Allahabad High Court
Indian Oil Corporation Ltd. , Mumbai ... vs R.S Filling Station, Indian Oil ... on 7 September, 2022
Bench: Devendra Kumar Upadhyaya, Rajnish Kumar
HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH RESERVED Court No. - 2 Case :- SPECIAL APPEAL No. - 307 of 2022 Appellant :- Indian Oil Corporation Ltd. , Mumbai Thru. Executive Director And Ors (In Wric 1262 Of 2020) Respondent :- R.S Filling Station, Indian Oil Corporation Ltd. Lakhimpur Kheri Thru. Amit Singh And Another Counsel for Appellant :- Manish Jauhari Counsel for Respondent :- Ashok Kumar Singh Hon'ble Devendra Kumar Upadhyaya,J.
Hon'ble Rajnish Kumar, J.
1. Heard Shri Manish Jauhari, learned counsel for the appellants and Shri Prashant Chandra, learned Senior Advocate, assisted by Ms. Radhika Singh, learned counsel representing the respondent no.1.
2. By instituting the proceedings of this special appeal under Chapter VIII Rule 5 of the Rules of the Court, the appellants have laid a challenge to the judgment and order dated 31.05.2022 passed by the learned Single Judge whereby Writ-C No.1262 of 2020 has been allowed and the order dated 19.10.2020 whereby the Retail Outlet Dealership awarded to the respondent no.1-petitioner was terminated, has been quashed with a further direction to the appellants-respondents to permit the respondent no.1-petitioner to run the Retail Outlet forthwith subject to the condition that the respondent no.1-petitioner shall comply with other requirements for dispensing the petroleum products as per the rules.
3. Before considering the competing submissions made by the learned counsel representing the respective parties, there are certain facts, which need to be noted for appropriate decision of the controversy involved in this case.
4. On 02.12.2015 respondent no.1-petitioner was appointed a Retail Outlet Dealer by the Indian Oil Corporation (the appellant herein) for running a Retail Outlet at Bariha Taranpur, District-Lakhimpur Kheri. The Retail Outlet Dealership is governed by the contract entered into between the parties and Marketing Discipline Guidelines-2012 (herein after referred to as 'Guidelines-2012'). On 31.05.2017 an inspection was conducted of the premises from where the respondent no.1-petitioner was running the Retail Outlet, by a Committee comprising of four officers constituted by the District Magistrate concerned. The said Committee on inspection submitted a report stating therein that out of 8 Nozzles, 6 were found in working condition, however, rest 2 Nozzles were found out of order. In the said report, it was also mentioned that on examination of the Pulsar Cards of all the Nozzles, 2 Pulsar Cards were found to be suspicious. Based on the report submitted on the basis of inspection carried on 31.05.2017, the Indian Oil Corporation issued a fact finding letter dated 31.05.2017 noting down therein the gist of the inspection report dated 31.05.2017 to the effect that "two Pulsar Cards were found with impression of tampering, due to which 3 Nozzles (2MS AND 1 HSD) were affected by these two Pulsar Cards". The fact finding letter dated 31.05.2017 required the respondent no.1-petitioner to submit its explanation as to why action should not be taken as per the Guidelines/Dealership Agreement. The petitioner submitted its reply on 15.06.2017 to the Indian Oil Corporation stating therein that the delivery from all 8 Nozzles were found in order at the time the inspection was conducted on 31.05.2017 and when the machines were opened, however, Pulsar Cards of two machines were said to be suspicious. In the reply dated 15.06.2017 it was also stated by the respondent no1-petitioner that in the Pulsar Cards no extra fittings were found and further that they were seized only on the ground of suspicion to which the petitioner did not agree.
5. It was further stated in the reply that from time to time the petitioner had got its pump stamped and every time the Pulsar Cards were checked. In reply dated 15.06.2017 the respondent no.1-petitioner has also made a prayer that no action should be taken till the enquiry report relating to the Pulsar Cards is received.
6. The Indian Oil Corporation, however, issued a show cause notice dated 30.08.2018 calling upon the respondent no.1-petitioner to explain as to why action should not be taken against it for breach of terms and conditions of the Dealership Agreement and violation of clause 5.1.4 of the Guidelines-2012 as amended and also for causing breach to the interest and good name of the Corporation.
