Gujarat High Court
M/S Luv Petroleum vs Hindustan Petroleum Corporation ... on 28 August, 2015
Author: N.V.Anjaria
Bench: N.V.Anjaria
C/SCA/17989/2014 CAV JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 17989 of 2014
With
CIVIL APPLICATION NO. 319 of 2015
In
SPECIAL CIVIL APPLICATION NO. 17989 of 2014
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE N.V.ANJARIA
==========================================================
1 Whether Reporters of Local Papers may be allowed to see the judgment ? No 2 To be referred to the Reporter or not ? No 3 Whether their Lordships wish to see the fair copy of the judgment ? No 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of No India or any order made thereunder ?
========================================================== M/S LUV PETROLEUM....Petitioner(s) Versus HINDUSTAN PETROLEUM CORPORATION LIMITED.....Respondent(s) ========================================================== Appearance:
MR YATIN OZA, LD. SENIOR ADVOCATE WITH MR APURVA R KAPADIA, ADVOCATE for the Petitioner(s) No. 1 MS MINOO A SHAH, ADVOCATE for the Respondent(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE N.V.ANJARIA Date : 28/08/2015 Page 1 of 25 HC-NIC Page 1 of 25 Created On Mon Sep 07 02:44:55 IST 2015 C/SCA/17989/2014 CAV JUDGMENT COMMON CAV JUDGMENT The petitioner has invoked jurisdiction of this Court under Article 226 of the Constitution, the petitioner has prayed for a direction against the respondent-Hindustan Petroleum Corporation Limited to immediately restore the supply of fuel, that is petrol and/or diesel at the Retail Outlet for which the dealership is granted to the petitioner under Agreement dated 30th June, 2013.
2. During the pendency of petition, respondent-
Hindustan Petroleum Corporation Limited (HPCL) filed the captioned Civil Application seeking reference to the dispute raised in the petition to the arbitration in accordance with the arbitration clause being Paragraph No.68 in the Dealership Agreement.
3. The relevant facts may be outlined. The respondent-HPCL issued a Letter of Intent dated 20th August, 2012 in favour of the petitioner for starting MS/HSD Retail Outlet Dealership on SH/56 Highway at Visnagar, in the category of open-woman. The dealership agreement dated 30th June, 2013 was executed which is for the period of 15 years containing an option to renew for further period of 5 years. It appears that on 26th April, 2014, inspection was carried out by the sales officer of the respondent Corporation at the site of the petrol pump run by the petitioner, wherein certain irregularities were noticed. The petitioner was asked to give explanation by letter dated 26th April, 2014. The petitioner replied on 28th April, 2014 stating that none of the Page 2 of 25 HC-NIC Page 2 of 25 Created On Mon Sep 07 02:44:55 IST 2015 C/SCA/17989/2014 CAV JUDGMENT defects or irregularity mentioned in the letter/notice was actually existed. The respondent had simultaneously with issuance of notice, had stopped supply of fuel. The petitioner requested in his reply to restore the supply immediately.
3.1 It appears that on the day, that is, 26th April, 2014 when the sales officer visited the petrol outlet site, there took place heated exchanges and it was alleged that abusive language was used. The sales officer lodged an FIR on 27th April, 2014 in respect of the incident alleged occurred on the day of his visit, alleging inter alia that the husband of the petitioner had abused him. An FIR being Crime Register II-68/2014 came to be registered with Visngaar Taluka Police Station alleging offences under Section 323, 504, 506(1), 114 of Indian Penal Code, 1860 and in that that FIR, (i) Chaudhary Alkeshbhai being the dealer of the petrol pump and (ii) Chaudhary Gautambhai were shown as accused. Later, the complainant officer appears to have addressed a letter dated 22nd August, 2014 to the police officer concerned that one of the accused's name was wrongly mentioned in the FIR dated 27th April, 2014.
3.2 The Corporation issued another show-cause notice dated 05th May, 2014 stating as to why the action should not be initiated as per the terms and conditions of the dealership agreement. Petitioner responded to the said notice on 13th May, 2014 and re- requesting the respondent-Corporation to resume the supply of fuel which was discontinued while issuing Page 3 of 25 HC-NIC Page 3 of 25 Created On Mon Sep 07 02:44:55 IST 2015 C/SCA/17989/2014 CAV JUDGMENT communication dated 26th April, 2014. It is the case of the petitioner that the second notice dated 23rd May, 2014 was based on the very grounds for which the first notice was issued and that the petitioner answered both the notices satisfactorily. Petitioner thereafter appears to have addressed communications to the Ministry of Petroleum and Gas complaining about the conduct of the HPCL.
