HIGH COURT OF CHHATTISGARH I BILASPUR WRIT PETITbN ’(C) M11658 OF 2009 Mahamaya Service Centre l‘l.[.5,QN_Eii Versus NDFNTS Indian Oil Corporation Limiied 'UO & Others m: for pronouncement of the order on ? #aay of September, 201C) Sd/- Satish K. Agnihotri Judge W HIGH CODRT OF QHHAT'DSGARH : BILA§PUR \WRIT PETITION (C) M11668 QF 2009 EETmONER Maharhaya Service Centre Versus Indian Oil Corporation Limited & Others (Writ petitions under Articie 226 of the Constitution of india) Single Bench : Hon’bie Shri Satish K. Agnihotri, J. Present :— Shri Prateek Sharma, Advocate for the petitioner. Shri P.S. Koshy, Advocate for the respondents. EESPONDENTS ORDER (Delivered on this W‘day of September, 2010) By this petition, the petitioner seeks to challenge the legality and validity of the order dated 09/03/2009 (Annexure P/1) passed by the Appellate Authority, lndian Oil Corporation Limited, Mumbai, whereby the appeal preferred by the petitioner against the order dated 01/09/2008 (Annexure P/15) was dismissed. The Retail 1 Outlet (Gramin Sewa Kendra) Dealership at Birra, Distict—Janjgir— Champa allotted in favour of the petitioner was terminated, by order dated 1/9/2008. The petitioner further seeks a direction to the respondents fof‘ Uninterrupted supply of HSD to the petitioner, in accordance with law. The facts, in short, for disposal of the case, are that on 11/12/2006 an agreement was executed between the petitioner ,nd the respondent-lndian Oil Corporation Limited (for short V “IOCL") whereby the petitioner was appointed as Dealer of Retail Outlet (Gramin Sewa Kendra) Dealership at Birra, Distict—Janjgir— : a Kg, (Vi LN Champa (for short “RO”) for sale of petrol [MS/High Speed Diesel (HSD)] of the IOCL. According to the petitioner, on 20/10/2007, the officers of the IOCL reached to the RO of the petitioner and demanded money. iOn refusal, the authorities of the IOCL conducted inspection at about 7.30 p.m. in absence 'of proper light. Thereafter, the alleged adulterated sample was taken away. On' 22/10/2007, a marker test was conducted at Bishrampur, where the petitioner put his signature on the report mentioning that ‘nt W a column No.04085481 Em W W Hé‘i %’. The marker test’report dated 22/1 0/2007 was prepared (Annexure P/5). ~ The petitioner received a show cause notice dated 07/11/2007 (Annexure P/6) whereby the petitioner was directed to explain the reasons for not turning up for witnessing the retesting of the sample at Nishatpura Lab, Bhopal on 02/1 1/2007. The petitioner submitted his reply on 15/11/2007 stating that no notice was served upon him to appear at Nishatpura Lab, Bhopal on . 02/1 1/2007. Again on 13/12/2007 (Annexure P/7) the petitioner was directed to present at Nishatpura Lab, Bhopal on 20/12/2007. The petitioner appeared on the said day, but the testing was not done. The reasons for the same are best known to the authorities of IOCL. The petitioner raised an Objection stating that no sample has been given to him and the sample take‘n by the IOCL is 6O days old, thus, he requested for taking new sample. However, without considering the objection raised I by the petitioner and behind the back of the petitioner on i T?» W W2 ....,_.::’: ’ ’ W 7’ "f 77 ' x7 L: W v’dp . ‘ "W r V #MJ » 21/12/2007, the test was conducted and the report was prepared (Annexure P/9). On 28/02/2008 (Annexure P/12) show cause notice was issued to the petitioner regarding the alleged irregularities committed by him and caiiing upon the petitioner to submit his reply within 10 days. Accordingiy, the petitioner submitted his repiy dated 11/03/2008 (Annexure P/1 3). After receipt of the repiy, by order V dated 10/09/2008 (Annexure P/15), ailotment of the RO of the petitioner was terminated. Being aggrieved by the said termination order, the petitioner preferred an appeal before the appellate authority. The appeal was dismissed by order dated 09/03/2009 in an illegal and arbitrary manner and without appreciating the points raised by the petitioner. Thus‘ this petition. Shri Sharma, learned counsel appearing for the petitioner. would submit that the inspection was conducted by the officials of the IOCL on 20/10/2007 in an abnormal atmosphere and without having proper lighting facility. The Bishrampur Lab is not a notified testing lab for conducting marker test of the HSD, as per ‘ the requirement of/MDG2005. Shri Sharma would further submit that no proper opportunity of hearing was afforded to the petitioner and even the principles of natural justice has also not V been foilowed in its letter and spirit. The test at Nishatpura Lab was conducted on 21/12/2007 behind the back of the petitioner and without considering the objection submitted by the petitioner on 20/12/2007. While dismissing the appeal of the petitioner, preferred against the termination order dated 10/09/2008, the I eppellate authority has not considered the points raised by the petitioner. 