IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) TUESDAY, THE EIGHTEENTH DAY OF NOVEMBER TWO THOUSAND AND EIGHT PRESENT THE HON'BLE MS JUSTICE G.ROHINI WRIT PETITION NO : 17065 of 2008 Between: M/s. Syam Sunder Indian Oil Service Station Rep. by Proprietor/dealer Smt.D.Nirmala D.No.5-17-1, Sathenapalli Main Road, Sattenapalli, Guntur District. ..... PETITIONER AND 1 Indian Oil Corporation Ltd., Marketing Division, A.P. State Office, 3-6- 436 to 438, 2nd Floor, Naspur House, Himayathnagar, Hyderabad, Rep. by its Executive Director. 2 Chief Divisional Retail Sales Manager, Divisional Office, Indian Oil Corporation Ltd., at G.V.R. Towers, 3rd Floor, Bharathi Nagar, Ring Road, Vijayawada, Krishna District. .....RESPONDENT(S) 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 writ or direction preferably writ of Mandamus declaring the order issued by 2nd respondent vide Ref. VJR/GN/22 dt. 30.7.2008 as illegal, arbitrary, violative of principles of natural justice and disproportionate and consequently set aside the same and pass such otheror further orders. Counsel for the Petitioner:MR.KOWTURU VINAYA KUMAR Counsel for the Respondent No.: MR.THOOMSRINIVAS The Court made the following : THE HON’BLE MS JUSTICE G.ROHINI W.P.NO.17065 OF 2008 ORDER The petitioner was appointed as a retail outlet dealer of Indian Oil Corporation Limited ( For short “the Corporation’) for retail sale of Petrol and High Speed Diesel Oil at Sattenapalli, Guntur District. Accordingly an agreement was executed in favour of the petitioner on 14-10-2005. While so, the petitioner’s outlet was inspected by Anti Adulteration Cell of the Corporation on 06-03-2008 and it was reported that as the inner sample container was not sealed, eligible sample was not available for testing. Pursuant thereto the 2nd respondent issued a show cause notice dated.22-04-2008 calling upon the petitioner to show cause as to why the agreement dated.29-06-2005 should not be terminated since the irregularity of absence of seals on inner sample container found in the inspection dated.06-03-2008 was a second offence leading to termination as per Marketing Discipline Guidelines-2005. The petitioner submitted its explanation dated.30.04.2008 stating that the inner seals were available, but by mistake the Manager of the petitioner had not written the seal number of the inner sample container on the label pasted on the wooden box. It was also pointed out that the outer seal of the wooden box was written on the sample label. However, the Corporation did not accept the said explanation and by order dated.30-07-2008 terminated the dealership agreement with immediate effect. Hence the present writ petition seeking a declaration that the order of termination dated.30.07.2008 passed by the 2nd respondent without properly appreciating the explanation offered by the petitioner is arbitrary and illegal. I have heard the learned counsel for both the parties and perused the material on record. Clause.6.1.1 of the guidelines provides for penal action to be taken against the erring retail outlet dealership for adulteration and other malpractices/irregularities as specified in Appendix.I. As per Sl.11 of the Appendix-I, for the irregularity of non-availability of tank lorry retention sample by a dealer, a fine of Rs.50,000/- is specified if it is the first offence. However, for the second offence termination of the agreement has been prescribed. In the show cause notice dated.22-04-2008 it was alleged by the Corporation that the petitioner’s outlet was earlier inspected on 25-05- 2006 during which “non-availability of tank truck retention sample” was observed by the inspection officer and pursuant thereto a fine of Rs.50,000/- was paid by the petitioner on 13.06.2006, the same being the first offence. It was further mentioned in the show cause notice that the irregularity now found in the inspection dated.06-03-2008 i.e., failure to seal the inner sample container being the second offence, it is proposed to terminate the dealership as per the Guidelines and accordingly the petitioner was called upon to submit its explanation. In the explanation dated.30-04-2008 the petitioner did not dispute that the irregularity found in the inspection dated.06-03-2008 was the second offence. However, it was explained that though inner seals were available, the Manager had failed to write the number of the seal on the label pasted on the wooden box. It was also pleaded that the said lapses may be pardoned and the proposed action for termination of dealership may be dropped. The petitioner contends that since the outer seal of the wooden box is intact no malpractice can be attributed and therefore the impugned termination is unwarranted. It is also contended that since the “tank lorry retention sample” is available but the only allegation is that the inner container is not sealed, the omission on the part of the petitioner at the most can be taken as a minor irregularity which does not attract serial No.11 of the Appendix.I to the Guidelines leading to the termination of the agreement. While reiterating the above submission, the learned counsel for the petitioner vehemently contended that the impugned termination of the petitioner’s dealership is highly disproportionate to the irregularity alleged apart from being arbitrary and unjust. In the counter-affidavit filed on behalf of the respondents, it is stated that in the absence of recording of inner seal number on the outer label the inspecting authorities of Anti Adulteration Cell concluded that the inner sample containers were not sealed and therefore the plea of the petitioner that the inner seals were available cannot be accepted. It is also pleaded that the necessity for recording the inner seal number on the label pasted along with Outer seal number on the wooden box is to prevent removal and replacement of the enclosed aluminum container by removing and replacing/tampering the wooden base of the wooden box and that the petitioner is bound to strictly follow the same. It is also pleaded that during the inspection carried out by the Corporation officials on 25-05-2006 it was found that the Tank Lorry retention sample was not available with the petitioner’s retail outlet and the same being the first offence, a fine of Rs.50,000/- was imposed as per the Marketing Discipline Guidelines-2005. The violation found in the inspection dated.06-03-2008 being the second offence the Corporation had rightly terminated the dealership after issuing a show cause notice and after considering the explanation submitted by the petitioner. The Marketing Discipline Guidelines-2005 placed before this Court made it clear that for the first instance of irregularity a fine of Rs.50,000/- has been prescribed and if the said irregularity is repeated for the second time the penalty of termination has been prescribed. In the case on hand, even according to the petitioner the seal number of the inner sample container was not written on the label pasted on the wooden box. However, the petitioner sought to contend that by mistake the Manager of the petitioner failed to write the seal number and that the outer seal on the wooden box was affixed even before the petitioner could note down the seal number of the inner sample container. It is also contended that failure to note the seal number was of no consequence since the outer seal of wooden box was intact and there was no scope for any malpractice. The said explanation offered by the petitioner was not accepted by the Corporation and while observing that it was a second offence, the dealership was terminated as per the Guidelines-2005. Since admittedly the seal numbers were not mentioned on the label, the Corporation cannot be found fault with in concluding that the inner sample containers were not sealed and therefore eligible samples were not available for the test. Whether the failure on the part of the dealer to note the seal number of the inner sample container on the label pasted on the outer wooden box gives scope for adulteration of Petroleum product, being a pure question of fact cannot be appreciated and decided by this Court and this Court cannot sit in appeal against the decision of the Corporation in the absence of any allegation of malafides or violation of the staturory provisions. Sofar as the justification of termination is concerned, as noticed above for the second offence the Marketing Discipline Guidelines-2005 prescribed penalty of termination and even Clause 45 of the Dealership Agreement empowers the Corporation to terminate the agreement in case of breach of any of the terms and conditions, covenants and stipulations contained in the agreement. Hence the impugned order cannot be held to be arbitrary or illegal on any ground what-so-ever. Accordingly the writ petition is dismissed. No costs. _____________ G.ROHINI,J 18th November,2008 *TSNR