GUNARATNE AND OTHERS V. CEYLON PETROLEUM CORPORATION AND OTHERS | 1996 2SLR 315

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For many years before 1994 the 1st Petitioner had – as an individual – a Dealership Agreement together with the requisite authority under section 5 E of the Ceylon Petroleum Corporation Act, No. 28 of 1961 as amended (by
Act No. 5 of 1963) for running a filling station for the sale, supply and distribution of petroleum. The same filling station was taken over by the petitioners in partnership on a Dealership Agreement signed by the Petitioners on
23.3.94 and by 1st Respondent on 26.10.94 and the petitioners were granted authority with dealer discounts to sell, supply and distribute Lanka Two Star Petrol, Lanka Diesel and lubricants under section 5 E of the Act. By letter
dated 4.1.96 signed by the Marketing Manager of the Ceylon Petroleum Corporation (9th Respondent) the said Dealership Agreement was terminated.  The authority was thus cancelled. Clause 12B of the Agreement and section 5H (4) of the Act had provisions for the termination of the Agreement.
The Board of the Corporation had passed a resolution to terminate the dealership of the Petitioners and to grant the Dealership authority to one B. K. Sarath Wickramasiri (11th Respondent). The resolution was implemented
without notice to the Petitioners. The resolution did not indicate any reason for the Board’s decisions. However according to the letter of termination dated 4.1.96 the Board had considered the contents of five warning letters
dated 23.2.81, 21.11.84, 19.5.86, 27.10.88 and 29.6.93 and had decided to terminate, with immediate effect the Petitioners’ Agreement and authority, acting under Clause 12 B and section 5H (4). The Corporation had a Marketing Manual setting out the procedure for the appointment of new dealers, but this procedure was not followed. The 11th Respondent stated had madean application for a dealership in or about August 1995 and an interview
had been held in the 9th Respondent’s office and he was aware the Corporation’s officials had made investigations into his application. There were however no pleadings or prayer in respect of the 11th Respondent’s dealership.
The 9th Respondent had tendered a Board paper dated 8.12.95 wherein he mentioned the five warning letters and stated that although in the last warning, the dealer had been cautioned that any further act of misconduct would result in termination, considering the said serious lapses, he recommends to the Board of Directors to terminate the dealership.

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