M/S.S.K.Shenbagamoorthy & Brothers vs Union Of India on 18 June, 2010

[Cites 21, Cited by 1]

Madras High Court

M/S.S.K.Shenbagamoorthy & Brothers vs Union Of India on 18 June, 2010

2.The petitioner is a partnership firm and is the dealer of petroleum products of Hindustan Petroleum Corporation Limited. On 30.06.2008, the officials of the M/s.S.G.S.India Private Ltd., representative of the 2nd respondent, inspected the retail outlet of the petitioner and collected samples of petrol from the pump nozzle. Four samples were taken and it was tested with the test kit and out of the four samples, three samples passed in the marker test and only one sample taken from Nozzle No.05471536, by utilising IAS Column number 04239664 failed in the marker test as it turn into pink. Thereafter, on 01.07.2008 tank truck sample was taken and subjected to the marker test and tank truck sample passed in the marker test and therefore, show cause notice was issued by the 2nd respondent, dated 02.07.2008 stating all these facts that the failure of nozzle sample of power in the marker test tantamount to adulteration of petrol, which is violative of Clause Nos.27, 44 and liable for action under clause Nos.58(1) & 58(m) of the Special Agreement, dated 29.06.1980 and the petitioner was called upon to show cause why the dealership shall not be cancelled. The petitioner sent a reply, dated 10.07.2008 questioning the power of M/s.S.G.S.India Private Ltd., to take samples and also questioned the result of the test. The petitioner also challenged the taking of samples on 30.06.2008 by filing the Writ Petition No.6167 of 2008, on the file of this Court and also the proceedings of the 3rd respondent, dated 30.06.2008 suspending the sale of all the petroleum products in the petitioner's retail outlet. Earlier, another dealer was also issued similar show cause notice on the basis of the test conducted in that dealer outlet and that dealer viz., M/s.D.Nagarajan & Co., Rep by its Managing Partner, Villupuram, challenged the show cause notice issued against them in W.P.(MD)No.29561 of 2007. In that writ petition, they challenged the power of M/s.S.G.S. India Private Limited, the 4th respondent herein, to take sample and to conduct test and also the issuance show cause notice on the ground that the 3rd respondent has pre-determined the issue on the show cause notice and therefore, to quash the show cause notice in the writ petition No.29561 of 20097. That writ petition was allowed by the learned Judge holding that the 4th respondent herein viz., M/s.S.G.S India Private Limited, is not the authorised person to conduct the test as per the provision of Motor Spirit and High Speed Diesel (Regulation of Supply Distribution and Prevention of Malpractices) Amendment Order, 2007. Aggrieved by the same, M/s.Hindustan Petroleum Corporation Ltd., filed W.A.No.391 of 2008 and the Writ Petition No.6167 of 2008 filed by the petitioner herein, challenging the proceedings of the 2nd and 3rd respondents, was also taken along with the Writ Appeal No.391 of 2008 and both were heard together and the Honourable Division Bench of this Court, by order, dated 21.11.2008 dismissed the Writ Petition No.6167 of 2008 filed by the petitioner and allowed the appeal filed by the Hindustan Petroleum Corporation Limited in W.A.No.391 of 2008. Thereafter, the 2nd respondent, after considering the reply filed by the petitioner to the show cause notice, issued the order, dated 12.12.2008 terminating the dealership agreement of the petitioner and that order is challenged in this writ petition.

3.The writ petitioner challenged the termination of the dealership on the ground that the 4th respondent herein is not authorised to take sample as per the Motor Spirit and High Speed Diesel (Regulation of Supply Distribution and Prevention of Malpractices) Amendment Order, 2007 and further contended that the Government of India has also realised that the marker test was defective and was not fully fool poof and has also withdrawn the marker test, which was granted to M/s.S.G.S. India Private Limited and also stopped the doping of mark in Kerosene.

4.It was further contended that no effective procedure was established to countenance the result of the marker test and the entire order suffers from violation of principles of natural justice and violation of fundamental rights enshrined under Article 14 and 19 of the Constitution of India and the result of the test is also stated not to be conclusive.

