Madhya Pradesh High Court
Bharat Petroleum Corporation Thr vs M/S Kisan Diesel Kendra Thr on 13 December, 2017
Bench: Sanjay Yadav, S.K. Awasthi
1 WA.164/2017
HIGH COURT OF MADHYA PRADESH
BENCH AT GWALIOR
DIVISION BENCH:
HON'BLE SHRI JUSTICE SANJAY YADAV
&
HON'BLE SHRI JUSTICE S.K. AWASTHI
WRIT APPEAL NO. 164 OF 2017
Bharat Petroleum Corporation Ltd
through its Chairman & Managing Director
and another
Vs.
M/s Kisan Diesel Kendra through its
proprietor Chhotelal Samariya and another
******************
Shri K.N. Gupta, learned Senior Counsel with
Shri R.S. Dhakad, learned counsel for the
appellants.
Shri Amit Lahoti, learned counsel for
respondent No.1.
********************
Whether approved for reporting : Yes/No
ORDER
(13/12/2017) Per Justice Sanjay Yadav:
Appellant takes exception to order dated 29/12/2016 passed in Writ Petition No. 3185/2009.
(2) The Writ Petition was directed against the orders dated 12/02/2009 and 11/06/2009.2 WA.164/2017
(3) Whereas by order dated 12/02/2009 retail outlet dealership of the respondent petitioner was terminated on the ground of adulteration found in High Speed Diesel (HSD) sample, which failed the Marker Test.
An appeal preferred thereagainst was dismissed on 11/06/2009.
(4) The relevant facts are that, by virtue of an agreement dated 26/02/1995 between the appellant and respondent No. 1, licence was granted by the appellant to respondent No. 1 to enter upon scheduled premises and to use the motor spirit and /or HSD pumps, storage tanks, pipes and fittings and all other facilities expected and provided by the company for the purpose of the sale of motor spirit and /or H.S.D; Motor oils, greases and other motor accessories as the license of the company. It was agreed by the licensee 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 HSD is kept free from water, dirt and other impurities and served from the pumps in such condition [clause 10(g)]; and to abide by the Petroleum Act 1934 and the rules framed thereunder for the times being in force as also any other laws, rules or regulations either of the Government or of any local body as may be in force [clause 10(k)]. That clause 13(vii) stipulated that notwithstanding 3 WA.164/2017 anything to the contrary contained in the agreement, the company shall be at liberty to terminate the agreement forthwith if the licensee is found guilty of a breach of any of the covenants and stipulations on his part contained in the agreement. And if the licensee commits breach of any covenant and /or stipulation in the license, the company shall not be bound to observe and perform its obligation [clause 13(d)]. That by way of supplementary agreement, simultaneously executed, besides other terms and conditions mentioned therein, it was agreed that in case of any default of any covenant contained in the dealership agreement the corporation shall be at liberty to terminate the agreement forthwith and take measures mentioned therein.
(5) That in order to prevent malpractices, Government of India in exercise of its powers conferred under Section 3 of the Essential Commodities Act 1955 framed Motor Spirit and High Speed Diesel (Regulation of Supply, Distribution and Prevention of Malpractices) Order, 2005. That by G.S.R. 18(E) dated 12 th January, 2007 (w.e.f. 12th January 2007) the Central Government caused amendment in the definition clause order 2 in clause (a) and inserted new clauses, viz, (f-1) and (m-1) as under:
(a) "adulteration" means presence of marker in motor spirit and high 4 WA.164/2017 speed diesel and/or the introduction of any foreign substance into motor spirit or high speed diesel illegally or unauthorisedly with the result that the product does not conform to the requirements of the Bureau of Indian Standards Specifications No.IS 2796 and IS 1460 for motor spirit and high speed diesel respectively or any other requirement notified by the Central Government from time to time.
(f-1) "Marker" means a chemical substance approved by the Central Government from time to time for blending in kerosene and other petroleum products with the objective of preventing their diversion or adulteration of motor spirit or high speed diesel.
(m-1) "test kit" means a set of equipment used to determine the presence of marker in kerosene, motor spirit, high speed diesel and other petroleum products.
(6) That "malpractices" as per clause (f) order 2 included the acts of omission and commission in respect of motor spirit and high speed diesel as to adulteration, pilferage, stock variation, unauthorized exchange, unauthorized purchase, unauthorized sale, unauthorized possession, over charging, sale of off-specification product and short delivery.
