Allahabad High Court
M/S Kisan Sewa Kendra , Sarai Dubaulia vs Union Of India And 3 Others on 22 October, 2024
Bench: Anjani Kumar Mishra, Jayant Banerji
HIGH COURT OF JUDICATURE AT ALLAHABAD Neutral Citation No. - 2024:AHC:167778-DB RESERVED Court No. - 3 Case :- WRIT - C No. - 32973 of 2018 Petitioner :- M/S Kisan Sewa Kendra , Sarai Dubaulia Respondent :- Union Of India And 3 Others Counsel for Petitioner :- Daya Ram Singh Chauhan,Swati Agrawal Srivastava Counsel for Respondent :- C.S.C.,A.S.G.I.,Devi Shanker Shukla,Tarun Varma With Case :- WRIT - C No. - 7392 of 2019 Petitioner :- M/S Kisan Sewa Kendra Respondent :- Union Of India And 3 Others Counsel for Petitioner :- Daya Ram Singh Chauhan,Sri V.K. Singh Senior Advocate,Swati Agrawal Srivastava Counsel for Respondent :- A.S.G.I.,Devi Shanker Shukla,Tarun Varma,Yogendra Kumar Hon'ble Anjani Kumar Mishra,J.
Hon'ble Jayant Banerji,J.
(Per: Hon'ble Jayant Banerji, J.) Order in Writ-C No. 32973 of 2018
1. Heard Shri U.K. Saxena, learned Senior Advocate assisted by Mrs. Swati Agrawal Srivastava for the petitioner. Shri Devi Shanker Shukla, learned counsel appears for the respondent nos. 2 and 3 (Indian Oil Corporation). Learned Standing Counsel, Shri Ankur Tandon, appears for the respondent no. 4- District Supply Officer.
2. Under challenge in the present petition is an order dated 7.7.2017 passed by the respondent no. 4- District Supply Officer, Ghazipur, which is a suspension order-cum- show cause notice issued to the petitioner to show cause why the license granted under the Motor Spirit and High Speed Diesel (Regulation of Supply & Distribution and Prevention of Malpractices) Order, 20051 be not cancelled. Further, under challenge is the order dated 16.10.2018 passed by the respondent no. 4 cancelling the license No. 68 granted to the petitioner for sale of diesel from the retail outlet.
3. It appears from the record that on 24.5.2017, an inspection was done by a team of officers in which it was found that in the dispensing units the pulsars of four nozzles, which were examined after breaking the seal, were tampered. The matter being suspicious, all the four nozzles were sealed. It appears that thereafter an FIR bearing Case Crime No. 0462 of 2017 was filed on 4.7.2017 in Police Station Karimuddinpur, District Ghazipur under Section 3/7 of the Essential Commodities Act, 1955, naming the proprietor of the petitioner firm and another. Thereafter, on 7.7.2017, the impugned suspension order and show cause notice was issued suspending the license No. 68 granted to the petitioner for sale of diesel and asking the petitioner to submit its clarification along with evidence.
4. A reply dated 28.7.2017 was submitted by the petitioner. By the impugned order dated 16.10.2018, after considering the reply, the license was cancelled by the respondent no. 4.
5. It is the contention of the learned counsel for the petitioner that at the time of the inspection carried out by the team on 24.5.2017, admittedly, the seal of the dispensing unit was opened, which reflected that the seal, which is put by the Weights and Measures Department under the supervision of the Oil Corporation, was intact and there was no tampering. It is stated that neither the density of the fuel nor the quantity was found to be faulty and there was no short supply. It is stated that the dealer is not the gainer by the so-called tampering of the pulsar/nozzle unit and no 'malpractice' as defined in the Order, 2005, was committed by the petitioner. Learned counsel has drawn pointed attention of the Court to the reply of the petitioner submitted after the show cause notice being reflected in paragraph no. 3 of the reply and in the additional statements made in the reply to the show cause notice as well as to paragraph nos. 28 and 38G of the amended writ petition. It is stated that the petitioner had no access to the pulsars and, therefore, the entire case set up by the respondents against the petitioner is illegal and deserves to be set aside.
6. Learned Standing Counsel, who appears for the contesting respondent no. 4, has referred to counter affidavit filed on behalf of respondent no. 4 to contend that test reports dated 1.6.2018 were submitted to the Indian Oil Corporation by the Original Equipment Manufacturer2 manufacturing the Pulsar units. Learned Standing Counsel has referred to the visual inspection report in the test report and the result thereof, to state that it was clearly reflected that tampering had been done in the Pulsar card. It is stated that in view of this definite test report of the OEM regarding the Pulsar card, there is little doubt that the petitioner was guilty of malpractices as defined in the Order, 2005 and the license was justifiably cancelled. Learned Standing Counsel has also stated that the engineer of the OEM was present at the time of the joint inspection and it was his opinion that the Pulsar was tampered with.
