Gauhati High Court
M/S R.M. Service Centre vs The Union Of India & 7 Ors on 13 October, 2015
1
IN THE GAUHATI HIGH COURT
(THE HIGH COURT OF ASSAM; NAGALAND; MIZORAM &
ARUNACHAL PRADESH)
WP(C) 2824/2014
M/s R.M. Service Centre
Proprietor Md. Safiquer Rashid
Ghograpar, National Highway-31,
District- Nalbari, Assam.
....PETITIONER
-versus-
1. Union of India
Represented by the Secretary to the Government of
India, Ministry of Petroleum & Natural Gas, New Delhi.
2. Indian Oil Corporation Ltd.,
G-9, Ali Yavar Jung Marg, Bandra (East),
Mumbai-400051, represented by its Chairman.
3. The Executive Director,
Indian Oil Corporation Ltd.,
North East Integrated State Office,
East Point Tower, Bamunimaidam, Guwahati-21.
4. The General Manager,
Indian Oil Corporation Ltd.,
Marketing Division, Eastern Region,
2 Gariahat Road (South) Dhakuria, Kolkata-700068.
2
5. Chief Divisional Retail Sales Manager,
Guwahati Integrated Divisional Office,
Noonmati, Guwahati-20.
6. Senior Divisional Retail Sales Manager,
Guwahati Integrated Divisional Office,
Noonmati, Guwahati-20.
7. Assistant Manager, (Retail Sales)
Ghy - II RSA, Guwahati Integrated Divisional Office,
Noonmati, Guwahati-20.
8. Sales Officer (Retail Sales)
Ghy - II RSA, Guwahati Integrated Divisional Office,
Noonmati, Guwahati-20.
...RESPONDENTS
BEFORE HON'BLE MR. JUSTICE MANOJIT BHUYAN Advocates for the petitioners - Mr. KN Choudhury, Senior Advocate Mr. I Ahmed, Mr. MK Mishra, Advocates for the Respondent No.1 - Mr. CK Sarma Baruah Advocates for the Respondent Nos.2 to 8 - Mr. MK Choudhury, Senior Advocate Mr. N Baruah Date of hearing - 13.8.2015 Date of delivery of judgment - 13.10.2015 3 JUDGMENT AND ORDER (CAV) Heard Mr. KN Choudhury, learned Senior counsel representing the petitioner assisted by Mr. I Ahmed, Advocate. Also heard Mr. CK Sarma Baruah, learned counsel representing the Union of India i.e. Respondent No.1 and Mr. MK Choudhury, learned Senior counsel representing IOCL, assisted by Mr. N Barua, Advocate.
2. The petitioner was appointed as a Dealer by IOCL for retail sale of Petrol/HSD/Motor Oil/Grease and such other petroleum products from its depot located at Ghograpar, abutting National Highway-31, in the district of Nalbari. To that end, a Memorandum of Agreement was entered into by and between the petitioner and IOCL on 20.12.1995. The terms and conditions governing the dealership were delineated in the said Agreement.
3. Business suffered in the year 2011 on account of expansion works of NH-31 under the East-West Corridor Project. Matters came to worse when sales and supplies from the Retail Outlet (RO) was ordered to be suspended vide IOCL letter dated 6.5.2013. Grounds indicated was that on a joint inspection at the RO on 6.5.2013 it was found that (i) the stock variation of HSD was beyond permissible limit, which is a positive variation, and (ii) the reference density of Tank No.2 (20 KL) was not available. Further, the Tanker Truck (TT) retention sample of the corresponding tank was not available at the time of inspection and because of the defective Dispensing Unit (Sl. No.LRL&T 3401), sample could not be collected from the connected Tank No.1(15 KL) HSD. According to IOCL, the shortcomings amounted to violation of Clause 5.1.9 and 5.1.11 of the Marketing Discipline Guidelines (MDG), 2012. The petitioner was asked to explain with justification as to why action should not be taken for the violations alleged.
