Anil Agrawal And 3 Others vs Government Of India And 4 Others
2023 Latest Caselaw 15622 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

?Neutral Citation No. - 2023:AHC:108669-DB
 
Court No. - 40
 

 
Case :- WRIT - C No. - 35934 of 2019
 
Petitioner :- Anil Agrawal and 3 Others
 
Respondent :- Government Of India And 4 Others
 
Counsel for Petitioner :- Santosh Dwivedi,Alok Singh,Ramendra Pratap Singh
 
Counsel for Respondent :- A.S.G.I., Y,C.S.C.,Ishan Shishu,Komal Mehrotra
 

 
Hon'ble Mahesh Chandra Tripathi,J.

Hon'ble Manjive Shukla,J.

1. Heard Sri Ramendra Pratap Singh, learned counsel for the petitioners and Sri Komal Mehrotra, learned counsel appears for Respondent No. 2, Hindustan Petroleum Corporation Limited.

2. Petitioners have preferred the present writ petition with following reliefs:

"(I) Issue a writ, order or direction in the nature of certiorari calling for the records of the case and quashing the impugned order dated on 27.07.2017 passed by Chief Regional Manager & Duly Constituted Attorney, Varanasi Retail Office: 2nd Floor, North Square, Shastri Nagar, Sigra, Varanasi. thereby terminating-Petrol/Diesel Dealer Agreement dated on 26.09.2003. During pendency of the present Civil Misc. Writ Petition before this Hon'ble Court. (Annexure No.-4).

(II) Issue a writ, order or direction in the nature of mandamus commanding upon the respondents by staying the effect and operation of impugned order dated on 27.07.2017 passed by Chief Regional Manager & Duly Constituted Attorney, Varanasi Retail Office : 2nd Floor, North Square, Shastri Nagar, Sigra, Varanasi. And may also be pleased to restore the Dealership Agreement dated on 26.09.2003 and supply of Petrol, Diesel in the interest of justice. during pendency of the present Civil Writ Petition before this Hon'ble Court. (Annexure No.-4)"

3. Facts, in brief, for filing the present writ petition are that M/s Agrawal Traders, G.T. Road, Mughalsarai applied for award of retail outlet dealership in favour of partnership firm for establishing the petrol pump at Mohammadabad, District Ghazipur and the said application was duly accepted by respondent Corporation i.e. Hindustan Petroleum Corporation Limited (hereinafter referred to as "the Corporation"). Consequently, the Regional Manager of the Corporation had accorded temporary arrangement for operation of the company owned outlet at Mohammadabad, District Ghazipur on 06.06.2003. Thereafter, as per the aforesaid arrangement dated 06.06.2003, necessary leave, license and permission for the duration of the said arrangement was accorded to the petitioners to enter on the said premises and to use the premises and outlet for the sole and exclusive purpose of storing, selling and handing the products purchased by the petitioners from the Corporation and the petitioners shall have no right, title or interest in the said premises or outlet. The aforesaid arrangement was made for a period of one year commencing from 10th day of April, 2003 or till the appointment of regular dealer or till termination earlier by the Corporation. Thereafter the aforesaid temporary arrangement was confirmed and converted into permanent adhoc dealership agreement on 23.06.2003. Thereafter, the Special Team constituted by District Magistrate, Ghazipur headed by Sub-Divisional Magistrate, Ghazipur inspected the petrol pump of M/s Agrawal Traders, Mahammadabad, District Ghaipur on 23.05.2017 and submitted its report indicating therein that out of four dispensing units, three dispensing units of the retail outlet were found to be correct and one Dispensing Unit Line (L.N.T.) Sl. No. E.W. 1644 was found tampered with by soldering a wire in the pulser of said unit.

