GUNAWARDENA v. CEYLON PETROLEUM CORPORATION AND OTHERS

017-SLLR-SLLR-2001-V-1-GUNAWARDENA-v.-CEYLON-PETROLEUM-CORPORATION-AND-OTHERS.pdf


GUNAWARDENA
v.CEYLON PETROLEUM CORPORATION AND OTHERS
SUPREME COURTAMERAS1NGHE. J.
PERERA. J. ANDEDUSSURIYA, J.
SC (FR) APPLICATION NO. 28/9710th NOVEMBER, 2000
Fundamental rights – Refusal by the Ceylon Petroleum Corporation togrant dealership In petroleum products at a Service Station ■ Applicationby petitioner to be appointed upon the demise of the original dealer,the petitioner's father – Legitimate expectation – Article 12(1) of theConstitution.
The father of the petitioner had been appointed and was functioning as theDealer for the 1st respondent Corporation at the Lanka Service Stationlocated at No. 169, Maya Avenue, Colombo 06 with effect from 3rd March1980 on the basis of an agreement PI. He was Issued with a letter ofauthority authorizing to deal In petroleum products in terms of section5(e) of the Petroleum Corporation Act. (vide P2). The land on which thesaid Filling Station was located belongs to the Corporation. The petitioner'sfather died on 8.5.1996 leaving as his sole heirs his widow and five children,including the petitioner.
The petitioner states that he was Involved in the management of the ServiceStation even prior to the death of his father; and after his demise carriedon the business effectively and efficiently without customer complaints;and bills for the purchase of petroleum products were settled in thepetitioner's name. The other heirs of the deceased In a letter addressed tothe 9th respondent (Marketing Manager of the Corporation) requested thatthe petitioner be appointed the Dealer of the Corporation at the said ServiceStation.
Thereafter the petitioner addressed a letter dated 29.05.1996 to the 2ndrespondent (Chairman of the Corporation) making a formal applicationfor appointment as such Dealer. Clause 9.2.5 of the Marketing Manual ofthe Corporation concerning change of Dealership, P9. provides, inter alia.
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that sympathetic consideration may be given to the family of thedeceased.
Consequently the 9th respondent prepared a Board Paper dated 3.7.1996,9R 12, recommending to the Corporadon the appointment of the peddoneras the Dealer of the said Service Stadon In succession to his father. However,on 17.10.1996 the 10th respondent (the Area Manager of the Corporation)visited the Service Stadon and pasted a letter dated 16.10.1996 (on thedirecdon of the 2nd respondent) under the hand of the 9<h respondentpurporting to cancel the agreement PI and requiring persons in charge ofthe Service Stadon to hand over the same and the equipment to the 10threspondent. The peddoner however, retained the possession of the ServiceStadon but the Corporadon Immediately stopped the supply of petroleumproducts to the oudet.
On Inquiries made, the peddoner found that the reason for the purportedcancellation of PI was to enable the Corporadon to appoint the 11threspondent the wife of the Secretary to the Minister of Power and Energeyas the Dealer of the said Service Stadon. This was In breach of clause8.2.1 of the Marketing Manual of the Corporation for the selection of aDealer, P 10, which requires consideration of at least three suitablecandidates before an appointment is made.
On 12.12.1996 the peddoner received a letter dated 6.12.1996, Pll.Informing him that possession of the Service Stadon would be taken overunder the provisions of the Petroleum Corporation Act. Thereafter theCorporation broke open the doors of the premises and handed over thepossession of the same to the 11Ul respondent with effect from 14.1.1997.
In response to the petitioner's claim the 9Ul respondent filed an affidavitalleging, Inter alia, Irregularities and public complaints In the carrying onof the business of the Service Station.
Counsel for the petitioner also submitted that the petitioner was seekingIn his application to agitate a matter which Is strictly within the realm ofcommercial contract which does not fall within the purview of thefundamental rights jurisdiction of the Supreme Court.
Held :
The allegations made against the petitioner have been made withoutsufficient evidence and even without calling upon either the petitioner
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or his father to give explanations, vls-a-vls those allegations, contraryto the principles of natural Justice.
The failure on the part of the respondent Corporation to appoint thepetitioner as the Dealer of the outlet at No. 169, Maya Avenue, Colombo6 having considered his application objectively and in a fair mannerIn terms of the rules set out In the Marketing Manual Is mala Jlde,grossly arbitrary, capricious and unreasonable.