4. The petitioner responded on 21.5.2013. It was pointed out that HS-2 Totalizer had been showing wrong reading and the Dispensing Unit was also not working properly, a fact that had been brought to the notice of IOCL with request for changing it. Additionally, it was stated that the RO had been 4 temporarily closed for the last two years due to expansion work of NH-31 and work over the stretch of road was still in progress and not opened for traffic.
5. On 27.6.2013, the IOCL informed the petitioner that the Test Report of the HSD samples drawn from the tanks on 6.5.2013 had been received. As per the Test Report, the samples failed to meet the specifications and, as such, an additional irregularity towards violation of MDG-2012 was added. A list of 4 (four) non-conformities detected in the RO were spelt out, being:
SN Non conformity Violation of clause
ref no of MDG-2012
1 Stock Variation of HSD: 12740 Ltrs Clause no.5.1.11
(Allowable limit 59 Ltrs)
2 Non availability of reference density at the Clause no.5.1.9
time of inspection, (Density Register was
produced but the reference density was not
recorded).
3 Failure of Nozzle sample of HSD collected on Clause no.5.1.1
06.05.2013
4. Non retention of TT retention sample Notes-i)
Accordingly, the petitioner was afforded another opportunity to make reply against the 4 (four) non-conformities detected. Copy of the Test Report enclosed to the letter dated 27.6.2013 indicated that sample was received at the laboratory on 22.5.2013 and tested on 29.5.2013.
6. In reply, the petitioner expressed shock and dismay and requested for a re-test of the umpire sample that had been drawn on the same day, sealed and certified by IOCL executives and retained with the petitioner. The petitioner also agreed to abide by the results of the umpire sample. With regard to the Dispensing Unit, it was indicated that the same was 20 years old and due to lack of maintenance on account of the road-widening project by NHAI, the totalizer has been showing wrong readings.
57. The request for re-test of the HSD sample was accepted by IOCL letter dated 6.8.2013. It was informed that the sample would be tested in the presence of the petitioner at Betkuchi Laboratory on a date to be decided after discussion with the Laboratory. IOCL also agreed to the request to visit the RO along with OEM Engineer on a mutually convenient date for checking the Dispensing Unit.
8. Two sets of HSD samples- one retained by the petitioner under Seal No.034791 and the other retained by the Field Survey Officer (FSO), Guwahati under Seal No.034768, both in aluminium containers - were tested. The result on the joint inspection of testing, as contained in IOCL letter dated 19.8.2013 revealed as under:
"Observed Test results are as under:
FSO Retention Sample Characteristics Unit Test Requirement as Test Result Reproducibility limit Method per BIS III (+) IS:1448 Appearance Clear & Bright (Visual) Colour (visual) Greenish 0 3 Density @ 15 C Kg/m P:16 820-845* 813.3 3.0 K.V. @ 400 C C.St. P:25 2.00-4.500 1.278 0.007V Distillation % Vol P:18 95 (Min) FBP:2900C 2.0 Recovery at 3600C Sulphur Mg/Kg D-2622 350 mg/Kg (Max) 458.2 46.8@S=350 ppm Remarks: FSO Retention sample does not meet the BIS III specifications w.r.t. test done as per MDG 2012.