7. From perusal of the record, it appears that a memorandum of agreement was executed on 3.6.2013 between the respondent Indian Oil Corporation and Smt. Shikha Agarwal carrying on business under the name of style of the firm Kisan Sewa Kendra, Sarai Dubaulia, District Ghazipur for operating a diesel outlet. Annexure No. 4 and 5 to the writ petition are inspection and analysis reports of the retail outlet of the petitioner bearing dates 27.7.2016 and 16.10.2016 respectively, which, it is stated on behalf of the petitioner, reflects that there was nothing wrong in the dispensing units.
8. On 24.5.2017, an inspection was carried out at the retail outlet of the petitioner in the presence of its Manager, by a team comprising of the Sub-Divisional Officer, Ghazipur, the Supply Inspector, the SHO P.S. Karimuddinpur, the District Supply Officer, Ghazipur, Inspector of the Metrology Department, the Sales Officers of BPCL and a representative of the OEM. A perusal of the report reflects that in the premises there were two dispensing units (two nozzles petrol and two nozzles diesel). Three nozzles (one petrol and two diesel) were functional while one nozzle petrol was non-functional. No complaint in respect of this nozzle was made by the dealer/manager. The delivery of the three nozzles was found to be within limits. Inspection of the pulsars of the four nozzles was done after breaking open the seals. The technician of the OEM stated that all the four pulsars were tampered with. As such, finding the same to be suspicious, the nozzles were sealed and the details of each were specified in the inspection report. The dealer/manager was directed to maintain status quo till further orders. An FIR dated 4.7.2017 was lodged under Section 3/7 of the Essential Commodities Act, 1955.
9. On 7.7.2017, an order was passed by the District Supply Officer suspending the license of the petitioner and asking it to show cause why the dealership should not be cancelled with regard to the irregularities found during the aforesaid inspection.
10. By a letter dated 28.7.2017, a reply was submitted by the petitioner to the District Supply Officer in which, as pointed out by the learned counsel for the petitioner, it was specifically stated that no offence has been committed by the dealership and no tampering was found with the pulsars. Till the time any laboratory does not submit a report with regard to the offence, no malpractice is made out. It was further stated that there was no short delivery. It was stated that only a possibility of tampering has been stated by the technician of the OEM and therefore, it is matter of investigation after confirming the fact from the concerned laboratory. Until the report of the investigating laboratory is not received by the competent authority till then no decision ought to be taken. It was accordingly prayed in that reply, that until a report is made available from the legal laboratory, the license of the dealership be restored.
11. By means of the order dated 16.8.2018, it was observed that the sealed pulsars obtained from the retail outlet of the petitioner was investigated by the OEM (Midco Company) who submitted their investigation report dated 1.6.2018 to the effect that the pulsar assemblies are not a per Midco standard design and had been found visibly tampered. It was observed that as per the laboratory report dated 1.6.2018 it was evident that the action taken against the dealer was lawful. It was noted that as regards the FIR dated 40.7.2017 lodged against the petitioner dealership, a chargesheet dated 21.8.2018 had been filed. Accordingly, it was found that the reply of the petitioner dated 28.7.2018 was baseless and the license of the petitioner dealership was cancelled with immediate effect.
12. It is evident from the aforesaid that the petitioner has been found guilty of 'malpractices' under the Order, 2005 and as such has been proceeded against leading to passing of the order impugned cancelling his license. The word 'malpractices' has been defined in Clause 2(f) of the Order, 2005, which reads as follows:
"(f) "malpractices" shall include the following acts of omission and commission in respect of motor spirit and high speed diesel-
(i) adulteration;
(ii) pilferage;
(iii) stock variation;
(iv) unauthorized exchange;
(v) unauthorized purchase;
(vi) unauthorized sale;
(vii) unauthorized possession;
(viii) overcharging;
(ix) sale of off-specification product; and
(x) short delivery;
13. The term 'pilferage' and 'unauthorized sale' have been defined in Clause 2(j) and 2(q) of the Order, 2005 as follows:
"(j) "pilferage" means stealing or attempt to steal product from a container used for transportation of the product or from a receptacle used for storage of the product and shall include any unauthorized attempt or act of tampering with such container or receptacle;
(q) "unauthorized sale" means sale of product by a dealer or consumer to another dealer or consumer or to any other person in contravention of the directive issued for the purpose by the State Government or the oil companies or in contravention of any provision of this order;"
However, the word 'short delivery' though included as an act of omission and commission in the definition of 'malpractices' has not been defined in the Order, 2005.