3.3 It is stated by the petitioner further that the petitioner was called by the respondent Corporation at its office and meetings were held on 22nd August, 2014, and minutes thereof came to be drawn on 26th August, 2014. The petitioner addressed communication dated 09th September, 2014 in response to the minutes.
3.4 The grievance of the petitioner is that the action on part of the respondent HPCL in stopping the supply of fuel is unjustified and arbitrary.
3.5 Both the learned advocates on behalf of the parties, since requested and consented that the petition be considered finally, they were heard in extenso on all aspects including on the case of respondent in the civil application, simultaneously. Order dated 24th July, 2015 was passed issuing Rule in the main petition as well as in the civil application to be decided with Special Civil Application.
4. Learned advocate Ms. Minoo Shah appearing for the respondent Corporation submitted by way of preliminary contention that in view of Clause 16 in Page 4 of 25 HC-NIC Page 4 of 25 Created On Mon Sep 07 02:44:55 IST 2015 C/SCA/17989/2014 CAV JUDGMENT the dealership agreement, the remedy of arbitration was provided and therefore, a direct writ petition without having recourse to the arbitration clause was not entertainable and petition was required to be dismissed on the said ground alone.
4.1 In support of the above submission, learned advocate for the respondent-Corporation relied on the following decisions-(i) Swiss Timing Ltd. vs. Common Wealth Games 1000 Org. Committee [(2014) 6 SCC 677],
(ii) Amritsar Gas Service vs. Indian Oil Corp. [(1991) 1 SCC 533], (iii) Gail (India) Ltd. vs. Gujarat State Petroleum [(2014) 1 SCC 329], (iv) Sunderam Finance vs. T Thankam (SC) [Civil Appeal No. 2079 of 2015], (v) Hindustan Petroleum Corporation vs. Siba Gas Agency [Civil Appeal No. 7799 of 2013 decided on 02.09.2013, Supreme Court], (vi) HPCL vs. Pink City Midway Petroleum (decided on 23.07.2003],
(vii) Nidus Enterprise vs. SOG [Special Civil Application No. 16593 of 2014, Gujarat High Court],
(viii) Letters Patent Appeal No. 540 of 2010 in Special Civil Application No. 2412 of 2011 [Gujarat High Court], (ix) Hindustan Petroleum vs. Yogita Gas [decided on 28.08.2014 in Civil Application No. 6521 of 2014 in Special Civil Application No.5607 of 2014, Gujarat High Court], (x) Hindustan Petroleum Vs. Nirmala H Maheshwari [decided on 21.01.2011 in Civil Application No. 663 of 2011 in Special Civil Application No. 15328 of 2010, Gujarat High Court],
(xi) Syed Tajuddin vs. Hindustan Petroleum [Writ petition No.5589-94/2013 decided on 01.04.2013, Karnataka High Court], (xii) Shri Channakeshava Page 5 of 25 HC-NIC Page 5 of 25 Created On Mon Sep 07 02:44:55 IST 2015 C/SCA/17989/2014 CAV JUDGMENT Transport vs. Indian Oil Corporation [decided on 10.04.2013 Writ Petition No. 10721 of 2013, Karnataka High Court].
4.2 Countering the said contention of the respondent, leaned senior advocate Mr. Yatin Oza assisted by learned advocate Mr. Apurva Kapadia for the petitioner submitted that it is not the rule of thumb that jurisdiction under Article 226 cannot be invoked where there is an arbitration clause in the agreement. In support of his contention, the reliance was placed on these decisions, (i) Harbanslal Sahnia Vs Indian Oil Corporation Limited [(2003) 2 SCC 107],
(ii) Sanjana M. WIG (Ms) Vs Hindustan Petroleum Corprn. Ltd. [(2005) 8 SCC 242], (iii) Zonal Manager, Central Bank of India Vs Devi Ispat Limited [(2010) 11 SCC 186], and (iv) Union of India Vs Tantia Construction Private Limited [(2011) 5 SCC 697]. It was submitted in furtherance that the discretion for entertaining the petition was required to be exercised in the present case in the facts and circumstances of the case and looking to the arbitrary conduct on part of the respondent-Corporation.