Dealer Retention Sample
Appearance Not clear, contains
(Visual) sludge & visible
impurities
Colour (Visual) Yellowish, Turbid
0 3
Density @ 15 C Kg/m P:16 820-845* 844.7 3.0
Dealer Sample is not found fit for testing due to presence of sludge.6
9. With regard to the test done on 19.8.2013, the petitioner marked a letter dated 21.10.2013 detailing the events occurring from the date of visit of an IOCL Executive to the RO on 6.5.2013. In so far as the Re-test is concerned, it was indicated that the result of the sample retained by the petitioner proved positive. However, the Test Report was not made available to the petitioner on the same day. Instead, after about 4 (four) days, the Area Manager of IOCL had indicated to the petitioner of certain errors in the Report and the necessity for changing it. On 25th of August, the Test Report was handed over with changes in the data. The issues raised in the said letter pertained to no responsible person being present from the petitioner's side at the time of inspection, far less the presence of any State Government officials. Further, although the sample retained by the petitioner was collected on 6.5.2013, the same was sent to the laboratory on 22.5.2013. Issue was also raised as to why the Area Manager (RS) wanted to change the Laboratory Test Report, amongst others. Request was made for considering the issues seriously and to render justice to the petitioner who is a physically handicapped person. The IOCL acknowledged receipt of the petitioner's letter dated 21.10.2013 stating that the same has been forwarded to the competent authority for a decision.
10. On 10.12.2013, the IOCL issued the Show Cause Notice for termination of Dealership for violation of the Marketing Discipline Guidelines (MDG)-2012. The violations alleged being:
(a) Stock variation beyond permissible limit, which is in violation of MDG-2012, Clause 5.1.11 ;
(b) Nozzle sample failure of HSD, which is in violation of MDG-
2012, Clause 5.1.1 ;
(c) Non availability of reference density, being in violation of MDG-
2012, Clause 5.1.9 ;
(d) Non availability of TT (Tanker Truck) retention sample, being in violation of MDG-2012, Chapter 5 Notes-i.
7In the SCN it was indicated that the irregularities/violation of (a) and
(b) above invites termination at the first instance as per Clause 8.2 of MDG- 2012. In so far as (c) and (d) are concerned, the action contemplated under Clause 8.4 of MDG-2012 is a Warning cum Guidance Letter at the first instance. In addition, it was also alleged that the aforesaid irregularities were also in violation of Clause 27 and 40 of the Dealership Agreement dated 20.12.1995, executed by and between the petitioner and IOCL. Accordingly, the petitioner was made to show cause as to why action towards termination of dealership agreement should not be taken for violation of Clause 5.1.11 and 5.1.1. of MDG-2012.
11. The petitioner made a detailed reply on 2.1.2014 by answering to each of the irregularities alleged. Shortly put, the petitioner explained the allegation at (a) above and denied any variation in his stock. As against (b) above, the petitioner explained that the conclusion arrived by IOCL in saying that the HSD in the RO is adulterated, is incorrect and prejudicial, inasmuch as, the same was arrived at only on the basis of the test result of the sample collected and retained by the IOCL official. With regard to (c) and (d) above, the reply was that since the RO had been temporarily closed due to on-going expansion of NH-31 and due to lack of deployment of full staff in the RO, the employee/Chowkidar present at the RO on the date of visit of the IOCL Executive, could not understand the requirements asked for by the IOCL officer.
12. The proceedings culminated in the Letter of Termination of Dealership dated 25.4.2014, preceded by a personal hearing afforded to the petitioner on 28.2.2014. The irregularities alleged were found established and, accordingly, the dealership agreement with the petitioner was terminated with immediate effect.
13. Mr. KN Choudhury, learned Senior counsel representing the petitioner, harps on the argument that procedural safeguards in reaching the impugned decision not having been followed, the action of IOCL is null and void. It is argued that samples not having been collected in presence of independent witnesses in accordance with the provisions under Clause (3), Order 7 of the 8 Motor Spirit and High Speed Diesel (Regulation of Supply, Distribution and Prevention of Malpractices) Order, 2005 read with sub-section (4) of Section 100 of the Code of Criminal Procedure, 1973 (as amended), all consequential actions/exercise undertaken by IOCL stood flawed. In this connection reference is also made to sub-section (2) of Section 26 of the Petroleum Act, 1934.
