V.GOPALA GOWDA, CJ & INDRAJIT MAHANTY, J. W.P.(C) NO.17279 OF 2009 (Decided on 22.09.2010) M/S. BINODINEE KISSAN SEVA KENDRA ……… Petitioner. .Vrs. INDIAN OIL CORPORATION LTD. & ORS. ……... Opp.Parties. CONSTITUTION OF INDIA, 1950 – ART.14,16, 19, 21. For Petitioner - M/s. Santanu Kr.Sarangi, Sundeep Kr.Sarangi, B.Behera & J.Acharya. For Opp.Parties – Mr. Sanjit Mohanty, Sr.Advocate M/s. S.Pattnaik, R.R.Swain, A.Mohapatra, A.Mohapatra, A.Mohanty & A.Mehar. V.GOPALA GOWDA, C.J. This writ petition has been filed by a retail outlet dealer of petrol, diesel and petroleum products in the name and style M/s. Binodinee Kissan Seva Kendra initially questioning the legality of the show cause notice dated 4.11.2009 issued to it under Annexure-11. 2. This Court vide order dated 7.12.2009 issued notice to opposite parties 2 and 3 by special messenger and thereafter matter was being adjourned and further, on account of the subsequent event that had taken place, the order of termination of petitioner’s dealership dated 24.02.2010 under Annexure-12 was passed. During pendency of the writ petition, an amendment petition was filed in this writ petition and the same was registered as Misc. Case No. 6745 of 2010, which came for consideration on 30.04.2010. Opposite parties 2 and 3 have not raised any objection to the prayer for amendment and the same was allowed. Now also opposite parties 2 and 3 have filed counter affidavit justifying the impugned order on various grounds. 3. The attack on the order of termination of dealership of the petitioner is on several grounds out of which the main ground is that the procedure under the Marketing Discipline Guidelines, 2005 issued by the Corporation regarding the conduct of test to find out whether the petroleum product supplied to the consumer is adulterated or not at the instance of a dealer or its servant or agent is not valid, to invoke right by the Corporation under Clause-17 of the terms and conditions of the dealership agreement between the Corporation and the petitioner. 4. The case of the petitioner is that the transporter’s sample was not tested because he has not retained the 2 X 1 litre MS as prescribed under Regulation-2.3 of the Marketing Discipline Guidelines, 2005. Therefore, the conclusion arrived at by the opposite party No.1 on the basis of laboratory test as indicated in the impugned order is only on the basis of the sample collected from the depot as well as the tank of the dealer. Therefore, it is contended that 3-tire sample testing procedure has not been complied with by the opposite party, which is mandatory in law, as the action of invoking the right of the Corporation under Clause-17 of the agreement for termination of the dealership, will have serious consequences upon the petitioner, as she will be losing her statutory right of running retail outlet of petrol, diesel and other petroleum products. 5. It is contended that the procedure laid down in the guidelines, should be strictly adhered to by the Corporation before invoking its right for termination of the dealership of the petitioner but that has not been done in the present case. Therefore, the action has been taken by the opposite party No.1 on the basis of incomplete test conducted by the officers of the Corporation and recorded the finding of fact holding that the samples of petroleum product collected from both the depot as well as the tank of the retailer found to be adulterated. Therefore, the action of the first opposite party in terminating the contract of the petitioner is arbitrary and unreasonable, which is violative of Article 14 and is interrelated to Articles 19(1)(g) and 21 of the Constitution of India. Therefore, the procedure provided under the guidelines will not come in the way of the petitioner to invoke the extraordinary discretionary jurisdiction of this Court in questioning the correctness of the impugned order. 6. Mr. Sanjit Mohanty, learned senior counsel appearing for the Corporation placing reliance upon Clause-2.3 of the Guidelines stated that the required 3-tier sample testing procedure has not been done in the present case. The burden lying on the petitioner has not been discharged in the instant case. He further states that the finding of the Officer in the laboratory test of the materials collected from the depot as well as the tank of the dealer is proved on the basis of the same Clause-17 of the agreement was invoked by the Corporation and the impugned order is passed under Annexure-12, therefore it does not call for any interference by this Court in exercise of this Court’s extraordinary & discretionary power for the reason that the finding of fact recorded on scientific laboratory analysis of the materials collected from the depot as well as the tank of the petitioner and the same was found to be altogether adulterated. Therefore, the dealer has committed misconduct in selling the petroleum products to the consumers which has brought bad name to the Corporation. On account of such serious misconduct on the part of the petitioner, the impugned order is justifiable and against this order the petitioner has got right of an Appeal under Notes-IV of Clause- 6.3 of the Guidelines, which has not been availed by her. Therefore, it is urged that this Court need not exercise its extraordinary and discretionary jurisdiction to grant any relief to the petitioner. 7. The second ground of justification of the impugned order is that the petitioner is bound by the terms and conditions of the dealership agreement which provides for arbitration clause. Therefore, if there is any serious dispute with regard to the correctness of the impugned order, it requires to get an arbitrator appointed who has to adjudicate the dispute between the parties under the provisions of the Arbitration and Conciliation Act, 1996 as the same is applicable to the facts of this case. In view of the aforesaid reasons the learned Sr. Counsel for the opposite parties would submit that the petitioner is not entitled for the reliefs as prayed for in this petition and therefore he has prayed for dismissal of this writ petition. 8. With reference to the above rival contentions raised by the learned counsel for the parties, we have carefully examined the correctness of the impugned order to answer the following points that would arise for our consideration. i) Whether the petitioner for redressal of her grievance has to avail either the appeal remedy or arbitration proceedings? 2 ii) Whether the impugned order is vitiated on account of non-compliance with the statutory requirement of 3 tier sample testing procedure as provided under the Guidelines? iii) What order the petitioner is entitled? 