THE HON’BLE SRI JUSTICE C.V. RAMULU Thursday, 17th August, 2006 W.P.No.10471 of 2006 Between: Malla Subba Rao and Sons … Petitioner and The Director of Civil Supplies, Government of Andhra Pradesh, Hyderabad and others … Respondents THE HON’BLE SRI JUSTICE C.V. RAMULU W.P.No.10471 of 2006 O R D E R: This Writ Petition is filed seeking a Mandamus declaring the Order of the 1st respondent in file No.E2/1557/2006, dated 18-4-2006 confirming the Order of the 2nd respondent passed in File No.Rc.330/2005, dated 4-2-2006 as arbitrary and illegal. Under the impugned Order, the wholesale kerosene dealer licence of the petitioner was cancelled on the ground that it had committed certain irregularities. The only charge against the petitioner was that the 3rd respondent-Mandal Revenue Officer, Sompeta Mandal reported that he had inspected the wholesale kerosene oil depot of the petitioner and on verification, it was found that 10,540 litres of stock in 48 drums was available against the book balance of 11,300 litres, thus there is a variation of 760 litres of kerosene oil. On enquiry, it was revealed that the wholesale dealer is doing clandestine business unauthorizedly and diverting the kerosene to black market and thus contravened the provisions of law. The 2nd respondent-Joint Collector issued a show cause notice asking the petitioner to explain as to why the wholesale dealership held by it should not be cancelled. Petitioner submitted its explanation stating that the ground stock, at the time of inspection, is 11,300 litres of kerosene oil and as per the letter of authorization, the permissible limit, even if considered as 1% in the month of April, on ground stock i.e. 60,000 litres, it would be 600 lites. If that 600 litres is added to the ground stock i.e. 10,540 litres, it would come to 11,140 litres. The ground stock in the month of May was 10,540 litres and the evaporation of 1% would come to 105 and if this is added, the total stock would be 11,245 litres. As per the stock book, the total stock in the month of May would be 11,300 litres. But, on deducting the evaporation of 1% i.e. 705 litres, the stock in the month of May would be 10,595 litres. But, the ground stock at the time of inspection was 10,540 litres. The authority has not calculated 48 tins accurately; as such, the variation of 55 litres arose. Thus, there was no variation in stocks as on the date of inspection and requested to revoke the suspension order. However, the 2nd respondent passed an Order stating that it was established that there was a shortage of 760 litres of kerosene oil, in a quantity of 11,300 litres. There are severe adverse press items appearing in local newspapers about black marketing of PDS Kerosene oil in Srikakulam District. The permissible variation calculated by the dealer is not in accordance with the rates in vogue and it is only an after-thought to escape from the guilt. Aggrieved by the same, the petitioner filed an appeal before the 1st respondent-Director of Civil Supplies, but the same was dismissed on 18-4-2006. Challenging the same, the present Writ Petition is filed. Heard both sides. The only question that falls for consideration is what is the exact procedure of calculating 1% of permissible variation in the stocks ? As per the guidelines issued by the authorities in CCS.Ref.No.E2/800/95, dated 10-7-1997 and CCS Circular No.P5/670/98, dated 15-6-1998, the variation/shortage in handling/leakage for kerosene is as follows: “At the time of stock checking, variation in actual stock and book stock is permissible to the extent of 1% of receipts, since the last check i.e. from the period when the shortage was last written off by the wholesale dealers.” It is unfortunate that the authorities have calculated the shortage on the basis of the stock available as on the date of inspection. The receipts, since the last check i.e. from the period when the shortage was last written off by the wholesale dealer, was not taken into consideration while calculating the 1% variation. Only on the basis of ground stock as available on the date of inspection, the variation was recorded and 1% of that was calculated to be 154 litres. According to the authorities, there was a variation of 760 litres when compared to the ground stock available as on the date of inspection. Therefore, it was held that there was a huge variation in the ground stock and the licence of the petitioner was liable to be cancelled. It is unfortunate that such a stand was taken by the authorities. The very clause, as noted above, would categorically indicate that variation in actual stock and book stock is permissible to the extent of 1% of receipts. There is no dispute that during the month of April and May,2005 the receipts were 60,000 litres of kerosene oil. If this is taken into consideration, the allowable variation is 600 litres. But the authorities have not accepted the contention of the petitioner that 1% of permissible variation is to be considered on the entire quantity. I am of the opinion that the conclusions reached by the authorities are contrary to their own guidelines, as noticed above. Therefore, the impugned Orders passed by the 2nd respondent on 4-2-2006 as confirmed by the 1st respondent on 18-4-2006 are liable to be set aside and are accordingly set aside. The Writ Petition is, therefore, allowed and the matter is remitted back to the 2nd respondent-Joint Collector for reconsideration. Respondent No.2 shall dispose of the matter afresh, after putting on notice and hearing the petitioner, within a period of three months from the date of receipt of a copy of this order. Till such time, the interim suspension granted by this Court on 5-6-2006 in W.P.M.P.No.13127 of 2006 shall continue. No order as to costs. 17-8-2006 prk