14. In so far as the Marketing Discipline Guidelines (MDG) is concerned, Mr. KN Choudhury makes reference to Clause 2.4.4 Notes (2) and Clause 2.5, to say that samples are required to reach the laboratories for testing preferably within 10 (ten) days from the date when the sample is collected and all the samples should be suitably coded before it is sent to the laboratory for testing. Further, in terms of Clause 2.5 (E), in the event a request is made by the dealer for testing his retained sample, his sample along with the counter sample retained by the Oil Marketing Company (OMC) are to be tested at any PSU Laboratory of his choice in the same/nearby State or FTL-NOIDA as per guidelines in presence of the Field Officer and the Retail Outlet dealer after due verification of the samples. According to Mr. Choudhury, the said procedure had not been followed. Going back to the time-limits for sample testing and results, reference is also made to Clause 2.10 which prescribes that all samples should reach the laboratory within 10 (ten) days from the date of drawal and the laboratory, in its turn, should preferably test the sample within the next 15 (fifteen) days. Also, the results are required to be communicated to the dealer by the concerned Oil Company preferably within the next 5 (five) days from the date of receipt of the test reports. According to Mr. KN Choudhury and in terms of the Clause 2.10 itself, the said procedure with regard to sample testing and furnishing of the results, requires strict adherence.
15. Reference to the aforesaid various Clauses of the MDG are being made to say that the strict requirements as to the time-limits under the MDG had been conveniently ignored. As a matter of fact, the samples were collected on 6.5.2013, sent to the laboratory on 22.5.2013 and tested on 19.8.2013, which apparently shows that the samples were tested after more 9 than 3 (three) months from the date of collection. Mr. KN Choudhury clarifies that the date of the first testing of the samples on 29.5.2013 had itself become redundant on the re-test being done on 19.8.2013 upon agreement of the parties and also on the ground that the first test was done without the presence of the dealer. As such, according to Mr. Choudhury, the actual test was done only on 19.8.2013.
16. Additionally, it is urged that the very initiation of the proceedings is illegal as the Show Cause Notice is based on both the Reports i.e. 29.5.2013 and 19.8.2013. It is contended that re-test having been done on 19.8.2013, as such, no reliance could have been derived from the first report dated 29.5.2013. Alleging that the decision-making process of IOCL had been flawed in also placing reliance upon the first report which came about without prior notice to the petitioner and without the presence of the petitioner or his representative at the time when the test was conducted, Mr. KN Choudhury refers to the case of Bharat Petroleum Corporation Ltd. v. Jagannath & Co. reported in (2013) 12 SCC 278 to drive home his point. On the procedural lapses and consequences thereof in taking action without adherence to the rules/guidelines framed for the purpose, Mr. KN Choudhury places reliance in the case of Harbanslal Sahnia & anr. v. Indian Oil Corporation Ltd. & ors., reported in (2003) 2 SCC 107 and in Hindustan Petroleum Corporation Ltd. & ors. v. Super Highw ay Services & anr., reported in (2010) 3 SCC 321 .
17. In sum and substance, Mr. KN Choudhury submits that not only the very initiation of the proceedings leading to cancellation of dealership is bad and illegal, also the entire decision-making process stood vitiated on account of the fact that the relevant provisions under the Marketing Discipline Guidelines had been given a total go-by. Anxiety expressed is that cancellation of dealership agreement being a serious business, the same could not have been taken lightly by throwing the guidelines to the winds.
18. Mr. MK Choudhury, learned Senior counsel representing the IOCL begins by saying that the Corporation does not derive pleasure in terminating a dealership agreement unless constrained by circumstances. Parties are 10 bound by the terms of the agreement and over-stepping entails serious consequences. Its primary object is to ensure that consumers do not get cheated. Questioning the very maintainability of the writ petition, Mr. MK Choudhury refers to Clause 68 of the Memorandum of Agreement dated 20.12.1995 to say that Court in the city of Kolkata alone has jurisdiction to entertain any suit, application or other proceeding in respect of any claim or dispute arising out of the Agreement. Clause 69 thereof is also pressed, which pertains to arbitral proceedings, to say that the petitioner, at the first instance, ought to have taken recourse to arbitration as provided under the Agreement. On the point of maintainability, it is also contended that alternative remedy by way of preferring an appeal under Clause 8.9(1) of the MDG was available to the petitioner and the same was clearly indicated in the letter of cancellation. However, the petitioner utterly failed to exhaust the alternative remedies and have straight-away invoked Article 226 of the Constitution of India. According to Mr. MK Choudhury, the writ petition is liable to be dismissed in limine on the limited grounds alone.