On the facts established, the petitioner had a-legitimate expectationthat he would be appointed Dealer of the aforesaid Service Stationupon satisfying prescribed conditions set out in the Marketing Manualof the 1st respondent Corporation.
«
Whilst Article 12 erects no shield against merely private conduct,public authorities .must conform to constitutional requirements, Inparticular to those set out In Article 12 even In the sphere of contract;and where there Is a breach of contract and a violation of the provisionsof Article 12 brought about by the same set of facts and circumstances,the aggrieved party cannot be contained to his remedy under the lawof contract.
The rights of the petitioner guaranteed by Article 12(1) of theConstitution have been infringed by the 1st to 8th respondents.
Cases referred to :
Att. Gen Jot Hong Kong v. Ng Yuen Shiu (1983) 2 AC 629
Associated Provincial Picture Houses Ltd. v. WednesburyCorporation. (1948) 1 KB 223
Wtckrematunga v. Ratwatte and others (1998) 1 Sri LR 201.
APPLICATION for relief for infringement of fundamental rights.
Tilak Marapone, PC. with Nalin Ladduwahetty and Jayantha Fernando
for petitioner.
R.K.W. Goonesekera with Sanjeewa Jayawardena for 1st to 1001
respondents.
A.K. Premadasa, PC. with Dr. Jayatiassa Costa and C.E. de Silva for
11th respondent.
Cur. adv. vult.
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April 3, 2001.
PERERA, J.The Petitioner in this case has sought a declaration fromthis Court that his fundamental rights guaranteed and protectedby Article 12(1) of the Constitution have been infringed by thefailure on the part of the 1st to the 8th Respondents to appointthe Petitioner as the Dealer of the 1st Respondent of the PetrolStation at No. 169, Maya Avenue, Colombo 6. He has also soughtan order from this Court quashing the decision of the Is' to the8th Respondents to appoint the 11th Respondent as the Dealerof the said Service Station and for a direction on the 1SI to S1*1Respondents to appoint the Petitioner as the Dealer of theCorporation at the Service Station at No. 169, Maya Avenueand to grant him the authority to deal in petroleum productsat the aforesaid location.
FACTS:It is the case of the Petitioner that the Petitioner’s fatherHiniduma Liyanage Ariyasinghe Gunawardena, was appointedand was functioning as the Dealer for the Corporation at theLanka Service Station located at No. 169, Maya Avenue,Colombo 6 and bearing Account No M/l 196, with effect from3rd March, 1980. The said Gunawardena upon suchappointment had entered into an Agreement with theCorporation (vide PI), and was issued with a letter authorisinghim to deal in Petroleum Products in terms of Section 5(e) of thePetroleum Corporation Act, No. 61 of 1928 as amended by Act,No. 5 of 1993 (vide P2)
The said Service Station situated at No. 169, Maya Avenue,Colombo 6 is classified as a ‘Corporation Controlled Outlet."The land on which the said filling Station was located belongsto the Ceylon Petroleum Corporation.
In terms of the said Agreement, Gunawardena wasappointed as the Dealer and was required to purchase Petrol
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and Diesel oil on a pre-paid basis from the Corporation at itsTerminal at Kolonnawa. The oil so purchased was transportedto the Service Station at No. 169, Maya Avenue, Colombo 6 andusing the facilities at the said outlet the Dealer was required todispense Petrol and other related products to consumers at thesaid Service Station.
The said H.L.A. Gunawardena who was the father of thePetitioner died on 8.5.1996 leaving as his sole heirs, his widowand 5 children including the Petitioner.
The Petitioner states that he was involved in themanagement of the said Service Station even prior to the deathof his father and continued to do so even after his demise.
According to the Petitioner after the death of his father, hehad carried on the business effectively and efficiently and freefrom any customer complaints. In the aforesaid circumstances,the family, that is, the heirs of the deceased H.L.A. Gunawardenahad a legitimate expectation that they would be appointed asthe Dealer of the Corporation at the Service Station situated atNo. 169, Maya Avenue, Colombo 6 in terms of the provisions ofthe Marketing Manual of the 1st Respondent Corporation.