'Shri Sharma would'next submit that under the provisions of clause 2.4.2 of the Marketing. Discipline Guidelines, 2005 (for short “the MDG, 2005”) one sample is to be retained by the dealer out of three samples. Admittedly, no sample was given to the dealer for comparison. Thus, this amounts to denial of I proper opportunity of hearing. On the other hand, Shri Koshy, learned counsel appearing for 'the respondents would submit that the allegation regarding demand of money by the officers of the IOCL is absolutely baseless and false. On a routine inspection carried out by the officials, they found that the HSD was adulterated. Shri Koshy would further submit that the petitioner was noticed for being present in the sample test which was to be carried at Nishatpura I Lab, Bhopal on 02/1 1/2007 Vide letter dated 30/10/2007. Apart from the letter of intimation, the petitioner and the transporter ' were verbally instructed by the field officer to come at Nishatpura Lab on 02/1 1/2007, b/ut'the‘petitioner did not turn up. Though the petitioner reached to Nishatpura Lab on 20/12/2007 but he refused to witness the reetesting of the sample. The full clinical test was conducted on 21/12/2007 and it was established that the RO sample clid‘not meet with the specification with respect to I sulphur test, whereas the TT/Depot' Sample did meet such ,V specification. Therefore, it was confirmed that the product being r ,m\w sold at he RO of the petitioner was adulterated. After t considering ail the aspects of the matter, the termination order of allotment of RO was passed. Even the appellate authority after considering the matter from all angles rightly rejected the appeal of the petitioner and the same does not warrant any interference by this Court. " Shri Koshy would next submit that challenging the validity of the marker test procedure and its consequences, a number of petitions have been filed before many High Courts, after considering its purpose and all other relevant aspects, it has been found valid, just and in accordance with law. Thus, there is no illegality or irregularity in the marker test procedure, which ‘ had been performed by the IOCL. The subject matter of the same is a contractual dispute under the contract dated ' 11/12/2006. The petitioner, being a dealer of the IOCL is duty bound to maintain the requisite standard of the product supplied by the IOCL in order to assure the growth in business and also to maintain the goodwill of the IOCL but the petitioner has failed to do the same. Shri Koshy would also/submit that clause 8 of the Motor Spirit and High Speed Diesel (Regulation of Supply, Distribution and ' Prevention of Malpractices) Order, 2005 (for short “the Order, 2005") has been amended by nOtification dated 12/1/2007 and new control Order namely; Motor Spirit and High Speed Diesel (Regulation of Supply, Distributipn and Prevention of Malractices) Amendment Order, 2007 (for short “the p Amendment Order, 2007”) was brought in force w.e.f. 12/1/2007 (Annexure — R/1 ). vi have heard Iearned counsel appearing for the parties, perused the pieadings and the documents appended thereto. There is no dispute with regard to date of inspection of RO on 20/10/2007. It is further not in dispute that one sampie of HSD coliected from RO was not given to the dealer (the petitioner). i the test conducted at Bishrampur on 22/10/2007, which was c attended by the petitioner, the result showing pink was doubted by the petitioner. Thereafter, notice dated 13/12/2007 (Annexure —- P/7) was issued directing the petitioner to remain present at Nishatpura Lab, Bhopal on 20/12/2007 for witnessing the test. It is also not in dispute that pursuant to the said notice, the petitioner appeared on 20/12/2007, but the test was not conducted on the said date and the same was conducted on the next date i.e. 21/12/2007 without informing the petitioner. The test was conducted on 21/12/2007 at Nishatpura Lab, Bhopal, without giving information to the petitioner and at the back of the petitioner. Thus, unhes’itatingly i hold that the test on 21/12/2007 was not conducted in presence of the petitioner. 