4.3 Learned senior counsel thereafter submitted on the merits of the action on part of respondent- Corporation that the irregularities so called found by the sales officer were minor in nature and were non- existence. He submitted that show-cause notice was twice issued by the respondent Corporation and on both the occasions, satisfactory explanation was furnished. He submitted that in view of the explanation of the Page 6 of 25 HC-NIC Page 6 of 25 Created On Mon Sep 07 02:44:55 IST 2015 C/SCA/17989/2014 CAV JUDGMENT petitioner only and having found the same adequate and satisfactorily, the company chose it not to terminate the dealership agreement and the dealership agreement is valid and live.
4.4 Learned senior counsel further relied on the relevant clauses/paragraphs from the Marketing Discipline Guidelines and in particular, paragraphs 8.4, 8.5.2, 8.5.3, 8.5.4, 8.5.7 and others. It was submitted on that basis that the procedure for taking action and the nature of penal action which could be taken are prescribed in the said Discipline Guidelines which are binding to the respondent, and that the irregularities alleged against the petitioner barring one for which also explanation was given, were minor in nature as per the Guidelines. Learned senior advocate further submitted that the Clauses of the dealership agreement relied on by the company were not applicable. He submitted that the procedure provided in the Marketing Discipline Guidelines ought to have been followed before taking any action. About non- maintenance of Density Register, it was submitted that the necessary Density Register was maintained, but since a close relative had expired, the petitioner could not remain present on the day and time of inspection, therefore the Density Register could not be shown.
4.5 Learned senior counsel next contended that the petitioner was never involved and was not present in the alleged incident of altercation at the petrol pump site for which the FIR was lodged by the sales Page 7 of 25 HC-NIC Page 7 of 25 Created On Mon Sep 07 02:44:55 IST 2015 C/SCA/17989/2014 CAV JUDGMENT officer. He submitted that the action of lodging FIR was mala fide and the sales officer wrecked ill-will by filing the same. It was submitted that it was an excuse and a harrasive step. He submitted that afterwards, the complainant himself stated to the police inspector that the petitioner was not present and his name in the FIR was wrongly given.
4.6 The prayer in the petition came to be contested by filing affidavit-in-reply by the respondent-Corporation raising various contentions including about taking recourse to the arbitration clause. It was contended that there was a breach of clause Nos.2, 19, 39, 40, 44 and 45 of the Dealership Agreement. The respondent-Corporation on the basis of those breaches inter alia justified its action of stopping the supply of the product fuel to the petitioner's outlet. The defence of the company was inter alia that the officer who carried out the inspection was discharging his public functions; he detected irregularities, therefore the warning-cum- guidance letter was issued to the petitioner-dealer. The respondent-Corporation relied on clause 5.1.9 of the Marketing Discipline Guidelines regarding the non- availability of reference density at the time of inspection. Having relied on the said clause in paragraph 4, it was contended in paragraph 5 that the main issue about the act of assault which took place at the premises of the retail outlet which was at the behest of the petitioner and her husband which amounted to serious violation of terms of the agreement.
Page 8 of 25HC-NIC Page 8 of 25 Created On Mon Sep 07 02:44:55 IST 2015 C/SCA/17989/2014 CAV JUDGMENT 4.7 In the affidavit-in-reply the thrust was given on the occurrence of incident on the date of inspection and the resultant filing of F.I.R. It was alleged that Mr.Alkeshbhai Chaudhari, the husband of the petitioner-dealer, was involved as he had constantly been communicating on the said day from his mobile and in turn the Sales Officer was threatened at the petrol pump site. The Corporation stated that the inspecting officer was subjected to harassment and the F.I.R. was required to be filed. It was stated by the deponent of the affidavit that the inspecting officer was perturbed at the time of filing of F.I.R. hence wrongly mentioned name of Alkeshbhai as an accused. It was contended that the incident was reported in the newspapers and that the petitioner and her husband were guilty of indulging into criminal conduct.
4.8 The fact about the two show causes notices and the reply given to them by the petitioner was not disputed, but it was submitted that the explanation of the petitioner was not satisfactory, that the irregularities were not minor and that the action have been taken as per the Marketing Discipline Guidelines. It is contended that, "HPCL states that in addition to the irregularities as mentioned in the warning cum guidance letter dated 26.4.2014 the action of suspension of supplies istaken under the provisions of the various clauses of the Dealership Agreement. It is denied that the irregularities are of a minor nature. Further, the MDG Guidelines state that the penalties provided in it are minimum and strict action under the Page 9 of 25 HC-NIC Page 9 of 25 Created On Mon Sep 07 02:44:55 IST 2015 C/SCA/17989/2014 CAV JUDGMENT terms of the Agreement can be taken."
