Chattisgarh High Court
Pal Singh Chawla vs Hindustan Petroleum Corporation ... on 17 September, 2012
HIGH COURT OF CHATTISGARH AT BILASPUR
WRIT PETITION C No 1778 of 2010
Pal Singh Chawla
...Petitioners
VERSUS
Hindustan Petroleum Corporation Limited & Others
...Respondents
! Shri Ashish Shrivastava Advocate for the petitioner
^ Shri N N Roy Advocate for the respondent No 1 and 2
CORAM: Honble Shri Satish K Agnihotri J
Dated: 17/09/2012
: Judgement
O R D E R
(Delivered on 17th day of September, 2012) PETITION UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA
1. Challenge in this petition is to the order dated 27.07.2009 (Annexure P/1) whereby the request of the petitioner for re-testing of the sample was rejected, the order dated 17.02.2010 (Annexure P/2) whereby the dealership agreement dated 10.05.2006 between the petitioner and the respondent-Corporation has been terminated and the allotment order dated 18.03.2010 (Annexure P/3) whereby the location for RO dealership has been changed from Bhanupratappur, District Kanker to Fingeshwar, District Raipur, and allotted to the respondent No. 3.
2. The facts, in brief, are that the petitioner is the proprietor of retail outlet (for short `RO') dealer namely M/s Chawla Petrol Pump, Fingeshwar, Raipur, engaged in sale of High Speed Diesel (for short `the HSD') i.e. Diesel and Motor Spirit (for short `the MS') i.e. Petrol. The petitioner established the petrol pump in February, 2006 pursuant to the dealership agreement executed between the petitioner and the respondent-Corporation on 10.05.2006 (Annexure P/6). The Mobile Lab Officer of the respondent-Corporation visited the RO of the petitioner and collected samples of HSD and MS on 30.03.2006. Total 9 samples were collected and out of 9 samples, 6 were taken by the Mobile Lab Officers for clinical test. Out of six samples, 4 were drawn from MS and 2 from HSD, wherein the density of the fuel was found proper. Thereafter, the petitioner received a notice after lapse of two months on 02.06.2009 alongwith laboratory test report wherein it was stated that there was a failure of MS sample calling upon the petitioner to submit asto why disciplinary action should not be initiated against the petitioner for violation of dealership agreement dated 10.05.2006 between the petitioner and the respondent-Corporation. The petitioner replied to the said notice on 10.06.2009 (Annexure P/9) stating therein that he had never indulged in any irregularity in his life and requested for re- testing of the samples again. A reminder was also sent on 09.07.2009 (Annexure P/1) stating that before taking any decision against the petitioner, the samples collected by them may be re-tested in any laboratory and the decision should not be based on the report of the mobile lab report alone. Despite that, the petitioner, vide letter dated 27.07.2009 (Annexure P/1) was informed that it was not possible to re-test the samples again as the petitioner's request was sent to the Head Office and the Head Office has rejected the request for re-testing of the samples. Ultimately, the dealership agreement dated 10.05.2006 was terminated on 17.02.2010 (Annexure P/2).
3. The petitioner, initially challenged the communication dated 27.07.2009 in W.P.(C) No. 4382/2009. During pendency of the said petition, the dealership agreement was terminated vide communication dated 17.02.2010 (Annexure P/2) and the respondent authorities allotted the RO to the respondent No. 3 vide order dated 18.03.2010 (Annexure P/3). Thus, the earlier writ petition i.e. W.P.(C) No. 4382/2009 was dismissed as withdrawn by order dated 07.04.2010 (Annexure P/17) in view of the fact that final order of termination of dealership was passed, with liberty to file another writ petition challenging the order of termination of dealership. Thus, this petition challenging the order dated 27.07.2009 (Annexure P/1) whereby the request for re-testing of the MS samples was rejected, the order dated 17.02.2010 (Annexure P/2) whereby the dealership agreement between the petitioner and the respondent-Corporation was terminated, and the order dated 18.03.2010 (Annexure P/3) whereby the respondent No. 3 was allotted RO dealership for sale of MS and HSD at Fingeshwar, Raipur.