14. ' sample failure and in the event of request for testing by the dealer, the same is to be considered by the State Office/ , Regional Office / Zonal General Manager of the concerned oil z company as provided under 2.5 (D) of the MDG, 2005. The purpose of retaining a sample by the dealer is that in case of n Clus 2.5 (D of te MDG, 2005 ads as under: ae ) h re u .5 ene‘al Point t be obsrvd i cse xxx xxx xxx xxx xxx xxx xx xxx xx D n e ue ng al the m d on meits y te S e n‘al G n f ced mp‘ f t l a ta b th l c mp el Offce er ree a t bi d xue b re e f te l t p e d d MD 0 ve ovons G, 205 ha been framed in accordance with the prisi of th rder 2005. Thus, it appears that retenion of a sampl b e O t e y dea / rs e fci b e e h eer th ofials on the asis of th sample rtained by te dal. I he case o hand. admittedly he sample collected by the n t n t IC OL ws a tested at Nishatpura La, b Bhopal on 20' ‘1/12/20‘7 th ck t o th behlnd e ba of the petitioner, as here was no notitte t e petition‘er to remaih present on 21/12/2007 to witness the testing of sample. Thus, retention of a sample by the dealer becon‘ies ) I case of sampl faNure, in the event of reqst for testi by the deer, sae to be consiered r b h tate Office/ Rgional / Z‘o eneral Maager o the oncern Oil Coany I approved by GM, he sampe of retil outlet reined y e deaer along with the ounter sale retained with the Fid i/ Dil mpany are to tested s er te Co be a p h ge rra f uidlines, pefebly in presence-0 the Field Officer, RO deal/ presentativ & representative of QC Dept of the Oil Co“ after due verifiction of the samples. All he 3 samples should be tested only in the sam lab, and if possible by the am person to ensure repeatality an e se reproducibility. The ependitr incurred for such testing should e covered from the dealr. The decision o h GM, which woud be based on the test results of all he 3 samles would be decisiv an bining on all.” the ler is necessaryto cos—Check the report: prepared by \ \ 2 Gr s o ee n éill a$ x x necessary. In such a situation it cannot be ruled Out 1:h:a1 the ta$1:ing conducted by the IOCL officialS was proper, as; the ather j obligations as provided under clause 8 of the Order 2005 read with clause 2.5 (D) ofthe MDG 2005 was not followed in ite letter and spirit. Hit Reliance of the iearned counsel appearing for the respondents upon the decisions of the High Court of Jharkhand in L/liarkhand F’etm/eum Dealers Association v. Union of India and Others7, High Court of Jammu & Kashmir in Kashmir Valley Tani}: Owners v. LlOi and Othersg and High Court of Madhya Prelciesh in ‘ Bhopal Petroleum Multipurpose Dealers, lVlP. vs Union of India and Others3, are not relevant to the facts of the case on hand. as i there is no challenge to the marker test or there is no demand for supply of marker test kit by the petitioner in the instant petition 1 St requirement to give one sample to the dealer as provided under the clause 8 of the Order 2005 has been dispensed with b‘y amendment Order, 2007 is not correct on the face of it. 2 d Original clause 8 of the Order 2005 reads as under : The next contention of the respondents that the ‘statutory “8. Sampling“ :of Product.—-—(1) The authorized under clause 7 shall draw the sample from the tank, nozzle, vehicle or receptacle, as the case may be, in clean aluminum containers to check whether density and other parameters of the prodl‘ict conform to the requirements of Bureau of Indian Standards specifications number lS 2796 and lS 1460 for motor spirit and high ‘ ' We ic) Nos/38 or 2007 i r owr" No 281 of 2007 1’ i/vif' M7458 or 2007 speed diesel respectively. Where samplers 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. (2) The authorized officer shall take and seal six samples of 1 litre each of the motor spirit or three samples of 1 litre each of the high speed diesel, Two samples of motor spirit or one of high speed diesel would be given to the dealer or transporter or concerned person under acknowledgment with instruction to preserve the sample in his safe custody till the