Upon the death of the said H.L.A. Gunawardena, the heirsof his estate decided to have the Petitioner appointed as theDealer of the Corporation at the said outlet and signed acommunication addressed to the Marketing of the CeylonPetroleum Corporation, Kolonnawa whereby the other heirsrequested the Marketing Manager, Ceylon PetroleumCorporation to appoint the Petitioner as the Dealer of theCorporation at the outlet situated at the said premises. The 9thRespondent in his Board Paper marked 9R12 has admittedthe receipt of this document.
Thereafter, the Petitioner addressed a letter dated 29th May,1996 (P4) addressed to the Chairman of the Ceylon PetroleumCorporation making a formal application for the Dealership of
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the Corporation at the aforesaid premises. In this letter, thePetitioner had specifically requested the 2nd Respondent to givedue consideration to the fact that it was he who had beenInvolved in the management of the said Service Station evenduring the lifetime of his father and appealed to him to grantthe Petitioner the Dealership.
According to the Petitioner, he effectively carried on thebusiness of the said Service Station upon the demise of the saidH.L.A. Gunawardena and bills for the purchase of PetroleumProducts were settled in the Petitioner’s name and/or throughhis Bank. (See P5A to P5D and PI3).
However, the Dealership of the said Service Station has beengranted to the 11th Respondent on a decision of the Board ofthe 1st Respondent upon a Board Paper prepared by the 9thRespondent. A true copy which has been produced markedP7.
On the 17th of October. 1996 the 10th Respondent whoarrived at the aforesaid Service Station had pasted a letter dated16.10.96 (on the directions of the 2nd Respondent), under thehand of the 9th Respondent Informing the Petitioner that It hasbeen decided to cancel the Dealership In terms of Section 12(b)of the Agreement PI and the authority given under Section 5(H) (4) of the Petroleum Corporation Act. This letter furtherrequired the persons In charge of the said Service Stadon tohand over the Service Station and the equipment owned by the1st Respondent Corporation to the 10th Respondent. (P8).
The 1st Respondent Corporation immediately thereafterstopped the supply of petroleum products to this Outlet. ThePetitioner however retained possession of the said ServiceStation.
According to the petitioner, Inquiries made by him revealedthat the decision to cancel the Agreement and Authority (PI)conveyed by the letter of the 9th Respondent dated 16.10.96
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had been taken by the 1st Respondent to enable the Corporationto appoint the 11th Respondent as the Dealer of the said LankaService Station at Maya Avenue. The Petitioner alleges that the1101 Respondent is the wife of a person employed at the SLFPHead Office and also functioned as a Secretary to the Ministerof Power & Energy under whose purview the 1st RespondentCorporation functions.
The Petitioner complains that the Area Manager (10thRespondent) in selecting the 11th Respondent as the Dealer hasfailed to comply with Clause 8:2 of the Marketing Manual of the1st Respondent Corporation for the selection of a Dealer. Theattention of this Court has been specifically invited to therequirement in the aforesaid paragraph for the Area Supervisorto make inquiries locally and obtain applications from at leastthree suitable candidates and to forward his comments as tothe competence and suitability of such candidates to the 10thRespondent. (Vide Clause 8.2.1 of P10).
Further in terms of Clause 9.2.5 of the Marketing Manual,the 1st Respondent Corporation is obliged to give sympatheticconsideration to the family members of a deceased Dealer inrespect of the Dealership, unless they are individually orcollectively incapable of operating the outlet satisfactorilybecause of lack of funds or other valid reason. (Vide P9 Clause9.2.5)
The Petitioner has averred that there was no valid reasonfor the 1st Respondent Corporation to form the opinion that thePetitioner was incapable of operating the said outletsatisfactorily.
It is the case of the Petitioner that after the demise of H.L.A.Gunawardena, the Petitioner had always faithfully, diligently andefficiently performed the duties and obligations as a Dealer ofPetroleum of the 1st Respondent and has not defaulted incomplying with any of the Terms, Covenants and Conditions ofthe Dealership Agreement or the Conditions under which
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commissions and allowances are payable to him in terms ofthe Agreement.
In the aforesaid circumstances, the Petitioner states thatupon the demise of his father, the 1st Respondent Corporationought to have considered him for appointment as the Dealer,there being no valid reason to believe that he was incapable ofoperating the outlet satisfactorily. The action of the Corporationin depriving him of the appointment as the Dealer andappointing the 11th Respondent is therefore mala fide.capricious, unreasonable and unfair.