14. Therefore, the word 'pilferage' is not only with regard to stealing or attempting to steal product from a container used for transportation of the product but also from a receptacle used for storage of the product. The word 'pilferage' has also been defined to include any unauthorized attempt or act of tampering with such container or receptacle.
15. The term 'unauthorized sale' is defined to mean, inter alia, sale of product by a dealer to a consumer or any other person in contravention of the directive issued for the purpose by the State Government or the Oil companies or in contravention of any provision of the Order, 2005.
16. In the Marketing Discipline Guidelines3 for Retail Outlet/Superior Kerosene Oil Dealerships of Public Sector Marketing Companies, which includes the respondent, Indian Oil Corporation, and which are effective from 8.1.2013, chapter IV deals with maintenance of company equipments at retail outlets. Clause 4.2 of the Guidelines reads as follows:
"4.2 MAINTENANCE OF PUMPS AND OTHER EQUIPMENTS
a) Equipments belonging to the Oil Company While, the Oil Company shall arrange to attend breakdown maintenance of the Dispensing Pumps and other equipments belonging to the Oil Company, it shall be the responsibility of the dealer to ensure that these equipments are handled in proper manner and day to day upkeep are carried out in accordance with the maintenance manual / instructions. In case of any breakdown, the same shall promptly be informed by the dealer to the Oil Company.
b) Equipments belonging to Dealer The dealer shall maintain all equipments belonging to him in good working condition at all times in accordance with the maintenance manual / instructions. "
17. Chapter V of the Guidelines refers to the types of irregularities at retail outlets (MS/HSD and SKO/LDO Dealerships). Clause 5.1.2 deals with short delivery of products, which reads as follows:
"5.1.2 SHORT DELIVERY OF PRODUCTS
a) With Weights & Measures Department Seals intact Sales through the concerned dispensing unit to be suspended forthwith and recalibration and re-stamping to be done before recommencement of sales.
(Even if short/excess delivery is found within permissible limit, recalibration and re-stamping to be done before recommencement of sales).
b) With Weights & Measures department Seals tampered W&M department seals are put on Metering unit and Totaliser unit with the help of a sealing wire and a lead seal which is embossed by W&M inspector.
The seal would be deemed tampered in the following cases also:
1. Seal itself is missing
2. Different seal has been put other than embossed by W&M inspector
3. Sealing wire is broken and not in one piece.
In addition other situations which can lead to manipulation of delivery/quantity / totaliser may also be treated as tampering.
In such cases, views and opinion of W & M authorities would be obtained and the opinion rendered by the W&M department should be final.
Based on the opinion of the W & M authorities, Penal action to be taken even if the delivery is found to be correct or excess.
In case of this irregularity, sales from the concerned dispensing unit to be suspended, DU sealed. Samples to be drawn of all the products and sent to lab for testing."
18. Clause 5.1.4 of the Guidelines reads as follows:
"5.1.4 ADDITIONAL / UNAUTHORISED FITTINGS / GEARS FOUND IN DISPENSING UNITS /TAMPERING WITH DISPENSING UNIT Any mechanism / fittings / gear found fitted in the dispensing unit which is likely to manipulate the delivery. Addition, Removal, replacement or manipulation of any part of the Dispensing Unit including any mechanism, gear, microprocessor chip / electronic parts/ OEM software will be deemed as tampering of the dispensing unit. In such cases, views and independent opinion of the original equipment manufacturer would be obtained and suitable decision taken. In case of this irregularity, sales from the concerned dispensing unit to be suspended, DU sealed. Samples to be drawn of all the products and sent to lab for testing."
