Scope of Judicial Review in Contract Cases Involving Technical Issues is Limited: Gujarat High Court Reiterates

Believing that the scope of judicial review in contractual matters, especially those requiring technical know-how, is limited, the Gujarat High Court refused to interfere with the order issued by the dispute resolution panel in which the Claimant’s challenge to show cause notices issued by Indian Oil Corporation were dismissed.

The brief facts of the case were that the claimant and the respondent company had entered into a concession to operate a high-speed diesel and petrol retail outlet in a village for 15 years in 2013. Subsequently, the weights and measures department carried out calibration work on the petitioner’s point of sale and issued a certificate. The Respondent’s Anti-Tampering Cell also inspected the Applicant’s distribution unit.

In accordance with the sighting report, show cause notices were issued to the claimant to explain the electronic calibration work as Nozzle-A and subsequently for providing unsatisfactory justification for the poor calibration, the Company terminated caution against any action under the concession agreement.

The High Court allowed the petitioner to respond to the SCA’s vacuum notice of show cause. The Respondent subsequently terminated the dealership contract, which was challenged by the Applicant by two ACAs. The petitioner’s appeal was also dismissed, hence the present petition.

The Claimant disputed that the distribution units had been inspected by the Respondent and that the seals were intact, that there had been no delay in delivery, no stock variation and that all the parameters had been found to be adequate. . The AAC had sealed Nozzle-A but allowed the claimant to continue through Nozzle-B even as the show cause notice was issued. Furthermore, the claimant had no knowledge of the mechanism of the distribution unit electronics and any occurrence of such an anomaly was purely coincidental. It has been argued that once the seal is found intact, the dealer cannot be penalized for any fault or defect. The reference was placed on HPCL V/s. Super Highway Service, Bharat Petroleum Corporation Limited V/s. Jagannath and Company and others and other precedents to support this claim.

On the other hand, the defendants maintained that the DRP had examined in a manner “at arm’s length” all the assertions of the applicant and that it was therefore unjustified for the applicant to invoke the extraordinary jurisdiction of the Court under Article 226. argue that any contradictory order leading to the stoppage of the sale only affects the respondents. In the interest of the public, the termination order for violation of the MDGs has been issued.

Judge Vaibhavi Nanavati while noting the various proven technical facts of the case that all the authorities had concurrently held against the Applicant. In addition, there was a “critical irregularity” under MDG according to inspection reports. Furthermore, the claim that the electronic calibration was a technical fault was rejected since the calibration was performed by the claimant and the “K factor” was changed.

Regarding the legal factors, the Single Judge cited Mrs. NG Projects Limited v. M/s. Vinod Kumar Jain & Ors.In contracts involving technical matters, courts should be even more reluctant because most of us in judges’ robes lack the expertise to adjudicate technical matters beyond our domain.

Furthermore, the Supreme Court, in a precedent with similar facts, had exercised its jurisdiction considering that the civil court had refused to exercise its power due to its incompetence. However, in this case, the claimant also went to civil court in 2014. The parties were also regulated by MDG and the same was introduced to maintain high standards of customer service. Significantly, the bench remarked:

The scope of judicial review for interference in contractual matters is very limited. In the facts of this case, the impugned orders issued by the defendant authorities are based on expert opinion and expertise in the field. The two contested orders are adopted by the experts in the field, furthermore, the appellate authority i.e. DRP comprised a High Court judge and two technical members considered the said matter and therefore, during adoption of the contested orders, the question in question was tested by the judicial expert as well as technical expert.

Accordingly, the motion was dismissed.

Case Title: SANDIP DALPATBHAI KIKANI v Indian Oil Corporation

Case No: C/SCA/10455/202

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