4. Learned counsel for the petitioner in this backdrop submits that after considering the said inspection report dated 23.5.2017, in most arbitrary manner, and without according opportunity of hearing to the petitioner, the respondent Corporation has terminated the Petrol/Diesel Dealership Agreement on 27.07.2017, which was entered into between the parties on 26.09.2003. Thereafter, one pulsar card seized from M/s Adhoc Agrawal Traders, Mohammadabad was sent to OEM M/s GVR India Pvt. Ltd., Coimbatore for OEM Test and after testing, the test report was sent vide test Report No. 170343 dated 09.11.2017, copy of the reference letter dated 14.11.2017 sent by C.R., Vijaya Kumar, DGM, Retail Region is annexed at Annexure No. 8 to the writ petition. The analysis and investigation report of one pulsar in question tested by Gilabarco Veeder Root Pvt. Ltd is as under:

" On visual inspection we have observed some wires are soldered on the sensor card.

Analysis and investigation:-

The Pulsar Card (LE90029), is connected to our standard test setup and observed the card is producing 25 ml for one rotation of sensor disk which is OK.

Conclusion:-

We have tested the sensor card it is producing 25ml for one rotation of the sensor disk, which is OK. On visual inspection we had observed some wires are soldered in the sensor card. This will not alter the delivery."

5. In this backdrop, learned counsel for the petitioners has placed reliance upon the judgement and order dated 26.04.2019 passed by Coordinate Bench of this Court in Writ C No. 15538 of 2018 (Ghazipur Petrol Supply Co. Vs. Hindustan Petroleum Corporation Limited and Ors.) wherein in similar facts and circumstances, action taken by the respondent Corporation was not approved by Division Bench of this Court and the same was held to be arbitrary and illegal on the principal of natural justice and accordingly, impugned order cancelling the agreement was set-aside and Writ Petition was allowed. Paragraph Nos. 5, 11 and 12 of the aforesaid judgement are reproduced hereinafter:

"5. It is stated that there has never been any complaint against the petitioner with regard to dispensing at the retail outlet. The retail outlet has three dispensing units which were manufactured by M/s Gilbarco Veeder-Root. It is stated that on 05.05.2017 an inspection was carried out at the retail unit of the petitioners by 5 member team and during the inspection the team took five litres of motor spirit from each dispensing unit and thereafter checked the quantities wherein nothing wrong was found thereafter the team opened the seal of the dispensing unit to check the Pulsar reading and on the said inspection it was found that out of the three dispensing units two were found to be correct but in respect of the third unit it was suspected that there was some internal wires. Copy of the inspection report dated 05.05.2017 is filed as Annexure-4 to the writ petition.

11. The petitioner has specifically argued that any action that ought to have been taken against the petitioner should have been decided only in terms of the Marketing Discipline Guidelines. Sri Atul Dayal, learned counsel for the petitioner, has extensively relied upon the provisions of Chapter V and Chapter VIII of the said Marketing Discipline Guidelines. Sri Dayal has argued that while passing the impugned order, the respondent-company did not obtain the opinion of the original equipment manufacturer which was in violation of Clause 5.1.4. Sri Dayal stressed that Clause 8.5.6 provides that show case notice will be issued within 30 days from the date of inspection indicating there irregularities and the said show cause notice should be accompanied by the specific allegations of irregularities and no such notice was issued within 30 days in fact in the present case the show cause notice was issued on 06.06.2017 which is beyond 30 days of the inspection, which was carried out on 05.05.2017. It is thus argued that the entire proceedings are illegal and deserves to be set aside on that ground alone.

12. The petitioner further argued that Clause 8.5.6 of the guidelines clearly provides that a personal hearing is to be given prior to passing the order, which the petitioners state were not given and, thus, the same is violative of the guidelines as well as against the principles of natural justice and thus liable to be set aside. It is further argued that Clause 8.5.8 of the guidelines require that on receipt of the reply to the show cause notice the charges levelled are required to be reviewed in view of the reply received and a speaking order is required to be passed giving the complete details of the irregularities committed, the reply of the dealer and the detailed reason as to why the replies are not acceptable to the person passing the order, Sri Dayal argued that the reply was not considered and the same was discarded as immaterial and the order was passed without assigning any reasons.

13. At last, the petitioners argue that the entire foundation based upon which the order dated 20.7.2017 was passed, has vanished, and, thus, the petitioner is entitled to restoration of the agreement and the dispensing unit.