(7) That Clause 7 of the Order 2005 empowers any officer of the oil company, not below the rank of Sales Officer, may, with a view of securing compliance with the 5 WA.164/2017 provisions of Order 2005 to:
(a) enter and search any place or premises of a dealer, transporter, consumer or any other person who is an employee or agent of such dealer or transporter or consumer;
(b) stop and search any person or vehicle or receptacle used or intended to be used for movement of the product;
(c) take samples of the product and seize any of the stocks of the product and the vehicle or receptacle or any other conveyance used or suspected to be used for carrying such stocks and thereafter take or authorise the taking of all measures necessary for securing the production of stocks or items so seized before the Collector or District Magistrate having jurisdiction under the provisions of the Essential Commodities Act, 1955 and for their safe custody pending such production;
(d) inspect, seize and remove with, such aid or assistance as may be necessary, books, registers, any other records or documents of the dealer, transporter, consumer or any other person suspected to be an employee or agent of the dealer, transporter or consumer.
(8) Sub-Clause (2) of Clause 7 of Order 2005 provides that:
"7(2) While exercising the power of seizure provided under sub-clauses
(c) and (d) above, the Authorized Officer shall record in writing the reasons for doing so and a copy of such recording shall be provided to the dealer, transporter, consumer or 6 WA.164/2017 any other concerned person, as the case may be."
(9) Clause 8 of the Order 2005 mandates:
"8. Sampling of product and testing.- (1) Where the product does not contain marker under sub-clause (1-A), the authorised officer under Cl.7 shall draw the sample from the tank, nozzle, vehicle or receptacle, as the case may be, in clean aluminum containers to check whether density and other parameters of the product conform to the requirements of Bureau of Indian Standard specifications number IS 2796 and IS 1460 for motor spirit and high speed diesel respectively. Where samples are drawn from retail outlet, the relevant tank-truck sample retained by the dealer as per Cl.3(b) would also be collected for laboratory analysis.
(1-A)The Authorised Officer under Cl.7 shall draw the sample from the tank, nozzle, vehicle or receptacle, as the case may be, in the test kit and test the product with the aid of test kit, to check whether the product contains any traces of marker. If such traces are found in the product, the Authorised Officer shall record the same in triplicate which shall be jointly signed by him and the dealer or transporter or concerned person or his representative, as the case may be, and give one copy of such recording to the dealer or transported or concerned person or his representative and another copy to the oil company concerned, as the case may be.
(2) Where the product does not contain marker under sub-clause (1-A), the authorised officer shall take and seal six samples of 1 litre each of the motor spirit or three samples of 1 litre 7 WA.164/2017 each of the high speed diesel Two samples of motor spirit or one high speed diesel would be given to the dealer or transporter or concerned person under acknowledgment with instruction to preserve the sample in his safe custody till the testing or investigations are completed. Two samples of Motor Spirit or one of High Speed Diesel shall be kept by the concerned oil company or department and the remaining two samples of Motor Spirit or one of High Speed Diesel would be used for laboratory analysis;
(3) The sample label shall be jointly signed by the Authorised Officer who has drawn the sample, and the dealer or transporter or concerned person or his representative and the sample label shall contain information as regards the product, name of retail outlet, quantity of sample, date, name of the Authorized officer, name of the dealer or transporter or concerned person or his representative;
(4) The Authorised Officer shall forward the sample of the product taken within ten days to any of the laboratories mentioned in Sch. III or to any other such laboratory when it may be notified by the Government in the Official Gazette for this purpose, for analysing with a view to checking whether the density and other parameters of the product conform to the requirements of Bureau of Indian Standard specifications number IS 2796 and IS 1460 for motor spirit and high speed diesel respectively.
(5) The laboratory mentioned in sub- clause (4) shall furnish the test report to the Authorised Officer within twenty days of receipt of sample at the laboratory.
8 WA.164/2017(6) The Authorised Officer shall communicate the test result to the dealer or transporter or concerned person and the oil company, as the case may be, within five days of receipt of test results from the laboratory for appropriate action.