19. Responding to the contentions of the petitioner with regard to Clause (3), Order 7 of the Malpractices Order, 2005 and sub-section (4) of Section 100 CrPC, Mr. MK Choudhury endeavours to draw a distinction between a statutory violation and a contractual violation. It is contended that the provision under the Malpractices Order, 2005 is wholly inapplicable, inasmuch as, the relationship between the petitioner and the IOCL is one governed under a contract and the terms of the contract do not envisage any criminal liability. Further, the IOCL being empowered under the Agreement to collect samples at any point of time, as such, the applicability of Section 100 CrPC cannot be insisted upon. In fact, Section 14 of the Petroleum Act itself allows inspection and sampling. Mr. MK Choudhury contends that the procedure adopted in reaching the conclusion was independent of the statutes. In fact, cancellation was made in exercise of powers emanating from the terms of the Agreement and that of the Marketing Discipline Guidelines framed for the purpose. Reliance is placed in the case of Hindustan Petroleum Corporation Ltd. v. Pink City M idw ay Petroleum s, reported in (2003) 6 SCC 503 , to say that the right of IOCL to take action against the erring 11 dealer under the terms of the Agreement is de-hors the proceedings that may be available to be initiated under the provisions of various other enactments. As per the decision of the Apex Court, it is contended that this right of the Corporation to suspend the supply of petroleum products to the erring dealer is a right exercised under the terms of the contract and is independent of the statutory provisions of various Acts.
20. Mr. MK Choudhury submits that power to cause drawal of samples, either by the Joint Industry Teams or by Mobile Laboratories for the purpose of undertaking density test, stock variation etc. can be had from Clause 2.4.3 and 2.4.4 of the MDG. Further, as regards the time-limits for drawal and testing of samples envisaged under the Guidelines (MDG), it is contended that the word "preferably" mentioned therein cannot be construed to imply as "mandatory". As such, the allegation of samples being tested beyond the period prescribed, cannot come to the aid of petitioner to assail the decision- making process.
21. As regards transparency of the proceedings initiated against the petitioner, it is contended that the report of inspection of the RO was duly communicated, to which the petitioner had also responded. Thereafter, another opportunity was afforded to the petitioner to make a final and consolidated reply to the four non-conformities detected on the basis of the Test Report dated 29.5.2013, copy of which was furnished to the petitioner. Again, on the basis of the reply received from the petitioner, a re-test was carried out resulting in the Test Report dated 19.8.2013. A Show-Cause Notice was duly issued and prior to issuance of the cancellation order, the petitioner's reply to the Show-Cause Notice had been considered by also affording the opportunity of personal hearing. To this end, it is contended, that the petitioner cannot allege violation of the principles of natural justice.
22. As regards the point urged by the petitioner that actions taken by IOCL stood vitiated on account of the fact that the first report dated 29.5.2013 had also been relied upon to cause detriment, Mr. MK Choudhury submits that the second test on 19.8.2013 having been undertaken only at the request of the petitioner, as such, IOCL cannot just ignore or obliterate 12 the findings of the first report. It is further contended that, assuming but not admitting, that the sample testings suffered anomalies, even in that case the non-conformity found established in respect of (a) i.e. 'Stock variation beyond permissible limit' would alone invite/entail termination of the dealership agreement in view of Clause 8.2 of the MDG.
