*THE HONOURABLE SRI JUSTICE D.S.R.VARMA AND *THE HONOURABLE SRI JUSTICE R.KANTHA RAO +WRIT APPEAL No.375 of 2009 %08.09.2009 #1. Hindustan Petroleum Corporation Ltd., rep. By its General Manager. 2. The Chief Regional Manager & Duly Constituted Attorney, Hindustan Petroleum Corporation Ltd., ….Petitioners Vs. $ M/s.Haji Abdul Rehman Haji Abdulla, HPCL Dealers. …. Respondent !Counsel for the Petitioners: Sri M.Ravindranath Reddy Counsel for the Respondent: Sri S.V.Bhatt <Gist : >Head Note: ? Cases referred: [1] (1996) 3 SCC 364 2 (1990) 3 SCC 752 3 AIR 1966 SC 875 4 AIR 1984 SC 273 5 AIR 1963 SC 375 IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) TUESDAY, THE EIGHTH DAY OF SEPTEMBER TWO THOUSAND AND NINE PRESENT HON'BLE SRI JUSTICE D.S.R.VARMA AND HON'BLE SRI JUSTICE R. KANTHA RAO WRIT APPEAL No.375 of 2009 Between: 1. Hindustan Petroleum Corporation Ltd., rep. By its General Manager, 2. The Chief Regional Manager & Duly Constituted Attorney, Hindustan Petroleum Corporation Ltd. … Petitioners And M/s.Haji Abdul Rehman Haji Abdulla, HPCL Dealers. … Respondent The Court made the following: HON'BLE SRI JUSTICE D.S.R.VARMA AND HON'BLE SRI JUSTICE R. KANTHA RAO WRIT APPEAL No.375 OF 2009 ORAL JUDGMENT: - (per the Hon’ble Sri Justice D.S.R.Varma) Heard the learned counsel appearing for the appellants as well as the learned counsel appearing for the respondent. 2. This Writ Appeal is directed against the order, dated 17.02.2009, passed by a learned single Judge, allowing Writ Petition No.7235 of 2009. 3. Appellants are the respondents and the respondent is writ petitioner in the writ petition. 4. For the sake of convenience, the appellants and the respondent will be referred to as the Corporation and the writ petitioner, respectively. 5. The Writ Petition was filed seeking writ of Mandamus declaring the proceedings dated 07.03.2008, terminating the licence as arbitrary, illegal and violative of principles of natural justice. 6. The facts, which are not in dispute, are that the Corporation had conducted an inspection on 16.03.2007 at the outlet belonging to the writ petitioners, that it was routine inspection in which no lapses or any irregularities were found, that the next inspection, which is random in nature, was conducted on 16.04.2007, during which course, certain lapses have been noticed by the Corporation, that the said lapses pertaining to metering unit weights and measures seals wire found cut, that the sealing wire coming out from the metering unit and that the MS delivery found to be short by 40 KL per 5 litres. 7. Nextly, totaliser unit weights and measures seal was not put properly, without tampering the weights and measures seal and wire, the totaliser unit can be taken out and refixed as it is. The said lapses were recorded and the same were furnished to the writ petitioner and the same was acknowledged by him. Consequently, a show cause notice, dated 02.05.2007, was given to the writ petitioner pointing out the following lapses, as were allegedly found during the inspection on 16.04.2007: 1. MS Pump metering Unit W/M seal found cut. 2. Short delivery through MS & HSD dispensing units. 3. MS & HSD pump totaliser unit WEIGHTS AND MEASURES seal not intact. 8. A detailed explanation was offered by the writ petitioner on 03.08.2007, but it was found that the explanation was only with regard to the first allegation pointed out in the said show cause notice. It was specifically further stated in the said explanation that during the inspection by the Quality Control Officer it was broken at his hands, which was noticed by the writ petitioner. He specifically averred that he did not open the dispensing unit, earlier to Quality Control Officer inspection. Had it been done so, they would have rectified the said mistake with the help of weights and measures Inspector much prior. Therefore, it appears that a second show cause notice was issued on 26.09.2007 pointing out the other two lapses, which were mentioned in the first show cause notice, dated 02.05.2007, and, of course, the said two lapses were a bit dilated and the writ petitioners was called upon to explain as to why action, including that of termination of the dealership agreement, cannot be taken against him, as provided under clauses 16, 22, 31, 42, 55(j) and 55(k) of the said agreement. An explanation, dated 05.11.2007, was submitted by the writ petitioner, wherein he had pointed out that the weights and measures seal found cut was because of the fall of rain water on the pumps and consequent thereof the rain water was being entered inside the pumps and as a result, the thin sealing wire was damaged and only due to that the said lapse had taken place and, therefore, the same was beyond the control of the writ petitioner. 