5.On the other hand, the respondents 2 and 3 filed a counter stating that the writ petition is not maintainable as there is an arbitration Clause in the agreement and the petitioner ought to have invoked the provisions of Arbitration and Conciliation Act and should not have invoked the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India. It is further stated in the counter that the parties are governed by the agreement and in respect of contractual matter, the Court should not interfere under Article 226 of the Constitution of India and therefore, the writ petition is not maintainable.

6.It is further stated in the counter that in order to eradicate the Adulteration of Petrol and Diesel with Kerosene, the Marker System was introduced. In the said Marker System, Kerosene is doped with the chemical called "Marker" before it is released in the market either under Public Distribution System or Industrial Use. The Patent owner and supplier of this Marker is M/s.Authentix, U.K, who supplies the Marker System to various countries across the globe. Under the Marker Test Programme, 5 parts per Million (PPM) of the Marker chemicals is blended with the Kerosene sold in India. Thus, PDS Kerosene available in India is blended with Marker. A special test kit has been approved by the Central Government and provided to officials conducting Marker Test. The kit contains buffer solution, plastic syringes, bottles and Immuno Assay System (IAS) columns. The IAS columns contains specially cultured resins which, when come into contact with the Marker Produces distinct pink colour. In this method, the sample of Petrol and Diesel collected from the retail outlet nozzle will be dropped into the IAS Column and if it turns to pink, it will prove that the product i.e. Petrol/Diesel is adulterated. Further, at the time of supplying petroleum products into the underground tanks of the retail outlet from the tank truck, two samples will be taken and one will be retained by the dealer and another will be given to the Tank Truck Driver. This is known as Tank truck Retention sample. To detect the adulteration, the Petroleum Company and its authorized representative M/s.S.G.S. India Private Limited will conduct surprise test at the petroleum outlets. If the petrol/diesel collected from the nozzle of the dispensing unit at the retail outlets turned pink, it will prove that the petrol/diesel is adulterated with Kerosene. To detect whether the adulteration was done by the dealer or by the transporter, the truck sample collected and retained by the dealer at the time of delivery before unloading the Petrol/Diesel in the underground tank will be tested by the marker test method. If the tank truck sample did not turn pink, it will conclusively prove that the adulteration was committed by dealer after delivery of the petroleum products to the dealer. On the other hand, if the tank truck sample also turned pink, it will prove that the dealer is innocent and the adulteration took place before deliver of the petrol to the underground tank.

7.The respondents 2 and 3 also narrated how the test was effected on 26.02.2008 in para 3 of the counter as follows :- "In the present case, on 30.06.2008, the official of M/s/.S.GS. India Pvt. Ltd., Representative of the HPCL, inspected the retail outlet of the petitioner and collected samples of Power (branded Petrol) from the pump nozzle, which was tested on 01.07.2008 and the Inspection/Test Report, dated 01.072008 has been signed by 1.Mr.B.Sampath and Mr.V.Thilagarajan of M/s.S.G.S. India Pvt. Ltd, 2. Mr.P.Sudalaimani, Depot Manager and Mr.E.Paul Murugan, Sales Officer of HPCL and Mr.K.Ramachandran representative of the petitioner dealer along with Mr.R,Marimuthu, Transporter and Mr.T.V.Bhaskar, Sale Officer and Mr.Hariprasad, Mobile Lab Officer. The Power collected from the Pump Nozzle as stated above when tested under the Marker system, turned into Pink Colour. Since the samples of Power collected and tested failed under the Marker Test, another set of samples were collected from the retail outlet pump nozzle. The samples so collected from the retail outlet pump nozzle and the tank truck retention sample, which was available at the retail outlet were tested once again under Marker system. Even in the second test also, the samples collected from the nozzle turned "Pink" while the tank truck retention sample passed. While the nozzle sample failed in the Marker Test as stated herein above, the Tank truck samples did not turn "Pink" thereby it was proved that the power which was being supplied to the consuming public by the dispensing pump was adulterated by the dealer. Therefore, a show cause notice was issued on 02.07.2008 and the same was challenged in W.P.(MD)No.6167 of 2008 and that writ petition was also dismissed and thereafter, final order was passed on 21.11.2008. It is further stated in para 7 of the counter that as per the terms of agreement the Corporation or its agents are entitled to enter the premises and inspect the management of the retail outlet. In the routine course, sample was tested for adulteration under the marker test which resulted positive proving presence of marker in the product which denotes adulteration of product power with SKO. As the sample failed, the sale and supplies were suspended and the test was conducted as per the procedure and the failure of nozzle sample of power in the marker test tantamount to adulteration of product, which is violative of clause Nos.27, 44 and liable for action under Clause Nos.58(1) & 58(m) of the agreement, dated 29.06.1980."

