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TMI Blog2024 (6) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... el (HSD) and Motor Spirit (MS). 3.3 The appellant issued show cause notice against the respondent dated 20th August, 2007, wherein the respondent was asked to submit a response to the alleged irregularities within a period of 7 days. 3.4 On the basis of the Preliminary Test Report, the Senior Sales Officer, Durgapur Sales Area informed the respondent of the suspension of supply with immediate effect. 3.5 The authorities of the appellant(s) conducted Joint Marker Test and the sample failed on such re-test as well. This is evident from the Analysis Report At page 164 of the paper book. 3.6 The authority of the Agency to conduct such collection of samples was questioned by the respondent at the Regional Office of the appellant(s). However, it is alleged that without considering the same Marker Test was conducted on such samples. 3.7 Being aggrieved by the order of suspension of supply, the writ petition which eventually gave rise to the present proceedings was filed. 4. In allowing the writ petition filed on behalf of the present respondent, the Learned Single Judge observed as under:- "...it appears that there are specific provisions under Clause 7 of the aforesaid order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the Agency had the authority to conduct the tests in question as Clause 2.2.2.3 of Marketing Discipline Guidelines MDG dated 1st August 2005 issued by the Government of India, provides that apart from oil company officials, mobile labs and 'agencies authorized by oil companies' were permitted to draw samples. (v) It was in furtherance of such guidelines that vide Circular dated 3rd November 2006 the Agency was appointed to carry out audits and Market Tests. (vi) The provisions of the Control Order do not apply to the present case as the respondent is not prosecuted for its violation and instead, the Agreement stands terminated for breach of the terms and conditions of the Agreement. (vii) It is also submitted that Clause 8 of the Control Order makes clear that there is no bar to appoint an outside agency to conduct the Marker Test. (viii) Reliance is placed on Indian Oil Corporation Ltd. v. R.M. Service Centre (2019) 19 SCC 662, and more specifically para 14 thereof. B. Respondent (i) The MDG are issued under Section 3 of the Essential Commodities Act, 1955 and therefore possess statutory force. The suspension of supply to the respondent was in terms of the aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmissions, the learned senior counsel for the respondent further relies on Harbanslal Sahnia v. Indian Oil Corporation Ltd. (2003) 2 SCC 107; Hindustan Petroleum Corporation & Ors. v. Super Highway Services & Anr. (2010) 3 SCC 321; Allied Motors Ltd. v. Bharat Petroleum Corporation (2012) 2 SCC 1; and Nazir Ahmad v. The King Emperor 1936 SCC OnLine PC 41, and certain other decisions. 8. It is necessary to refer to certain Rules, Regulations/provisions of documents for being part of the record to examine the issue in the present lis. For ease of reference, they are extracted hereunder : Provisions of the Agreement and other relevant documents I. Agreement inter se parties Certain clauses of the agreement between the parties dated 1.2.1997, relevant to the present dispute: "4. The licence and permission granted as aforesaid for the use of the outfit shall terminate immediately on the termination of this Agreement or on any breach of any of the terms thereof. x x x x 26. The dealer shall be responsible for all loss, contamination, damage or shortage of or to the products whether partial or entire, and no claim will be entertained by the corporation therefor under any cir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation for the proper carrying on of the dealership of the corporation. The dealer shall scrupulously observe and comply with all laws, rules regulations and requisitions of the central/state government and of all authorities appointed by them or either of them including in particular the chief controller of explosives, government of India, and/or municipal and/or any other local authority with regard to the storage and sale of such petroleum products. x x x x 58. Notwithstanding anything to the contrary herein contained, the Corporation shall also be at liberty to terminate this Agreement forthwith on or at any time after the happening of any of the following events, namely : x x x x H) If the dealer does not adhere to the instructions issued from time to time by the corporation in connection with safe practices to be followed by him in the supply/storage of the Corporation's products or otherwise. I) If the dealer shall contaminate or tamper with the quality of any of the products supplied by the Corporation. M) If the dealer shall either by himself or by his servants or agents commit or suffer to be committed any act, in the opinion of the Chief Regional Manager ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Essential Commodities Act, 1955 and for their safe custody pending such production; (d) inspect, seize and remove with, such aid or assistance as may be necessary, books, registers, any other records or documents of the dealer, transporter, consumer or any other person suspected to be an employee or agent of the dealer, transporter or consumer; (2) While exercising the power of seizure provided under subclauses (c) and (d) above, the authorized officer shall record in writing the reasons for doing so and a copy of such recording shall be provided to the dealer, transporter, consumer or any other concerned person, as the case may be. (3) The provisions of S. 100 of the Code of Criminal Procedure, 1973 (2 of 1974), relating to search and seizure shall, as far as may be, apply to searches and seizures under this Order. III. Marketing discipline guidelines, 2005 "Chapter - 2 INDUSTRY GUIDELINES FOR SAMPLE COLLECTION AND TESTING (3-TIER) SAMPLING SYSTEM) x x x x x 2.2.2 AT RETAIL OUTLETS At the Retail outlets, samples are required to be drawn by the following : 2.2.2.1 By the dealer/his representative on receipt of each supply through tank lories at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Order has penal consequences leading to conviction. The provisions of search and seizure contained in Clause 7 read with Section 100 of the Code will come into play only in the event a person is sought to be prosecuted for violation of the provisions of the Control Order. Admittedly, in the present case, the dealer is not sought to be prosecuted for the violation of the Guidelines, therefore, the procedure for drawing of samples which is a necessary precondition under the Control Order for prosecuting an offender does not arise for consideration. 15. The dealer has entered into an agreement on 20-12-1995. It is not disputed that the dealer is bound by the Guidelines issued by the Public Sector Oil Marketing Companies. Clause 2.4.4 of the Guidelines provides for procedure for drawing of samples. Note (2) provides that the samples drawn should reach the laboratory for testing "preferably within ten days of the collection of the samples". Similarly, sub-clause (A) of Clause 2.5 of the Guidelines provides that all samples should be suitably coded before sending them to the laboratory for testing "preferably" within ten days of drawing the samples. Sub-clause (I) of Clause 2.5 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the termination of his dealership agreement also offends the wellestablished principle that no person should be condemned unheard. It was the duty of the petitioner to ensure that Respondent 1 was given a hearing or at least serious attempts were made to serve him with notice of the proceedings before terminating his agreement. x x x x x 33. 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." 14. The crux of the above decision is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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