CASE NAME: INDIAN OIL CORPORATION LTD. & ORS. V. M/S SHREE NIWAS RAMGOPAL & ORS.
CASE NUMBER: SLP (CIVIL) NO. 1381 OF 2025
DATE OF JUDGMENT: JULY 14, 2025
JUDGES: HON’BLE JUSTICE AHSANUDDIN AMANULLAH AND PANKAJ MITAL
Introduction
The case at hand relates to a disagreement between Indian Oil Corporation Limited (IOCL) and a partnership company carrying on the business of kerosene distribution. When one of the partners in the firm died, the remaining partners, together with one of the legal heirs of the deceased partner, endeavoured to refuse to accept the reconstitution because it was not in compliance with its internal guidelines. This resulted in a series of litigations, which ended in a directive from the High Court to IOCL to continue the supply of kerosene to the firm until the dispute was settled or the firm was reconstituted in terms of law. IOCL challenged this directive through a Special Leave Petition (SLP) before the Supreme Court.
Issues for Determination
- Was IOCL correct in not recognising the surviving partners’ reconstituted partnership and the deceased partner’s legal heir?
- Was the High Court justified in issuing directions like mandamus to IOCL to resit the kerosene supply to the firm?
- Whether IOCL’s view on interpreting its guidelines was to support the continued running of the business.
Legal Provisions Involved
Article 136 of the Constitution of India – Supreme Court’s Special Leave Petition jurisdiction.
Article 226 of the Constitution of India – Jurisdiction of High Courts to issue writs including mandamus.
Principles of administrative law – non-arbitrariness in the decision-making of the administration.
Principles of contract law apply to partnership firms and reconstitution when a partner dies.
Petitioner’s (IOCL’s) Arguments
IOCL argued that the reconstitution of the partnership firm was not carried out in accordance with its internal guidelines, so the supply of kerosene could not be continued. It argued that it was only after due compliance with the prescribed procedure and guidelines that the new partnership could be recognised. IOCL also argued that the High Court’s mandamus interfered with their internal policy decisions and was an instance of judicial overreach.
Respondent’s Arguments
The respondent partnership entity, which was shown by the surviving partners and one legal beneficiary of the deceased, contended that the reconstitution was necessary and valid to perpetuate the kerosene distribution business. They insisted that IOCL’s denial was arbitrary and would interrupt a vital service and the companions successfully operating for years. They also noted that none of the legal successors of the deceased had objected or challenged the reconstitution.
Court’s Analysis
The Supreme Court noted that IOCL had misinterpreted its guidelines and had taken a hyper-technical approach. The aim of such guidelines must be to ensure that business continuity is not unnecessarily obstructed. The Court observed that the new partnership consisted of one efficient heir of the deceased and the surviving partners already present, and no heir had objected to this arrangement in front of any judicial forum. Under such circumstances, IOCL’s denial to recognise the reconstituted firm and its decision to suspend kerosene supply were legally untenable and commercially irrational. The Court emphasised that the direction of the High Court, subject to any future order in a civil court or probate proceeding, was reasonable and did not prejudice IOCL.
Judgment
The Supreme Court ruled that there was no illegality or error in the High Court order. The Court rejected the Special Leave Petition by IOCL, observing that the petition lacked merit. The Court also added that IOCL must desist from a narrow bureaucratic approach that obstructs business continuity, particularly when the suggested reconstitution aggrieves no party.
Conclusion
The ruling upholds the doctrine that public sector undertakings such as IOCL should conduct themselves fairly and in a way that promotes the continuation of necessary services. The ruling emphasises the significance of purposive interpretation of administrative directives and discourages unjustified technical objections that compromise established business arrangements. In not intervening in the High Court’s order, the Supreme Court reaffirmed judicial devotion to fair administrative action and just business practices.
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WRITTEN BY AYUSHI TRIVEDI