The Petitioner has also adverted to an earlier applicationmade to this Court for relief upon the decision of the 2ndRespondent to terminate the Dealership awarded to his father(Application No. 713/96) on the ground that the Dealership heldby the deceased Gunawardena enured to the benefit of the heirsof his estate. This Court has refused leave to proceed in respectof his application on the basis that there existed no such rightto inherit but had reserved the right to the Petitioner to file afresh application if the lsl Respondent failed to appoint amember of the family, upon such application being made bythat family member.
Thereafter, the Petitioner had met the 3rd Respondent andhad requested him to reconsider the decision taken by the Boardand to grant a further opportunity to the Petitioner byrecommending to the Board to review the decision of the Boardto appoint the 11th Respondent as the Dealer of the ServiceStation at Maya Avenue. The 3rd Respondent had then giventhe Petitioner an assurance that he would make suchrecommendation to the Board of the 1st Respondent Corporationand acting upon such assurance the Petitioner had awaited hisappointment as the Dealer of the said Service Station.
However on 12.12.96 the Petitioner had received a letterdated 6.12.96 requiring the Petitioner to hand over possessionof the premises No. 169, Maya Avenue, Colombo 5 on which
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premises the said Service Station was located and that thepossession of the premises in question would be taken over interms of Section 32(a) (i) and (11) read with Section of the 38(2)of the Petroleum Corporation Act. (Vide PI 1).
Consequent to the aforesaid letter, the 1st RespondentCorporation has broken open the doors of the said ServiceStation and has handed over the possession of same to the11th Respondent with effect from 14.1.97. The 11th respondentis presently functioning as the Dealer of the Corporation atthe said premises.
President’s Counsel on behalf of the Petitioner submittedthat having regard to the matters the Petitioner has pleaded,the decision taken by the 1st Respondent and the 2nd to the 8thRespondents as members of the Board of Directors of the 1stRespondent Corporation to refrain from appointing the Petitioneras the Dealer of the said Outlet and the decision to award sameto the 11th Respondent is mala fide, capricious, unreasonableand unfair and that by such action the Petitioner has beensubjected to hostile discrimination in violation of hisfundamental rights guaranteed by Article 12(1) of theConstitution.
It is in these circumstances, that the Petitioner sought adeclaration that the fundamental rights of the Petitionerguaranteed and protected by Article 12(1) of the Constitutionhave been infringed by the failure to appoint the Petitioner as theDealer of the Outlet located at No. 169, MayaAvenue, Colombo6.
In response to this claim of the Petitioner, the 9* Respondenton behalf of the 1st to the 10th Respondents in this case filed avery comprehensive affidavit seeking to justify the decisionof the 1st to the 8th Respondents to appoint the ll,bRespondent sis the Dealer of the Service Station at No 169, MayaAvenue and authority granted to her to deal in petroleumproducts upon the following grounds
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Irregularities perpetrated by the Petitioner
Neither the Petitioner and/or the Petitioner’s mother operatedthe said Service Station satisfactorily after the death ofMr. H.L.A. Gunawardena resulting in numerous complaintsfrom members of the public in respect of the constantlyinsufficient stocks of petroleum and diesel. The Petitioner'smother and/or the Petitioner had failed negligently tomaintain the minimum required stock of diesel and petrolin the underground storage tanks of the Service Stationcontrary to the rules and regulations formulated by the Is1Respondent. It is the position of the 9th Respondent thatmaintenance of this minimum quantity is insisted upon bythe 1st Respondent in order to ensure the ready anduninterrupted supply of petroleum to the public.
In September and October 1996. i. e. immediately beforethe 11th Respondent was appointed as the Dealer of thesaid Service Station this fact was detected. In support ofthis proposition he produced the “Daily Sales Analysis” forthe months of September and October, 1996 marked 9R3and 9R4.
Public complaints against the Petitioner
In about the latter part of July 1996, the 9th Respondent-the Marketing Manager of the Is* Respondent became awarethat the Area Manager (West/South) of the 1st Respondenthad received numerous complaints from members of thepublic to the effect that the service extended at this ServiceStation was very unsatisfactory in view of the constantlydepleted levels of petroleum and diesel maintained at theStation.
