Case: Bharat Petroleum Corporation Ltd Vs. M/s Jagannath &amp; Co. &amp; Others

in order to satisfy the conscience of the dealer about the authenticity of the tests so conducted, it has been contemplated in the Guidelines that on the request of the dealer, the test(s) could be conducted in his presence. In Hindustan Petroleum Corporation Ltd. & Ors. vs. M/s Super Highway Services & Anr., (2010) 3 SCC 321 , this Court held that the Guidelines being followed by the Corporation require that the dealer should be given prior notice regarding the test so that he or his representative also can be present when the test is conducted. The said requirement is in accordance with the principles of natural justice and the need for fairness in the matter of terminating the dealership agreement and it cannot be 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 evidence for such service of notice on the dealer. Strict adherence to the above requirement is essential, in view of the possibility of manipulation in the conduct of the test, if it is conducted behind the back of the dealer. It was further held that the cancellation of dealership agreement of a party is a serious business and cannot be taken lightly. As pointed out in the said decision, in order to justify the action taken to terminate such an agreement, the authority concerned has to act fairly and in complete adherence to the rules/guidelines framed for the said purpose. 11) It is further seen that after sealing of the petrol pump in the night of 22.08.2005 by respondent No.6 herein, the respondent-dealer waited for the result but no copy of the same was given to them. Since the dealer suspected some foul game on the part of the said officer, they filed Civil Suit being O.S. No. 695 of 2005 before the Civil Judge (Senior Division), Saharanpur seeking injunction against the interference with the sale and supply of petroleum products. It is brought to our notice that immediately upon filing of the said suit, on 31.08.2005, the BPCL supplied one copy of the report alleging it to be of the samples collected from the RO. The respondent-Firm did not believe the said report and requested for fresh sampling of products and examination by some independent laboratory. As the respondent-Firm did not get any response, they filed an application in the pending suit seeking collection of fresh samples from the sealed tanks in the presence of Court Commissioner and its examination by an independent agency. 12) In this regard, it is relevant to refer Section 20 of the Petroleum Act, 1934 which reads as under: 20. Right to require re-test – (1) The owner of any petroleum, or his agent, who is dissatisfied with the result of the test of the petroleum may, within seven days from the date on which he received intimation of the result of the test, apply to the officer empowered under Section 14 to have fresh samples of the petroleum taken and tested. (2) On such application and on payment of the prescribed fee, fresh samples of the petroleum shall be taken in the presence of such owner or agent or person deputed by him, and shall be tested in the presence of such owner or agent or person deputed by him. (3) If on such re-test, it appears that the original test was erroneous the testing officer shall cancel the original certificate granted under Section 19, shall make out a fresh certificate, and shall furnish the owner of the petroleum, or his agent, with a certified copy thereof, free of charge. 13) Though the appellant-BPCL protested the said application contending that the said provision in the Petroleum Act,1934 is not applicable and the very same objection was raised by learned senior counsel for the appellant before us, it is relevant to quote clause 10(k) of the Dealership Agreement with which the parties are bound is as under: 10(k) - To abide by the Petroleum Act, 1934 and the rules framed hereunder for the time being in force as also in other laws, rules or regulations either of the Government or any local body as may be in force. In view of the Dealership Agreement, particularly, clause 10(k) referred above, the contention of learned senior counsel for the BPCL is liable to be rejected. In terms of Section 20 of the Petroleum Act, 1934 the contesting respondents had a right to have fresh samples drawn and get the same re-tested within seven days of intimation of the test results. It is the assertion of the contesting respondents that the test reports were intimated to them only upon filing of a suit before the trial Court. After getting the above reports, on 02.09.2005, the contesting respondents moved an application before the trial Court in the said suit for fresh sampling/retest of the products. Though an objection was raised for filing counter statement in the said application, it is brought to our notice that in spite of several opportunities given by the Court, no such objection was ever filed. It was further pointed out by learned counsel for the contesting respondents that they timely exercised their right available in law. In view of the application filed by the contesting respondents on 02.09.2005 and in the light of Section 20 of the Petroleum Act,1934 as well as the terms of Dealership Agreement, the objection raised by learned senior counsel for the BPCL is liable to be rejected. 