8.It is further stated that the marker test was introduced in 2005 and the marker test was dis-continued not for the reasons stated by the petitioner, but on the basis of the report of the Technical Committee and the discontinuation of marker system is temporary in nature pending selection of new supplier for marker as the existing contract with the present contract namely, M/s.Authentix has expired and also to test advanced technology to prevent adulteration in auto fuels. It is, therefore, stated that the action was taken as per the guidelines of the Ministry, which is prevalent at the relevant period and as the petitioner violated the terms of agreement and the sample also failed in the marker test, it is proved that the petitioner has adulterated, which is violative of terms of agreement and hence, action was taken in accordance with law and therefore, it is liable to be dismissed.

9.Mr.N.R.Chandran, the learned Senior Counsel representing the petitioner submitted that even though, arbitration clause is provided in clause 68 of the agreement that will not be the reason to dismiss the writ petition and relied upon the judgment of the Honourable Supreme Court reported in 2003(2)SCC 107 [Harbanslal Sahnia v. Indian Oil Corpn. Ltd.] and submitted that even though there is an arbitration clause in the agreement, the writ petition is maintainable as the writ petition seeks enforcement of the fundamental rights and where there is failure of principles of natural justice and therefore, the argument of the respondents that the writ petition is not maintainable cannot be accepted.

10.He further submitted that as per Motor Spirit and High Speed Diesel (Regulation of Supply, Distribution and Prevention of Malpractices) Amendment Order 2007, samples should be taken by the officers stated in clause 7 of the said order and in this case, admittedly the samples were taken by the 4th respondent, who is not the authorised persons stated in clause 7 in the said order and therefore, taking of sample by the unauthorised persons is illegal and no action can be initiated on the basis of the samples taken by the unauthorised persons.

11.He further submitted that though the writ petition W.P.No.6167 of 2008 filed by the petitioner was dismissed by the Honourable Division Bench, a perusal of the order of the Honourable Division Bench would show that the Division Bench has not considered the case of the petitioner that the 4th respondent was not the authorised person and the Honourable Division Bench has proceeded on the basis of the facts related to W.P.No.29561 of 2007, which is the subject matter of W.A.No.391 of 2008 and the Division Bench has held that the submission relating to engagement of outlet agency cannot be accepted and therefore, submitted that the Division Bench has not dealt with the issue that the 4th respondent is not the authorised person to conduct test and therefore, the entire procedure is vitiated. He further submitted the termination of dealer-ship was on the basis of the marker test, which was conducted by the 4th respondent and it was proved to be defective and therefore, it was withdrawn subsequently and hence, the entire proceedings based on the marker test cannot be sustained and therefore, the impugned order is liable to be set aside.

12.On the other hand, the learned counsel appearing for the respondents, Mr.M.Sridhar submitted that it is proved in the test conducted on 30.06.2008 that the retail outlet sample failed in the marker test and it was also conducted with the tank truck sample on 01.07.2008 and the samples passed in the marker test and therefore, it is clearly proved that the petitioner was selling adulterated products and hence, the action of the respondents 2 and 3 is justified and the action is in consonance with the terms of the agreement between the parties. He further reiterated that as per the judgment reported in 2005(8) SCC 242, in the case of Sanjana M.Wig. vs. Hindustan Petroleum Corpn. Ltd.], the writ petition is not maintainable in view of the arbitration clause available in the agreement between the parties and therefore, the writ petition is liable to be dismissed. It is further submitted that the same plea has been taken before the Honourable Division Bench that the 4th respondent is not the authorised person to take samples and that was negatived by the Division Bench and hence, the petitioner is estopped from raising the same plea in the writ petition about the competency of the 4th respondent to take sample from the petitioners outlet.

13.I have given my anxious consideration to the submissions made by both parties.

14.On the basis of the arguments advanced by both the parties, the following points emerged for determination:-

1.Whether the writ petition is maintainable in view of the arbitration clause found in clause 67 of the terms of agreement between the parties?