5. Having traveled through the facts and material on record and having considered the contentions of both the sides, it appears that the petrol outlet run by the petitioner-dealer was inspected on 26th April, 2014, upon which a warning- cum-guidance letter dated 26th April, 2014 was issued to the petitioner in which the following irregularities were pointed out-(i) DSE/DR was not present at outlet, (ii) Non provision of free AIR to customers, (iii) Non provision of permanent purified water facility for customers, (iv) No telephone facility at outlet, (v) Uniforms were not provided to FSM's, (vi) Water paste is not available at outlet,
(vii) 5 ltr. measurement dully clarified by W & M, not available at outlet, (viii) Filter paper not available at outlet, (ix) Du stamping record not available at outlet.
5.1 The petitioner sent reply 28th April, 2014 submitting explanation, stating inter alia that in view of death of near relative on the date of inspection, petitioner could not remain personally present. About the irregularity of air filling machine, it was stated that the same was under the process of installation, that the drinking water facility was available at the petrol pump and five personnel working at the petrol pump had with them the necessary uniform. It was stated that the other facilities were also available. It appears that the main irregularity was about the allegedly non-
Page 10 of 25HC-NIC Page 10 of 25 Created On Mon Sep 07 02:44:55 IST 2015 C/SCA/17989/2014 CAV JUDGMENT maintaining the density register and non-production thereof at the time of inspection. About the said aspect, the explanation was that since the dealer could not remain personally present for the aforesaid reason, though the register was available, the same could not be shown to the inspecting officer. Along with the reply, a copy of MS/HD Density Register was forwarded to the company, stating that it was already being maintained.
5.2 The respondent-Corporation did not respond in any way after the said reply dated 28th April, 2014. Neither any communication was sent to the petitioner, nor the supply of petrol/diesel which was discontinued, was restored or anything was intimated in writing. Another show cause notice, instead, came to be issued on 05th May, 2014 referring to the very irregularities mentioned in the warning letter dated 26th April, 2014 was issued. In the second show cause notice it was further alleged that against the inspecting officer criminal behaviour was meted out and physical and verbal threats were given by the miscreants. The company mentioned breach of the clauses of the Dealership Agreement and asked the petitioner to submit a reply. The petitioner submitted a detail reply dated 13th May, 2014.
5.3 The conditions for which the breach has been alleged by the respondent-Corporation were the conditions Nos.2, 19, 39, 40, 44 and 45 of the Dealership Agreement. While the contention on behalf of the petitioner that the above conditions referred Page 11 of 25 HC-NIC Page 11 of 25 Created On Mon Sep 07 02:44:55 IST 2015 C/SCA/17989/2014 CAV JUDGMENT to and relied on for their alleged violation do not attract in the facts of the case, could not be brushed aside lightly, in any view, noticeably and significantly, despite the two notices alleging irregularities and violation of conditions in the Dealership Agreement, the Corporation has not terminated the Dealership Agreement. The Dealership Agreement dated 30th June, 2013 which is for 15 years period subsists between the parties.
5.4 If the incident on the day of inspection and filing of F.I.R. by the Sales Officer of the Corporation on the next day, is the main plank for taking action by the Corporation against the petitioner-dealer, then, apart that the Dealership Agreement is not terminated though the incident and filing of F.I.R. in that regard was a serious event accordingly emphasized by the Corporation, the complainant Sales Officer after a gap of four months addressed a letter dated 22nd August, 2014 to the Police Inspector wherein it was stated by the complainant himself that in the complaint lodged on 27th April, 2014 about the criminal occurrence at the outlet, he had committed a mistake in naming the accused. He stated that by inadvertence he mentioned in the complaint that the Alkeshbhai and his brother Yogeshbhai used foul language and graved his shirt and threatened but said two names were mentioned because he was disturbed. He stated that, "the fact of the matter is Alkeshbhai was not present at the site, however Yogeshbhai was present. The two people how manhandled me were not known to me....".
Page 12 of 25HC-NIC Page 12 of 25 Created On Mon Sep 07 02:44:55 IST 2015 C/SCA/17989/2014 CAV JUDGMENT 5.5 It further appears that the Corporation and the Dealer had some negotiations on the issue of the incident in question. A meeting appears to have been held on 22nd August, 2014. The Minutes of the Meeting is produced at Page No.68 in the compilation. It is not out of place to reproduce the extract of what was recorded. During the meeting following was transpired.