(10) That on 25/02/2007 the officers of appellant company inspected the retail outlet of respondent No. 1 and tested motor spirit as well as Diesel product of retail outlet. Samples of Motor spirit and high speed diesel were drawn for testing (MS-3x2Wr and HSD- 3x1Wr). One set of samples was handed over to the respondent No. 1's representative. Following T.L (Tank Lorry) retention samples were taken by the company, viz, Supply T/L No. Challan Observed Seal Date Density NOS MS 27/01/07 MP071780 731.5 731.5 702782 1x1 MS 10/02/07 MP09 KC 5186 733 733.7 702773 1x1 HSD 12/01/07 MP07G1780 831.5 831.0 702797 1x1 HSD 10/02/07 MP09KC5186 827.9 827.8 702783 1x1 (11) It was further recorded:
Distribution Tank Product Test Analytical Contact Nozzle No. Type Column Result Sign Number (P/N) 04111273 9D289 1 Diesel 04111270 P 7A2094 2 Petrol 04111270 N (12) The team then recorded "HSD sample found 'positive' in Marker Test."
(13) At this stage, the submissions made on 9 WA.164/2017 behalf of respondent No. 1 that there is interpolation in the Standard Operational Form: Site Report, wherein in respect of distribution nozzle 9D289 two test column numbers are noted i.e.: 04111273 and 04111270 against product diesel and under the head "Analytical Result (P/N) 'P' is interpolated. On these submissions, it is contended that there is interpolation as to test report of diesel product. The appellant, to rule out the doubt, has placed before us the original site report wherein we do not find any interpolation, as alleged. It is noted down in clear terms the positive analytical result, meaning thereby that with the Marker Test being applied the HSD was found adulterated.
Therefore the contentions of interpolation in the site report deserves to be and is negatived.
(14) That one of the samples collected on 25/02/2007 was sent to quality control laboratory, Mathura, where the HSD sample of Supply Location, Tank Lorry and Retail Outlet were tested with marker test kit on 03/03/2007. The tested column of HSD sample of retail outlet turned pink showing the product adulterated.
(15) Show cause notice was served on 28/06/2007. The respondent No. 1 filed the reply on 10/07/2007. The termination order 10 WA.164/2017 was passed on 12/02/2009, whereagainst respondent filed an appeal. The appeal was decided on 17/09/2007 whereby decision was taken that retail outlet retention sample be re- tested. The reasons are worth noting:
"The Detailed Procedure for Marker Tests at Retail Outlets dtd.09.02.2007 as well as the Revised Marker Testing Procedure dtd 29.03.2007 gives a provision for testing of samples in the laboratory in the presence of dealer. The Marker legislation of MDG was implemented w.e.f.15.02.2007 but SGS had some reservations on the procedure note hence it was kept in abeyance. This particular incident of Marker Failure at Kisan Diesel Kendra, Baroda on 25.02.2007 pertains to the interim period. As per the procedure, we should have only conducted Marker Test on the RO, TL and SL sample at the Laboratory in the presence of the Dealer. However we have provided a full specification test report along with the SCN which clearly mentions that the RO sample meets the requirement of HSD (BSII) but fails in Marker Test.
Since we have denied the dealer the choice to be present at the time of Marker Testing at the Laboratory, we feel that it could result in unnecessary litigation in future. Considering this, we recommend that the RO Retention Sample be re-tested for Maker in the Laboratory in the Dealer's presence to decide the further course of action on the dealership."
(Emphasis Supplied) (16) In furtherance to order in appeal the petitioner was called upon to witness the test at quality control laboratory situated at Indore 11 WA.164/2017 on 07/01/2008. On 07/01/2008, the respondent No. 1 along with the sample retained by him appeared at Quality Control Laboratory, Indore.
(17) It is at this stage the controversy brews.
(18) Whereas, it is contended on behalf of the respondent No. 1 that on 07/01/2008 the petitioner was informed that the tank lorry and depot samples are not available and therefore was asked to go with his sample. On the contrary, the contention on behalf of the Appellate Company is borne out from the internal correspondence dated 22/07/2008 brought on record by appellant company with return filed in the writ petition as Annexure R2/9 wherefrom following facts get reflected:
"The dealer vide his reply dated 10.07.2007 had requested for retesting of Marker in his presence. Accordingly, on 07.01.2008, the RO retention sample was tested for Marker at QC Lab, Indore in the presence of dealer and his representatives. The marker column had turned pink and the same was shown to the dealer. However, he has refused to sign the joint test report.
During our officials visited the RO, verbal/demonstrative training on selling skills and QC issues were imparted to the subject dealer.
