Calcutta High Court (Appellete Side)
Tarun Kumar Halder & Anr vs Bpcl & Ors on 18 March, 2011
Author: Pinaki Chandra Ghose
Bench: Pinaki Chandra Ghose
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IN THE HIGH COURT AT CALCUTTA
CIVIL APPELLATE JURISDICTION
APPELLATE SIDE
F. M. A. NO. 609 OF 2009
+
C.O.T. 20 of 2009
TARUN KUMAR HALDER & ANR.
VS.
BPCL & ORS.
P R E S E N T :-
The Hon'ble Mr. Justice PINAKI CHANDRA GHOSE
a n d
The Hon'ble Mr. Justice SHUKLA KABIR (SINHA)
For the appellants :-
Mr. Anindya Kr. Mitra, Sr. Adv.
Mr. R. A. Agarwala
Mr. R. Dhara
For B.P.C.L. :-
Mr. Sabyasachi Chowdhury
Mr. S Singbhi
Ms. Raya Bhadra
For the respondent no.:-
Mr. Sourya Sadhan Bose
Heard on : 25th August, 2010, 15th September, 2010.
Judgment on : 18th March, 2011.
PINAKI CHANDRA GHOSE, J. : This appeal is directed against a judgment dated 6th
(W)
November, 2008 in W.P. No. 27514 of 2007 where the Hon'ble Single Judge was pleased to
dismiss the writ petition.
Facts of the case briefly are as follows :-
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In pursuance of a Memorandum of Agreement (hereinafter referred to as the M.O.A.)
executed on 2nd November, 1998 between the Bharat Petroleum Corporation Ltd. (hereinafter
referred to as the B.P.C.L.) and the three brothers, they were appointed as dealers and licence
was granted in their favour by the B.P.C.L. for a period of 15 years w.e.f. 26th June, 1998 to run
the retail outlet at 73D, Narkeldanga Main Road, Kolkata - 700 054 and to use motor spirit
and/or HSD pumps, storage tanks, pipes and fittings and all other facilities that may be provided
by B.P.C.L. on the said premises during continuance of the licence.
The case of the writ petitioners that they have been running the retail outlet without
any stigma and at no point of time any complaint was lodged by any customer regarding quality
and quantity of petroleum products sold by them from the retail outlet. From time to time,
officials of the B.P.C.L. conducted a number of inspections and on each of such inspection, no
irregularity was detected.
It is further stated that on 20th October, 2007 employees of SGS India Private Limited,
the respondent no. 4 herein, being a private agency having no authority to enter upon the retail
outlet made an unauthorized collection and testing of samples which was objected to by the
petitioners. It is stated that no steps could be taken by B.P.C.L. on the basis of such
unauthorized testing, no step was taken and the same was dropped.
On 3rd December, 2007 employees of the respondent no. 4 again visited the retail outlet
of the writ petitioners and sought to conduct marker test of high-speed diesel and motor spirit.
Despite objections samples were collected from the retail outlet and the petitioners were
informed that after carrying out the marker test of petrol and diesel products, it was expressed
that while all products had passed the tests, testing of diesel on analysis has shown 'P' (Pink) on
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the marker and, therefore, has failed the test. The said report was also supplied to the
petitioners by the employees of the respondent no. 4.
On the basis of such test conducted by respondent no. 4, petitioners received a
communication from the Deputy Manager (Sales) of B.P.C.L. mentioning that HSD (Diesel)
sample tested vide IAS Column no. 04162442 had turned 'Pink' and, accordingly, in terms of the
existing guidelines the petitioners were advised to suspend the sale of all products with
immediate effect till further intimation. It was further conveyed that all tanks and dispensing
units were being sealed.