testing or investigations are completed. Two samples of Motor Spirit or one of High Speed Diesel shall be kept by the concerned oil company or department and the remainingtwo samples of Motor spirit or one of Hlgh Speed Diesel would be used for laboratory analysis; (3) The sample label shall be jointly signed by the authorized officer who has drawn the sample, and the dealer or transporter or concerned person or his representative and the sample label shall contain information as regards the products, name of retail outlet, quantity of sample, date, name of the authorized officer, name of the dealer or transporter or concerned person or his representative; (4) The authorized officer shall forward the sample of the product taken within ten days to any of the laboratories mentioned in Schedule lll or to any other such laboratctry when it ma be notified by the Government in the Offic‘ i Gazette for this purpose, for analysing with a view to checking whether the density and other parameters of the product conform to the requirements of Bureau of Indian Standard specifications number lS 2796 and IS 1460 for motor spirit and high speed diesel respectively. (5) The laboratory mentioned in sub” clause (4) shall furnish the test report to the authorized officer within, twenty days of receipt of sample at the laboratory. nr I < (6) e athorized officer $hll communicate the test re$ult to the dale transrter o concerned perso and compn, s t se y b n e days of cpt test results from the tabortory for ppopte acton Cle 8 mn e 00 p otic aus of the Aendmet Ordr 27 ublished by nificatm te 2/1/007 reas as under ; SR 18 (F—~ln exerse o e powers conferred y Seco of Essenal Cmes Ac 1955 (10 1%5) the Cetral Governen hereby mkee the fllwi oer to amd e Motor Sit and l-lig peed Dies (Reulation f Suply, Distribution and reventin f Mlactices) Orer, 2005 nely; T m r Del Rgution upp Dio nd Prveti aati nent 200 (2) It shall com into force n the date of its pblication in the Offiial Gazette. 1,(1) his Order ay be called the Moto Spirit and High Speed ies (ela of Sly, stributin a enon of Mlprcces) Amedm Order, 7. ’ e o u c XXX XXX XXX XXX XX XXX XXX XXX XXX (3) In th said orer, in clause 8.~w e d (a) r the hading ”sampli o product”, t heading “sampl of proct and testing” shl subitute. (b) after the heding an before the sb—cus (1), the fllof' sla l ned namely :u officer under clause 7 shall draw te sample rom the tank, nozz vehicle or ceptacle, a case may be, in the test ki est the proct i h ai ulae owitg ub-Cuse shal be isrte, Th u a er hr po r n thn oil ay a hé ca ma e wrthl fw reei of a arna t dad 12 d ) CI f th b tin 3 the ti omoditi t of n mt a oong rd en th pir h S el g o p Po o apr d ; am X fo e ng f he ing du at be std a d “(1A) The authorized h f zi‘e, re s the t: and t du wth te d of 1] test kit to check wheh t: product contains any trace o marker. If such traces ar fo in the product, the auo officer shall recor the same triplicate which shall be jointly signed by him and the aler 3r transporter or concened s or his representative, a case may be, and give on of such recordin to the ear or transporter or ncerned person or his-representati and another copy to the oil compa concerned, as the ca y be". in sub—clause (1), for the wors, “the authorized”, the follg shall be substitute, namely — “Where the product does o contain marker d sub—clause (1A), the author officer”. “GSR. 19 (E).—ln exercis ot' the powers conferred by Section 3 of th Essential Commodities Act, 1955 ('10 o 1955) the Central G,overnment hereby make the following order further to amen t Kerosene (Restriction on Use and Fixation o Ceiling Price) Order, 1993, namely 1m- 1.(1) This Order may be calle tl‘ie Kerosene (Restriction on Use nd ixon f Ceiling Price) Amendment Order, 2007 . (Z{ ltush‘ail come into forc on the date of its publication in the Official Gazete e e f s d he f l d a Fati o XXX XXX XXX XXX XXX XX XXX XXX XXX (3) In the said order, after clas the following clause shall be insert, namely:— “8A. Kerosene to be blended ih marker—All kerosene sold i lnd ter he s; f e und thrized d In de ( r peron s the e cony g cle co ve ny se ma d owin d : nt uner ized e t X ue B ed Wt n ia. hether under the blic striuharl systm or parallel marketin y‘srtl, sha be blded with marker t fe pars er‘ln (m) conentraln with the objective of preveig s divero r aul‘eration