The 9th Respondent also seeks to rely on a report furnishedby the Area Manager (West/South) dated 19.8.96 after aroutine inspection by the Service Station Manager. (Vide9R7) and extracts from the Field Officer’s log book after a
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visit to this Service Station by the Deputy Marketing Managermarked 9R6 that the Lanka Service Station at Maya Avenuehad been operated in a manner which is prejudicial andinimical to the discharge by the 1st Respondent of its dutytowards the public under the stewardship of the Petitioner’smother and/or Petitioner.
The 9th Respondent has also referred to two complaints(9R10 & 9R11) made against the Petitioner’s father regardinghis failure to operate the Service Station satisfactorily – buthe states that the allegations could not be proved withsufficient certainly to warrant the imposition of disciplinaryaction although inquiries were made by the 1st Respondent.
P4 is not an application
The 9th Respondent states that the document marked P4 ismerely a letter from the Petitioner indicating his desire to beappointed as the Dealer of the Lanka Service Station atMaya Avenue and fails to furnish any acceptable materialpertaining to the Petitioner’s ability to operate Dealershipon a long-term basis. P4 was therefore not a properlyconstituted application. There was also some degree ofdoubt In regard to the financial capacity of the Petitioner tooperate the Dealership successfully.
In the 9th Respondent’s affidavit he has specifically statedthat he was not aware that the husband of the 11thRespondent (the present Dealer) was a Secretary to the Hon.Minister of Power & Energy and the then Deputy Minister ofDefence.
That the Marketing Manual of the 1st RespondentCorporation has been abrogated and was therefore not inoperation at all times material to the Petitioner’s applicationhaving been invalidated by the Board of Directors of the 1stRespondent Corporation (Vide 9R18 & 9R19). Withoutprejudice to the invalidity of the Marketing Manual the 9th
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Respondent states that in any event Clause 9.2.5 of the saidManual specifically points out that “while sympatheticconsideration may be given to the family of the deceased, ifthey are individually or collectively incapable of operatingthe outlet satisfactorily because of lack of funds or othervalid reasons, their claims may be dismissed."
That upon the death of the Petitioner’s father the Dealershipwas automatically terminated as a result of the death of theappointed dealer.
I now propose to examine the validity of the grounds set outby the 9th Respondent in his affidavit justifying the nonappointment of the Petitioner as the Dealer of the aforesaidService Station.
& (b) The failure on the part of the Petitioner's motherand/or Petitioner to operate the Service Stationsatisfactorily. In this connection, the Petitioner in his counteraffidavit has invited the attention of this Court to the fact thatthe 1st Respondent Corporation has at no stage issued anywarnings to either the Petitioner or to his father during his life-time with regard to the unsatisfactory manner in which the saidFilling Station has been operated nor has the 1st RespondentCorporation at any stage called for any explanation either fromthe Petitioner or from his father with regard to the inadequatestock of fuel maintained at the said Filling Station. The 9IhRespondent has failed to adduce any evidence on this aspect ofthe matter.
In the absence of any form of evidence in support ofthe matter set out above, I agree with the submission ofMr. Marapone, P C. on behalf of the Petitioner that it is safe topresume that the operation of the said Filling Station wascontinued satisfactorily before and after the death of thePetitioner’s father on 8.5.96 without any complaints from thepublic. It is also relevant to observe that the Respondents havefailed to produce any complaint from the public for the period
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January to October, 1996 nor have they produced any detailswith regard to the Inadequate stock levels maintained or theunsatisfactory manner In which the said Filling Station wasoperated in the months immediately after the death of thePetitioner’s father. In this connection it is significant that the9th Respondent has admitted that he had prepared a BoardPaper No 1996/106/1196 dated 3.7.96 (9R12) recommendingto the Board of Directors of the 1st Respondent Corporation theappointment of the Petitioner as the Dealer of the said ServiceStation in succession to his late father.
There also appears to be much substance in the submissionof Counsel for the Petitioner that detections and spot inspectionsreferred to in the 9th Respondent’s affidavit and the allegationsrelating to the maintenance of Inadequate stock levels surfacedonly in September and October 1996 when the appointment ofthe 11th Respondent as Dealer was under consideration by the1st Respondent Corporation. The letter issued by the Bank ofCeylon to the 1st Respondent dated 20.9.96 (9R15) relating tothe financial capacity of the 11th Respondent is stronglysupportive of the fact that towards the latter part of September1996 the selection of the 11th Respondent for Dealership wasunder serious consideration by the 1st Respondent Corporation.The aforesaid facts in my view support the proposition of thePetitioner that at this stage the 1st Respondent Corporation wasmaking every endeavour to pave the way for the 11th Respondentto obtain the Dealership of this Service Station.
