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TMI Blog2011 (12) TMI 789X X X X Extracts X X X X X X X X Extracts X X X X ..... uring this period it was given 10 awards from time to time declaring its dealership as the best petrol pump in the entire State of NCT of Delhi. On a number of occasions, samples of the Appellant were tested by the Respondent-Corporation and on each occasion its samples were found to be as per the specifications. 5. According to the Appellant, it had maintained highest standards and norms of an excellent petrol pump, yet, the Respondent-Corporation, in a clandestine manner, terminated its dealership in the most arbitrary manner and in total violation of the principles of natural justice. 6. It was further urged by the Appellant that its dealership was terminated without even issuing any show cause notice and/or giving an opportunity of hearing to it. The termination of dealership was contrary to the mandatory procedural provisions of law. According to the Appellant, the said termination was mala fide, arbitrary and illegal. 7. It may be pertinent to mention that in the morning of 15th May, 2000, an unauthorized police officer accompanied by the officials of the Respondent conducted a raid at the Appellant's petrol pump. According to the Appellant, the raid was illegal as an una ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2 samples of MS (and/or one of HSD), would be kept by the concerned Oil Company or department and the remaining two samples of MS (and/or one of HSD) would be used for laboratory analysis. 11. The Appellant urged that in the present case, samples were allegedly taken from 6 sources. Therefore, the Respondent Corporation as per the provision should have taken 36 samples (6 samples from each of the source) and handed over 12 samples (2 from each of the 6 sources) to the Appellant, being the dealer, under acknowledgement. The Respondent Corporation however, neither took 36 samples, nor did it hand over the prescribed number of 12 samples to the Appellant. This is clear from the counter affidavit filed by the Respondent in Writ Petition (C) No. 7382 of 2001 placed on record. It is clearly stated in the counter affidavit filed by the Respondent Corporation that it is pertinent to state that two samples from each of the tanks containing adulterated products were drawn by the answering Respondent in the presence of the police officials of the crime branch and the representative of the Appellant as well. 12. Out of these two samples, one sample was retained by the crime Branch of Delhi P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollows: The law being as noticed above, it is very clear that the search and seizure is bad in law and is in contravention of mandatory provisions of the Essential Commodities Act and contravention of Motor Spirits (High Speed Diesel Act) and in any case the prosecution cannot establish its case against any of the accused and accused persons are liable to be discharged on this very ground and no charge should be framed... There is no evidence whatsoever to show that petrol supplied was adulterated or not. 15. The Appellant referred to section I (c) of Chapter 6 of the Guidelines of 1998 which provides as follows: Wherever samples are drawn, either pursuant to random checks or where adulteration is suspected, 3 sets of signed and sealed samples (6x1 ltr of MS and 3x1 ltr of HSD) should be collected from the RO, out of which one set should be kept with the dealer, one with the company and the third to be sent for laboratory resting within 10 days. For the sample kept with the dealer, proper acknowledgement will be obtained and the dealer will be instructed to preserve the same in his safe custody till the testing/investigation are completed. 16. According to the Appellant, it is clea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en to the Appellant to provide any explanation. Instead Appellant's dealership was summarily terminated on the very date the alleged test reports certifying the sample to be adulterated was received i.e. 16.5.2000, the very next day after the samples were taken. It is relevant to state that the premeditated nature and mala fide of the test reports was writ large as the test reports on the basis of which the Appellant's dealership was allegedly terminated itself indicated terminated dealer . b) Clause (d) of Section 1 of the Marketing Discipline Guidelines further provides that if the explanation of dealer is not satisfactory, the Company should take action as follows: a. Fine of Rs. 1 lakh and suspension of sales and supplies for 45 days in the first instances; b. Termination in the second instance. 19. It is thus clear from the above provision that the Guidelines prescribe termination only in case of second instance of adulteration of Motor Spirits. It is an admitted case that this was the first instance of alleged adulteration of Motor Spirits. 20. One of the grounds taken by the Respondent-Corporation for termination in its letter dated 16.5.2000 was that in the past als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery least in departure from, the Motor Spirits High Speed Diesel Order and the Marketing Discipline Guidelines and has also acted contrary to the principles of natural justice and fair play both in respect of taking samples which formed the basis of termination, as also in respect of the termination of dealership. 25. The Appellant referred to the decision in Bharat Filling Station and Anr. v. Indian Oil Corporation Ltd. 104 (2003) DLT 601 wherein the Delhi High Court specifically referred the Market Discipline Guidelines. Relevant part of the judgment is reproduced as under: As noted above, IOC, whenever enters into dealership agreement, xecutes memorandum of agreement which lays down standard terms and conditions. These conditions, inter alia, include provisions for termination of the dealership as well. It is provided that the agreement can be terminated by giving required notice. It may however be mentioned that at the same time in order to ensure that such agreements with the dealers are worked out in a systematic manner and the Respondent IOC does not invoke the termination clause arbitrarily, Government of India has issued Marketing Discipline Guidelines. 