IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) TUESDAY, THE TWENTY SIXTH DAY OF AUGUST TWO THOUSAND AND EIGHT PRESENT THE HON'BLE MR JUSTICE GODA RAGHURAM WRIT PETITION NO : 18501 of 2008 Between: M/s.K.A.N.& Sons, Dealer :Hindustan Petroleum Corporation Ltd., 75 Feet Road, Visakhapatnam-530001 rep.by its Authorised representative Sri K.Venkanna ..... PETITIONER AND Hindustan Petroleum Corporation Limited, Rep. by its Chief Regional Manager & Duly Constituted Attorney, Visakhaa Regional Office Petero Nilayam, PB No. 135, Visakhapatnam 500 033. .....RESPONDENT Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Aﬃdavit ﬁled herein the High Court will be pleased to to issue a Writ, in the nature of a Writ of Mandamus or any other appropriate Writ, direction or order declarng the Order Ref. VRO/BVK/LVR/RET, dated July 22, 2008 served on the petitioner on 21/08/2008 of the Chief Regional Manager & Duly Constituted Attorney, Hindustan Petroleum Corporation Limited, the respondent herein, as illegal and void; and pass Counsel for the Petitioner:MR.P.KAMLAKAR Counsel for the Respondent No.: MR.T.SRINIVAS The Court made the following : THE HON’BLE SRI JUSTICE GODA RAGHURAM W.P.No. 18501 of 2008 Oral Order: Heard the learned counsel for the petitioner and Sri Srinivas learned counsel for the respondent- Petroleum Corporation. By the impugned order dated 22-07-2008 after a due process of notice and opportunity, the respondent-Corporation passed an order terminating the dealership agreement dated 19-03-2002 between the respondent and the petitioner under which the petitioner was authorized to run a retail outlet dealership for petroleum products accredited to the respondent-Corporation. The oﬃcials of the respondent-Corporation inspected the business premises of the petitioner on two earlier occasions on 12-10-2007 and 24-03-2008 and found no irregularity and recorded that the weights and Measures seals are intact; the totaliser seals are intact and that the delivery of Motor Spirit (MS) and High Diesel Spirit (HSD) is correct and not either short or excess. The other parameters of the quality of petroleum products vended was also found to be within the authorized parameters. Another inspection was made of the petitioner’s unit on 10-04-2008. In this inspection while no transgression was found with regard to the weights and measures seals; the totaliser seals or the quantity or quality of the MS and HSD, the inspection team recorded that in respect of one of the vending units relating to HSD “duplicate gears observed”. On this irregularity noticed, the sales in all the four vending units two of MS and two of HSD were suspended and the meter and dip readings as on the date and time of suspension of sales were recorded. Aggrieved by the total suspension of the operations ordered by the respondent-Corporation, the petitioner approached this Court by way of W.P.No.8198 of 2008. The said writ petition was disposed of by the order dated 16-04-2008. This Court observed that since the irregularities were recorded only in respect of one vending unit pertaining to HSD and since an enquiry into the irregularity alleged in respect of this vending unit is pending consideration by the respondent- Corporation, the ends of justice would be achieved by permitting the petitioner to conduct sales in respect of other dispensing units while conﬁning the suspension of the sales to the vending unit of HSD in respect of which the irregularities were noticed viz., employment of duplicate gears. Thereafter the respondent-Corporation issued a show cause notice on 20-05-2008 alleging unauthorized alteration of the speciﬁed HSD dispensing unit by introducing a duplicate (additional) gear and alleging that the duplicate gear was added with a view to manipulating the deliveries. This show cause notice intimated to the petitioner that this conduct of the petitioner constitutes contravention of Clauses 15, 16, 22, 42 and 55 (K) of the Dealership Agreement dated 19-03-2002 entered into between the parties. On 23-05-2008, the petitioner submitted an explanation to the show cause notice controverting the several allegations as also the allegation that the petitioner’s conduct or the irregularities found in the dispensing unit pertaining to HSD Unit were in contravention of the clauses of the Dealership Agreement. More particularly, in paragraph No.3 of the explanation dated 23-05-2008, the petitioner asserted that at the inspection on 10-04-2008 in respect of which a report was draw up, the weights and measures seals were seen to be intact; that the gear unit is not visible nor the duplicate gears; that unless the weights and measures seals are tampered, the gears cannot be touched; and that the inspecting oﬃcers could not have observed that the dispensing unit had duplicate gears unless the weights and measures seals are removed and the dispensing unit is opened for inspection. The petitioner also adopted the position that the inspection team could