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TMI Blog2019 (11) TMI 1828X X X X Extracts X X X X X X X X Extracts X X X X ..... on 6th May, 2013 when it was found, on the joint inspection, variation of stock of High Speed Diesel beyond permissible limit; density of Tank No. 2 was not available and that tanker truck retention of the corresponding tank was not available at the time of inspection. The Appellant had drawn three samples from Tank No. 2. One sample was sent for testing, another sample was retained by the Field Survey Officer and the third sample was handed over to the dealer. A show cause notice was issued to the dealer on 6th May, 2013, alleging violation of Clauses 5.1.9 and 5.1.11 of the Guidelines. The dealer submitted his explanation on 21st May, 2013, inter alia, stating that dispensing unit was not working properly and, therefore, wrong readings were shown. 3. The dealer was informed on 27th June, 2013 that test report of High-Speed Diesel samples drawn from the tank on 6th May, 2013 had been received. The report was that the samples failed to meet the specifications. Thereafter, in response to a show cause notice dated 27th June, 2013 to explain the non-conformities detected, the dealer vide letter dated 17th July, 2013 requested to seek retesting of the umpire sample which was drawn on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g violations were detected and the penal action was taken: In view of the above the cumulative MDG violations detected and established in the Retail Outlet are as follows: a. Stock variation beyond permissible limit (Violation of MDG-2012 Clause No. 5.1.11) b. Nozzle Sample failure of HSD. (Violation of MDG 2012 Clause No. 5.1.1) c. Non availability of reference density (Violation of MDG-2012 Clause No. 5.1.9) d. Non availability of TT retention sample (Violation of MDG-2012 Chapter 5 notes-i) The penal action for the irregularity mentioned in point no (a) & (b) is termination in the first instance as per Clause No. 8.2 of MDG-2012. The penal action for the irregularity mentioned in point no (c) & (d) is Warning cum Guidance letter in the first instance as per Clause No. 8.4 of MDG-2012. The above stated irregularities are also in violation of the provisions made under Clause No. 27 and Clause No. 40 of the dealership agreement executed by and between you and the corporation on 20.12.1995. 8. The dealer challenged the termination of the dealership before the Gauhati High Court. The learned Single Judge allowed the writ petition on 13th October, 2015 holding that as p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding recorded by the learned Single Judge is a plausible finding, therefore, does not warrant interference in an intra-court appeal. 11. Learned Counsel for the Appellants argued that the findings recorded by the High Court that the Guidelines require strict adherence is a total misreading of the Guidelines. For such an argument, reference is made to Note 2 of Clause 2.4.4; Sub-Clauses A and I of Clause 2.5; Clause 8.2 classifying critical irregularities; Clause 8.3 classifying major irregularities as well as Clause 5.1.1 of what is meant by the adulteration and Clause 5.1.11 providing for consequences of stock variation to contend that in the event of failure of sample in the cases of positive stock variation beyond permissible limit, action in line with that of adulteration is to be initiated. Thus, apart from the adulteration, even the stock variation in the event of failure of sample leads to critical irregularity. It is contended that the High Court erred in allowing the writ petition and setting aside the termination of the dealership. The relevant Clauses from the Guidelines read as under: 1.5 Observance of statutory and other Regulations (i) All statutory Rules and Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and supplies of all products to be suspended immediately. Study to be carried out to identify the reasons for stock variation. If the sample passes but some other irregularity like unauthorized purchase etc. is established action to be taken accordingly. However, if the sample fails, action in line with that of adulteration will be initiated. xx xx xx 8. Action to be taken by OMC under the Marketing Discipline Guidelines 8.1 All irregularities (mentioned in chapter-5) are classified into three categories, i.e. Critical, Major and Minor. 8.2 Critical Irregularities: The following irregularities are classified as critical irregularities: i. Adulteration of MS/HSD (5.1.1) xx xx xx Action: Termination at the First instance will be imposed for the above irregularities. 8.3 Major Irregularities: The following irregularities are classified as major irregularities: i. xx xx xx ii. Non availability of reference density at the time of inspection. (5.1.9) iii. xx xx xx iv. Stock variation beyond permissible limits but sample passing quality tests. (5.1.11) xx xx xx Action: Except in case of (iii), (vii), (viii), (ix) and (x) above: First instance: Suspension of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lership Under Articles 21 and 14 of the Constitution of India. Learned Counsel for the dealer relied upon the judgments referred to by the Division Bench of the High Court. 13. The first issue required to be examined is whether the Appellants were required to follow the procedure under the Control Order read with Section 100 of the Code. The Control Order has been issued Under Section 3 of the Act. Such Act has been enacted for control of the production, supply and distribution and trade and commerce, of certain commodities. In respect of High Speed Diesel and Motor Spirit, the Control Order is issued for Regulation of supply and distribution and prevention of the malpractices. Section 6A of the Act provides for confiscation of the essential commodity whereas, Section 7 of the Act makes any person who contravenes any order made Under Section 3 liable for criminal prosecution. Therefore, we find that the effect of issuance of the Control Order is that in the event of violation of such Control Order, any person who contravenes any order made Under Section 3 of the Act i.e. the Control Order, he is liable to be punished by a Court. Therefore, the violation of the Control Order has pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confronted to the dealer. Still further, the dealer has not raised any objections regarding delay in sending the sample in the two replies submitted by him on 17th July, 2013 and 2nd January, 2014. The argument that the umpire sample in the hands of the dealer could not be tested because of sludge and to doubt the other two samples is totally untenable. Such argument is based upon conjectures as the other two samples collected and sealed cannot be permitted to be disputed only because one sample was found with sludge. There is no material to doubt the correctness of the samples taken. 16. The first test report dated 29th May, 2013 was found deficient in the density as also in K.V. @40 degree celsius, sulphur and distillation recovery. Even the report dated 19th August, 2013 is found to be deficient in density, K.V., distillation recovery and sulphur. The result of the second report is almost the same as the sample tested on 29th May, 2013. Thus, the Appellant has rightly terminated the dealership for adulteration of the High Speed Diesel. 17. There was variation in stock beyond permissible limits. In case of positive stock variation beyond permissible limits and on account of fai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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