f or v eoleum rduct,” fl ae dr o the Clus 8 of the Ore 2005 was amended to the effect fr eading ‘sampllng of duct‘ as ubstituted by th hedi saplng of poduc an testing’. After sub-clusse (1, ub— ‘ml rt d a ) S clau (‘l ine hee mdet i ee A) was srted. Tr is no change/aenmn n sub-clse (2) of clause 8 of the Order 05, which provides fer ‘ aU 20 gi f mpl Hh S ler ving o one sae of ig peed Diesel to the dea ClatJse 8 s lso b iserted dealing ith Kerosene t be blded wth ma an b cse 8i i ker without y amendment in su-clause'(2) of lau the Order, 05. Thus, sub~clausse (2) of‘claue 8 of th of 20 s ‘ e rr, 005 remains Lin-amende and the ame oughl o l'iave Ode 2 d s t bn iven full ffect to. ee g e In Hstan indu Petroleum Corpraion ot Limited and Others v. Super Hil’y Sen/ices and Another", while considering the ‘giwa rmna ealp Cor e e ud l teition of dershi the Supreme ut observd a ner : N :ey i “31 e cancllatin of dlei Th eo earshp glent pit Is ri bte s aeme of a ay a seous usn and cat ak htl ln order o Juy the acon taken to erminate such n agreement, the authority concerned has to act fairly and in complete adherence to th‘e rules/guidelines framed for the said purpoee. The non—service of notice to the aggrieved a person before the termination of his dealership agreement also offends the well— established pnncrple that no person should be condemned unheard lt was the duly of the petitioner to ensure that Respondent ii) 3 spo 321 w pu dibt e g se'r ll en a iv t pmilio pp cta ntn it sin o dt o the ptr pos h pro w s e ang A ha a een n w o en nno be ten llgy t stif ti t ia ' m No.1 was given a hearing or at least serimm attempts were made to serve him with notwe of the proceedings before terminating his agreement 3’3 The gurdehnes being followed by the Corporation requrre that the dealer should he given prior notice regarding the test so tliqlt he or his representative also can be pie‘ Hit when the test is conducted. The néiid requirement is lri accordance with the princlples of natural Justice and the need for fairness in the mattei of terminating the dealership agreement and it cannot he made an empty formality Notice should be served on the dealer sufficiently early so as to give him adequate time and opportunity to arrange for his presence during the test and there should be admiSSible eVIdent‘ lei such serVIce of notice on the dealer“ Strict adherence to the above requirement is essential in view of the ‘possmility of manipulation in the conduct of the test if it is conducted behind the back of the dealer " With regard to the contention of the respondents that the dlS‘pLited had arising out of a contract is noticed to be rejected o a simble ground that the IOCL has been held as an organ or instr'urrientality of the State as contemplated under the ptovisions of Atticle 12 of the Constitution of India. (See Mahabfr Auto $t0res and others v. Indian Oil CorporatiOn and Othersf'). ‘ Thus, the arbitrariness, discriminatioh and unreasonableness exercised / l a . on the part of respondent Corporation can be examined by this Court under the writ jurisdiction. The test conducted ori 21/12/2007 and the report of the same was intimated to the petitioner on 28/2/2008, which was also in t ) 3 soc 752 ‘ n ‘ ‘ tattle 14 \‘v‘\’\ mntravention 0f the provisions 0f sub—clause (6) of clause 8 of the Order 2005 If is; a duty cast on the authorities of the State and the ingtr'iJITiehtalities of the State that they should foll0w the properi procfedure‘prescribed in the ruies and reguiationsi, The contravention of the same cannot be permitted. it is unc'ontr‘overted legal position that where a statute requires to do a certain thing in a certain way‘ the thing must be done in that way or' not at all. A canstitution Bench of the Supreme Court in Sukhclev Sing/r and others v. Bhagatram Sardar Singh Raghuvallshi an I d another6, observed that the rules and regulations framed by the statutory Corporations. have the force of law and, as such, the statutory authorities cannot deviate from the statutory provisions. If there is any deviation, the Court may invalid such actioris in violation of statutory rules and regulations by a legal sanction of declaration. (See Haresh Dayaram Thakur v. Mate of Maharashtra and Others7 and Prabha Shankar Dubey v. State of Mad/rye Pradesha). In Sukhdev Singh (ehpra); the Supreme Court observed as under : “33