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b) It is illegal nor to communicate the inspection report prepared in the forenoon favourable to the petitioner. Video recording was made by petitioner.

Video footage of the afternoon events show the existence of first report as admitted by the inspecting team.

c) Impugned order takes into consideration past issues contrary to Marketing Discipline Guidelines (MDG). Past issues were not subject matter of the show- cause notice. No opportunity was offered to the petitioner to offer his explanation. According to clause 8.5.5 of MDG, the issues which occurred five years prior to the current inspection should not be considered while taking penal action. The past issues which were referred to in the final order occurred in the year 2000 and 2003.

d) The mere presence of double gear per se cannot attract allegation of committing critical irregularity. Clause 5.1.4 of MDG is attracted only if it is proved that there was intention to manipulate delivery of fuel. In this case inspection report clearly disclosed that delivery was accurate, seals were found to be intact and the samples taken did not contain any impurities. Thus, what is alleged against petitioner cannot be classified as critical irregularity and thus termination of dealership is illegal.

13. Though various clauses of the contract are referred to in the operative portion of the impugned order, all those clauses deal with the generality of obligations of parties, but do not deal specifically with reference to misconduct and consequential action. The misconduct and the consequential action is codified in MDG.

14. Arbitration clause is provided in dealership agreement. Whereas termination is based on violation of clauses in MDG. MDG is not part of dealership contract. It is independent.

WHETHER THE ORDER OF TERMINATION OF DEALERSHIP OF THE PETITIONER IS VALID ?

23. The MDG classified three kinds of irregularities, which can result in appropriate penal action i.e., critical irregularity (8.2), major irregularity (8.3) and minor irregularity (8.4). The violation of clause 5.1.4 would attract critical irregularity (8.2 (iv)). Refusal by the dealer to allow drawl of sample or carry out inspection and non-availability of reference density at the time of inspection are classified as major irregularities. Major irregularity would attract suspension of sales and supplies for 15 days for the first irregularity, 30 days for the second irregularity and would invite termination of dealership, if such offences committed third time. Poor housekeeping, driveway salesmen at the ROs not in uniform/wearing badges are classified as minor irregularities, which would attract warning and guidance in the first instance, imposing of fine of Rs.10,000/- on second instance and Rs.25,000/- per irregularity on occurrence of third instance onwards.