9. Nextly, it was pointed out that for the first time it was noticed by the writ petitioner when the Quality Control Officer opened the dispensing unit and immediately the weights and measures Inspector carried out the stamping job for the unit upon the request made by the writ petitioner. 10. As regards the short delivery, it was explained that the pumps were very old and were used since a long time and due to that there may be some variation occurred, but not for any other reason. It was only a mechanical loss, at best, and that there was no intentional involvement in the said short delivery. Similarly, it appears that a comprehensive explanation was offered by the writ petitioner on 03.08.2007. 11. It further appears that regardless of the comprehensive explanation, coupled with the explanation offered earlier, making a specific allegation that the weights and measures seal and wire were broken at the hands of the Quality Control Officer and the further explanation for the second show cause notice, the impugned order of terminating the licence was passed by the Corporation, on 07.03.2008. 12. Challenging the said order, the writ petition has been filed. 13. The learned single Judge, having considered the merits in the material, available on record, set aside the impugned order, mainly on the ground that in the absence of any rules regarding the inspection and conducting an enquiry and termination of the licence, the authorities shall act in a fair manner and in consideration with the principles of natural justice and thereby allowed the writ petition. Hence the present Writ Appeal. 14. The learned counsel Sri M.Ravindranath Reddy, appearing for the Corporation would submit that when there are no rules, there was no necessity for the learned single Judge to observe that an enquiry ought to have been conducted, in which the Corporation ought to have examined the witnesses establishing the case against the writ petitioner and in which case the writ petitioner ought to have been given an opportunity of cross-examining the witnesses. He further submits that when there are no rules, postulating such a procedure, the learned single Judge ought not to have made those observations, while allowing the writ petition. 15. It is his further submission that when the writ petitioner made certain averments, it is for him to establish his case by examining any witnesses, but not for the Corporation. In other words, the observations made by the learned single Judge, in this regard, should be in every way wrong, insofar as the method of enquiry ought to have been conducted, in the absence of any rules. 16. It is his next submission that even if there are any rules, prescribing the procedure, if no prejudice is caused to the aggrieved party, no enquiry would get automatically vitiated. In other words, the theory of prejudice is recognised by the apex Court in State Bank of Patiala vs. S.K.Sharma[1] 17. In this connection, it is pertinent to note that, admittedly, there are no rules, prescribing any procedure, as to what should be done in case where certain lapses have been allegedly committed by the dealer. 18. In such circumstances, the question before the learned single Judge appears to be that, can the Corporation automatically terminate the licence merely basing on the inspection report, without verifying the element of truth in the explanation offered by the writ petitioner? 19. The learned single Judge had relied on a judgment rendered by the apex Court in Mahabir Auto Stores and others vs. Indian Oil Corporation and others[2], wherein it was pointed out thus: - “…In appropriate cases, actions uninformed by reason may be questioned as arbitrary in proceedings under Article 226 or Article 32. Though it may not be necessary to give reasons but in the field of this nature fairness must be there to the parties concerned. So, whatever be the activity of the public authority, in such monopoly or semi monopoly dealings, it should meet the test of Article 14….. Whether a case involved public law or private law rights depends upon the facts and circumstances of the case. The dichotomy between rights and remedies cannot be obliterated by any strait jacket formula…..” 20. Eventually, the learned single Judge had observed that, in the case on hand, mere charge and explanation were not sufficient to hold the writ petitioner was guilty of the alleged act. It could have been fair on the part of the Corporation if the Inspecting Officer was called and examined in the matter and the writ petitioner was given an opportunity to cross-examine him, to elicit the truth or otherwise as to breaking of the seal. 21. In this regard, it is the serious contention of the learned counsel for the Corporation that there was no such relief sought by the writ petitioner nor any procedure was contemplated anywhere. It is his submission that it is only the terms and conditions of the agreement that govern the field. Therefore, in the absence of any such rules, as regards the factual position, particularly regarding the malpractices or lapses, as the case may be, found to have been perpetrated by the writ petitioner, the same ought to be enquired into in a fair and reasonable manner, only in order to show that a fair enquiry apparently was conducted before resorting to the extreme step of terminating the licence. Otherwise, the corollary would be the likelihood of power being exercised arbitrarily by the instrumentalities of the State, while performing their contractual obligations. 