4. Shri Shrivastava, learned counsel appearing for the petitioner submits that the action of respondent authorities is arbitrary and illegal. The impugned order of rejection of re-testing the MS samples are contrary to the clause No. 2.5 (D) of the Marketing Discipline Guidelines (for short `the MDG') issued for all Public Sector Oil Marketing Companies. The respondent Corporation had failed to test the MS samples within stipulated time prescribed in clasue 2.10 of the Marketing Discipline Guidelines. In support of his contention, he would rely on a decision of the Supreme Court, in Hindustan Petroleum Corporation Ltd. & Others v. Super Highway Services & Another1.
5. On the other hand, Shri Roy, learned counsel appearing for the respondent-Corporation would submit that the plea of the petitioner that by virtue of clause 2.5(D) of the MDG, the sample of petroleum product was required to be tested by the answering respondents was not mandatory. The said clause clearly expresses that in case of any application being forwarded by the dealer for re-
testing the same is to be considered on merit and only on finding the case to be proper, a re-testing is to be done following the procedure prescribed. The sample obtained from the nozzle point of the RO of the petitioner failed, whereas the tank lorry sample and the depot sample were able to meet the requisite technical specifications in the test conducted by the mobile laboratory. Thus, it was clear that the product was adulterated by the petitioner himself. The failure of the sample obtained from the RO to meet the technical specification was violative of various clauses of dealership agreement and hence the same was terminated by the respondent No. 1. The said RO was handed over to the respondent No. 3, a scheduled tribe candidate under the specific guidelines of the Ministry of Petroleum & Natural Gas, for maintaining supply of petroleum products in the area concerned smoothly to subserve the common interest of the public. The petition has no merit and it deserves to be dismissed.
6. Case of the respondent No. 1 and 2 was that the allotment of RO to the respondent No. 3 was only to maintain proper supply of petroleum products in the area.
7. Notice was issued on 19.04.2010. Thereafter, a second notice was issued to the respondents on 16.06.2010, and in addition, dasti notice on the respondents was also permitted. The respondent No. 3 has declined to accept dasti notice on 04.07.2010. Thus, the service of notice in respect of respondent No.3, is complete. The matter proceeded thereafter. None appears nor is any representation or response filed on behalf of respondent No. 3, despite service of notice.
8. In the instant case, the facts are admitted. There is no dispute that 9 samples were collected by the mobile testing laboratory officers of the respondent-Corporation from the RO of the petitioner. Thereafter, only six samples were taken by them and three were left. It is also not in dispute that the density of the MS and HSD were found proper by the officers of the respondent- Corporation. The most important question which arises in this petition is asto whether before termination of the dealership, the petitioner ought to have been given full opportunity to be present and explain at the time of testing or if a request for re-testing is made, the same should not have been rejected on technical ground that the Head Officer did not find the same proper for re-testing.
9. In Hindustan Petroleum Corporation Limited and Others v. Super Highway Services and Another2, while considering the termination of dealership, the Supreme Court observed as under :
"31. The cancellation of dealership agreement of a party is a serious business and cannot be taken lightly. In order to justify the action taken to terminate such an agreement, the authority concerned has to act fairly and in complete adherence to the rules/guidelines framed for the said purpose. The non-
service of notice to the aggrieved person before the termination of his dealership agreement also offends the well-established principle that no person should be condemned unheard. It was the duty of the petitioner to ensure that Respondent No.1 was given a hearing or at least serious attempts were made to serve him with notice of the proceedings before terminating his agreement.
33. The guidelines being followed by the Corporation require that the dealer should be given prior notice regarding the test so that he or his representative also can be present when the test is conducted. The said requirement is in accordance with the principles of natural justice and the need for fairness in the matter of terminating the dealership agreement and it cannot be made an empty formality. Notice should be served on the dealer sufficiently early so as to give him adequate time and opportunity to arrange for his presence during the test and there should be admissible evidence for such service of notice on the dealer. Strict adherence to the above requirement is essential, in view of the possibility of manipulation in the conduct of the test, if it is conducted behind the back of the dealer."