In evaluating the allegation made by the 9th Respondentthat he became aware in the latter part of July 1996 that theArea Manager (North/South) at the 1st Respondent Corporationhad received numerous complaints from the members of thepublic alleging that the service extended at this Service Stationwas very unsatisfactory in view of the constantly depleted levelsof petroleum and diesel maintained at the said Service Station,it is relevant to note that the Respondents have not producedany details with regard to the inadequate stock levelsmaintained or the unsatisfactory manner in which the said
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Filling Station was being operated immediately after the deathof the Petitioner’s father in May 1996 – the documents producedrelate only to the months of September and October 1996. It isthe submission of Counsel for the Petitioner that orders wereplaced by the Petitioner upon payment of cash with the 1stRespondent Corporation so that there would be adequatestocks when the inspections took place. Howeverthe delivery of necessary stocks of petrol and diesel had beendeliberately delayed with a view to ensuring that there wouldnot be adequate stocks when the inspections took place. Counselrelied on the documents marked P15(A) to P15(N) in supportof his submission.
Further, the Petitioner in this letter P4 dated 20.5.96 whileapplying for the Dealership had indicated to the 2nd Respondenthis financial capability and suitability to continue as the Dealerof the said Service Station. Hence in my view, it is safe to presumethat the 9th Respondent prepared the Board Paper (9R12)recommending the Petitioner for Dealership having determinedthat the Petitioner was both financially stable and was capableof conducting the operations of the Service Station in a suitablemanner.
It is also necessary to observe that no report from the AreaManager (10th Respondent) has been adduced in support ofthe 9th Respondent’s contention that the said Service Stationwas functioning in an unsatisfactory manner either immediatelybefore or after the aforesaid Board Paper (9R12). In the aforesaidcircumstances, there appears to be merit in the contention ofCounsel for the Petitioner that the adverse material was collectedthereafter for the purpose of preventing the Board Paper (9R12)being approved by the Board of the Respondent Corporationas the 11th Respondent had by this time indicated an interestin the Dealership of the said Service Station.
Yet another matter that must be borne in mind in this regardis that no material has been placed before this Court to establishthat the Petitioner was at any stage called upon to give any
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explanation either by the 9th Respondent or by the Board of the1st Respondent Corporation with regard to the inadequate stocklevels maintained at the said Service Station, the Petitioner’sfinancial capabilities or with regard to any complaint on theunsatisfactory manner In which the said Service Station hadbeen operated.
(c) The letter P4 submitted by the Petitioner for Dealershipof this Service Station is not a properly constitutedapplication. It was the contention of Counsel for the 1st to the10th Respondents that the document produced marked P4 ismerely a letter from the Petitioner indicating his desire to beappointed as the Dealer of the Lanka Service Station at MayaAvenue. The said letter failed to furnish any acceptable materialpertaining to the Petitioner’s ability to operate a Dealership ona long-term basis.
1 wish to observe that the document marked P4 which isthe letter dated 29.5.96 by which the Petitioner applied for theDealership of this Service Station he has indeed indicated tothe 1st Respondent his financial capability and his suitabilityto continue as the Dealer of the said Service Station. In point offact, the Respondents have not produced in this case details ofany public complaints that existed from January to October96, nor produced any details with regard to the inadequate stocklevels maintained and the unsatisfactory manner the said FillingStation was being operated during the period immediately afterthe death of the Petitioner’s father.
Further, in my view, there can be little doubt that the 9thRespondent when he prepared the Board Paper marked 9R12recommending the Petitioner to be appointed as the Dealer ofthe said Service Station, he had acted upon the document P4and had accepted the suitability and financial capability of thePetitoner for appointment as the Dealer of this Service Station.
The conduct of the 9th Respondent to initiate inquiries intothe capacity and eligibility of the Petitioner after he preparedthe document 9R12 lends support to the allegation made by
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the Petitioner that the 9th Respondent was not acting bona Jldein this matter and raises grave suspicions in regard to the courseof conduct adopted by him. If the Petitioner’s application (P4)had not been properly constituted as alleged by the 9,hRespondent, then the question arises as to why the 9thRespondent prepared the Board Paper (9R12) recommendingthe Petitioner’s application for appointment for Dealership.
