Jharkhand High Court
Shresta Fuels vs Indian Oil Corporation Ltd ⩔ on 29 June, 2017
Author: Rajesh Shankar
Bench: Rajesh Shankar
IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P. (C) No. 2883 of 2007
Shresta Fuels, situated at N.H. 33, Chuttupalu, Opposite Shiddarth Public
School, P.O. and P.S. Ramgarh, Dist. Hazaribagh, through its proprietor
Md. Zubair, Son of Late Md. Ali Muddin, resident of New Market, near
Jhonson Studies, P.T.P.S. Patratu, P.S. Patratu, Dist. Hazaribagh.
... ... ... ... ... Petitioner
Versus
1. Indian Oil Corporation Limited, having its registered office at G-9
Aliyawarjanj, P.O. and P.S. Bandra (East) Mumbai-500051 (Maharashtra)
and one of its Divisional office at Namkum Depot, P.O. and P.S.
Namkum, Dist. Ranchi through its General Manager
2.Divisional Manager, Retail, Indian Oil Corporation Limited, Nakum,
Depot, P.O. and P.S. Namkum, Dist. Ranchi
3.Assistant Divisional Manager, Indian Oil Corporation Limited,
Namkum Depot, P.O., P.S. Namkum, Dist. Ranchi
4. Depot Manager, Indian Oil Corporation Limited, Namkum Depot, P.O.
and P.S. Namkum, District-Ranchi
5. Sales Officer, Indian Oil Corporation Limited, Namkum Depot, P.O.
and P.S. Namkum, Dist. Ranchi ... ... Respondents
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CORAM : HON'BLE MR. JUSTICE RAJESH SHANKAR
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For the Petitioner : Mr. Kumar Vaibhav, Advocate
For the Respondents : Mr. Amar Nath Gupta, Advocate
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12/29.06.2017The present writ petition has been filed for quashing the order dated 12.03.2007 issued under the seal and signature of the Sales Officer of the respondents-company in terms of which the sale and supply license of the petitioner was suspended on the basis of marker test report. Further prayer has been made for issuance of direction upon the respondents to provide marker kit to the petitioner so as to enable it to conduct test on the petroleum products and samples which are received in the retail outlet of the petitioner from the depot of the respondents- company through different transport agencies.
2. During the pendency of the present writ petition, the respondents terminated the dealership of the petitioner vide order dated 23.07.2007 which was challenged by way of filing I.A. No. 3245 of 2007 and the same was allowed vide order dated 26.08.2008 and the said interlocutory application was treated as part of the main writ petition.
3. Learned counsel for the petitioner submits that the petitioner was having a retail outlet of the respondent company since 2002. As per the Marketing Discipline Guidelines 2005, the retail outlets have been cast -2- a duty to check the density of the product at the time of decanting which are received by them from the tank lorry carrying the product from the company depot. It is further submitted that the Marketing Discipline Guidelines was amended w.e.f. 15.02.2007 wherein it was provided that 'marker test' has to be conducted on the samples drawn from all the tanks. In the case of 'marker test' failing on any of the samples drawn from all the retail outlet, the corresponding T.T. samples retained by the dealer would also be tested for presence of marker. However, in spite of repeated request of the Jharkhand Petroleum Pump Dealers Association, the marker kit was not made available to the dealers. It is also submitted by learned counsel for the petitioner that on the occasion of Holi, some anti social elements raided the retail outlet of the petitioner and took away the T.T. Samples and the said incident was also reported to the concerned police station on 05.03.2007. The petitioner continued to maintain the density chart of the products as per the Marketing Discipline Guidelines 2005 and on 12.03.2007, the density was recorded as 840.6 kg./m3. which was within the permissible limit. However, on 12.03.2007 itself, the representative of M/s. S.G.S. Agency visited the retail outlet of the petitioner and conducted 'marker test' of the samples collected from the retail outlet and prepared the test report, but the same was not signed by any employee of the petitioner, because the site manager was not present at that time. On the basis of the report, the respondent no. 5 passed an order contained in Ref. No. Sk/Marker/Shrestha dated 12.03.2007 suspending the supply license of petitioner with immediate effect. Thereafter a show cause notice was issued to the petitioner on 17.03.2007 which was replied by it on 23.03.2007. However, since no order was passed, the present writ petition was filed. Subsequently, the General Manger of the respondent company vide order dated 23.07.2007 terminated the retail outlet dealership license of the petitioner which is also challenged by the petitioner in the present writ petition.