10. The aforesaid issue came up for consideration in Mahamaya Service Centre v. Indian Oil Corporation Ltd. & Others3, wherein this Court has considered various aspects including MDG, clause 8 of the Motor Spirit and High Speed Diesel (Regulation of Supply, Distribution and Prevention of Malpractices) Order, 2005 (for short "the Order, 2005") which has been amended by notification dated 12/1/2007 and new control Order namely; Motor Spirit and High Speed Diesel (Regulation of Supply, Distribution and Prevention of Malpractices) Amendment Order, 2007 (for short "the Amendment Order, 2007") was brought in force w.e.f. 12/1/2007 and various decisions of the Supreme Court and the High Courts.
11. Clause 2.5 (D) of the MDG, reads as under :
"2.5 General Points to be observed in all cases:
xxx xxx xxx xxx xxx xxx xxx xxx xxx D) In case of sample failure, in the event of request for testing by the dealer, the same to be considered on merits by the State Office/ Regional Office/ Zonal General Manager of the concerned Oil Company. If approved by GM, the sample of retail outlet retained by the dealer along with the counter sample retained with the Field Office/Oil Company are to be tested as per the guidelines, preferably in presence of the Field Officer, RO dealer/ representative & representative of QC Dept. of the Oil Co.
after due verification of the samples. All the 3 samples should be tested only in the same lab, and if possible by the same person to ensure repeatability and reproducibility. The expenditure incurred for such testing should be recovered from the dealer. The decision of the GM, which would be based on the test results of all the 3 samples would be decisive and binding on all."
12. MDG has been framed in accordance with the provisions of the Order 2005. Thus, it appears that retention of a sample by the dealer is necessary to cross-check the report prepared by the officials on the basis of the sample retained by the dealer.
13. Original clause 8 of the Order 2005 reads as under :
"8. Sampling of Product.-(1) The authorized under clause 7 shall draw the sample from the tank, nozzle, vehicle or receptacle, as the case may be, in clean aluminum containers to check whether density and other parameters of the product conform to the requirements of Bureau of Indian Standards specifications number IS 2796 and IS 1460 for motor spirit and high speed diesel respectively. Where samples are drawn from retail outlet, the relevant tank-truck sample retained by the dealer as per clause 3 (b) would also be collected for laboratory analysis.
(2) The authorized officer shall take and seal six samples of 1 litre each of the motor spirit or three samples of 1 litre each of the high speed diesel. Two samples of motor spirit or one of high speed diesel would be given to the dealer or transporter or concerned person under acknowledgment with instruction to preserve the sample in his safe custody till the testing or investigations are completed.
Two samples of Motor Spirit or one of High Speed Diesel shall be kept by the concerned oil company or department and the remaining two samples of Motor spirit or one of High Speed Diesel would be used for laboratory analysis;
(3) The sample label shall be jointly signed by the authorized officer who has drawn the sample, and the dealer or transporter or concerned person or his representative and the sample label shall contain information as regards the products, name of retail outlet, quantity of sample, date, name of the authorized officer, name of the dealer or transporter or concerned person or his representative;
(4) The authorized officer shall forward the sample of the product taken within ten days to any of the laboratories mentioned in Schedule III or to any other such laboratory when it may be notified by the Government in the Official Gazette for this purpose, for analyzing with a view to checking whether the density and other parameters of the product conform to the requirements of Bureau of Indian Standard specifications number IS 2796 and IS 1460 for motor spirit and high speed diesel respectively.
(5) The laboratory mentioned in sub-clause (4) shall furnish the test report to the authorized officer within twenty days of receipt of sample at the laboratory.
(6) The authorized officer shall communicate the test result to the dealer or transporter or concerned person and the oil company, as the case may be, within five days of receipt of test results from the laboratory for appropriate action."
14. Clause 8 of the Amendment Order 2007 published by notification dated 12/1/2007 reads as under :
"G.S.R. 18 (E).-In exercise of the powers conferred by Section 3 of the Essential Commodities Act, 1955 (10 of 1955) the Central Government hereby makes the following order to amend the Motor Spirit and High Speed Diesel (Regulation of supply, Distribution and Prevention of Malpractices) Order, 2005, namely;
1.(1) This Order may be called the Motor Spirit and High Speed Diesel (Regulation of supply, Distribution and Prevention of Malpractices) Amendment Order, 2007.
(2) It shall come into force on the date of its publication in the Official Gazette.
xxx xxx xxx xxx xxx xxx xxx xxx xxx (3) In the said order, in clause 8.--
(a) for the heading
"sampling of products", the
heading "sampling of product
and testing" shall be
substituted.