"a) The dealer stated that she is having severe financial crisis and expressed her regret for the incident of manhandling of sales officer at M/s Luv Petroleum Retail outlet premises on 26.4.2014.
The dealer tendered verbal apology towards the incident.
b) DGM, Retail referred to meeting held on 8.5.2014 and stated that inspite of dealer agreeing to file FIR against the manhandling incident no further action has been taken by her. On the contrary in the replies to Show cause notice and also in various communications the dealer has denied occurrence of any such incident. He specifically asked the dealer what is her version of the matter.
c) Dealer stated that incident of manhandling of Sales officer indeed took place at M/s Luv Petroleum, Retail outlet on 26.4.2014 and said act was committed by Shri Babubhai, however, Alpesh Bhai was not present at the outlet, at the time of incident and only Yogeshbhai was present at the outlet. Mr Yogesh Bhai is the person who is Manager who is handling day to day activities of the outlet on behalf of the dealer. She also stated that she has high respect for the Sales Officer and highly regrets the incident which has caused insult to the Sales Officer.
d) DGM, Retail specifically stated that why then she is not lodging the requisite FIR on such serious incident inspite of full knowledge of such act at M/sLuv Petroleum premises.
e) Dealer replied stating that since FIR filed by Shir Padmesh Shukla specified that Alpeshbhai was present at the outlet, Alpeshbhai gave a statement that no such incident of manhandling had taken place.
Page 13 of 25HC-NIC Page 13 of 25 Created On Mon Sep 07 02:44:55 IST 2015 C/SCA/17989/2014 CAV JUDGMENT
f) DGM-Retail stated that our stand on occurrence of such incident and absence of Alpesh Bhai from the scene is very clear from contents of Show Cause Notice and also contents of letters written to Hon'ble Director General of Police - State of Gujarat, Secretary, Civil Supplies, Superintendent of Police etc. DGM-retail clarified that he does not want that any innocent person should be prosecuted. However, he reiterated that people who have manhandled must be prosecuted and punished.
g) Dealer stated that she has paid an amount of Rs 8 Lks by way of RTGS and said amount is held by HPCL. To this DGM-Retail, HPCL stated that no request for refund of money is made by dealer till date. If request is made the said money may be refunded subject to reconciliation of accounts and assets.
h) DGM-Retail several times reiterated that if the dealer is really concerned about the manhandling incident he must immediately lodge an FIR. He further stated that if any statement or apology is to be made, the same must be in writing.
i) Dealer replied that no complaint whatsoever would be filed even if the Dealership is Terminated.
With this the meeting was concluded, the dealer and her representatives left the office at 1 PM."
5.6 It was contended on behalf of the petitioner that though the petitioner tendered his apology to the incident and expressed regrets about what happened, the highest authority of the Corporation insisted that the dealer should lodge an F.I.R. and that if the apology is to be given, the same must be in writing, learned counsel for the petitioner asserted, which was countered by denial by the other side, that the above was the crux.
6. In the above background coming to the main aspect of irregularities alleged, the relevant clauses in the Marketing Discipline Guidelines may be referred to. Chapter VIII of the Guidelines deals with the Page 14 of 25 HC-NIC Page 14 of 25 Created On Mon Sep 07 02:44:55 IST 2015 C/SCA/17989/2014 CAV JUDGMENT action to be taken by the company under the Guidelines. Clause 8.1 says that irregularities mentioned in Chapter V are classified in three categories, that is critical, major and minor. The classification and the action which may be taken in respect of those irregularities is as per Clauses 8.2, 8.3, 8.4. They are reproduced hereunder.
"8.2 Critical Irregularities: The following irregularities are classified as critical irregularities:"
i. Adulteration of MS/HSD (5.1.1)
ii. Seals of the metering unit found tampered in the
dispensing pumps {5.1.2(b)}
iii. Totalizer seal of dispensing unit tampered for deliberately making the totalizer non functional or not reporting to the company if totalizer is not working. (5.1.3 read with 5.1.2) iv. Additional/Unauthorised fittings and gears inside the dispensing units/tampering with dispensing units. (5.1.4) v. Unauthorised storage facilities (5.1.5) vi. Unauthorised purchase / sales of products (5.1.6) vii. Tank lorry carrying unauthorised product found under decantation at the RO (5.1.7) Action: Termination at the FIRST instance will be imposed for the above irregularities.
8.3 Major Irregularities: The following irregularities are classified as major irregularities:
i. Refusal by the dealer to allow drawl of samples/carry out inspections. (5.1.8) ii. Non availability of reference density at the time of inspection (5.1.9) iii. Selling of normal MS/HSD at branded fuels.