The order of suspension followed by a letter dated 7th December, 2007 from the
Territory Manager (Retail), Kolkata of B.P.C.L. The said letter reiterated the visit of the officials
of the respondent no. 4 to the retail outlet on 3rd December, 2007 and further reiterated the
result of such inspection. The said letter also stated that in terms of the prevailing policy
retesting of the samples of the retail outlet, the tank lorry and the supply location were
conducted at the Budge Budge laboratory of B.P.C.L. on 6th December, 2007 in the presence of
the writ petitioners, the transporters' representative, representative of the respondent no. 4
and the Deputy Manager (Sales) and on testing, the HSD sample taken from the retail outlet
tested 'P' (Pink) while HSD sample drawn taken from the tank lorry indicated the result 'N' (Not
pink). The copy of the test report was also enclosed to the said letter and the petitioners were
granted 7 days time to explain in writing. The reasons for failure of HSD sample collected from
the retail outlet to pass the marker test failing which it would be construed that they have no
explanation to offer and action would be initiated.
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The writ petitioners challenged the authority of the respondent no. 4 to conduct the
marker test and to collect samples from the outlet and also the jurisdiction of the company
(B.P.C.L.) to proceed against the petitioners on the basis of the said report.
The writ petitioners stated that in terms of the Petroleum Act, 1934 (hereinafter
referred to as the 1934 Act) and the Rules made thereunder read with the provisions of the
Motor Spirit and High Speed Diesel (Regulation of Supply, Distribution and Prevention of
Malpractices) Order, 2005 (hereinafter referred to as the 2005 Order) and the Marketing
Discipline Guidelines, 2005 (hereinafter referred to as the Guidelines), only those officers
authorized by the competent authority may enter into the retail outlet, collect sample and
conduct test and, therefore, B.P.C.L. not being authorized to engage the respondent no. 4 lacks
the competence to proceed against the petitioners on the basis of report submitted by it.
It is further stated that the order of suspension should be revoked allowing the
petitioners to carry out the normal business from the retail outlet.
Thereafter, the writ petition was filed on 19th December, 2007 challenging the
engagement of the respondent no. 4 by B.P.C.L. to conduct tests in the retail outlet of the
petitioners, the order suspending sales on the basis of report prepared by it, the show cause
notice issued by B.P.C.L. on 7th December, 2007 and its refusal to revoke the order of
suspension.
The said writ petition was dismissed by the Hon'ble Single Judge. Being aggrieved, this
appeal has been preferred by the writ petitioners.
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Learned Counsel appearing on behalf of the appellants contended that Control Order is
a statutory one and does not authorize an agent of an oil company to collect samples. He
further referred to Para 2.2.2.3 of the Guidelines and Para 4 of the 2007 amendment to the
Guidelines which authorize such an agent to collect sample for the purpose of testing is contrary
to Clause 7 of the Control Order. According to him, the Guideline framed by the Central
Government is administrative and must yield to the statutory Control Order. The collection of
sample by SGS being illegal, the entire action following the same is illegal and unsustainable in
law. The Control Order has conferred power upon specified persons or authorities so that a
dealer may not be exposed to the whims of outside agencies.
He further submitted that the requirement of Para 2.4.2 of the Guidelines for handing
over to the dealer one of the three samples collected has the object of providing checks and
balances so that the dealer can get an opportunity to participate at the laboratory test when he
can demand that the sample kept with him also be tested. According to him, the sealed sample
sent for laboratory test is sealed is not a full proof guarantee and that is the reason the
Guidelines has made provision for keeping one sample with the dealer.
He further drew our attention to a decision of "Hindustan Petroleum Corporation
Limited Vs. Super Highway Services & Anr." reported in 2010 (3) SCC 321 and submitted that
Supreme Court while dealing with a situation in which the notice fixing the date of the test, was
found not having been served upon the dealer. The Supreme Court was pleased to set aside the
order of termination of dealership on that ground. He further submitted that the dealer was
deprived of a proper opportunity in the absence of a sample being kept with them.