14) It is also pointed out that it was respondent No.6 herein who made the inspection, collected the samples, issued show cause notice and passed an order of cancellation of the Dealership Agreement/Licence. By impleading him as one of the respondents - respondent No.4 in the High Court – specific allegations were made against him that he acted mala fidely in cancelling the same and those assertions cannot be lightly ignored.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]10) It is rightly pointed out that the samples were not tested in any government laboratory and these tests were conducted in thes laboratory itself. Therefore, in order to satisfy the conscience of the dealer about the authenticity of the tests so conducted, it has been contemplated in the Guidelines that on the request of the dealer, the test(s) could be conducted in his presence. In Hindustan Petroleum Corporation Ltd. & Ors. vs. M/s Super Highway Services & Anr., (2010) 3 SCC 321 , this Court held that the Guidelines being followed by the Corporation require that the dealer should be given prior notice regarding the test so that he or his representative also can be present when the test is conducted. The said requirement is in accordance with the principles of natural justice and the need for fairness in the matter of terminating the dealership agreement and it cannot be 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 evidence for such service of notice on the dealer. Strict adherence to the above requirement is essential, in view of the possibility of manipulation in the conduct of the test, if it is conducted behind the back of the dealer. It was further held that the cancellation of dealership agreement of a party is a serious business and cannot be taken lightly. As pointed out in the said decision, in order to justify the action taken to terminate such an agreement, the authority concerned has to act fairly and in complete adherence to the rules/guidelines framed for the said purpose11) It is further seen that after sealing of the petrol pump in the night of 22.08.2005 by respondent No.6 herein, the respondent-dealer waited for the result but no copy of the same was given to them. Since the dealer suspected some foul game on the part of the said officer, they filed Civil Suit being O.S. No. 695 of 2005 before the Civil Judge (Senior Division), Saharanpur seeking injunction against the interference with the sale and supply of petroleum products. It is brought to our notice that immediately upon filing of the said suit, on 31.08.2005, the BPCL supplied one copy of the report alleging it to be of the samples collected from the RO. The respondent-Firm did not believe the said report and requested for fresh sampling of products and examination by some independent laboratory. As the respondent-Firm did not get any response, they filed an application in the pending suit seeking collection of fresh samples from the sealed tanks in the presence of Court Commissioner and its examination by an independent agencyIn view of the Dealership Agreement, particularly, clause 10(k) referred above, the contention of learned senior counsel for the BPCL is liable to be rejected. In terms of Section 20 ofthe Petroleum Act, 1934 the contesting respondents had a right to have fresh samples drawn and get the same re-tested within seven days of intimation of the test results. It is the assertion of the contesting respondents that the test reports were intimated to them only upon filing of a suit before the trial Court. After getting the above reports, on 02.09.2005, the contesting respondents moved an application before the trial Court in the said suit for fresh sampling/retest of the products. Though an objection was raised for filing counter statement in the said application, it is brought to our notice that in spite of several opportunities given by the Court, no such objection was ever filed. It was further pointed out by learned counsel for the contesting respondents that they timely exercised their right available in law. In view of the application filed by the contesting respondents on 02.09.2005 and in the light of Section 20 of the Petroleum Act,1934 as well as the terms of Dealership Agreement, the objection raised by learned senior counsel for the BPCL is liable to be rejected14) It is also pointed out that it was respondent No.6 herein who made the inspection, collected the samples, issued show cause notice and passed an order of cancellation of the Dealership Agreement/Licence. By impleading him as one of the respondents - respondent No.4 in the High Court – specific allegations were made against him that he acted mala fidely in cancelling the same and those assertions cannot be lightly ignored.