(5.1.10) iv. Stock variation beyond permissible limits but sample passing quality tests. (5.1.11) Page 15 of 25 HC-NIC Page 15 of 25 Created On Mon Sep 07 02:44:55 IST 2015 C/SCA/17989/2014 CAV JUDGMENT v. Non maintenance of records since last inspection.
(5.1.12) vi. Overcharging of MS/HSD/CNG/Auto LPT (5.1.13) vii. Dealer operating the automated RO in manual mode without authorization. (5.1.16) Action: Except in case of (iii) Suspension of sales and supplies for 15 days for the first irregularity, 30 days for the second irregularity, and a third offence would lead to termination of the dealership.
Action in case of (iii) above would be as under:-
in the first instance OMC would impose a penalty of recovery of differential price since last inspection. Termination will be the action in case of 2nd instance.
8.4 Minor Irregularities: The following irregularities are classified as minor irregularities:
i. Short delivery with Weights and measures Department s' seals intact where the dealer has not informed the OMC of this defect (5.1.2(a)) ii. Non maintenance of specified records where record from last inspection are mentioned but prior records are not available (5.1.12) iii. Non provision of facilities like air, clean toilet, telephone and first and box (5.1.14) iv. Miscellaneous.
a) Non display of authorized Retail Selling prices of MS/HSD/CNG/AUTO LPG (5.1.14)
b) Non display of density, opening stock of the day, sticker ensuring zero before delivery on dispensing unit, name of product on each nozzle of MPD, contact details of authorized persons to be contacted in case of Complaint/Grievance/Emergency (5.1.17)
c) Non maintenance of complaint book or not providing the same when demanded by the customer. (5.1.17)
d) Poor housekeeping (5.1.17)
e) Driveway Salesmen at the Ros not in uniform/wearing badges. (5.1.17) (one or more irregularity under the above category a, b, c, d, or e will be considered as one irregularity only for the purpose of taking action) Page 16 of 25 HC-NIC Page 16 of 25 Created On Mon Sep 07 02:44:55 IST 2015 C/SCA/17989/2014 CAV JUDGMENT Action: (except in case of (i) in above): Warning-
cum-guidance letter in the first instance. Rs. 10,000/- per irregularity on second instance and Rs.25,000/- per irregularity on third instance onwards.
Action in case of (i) above would be a under:
First instance : warning letter to be issued Second instance within one ye of 1st instance Rs.10,000/- per nozzle found delivering short.
Third and subsequent instances within one year of 1st instance: Rs.25,000/- per nozzle found delivering short."
6.1 The irregularities were mentioned in the warning-cum-guidance letter dated 26th April, 2015 which are reproduced hereinabove in paragraph 5. All the irregularities except about the Density Register fall under the category of minor irregularity. The action proposed for the irregularities alleged were minor irregularities is to give warning-cum-guidance letter in the first instance and thereafter fine of Rs.10,000/- per irregularity on the second instance and fine of Rs.25,000/- per irregularity on the third instance are provided for.
6.1.1 Clause 5.1.9 is about non-availability of reference density, providing as under.
"5.1.9 NON-AVAILABILITY OF REFERENCE DENSITY AT THE TIME OF INSPECTION The dealer is required to check and record morning density on daily basis. This has to be carried out latest by 10 AM every day. Similarly whenever fresh loads are received the dealer is expected to check and record density of composite product in the RO tank after decantation. Therefore non availability of the following density at the time of inspection would be treated as "non-availability of reference density":Page 17 of 25
HC-NIC Page 17 of 25 Created On Mon Sep 07 02:44:55 IST 2015 C/SCA/17989/2014 CAV JUDGMENT
(a) If inspection is carried out before 10 AM, density as recorded of the previous morning or density of composite product if load was received the previous day.
(b) If inspection is carried out after 10 AM, but before receipt of any load on that date, the density as recorded on the morning of that day.
(c) If inspection is carried out after 10 AM, but after receipt of any load on that date, the density as recorded of the composite product after unloading.
In case of non-availability of reference density at the time of inspection, sales and supplies of all the products to be suspended immediately. Samples of all products to be drawn and sent to lab for testing. If the sample passes then penal action specified for this irregularity to be taken. If sample fails, penal action in line with the irregularity of adulteration to be taken."
