  

order  that even after payment is made, if partner nos. 1  

and  2  do  not  give  no  objection,  the  Corporation  shall  

reconstitute the firm waiving the No Objection.  Challenging  

the  judgment,  Bharat  Petroleum Corporation  Limited  has  

preferred the present appeal.

6. The learned counsel appearing  for  the appellant –

corporation contended that the  agreement dated 3.5.1984  

reconstituting the firm was not intimated to the Corporation  

and only after the death of partner Roop Rani Tandon the

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request  for reconstitution of the firm was received in the  

year 2012 and the said proposal was not in accordance with  

their policy for reconstitution of partnership dealership and  

the High Court erred in directing the Corporation to proceed  

with  the  reconstitution  of  the  firm waiving  No  Objection  

Certificate from respondent nos. 2 and 3 herein and hence  

the impugned judgment is liable to be set aside.

7. Per contra the learned counsel appearing for the firm  

namely  respondent No.1 herein  contended that  after  the  

agreement dated 3.5.1984 respondent Nos. 2 and 3 herein  

are  no  longer  partners  of  the  firm  and  said  fact  was  

intimated to the Corporation and after the death of partner  

Roop  Rani  Tandon  a  request  for  reconstitution  was  

submitted  in  writing  and  the  Corporation  is  obliged  to  

reconstitute  the  firm  and  the  impugned  judgment  is  

sustainable.  The learned counsel appearing for respondent  

nos.  2  and 3  submitted   that  even after  the  agreement  

dated 3.5.1984 respondent nos. 2 and 3 continued to be  

partners of the firm though their entitlement was restricted

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to the supply of 100 litres of petrol per month or its value  

thereof.

8. We carefully considered the rival contentions of the  

parties.   The  firm  M/s  B.M.  Motors  was  constituted  on  

26.6.1973 with four partners  and the said firm was running  

the  retail  outlet  from  12.8.1975  onwards.   It  is  also  

admitted that all the four partners entered into subsequent  

agreement  dated  3.5.1984  and  as  per  the  terms  and  

conditions  of  the  said  agreement   partner  nos.  1  and  2  

namely respondent nos.2 and 3 herein would receive 100  

litres of petrol per month or its value thereof.  They further  

agreed that they will have neither right in the retail outlet  

nor claim right in the assets or liabilities of the firm and  

partner nos. 3 and 4 would run the retail outlet in the name  

of the firm.  A reading of the agreement dated 3.5.1984  

clearly reveals that respondent nos. 2 and 3 herein have  

virtually retired from the partnership and their entitlement  

was only to supply of 100 litres of petrol per month from  

the said date.  In other words   it cannot be said that the  

original  partnership  deed  continued  thereafter.  It  is  also

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relevant  to  point  out  that  partner  nos.  3  and  4   were  

recognized as partners of the reconstituted  firm from that  

date. The agreement dated 3.5.1984 was  also acted upon  

and it is not  in dispute that 100 litres of petrol per month  

was supplied to respondent nos.  2 and 3 herein till  June  

1993.

9. Thereafter the firm instituted a suit being Civil  Suit  

No.368 of  1995 against  Respondent nos.  2 and 3 herein  

seeking for decree of permanent injunction to restrain them  

from interfering  in  the  management  and  working  of  the  

plaintiffs retail outlet and the suit was decree ex-parte on  

14.1.2004.  Though respondent nos. 2 and 3 herein have  

claimed that they have filed an application  to set aside the  

ex-parte  decree  and  the  same is  still  pending   and  the  

decree is in force.  In other words the retail outlet in the  

name of the firm continue to be run by partner nos. 3 and 4  

only for  nearly three decades.  In such circumstances  the  

agreement dated 3.5.1984 is in effect the retirement deed  

executed by respondent nos. 2 and 3 herein from the firm

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B.M.  Motors  and  it  has  to  be  treated  as  No  Objection  

Certificate in so far as they are concerned.

10. Respondent No.1 herein in its counter affidavit dated  

31.01.14 have stated that in compliance of the direction of  

the High Court in the impugned judgment, it had sent the  

bank  draft/pay  order  dated  10.6.2013  for  a  sum  of  

Rs.8,64,650/-  issued  by  Canara  Bank  Kannauj  Branch  to  

respondent nos. 2 and 3 herein towards the value of 100  

litres of petrol per month for the period from June 1993 to  

June 2013.  Respondent Nos. 2 and 3 in their letter dated  

28.6.2013 shown as Annexure CA-2 to the counter affidavit  

of respondent no.1 have acknowledged the receipt of the  

said pay order and have stated that they have kept the said  

pay order  as security and will  not encash it  till  the final  

decision  is  taken  by  the  Corporation  in  respect  of  

reconstitution of the firm. It appears that the said pay order  

has not been encashed and had expired.  Be that as it may  

the order passed by the High Court is, in our opinion, just  

and  equitable  inasmuch  as,  while  it  had  protected  the

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interests  of  the  retiring  partners-respondents  2  and 3,  it  

had  ensured  that  they  do  not  frustrate  either  the  

agreement by which they had surrendered their rights in  

the profit and losses of the partnership or interfere with the  

smooth running of the business by the continuing partners,  

in  breach  of  the  decree  passed  in   their  favour.   The  

arrangement arrived at between the partners may not have  

been disclosed to the petitioner corporation but such non-

disclosure should not be allowed to result in termination of  

the  agency  especially  when  one of  the  parties  is  acting  

unreasonably or armtwisting the other party, to extract an  

extra  pound  of  flesh  from it.   The  petitioner-corporation  

would in such a case be expected as a public sector entity,  

to  act  fairly  and objectively  to  prevent  one party  taking  

undeserved  advantage  over  the  other  on  technical  or  

procedural  grounds.   There  is  no  gain  saying  that  while  

considering reconstitution of the partnership the petitioner-

corporation shall be free to stipulate conditions that would  

protect its business interest, goodwill and reputation among  

its consumers.

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11. Since the Bank draft received by respondents 2 and 3  

has not been encashed we direct that the first respondent  

firm shall deposit a sum of Rs.8,64,650/- with the Registrar  

of the High Court of Allahabad, to be released in favour of  

respondent Nos. 2 and 3 herein, upon surrender of the bank  

draft/pay  order  dated  10.6.2013  received  by  them  from  

respondent No.1.  The needful shall be done within a period  

of one month from the date of judgment.  Upon the deposit  

of the amount as aforesaid, the proposal for reconstitution  

of  the  1st respondent-firm  submitted  to  the  appellant-

corporation,  shall  be  considered  for  acceptance,  treating  

agreement  dated  3.5.1984  entered  into  between  the  

original  partners  as  a  “No  Objection  Certificate”  by  

respondent Nos. 2 and 3 to such reconstitution. The  

appeal is disposed of accordingly. No costs.

………………………….J. (T.S. Thakur)

……………………………J. (C. Nagappan)

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New Delhi; April  17, 2014