IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN WEDNESDAY, THE 14TH JANUARY 2009 / 24TH POUSHA 1930 OP.No. 22544 of 2002(H) ----------------------- PETITIONER(S): --------------- M/S.JANATHA TRADING COMPANY, IOC DEALERS, VADAKKANCHERRY, PALAKKAD-678683, REPRESENTED BY ITS MANAGING PARTNER SUNIL GEORGE. BY ADV. SRI.K.JAJU BABU SMT.M.U.VIJAYALAKSHMI RESPONDENT(S): --------------- 1. INDIAN OIL CORPORATION LTD., COCHIN DIVISIONAL OFFICE, PANAMPILLY AVENUE, PANAMPILLY NAGAR P.O., KOCHI-682036, REPRESENTED BY ITS GENERAL MANAGER. 2. THE DEPUTY GENERAL MANAGER (MARKETTING) INDIAN OIL CORPORATION LTD., COCHIN DIVISIONAL OFFICE, PANAMPILLY AVENUE, PANAMPILLY NAGAR P.O., KOCH-682 036. 3. THE SENIOR DIVISIONAL MANAGER (MARKETTING DIVISION), INDIAN OIL CORPORATION LTD. COCHIN DIVISIONAL OFFICE, PANAMPILLY AVENUE, PANAMPILLY NAGAR P.O., KOCHI-682036. ADV. SRI.E.K.NANDAKUMAR FOR R2,3 SRI.A.K.JAYASANKAR NAMBIAR FOR R2,3 SMT.PRIYA MAHESH FOR R2,3 SMT.PRIYA MANJOORAN FOR R2,3 THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 14/01/2009, THE COURT ON THE SAME DAY, DELIVERED THE FOLLOWING: PETITIONER'S EXHIBITS: O.P.NO. 22544/2002. ----------------------------------------------------------------- EXT.P1 TRUE COPY OF INTIMATION DT. 4-3-2002. EXT.P2 OBJECTIONDT. 15-3-2002. EXT.P3 LETTER DT. 21-3-2002. EXT.P4 INTIMATION DT. 16-5-2002. EXT.P5 OBJECTION DT. 22-5-2002. EXT.P6 ORDER DT. 23-7-2002. EXT.P7 AGREEMENT DT. 12-4-1988. EXT.P8 RELEVANT EXTRACT OF MDG-2001. EXT.P9 OFFICIAL RELEASE GIVEN BY CBI ON 19-4-2004. EXT.P10 NEWS REPORT DT. 22-5-2004. EXT.P11 COMMUNICATION DT. 29-6-2004. RESPONDENTS' EXHIBITS: ------------------------------------- EXT.R3(a) GAZETTEE DT. 11-5-2001. EXT.R3(b) LETTER DT. 27-2-2002. EXT.R3(c) WORK ORDER DT. 19-9-2001. [TRUE COPY] P.S TO JUDGE. S. Siri Jagan, J. =-=-=-=-=-=-=-=--=-=-=-=-=-=-=-=-=-= O.P. No. 22544 of 2002 =-=-=-=-=-=-=-=-=--=-=-=-=-=-=-=-=-= Dated this, the 14th January, 2009. J U D G M E N T Petitioner is a dealer of the 1st respondent-Oil Company for sale of petroleum products manufactured by the 1st respondent Company. By Ext. P1, the petitioner was directed to show cause why action should not be taken against the petitioner under the dealership agreement/Marketing Discipline Guidelines, on account of the samples taken by the Anti Adulteration Cell from the retail outlet of the petitioner having tested negative in quality. The petitioner filed Ext. P2 reply to the same in which, inter alia, he requested that the tank lorry sample and retention sample from the supply point in respect of the product supplied to the petitioner also may be subjected to lab test and compared with the test report of the sample taken from the retail outlet on 19-1-2002, before taking any further action. In the same, he also requested for a re-test of the sample taken from the outlet. Although, by Ext. P4, re-test of the second sample taken from the petitioner's outlet was ordered, the other request of the petitioner to subject the sample from the tanker lorry and the supply point to lab test was not acceded to. Thereafter, by Ext. P6, the dealership agreement with the petitioner was terminated on the ground that the petitioner was found guilty of adulteration of the petroleum products supplied to them on the basis of the test report forwarded by the Anti-Adulteration Cell. The petitioner is challenging Ext. P6 in this original petition and seeking the following reliefs: “i) Issue a writ of certiorari or other appropriate writ, order or direction, calling for the records leading to Ext. P6 and quash the same; O.P. No. 22544/2002 -: 2 :- ii) direct the respondents to restore the dealership and supply and sales to the petitioner's retail outlet forthwith; iii) stay the operation of Ext. P6 and restore supply and sales to the petitioner's retail outlet, pending disposal of the original petition.” 2. The contention of the petitioner is that the action against the petitioner being under Marketing Discipline Guidelines, a copy of which has been produced as Ext. P8, the procedure prescribed in Ext. P8 should also be complied with before finding the petitioner guilty. He points out that the Marketing Discipline Guidelines contemplated testing of three samples, namely, the sample drawn from the outlet, sample taken from the tanker lorry and the samples kept at the supply point in respect of the particular supply to the dealer through the tanker lorry and compare the results of all the three before a dealer can be found guilty of adulteration. According to him, in this case, only one sample has been tested, that was from the outlet alone. There is no comparison of the results of the tests of the other two samples in this case. But, he frankly admits that in so far as the tanker lorry sample kept by him was not properly sealed, he cannot now validly claim that the test results of the tanker lorry sample should also be compared with now. But he submits that the respondents were bound to compare the test results of the supply location sample with the test result of the sample from the outlet before the petitioner can be found guilty under the Marketing Discipline Guidelines. 