7. The show cause notice also mentioned that the alleged irregularity was widely reported in the print and electronic media which had caused prejudice in the mind of the general public and the customers and as such the same had resulted in tarnishing the image and reputation of the Corporation. The show cause notice dated 30.08.2018 mentioned the inspection report dated 31.05.2017, to the fact finding letter issued on 31.05.2017 and also a report dated 15.06.2018 furnished by the MIDCO Company. The show cause notice mentions the remarks made in the report dated 15.06.2018 submitted by the MIDCO Company and the remarks as indicated in the said report dated 15.06.2018 are as follows:
(i) R1 resistor is found missing on pulsar PCB.
(ii) Additional solder marks are observed on C8 capacitor lead.
(iii) Additional solder marks are observed on L4 location of pulsar PCB. Regarding the said test, it was reported in the report submitted by the MIDCO Company dated 15.06.2018 that it was not tested due to non conformance to MIDCO design.
8. The result of the MIDCO report dated 15.06.2018 was also mentioned in the show cause notice which is extracted as under:-
"Result: Pulsar Cards are not found in conformance with MIDCO standard design as per visual inspection report."
9. To the show cause notice dated 30.08.2018 the respondent no.1-petitioner submitted its reply on 05.10.2018. In this reply the respondent no.1-petitioner inter alia submitted that the show cause notice was issued on the basis of presumption and that it was based on defective report, stating the reason that it was not possible to give a conclusive finding by way of visual inspection. In the reply the respondent no.1-petitioner further stated that in the identical circumstances, Mr. U. Shri Pathi Acharya, Professor and Head of Department, Department of Electronic and Communication Engineering, National Institute of Technology Karnataka, Mangalore has opined that it is not possible to detect by visual inspection alone as to whether any tampering or extra fitting has been attached to the Board because of the complex circuit and interconnections and also because the design of the system is not generic.
10. In the meantime, an analysis report dated 12.10.2018 was submitted by General Energy-Management System Pvt. Ltd. The report dated 12.10.2018 is quoted as under:-
- Hardware and software have been found genuine.
- No unauthentic device/chip is found within the hardware.
- Soldering signs impressions have been observed in pulsar PCB circuitry however during testing all operations were found normal.
- Soldering impressions indicate that either PCB has been tried to repair or some external wiring was soldered and removed.
- Joint observations made by authorities regarding machine calibration during inspection are not confronted.
11. The respondent no.1-petitioner by means of filing supplementary reply dated 27.11.2018 brought to the notice of the Corporation the second report dated 12.10.2018. In the said second report inter alia following was also observed:
"Received PCB was found intact and there are no sign of any Physical damage in original circuitry.
Soldering signs/impressions have been observed in pulsar PCB circuitry however during testing all operations were found normal."
12. It may also be stated that an F.I.R. against the respondent no.1-petitioner was also lodged for the offences under the Essential Commodities Act, however, on investigation a Final Closure Report was submitted by the Investigating Officer which was accepted by the learned trial court by means of an order dated 06.02.2019. It is also noticeable that earlier, license of the respondent no.1-petitioner was cancelled by the District Supply Officer, however, on 13.09.2017 the District Supply Officer had restored the same.
13. Based on the show cause notice dated 30.08.2018 the Corporation passed an order on 14.03.2019 whereby the Retail Outlet Dealership was terminated for the alleged infringement of the Dealership Agreement and clause 5.1.4 of the Guidelines-2012. The respondent no.1-petitioner filed Writ Petition No.9062 (M/B) of 2019 challenging the order dated 14.03.2019 whereby the Corporation had terminated the Retail Outlet Dealership. Writ Petition No.9062 (M/B) of 2019 was finally disposed of by a Division Bench of this Court by means of the order dated 02.04.2019 whereby it was made open to the respondent no.1-petitioner to prefer an appeal before the appellate authority under paragraph 8.9 of the Guidelines-2012 within 30 days and it was further directed that in case any appeal is filed along with an application for interim relief, the appellate authority shall examine the said application for interim relief and decide the same as also the appeal in accordance with law. The Court further provided vide order dated 02.04.2019 that till disposal of the interim relief application, the operation and implementation of the order dated 14.03.2019 terminating the Retail Outlet Dealership of the respondent no.1-petitioner shall remain in abeyance and that the respondent no.1-petitioner shall be allowed to operate its dispensing unit till then.