26. The Appellant a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded that Delhi Territory had drawn samples regularly from the retail outlet. All 10 samples drawn in 1999-2000 were found on spec. Despite this, the dealership had already been terminated the very day after the raid. 32. The Appellant also urged that the order of the Delhi High Court in Writ Petition (Civil) No. 7382 of 2001 dated 9.9.2004 directed the Respondent to give a show cause notice, personal hearing and pass a reasoned order. It was not given and the Appellant was constrained once again to approach the High Court who then directed the Respondent to grant the Appellant a personal hearing at a higher level. The action of the Respondent is mala fide which is reflected from the fact that at various stages the Respondent-Corporation has tried to improve its case by supplanting reasons in support of the termination. This is clear from the following facts: i. The first notice dated 16.5.2000 terminating the dealership points out the following three grounds for termination: a. One of the samples during the raid and taken from the laboratory testing had failed specification of U.L.P. b. In the past also a product sample collected from the retail outlet was found to have failed spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ident that even at the stage of final disposal and two years after the filing of the present special leave petition, the Respondent has made serious effort to improve its case by filing a supplementary affidavit dated 19.8.2011, vide which the Respondent has sought to allege for the first time that it handed over requisite number of samples to the Appellant. The supplementary affidavit states that Samples of products were collected from five tanks of petrol/motor spirit. From each of the five tanks of petrol/motor spirit, six sets of samples in aluminium bottles (i.e. total of thirty 30 sample bottles) were taken. In addition to this, six samples in aluminium bottles were taken from the tank lorry which was found to be decanting petrol/motor spirit in the underground tanks for petrol/motor spirit. As such, the total number of samples taken in bottles were 36. Out of the 36 sample bottles collected, 12 were retained by the BPCL, 12 were handed over to the dealer and 12 were sent for testing to the specified laboratory. 36. The Appellant further submitted that the said averment is completely false and contradictory to its own pleadings before the High Court in WP (C) No. 7382 of 2001 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and tested as per the procedure laid down and on the receipt of the results indicating the adulteration of products. Thus, the action contemplated under the provisions of the DPSL Agreement dated 28.01.1971 was taken. 42. The Respondent-Corporation denied that the action initiated against the Appellant was in any manner mala fide or manipulated for grabbing the business outlet on the false pretext. The Respondent-Corporation also submitted that reliance cannot be placed upon the Report submitted by the IIP Dehradun as the tests conducted by them do not comply the specifications laid down by the Bureau of Indian Standards. Moreover, the IIP, Dehradun did not conduct the RON Test. Not following the specifications and conducting of the RON Test was essential for testing the quality and the specification of the ULP for meeting specifications of the Motor Spirit. 43. According to the Respondent, the report submitted by the IIP, Dehradun is sacrosanct. The said sample was sent much after the incident of adulteration and the same is not in accordance with the MS/HSD Control October, 1998 issued by the Government of India. 44. In the rejoinder affidavit, the Appellant reiterated its submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny case the prosecution cannot establish its case against any of the accused and accused persons are liable to be discharged on this ground alone and no charges can be framed. Further, it is an admitted that that there was no receipt of two samples from each source being handed over to the Petitioner. This is clear evidence of the fact that the samples were never handed over. In addition, the High Court in its order dated 9.9.2004 held that .. there is no manner of doubt that the principles of law applied to the given facts of the present case are squarely covered by the judgment of the Supreme court in Harbanslal Sahnia's case. 48. Mr. Mukul Rohtagi, learned Senior Advocate appearing for the Appellant in support of his contentions placed reliance on some of the following judgments. 49. In Harbanslal Sahnia and Anr. (supra), the Court dealt with the question of termination of dealership by the Indian Oil Corporation Ltd. In this case, it was asserted before this Court that dealership has been terminated on irrelevant and non-existent grounds, therefore, the order of termination is liable to be set aside. In this case, there has not been compliance of the procedure. The failure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rved thus: 38. Although ordinarily a superior court in exercise of its writ jurisdiction would not enforce the terms of a contract qua contract, it is trite that when an action of the State is arbitrary or discriminatory and, thus, violative of Article 14 of the Constitution of India, a writ petition would be maintainable (See: ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd. (2004) 3 SCC 553). 56. Reliance has also been placed on Gujarat State Financial Corporation v. Lotus Hotels Pvt. Ltd. (1983) 3 SCC 379. In this case the Court held that the public corporation dealing with public cannot act arbitrarily and its action must be in conformity with some principles which meets the test of reason and relevance. 57. We have heard the Learned Counsel for the parties at length and have perused the decisions relied on by the parties. 58. In the instant case, samples were taken on 15th May, 2000. On the very next day i.e. on 16th May, 2000, without even giving a show-cause notice and/or giving an opportunity of hearing, the Respondent-Corporation terminated the dealership of the Appellant. The Appellant had been operating the petrol pump for the Respondent for the las ..... X X X X Extracts X X X X X X X X Extracts X X X X
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