(emphasis supplied)
19. A perusal of the definitions of 'pilferage' and 'unauthorized sale' as well as the provisions of the Guidelines of the Indian Oil Corporation as narrated above, leave little room for doubt that the definitions are wide. Where the equipment relating to dispensing of fuel has been stated by the OEM that is Midco in the present case, as being tampered with, such a technical affirmation by an expert body cannot be dismissed lightly and neither can this Court sit in appeal over opinion of domain experts in writ petitions (Ref: Academy of Nutrition Improvement and others Vs. Union of India4; G. Sundarrajan Vs. Union of India and others5 and Shri Sitaram Sugar Company Limited and another Vs. Union of India and others6). At this stage, it is pertinent to refer to the test report dated 1.6.2018 of the OEM, that is, Midco. The extracts of the test report are as follows:
"TEST REPORT Material Received Item No. 1- Midco Surefill Pulsar Card for nozzle No. 1 Item No. 2- Midco Surefill Pulsar Card for nozzle No. 2 PCB Design Reference Number Item No.1- MID03323B201003 Item No.2- MID03323B201003 Tests/Parameter Result Remarks Pulsar Body serial number OK (Refer Remarks) Item No.1- 3004129159 Item No.2- 3004129160 Visual Inspection Note:
Visual Inspection has been done without providing Power to the received materials under test. Not OK (Refer Remarks) Item No.1& 2- (I) Additional Solder marks are observed on Pins of U5, U6, U7, U8, U9, U10 and U11 sensors. (II) Additional Solder marks are observed on 5V IN & GND location of pulsar PCB. (III) U5 & U6 Sensor's pin is found disconnected from pulsar PCB. (IV) Additional Solder marks are observed on pulsar's cable shield. (V) Cable Shield is disconnected from pulsar connector.
Delivery Test:
Not Tested (Refer Remarks) Not tested due to non conformance to Midco design Result:
Pulsar assemblies are not as per Midco standard design and have been found visibly tampered. Note:
Tests have been carried out as per Midco norms only.
TEST REPORT Material Received Item No. 1- Midco Surefill Pulsar Card for nozzle No. 1 Item No. 2- Midco Surefill Pulsar Card for nozzle No. 2 PCB Design Reference Number Item No.1- MID03323B201003 Item No.2- MID03323B201003 Tests/Parameter Result Remarks Pulsar Body serial number OK (Refer Remarks) Item No.1- 3004127195 Item No.2- 3004127196 Visual Inspection Note:
Visual Inspection has been done without providing Power to the received materials under test. Not OK (Refer Remarks) Item No.1& 2- (I) Additional Solder marks are observed on Pins of U5, U6, U7, U8, U9, U10 and U11 sensors. (II) Additional Solder marks are observed on 5V IN & GND location of pulsar PCB. (III) Pins of U5 & U6 Sensor are found disconnected from pulsar PCB. (IV) Additional Solder marks are observed on pulsar's cable shield. (V) Cable Shield is found disconnected from pulsar connector.
Delivery Test:
Not Tested (Refer Remarks) Not tested due to non conformance to Midco design Result:
Pulsar assemblies are not as per Midco standard design and have been found visibly tampered. Note:
Tests have been carried out as per Midco norms only.
20. In view of the aforesaid test report, it is evident that the pulsar assemblies that were obtained from the dealership from the four dispensing units, were reflected as tampered with in the test reports by the OEM, which, as per clause 5.1.4 of the Guidelines would be deemed as tampering of the dispensing unit, and thus the same would be covered under the definition 'malpractices' as defined in the Order, 2005. The aspect of tampering of pulsar assemblies would definitely be violation of directive of the respondent Oil Corporation as provided in its guideline and, therefore, it would come within the ambit of 'unauthorized sale' as defined in the Order, 2005.
21 As is evident from perusal of the Clause 5.1.4 of the Guidelines, it relates to any mechanism / fittings / gear found fitted in the dispensing unit which is likely to manipulate the delivery. Tampering of the dispensing unit would be deemed where addition, removal, replacement or manipulation of any part of the dispensing unit including any mechanism, gear, microprocessor chip / electronic parts/ OEM software has taken place. The provisions of the Guidelines specifically provide that in such cases, the views and independent opinion of the OEM would be obtained and suitable decision would be taken. Moreover, in case of this irregularity, sales from the concerned dispensing unit to be suspended and the dispensing unit is to be sealed.
22. In view of the aforesaid, we find no reason to interfere with the orders impugned and this writ petition is, accordingly, dismissed.
Order in Writ-C No. 7392 of 2019
23. The aforesaid writ petition has been filed seeking the following relief:
"I. Issue a writ, order or direction in the nature of certiorari quashing the impugned order dated 09.02.2019 passed by the respondent no.4, Chief Divisional Retail Sales Manager, Babatpur Road, Harhua, Varanasi (Annexure No.14 to the writ petition). II. Issue a writ, order or direction in the nature of Mandamus directing the respondents to run the business of retail outlet by the petitioner."
