Shambhu Malakar vs. Union Of INDIA & Ors

Facts

The petitioner, Shambhu Malakar, filed a writ petition challenging the allotment of an LPG distributorship by Bharat Petroleum Corporation Limited (BPCL) to M/s Shib Shakti Bharatgas, a partnership firm whose partners are respondent nos. 5 and 6. The distributorship was advertised as reserved for the Other Backward Classes (OBC) category. The petitioner, who is not an OBC but a Scheduled Caste person, had entered into various agreements with respondent no. 5, including lease deeds for land and a partnership agreement, aiming to become a 95% or 90% partner in the distributorship. The petitioner claims to have invested capital and managed the business, while respondents 5 and 6 allegedly attempted to take control. The petitioner sought intervention from BPCL and permission to continue the business. Respondents 5 and 6 argued that the agreements were obtained by fraud and misrepresentation, and a civil suit challenging them was pending. BPCL argued that the petitioner, not being OBC, was ineligible and that the agreements were benami, violating the distributorship terms and guidelines.

Held

The Court held that the writ petition was not maintainable in law. Firstly, the dispute was found to be primarily a private dispute between the petitioner and respondents 5 and 6, lacking any public law element that would warrant writ jurisdiction. Secondly, the petitioner, not belonging to the OBC category, was ineligible for the LPG distributorship, which was explicitly advertised as reserved for OBC candidates. The Court noted that the purported agreements between the petitioner and respondents 5 and 6 were not binding on BPCL. Even if authentic, these agreements were considered to be for an illegal consideration (securing an OBC-reserved distributorship by a non-OBC person) and were contrary to the Guidelines for Reconstitution of LPG Distributorship and the distributorship agreement between BPCL and respondents 5 and 6, thus vitiating their enforceability under the Contract Act. The Court found that no procedure for reconstitution or induction of an outside partner, as stipulated in the Guidelines, had been followed. Therefore, the petitioner had no contractual or legal right to be enforced against BPCL, and his remedies, if any, lay in civil or criminal proceedings against respondents 5 and 6. The writ petition was dismissed on contest.

Key Issues

1. Whether the writ petition is maintainable in law, considering the dispute is primarily private between the petitioner and respondents 5 and 6, and lacks a public law element, particularly in light of the petitioner not belonging to the reserved OBC category for the distributorship? 2. Whether the purported agreements between the petitioner and respondents 5 and 6, which allegedly facilitated the petitioner's involvement in an OBC-reserved distributorship, are legally enforceable and binding on BPCL, especially when they contravene the distributorship agreement and the Guidelines for Reconstitution of LPG Distributorship? Petitioner's arguments: The petitioner contended that respondents 5 and 6 are bound by estoppel to formally induct him as a partner, as he invested capital and managed the business based on their assurances and agreements. He argued that he successfully ran the distributorship for years, obtaining necessary clearances and permissions, and that respondents 5 and 6 did not participate in its success. The petitioner relied on the executed agreements to assert his rights as a partner. Respondents' arguments: Respondents 5 and 6 argued that the agreements were tainted by fraud and misrepresentation, and a civil suit challenging their authenticity was pending. They also pointed out that the petitioner, not being OBC, was ineligible for the distributorship. BPCL argued that no cause of action existed against it, as the dispute was private. BPCL further contended that the petitioner's conduct was mala fide, attempting to unlawfully usurp an OBC-reserved vacancy through benami arrangements, violating the distributorship agreement and the Guidelines for Reconstitution of LPG Distributorship.