M/S Modern Service Station vs Indian Oil Corporation Limited ...
2023 Latest Caselaw 15618 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

A. F. R.       
 
Neutral Citation No. - 2023:AHC:109291
 
Court No. - 9
 

 
Case :- WRIT - C No. - 13514 of 2022
 

 
Petitioner :- M/S Modern Service Station
 
Respondent :- Indian Oil Corporation Limited And 5 Others
 
Counsel for Petitioner :- Ashish Kumar Singh,Ravi Anand Agarwal,Shreya Gupta
 
Counsel for Respondent :- Rakesh Kumar
 

 
Hon'ble Alok Mathur,J.

1. Heard Ms. Shreya Gupta, learned counsel for the petitioner as well as Sri Rakesh Kumar for the respondents.

2. The petitioner has approached this Court being aggrieved  by the order dated 21.9.2020 passed by  Area Manager Retail Sales, Mathura - I, Indian Oil Corporation Limited  thereby stopping the sales  from their dispensing units until further orders. The petitioner has also assailed the order dated 5.10.2021 passed by Divisional Retail Sales Head, Agra Division Office, Marketing Division, Indian Oil Corporation Limited (Marketing Division), Agra thereby terminating the retail outlet dealership of the petitioner.

3. The petitioner being aggrieved by the order of cancellation of his retail outlet dealership had preferred an appeal which has also been rejected by means of impugned order dated 7.4.2022 passed by Executive Director (Retail Sales -N & E)/Appellate Authority, Indian Oil Corporation Limited, Head Office, Mumbai.

4. It has been submitted that the petitioner was appointed as a dealer in terms of petrol/HSD Pump Dealer Agreement dated 11.4.2021 executed between the petitioner and Indian Oil Corporation. They were further granted a license for carrying on business in the name and style of M/s Modern Service Station situated at Yamunapar, Laxmi Nagar, Mathura. It is stated that since 11.4.2021 the petitioner has been conducting the sales from the outlet in accordance with the terms and conditions of the agreement as well as Marketing Discipline Guidelines and there has never been grievance from any corner or any allegation against the petitioner with regard to their retail dealership.

5. It has further been submitted that the petitioner's retail outlet has two Dispensing Units manufactured by M/s Gilbarco Veeder Root (hereinafter referred to as M/s GVR). One of these two dispensing units is old and the second unit of High Speed Diesel (HSD) was procured from some other retail outlet by the respondent and was installed at the petitioner's retail outlet in 2019. Both the units are being maintained / inspected by engineers from M/s GVR and concerned government authorities and officers of the respondent corporation.

6. It is further submitted that the dispensing units require regular periodic stamping by Weights and Measures Department which were regularly done and the last stamping of the unit was done on 23.3.2019 by Weights and Measures Department and M/s. Gilbarco Veeder Root. Whenever there was any problem in running the two dispensing units the complaints were lodged by the petitioner which were expeditiously looked into by M/s GVR and the said units were lastly inspected on 14.1.2020 by the officers of the respondent-corporation and it was reported that all the seals are intact and no variation was found in the stocks.

7. It is stated that prior to cancelling the stamping of the dispensing unit certain amounts have to be deposited by the petitioner and accordingly the said amounts were deposited by the petitioner on 13.3.2020 and re-stamping was due but owing to COVID 19 conditions and lock-down the said stamping was extended till 30.9.2020.

8. It is stated that as their stamping of the dispensing units was due and the Area Manager, Retail Sales, Mathura-I visited the pump of the petitioner and orally asked them not to dispense the oil as their re-stamping was pending and accordingly on the basis of oral orders, they stopped the sales from 15.9.2020 on-wards. It has further been submitted that on 16.9.2020 the authorized service engineer of M/s Gilbarco Veeder Root by the name of Mr. Girendra, who was authorized representative of the respondent corporation, visited the retail outlet and was handed over the keys of both the dispensing units for the purpose of up-gradation of the software but he noticed certain defects in the mother board and he handed over the report which has been annexed along with the writ petition. According to the said report the seal was broken for the purpose of checking of the machines and for certain repair works but stamping could not be done by him, and he further noted that CPU cards are required to be replaced.

9. It has been submitted that the authorised agent left the machines in the same conditions, without repairing or stamping them and also without closing the dispensing units and the petitioner was under belief that that he would visit them on the next day i.e. 17.9.2020 to repair the said machines. He had reported that both the machines were defective, and the motherboard was require to be replaced and, therefore, stamping could not be done.