For the aforesaid reasons, I am unable to accept thestatement of the 9th Respondent who at this late stage takes upthe position that P4 was not an application for Dealership whichconformed to the requirements of the 1st RespondentCorporation.
The 9th Respondent in his affidavit has stated that hewas not aware that the husband of the 111* Respondent(the present dealer) was the Secretary of the Hon. Ministerof Power & Energy and the then Deputy Minister of Defence.
However, on this matter, we have the specific averment in theaffidavit furnished by the 11th Respondent herself who saysthat she is the wife of Samarasekera referred to in paragraph
of the petition and that her husband was the Secretary tothe Hon. Anuruddha Ratwatte, Minister of Power & Energy andthe Deputy Minister of Defence.
Marketing Manual of the 1st Respondent Corporationhas been abrogated – The 9th Respondent has also raised theobjection that the Marketing Manual of the 1st RespondentCorporation has been abrogated and was therefore not inoperation at all times material to the Petitioner’s application. Itwas the contention of Counsel for the 1st to the 10th Respondentsthat at the relevant time the Marketing Manual had beeninvalidated by the Board of Directors of the 1st RespondentCorporation (9R18 & 9R19).
However, upon a perusal of the document (9R18), it is clearthat while it contains a declaration that the Marketing Manualis obsolete, the decision of the 1st Respondent Board dated
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24.9.96 (9R19) does not Indicate that the Board of the 1stRespondent Corporation had made a decision either to abrogateor declare the Marketing Manual to be obsolete. Instead theBoard had only taken note of the contents of the Board Paper(9R18) submitted by the 9th Respondent. I am unable thereforeto accept the averment of the 9th Respondent that at all timesmaterial for the Petitioner’s application for Dealership and theappointment of the 11th Respondent as the new Dealer, theMarketing Manual had been abrogated by the Board of Directorsof the 1st Respondent Corporation.
I hold, therefore, that upon the material placed before thisCourt there is no justification to hold that the Marketing Manualhad in fact been abrogated, nor has there been a declaration bythe 1st Respondent Board to the effect that the MarketingManual was obsolete. In point of fact a memo dated 30.12.96(P12) addressed to the 2nd Respondent by the 9th Respondentrelating to the appointment of Dealer of a Corporation ControlledOutlet at Thambuttegama is supportive of the fact that the 1stRespondent Corporation was indeed acting in conformity withthe Guidelines set in the Marketing Manual (Vide P20) even aslate as December 1996.
Part 8 of the Marketing Manual relates to the appointmentof Dealers which lays down the policy and procedure in theappointment of Dealers. Clause 8.2.1 requires the AreaSupervisor to make inquiries locally and obtain applicationsfrom at least 3 suitable candidates and to forward his commentsas to the competency and suitability of the 3 candidates asrequired by Clause 8.2 of the Marketing Manual. (Vide Part 8 ofthe Marketing Manual marked P9 of the Is' RespondentCorporation). There is no material whatsoever furnished by theRespondent to show that they have complied with the aforesaidrequirements.
The only conclusion one can reach in the aforesaidcircumstances is that the Is' Respondent Corporation had nottaken any step in terms of the procedure laid down by the
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Marketing Manual In the selection of the dealer for this ServiceStation and in taking steps to appoint the 11th Respondent asthe dealer of the said Service Station.
Further, Part 9 of the Marketing Manual makes provisionfor change of Dealership and Closure of Outlets. Clause 9.2.5states thus:
“While sympathetic consideration may be given to the familyof the deceased, if they are individually or collectivelyincapable of operating the outlet satisfactorily because oflack of funds or other valid reasons, their claims may bedismissed.”
On a consideration of the entirety of the material placedbefore this Court by the 1st to the 10th Respondents, one cannotreasonably come to the conclusion that any endeavour has beenmade by the 1st Respondent Corporation to comply with theprovisions contained in Clause 9.2.5 of the Marketing Manual.In my view the Respondents have failed to give anyconsideration whatsoever to ascertain whether the petitioner“was individually or collectively incapable of operating the outletsatisfactorily because of lack of funds or other valid reasons."
On the contrary, the material placed before this Court ismore supportive of the fact that the Petitioner has efficientlyperformed his duties and obligations as a Dealer of petroleumproducts of the Corporation and has not defaulted in complyingwith any of the terms and/or conditions of the DealershipAgreement.