23. In so far the case of Harbanslal Sahnia (supra) is concerned, Mr. MK Choudhury contends that going by the facts of the reported case, the same do not come to the aid of the petitioner. The subject commodity in the case was kerosene, which is a controlled item. The government orders applicable to it was rightly held to be mandatorily complied with. Each case being an authority for what it actually decides, therefore, it is contended that no reliance on the Apex Court's case can be made in the facts and circumstances of the instant case. Lastly, the petitioner having raised all the issues for the very first time before this Court without exhausting the alternative remedies available under the Agreement and the Guidelines, as such, the petitioner is not entitled to equity before this Court.
24. The facts in issue have been noticed. On the question of the maintainability of the writ petition for failing to take recourse to the alternative remedy available under the arbitration clause, it is no more res integra that the rule of exclusion of writ jurisdiction is a rule of discretion and not one of compulsion. In Harbanslal Sahnia (supra), the Apex Court held that even inspite of availability of alternative remedy the Court, in an appropriate case, may still exercise its writ jurisdiction in at least three contingencies:
(i) where the writ petitioner seeks enforcement of any of the fundamental rights;
(ii) where there is failure of the principles of natural justice;
(iii) where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged.13
A consideration of the facts of the case, as alluded to above, at least attracts the applicability of the first contingency. The case made out by the petitioner is that his dealership agreement, from which he derived his sustenance and livelihood, had been terminated in a manner by ignoring the provisions under the Guidelines. This, according to the petitioner, is not only illegal and prejudicial, causing grave detriment to his interest, it also acts by way of delivering a severe blow to his livelihood. In such circumstances, the petitioner cannot be non-suited by relegating the case to arbitration proceedings.
25. In a catena of decisions on the power of judicial review of administrative decisions, the Apex Court have time and again reiterated that notwithstanding the free play in the joints available with the State, the Court can certainly examine whether the decision making process was reasonable, rational, not arbitrary and not violative of Article 14 of the Constitution of India. Interference under Article 226 comes into play only if the process adopted or decision made by the authority is malafide or is so arbitrary and irrational that the Court can hold that the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached. Endeavour in this case would be to ascertain whether the action of the IOCL was arbitrary and not in accordance to the Guidelines.
26. Before proceeding further it is placed on record that for adjudication of this case, recourse and deliberations of the counsels with regard to the applicability of the provisions under Clause (3), Order 7 of the Malpractices Order, 2005 and that of sub-section (4) of Section 100 CrPC is not gone into, inasmuch as, the primary issue for decision is whether the IOCL is justified in terminating the Agreement and while doing so whether it had followed/adhered to the Guidelines framed for the said purpose.
27. Turning to the provisions under Clause 2.4.4 Notes (2), Clause 2.5 and Clause 2.10 of the Guidelines, the time-limits prescribed for sending the samples to the laboratory from the date of collection as well as the time within which the sample should be tested from the date when it reached the laboratory, are provisions that requires strict adherence. If a contrary view is 14 adopted to allow the respondent Corporation to take as much time at its discretion for sending the sample to the laboratory and thereafter to get it tested, the said provisions prescribing time-limits would be rendered otiose and redundant. On that account, the time-limits ought not to have been prescribed/mentioned in the said Clauses in the first place. Surely, this cannot be the intention of IOCL being full well aware that time gap between the sample taken and laboratory test is essentially to be maintained so as to avert any variations in the density test of the sample so collected. The argument of Mr. MK Choudhury that the word "preferably" occurring in the said clauses cannot be construed as "mandatory", this Court rejects the said contention and holds that the adherence of the time-limits prescribed under the Guidelines is directly proportionate to the ultimate decision that would be reached. The time-limits and adherence thereof is a contractual obligation that has to be discharged by the Oil Corporation in letter and spirit.