In the above circumstances, based on the Marker Test failure of the HSD sample on 25.02.2007, the dealership is recommended to be terminated on 12 WA.164/2017 the grounds proven adulteration of HSD at the RO.
After termination, this RO will be handed over to pending SC / ST LOI holder. There is no outstanding in the corpus fund account.
Submitted for approval."
(19) The statement in the said correspondence that "the RO retention sample was tested for Marker at QC Lab, Indore in the presence of dealer and his representatives" has been seriously objected by the respondent No. 1 who filed an affidavit in the Writ Petition stating that he still possess the sealed sample taken on 25/02/2007.
(20) However, a different version came to be depicted by the Appellant Company in an affidavit filed by its employees, viz, S/Shri Vineet Bhutani and Ravi Bhatia. Shri Vineet Bhutani in his affidavit in paragraph 12, 15, 16 and 18 stated:
"12. That, for re-testing of retail outlet retention sample the petitioner was called on 07.01.2008 in the laboratory at Indore.
15. That, the petitioner himself suggested that the company retention sample be tested first and he will be satisfied with the report from that sample. And if tested company retention sample test failed then he will not insist for retest of Dealer retention sample.
16. That, first of all in the presence of petitioner's representative, the seals of 13 WA.164/2017 the company retention sample were checked by Mr. Ravi Bhatia (Lab In- charge Indore) and were found to be intact. On behalf of petitioner no objection about condition of sample i.e. seals and packaging was raised. Sample retained by the company was tested first for marker and that sample was found adulterated being turned into pink color in marker test. Laboratory In-charge who conducted the test along with me, requested the petitioner's representative to sign the report.
18. That, dealer retention sample could not be tested for want of presence of petitioner's representative and it remained intact in my safe custody. It was subsequently handed over by me to Petitioner's representative on 12.01.2008 at Shivpuri. Acknowledgment was also taken by petitioner. Copy of acknowledgment is filed herewith and marked as Annexure X/1."
(21) Similarly, Shri Ravi Bhatia who was laboratory incharge at Indore on 07/01/2008 stated in affidavit:
"3. That, Mr. Vineet Bhutani Company representative and Petitioner Chhote Lal Simariya along with Yogendra Singh and Ram Mohan Singh came to Indore Laboratory on 07.01.2008 along with their samples kept in respective custody that is Mr. Vineet Bhutani brought HSD Company retention retail outlet sample kept in Company custody and Petitioner brought Dealer retention sample kept in his custody, for testing.
4. That, first of all in presence of all i.e. I, Mr. Vineet Bhutani and Petitioner and his representatives, 14 WA.164/2017 seals and packaging of company retention sample was checked and all them found the seals intact i.e. no objection regarding seals or packaging of samples were raised by either party.
5. That, on suggestion of Petitioner the company retention sample be tested and he will be satisfied with the result on sample. I tested the company retention sample and the Marker Column turned pink i.e. sample found adulterated.
6. That, I requested petitioner, his representative's and company representative Mr. Vineet Bhutani to sign the lab test report witnessed by them but petitioner and his representatives refused to sign the lab report and left the terminal leaving behind the HSD sample brought by them.
7. That, I waited till 17:50 hours for petitioner to come back so that retail outlet samples kept in his custody (thereinafter referred as "Dealer retention sample") can also be checked and the lab report can be finalized after taking signature of both the witnessing parties, however, petitioner did not return till 17:50 hours to the laboratory. Thereafter I closed the laboratory after signing the report dt. 07.01.2008 & along with narration which took place during the testing."
(22) Evidently, what was reported to the Head Office vide communication dated 22/07/2008 was that "the RO retention sample was tested for marker at Quality Control Laboratory, Indore in the presence of dealer and his 15 WA.164/2017 representatives", which is contrary to the fact.
(23) The report dated 22/07/2008 resulted in the order of termination dated 12/02/2009. Interestingly, the order dated 12/02/2009 takes into consideration the earlier report of 03/03/2007 which was already discarded and direction for retesting was issued.