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He also submitted that in the instant decision the Hon'ble Judge had been considered
Para 10(o) of the Agreement, does not authorize collection of samples by an agent of the Oil
Company for the purpose of testing or marker test and he relied on an unreported decision of
the Madras High Court in the case of "Chief Regional Manager, HPCL Vs. M/s. D. Nagarajan &
Co." and submitted that the said case is distinguishable since the points were different. In the
said decision it was decided that the show-cause notice disclosed pre-determined mind. This
was negatived in Para 12 of the Judgment. He further submitted that the samples were not only
collected by SGS but also by an oil company. He also submitted that the action on the part of
the respondents are liable to be set aside and the writ petitioner should have been succeeded in
the matter.
Mr. Chowdhury, Learned Advocate appearing for the B.P.C.L. submitted that Para 10(o)
of the Agreement provides that B.P.C.L. its officers, agencies and servants will have the power
to investigate the facilities of the Petroleum Pump. The Marketing Discipline Guidelines, 2005
provides at Clause 2.2.2.3 that Agencies authorized by Oil Companies will draw samples.
Amendment to the above guideline issued on 15th January, 2007 by the Government of India,
Ministry of Petroleum & Natural Gas provides for agencies authorized to draw samples and
modalities of marker test. Which was duly intimated to the entire retail outlet by a letter dated
12th April, 2007. It was also intimated to all the retail outlets that all Oil Marketing Companies
have appointed SGS Pvt. Ltd. to conduct necessary marker test at dispensing units. The subject
Retail outlet was inspected on 19th December, 2007 when the marker test result showed positive
and sales were suspended from 20th December, 2007. Accordingly, the writ petitioner was asked
to be present on 28th December, 2007 for laboratory test. At the laboratory test the sample
failed in presence of the writ petitioner. it is also submitted that all steps have been taken by
the respondent authority in accordance with the provision of law.
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He further submitted that in the decision reported in (2010) 3 SCC 321 (supra) where
the Apex Court did not pass any observation with regard to the legality and validity of the
appointment of SGS Pvt. Ltd.'s authority to conduct the marker test.
A Division Bench of the Allahabad High Court in Writ Petition no. 16930 of 2009 (Kishore
Auto Sales & Ors. Vs. BPCL & Ors.) by judgment dated 14th May, 2010 have held regarding the
authority of B.P.C.L. to authorize S.G.S. Pvt. Ltd. to carry out marker test.
Our attention has also been drawn to a decision reported in AIR 2010 SC 463 where the
Supreme Court held that the Court should not ordinarily interfere with the policy decision of the
State. It is further stated in 2003 (6) SCC 503 by the Supreme Court that the company is having
legal authority in terms of the Dealership Agreement to take action for any breach of any
condition in the Agreement. In the instant case, the writ petitioner was responsible for
adulteration and action was taken after verifying at the Company's approved laboratory at
Budge Budge.
It is further submitted that the Supreme Court held that the writ Courts being
governed by the principle of Equity should ensure that reliefs may be granted only in favur of
litigants coming with clean hands. The writ petitioners having adulterated MS/HSD is not
entitled to get any relief [See: (1996) 5 SCC 54, (1997) 4 SCC 713, (2007) 8 SCC 449 and
(2008) 12 SCC 481].
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In view of that it is submitted that the order so passed by the Hon'ble Judge does not
suffer from any irregularity or illegality and therefore, it is submitted the order so passed by the
Hon'ble Single Judge should be upheld by the Court.
Learned Advocate appearing on behalf of the respondent no. 4 submitted that the
respondent no. 4 was appointed as Inspection Agency by Indian Oil Corporation Ltd., IBP Co.
Ltd., HPCL Ltd. and B.P.C.L. Ltd. on 27th September, 2006. The job of the respondent no. 4 is to
enter upon a retail outlet on behalf of any of the Oil Companies and to draw samples from the
nozzle of the dispensing units thereat and conduct a marker test. After performing the marker
test the duty of the respondent no. 4 is to inform to the officer of the concerned Oil Companies
for taking necessary action. Thereafter, test is conducted by the Oil Companies at its laboratory
in the presence of representatives of all concerned parties, including representatives of the
retail outlet. On the basis of such re-test, necessary action is taken by the Oil Company. In the
present case, representative of the retail dealer was present at the time when such re-test was
done and the same has been done in accordance with law. It is further submitted that there is
no merit in the appeal and the appeal should be dismissed.