2.Whether the writ petitioner is entitled to take the plea that the 4th respondent is not competent to take sample, having regard to the finding of the Division Bench in the judgment rendered in W.A.No.391 of 2008 in W.P.No.6167 of 2008?

3.Whether the marker test employed by the 4th respondent is valid, having regard to the fact the same was withdrawn in the year 2008 by the Government?

15.Point No.1: In the Judgment reported in 2005(8) SCC 242, in the case of Sanjanam Wig. vs. Hindustan Petroleum Corpn. Ltd., the Honourable Supreme Court has held as follows: "It may be true that in a given case when an action of the party is dehors the terms and conditions contained in an agreement as also beyond the scope and ambit of the domestic forum created therefor, the writ petition may be held to be maintainable; but indisputably therefor such a case has to be made out. It may also be true, as has been held by this Court in Amritsar Gas Service [1991(1)SCC 533] and E.Venkatakrishna [2000(7)SCC 764] that the arbitrator may not have the requisite jurisdiction to direct restoration of distributorship having regard to the provisions contained in Section 14 of the Specific Relief Act, 1963; but while entertaining a writ petition even in such a case, the Court may not lose sight of the fact that if a serious disputed question of fact is involved arising out of a contract qua contract, ordinarily a writ petition would not be entertained. A writ petition, however, will be entertained when it involves a public law character or involves a question arising out of public law functions on the part of the respondent..

16.The Honourable Supreme Court in that judgment relied upon the judgment reported in 2005(6) SCC 499 [Gujarat Ambuja Cement Ltd referring to Harbanslal Sahnia [2003(2) SCC 107] held as follows:-

"22(24)....There are two well-recognised exceptions to the doctrine of exhaustion of statutory remedies. First is when the proceedings are taken before the forum under a provision of law which is ultra vires, it is open to a party aggrieved thereby to move the High Court for quashing the proceedings on the ground that they are incompetent without a party being obliged to wait until those proceedings run their full course. Secondly, the doctrine has no application when the impugned order has been made in violation of the principles of natural justice. We may add that where the proceedings itself are an abuse of process of law the High Court in an appropriate case can entertain a writ petition.

23(25)...Where under a statue there is an allegation of infringement of fundamental rights or when on the undisputed facts the taxing authorities are shown to have assumed jurisdiction which they do not possess can be the grounds on which the writ petitions can be entertained. But normally, the High Court should not entertain writ petitions unless it is shown that there is something more in a case, something going to the root of the jurisdiction of the officer, something which would show that it would be a case of palpable injustice to the writ petitioner to force him to adopt the remedies provided by the statute."

17.The Honourable Supreme Court has also referred to the judgment reported 2003(2) SCC 107 [Harbanslal Sahnia] and observed that "in a appropriate case, in spite of availability of the alternative remedy, the High Court may still exercise its writ jurisdiction in at least three contingencies (i) where the writ petition seeks enforcement of any of the fundamental rights; (ii) whether there is failure of principles of natural justice; or (iii) where the orders or proceedings are wholly without jurisdiction or the vires of an Act is challenged."

18.But in the judgment reported in 2005(8) SCC 242, [Sanjanam Wig vs. Hindustan Petroleum Corporation Ltd.,], it has been observed that while exercising a plenary jurisdiction, the Court must take supervening circumstances into consideration and it was found that in that case, the parties admittedly invoked the arbitration agreement before the arbitrator and entered into a settlement and therefore, the Honourable Supreme Court opined that in this matter, no case has been made out for grant of relief of restoration of the dealer ship. Therefore, it cannot be stated that as per the judgment reported in 2005(8)SCC 242, the writ petition is not maintainable, having regard to the fact that there is an alternative remedy viz., arbitration clause is available in the agreement between the parties. As as matter of fact, the Honourable Supreme Court in that judgment upheld the power of the Court to entertain the writ petition even in the presence of arbitration clause by relying the judgment reported in 2005(6) SCC 499 and in 2003(2) SCC 107.

19.Further, as observed by the Honourable Supreme Court in the aforesaid judgment that instead of availability of alternative remedy, the writ petition is maintainable where the writ petition seeks enforcement of fundamental rights or where there is violation of principles of natural justice or where the orders or proceedings are wholly without jurisdiction or the vires of an Act is challenged and it is contended by the petitioner that the action taken by the 4th respondent in conducting the test is solely without jurisdiction and therefore, as per the above judgment, the writ petition is maintainable.