10. On the very next date i.e. 17.9.2020 the petitioner's retail outlet was jointly inspected by a team comprising MS(Retail Sales) Mathura II, RSA-Shri Pradeep Kumar, Service Engineer of Gilbarco Veeder Root  and Mr. Gopal Singh, LMO Mathura and Mr. A. S. Kushwaha  (respondent No.4). During the said inspection it was found that seal of both the dispensing units was broken and extra soldering with small wire was found on both the motherboards which were removed from the dispensing units, sealed and handed over to Area Manager (Retail Sales). The inspection report dated 17.9.2020 was prepared and was also countersigned by authorized retailer of the petitioner. The said cards were subsequently sent to M/s GVR for their report on the said card. According to the said report extra soldering work was observed in the mother boards and extra wire sealing was also found between the connector and the mother board. It was found that extra soldering work was done and sealing connector of the said wire was found torn and wire broken with intent to manipulate the dispensing unit and deliver fuel from the dispensing units. Pending report from the Indian Oil Corporation the sale of the petitioner was stopped by means of letter dated 21.9.2020 on the ground that certain irregularities have been observed in the petitioner's retail outlet at the time of joint inspection on 17.9.2020. Show cause notice was also issued to the petitioner on 8.10.2020 calling upon them to explain as to why action be not initiated in terms of clause 5.1.4 of the Marketing Discipline Guidelines-2012/Dealership Agreement.

11. The petitioner denied the allegations levelled against him by submitting reply on 12.10.2020 and also informed the respondents about visit of the authorised engineer of O.E.M. i.e. M/s GVR by the name of Mr. Girendra. The sales of the petitioner's retail outlet were stopped pending the inquiry.

12. Petitioner approached this Court by filing writ petition No.23158 of 2020 which was disposed of by this Court by means of order dated 18.12.2020 directing the respondents to conclude the pending inquiry initiated against the petitioner, expeditiously, preferably within a period of four weeks. It is in pursuance of the order passed by this Court that joint inspection of the retail outlet was conducted by the same team who had conducted the inspection previously on 17.9.2020. After receiving the said report on 5.3.2021 a show cause notice was given to the petitioner on 21.3.2021 referring to the report submitted by M/s GVR. The petitioner replied to the show cause notice on 31.6.2021 and after considering the reply of the petitioner by means of order dated 5.10.2021 the dealer agreement dated 11.4.2011 was cancelled in terms of clause 5.1.4 of the Marketing and Discipline Guidelines.

13. The petitioner being aggrieved by the said order had filed an appeal which has also been rejected by means of order dated 7.4.2022. Both the aforesaid orders have been impugned before this Court in the present writ petition.

14. Learned counsel for the petitioner while assailing the order of termination as well as appellate authority has submitted that both the orders are illegal and arbitrary and have been passed in violation of the principles of natural justice. It is stated that one of the grounds taken by the petitioner in their response to the show cause notice was with regard to visit of the authorized agent of M/s GVR on 16.9.2020. It was stated that the authorized representative had visited the retail outlet to upgrade the software and also to conduct stamping of the dispensing units had broken the seals to access the motherboards. It was submitted that at the time of inspection the machine was lying in the same condition as was left after the authorised agent of M/s GVR had attempted to repair the dispensing units, and consequently it cannot be said that it is the petitioner who can be held responsible for tampering of manipulating the motherboards.

15. It is also stated that it is evident from his report that the authorised agent had checked the CPU seal and found them to be defective and had advised replacement of the said cards. It was stated that tampering if any may have been done by the authorized representative. To decide the said issue a joint inspection was conducted by 17.9.2020, and according to the inspection report prepared on the said date it has been noticed that the seals have been broken . The petitioner in his response had stated that they have been running the dispensing unit for last nine year and there has never been any complaint with regard to their operation of the said outlet.

16. It is also noticed that in paragraph 8 of the  of the response they have clearly mentioned about the fact about the visit of the authorized service engineer of M/s GVR Mr. Girendra and also the fact that he had informed the petitioner that he had upgraded the software in both the dispensing units and also that some problems /defect seemed to have occurred in the CPU cards of both the dispensing units, and as such he was unable to complete his job and advised that CPU cards need to be replaced and pending aforesaid working machines were left open. It has further been submitted that it was the normal practice of the respondents that if there is any problem in mother boards they are immediately sent to OEM for testing but in the present case the OEM cards were kept in possession of the respondents for over 2 months before they were sent for testing and, hence, by the said date there was sufficient time for tampering with the said motherboards. There is no explanation forthcoming from the respondents as to why the mother boards were kept with them for over two months before sending them for testing and obtaining the report from the OEM regarding the fact as to whether there was any tampering or soldering.