(24) Learned Single Judge faced with these facts framed the following issues:
"i- Whether petitioner is not entitled to invoke writ jurisdiction of this Court under Article 226 and 227 of the Constitution of India for the reason, termination of High Speed Diesel dealership was due to failing of sample in Marker test in the laboratory and the report upon examination have been found to be in order by authority competent to terminate the dealership and appellate authority confirming the same?
ii- Whether disputed questions of facts are involved to decline exercise of writ jurisdiction under Article 226 and 227 of the Constitution of India?
iii- Whether principles of natural justice have been violated in the matter of carrying out the test at the laboratory at Mathura or Indore entitling the petitioner to make complaint of violation of Article 14 read with Article 19 (1) (g) of the Constitution of India in the matter of termination of High Speed Diesel dealership and seek redressal of grievance against termination of dealership under Article 226 and 227 of the Constitution of India?16 WA.164/2017
iv- Whether respondents have acted fairly and reasonably and adhered to written regulated procedure to carry out Marker test?"
After considering the rival contentions and pleadings passed the following order:
"12. At this stage, this Court called upon the senior counsel for the respondents/Oil Company Shri K.N. Gupta to seek instructions for the purpose of carrying out adulteration test on the sealed retail outlet sample available with the petitioner. Shri Gupta states that he has instructions to state that no such test is possible.
As a result, this Court concludes as under:-
i- Since Marker test carried out at Mathura laboratory on 27/2/2007 was without notice to the petitioner and behind his back, the same is contrary to the procedure prescribed under the Industry Transport Discipline Guidelines and in violation of principles of natural justice.
Likewise, the Marker test conducted on 7/1/2008 at Indore laboratory since was not carried out on the retail outlet retention sample, as directed by the Executive Director (Retail) West, therefore, its report is held to be arbitrary, illegal and contrary to the directions of the competent authority and inconsequential, as once the Executive Director (Retail) West had directed to carry out Marker test on retail outlet sample, the concerned Area Manager had no authority to deviate therefrom and resort to Marker test on company 17 WA.164/2017 retention sample. This act of the Area Manager has caused serious prejudice and detrimental to the rights and interests of the petitioner, which led to termination of dealership.
Therefore, the impugned termination of dealership based upon the aforesaid reports are held to be arbitrary and illegal. Hence, the petitioner is entitled to invoke writ jurisdiction of this Court under Article 226 and 227 of the Constitution of India.
ii- This Court finds that in view of the aforesaid conclusion, the contention that the instant case involves disputed questions of facts and not liable to be interfered with under Article 226 and 227 of the Constitution of India cannot be countenanced.
Petitioner has been denied equality before law and equal protection of law in the matter of termination of dealership. To justify the action of termination of dealership the authority concerned has to act fairly and in complete adherence to the rules/guidelines framed for the said purpose. It was the bounden duty of the respondents to issue notice to the petitioner and afford him opportunity to remain present at the time of testing of sample at Mathura laboratory and further the retail outlet sample, since was available, the same ought to have been tested and not the company retention sample. The aforesaid view of this Court finds support from the judgments in the cases of Harbanslal Sahnia (supra), Natwar Singh (supra) and Hindustan Petroleum Corporation 18 WA.164/2017 (supra) rendered in almost similar facts and circumstances in the context of applicability of principles of natural justice and adherence of the procedure/guidelines in the matter of termination of dealership of petroleum products.
13. Accordingly, the writ petition stands allowed. Impugned orders of termination of dealership, Annexures P/1 and P/2, dated 12/2/2009 and 11/6/2009, are hereby quashed. Respondents are directed to restore the dealership of the petitioner forthwith."
(25) When the conclusion arrived at by learned Single Judge is tested on the anvil of the fact that the order dated 12/02/2009 terminating the retail outlet dealership rested on the earlier findings by the Mathura Laboratory and that the Retail Outlet sample with the respondent Retailer was not tested at Indore Laboratory; and no fresh opportunity of hearing was afforded to the respondent after the test conducted at Indore Laboratory, the same cannot be faulted with. As it was incumbent upon the Oil Company to have afforded an opportunity of hearing to the respondents informing the outcome of the test conducted therein.
(26) Even otherwise as evident from the record that the Marker Test was introduced w.e.f. 15/2/2007 and was withdrawn vide notification dated 01/01/2009:-
19 WA.164/2017"Ministry of Petroleum and Natural Gas Order No.GSR 1(E) dated the 31st December, 2008. Published in the Gazette of India (Extraordinary) Part II Section 3(i) dated 1.1.2009 Pages 1-2.