9. The aforesaid points are answered in favour of the petitioner by assigning the following reasons:- i) The appeal remedy as provided in the guidelines is no bar for this Court to invoke extraordinary and discretionary jurisdiction under Article 226 of the Constitution of India. ii) It is well settled principles of law that if an order is in violation of the principles of natural justice or statutory rules, there is no bar for the petitioner to approach this Court despite the statutory right of appeal is available for the petitioner. iii) The Marketing Discipline Guidelines do not support the Corporation in passing the impugned order. No doubt the petitioner for the purpose of regulating its conduct of business entered into the contract with the Corporation by executing necessary agreement which is statutory in nature. iv) The guidelines provide an Appeal remedy. Without exhausting the appeal remedy, in case this Court is satisfied that there is violation of the statutory rule or the principles of natural justice and also the act of the authority is found to be arbitrary or unreasonable, then the Appeal remedy for the petitioner is no bar for this Court to exercise it extraordinary and discretionary power to grant the relief to the petitioner. 10. In the instant case challenge was made by the petitioner to the show-cause notice dated 4.11.2009(Annexure-11). On 7.12.2009 notice was issued to the opposite parties and thereafter the event of passing of the order of termination of dealership had taken place and therefore the petitioner has rightly filed an amendment application, the same was allowed in Misc. Case No.6745 of 2010 vide order dated 30.4.2010 as there was no opposition to the prayer for amendment to this writ petition. 11. The counter statement is also filed justifying the impugned order. The order of termination could have been the subject matter of appeal before the appellate authority if the writ petition is not pending. Since the matter is pending before this Court, at this stage directing the petitioner to approach the appellate authority is not correct and the Appeal remedy to the petitioner also not a bar for this Court to entertain this petition for the reason that the procedure required to be followed under the guidelines has not been strictly followed by the Corporation by not conducting 3-tier sample testing procedure before terminating the contract as the transporter’s sample at the time of delivery of petroleum products to the petitioner by the transporter was not available for testing with the samples collected from the petitioner’s depot/tank, the laboratory tests were conducted. The procedure of 3 tier test under the Guidelines has to be held as mandatory for the reason that exercise of the right under Clause 17 of the agreement by the Corporation on the basis of laboratory tests report will have a serious civil consequence upon the petitioner’s right. 12. The contention urged on behalf of the Corporation is that the burden lies on the petitioner to prove the fact that she was not selling adulterated petroleum products to her customers. The said burden is not discharged since the petitioner did not retain 2 X1 litre MS as required under the Regulation-2.3 of the Marketing Discipline Guidelines. This contention cannot be accepted by us for the reason that before invoking the right by the Corporation under Clause-17 of the agreement for terminating the contract of the petitioner, the procedure as contemplated under the guidelines was required to be 3 strictly adhered to by the Corporation in the instant case. Therefore the Corporation has not discharged the initial burden by conducting the required tests as contemplated under Regulation-2.3 of the Guidelines. Therefore, the conduct of tests of sample is incomplete, inconclusive for not conducting the laboratory tests of sample of the transporter. In case there was collection of sample of the transporter retained by the dealer as well as the transporter itself in the absence of availability of the sample of the transporter with the dealer, then there was no difficulty for the Corporation to procure sample from the transporter to find out whether at the time of the delivery of the petroleum products to the petitioner the sample of the same should be retained by the transporter. Conducting the laboratory test without procuring the required sample of the transporter and accepting the report of the Officer on the basis of the laboratory tests done from the samples drawn from the Depot and tank of the dealer and arriving at the conclusion that it was adulterated, is an incomplete tests conducted by the Officer and the Corporation has not complied with the mandatory procedure to find out the truth of the matter. Therefore, termination of the contract of dealership of the petitioner by the Corporation is in violation of a well established procedure which is strictly required to be followed by the Corporation under the Guidelines referred to supra. Therefore, the action of the Corporation in accepting the report of the laboratory test and not accepting the explanation given by the petitioner for the reason that she has not discharged her onus in not producing the samples collected by her at the time of delivery by the transporter is not sustainable in law. The question of defence on the part of the petitioner does not arise unless the required procedure is followed by the Corporation to invoke its right under Clause-17 of the agreement. The act of the Corporation is not only un-reasonable but also arbitrary and therefore the same is in violation of the Article 14, as the decision of the Corporation by conducting 2 tier sample tests but not by 3 tier sample tests as required under the guidelines. 13. In this regard, it is worthwhile to refer to a decision of the Hon’ble Supreme Court in the case of Mahabir Auto Stores and others v. Indian Oil Corporation and others, AIR 1990 SC 1031, wherein Hon’ble Supreme Court with reference to Article-14 at Paragraph-12 after adverting to various constitution decisions of the Supreme Court examined the power of the High Court and the Supreme Court under Articles 226 and 32 respectively in the cases of E.P. Royappa v. State of Tamul Nadu & another , AIR 1974 SC 555 & Maneka Gandhi v. .Union of India, (1978) 1 SCC 248 it is held that in respect of the statutory Corporation, Article 14 is attracted if it is shown that its action is either arbitrary or unreasonable When there is violation of Article 14 on the part of the Statutory Authority which is interrelated to Articles 19(1)(g) and 21 of the Constitution. For the foregoing reasons there is violation of the fundamental rights of the petitioner. Hence on the ground it self this Court is required to exercise its extraordinary and discretionary power and grant the reliefs to the petitioner in this petition. 14. Accordingly, we answer the aforesaid points in favour of the petitioner, allow the writ petition and quash the order of termination dated 24.2.2010 under Annexure-12. The steps for consequential relief by restoring the dealership to the petitioner must be made by the Corporation immediately. Writ petition allowed. 4