17. They had further stated that in the inspection report prepared on 17/09/2020 there was no mention of tampering or soldering but the same was mentioned in the report submitted by OEM. The petitioners have denied their involvement in the said tampering if any. They have further stated that the report should have been obtained from the authorized service engineer of the M/s GVR who had opened the dispensing unit on 16.9.2020 prior to proceeding against the petitioner.

18. The response of the petitioner was considered by Executive Director (State of U.P.) Office - II, Noida and the order of termination of the agreement was passed by Divisional Retail Sales Head, Agra Division, Agra. In the said order of termination, he has considered the report submitted by OEM M/s GVR where it was clearly found that motherboards have been tampered with and certain extra soldering work was done which accordingly may lead to manipulations of these two dispensing units. It has further been stated that merely because the dispensing units were in custody of the petitioner, they have been held to be guilty of tampering with the said dispensing units and the retail outlet dealership has been cancelled.

19. Learned counsel for the petitioner assailing the impugned orders submits that even the reply submitted by them has not been considered while passing the impugned order of termination of the retail outlet. It is submitted that detailed facts have been narrated in the reply with regard to breaking up of the seal by authorized service engineer of OEM M/s. GVR on 16/09/2020 and also the fact that he had inspected the motherboards and had also submitted his report in this regard.

20. It is stated that tampering, if any, could have been done by authorized agent in as much as admittedly he had opened the said machine. The competent authority while terminating the retail outlet dealership has not even considered this aspect of the matter or recorded a finding with regard to the defence taken by the petitioner and, hence, in this regard it is stated that the impugned orders is vitiated on the ground of non-application of mind. It is further submitted that this aspect of the matter was specifically taken in the appeal preferred by the petitioner but still the appellate authority chose to ignore the defence raised by the petitioner and rejected the appeal.

21. Learned counsel for the petitioner submits that the essential facts which have been raised by the petitioner in their defence have been illegally and arbitrarily ignored by the respondents leading to miscarriage of justice and accordingly both the orders impugned are illegal and arbitrary  and are liable to be set aside.

22. Learned counsel for the respondent has defended the action of the Indian Oil Corporation. He has submitted that tampering with dispensing units is a serious offence and provision for the same have been clearly laid down in Marketing and Discipline Guidelines. On inspection dated of 17.9.2020 of motherboards it was found that there were additional soldering and wire attached to the said motherboards leading to irrefutable evidence that the said units have been tampered with and in the said situation where the dispensing units are in exclusive custody of the petitioner, it is the petitioner who is responsible, and there is no infirmity in the decision of the respondents to terminate the retail  outlet dealership. He has further submitted that due opportunity was given to the petitioner where a show cause notice was him, and a preliminary inquiry was conducted prior to initiating action against the petitioner. It has further been submitted that entire action was based on the report submitted by the inspecting team led by MS (Retail Sales), Mathura-II who had inspected the site and submitted report that motherboards have been tampered with and extra soldering and wire attached to the motherboards  which clearly demonstrates that the motherboards have been tampered with for manipulation of the delivery of the oil and, hence, submits that the impugned orders are legal and correct.

23. I have heard learned counsel for the parties and perused the records.

24. It is noticed that an agreement was entered into between the petitioner and the respondents way back on 11.4.2011 where the petitioner was given the retail outlet dealership situated at Yamunapar, Laxmi Nagar, Mathura and they have acted as a dealer  for the respondents for the last nearly nine years and there has been no complaint whatsoever till the inspection was conducted on 17.9.2020. In the said inspection certain tampering have been found in mother boards. During inspection the motherboards were taken out and sent for inspection to the OEM which reported that there was extra soldering and wire attachment to the motherboard and it seems that they have been tampered with leading to manipulation in operation of the dispensing units. As a dispensing unit are an exclusive control of the dealer, there is a presumption that is responsible for the said manipulations.

25. Show cause notice was given to the petitioner. The petitioner replied to the said notice stating that that certain testing had been done on 16.5.2010, which is a day prior to the joint inspection where the service engineer of M/s GVR had visited the retail outlet. Before commencing the repair he has informed the petitioner that he has obtained oral permission from the OEM as well as from the authorities of Weights and Measurement Department  to inspect the said machines for the purpose of stamping of the cards. He had worked on the said machine for nearly two hours and could not complete the work on the said date and the work was to be continued after replacement of the motherboards. He submitted his report which is annexed along with the writ petition. From the said report it evident that he has found that certain defects in mother boards  and was of the opinion that the same require replacement and because of which the job of software up-gradation  could not be taken up on the same day. It has further been stated that the machines were kept in the same state as they were left by the authorised agent for the aforesaid purposes. The retail outlet was subjected to inspection on the very next date i.e. 17.9.2020. The inspecting team visited the retail outlet of the petitioner and found tampering in the motherboards where extra soldering and wire were found. A show cause was given to which the petitioner submitted detailed reply culminating in the impugned order of termination.