In exercise of the powers conferred by Section 3 of the Essential Commodities Act, 1955 (10 of 1955), the Central Government hereby makes the following order further to amend the Motor Spirit and High Speed Diesel (Regulation of Supply, Distribution and Prevention of Malpractices) Order, 2005, namely:-
1. (1) This Order may be called the Motor Spirit and High Speed Diesel (Regulation of Supply, Distribution and Prevention of Malpractices) Amendment Order, 2008.
(2) It shall come into force on the date of its publication in the Official Gazette.
2. In the Motor Spirit and High Speed Diesel (Regulation of Supply, Distribution and Prevention of Malpractices) Order, 2005.
(1) in clause 2,-
(a) In item (a), the words "presence of marker in motor spirit and high speed diesel and/or" shall be omitted;
(b) in item (e), the words "and also does not contain any traces of marker" shall be omitted.
(c) item (f1) shall be omitted.
(d) in item (g), the words "and also does not contain any traces of marker" shall be omitted;
(e) item (m1) shall be omitted;
(f) in item (t), the words "having 20 WA.164/2017 traces of marker and/or" shall be omitted.
(2) in clause 8, -
(a) sub-clause (1A) shall be omitted.
(b) In sub-clause (1) for the words, "Where the product does not contain marker under sub-clause (1A), the authorized officer", the words "The authorized", shall be substituted."
That decision on the basis of Laboratory Report was taken on 12.02.2009 i.e. after the Marker System was withdrawn. It has been held in Kolhapur Canesugar Works Ltd. and another Vs. Union of India and others [AIR 2000 SC 811] that:
"15. Rules 10 and 10-A were omitted and a new provision was introduced by Rule 10 with effect from 6th August 1977. In the said Rule a period of 6 months was prescribed for initiating action for realisation of the duty which has not been levied or paid or has been shortlevied, erroneously refunded or any duty assessed has not been paid in full. No provision regarding residuary power was made in the Rules.
35. For the reasons set forth above we do not accept the view taken in Saurashtra Cement and Chemical Industries Ltd. (supra), in Falcon Tyres Ltd. (supra) and the other decisions taking similar view. It is not correct to say that in considering the question of maintainability of pending proceedings initiated under a particular provision of the rule after the said provision was omitted 21 WA.164/2017 the Court is not to look for a provision in the newly added rule for continuing the pending proceedings. It is also not correct to say that the test is whether there is any provision in the rules to the effect that pending proceedings will lapse on omission of the rule under which the notice was issued. It is our considered view that in such a case the Court is to look to the provisions in the rule which has been introduced after omission of the previous rule to determine whether a pending proceeding will continue or lapse. If there is a provision therein that pending proceedings shall continue and be disposed of under the old rule as if the rule has not been deleted or omitted then such a proceeding will continue. If the case is covered by Section 6 of the General Clauses Act or there is a pari-materia provision in the statute under which the rule has been framed in that case also the pending proceeding will not be affected by omission of the rule. In the absence of any such provision in the statute or in the rule the pending proceedings would lapse on the rule under which the notice was issued or proceeding was initiated being deleted/omitted. It is relevant to note here that in the present case the question of divesting the Revenue of a vested right does not arise since no order directing refund of the amount had been passed on the date when Rule 10 was omitted."
(27) In the case at hand, evidently, the report dated 03/03/2007 reveals that the sample meets the requirement of HSD (BS II) and found P (Pink Marker Test). This report led to initiation of proceedings against the 22 WA.164/2017 respondent. However, the proceedings initiated during subsistence of Marker Test System lapsed with the withdrawal of said Marker Test System w.e.f. 01.01.2009 as there was no stipulation that, the proceedings initiated during subsistence of Marker Test System were saved. For these reasons also, in our considered opinion, the rejection order dated 12/02/2009 cannot be upheld.
(28) The Appellant has relied on the decision in "Shangrila Food Products Ltd. And another Vs. Life Insurance Corporation of India and another [(1996) 5 SCC 54]; Prestige Lights Ltd. Vs. State Bank of India [(2007) 8 SCC 449] and K.D. Sharma Vs. Steel Authority of India Limited and others [(2008) 12 SCC 481]"
to bring home submissions that no-one can take unfair advantage of the circumstances and that one must come to the Court with clean hands and that there should not be suppression of facts.
