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4."

(b) Sub-Clause (B) of Clause 4 of the said Order provides that while exercising the power of seizure under Clause 4 (A) (iv) the authorised officer shall record in writing the reasons for doing so, a copy of the which shall be given to the dealer.

10. According to the appellant, in the present case, no such reasons in writing were provided.

(c) Clause 5(2) of the said Order lays down the procedure for sampling of product which provides that "the Officer authorised in Cl. 4 shall take, sign and seal six samples of 1 litre each of the Motor Spirit or 2 of 1 lit. each of the High Speed Diesel, 2 samples of the Motor Spirit (or one of High Speed Diesel) would be given to the Dealer or transporter or concerned person under acknowledgement with instruction to preserve the sample in his safe custody till the testing or investigations are completed, 2 samples of MS (and/or one of HSD), would be kept by the concerned Oil Company or department and the remaining  two samples of MS (and/or one of HSD) would be used for laboratory analysis."

16. According to the appellant, it is clear that the samples were collected in violation of mandatory procedure of law as provided under the said Order and therefore the termination order passed on the basis of test reports of samples so collected is completely illegal and liable to be set aside.

17. The appellant relied on the case of Harbanslal Sahnia and Another v. Indian Oil Corporation Ltd. and Another (2003) 2 SCC 107, wherein the Indian Oil Corporation  terminated the dealership of Harbanslal Sahnia on the basis that the sample drawn from the petrol pump did not meet the standard specification. This Court found that two government orders providing for the procedure for taking samples had been violated and in view of the same found that the failure of the sample taken became irrelevant and non-existent fact which could not have been relied upon for terminating dealership, and quashed the order terminating the dealership and restored possession. It is submitted that the fact that two samples were not left with the appellant is not only a violation of the mandatory principles of law but also of fair play and natural justice as the appellant is deprived of its valuable right to contest the veracity of the test reports. This provision of law is the single most important check on arbitrary action by the respondent.

41. The respondent also submitted that the respondent-

Corporation did not show any haste in getting the samples tested. The samples were drawn and tested as per the  procedure laid down and on the receipt of the results indicating the adulteration of products. Thus, the action contemplated under the provisions of the DPSL Agreement dated 28.01.1971 was taken.

42. The respondent-Corporation denied that the action initiated against the appellant was in any manner mala fide or manipulated for grabbing the business outlet on the false pretext. The respondent-Corporation also submitted that reliance cannot be placed upon the Report submitted by the IIP Dehradun as the tests conducted by them do not comply the specifications laid down by the Bureau of Indian Standards. Moreover, the IIP, Dehradun did not conduct the RON Test. Not following the specifications and conducting of the RON Test was essential for testing the quality and the specification of the ULP for meeting specifications of the Motor Spirit.

48. Mr. Mukul Rohtagi, learned Senior Advocate appearing for the appellant in support of his contentions placed reliance on some of the following judgments.

49. In Harbanslal Sahnia and Another (supra), the Court dealt with the question of termination of dealership by the Indian Oil Corporation Ltd. In this case, it was asserted before this Court that dealership has been terminated on irrelevant and non-existent grounds, therefore, the order of termination is liable to be set aside. In this case, there has not been compliance of the procedure. The failure of the sample taken from appellants' outlet on 11.2.2000 becomes an irrelevant  and non-existent fact which could not have been relied on by the respondent Corporation for cancelling the appellants' licence.