26. Even in appeal of the petitioner the moot question raised was as to whether the petitioner can be held responsible for tampering with the mother board in peculiar facts and circumstances of the case where the machine was opened by authorised agent of M/s GVR a day prior to the inspection.

27. It is noticed that firstly that this aspect of the matter was duly brought to the notice of the competent authority in the reply to the show cause notice tendered by the petitioner, but the respondents chose not to address the said issue and proceeded to terminate the retail outlet dealership agreement of the petitioner without adverting to the submissions made in the reply. This specific aspect was also raised in the appeal preferred by the petitioner, but the appellate authority also chose to ignore the said vital aspect of the matter while rejecting the appeal preferred by the petitioner. Needless to say that both the authorities have acted in most illegal and arbitrary manner where they have chosen to ignore the grounds raised by the petitioner in his reply.

28. Due opportunity of hearing was necessary to be provided to the petitioner before any action could be taken against him.  It is settled proposition of law delineated by Supreme Court in catena of judgments that principles of natural justice should not reflect as a mere empty formality, but proper opportunity of hearing deserves to be given to the delinquent before taking any action against him.  In the present case the petitioner has specifically taken his defence that on 16.9.2020 the machines have been opened up by the authorised service engineer of OEM and he might have been responsible for tampering with the said machines. It was incumbent upon the respondents to have addressed the said issue duly considered the same and recorded a finding in this regard. Not adverting to the defence raised by the petitioner, the prescribed authority as well as the appellate authority have abdicated the jurisdiction vested in them and passed the impugned orders without application of mind. It was necessary for the respondents to have obtained response of OEM as well as Service Engineer who had visited the retail outlet on 16.9.2020 before proceedings against the petitioner. This vital piece of evidence was lost when the respondent authorities chose to ignore this aspect of the matter while dealing with the issue relating to termination of dealership of the petitioner.

Not dealing with the issues raised by the petitioner as defence, is also violation of the principles of natural justice. "Fair hearing" and "opportunity of hearing" during the enquiry proceedings would have no meaning in case the enquiry officer does not consider the submissions raised in defence by the person who is proceeded against. Opportunity of hearing would include due consideration of all the defences raised by the person who is proceeded against, and failing to consider the reply would be a clear violation of the principles of natural justice, and such an order would be arbitrary and violative of article 14 of the Constitution of India.

29. The retail outlet dealership of the petitioner has been terminated merely on the basis of the presumption, only considering the report of the OEM which only indicates that the mother board have been tampered with but still it was necessary for the respondents to return a finding that it was the petitioner, who was responsible for tampering with the mother board. Merely the basis of the allegations the agreement could not have been cancelled, in absence of cogent evidence pointing towards the involvement of the petitioner in such tampering and manipulation. Such action should not have been taken merely on the basis of presumption rather there has to be some cogent and reliable evidence with regard to tampering the motherboard by the petitioner so as to take action against the respondents. This evidence could have been made available had the respondent organization during the enquiry examined or recorded the statement of authorized service engineer of M/s GVR who had visited the retail outlet on 16.9.2020 and opened the dispensing unit after breaking open the seal. In absence of vital piece of evidence there is no other material which could link tampering of mother boards with the petitioner.

30. The enquiry officer as well as the appellate authority failed to consider the reply of the petitioner in this regard which leads to the irresistible conclusion that the impugned order has been passed without application of mind. Even otherwise, this Court is of the considered view after examining the material available on record that there is no evidence which can link tampering of the mother boards to the petitioner, except the fact that the machines were in exclusive custody of the petitioner. We also considered that prior to the inspection the dispensing units had been opened by the authorised service engineer of M/s GVK. No effort was made to record the evidence of the service engineer which could have demonstrated whether he had handled the motherboards or not. In light of the above this court is of the considered view that the findings recorded by the prescribed authority linking the manipulation of motherboard to the petitioner is not borne out from the records and therefore the impugned orders are illegal and arbitrary accordingly set aside.

31. The next question arises is as to whether after setting aside the impugned orders whether the matter should be remitted back to the respondents to reconsider, and proceed after removing the infirmity pointed out by this Court and to revisit the order of termination  or natural consequence may be allowed to be followed i.e. restoration of the license to run the outlet ?