6.1.2 Sub-clause (ii) of Clause 8.3 list "non- availability of reference density" in Clause 5.1.9 as major irregularity.
6.1.3 Clause 8.5.2 of the Guidelines says that all the irregularities needs to be established before any action is taken against the dealer. Clause 8.5.3 of the Guidelines says that in case of two or more irregularities are detected at the same time at the same retail outlet-(a) Each of the irregularities should be accounted as an instance against the respective class of irregularity, (b) Suitable action will be taken for that specific irregularity and also for that specific instance, (c) Suitable action will be taken for each of the irregularity thereby giving a compounding effect. Clause 8.5.4 says that in case of irregularities not specifically mentioned, the Oil Company concerned shall take schedule action after Page 18 of 25 HC-NIC Page 18 of 25 Created On Mon Sep 07 02:44:55 IST 2015 C/SCA/17989/2014 CAV JUDGMENT inquiry and in accordance with the principles of natural justice. Clauses 8.5.6, 8.5.7 and 8.5.8 says that in respect of all the case of irregularities, a show cause notice would be issued and the dealer would have a period of 15 days to reply.
6.1.4 Clause 8.5.8 is extracted with relevance.
"8.5.8 Upon receipt of the reply to the show cause notice, the authorised officer of the OMC will review the charges leveled and the reply received and pass a speaking order preferably within a period of 45 days from the receipt of the reply. The speaking order shall indicate complete details of the irregularities committed the reply of the dealer and detailed reasons as to why the reply is acceptable / not acceptable to the official."
6.1.5 Clause 8.7 of the Guidelines inter alia requires for continuing the stop supplies of fuel to the retail outlet during the period of investigation.
7. In the facts of the present case, it is not in dispute that though two show cause notices were given and the petitioner replied, the case is not reviewed by the respondent-Corporation. Since the major irregularity alleged was only in respect of non- availability of Density Register and the said Density Register was available as per the say of the petitioner and copy thereof was sent immediately with reply dated 28th April, 2015 offering the explanation for not able to be produced at the time of inspection, the respondent-Corporation could have reviewed and verified the case of the petitioner, a fresh inspection could have been undertaken. However during the period, show cause notices one after another was Page 19 of 25 HC-NIC Page 19 of 25 Created On Mon Sep 07 02:44:55 IST 2015 C/SCA/17989/2014 CAV JUDGMENT issued, the reply was received by the company but no response or decision was taken. The interregnum period was a time whiled away and the supplies to the outlet of the petitioner remained discontinued and stopped. No written intimation was given to the petitioner. The Dealership Agreement is valid and existing and the company for the considerations prevailed with it, has not terminated the same.
7.1 The conduct of the respondent-Corporation in its totality and in particular the action of discontinuing the fuel supply is in breach of bare minimum play of fairness and devoid of natural justice. The discontinuation of supply of fuel emerges as unreasonable, one sided and therefore arbitrary given the entire scenario of the facts and circumstances.
8. It is true that since in the Dealership Agreement there exist arbitration clause as per paragraph 68, the parties to the Agreement being bound by it, the said remedy would have to be resorted to. However it is equally trite that invocation of writ remedy is not barred. Whether and to what extent the redressal could be given in the writ jurisdiction and whether to be given or not is a matter of discretion. This discretion would be guided by facts and circumstances of each case. In Union of India Vs Tantia Construction Private Limited [(2011) 5 SCC 697] the Supreme Court has stated, "Apart from the above, even on the question of maintainability of the writ petition on account of Page 20 of 25 HC-NIC Page 20 of 25 Created On Mon Sep 07 02:44:55 IST 2015 C/SCA/17989/2014 CAV JUDGMENT arbitration clause included in the agreement between the parties, it is now well established that an alternative remedy is not an absolute bar to the invocation of the writ jurisdiction of the High Court or the Supreme Court and that without exhausting such alternative remedy, a writ petition would not be maintainable. The various decisions cited by Mr.Chakaborty would clearly indicate that the constitutional powers vested in the High Court or the Supreme Court cannot be fettered by any alternative remedy available to the authorities. Injustice, whenever and wherever it takes place, has to be struck down as an anathema to the rule of law and the provisions of the Constitution." (Para
33)
9. From the above discussed and highlighted facts, circumstances and events, following facts have emerged amongst others.
(i) The major irregularity alleged against the petitioner was in respect of non-maintenance of the Density Stock Register which was not produced before the Inspecting Officer on the day of inspection. However, reply was immediately sent by the petitioner offering the explanation and the reasons not being able to produce the same. The explanation was that because of death of a relative, the petitioner was not present at site. The Density Register was physically available, copy of which was sent by the petitioner with her reply dated 28th April, 2014.