24. A detailed judgment has been passed in Writ-C No. 32973 of 2018 in which an order dated 7.7.2017 passed by the District Supply Officer, Ghazipur, suspending the license of the petitioner firm and asking it to show cause has been challenged as well as an order dated 16.10.2018 passed by the District Supply Officer finding the reply submitted by the petitioner firm against the show cause notice as baseless, and has proceeded to cancel the license for sale of diesel in the retail outlet. The aforesaid petition of 2018 has been dismissed.
25. Under challenge in the present petition is an order passed by the respondent no. 4, the Chief Divisional Retail Sales Manager of the respondent-corporation terminating the dealership of the petitioner. A perusal of the impugned order dated 9.2.2019 reflects that it is in reference to the inspection dated 24.5.2017 made by the joint inspection team, a fact finding letter dated 25.5.2017, the reply on behalf of the dealership dated 8.6.2017, the show cause notice dated 29.8.2018 and the petitioner's reply dated 8.10.2018.
26. The show cause notice dated 29.8.2018 sent to the petitioner by the respondent no. 4 refers to the inspection made on 24.5.2017 by the joint inspection committee in the presence of the representative of the petitioner and that all four pulsars were removed and sealed on the grounds of suspicion of tampering. Reference was made to the fact finding letter dated 25.5.2017 issued to the petitioner and the reply of the petitioner submitted thereon. The test report dated 1.6.2018 from the OEM reflecting the tampering of all four pulsars was specified in the show cause notice and the petitioner was called upon to show cause why the dealership should not be terminated under relevant clauses of the dealership agreement and why the security deposited not be forfeited. A detailed reply was submitted by the petitioner in which primarily the ground raised was that tampering of pulsars could not be done without opening the seals and hence the onus of proof lies on the respondent-corporation and the OEM with regard to the quality of pulsars and not on the dealer who has neither the authority nor has access to the pulsars.
27. In the impugned order, the Respondent No. 4 observed as follows:
"You have submitted your reply dated 08.10.2018. Your reply has been considered but the same has not been found satisfactory due to following reasons.-
a) Dealer is custodian of the total retail outlet outfits and any tampering with the pulsar is not possible without his involvement and or knowledge of the dealer. During the SIT inspection of the retail outlet in the State of Uttar Pradesh and subsequent inspection under the direction of Government of Uttar Pradesh it was observed that a racket on large scale was going on at the retail outlets by attaching additional electronic devices which was being operated by some remote control mechanism. At some RO's additional devices were caught while at some RO's impressions/marks of attaching additional devices were found in the pulsar as they were removed by the dealers. At your retail outlet also impressions, details of which are given in the inspection report and also mentioned in the show cause notice, were observed by MIDCO official on the date of inspection as well as during testing of the same.
b) Due to above reasons, intactness of legal metrology seal, correct delivery of the product from the dispensing units are immaterial. No additional fitting/irregularity observed during earlier inspections also does not have any bearing upon the findings of the investigation team during Investigation dated 24.05.2017.
c) MIDCO is the original manufacturer of Dispensing Unit installed at your retail outlet and only they are authorized and equipped to ascertain whether any tampering with the dispensing units and pulsar has been made or not. Government laboratories are not authorized for testing of dispensing units and pulsars. It is the spirit of granting the dealership that dealer will deliver the correct quality of the product to the customers and not make any attempt to cheat them. However, the tampering with the pulsar clearly indicates that you had cheated to the customers.
d) Delay in sending the pulsar card for testing by MIOCO has no potential to change the characteristics of the equipments.
Your above act has been found in breach of the provisions of dealership agreement more particularly clause 8 and 42 and as such dealership is liable to be terminated under clause 45 of the agreement. It may also be noted that vide order dated 16.10.2018 DSO, Ghazipur has cancelled your retail selling license.
In view of the above the competent authority has decided to terminate the dealership agreement with immediate effect. You are hereby called upon to settle your accounts within 10 days from the date of this letter and handover the all equipments belonging to the Corporation to the authorized officials of the Corporation immediately on their request. Your security deposit of Rs 10,000/- is hereby forfeited."
28. The aspects of cancellation of the license by the District Supply Officer and the report of the OEM have been considered in detail in the aforesaid writ petition of 2018 and are not being repeated here for the sake of brevity. The action taken by the respondent-corporation in the instant petition is a corollary to the termination of license of the petitioner to sell diesel from the retail outlet. Under the facts and circumstances of the case, the impugned order requires no interference by this Court and is upheld.
29. This petition is, accordingly, dismissed.
Order Date :- 22.10.2024 A. V. Singh