3. The prayers of the petitioner are stoutly opposed by the learned standing counsel for the respondents with the help of a counter affidavit and an additional counter affidavit filed in this case. The contention of the respondents is that the action taken against the petitioner is not under the Marketing Discipline Guidelines. The O.P. No. 22544/2002 -: 3 :- inspection of the petitioner's outlet and drawing of samples were by the Anti Adulteration Cell under the Motor Spirit and High Speed Diesel (Regulation of Supply, Distribution and Prevention of Malpractices) Order, 2005, which is the successor of the earlier order of 1998. According to counsel for the respondents, the said order does not contemplate testing of the supply location sample as provided in the Marketing Discipline Guidelines. The Anti Adulteration Cell team inspected the petitioner's outlet, took samples from the petitioner's outlet, tested the same, found it to be negative for quality and forwarded it to the respondents for appropriate action under the Marketing Discipline Guidelines. Since the test result proved that there was adulteration in the sample, Ext. P1 show cause notice was issued and after considering the contentions of the petitioner and taking into account the fact that earlier also, the petitioner was found guilty of adulteration of LDS on 13-10-2001, the dealership agreement with the petitioner was terminated. According to learned counsel for the respondents, the procedure prescribed under the Marketing Discipline Guidelines is not applicable to the action initiated by the Anti Adulteration Cell under the order mentioned above. The said order prescribes a separate procedure of sampling and testing and the Anti Adulteration Cell is expected to follow only that procedure and following that procedure, the test results of the samples from the petitioner's outlet was forwarded to the respondents, on which action was taken. According to counsel, once the Anti Adulteration Cell forwards the results, the respondents are expected only to take further action on the basis of that report and further there is no question of complying with any other procedure prescribed under the Marketing Discipline Guidelines. He further submits that this Court, in the decision in Pratheesh Fuels v. O.P. No. 22544/2002 -: 4 :- Indian Oil Corporation, 2002(1) KLJ 186 held that even principles of natural justice have to be subservient to public interest as the well being of citizens are the ultimate aim of the regulations. He points out that the entire action taken by the respondents is for the purpose of ensuring that the interests of the citizens are protected and therefore public interest demands that for non-compliance with any procedure under the Marketing Discipline Guidelines, if at all applicable, which itself is disputed, the petitioner should not be absolved of the misconduct committed by him in selling adulterated fuel to the public. 4. Counsel for the petitioner points out that the reliance on the 2005 order itself is misplaced in so far as the sampling in this case was on 19-1-2002 at which time what was applicable was the 1998 order, which did not even contemplate forwarding of any test report by the Anti-Adulteration Cell to the respondents for any action under the Marketing Discipline Guidelines and as such the contention of the respondents that they are bound to accept the test result forwarded by the Anti-Adulteration Cell itself cannot be accepted at all. 5. I have considered the rival contentions in detail. 6. From Ext. P2 reply of the petitioner to Ext. P1 notice, I find that immediately on receipt of Ext. P1 show cause notice itself, the petitioner had submitted Ext. P2, in which there was a categoric request that the tank lorry sample and supply point samples should be subjected to test and its report should be compared with the test report of the outlet sample. It is not disputed before me by the respondents that the supply location sample had not been tested and compared with the test report forwarded by the Anti Adulteration Cell to the respondents. It is also not disputed before me by the respondents that in Ext. P8 Marketing Discipline Guidelines, a O.P. No. 22544/2002 -: 5 :- procedure of comparing the test result of the outlet sample with the supply location sample is contemplated before action is taken under Marketing Discipline Guidelines. If the respondents themselves had initiated the proceedings against the petitioner under the Marketing Discipline Guidelines, they could not have found the petitioner guilty, unless they compared the test result of the outlet sample with the supply location sample and found that both of them tallied. 