(ii) Two show-cause notices were issued to the petitioner. Both were replied. The Corporation however acted with discontinuance of petrol/diesel simultaneously on issuance of first notice and thereafter, did not respond to the reply and the explanation.
(iii) Conspicuously, though breaches are alleged, Page 21 of 25 HC-NIC Page 21 of 25 Created On Mon Sep 07 02:44:55 IST 2015 C/SCA/17989/2014 CAV JUDGMENT the respondent never terminated the dealership agreement. Dealership agreement subsists.
(iv) All the irregularities except Density Register Maintenance were minor irregularities under the Marketing Discipline Guidelines. For those irregularities, the penalty was of warning and fine.
(v) Even as the Corporation discontinued the product namely petrol/diesel, to the retail outlet, no intimation in writing in that regard was sent. It was an action resorted to parallelly while issuing the warning-cum-guidance letter dated 26th April, 2015.
(vi) The Corporation did not make any inquiry. It did not even verified the facts after the explanation offered by the petitioner in reply. The discontinuation of supply of fuel was resorted to simultaneously with letter dated 20th June, 2015. Even summary inquiry was not made to establish the irregularity. It has to be concluded that in discontinuing the supply of fuel, respondent- Corporation failed to apply the bare minimum principles of fairness and did not observe the natural justice.
9.1 In the above conspectus of the matter, rights of the parties have to be balanced. The arbitration clause operates and the dispute between the petitioner and the respondent-Corporation arising in whatever form and manner, could be resolved through the process of arbitration. However the Court is Page 22 of 25 HC-NIC Page 22 of 25 Created On Mon Sep 07 02:44:55 IST 2015 C/SCA/17989/2014 CAV JUDGMENT inclined to grant in this petition a limited redressal and relief to the petitioner to the extent of restoring supply of fuel by the respondent-Corporation at the outlet of the petitioner.
10. As a result of foregoing discussion and reasons, the present petition is disposed of by issuing following directions.
(i) Respondent-Hindustan Petroleum Corporation Limited shall resume the supply of the fuel petrol and/or diesel, at the Retail Outlet of the dealership of the petitioner at the site on SH/56 Highway, Visnagar, within a period of 10 days from the date of receipt of this order. Such supply shall be continued for two months from the date of commencement thereof, The petitioner is at liberty to produce simple copy of this order before the respondent-Corporation and the period of 10 days prescribed above shall start from the date of production of order by the petitioner.
(ii) The petitioner may invoke arbitration clause
being Paragraph 68 in the Dealership
Agreement dated 30th June, 2013 to resort to the arbitration raising the dispute in respect of the action on part of the respondent company with regard to discontinuation of supply of fuel, Page 23 of 25 HC-NIC Page 23 of 25 Created On Mon Sep 07 02:44:55 IST 2015 C/SCA/17989/2014 CAV JUDGMENT
(iii) Remedy to pursue the interim measures under the relevant provisions of the Arbitration and Conciliation Act, 1996 in accordance with law are kept open for the parties after the fuel supply is restored as per (i) above,
(iv) The direction as regards the supply of fuel by the respondent company given in (i) above shall be initially for the period of two months from the date of commencement, to be subject to further orders as may be passed at the interim stage either by the Court or by the Arbitrator, as the case may be, if the remedy for interim measures is invoked by the petitioner,
(v) The Arbitrator which may be appointed as per the arbitration clause shall complete the arbitral proceedings expeditiously and within six months from the date of commencement of proceedings before him.
11. The petition is allowed in terms above. Rule is made absolute to the extent above.
ORDER IN CIVIL APPLICATION In view of the order passed in the main Special Civil Application, no orders are required to be passed in this Civil Application. The same is accordingly disposed of.
Page 24 of 25HC-NIC Page 24 of 25 Created On Mon Sep 07 02:44:55 IST 2015 C/SCA/17989/2014 CAV JUDGMENT (N.V.ANJARIA, J.) FURTHER ORDER At this stage, learned advocate Ms.Minoo Shah requested the Court to stay the operation of direction in (I) hereinabove which relates to resumption of supply for fuel, petrol and/or diesel.
For the reasons recorded in the judgment, this Court does not see any justification to accede to the request. Hence, it is rejected.
(N.V.ANJARIA, J.) Anup Page 25 of 25 HC-NIC Page 25 of 25 Created On Mon Sep 07 02:44:55 IST 2015