20.Point No.2: To appreciate the above point, we will have to see the various clauses in the Mother Spirit and High speed Diesel (Regulation of Supply,Distribution and Prevention of Malpractices) Order 2005 and Amendment Order 2007 and also the judgment of the Division Bench rendered in W.A.No.391 of 2008 and W.P.No.6167 of 2008. When the sample was taken on 20.06.2008, the Motor Spirit and High Speed Diesel (Regulation of Supply, Distribution and Prevention of Malpractices) Order 2005 as amended by 2007 was in force and as per clause (2)(a) as amended by the Amendment Order 2007, "adulteration' means the presence of marker in Motor Spirit and High Speed diesel and/or the introduction of any foreign substance into motor spirit or high speed diesel illegally or unauthorizedly with the result that the product does not conform to the requirements of the Bureau of Indian Standards specifications number IS 2796 and IS1460 for motor spirit and high speed diesel respectively or any other requirement notified by the Central Government from time to time.

21.Marker has been defined in clause (f1) that 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 and as per clause 2(g) 'Motor Spirit' means any hydrocarbon oil, excluding crude mineral oil, which means meets the requirements of Bureau of Indian Standards specification number IS2796 and also does not contain any traces of marker.

21.'Test Kit' is defined in clause [m1] that a set of equipment used to determine the presence of marker in kerosene, motor spirit, high speed diesel & other petroleum products .

22.Power of search and seizure stated in clause 7(1) as follows: "Any Gazetted Officer of the Central Government or a State Government or any police officer not below the rank of Deputy Superintendent of Police duly authorised, by general or special order of the Central Government or a State Government, as the case may be, or any officer of the oil company, not below the rank of sales officer, may, with a view to securing compliance with the provisions of this Order, or for the purpose of satisfying himself that this Order or any order made thereunder has been complied with or there is reason to believe that all or any of the provisions of this Order have been and are being or are about to be contravened.

23.As per clause 8(1a), the procedure for taking sample was stated as follows: Sampling of Product and testing:- The authorised officer under clause 7 shall draw the samples 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 representatives, as the case may be and give one copy of such recording to the dealer or transporter or concerned person or his representative and another copy of the oil company concerned, as the case may be.

24.It is seen from the counter filed by the respondents that there has been large scale diversion of kerosene meant for domestic use for adulteration purpose and if petrol or diesel is adulterated with Kerosene, it is very difficult to detect such adulteration in view of the border difference and easy solubility of kerosene with petrol and diesel. Further, the adulteration of petrol and diesel with kerosene also causes serious pollution and damage to the vehicles. Therefore, with a view to eradicate the adulteration of petrol and diesel with kerosene, the marker system was introduced and as per marker system, kerosene is doped with a chemical called 'marker' before it is released in the market either under Public Distribution System or Industrial Use. A special test kit has been approved by the Central Government and provided to officials conducting marker test and that kit contains buffer solution, plastic syringes, bottles and Immuno Assay System (IAS) columns. The IAS columns contains specially cultured resins which when come into contact with the Marker products distinct pink colour. The PDS kerosene available in India is blended with Marker and therefore, in the event of adulteration of kerosene with petrol or diesel, a sample collected from retail outlet nozzle dropped into the IAS Column would turn to pink and that would prove that the product is adulterated.

25.Further, test will also be carried out by taking samples from tank truck sample and when the marker test is applied to the tank truck sample and it pass as the test viz., if does not turn pink, the petrol and diesel as per to the retail is adulterated and the adulteration is done by the retailer. Therefore, by conducting the above procedure, it can be easily found where adulteration was done by the dealer or the the dealer was supplied with adulteration book.

26.In this case, according to the respondents 2 to 4. on 30.06.2008 samples were taken by the 4th respondent viz., S.G.S.India Private Limited from the retail outlet of the petitioner. When marker test is applied to those four samples, it was found that the above 4 samples taken from 4 nozzle unit, one sample taken from Unit No. 054715666, when applied to IAS No.4239664 turn into pink and therefore, the petroleum was found adulterated and when the test was conducted on 01.07.2008 with the tank truck sample, it passed the test and therefore, it was contended by the respondents that the adulteration was done by adding kerosene into petrol and diesel by the dealer.