14. The respondent no.1-petitioner accordingly preferred an appeal before the appellate authority, namely, Dispute Resolution Panel of the Corporation which was allowed by the appellate authority by means of the order dated 15.10.2019 whereby the order terminating the Retail Outlet Dealership, dated 14.03.2019 was set aside and the Indian Oil Corporation was directed to proceed with the matter from the stage of granting of personal hearing to the respondent no.1-petitioner. It was further directed that the retail outlet shall continue to operate partly in terms of the order dated 02.04.2019 passed by this Court in Writ Petition No.9062 (M/B) of 2019 till fresh orders are passed by the Corporation on the merit of the case. The respondent no.1-petitioner, however, challenged the order dated 15.10.2019 passed by the appellate authority by way of filing Writ Petition No.1262 (M/B) of 2020. During the pendency of the said writ petition an order was passed on 19.10.2020 whereby the Retail Outlet Dealership was once again terminated. The said order dated 19.10.2020 was challenged by the respondent no.1-petitioner by filing Writ-C No.21992 of 2020 which was dismissed as withdrawn by this Court by means of an order dated 28.04.2022 and Writ Petition No.1262 (M/B) of 2020 (new number assigned to this writ petition is Writ-C no.1262 of 2020) was amended by challenging the order dated 19.10.2020. Thus, under challenge in the writ petition which has been decided by the learned Single Judge was the appellate order dated 15.10.2019 and the order terminating the Retail Outlet Dealership, dated 19.10.2020. So far as the challenge to the appellate order dated 15.10.2019 is concerned, since the said order got exhausted once the order dated 19.10.2020 was passed, the challenge did not survive before the learned Single Judge. The learned Single Judge thus, adjudicated the validity of the order dated 19.10.2020 terminating the Retail Outlet Dealership of the respondent no.1-petitioner and by means of the order under challenge in this special appeal, quashed the said order dated 19.10.2020 and directed the Indian Oil Corporation to permit the respondent no.1-petitioner to run the retail outlet forthwith.
15. It is this order dated 31.05.2022 passed by the learned Single Judge in Writ-C No.1262 of 2020 which is under challenge before us in this special appeal.
16. Shri Manish Jauhari, learned counsel representing the appellants has vehemently argued that the learned Single Judge while passing the judgment and order under appeal did not consider the fact that Pulsar was sent to the Oil Equipment Manufacturer Company i.e. MIDCO Company Ltd. which is the competent authority to give its expert opinion. It has further been argued that the learned Single Judge has also did not take into account the fact that the report of the other Oil Equipment Manufacturer i.e. M/s Dresser Wayne was not considered by the Corporation and the said test result was available to the appellant-Corporation only after issuance of the show cause notice dated 30.08.2018. It has also been argued by the learned counsel for the appellants that even in the report submitted by M/s Dresser Wayne if an observation was made that there was soldering marks on the pulsar, the same indicated tampering of the equipment. Further submission of the learned counsel for the appellants is that reliance placed by the learned Single Judge on the judgment in the case of M/s Chaudhary Filling point, Kazipur and another vs. State of U.P. and others, dated 30.01.2019 is not tenable for the reason that the facts of the said case were different from the facts of the present case as the case of the appellant-Corporation is based on the report given on spot by Oil Equipment Manufacturer during inspection. It has also been argued that the judgment under appeal rendered by the learned Single Judge suffers from manifest error as learned Single Judge has erred in not considering the purport of clause 5.1.4 of the Guidelines-2012 in its true perspective.
17. Sum and substance of the arguments made by the learned counsel for the appellant-Corporation is that the second report dated 12.10.2018 submitted by M/s Dresser Wayne could not have been relied upon by the learned Single Judge for the reason that the same was not part of the show cause notice dated 30.08.2018 on the basis of which the order terminating the Retail Outlet Dealership, dated 19.10.2020 has been passed. The submission advanced on behalf of the appellant-Corporation is that the report submitted by M/s MIDCO Company, dated 15.06.2018 sufficed to draw the inference that the respondent no.1-petitioner has violated clause 5.1.4 of the Guidelines-2012 and thus, reliance placed on the other report i.e. the second report, dated 12.10.2018 is highly misconceived. Accordingly, it has been argued on behalf of the appellant-corporation that the instant appeal deserves to be allowed.
18. Opposing the special appeal, Shri Prashant Chandra, learned Senior Advocate, assisted by Ms. Radhika Singh representing the respondent no.1-petitioner has argued that there is no error in the judgment of learned Single Judge which is under appeal herein. It has been argued that the second report dated 12.10.2018 submitted by M/s Dresser Wayne has rightly been relied upon by the learned Single Judge and further that the said report may not have been available with the respondent-Corporation at the time show cause notice dated 30.08.2018 was issued, however, the said report was furnished by the respondent no.1-petitioner by means of its supplementary reply submitted to the appellant-Corporation on 27.11.2018. Thus, his submission is that the said second report dated 12.10.2018 could not have been ignored by the appellant-Corporation at all and that the said analysis report does not in any manner indicate any tampering in the equipment so as to attract any action against the appellant-Corporation which has resulted in termination of the Retail Outlet Dealership. It has, thus, been argued that special appeal ought to be dismissed at its threshold.