After hearing the parties it would be necessary for us to decide the question regarding
some of the Clauses mentioned in the Memorandum of Agreement which are relevant for the
purpose of the deciding the issue raised before us that whether oil company the respondent has
a right to appoint an agency to test the authenticity of the motor spirit a H.S.D. supplied by the
oil company ? The said Clauses may be set out hereunder :-
"10. The Licensees hereby covenant and agree with the Company as follows :
***********
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(g) Not to adulterate the Petroleum Products supplied by the Company and at all times to take all reasonable precautions to ensure that the Motor Spirit or H.S.D. is kept free from water, dirt and other impurities and served from the pumps in such condition.
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(i) To be responsible for all Motor Spirit or H.S.D. or other Petroleum products delivered by the Company to the Licensees from the time of the delivery thereof into the storage tanks of the pumps upon the said premises or otherwise and to pay for all supplies ordered by them prior to the delivery thereof unless otherwise agreed.
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(o) At all times and from time to time during the currency of this licence to give adequate facilities to the Company its officers, agents and servants to inspect and test the accuracy and general working of the pumps and other equipment upon the said premises and to investigate the conduct and management by the Licensees of the said facilities and afford to the Company its officers, agents and servants all proper and necessary assistance and facilities for conducting such inspection and investigating and for maintenance of the buildings and equipment.
*********** 13(a). Notwithstanding anything to the contrary herein contained the Company shall be at liberty to terminate this agreement forthwith upon or at any time on the happening of any of the events following:
***********
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vii) If the Licensees shall be guilty of a breach of any of the covenants and stipulations on their part contained in this agreement.
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(d) That if Licensees commit breach of any covenant and/or stipulation in this Licence, the Company shall not be bound to observe and perform its obligations hereunder.
***********"
We have also noticed that if a dealer indulges marker test in terms of Clause 2(f) of the 2005 Order, he would be liable to be prosecuted in terms of the E.C. Act. We have also scrutinized the 1934 Act and the 2005 Order issued by the Central Government in exercise of power conferred by Section 3 of the E.C. Act. In our opinion, those Acts and the Order and Guidelines have been made with an intention to punish the wrong-doer for committing statutory violation and the proceeding should be drawn up in terms of the agreement between the Oil Company and its dealer.
We have also considered the Clauses of agreement entered into between the parties and we hold that the appointment of agency, the respondent no. 4, has been made in accordance with the terms of the agreement. Therefore, we hold that the follow-up actions taken by the respondent no. 1 does not suffer from any illegality. We have noticed that the appellant duly participated in the re-test done at the laboratory of the respondent no. 1.
We also noticed that even if the respondent no. 4 is not authorized to collect and test the samples in the manner laid down in the statutory provisions, would not warrant a finding that B.P.C.L. under the terms of the contract is not empowered to engage respondent no. 4.
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Consequently, the respondent no. 4 is authorized to inspect the retail outlets of B.P.C.L., and to collect and test samples. We held that B.P.C.L. has a right to appoint the respondent no. 4 and further in terms of the M.O.A. under 10(o), the writ petitioners have the power to take steps to conduct an inspection and investigation at the outlet.
After considering this aspect of the matter, we hold that in the given facts the finding of the B.P.C.L. that the petitioners have adulterated H.S.D. has not suffered from any illegality and thereby appellants are liable to suffer penal consequences.
Therefore, in our considered opinion, the appeal is without any merit and we affirm the judgment delivered by the Hon'ble Single.
Hence, the appeal is dismissed on the above terms.
In view of that, the appeal being C.O.T. 20 of 2009 is disposed of on the above terms.
( PINAKI CHANDRA GHOSE, J.) I agree.
( SHUKLA KABIR (SINHA), J.)