It would appear to me that the allegations made againstthe Petitioner have been made without sufficient evidence andeven without calling upon either the Petitioner or his father togive explanations, vis-a-vis, those allegations contrary to theprinciples of natural justice. It is also significant in thisconnection to advert to the fact that the allegation that adequatestock levels had not been maintained have been levelled against
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the Petitioner, particularly during the months of September andOctober, 1996 after the 11th Respondent had clearly indicatedan interest in the Dealership as borne out by 9R15. Neither the1st Respondent Board nor the 9th Respondent has adducedany evidence to support the allegation with regard to theinadequate stock levels or other allegations during the periodbefore and immediately after the death of the Petitioner’s father,i.e. the 8th of May, 1996.
There seems to be much merit in the submission of Counselfor the Petitioner that the Petitioners have delayed delivery offuel “during the period the Respondents allege the ServiceStation had inadequate stock levels” after payment was madein cash which is borne out by the documents P15A to P15M toenable the Respondents to justify the Dealership being given toa person other then the Petitioner.
The Petitioner’s position is that the failure on the part ofthe 1st to the 10th Respondents to consider his application uponits merits for Dealership is mala fide, grossly arbitrary,capricious and unreasonable, and also that such failure hasbeen influenced by collateral considerations and made for allegedreasons which do not bear any form of objective scrutiny.
1 am of the view that the failure on the part of the Is1Respondent Corporation to appoint the Petitioner as the Dealerof the Outlet located at No. 169, Maya Avenue, Colombo 6, havingconsidered his application objectively and in a fair manner interms of the rules set out in the Marketing Manual of the 1stRespondent Corporation constitutes action which is mala fide,grossly arbitrary, capricious and unreasonable.
It has been held in the Case of Att. Gen. for Hong Kong v.Ng Yuen Shiu(U that a legitimate expectation which has beencreated may sometimes be no more them that a particularprocedure may by followed.
On the facts established in the present case, I hold that thePetitioner had a legitimate expectation that he would be
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appointed Dealer of the aforesaid Service Station upon satisfyingprescribed conditions set out in the Marketing Manual of the1st Respondent Corporation. I hold that the rights of thePetitioner guaranteed by Article 12(1) of the Constitution havebeen infringed by the 1st to the 8th Respondents. It is now wellsettled law that if it can be shown that a decision was based onirrelevant considerations, or that improper purposes were beingpursued, it will be struck down on the Wednesbury Criteria.(See Associated Provincial Picture Houses Ltd. v. WednesburyCorporation)'21.
It was also contended on behalf of the Respondents thatthe purported right of the Petitioner cannot be vindicated in afundamental rights application. It was Counsel’s submissionthat the Petitioner was seeking in his application to agitate amatter which is strictly within the realm of private commercialcontract which does not fall within the purview of thefundamental rights jurisdiction of this Court. This matter hasnow been finally resolved by this Court. In the case ofWickrematunga vs Anuruddha Ratwatte and Others131 – whereit was held that “Law in Article 12 of the Constitution includesregulations, rules, directions, principles, guidelines and schemesthat are designed to regulate public authorities in their conduct.In the context, whilst Article 12 erects no shield against merelyprivate conduct, public authorities must conform toconstitutional requirements, in particular to those set out inArticle 12 even in the sphere of contract; and where there is abreach of contract and a violation of the provisions of Article 12brought about by the same set of facts and circumstances, theaggrieved party cannot be confined to his remedy under the lawof contract.”
I accordingly declare that the action of the 1st to the 9thRespondents in this case is indeed mala fide, grossly arbitrary,capricious and unreasonable and the Petitioner's fundamentalright to equal protection of the law has been violated. In thecircumstances of this case, I consider it just and equitable that
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Gunawardena v. Ceylon Petroleum Corporation and Others
(Perera, J.)«
251
the 1st Respondent Corporation should pay the Petitioner a sumof Rs 250,000/- as a solatium.
I make order that a sum of Rs 250,000/- be paid by the 1stRespondent Corporation to the Petitioner as a solatium for theinfringement by the Corporation of the Petitioner’s fundamentalrights. I also make order that the 1st Respondent Corporationshall pay the Petitioner a sum of Rs 25,000/- as costs.
AMERASINGHE, J.I agree.
EDUSSUR1YA, J.I agree.
Relief granted.