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24. Indian Oil Corporation Limited and Ors. vs. Shree Niwas Ramgopal and Ors.
(SC) 2025 INSC 832 (SC)
July 14, 2025
Partnership Firm – Dealership agreement with oil company – Death of a partner – Continuation of the firm – Requirement of inclusion of all partners or NOC of partners not being included in the firm – Excessive and arbitrary demand by the oil company - Principle of fairness-Termination of agreement was held to be not valid. [S. 42, Partnership Act, 1932].
FACTS
The Respondent (partnership firm) was initially a sole proprietorship concern owned by one Mr. Kanhaiyalal Sonthalia, which was reconstituted as a partnership firm on November 24, 1989, by inducting two of his sons as partners. Thereafter, on May 11, 1990, the Respondent firm entered into a dealership agreement with the Petitioner oil company for retail distribution of kerosene. The dealership agreement contained a clause wherein, upon the death of any partner, the Respondent firm shall notify the Petitioner oil company about the particulars of the deceased’s legal heirs and that the Petitioner oil company shall have the right to continue, reconstitute, or terminate the dealership agreement. Mr. Ka