(b) after the heading and before the sub clause (1), the following sub-clause shall be inserted namely:-
"(1A) The authorized officer under clause 7 shall draw the sample from the tank, nozzle, vehicle or receptacle, as the case may be, in the test kit and test the product with the aid of test kit, to check whether the product contains any traces of marker. If such traces are found in the product, the authorized officer shall record the same in triplicate which shall be jointly signed by him and the dealer or transporter or concerned person or his representative, as the case may be, and give one copy of such recording to the dealer or transporter or concerned person or his representative and another copy to the oil company concerned, as the case may be".
(c) In sub-clause (1), for the words, "the authorized", the following shall be substituted, namely:-
"Where the product does not contain marker under sub- clause (1A), the authorized officer".
"G.S.R. 19 (E).-In exercise of the powers conferred by Section 3 of the Essential Commodities Act, 1955 (10 of 1955) the Central Government hereby makes the following order further to amend the Kerosene (Restriction on Use and Fixation of Ceiling Price) Order, 1993, namely :-
1.(1) This Order may be called the Kerosene (Restriction on Use and Fixation of Ceiling Price) Amendment Order, 2007 .
(2) It shall come into force on the date of its publication in the Official Gazette.
xxx xxx xxx xxx xxx xxx xxx xxx xxx (3) In the said order, after clause 8, the following clause shall be inserted namely:-
"8A. Kerosene to be blended with marker-All Kerosene sold in India whether under the public distribution system or parallel marketing system, shall be blended with marker at five parts per million (ppm) concentration with the objective of preventing its diversion or adulteration of other petroleum products."
15. Clause 8 of the Order 2005 was amended to the effect for the heading `sampling of product' was substituted by the heading `sampling of product and testing'. After sub- clause (1), sub-clause (1A) was inserted. There is no change/amendment in sub-clause (2) of clause 8 of the Order 2005, which provides for giving of one sample of High Speed Diesel to the dealer. Clause 8A has also been inserted dealing with Kerosene to be blended with maker without any amendment in sub-clause (2) of clause 8 of the Order, 2005. Thus, sub-clause (2) of clause 8 of the Order, 2005 remains un-amended and the same ought to have been given full effect to.
16. The order dated 09.09.2010 passed by this Court in Mahamaya Service Centre (supra), was challenged by the respondent-Corporation before the Supreme Court, wherein the Supreme Court was pleased to dismiss the Special Leave to Appeal (Civil) No. 34817/2011, on 04.11.2011.
17. The sole contention of the respondent-Corporation that clause 2.5(D) of the MDG is not mandatory. The discretion is left at the Head Office to permit re-testing or not, is unsustainable in law. The Supreme Court in Hindustan Petroleum Corporation Limited and Others (supra), has observed that "The cancellation of dealership agreement of a party is a serious business and cannot be taken lightly."
18. Thus, the Head Office cannot adopt a different standard for different testing. The communication of rejection of the request of the petitioner for re-testing of MS samples does not disclose anything asto how the mind of the officers dealing with the issue was applied and decision was taken not to permit re-testing.
19. The respondent No. 3 has chosen not to appear before this Court and to put forward its case. It appears that the respondent No. 3 has not claimed right over the RO at Fingeshwar, which was initially allotted to the petitioner and without information to the petitioner, the same was allotted to the respondent No. 3. The petitioner's right was created on execution of the agreement between the petitioner and the respondent-Corporation on 10.05.2006, that cannot lightly be taken away without affording opportunity of hearing and also not permitting re-testing which is required to be done under provisions of the MDG and the Order, 2005 and Amendment Order, 2007, as discussed hereinabove. Thus, for want of appearance and submission, no other conclusion can be drawn except as aforestated.
20. In view of the above and for the reasons stated hereinabove, the impugned orders dated 27.07.2009 (Annexure P/1) and 17.02.2010 (Annexure P/2) and the order dated 18.03.2010 (Annexure P/3) are quashed. The respondent-Corporation is directed to restore the RO at Fingeshwar, Raipur to the petitioner, forthwith. The respondent No. 3 may be granted RO at the original place from where he has been shifted.
21. Accordingly, the petition is allowed with no order asto costs.
JUDGE