4. Learned counsel for the petitioner further submits that the respondents have acted most arbitrarily in terminating the retail outlet dealership license of the petitioner on the basis of marker test report as the marker kit was not available with him. The petitioner carried out the density test as per the Marketing Discipline Guidelines and the result did -3- not show deviation in the quality of the product and as such the impugned orders dated 12.03.2007 and 23.07.2007 issued at the instance of the respondents-company may be quashed and the respondents-company may be directed to restore the license of retail outlet dealership of the petitioner.
5. Per contra, the learned counsel appearing on behalf of the respondents submits that as per clause 28 of dealership agreement any dispute regarding any right, liability and omission on account of any party has to be referred to the sole arbitrator i.e. Director, Marketing, Indian Oil Corporation Ltd. However the petitioner did not invoke the arbitration clause of the agreement and approached this court under Article 226 of the Constitution of India. It is further submitted on behalf of the respondents that on 12.03.2007, a 'marker test' was conducted in presence of the representatives of the petitioner and the sample turned pink in the said marker test confirming adulteration, but the representatives of the retail outlet of the petitioner refused to sign the said report. As per the Marketing Discipline Guidelines, the dealers must retain T.T. samples in their retail outlet, but at the time of inspection, on 12.03.2007 no T.T. sample was found in the retail outlet of the petitioner. It is also submitted on behalf of the respondents that non retaining of the T.T. samples is also an offence and the dealership license of the retail outlet can be terminated under Marketing Discipline Guidelines 2005. In the present case, as per the provisions of the Marketing Discipline Guidelines, supply and sale license of the petitioner was immediately suspended and subsequently, after considering the reply of the petitioner, the impugned order dated 23.07.2007 was passed terminating the retail outlet dealership license of the petitioner. The marker test was introduced in the year 2007 for keeping strict check in adulteration of petroleum products in the retail outlets and therefore no illegality was committed by the respondents in terminating the retail outlet dealership license of the petitioner.
6. Having heard the submissions of learned counsels for the parties and after going through the relevant documents available on record it appears that on 12.03.2007 a 'marker test' was conducted by M/s S.G.S. Ltd. (an authorized agency of the respondent-company) in the retail outlet of the petitioner in presence of the representatives of the retail -4- outlet of the petitioner. As per the terms and conditions of Marketing Discipline Guidelines, the said agency reported the test result to the respondent-company. Thereafter, supply and sale license of the petitioner for all petroleum products was suspended and the information to that effect was also given to it. Show cause notices were issued to the petitioner on 17.03.2007 and 09.05.2007 by the respondent-company and reply to the said show cause notices were also submitted by the petitioner on 23.03.2007 and 29.05.2007. In the meantime, present writ petition was filed by the petitioner and vide order dated 02.07.2007, the petitioner was given liberty to approach the respondents with direction to the respondents to consider the representation of the petitioner and pass appropriate order within a period of one week. Thereafter, the petitioner again filed representation on 07.07.2007 before the respondents and after considering the same, the General Manager of the respondent-company passed an order of termination of the retail outlet dealership license of the petitioner on 23.07.2007.
7. Under the aforesaid factual contour of the case, it is relevant to deal with the scope of judicial review in contractual matters by the High Court in its writ jurisdiction. The scope of judicial review under Article 226 of the Constitution of India in contractual matters has been discussed in detail by the Hon'ble Supreme Court in the case of Sri Ram Builders versus State of Madhya Pradesh and Others reported in (2014) 14 SCC 102. The relevant paragraphs of the judgment reads as under:-
58. In the ultimate analysis, the whole controversy boils down to a breach of contract by M.P. RTC entered into with the appellant. The scope of judicial review is very limited in contractual matters even where one of the contracting parties is the State or an instrumentality of the State. The parameters within which power of judicial review can be exercised, has been authoritatively laid down by this Court in a number of cases.
