Indian Oil Corporation Limited & Ors. vs M/s Shree Niwas Ramgopal & Ors.

Court

Supreme Court of India

Date

14 July 2025

Case No.

Special Leave Petition (Civil) No. 1381 of 2025

Result

Dismissed

Bench

Pankaj Mithal, Ahsanuddin Amanullah

Citation

[2025] 8 S.C.R. 1 : 2025 INSC 832

Acts & Sections

Partnership Act, 1932

Issue for consideration

Whether the Division Bench of the High Court rightly upheld the mandamus issued by the Single Judge directing the IOCL to maintain the supply of kerosene to the respondent No.1-partnership firm till it is reconstituted or its dealership agreement is terminated.

Headnote

Partnership Act, 1932 – s.42 – Kerosene dealership agreement entered into between IOCL and respondent No.1-partnership firm having three partners – However, on the death of one of the partners of the partnership firm, IOCL discontinued the supply of kerosene to the existing firm without terminating its dealership – Writ Petition filed by the firm and its partners – Allowed, IOCL was directed to continue the supply of kerosene to the existing partnership firm till it is reconstituted subject to the condition stated – Correctness:

Held: No error or illegality in the order of the High Court – The partnership consisted of three partners and the deed of partnership itself, in unequivocal terms, provided that the death of a partner shall not cause discontinuance of partnership and the surviving partners may continue with the business – Therefore, the principle laid down in s.42 is not applicable and the partnership would continue despite the death of one of the partners – Furthermore, the firm was reconstituted as per the proposal submitted having the surviving partners and one of the heirs and legal representatives of the deceased, as the third partner – However, the said reconstituted firm was not recognised by the IOCL as all the heirs and legal representatives of the deceased persons did not join or did not express their unwillingness to join the partnership firm – The insistence of the respondent that all the legal heirs of the deceased partner should join the reconstituted firm or give ‘No Objection Certificate’ to the reconstituted firm is contrary to the spirit of the original deed of partnership – Respondent has no role to play in determining as to who is the competent heir of the deceased partner – It should be left on the wisdom of the existing partners – IOCL misconstrued its own guidelines in not recognising the reconstitution of the partnership firm – Approach of IOCL arbitrary, creating hinderance in the running business – Deprecated – Impugned order not interfered with. [Paras 18, 22, 25-27, 28, 30]

Judgment Pankaj Mithal, J. 1. Heard Smt. Madhavi Goradia Divan, learned senior counsel for the Petitioner, Shri Yashraj Singh Deora, learned senior counsel for the Respondent Nos. 1 to 3 and Smt. Pallavi Pratap, learned counsel for the Respondent Nos.7 and 8. 2. It is a classic case where instead of acting in a just, fair and equitable manner, the statutory corporation, a state instrumentality, has acted in a high-handed manner while exercising arbitrary powers with no sense of fairness in a matter of commercial interest. 3. The Indian Oil Corporation Limited1 after having lost before the

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