22. The terms and conditions of the contract are different from enquiring into the allegations levelled against the perpetrator of the alleged irregularity like the writ petitioner. If the Corporation is given such a long rope just to point out the irregularities or lapses, as the case may be, by way of calling for an explanation, without assigning any reasons to reject the explanation and terminating the contract, the same would amount to conferring an unfiltered power on the authority like the Corporation. 23. That is precisely the reason why, at least, there should appear that an enquiry is conducted in a fair and reasonable manner, particularly, in the absence of any prescribed procedure, by way of rules or regulations. 24. It is to be further seen that there is a specific averment made by the writ petitioner that weights and measures Seal was found broken at the hands of the Quality Control Officer. Therefore, there is divergence in the views. In this regard; the version of the corporation is that it was found cut, obviously attributable to the writ petitioner and the version of the writ petitioner is that it is broken in the hands of the Quality Control Officer during inspection. 25. In such a case, the submission of the learned counsel for the Corporation is that the burden of proving the allegation levelled by the Corporation lies with the writ petitioner only, but not with the Corporation. This submission cannot be accepted for the simple reason that the original allegation was levelled by the Corporation against the writ petitioner, which was made basis among other grounds for terminating the licence. 26. In such an event, the burden does lie always on the person or authority who made that allegation initially. The explanation offered and the statement made therein is more or less only in the nature of refuting the allegation levelled against him. 27. The genesis, in other words, is the allegation levelled by the Corporation against the writ petitioner only. In such a case, the burden can never be shifted to the writ petitioner to prove his innocence. 28. The learned counsel for the corporation further places reliance on the judgments of the apex Court in H.S. & I.E. Board, U.P. vs. Bagleshwar[3] and K.L.Tripathi vs. State Bank of India[4]. 29. In the above case (3 supra) the apex Court observed that where no animus is suggested and no mala fides have been pleaded, the enquiry conducted should be treated as a fair enquiry, after giving reasonable opportunity to make the defence. It was further observed that in the matter of adoption of unfair means, direct evidence may some times be available, but cases may arise where direct evidence is not available and the question will have to be considered in the light of probabilities and circumstantial evidence. This problem which educational institutions have to face from time to time is a serious problem and unless there is justification to do so, Courts should be slow to interfere with the decisions of domestic Tribunals appointed by educational bodies like the Universities. 30. In State of Mysore vs. Shivabasappa Shivappa Makapur[5], the apex Court observed that the tribunals exercising quasi-judicial functions are not Courts and therefore they are not bound to follow the procedure prescribed for trial of actions in Courts nor are they bound by strict rules of evidence. They can, unlike Courts, obtain all information material for the points under enquiry from all sources, and through all channels, without being fettered by rules and procedure, which govern proceedings in Court. The only obligation which the law casts on them is that they should not act on any information which they may receive unless they put it to the party against whom it is to be used and give him a fair opportunity to explain it. What is a fair opportunity must depend on the facts and circumstances of each case but where such an opportunity had been given, the proceedings are not open to attack on the ground that the enquiry was not conducted in accordance with the procedure followed in courts. 