19. We have considered the respective submissions made by the learned counsel representing the respective parties and have also gone through the record available before us on this special appeal.
20. For appreciating the respective submissions made on behalf of the parties, we may first of all extract clause 5.1.4 of the Guidelines-2012 which is as under:
"5.1.4 ADDITIONAL / UNAUTHORISED FITTINGS / GEARS FOUND IN DISPENSING UNITS /TAMPERING WITH DISPENSING UNIT Any mechanism / fittings / gear found fitted in the dispensing unit which is likely to manipulate the delivery.
Addition, Removal, replacement or manipulation of any part of the Dispensing Unit including any mechanism, gear, microprocessor chip / electronic parts/ OEM software will be deemed as tampering of the dispensing unit.
In such cases, views and independent opinion of the original equipment manufacturer would be obtained and suitable decision taken.
In case of this irregularity, sales from the concerned dispensing unit to be suspended, DU sealed. Samples to be drawn of all the products and sent to lab for testing."
21. A perusal of the aforequoted clause 5.1.4 reveals that any mechanism or fitting or gear if found fitted in the dispensing unit which is likely to manipulate the delivery and any addition/removal/replacement or manipulation of any part of the Dispensing Unit will be deemed as tampering of the dispensing unit. In such cases where any tampering in the dispensing unit is reported, views and independent opinion of the original equipment manufacturer (OEM) would be obtained and suitable decision shall be taken.
22. Submission of the learned counsel for the appellants, thus, hinges around the provisions contained in clause 5.1.4 of the Guidelines-2012. According to the appellant-Corporation, the first report submitted by the MIDCO Company, dated 15.06.2018 clearly indicated that additional solder marks were observed and that Pulsar Card was not found in conformance with MIDCO standard as per visual inspection test. Thus, the test report submitted by M/s MIDCO Company is based on visual inspection test. The report further states that inspection was done without providing power to the received materials which were tested.
23. In contrast to the said report dated 15.06.2018 submitted by the MIDCO Company, another report dated 12.10.2018 is on record, which was submitted by the respondent no.1-petitioner along with the supplementary reply dated 27.11.2018. The said report dated 12.10.2018 clearly indicates that soldering signs/impression have been observed, however, during testing all operations were found normal. The report further clearly states that hardware and software were found genuine and no unauthentic device/chip was found within the hardware. The said report dated 12.10.2018 notices soldering signs impression but it also reported that during testing all operations were found normal. It also states that soldering impressions indicate that either PCB has been tried to be repaired or some external wiring was soldered and removed. Thus, though the second report dated 12.10.2018 found that certain soldering signs/impressions were observed in the pulsar PCB circuitry but it was also reported that during testing all operations were found normal. Once the second report dated 12.10.2018 clearly mentions that during testing all operations of the pulsar were found normal, as to whether it would amount to infringement of clause 5.1.4 of the Guidelines-2012 was the issue which ought to have been considered and decision thereon ought to have been taken by the appellant-Corporation while considering the case. However, undisputedly the second report dated 12.10.2018 which appears to run contrary to the first report submitted by the MIDCO Company on 15.06.2018, was not taken into consideration by the appellant-Corporation while passing the impugned order dated 19.10.2020 terminating the Retail Outlet Dealership of the respondent no.1-petitioner. The plea taken by the learned counsel for the appellants for not considering the second report dated 12.10.2018 is that the same was not available with the Corporation at the time when the show cause notice dated 30.08.2018 was issued. However, it is not in dispute that before passing the impugned order dated 19.10.2020 the second report dated 12.10.2018 was available with the Corporation as the same was submitted by the respondent no.1-petitioner along with the supplementary reply dated 27.11.2018 furnished to the show cause notice dated 30.08.2018.
24. It is not a case where the appellant-Corporation did not consider the second report dated 12.10.2018 for want of availability of the said report before the Corporation; rather as pleaded by the learned counsel for the appellants, the said report was not considered for the reason that it did not form part of the show cause notice dated 30.08.2018.