(29) There can be no cavil in respect of a settled proposition of law that ".......the High Court in exercise of its jurisdiction under Article 226 of the Constitution can take cognisance of the entire facts and circumstances of the case and pass appropriate orders to give the parties complete and substantial justice. This 23 WA.164/2017 jurisdiction of the High Court, being extraordinary, is normally exercisable keeping in mind the principles of equity. One of the ends of the equity is to promote honesty and fair play. If there be any unfair advantage gained by a party priorly, before invoking the jurisdiction of the High Court, the court can take into account the unfair advantage gained and can require the party to shed the unfair gain before granting relief." [Shangrila Food Products Ltd. And another (supra) paragraph 11].
And that "....a prerogative remedy is not a matter of course. In exercising extraordinary power, therefore, a Writ Court will indeed bear in mind the conduct of the party who is invoking such jurisdiction. If the applicant does not disclose full facts or suppresses relevant materials or is otherwise guilty of misleading the Court, the Court may dismiss the action without adjudicating the matter. The rule has been evolved in larger public interest to deter unscrupulous litigants from abusing the process of Court by deceiving it. The very basis of the writ jurisdiction rests in disclosure of true, complete and correct facts. If the material facts are not candidly stated or are suppressed or are distorted, the very functioning of the writ courts would become impossible." [Prestige Lights Ltd (supra) Paragraph 35].
24 WA.164/2017(30) On fair consideration of these settled propositions of law, it is difficult to perceive, in given facts of present case, as to they being of any assistance to the Appellant. Rather, they come to the rescue of the respondent retailer who has been subjected to the procedure in contravention of the statutory provisions.
(31) It is held in "Hindustan Petroleum Corporation Limited and others Vs. Super Highway Services and another [(2010) 3 SCC 321]" that the cancellation of dealership agreement is a serious business and cannot be taken lightly and that no person should be condemned unheard. It is held by their Lordships:
"31. The cancellation of dealership agreement of a party is a serious business and cannot be taken lightly. In order to justify the action taken to terminate such an agreement, the authority concerned has to act fairly and in complete adherence to the rules/guidelines framed for the said purpose. The non-service of notice to the aggrieved person before termination of his dealership agreement also offends the well- established principle that no person should be condemned unheard. It was the duty of the petitioner to ensure that the Respondent 1 was given a hearing or at least serious attempts were made to serve him with notice of the proceedings before terminating his agreement.
32. In the instant case, we are inclined to agree with Mr. Bhatt's submissions 25 WA.164/2017 that the High Court did not commit any error in allowing the writ petition filed by the Respondent herein, upon holding that notice of the Laboratory Test to be conducted at the Barauni Terminal had not been served upon the Respondent 1, which has caused severe prejudice to the said respondent since its dealership agreement was terminated on the basis of the findings of such Test. Admittedly the dealership agreement was terminated on the ground that the product supplied by the petitioner corporation was contaminated by the respondent. Such contamination was sought to be proved by testing the T.T. retention sample in the laboratory at Barauni Terminal.
33. The guidelines being followed by the Corporation require that the dealer should be given prior notice regarding the test so that he or his representative also can be present when the test is conducted. The said requirement is in accordance with the principles of natural justice and the need for fairness in the matter of terminating the dealership agreement and it cannot be made an empty formality. Notice should be served on the dealer sufficiently early so as to give him adequate time and opportunity to arrange for his presence during the test and there should be admissible evidence for such service of notice on the dealer. Strict adherence to the above requirement is essential, in view of the possibility of manipulation in the conduct of the test, if it is conducted behind the back of the dealer.
34. In the present case, there is no admissible evidence to prove service of notice on the respondent or refusal of notice by the respondent. Further, the notice dated 28.05.2008 which 26 WA.164/2017 was allegedly refused by respondent, did not give him adequate time to arrange for the presence of himself or his representative during the test to be conducted at 3.00 p.m. on 29-05- 2008. It is also to be noted that the endorsement regarding the alleged refusal is dated 29-05-2008 itself. Thus, the termination of the dealership agreement of the respondent was arbitrary, illegal and in violation of the principles of natural justice."
(32) In view whereof since we find no error in the conclusion arrived at by learned Single Judge in causing indulgence with the orders dated 12/02/2009 and 11/06/2009; consequently, Appeal fails and is dismissed. However, no costs.
(Sanjay Yadav) (S.K. Awasthi)
Judge Judge
(13/12/2017) (13/12/2017)
pd
PAWAN DHARKAR
2017.12.15
17:20:46 -08'00'