32. In this regard counsel for the petitioner has submitted that in similar circumstances in the case of M/s Chaudhary Filing Point, Kazipur Vs. State of U.P. and others passed in M.B Writ No.27043 of 2018  where also the matter relating to tampering of mother board came up before this Court and this Court was of the considered opinion that there was no actionable evidence which can related to tampering being done by the petitioner and according restored the retail outlet dealership  of the petitioner therein.  Relevant paragraph  of the judgment is quoted as under:-

"As seen from the reading of the impugned order, the only reason assigned for being not satisfied with the explanation offered by the petitioner was that there was tampering in the DU and pulsar card contains certain soldering marks. However, what was not considered by the competent authority was that at what point of time this unauthorized tampering/soldering was done in the dispensing unit and how the dealer is manipulating the distribution of fuel. No material, much less credible one has been brought on record by the respondents to disclose the unauthorized access to the equipment by the petitioner. It was specific stand of the petitioner that periodically the Weights and Measurements Department officials inspected the seals and they were found to be intact. Furthermore, what is the impact on tampering/soldering in delivery unit is not disclosed. How the dealer can manipulate delivery of fuel by inserting such unit is not explained. The only objective of a dealer to tamper with dispensing unit is to manipulate delivery of fuel. In this case, the delivery of fuel was found to be accurate prior to checking of unit and after the checking. Furthermore, the defence of the petitioner that it is possible that the supplier himself might have done soldering while repairing for proper functioning of the unit by supplier himself cannot be brushed aside."

33. Similarly, reliance has also been placed on another judgment of this Court passed in Writ C No.25127 of 2018 (M/s Kamla Kant Automobiles and another Vs. State of U.P. and others) which has held as under:-

"After holding that the order dated 24.7.2017 is bad in law and liable to be quashed, the question arises as to whether the petitioner is entitled to restoration of dealership. There being no violation of any clause of agreement, no proceedings have culminated in accordance with law and after being exonerated of all the allegations levelleld against the petitioner only natural outcome has to be restoration of all benefits which the petitioner was deprived of unauthorizedly."

34. Sri Rakesh Kumar appearing for the respondent-oil corporation, has submitted that once it is noticed that there is defect / infirmity in the proceedings then it would be appropriate to remit the matter back to the competent authority to consider the aspect of the matter which has not been considered by them and pass fresh orders of termination has been passed.  In this regard it is noticed that principles of natural justice come to the rescue of a delinquent against whom action is proposed. The import of principles of natural justice is that a person against whom action is taken should be given adequate opportunity of hearing so as to adequately defend itself. In the present case, it is noticed that apart from the fact that the petitioner had submitted a detailed reply but still the respondents failed to consider all the aspect of the matter before terminating the retail outlet dealership agreement.

35. It is further noticed that the evidence which was available when the defect in the proceedings was pointed out by the petitioner would no longer available after such a long lapse of time though it was incumbent upon the respondent - organization to have recorded the statement of the authorized service engineer of OEM during the inquiry. It has been informed that the said authorised service engineer is no longer in employment as per the respondents. In the peculiar facts of the present case, this Court is of the considered view that a matter, at the discretion of the court, can be remitted for fresh consideration only when there is non-adherence of the principles of natural justice, and the infirmities pointed at by the Court of such nature which can be cured by remitting the matter before the prescribed authority. Non recording of vital piece of evidence is not part of the procedure, but related to the merits of the case and once inquiry has been concluded and it is found that the charges are not proved, then it would not be fair to the delinquent to remand the matter for recording further evidence which may have been available but not recorded. Wherever there is violation of principles of natural justice, the rights of the delinquent to defend himself is violated and matter is remitted to the inquiry officer to provide full opportunity to the delinquent. No such right has been recognized or vests in prosecution to be given another chance to proceed afresh and be permitted to record further evidence which was not recorded previously and then to pass a fresh order of penalty against the person proceeded against. Once proceedings have been completed against the delinquent, then principal of double jeopardy would operate against remitting of the matter at the behest of the prosecution and therefore it would not appropriate to remit the matter for taking fresh evidence.

36. In light of the above discussion the order of termination of dealership as well as the appellate order are illegal and arbitrary and, as such, the orders dated 21.9.2020, 5.10.2021 and 7.4.2022 are set aside.

37. The respondents are directed to restore the retail outlet dealership of the petitioner forthwith.

38. The writ petition stands allowed.

Order Date :- 18.5.2023                                                   (Alok Mathur, J.)
 
RKM.