25. As already observed above, the reports dated 12.10.2018 and 15.06.2018 run contrary to each other. The report dated 12.10.2018 was available before the appellant-Corporation before passing the impugned order dated 19.10.2020, however, the same has not been considered. It cannot be said that the said report dated 12.10.2018 did not constitute a relevant ground or material which could not have been taken into consideration by the respondent-corporation before passing the order dated 19.10.2020 whereby the Retail Outlet Dealership of the respondent no.1-petitioner was cancelled. Learned Single Judge has considered clause 5.1.4. in the judgment and order under appeal and has observed that the words ''addition', ''removal', ''replacement' or ''manipulation' are to be interpreted to be the acts which may be done by any person by a conscious action with an intent to manipulate delivery to gain unfair advantage. Learned Single Judge has also given a finding that the report dated 15.06.2018 furnished by MIDCO Company is silent, however, the report submitted by M/s Dresser Wayne suggests otherwise and thus has concluded that no material existed on record so as to attract clause 5.1.4. Learned Single Judge has also opined that any decision taken on the basis of misreading of a document or in ignorance of a document or without recording reasons would qualify as arbitrary and perverse and shall be hit by Wednesbury arbitrariness. Learned Single Judge has also observed that the order dated 19.10.2020 only records the earlier order, directions given by the appellate authority and absence of respondent no.1-petitioner during the course of personal hearing and abruptly records that respondent no.1-petitioner had failed to discharge its responsibilities as custodian of the outfit. Learned Single Judge has thus, concluded that the order dated 19.10.2020 suffers from non application of mind by the authorities concerned of the Corporation.
26. From the facts as culled out from the records available before us it is abundantly clear that while passing the order dated 19.10.2020 the appellant-Corporation did not consider the second report dated 12.10.2018 which not only runs contrary to the earlier report dated 15.06.2018 but also opines that "during testing all operations were found normal". In our considered opinion the second report dated 12.10.2018, thus, constituted a relevant material which ought to have been considered by the appellant-Corporation before arriving at any conclusion regarding infringement of clause 5.1.4 of the Guidelines-2012. Thus, non-consideration of the vital piece of evidence/material in the form of the report of the other Original Equipment Manufacturer, M/s Dresser Wayne was fatal and therefore it was improper to invoke the provisions contained in clause 5.1.4 of the Guidelines-2012. It is also relevant to point out that the report of the Professor of NIT was also not taken into consideration by the appellant-Corporation while passing the order dated 19.10.2020 which was challenged before the learned Single Judge in the writ petition. Taking into account all the aforesaid aspects of the matter, learned Single Judge has finally opined that the order dated 19.10.2020 whereby the Retail Outlet Dealership of the respondent no.1-petitioner was terminated, was not sustainable. The relevant material and evidence specially the second report dated 12.10.2018 was not admittedly considered and further that the order dated 19.10.2020 suffered from non-application of mind for the reason that apart from the order being based on the earlier order and reproducing the directions given by the appellate forum and also recording the fact of absence of the respondent no.1-petitioner, the concerned authority of the Corporation abruptly concluded that the respondent no.1-petitioner had failed to discharge its responsibilities.
27. When we analyze the submissions made by the learned counsel for the appellants in the light of the aforementioned facts and reasons and in the light of the findings recorded by the learned Single Judge in the judgment and order under appeal, we find ourseves unable to agree with the said submissions. As a matter of fact, the second report dated 12.10.2018, which is based on technical analysis, ought to have been considered by the appellant-Corporation and non-consideration of the said report, in our considered opinion, was sufficient to vitiate the order dated 19.10.2020 whereby the Retail Outlet Dealership of the respondent no.1-petitioner was terminated.
28. For the reasons aforesaid, we are not inclined to interfere in the judgment and order dated 31.05.2022 passed by the learned Single Judge. We accordingly affirm the same.
29. However, before parting with the case, we also find it appropriate to direct the appellant-Corporation to reconsider the entire matter in the light of the observations made herein above considering all relevant material, including the second report dated 12.10.2018 and take decision afresh.
30. The competent authority of the respondent-corporation, thus, shall decide the matter afresh as observed above within two months from the date a certified copy of this order is submitted by the respondent no.1-petitioner before it.
31. We are issuing the direction to the appellant-Corporation for reconsideration of the entire matter afresh for the reason that the exact purport of the second report dated 12.10.2018 can be analyzed and effect of the said report can be considered only by the experts of the area for the reason that the report is technical in nature which lies in the exclusive realm of the technical experts.
32. The Special Appeal is, thus, disposed of in the aforesaid terms.
33. Parties to bear their own costs.
Order Date :-07.09.2022 akhilesh/