28. Another important issue that needs to be addressed is with regard to the submission of Mr. MK Choudhury that even if out of the four irregularities/non-conformities found against the petitioner, the first irregularity is found established, the same would itself entail termination of the dealership Agreement. The first irregularity is in respect of "stock variation beyond permissible limit". The contention of Mr. MK Choudhury was that the said irregularity alone invites penal action of termination under Clause 8.2 of the Guidelines. For better appreciation, the said clause is reproduced below:
"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 tempered in the dispensing pumps. {5.1.2(b)} iii. Totalizer seal of dispensing unit tampered or deliberately making the totalizer non functional 15 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/seals 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."
From a perusal of Clause 8.2 above, this Court is constrained to say that irregularity in respect of "stock variation beyond permissible limit", being a violation of Clause 5.1.11 of the Guidelines, is not a critical irregularity within the meaning of Clause 8.2. The irregularities mentioned under Clause 8.2 nowhere takes within its fold any irregularity which may be in violation of Clause 5.1.11 of the Guidelines. Clause 5.1.11 only permits that in case of stock variation beyond permissible limits, the dealer would be called upon to explain and while sales and supplies to the RO would be permitted to continue during the investigation period, such supply would be suspended (emphasis mine) in case the explanation of the dealer is not found satisfactory. Having perceived the provisions under Clause 8.2 and that of Clause 5.1.11 of the Guidelines, the contention put forth by Mr. MK Choudhury have no legs to stand. Any irregularity in respect of "stock variation beyond permissible limit" under Clause 5.1.11 cannot entail termination of dealership under Clause 8.2 of the Guidelines.
29. To prioritize the points for adjudication of the case, the arguments of the petitioner that the decision-making process stood vitiated for taking into consideration the results of the first report, which stood redundant in view of the re-test done, this Court refrains from making any deliberations on the 16 issue. As stated above, the adjudication of this case is confined to a decision on the applicability of the Guidelines qua the parties before this Court.
30. In the case of Hindustan Petroleum Corpn Ltd. (supra), relied upon by Mr. MK Choudhury, the facts in issue was with regard to short supply and tampering of seals indulged by the respondent dealer therein. The Apex Court, while negativing the conclusion of the Courts below, held that if the Corporation is satisfied of the irregularities indulged in by the dealer, it would be entitled to initate such action as is contemplated under the Agreement like suspending or stopping the supply of petroleum products to such erring dealer. Facts in the reported case is entirely distinct from the facts in the instant case. While the reported case deals with the aspect of suspension of supply, the present case relates to the extreme penalty of termination of dealership. In such a case a much higher degree of circumspection would be required to ascertain whether the cancellation of dealership meets the procedure and the essential ingredients envisaged under the Guidelines. In order to justify the action taken to terminate the dealership agreement, the respondent IOCL has to show that it acted fairly and in complete adherence to the Guidelines framed for the purpose. This is the law laid down in the case of Bharat Petroleum Corpn. Ltd. (supra).
31. On a conspectus of the above, it is seen that the essential conditions under Clause 2.4.4 Notes (2), Clause 2.5 and Clause 2.10 of the Guidelines had been conveniently ignored. In other words, there is no semblance of adherence to the time-limits as envisaged in the said Clause under the Guidelines. The conditions under Clause 2.4.4 Notes (2), Clause 2.5 and Clause 2.10 being essentially mandatory, the cancellation of the dealership agreement is held to be flawed being a creation of a decision-making process which clearly marks a departure from the Guidelines. The procedural obligations under the Guidelines having been given no significance, rather thrown to the winds, there can be no second option but to hold that the action of the respondent Corporation in terminating the Agreement is fallacious and not sustainable in law.
1732. For the reasons aforesaid, this writ petition stands allowed and the order dated 25.4.2014 issued by IOCL terminating the dealership agreement dated 20.12.1995 is hereby set aside and quashed.
33. There shall be no order as to costs.
JUDGE gunajit