7. Ext. R3(b) produced by the respondents is the communication from the Anti Adulteration Cell to the respondents which reads thus: “This has reference to the inspection carried out at your Retail Outlet, Janatha Trading Co., Vadakkencherry, Palghat Dist., Kerala on 19.01.2002. We are enclosing herewith the copies of the test reports of MS/HSD samples drawn from the RO. HSD sample drawn failed in distillation test. Therefore, necessary action may be taken as per MDG-2001. Kindly confirm action taken to DG, AAC, New Delhi with a copy to us.” (Underlining supplied) Therefore, what was under contemplation by the Anti Adulteration Cell was further proceedings as per Marketing Discipline Guidelines, 2001. In fact, Ext. P1 show cause notice was issued to the petitioner for action as per the dealership agreement/Marketing Discipline Guidelines. 8. In this connection, it must be noted that the supply location sample is to be mandatorily preserved by the respondents themselves in respect of every supply made from the supply location to the dealers. That sampling could not have been done by the Anti O.P. No. 22544/2002 -: 6 :- Adulteration Cell for obvious reasons. Therefore, when the Anti Adulteration Cell forwarded the test result of the outlet sample for further action under the Marketing Discipline Guidelines, I am of opinion that such action could have been completed only after following the procedure prescribed in the Marketing Discipline Guidelines for action by the respondents themselves, if they had initiated action before the petitioner could have been found guilty of any adulteration. One of the conditions mentioned in the Marketing Discipline Guidelines, Ext. P8, admittedly, is that the supply location sample test results have to be compared with the test result of the outlet sample. In spite of repeated assertion by the counsel for the respondents that in so far as the 2005 order or the 1998 order does not contemplate such a procedure, I am unable to accept that contention in view of the fact that the respondents could not have taken any action against the petitioner except under the Marketing Discipline Guidelines. In fact, in this connection, the contention of the petitioner that what was applicable was not the 2005 order but the 1998 order, which did not even contemplate forwarding of the test result by the Anti-Adulteration Cell to the respondents for any action, but, only contemplated prosecution by the Anti-Adulteration Cell by themselves, which the Anti-Adulteration Cell had not chosen to do in this case. Therefore, admittedly, the petitioner was found guilty of adulteration without complying with the procedure prescribed under the Marketing Discipline Guidelines, which I have already held the respondents should have mandatorily complied with before the petitioner could have been found guilty. The reliance by the respondents on the decision in Pratheesh Fuels' case (supra) is misplaced. The facts of that case are not at all comparable with the facts of this case. There, the contention was that the very same O.P. No. 22544/2002 -: 7 :- samples were not subjected to a fresh laboratory test and the petitioner in that case was not intimated about the results. Further, counsel for the petitioner relies on the Supreme Court decision in Harbanslal Sahnia & another v. Indian Oil Corporation Ltd. & others, (2003) 2 SCC 107 to show that where there is failure of principles of natural justice in cases of termination of dealership which is the bread and butter of the dealer, the court should necessarily interfere. Here is a case where the petitioner has been found guilty without complying with the procedure prescribed by the respondents themselves in their own Marketing Discipline Guidelines. The very intention of prescribing comparison between the test result of the supply location sample with that of the outlet sample is to obviate the possibility of any manufacturing defect at the supply point itself. Therefore, the respondents themselves had in their contemplation a possibility of the supply itself being defective. When they themselves contemplate ruling out such a possibility before finding a dealer guilty of adulteration, I do not think that the petitioner could have been found guilty without ruling out that possibility, especially when the respondents themselves had prescribed such elaborate procedure for finding a dealer guilty. Further, nothing prevented the respondents from testing the supply location sample also because all along that sample was in their possession and nothing whatsoever prevented them from testing the same also and comparing the result with the result forwarded by the Anti-Adulteration Cell. In the above circumstances, in the absence of test result of the supply location sample, I am satisfied that the petitioner could not have been found guilty of adulteration as has been done by Ext. P6. In the above circumstances Ext. P6 is quashed. The O.P. No. 22544/2002 -: 8 :- respondents are directed to re-start the supply and sales to the petitioner's retail outlet within a period of one month from the date of receipt of a copy of this judgment. The original petition is allowed as above. S. Siri Jagan, Judge. Tds/