27.On the other hand, it was contended by the learned Senior counsel appearing for the petitioner, Mr.N.R.Chandran that even when test was done in respect of truck tank sample, the colour variation was noted and that was also mentioned by the dealer in the report and the dealer has requested the Corporation to have the sample tested in the Lab and without conducting the same, the Corporation illegally terminated the agreement on the basis of the marker test, which is also disputed by the dealer.

28.Mr.N.R.Chandran, the learned Senior counsel appearing for the petitioner submitted that as per clause 7 and 8 of the Motor Spirit and High Speed Diesel (Regulation of Supply, Distribution and Prevention of Malpractices) Amendment Order 2007, only the following officers are competent to conduct the search and seizure and they are as follows:-

"Any Gazetted Officer of the Central Government or a State Government or any police officer not below the rank of Deputy Superintendent of Police duly authorized, by general or special order of the Central Government or a State Government, as the case may be; or Any officer of the oil company, not below the rank of sales officer; As per clause 8 (1)(a), the authorised officer under clause 7 shall draw the samples from the tank nozzle , vehicle or receptacle, as the case may be , in clean aluminium containers, to check whether density and other parameters of the product conform to the requirements of Bureau of Indian Standard specifications under 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 clause 3(b) would also be collected for laboratory analysis.

Therefore, a reading of clause 7 and 8 would make it clear that only persons authorised under clause 7 are empowered to take samples, as per clause 8.

29.In this case, it is seen from the show cause as well as the termination of dealer-ship agreement that sample was taken by the 4th respondent. Admittedly, the 4th respondent was not mentioned as one of the persons as per clause 7. Further, in the letter of the 2nd respondent, dated 30.06.2008, it was admitted that marker test was conducted in the retail out let by the M/s.S.G.S. India Private Limited, representative and it has been made clear in that letter, consequent to the marker test done in the retail outlet by M/S.S.G.S.India Private Limited and the results thereupon, the petitioner was requested to come and witness the marker test to be done on R.O. sample drawn by SGS representative, TT retention sample and depot sample, dated 23.06.2008 at Kappalur depot on 01.07.2008 at 10.00 hrs without fail. Therefore, it is clearly admitted that the sample was taken by SGS and no doubt, it was taken in the presence of the officials of the second respondent. It is further admitted in the counter filed by the 2nd respondent that on 30.06.2008, the officials of SGS, representatives of HPCL, inspected the retail outlet of the petitioner and collected samples of power from the pump nozzle. Therefore, it is admitted by the 2nd respondent that sample was taken by the 4th respondent viz., SGS, in the tank truck and sample was not taken, as per clause 8 of the aforesaid order as amened 2007 by the persons mentioned therein. In those circumstances, can it be said that the sample taken by the unauthorised person is legal and whether any action can be taken on the basis of the test conducted by the unauthorised person and whether the petitioner is estopped from taking the plea that the 4th respondent is not the authorised person to take sample.

30.To appreciate the above question, we will have to see the judgment rendered by the Division Bench in Writ appeal No.391 of 2008 and W.P.No.6167 of 2008 filed by the Oil Company against the order passed in W.P.No.29561 of 2007 . As stated supra, the Writ Appeal No.391 of 2008 was filed by D.Nagarajan & Co.,rep by its Managing Partner, Villupuram & others, challenging the show cause notice on two grounds viz., the 4th respondent is not competent to take the sample and therefore, the suspending of sample and the result thereupon cannot be based for issuing show cause notice and while issuing show cause notice, the authorities have pre-determined the issue and the learned single Judge held that the 4th respondent viz., SGS is not an authorised person to take the sample and therefore, the show cause notice issued on the basis of that is not legal and quashed the show cause notice . That was challenged in W.A.No.391 of 2008 and the writ petition filed by the petitioner viz., 6167 of 2008 challenging the same show cause notice also clubbed along-with the writ petition and the Honourable Division Bench held that there was no question of predetermination while issuing the show cause notice and regarding the competency of the 4th respondent to conduct search and seizure, the Division Bench has held as follows:

"16.We have perused the records enclosed with the paper book submitted in Writ Appeal No.391 of 2008. There are copies of few formats enclosed in the paper book showing the name of S.G.S. and in the said format(s), the name of the petroleum dealer, the code, postal, address, the name of the auditor of S.G.S, representative of the dealer present at the time of the test, the name of the Officer of the Petroleum company , etc., have been shown. The said format(s) was signed by the S.G.S. Auditor, OMC Field Officer and the dealer/representatives.