31. The said observations of the apex Court made in the above cases are also unexceptionable but the peculiarity in the present case is also to be noticed that the Corporation is neither a tribunal nor a Court nor a quasi-judicial authority. On the contrary, it has been acting only as a party to the contract and was trying to see that the contractual obligations are performed in a right perspective. If there is any deviation found, the same has to be established upon an enquiry caused in a fair manner much on account of the non-availability of any prescribed procedure. But, while seeing the implementation or compliance of the contractual obligations, if the authority like the Corporation proceeds on the footing that the writ petitioner had committed some irregularities or found some lapses, it cannot unilaterally resort to take extreme step of terminating the licence. Any such extreme action should be preceded by a reasonable enquiry, at least, appearing as fair and reasonable. 32. In K.L.Tripathi’s case (4 supra), the apex court discussed about the basic concept of fair play in the action of administrative, judicial or quasi-judicial. While explaining what is fair play in action, it is observed that such fair play must depend upon the particular lis, if there be any, between the parties; that in case of dispute, right of cross-examination must inevitably form part of fair play in action, but where there is no lis regarding the facts but certain explanation of the circumstances, there is no requirement of cross-examination to be fulfilled to justify fair play in action. 33. Again we reiterate the same view, as was expressed by us in the earlier paragraph. In all these cases referred above, it is to be remembered that the actions of the tribunals, the Courts or the quasi judicial authorities, while dealing with a lis, were under question and the apex Court, basing on the facts and circumstances of each case, made those observations, which are unexceptionable. 34. But, as already pointed out by us, this is totally a different kind of lis. This is a case where an action of termination of licence was resorted to by the Corporation, which is a part of contractual obligation, being a party to the contract. 35. Therefore, the dispute, if any, particularly, on the factual aspects shall not be treated as a lis, pending before the Court or tribunal or a quasi-judicial authority and, therefore, again as pointed out by the learned single Judge, basing on the judgment rendered by the learned apex Court, in Mahabir’s case (2 supra), reasonable and fair opportunity to go into the disputed questions have to be gone into and, if necessary, particularly, when the extreme action as stated to be taken, it is imperative on the part of the Corporation to conduct at least a sort of enquiry, which appears to be fair, though not in a strict sense, but absolutely fair because there are no rules, which alone can decide as to whether formalities are strictly adhered to or not. 36. Lastly, we may have to observe that the standard of enquiry to be conducted by a judicial authority, or a Court or a quasi-judicial authority, is different from the standard of enquiry that is expected to be conducted by an authority like the Corporation. It does not mean that the Corporation can proceed and resort to terminate the licence by simply calling upon the writ petitioner to offer an explanation and without assigning any reason can reject and can proceed further. 37. In that context, the learned single Judge had examined the matter before him and made certain observations regarding the method of conducting an enquiry. We make it clear that the enquiry that was expected by the learned single Judge to be conducted need not necessarily be and strictly be in the same method. 38. In other words, no straight jacketed method has been carved out by the learned single Judge as regards the conduct of the enquiry. 39. What all was pointed out by the learned single Judge was a reasonable enquiry ought to have been conducted before arriving at any conclusion, which may result in terminating the licence of the writ petitioner. 40. Therefore, we have no option except to agree with the findings recorded by the learned single Judge, while allowing the writ petition. 41. The learned counsel appearing for the Corporation, at this stage, makes a request that the Corporation be given liberty to conduct an enquiry, without prejudice to the contentions raised earlier. 42. But, having regard to the facts and circumstances, it is not proposed to make any further observations in this regard. 43. For the foregoing, the Writ Appeal is lack of merits and the same is liable to be dismissed. 44. In the result, the Writ Appeal is dismissed. However, there shall be no order as to costs. ________________________ JUSTICE D.S.R.VARMA _________________________ JUSTICE R.KANTHA RAO 08.09.2009. Lmv Note: LR Copy to be marked [1] (1996) 3 SCC 364 [2] (1990) 3 SCC 752 [3] AIR 1966 SC 875 [4] AIR 1984 SC 273 [5] AIR 1963 SC 375