not have opened the dispensing unit without removing the weights and measurers seals and this could not have been done in the absence of oﬃcers of the Weights and Measures Department. The petitioner stated that the Weights and Measurers Department Oﬃcers were never called before breaking the weights and measures seals and therefore no action is called for. In substance, the defense of the petitioner as set out in paragraph No.3 of the explanation dated 23-05- 2008 is that there was no physical possibility of the petitioner having manipulated the gears section of the unit by adding the duplicate gear without entering into the dispensing unit after removing the weights and measures seals. Since the weights and measures seals were found to be intact in the inspection on 10-04-2008 as recorded in the proceedings of that date, the allegation that the petitioner had indulged in or has facilitated some agency within the petitioner’s control to alter the gears in the dispensing unit, is factually incorrect, was the clearly asserted defence. The respondents passed ﬁnal orders on 22-07- 2008 merely recording that in the inspection on 10- 04-2008 it is observed that there is an additional ﬁtting i.e., a duplicate gear (double gear) in the metering unit which is a clear violation of Clauses 15,16, 22 and 42 of the Dealership Agreement dated 19-03-2002 and that as the petitioner qua Clause 42 of the Dealership Agreement dated 19-03-2002 undertook ﬁdelity to the clauses of agreement and to the directions or rules by the respondent-Corporation under the Dealership Agreement, the petitioner is seen to have contravened Clause 42 of the Dealership Agreement ‘by indulging in the malpractice of using additional fittings i.e., duplicate gear (double gear).’ The ﬁnal order of the respondent-Corporation dated 22-07-2008 (impugned in the writ petition) neither expressly nor by any discernable implication addresses the aforestated defense of the petitioner as is set out in paragraph No.3 of the explanation dated 23-05-2008. The transgression by the petitioner of Clauses 15,16, 22 or 42 of the Dealership Agreement would arise only if the petitioner has itself or through an agency authorized by it permitted alteration of the equipment. Even though in certain circumstances no direct evidence may be possible, an inference of such transgression may legitimately be drawn, if there is an alteration of the equipment and if it could be established that such alteration is possible only either by acts of commission or omission on the part of the petitioner. In the context of the petitioner’s explanation wherein he takes the speciﬁc position that in view of the intact seals of weights and measures department as found in the inspection report dated 10-04-2008, the petitioner could not have physically entered into the metering area of the dispensing unit, the respondents were required to analyze this defense and record a conclusion on this aspect. In the absence of such analysis, the conclusion of malfeasances by the respondents is an ipsi dixit and not a reasoned order, permissible in a quasi judicial proceedings. The impugned order visits the petitioner with adverse civil consequences at the hands of the respondents which is an agent and instrumentality of the State and these adverse civil consequences are inﬂicted on recording of misconduct on the part of the petitioner impacting the petitioner’s commercial future as well as its reputation and possibly disentitles the petitioner to any future relationship with the respondent- Corporation. Greater care and concern must reﬂect in an order of termination of the dealership. No such care is discernable in the impugned order. On the analysis above, the order of the respondent-Corporation dated 22-07-2008 is set aside. The respondents shall reconsider the entire issue in the light of the allegations set out in its show cause notice dated 20-05-2008 and duly taking into account the explanation of the petitioner contained in the petitioner’s response dated 23-05-2008 and shall pass a fresh order in the light of the observations set out in this judgment. This Court in the judgment dated 16-04-2008 in W.P.No. 8198 of 2008 permitted the petitioner to pursue the business in three of the dispensing units, one HSD and two MS units except the HSD dispensing unit in respect of which the petitioner is alleged to have indulged in transgression of the conditions of the Dealership Agreement dated 19-03- 2002 viz., DU MIDCo. Sl.No. 04KH 1038 V (HSD). In the facts and circumstances of the case pending de nov o orders to be passed by the respondents as directed herein, the petitioner may pursue business of vending petroleum products in the other dispensing units except the one in respect of which the enquiry is pending with the respondents. The writ petition is disposed of as above. There shall be no order as to costs. ____________________ GODA RAGHURAM, J Dated: 26-08-2008 pvks Nb:- Furnish c.c. as soon as possible. B/o pvks