In the "Marker Project Witnessing of Joint Test" report of which has been submitted, it is in the format of the Hindustan Petroleum Company, wherein, the sample test has been reflected and it not only bears the signature(s) of the dealer, transporter, but also the officer(s) of the Hindustan Petroleum.

17.Learned Senior counsel appearing for the Hindustan Petroleum submitted that as per the new/amended guidelines/order/Rules, introduction of blending of maker in the potential of adulteration, outside agency should be engaged only for supply of 'test kit' and it is from the said test kit, the samples are drawn and to find out that the test kit is proper or not, report is submitted by the fourth respondent-SGS India Private Limited, which has supplied the 'test kit' in the present case.

So far as the 'test is concerned, the test has been conducted separately by the officer of the Hindustan Petroleum and for that purpose,'marker project witnessing of joint test report' has been submitted in the format of the Hindustan Petroleum, the result of the test of the nozzle and the samples, have been shown including the nozzle as found after the test, which have not been reflected in the standard operational format submitted by the SGS.

On a perusal of the formats, we find that the SGS, which supplied the 'test kit' for marker, while giving the details in their format as to the connection to which the test kit has been used, the SGS has not given any finding in regard to the colour of the petroleum product as found after one or other test(s), which has been done and submitted by the officials of the Hindustan Petroleum and submitted with the other report, namely marker product witness joint test report.

18.In the facts of the cases, the second submission relating to engagement of outside agency,cannot be accepted, apart from the fact that the said issue was not raised by the petroleum dealer(s) before the Writ Court."

31.It is seen from the above paragraphs that having regard to the paper book submitted in W.A.No.391 of 2008, the Honourable Division Bench came to the conclusion that SGS supplied the test kits for marker, and also gave the details in their format as to the manner in which the test kit has to be used and the SGS has not given any finding in regard to the colour of the petroleum product as found after one or other test, which has been done and submitted by the officials of the Hindustan Petroleum and submitted with the other reports viz., namely marker product witness joint test report. Therefore, on the basis of the paper book submitted in respect of W.A.No.391 of 2008, the Honourable Division Bench has held that the test sample was not taken by SGS and therefore, in view of the facts of the case, the 2nd submission relating to engagement of outside agency cannot be accepted, apart from the fact that the said issue was not raised by the petroleum dealer before the Writ Court.

32.The above finding in para '18' of that judgment would further make it clear that the Honourable Division Bench has given the said finding only on the basis of the materials available in the Writ Appeal No.391 of 2008. As stated supra, in so far as the petitioner is concerned, it is admitted by the respondents, in their counter in para '3' that test was conducted by the SGS, who is representative of Hindustan Petroleum Corporation Limited and in their letter, dated 30.06.2008 also, it is admitted by the 2nd respondent that SGS has conducted the test. Therefore, though the Division Bench dismissed the writ petition, it cannot be stated that the Honourable Division Bench has held that SGS is competent to take the sample and the test conducted by the SGS, the 4th respondent herein, is valid in law. Therefore, in my opinion, the judgment of the Honourable Division Bench of this Court did not lay down that the 4th respondent is competent to conduct the test and is competent to take the sample. On the contrary, having regard to the facts available in the Writ Appeal No.391 of 2008, the Honourable Division Bench has held that SGS did not take the sample and the sample was taken by officials of the Petroleum Corporation and test was conducted by them. Therefore, it cannot be stated that the petitioner is estopped by the finding of the Honourable Division Bench and it will not operate as res-judicata. In my opinion, the Division Bench has not dealt with the point whether SGS is competent to take sample and conduct test as per clause 8 of the Motor Spirit and High Speed Diesel (Regulation of Supply, Distribution and Prevention of Malpractices) Order 2005 as amended Act 2007. In this case, it is admitted that the sample was taken by the 4th respondent viz., SGS and test was conducted by the 4th respondent. As stated supra, as per clause 7 and 8, the 4th respondent is not an authorised person to conduct search and seizure and therefore, the 4th respondent is not competent to take sample and conduct the test. If the 4th respondent is not competent person to take sample and conduct the test, the question that arises for consideration is whether the test conducted by the 4th respondent or the sample taken by the 4th respondent is valid and whether any action can be taken on the basis of the test conducted by the 4th respondent, who is not authorised to take samples. According to me, when the 4th respondent is not an authorised person to take sample, even though he has been authorised by the Petroleum Corporation in the absence of any such delegation of such power by the provision of the Act and Rule, such authorisation or delegation is not legal and not permissible in law.