59. In Tata Cellular v. Union of India this Court upon detailed consideration of the parameters within which judicial review could be exercised, has culled out the following principles: (SCC pp. 675 & 677, paras 70 & 77)
70. ................................
77. The duty of the court is to confine itself to the question of legality. Its concern should be:
(1) whether a decision-making authority exceeded its powers?
(2) committed an error of law, (3) committed a breach of the rules of natural justice, (4) reached a decision which no reasonable tribunal would -5- have reached, or (5) abused its powers.
Therefore, it is not for the court to determine whether a particular policy or particular decision taken in the fulfilment of that policy is fair. It is only concerned with the manner in which those decisions have been taken. The extent of the duty to act fairly will vary from case to case. Shortly put, the grounds upon which an administrative action is subject to control by judicial review can be classified as under:
(i) Illegality: This means the decision-maker must understand correctly the law that regulates his decision-making power and must give effect to it.
(ii) Irrationality, namely, Wednesbury unreasonableness.
(iii) Procedural impropriety.
The above are only the broad grounds but it does not rule out addition of further grounds in course of time."
(emphasis in original)
8. Further, in the case of Rajasthan State Industrial Development & Investment Corporation & Anr. vs. Diamond & Gem Development Corporation Ltd. and Another, reported in (2013) 5 SCC 470, the Hon'ble Apex Court has held in paragraph nos. 21 and 22 as quoted hereunder:-
"21. It is evident from the above that generally the Court should not exercise its writ jurisdiction to enforce the contractual obligation. The primary purpose of a writ of mandamus is to protect and establish rights and to impose a corresponding imperative duty existing in law. It is designed to promote justice (ex debito justitiae). The grant or refusal of the writ is at the discretion of the court. The writ cannot be granted unless it is established that there is an existing legal right of the applicant, or an existing duty of the respondent. Thus, the writ does not lie to create or to establish a legal right, but to enforce one that is already established. While dealing with a writ petition, the court must exercise discretion, taking into consideration a wide variety of circumstances, inter alia, the facts of the case, the exigency that warrants such exercise of discretion, the consequences of grant or refusal of the writ, and the nature and extent of injury that is likely to ensue by such grant or refusal.
22. Hence, discretion must be exercised by the court on grounds of public policy, public interest and public good. The writ is equitable in nature and thus, its issuance is governed by equitable principles. Refusal of relief must be for reasons which would lead to injustice. The prime consideration for the issuance of the said writ is, whether or not substantial justice will be promoted. Furthermore, while granting such a writ, the court must make every effort to ensure from the averments of the writ petition, whether there exist proper pleadings. In order to maintain the writ of mandamus, the first and foremost requirement is that the petition must not be frivolous, and must be filed in good faith. Additionally, the applicant must make a demand which is clear, plain and unambiguous. It must be made to an officer having the requisite authority to perform the act demanded.-6-
Furthermore, the authority against whom mandamus is issued, should have rejected the demand earlier. Therefore, a demand and its subsequent refusal, either by words, or by conduct, are necessary to satisfy the court that the opposite party is determined to ignore the demand of the applicant with respect to the enforcement of his legal right. However, a demand may not be necessary when the same is manifest from the facts of the case, that is, when it is an empty formality, or when it is obvious that the opposite party would not consider the demand".
9. In the facts of the present case, it does not appear that the respondent-company while suspending the sale and supply license of the petitioner vide impugned order dated 12.03.2007 and the order of terminating the retail outlet dealership of the petitioner vide impugned order dated 23.07.2007 exceeded its power or committed breach of principles of natural justice. The said orders do not suffer from any irrationality, unreasonableness and procedural impropriety. In fact the respondents have passed the impugned orders enforcing the provisions of the Marketing Discipline Guidelines (M.D.G.) 2005 and the dealership agreement dated 21.06.2002. The said fact is evident from the impugned order dated 23.07.2007 terminating the retail outlet dealership license of the petitioner.
10. In view of the aforesaid facts and the judicial pronouncements, I find no reason to interfere with the impugned orders dated 12.03.2007 and 23.07.2007. The writ petition is accordingly dismissed.
(Rajesh Shankar, J.) Jharkhand High Court, Ranchi Dated 29/06/2017 Binit/A.F.R.