33.Further, in the matter of Narcotic Drugs and Psychotropic Substances Act, 1985, the Honourable Supreme Court has discussed the power of the unauthorised person to conduct search and seizure in the judgment reported in 1994(3) SCC 299 [State of Punjab vs. Balbir Singh] as follows:

"Under Section 41(1) only an empowered Magistrate can issue warrant for the arrest or for the search in respect of offences punishable under Chapter IV of the Act etc. when he has reason to believe that such offences have been committed or such substances are kept or concealed in any building, conveyance or place. Likewise only empowered officers or duly authorised officers as enumerated in Section 41(2) and 42(1) can act under the provisions of the NDPS Act. Under Section 41(2) only the empowered officer can give the authorisation to his subordinate officer to carry out the arrest of a person or search as mentioned therein. The Legislature intended that only certain Magistrates and certain officers of higher rank and empowered can act to effect the arrest or search. This is a safeguard provided having regard to the deterrent sentence contemplated and with a view that innocent persons are not harassed. Therefore, if an arrest or search contemplated under Sections 41 and 42 is made under a warrant issued by any other Magistrate or is made by any officer not empowered or authorised, it would per se be illegal and would affect the prosecution case and consequently, vitiate the trial."

34.Further, in the judgment reported in 2009(1) Scale 570, in the case of Hamidbhai Azambhai Malik vs. State of Gujarat, the Honourable Supreme Court after relying upon the judgment reported in 1994(3) SCC 299 held that violation of mandatory provision would affect the prosecution case and vitiate the trial .

35.Further, in the judgment reported in 1999(6) SCC 172, the failure to follow the mandatory provision as enumerated under section 50(4) of the NDPs Act would affect credibility of the prosecution case. As per 50(4) of the NDPS Act, no female shall be searched by any one excepting a female. In that case, that was not followed and the Honourable Supreme Court held that the illicit article seized from the person of an accused, during search conducted in violation of the safeguards provided in Section 50 of the Act,cannot itself be used as admissible evidence of proof of unlawful possession of the contraband on the accused and an illegal search cannot also entitle the prosecution to raise a presumption under Section 54 of the Act because the presumption is an inference of fact drawn from the facts which are known as proved. Therefore, it is made clear from the above judgments, that when search and seizure were conducted by the persons, who are not authorised, no action can be taken on the basis of such search and seizure as the search and seizure are termed as illegal.

36.Further, in the judgment reported in 2001 CTC 554 (SC), [State of M.P vs. Bhupendra Singh] while dealing with Explosive Substances Act, the Honourable Supreme Court has held that under Section 7 of the Explosive Substance Act, 1908, the Central Government has delegated the power to District Magistrate and therefore, the State Government has no power to further delegate the power to the Additional District Magistrate and the action taken by the Additional District Magistrate is not valid. Therefore, having regard to the fact that the 4th respondent is not the competent person to take sample or conduct test, it cannot be stated that the sample was taken as per the provisions of the Motor Spirit and High Speed Diesel (Regulation of Supply, Distribution and Prevention of Malpractices) Order, 2005 as amended 2007 and hence, the entire proceedings on the basis of such illegal taking of sample is vitiated and the test conducted by the unauthorised persons cannot be the basis for terminating the agreement.

37.As I have held that the 4th respondent is not the competent person to conduct test and to take sample and therefore, the termination of dealer-ship agreement on the basis of test conducted by the 4th respondent is illegal, there is no need to consider the 3rd point raised above.

38.In the result, the writ petition is allowed. Consequently, connected Miscellaneous Petitions are closed. No costs.

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