14. The petitioner has placed on record the report of the original equipment manufacturer as Annexure-11 to the writ petition wherein the OEM has recorded that nothing wrong was found in the dispensing units. The petitioner has also placed on record that after the report of OEM he has requested the respondent-Corporation vide his letter dated 05.03.2018 to reopen the retail unit, however, the same was not done as such the petitioner was constrained to file the present petition.

15. The petitioner has also placed reliance on two judgements of the Hon'ble Supreme Court in case of E. Venkatakrishna vs. Indian Oil Corporation and another, (2000) 7 SCC 764, Harbanslal Sahnia and another vs. Indian Oil Corporation Ltd. and others, (2003) 2 SCC 107 and a judgement of this Court in M/S Kamal Kant Automobiles And Another vs. Hindustan Petroleum Corporation Ltd. And 2 Others, 2019 (3) ADJ 307 (DB).

16. Sri Vikas Budhwar, learned counsel for the Corporation fairly argued that points urged by the petitioner and the relief sought by the petitioner are squarely covered by the judgement of this Court in the case of M/S Kamal Kant Automobiles And Another vs. Hindustan Petroleum Corporation Ltd. And 2 Others, 2019(3)ADJ 307 (DB).

This Court in the judgement passed in the case of M/s Kamal Kant Automobiles (supra) had framed three questions:

(1) Whether the order dated 24.7.2017 passed by the Corporation terminating the agreement is perverse and based on no material and contrary to the Marketing Discipline Guidelines?

(2) Whether this Court should exercise its power under Article 226 of the Constitution of India in view of Arbitration Clause in the agreement? and;

(3) Whether the petitioner is entitled to restitution of the dealership?

17. This Court while deciding the question no. 1 relying upon the judgement of Food Corporation of India Vs. Kamdhenu Cattle Feed Industries Ltd. 1993(1) SCC 71, Hindustan Petroleum Corporation Limited and others vs. Super Highway Services and another, (2010) 3 SCC 321 and Bharat Petroleum Corporation Limited vs. Jagannath and Company and others, (2013) 12 SCC 278 held that orders passed without complying with the provisions of Marketing Discipline Guidelines and in violation of principles of natural justice are bad in law. This Court also considered the effect of the arbitration clause and held that in view of the fact that order suffered from non-observance of principles of natural justice, arbitration clause could be of no avail and it was also held that the arbitration clause would not provide an effective and efficacious remedy as the arbitrator was not empowered to grant the relief of restoration of dealership. This Court ultimately had set aside a similar order of termination of dealership and issued mandamus for restoration of the agreement and for restoration of supplies.

18. Considering the averments made at the bar, we are of the view that the facts of the present case are similar to the facts as urged in the case of M/s Kamal Kant Automobiles (supra) and, thus, the findings recorded therein would squarely apply to the facts of the present case. Considering the factual averments, the subsequent report of the OEM and the judgement of M/s Kamal Kant Automobiles, we have no hesitation in holding that the order dated 20.7.2017 is in complete disregard to the Marketing Discipline Guidelines and principles of natural justice and is thus wholly arbitrary, illegal and is liable to be set aside.

19. Accordingly, the order dated 20.7.2017 is set aside and the respondents are directed to forthwith restore the agreement dated 28.9.2015 and to restore the supplies to the petitioner's retail outlet within a period of two months from today subject to the petitioner having all requisites statutory permissions.

20. The writ petition is allowed in terms of the said order.

No order as to costs. "

6. So far as factual & legal aspect of the matter is concerned, Sri Komal Mehrotra, learned counsel for the Respondent No. 2 fairly acknowledges the analysis and investigation report and also the conclusion, which has been drawn. So far as aforementioned judgement i.e. Ghazipur Petrol Supply Co. (Supra) is concerned, learned counsel for the respondent Corporation submits that the same has not been disputed and has been complied with by the Corporation and the agreement of the petitioner in the aforesaid case, has also been restored.

7. Learned counsel for the petitioners submits that initially against the termination of agreement, the petitioners have preferred an injunction suit and an ex-parte injunction was accorded in favour of the petitioners and petitioners were running the outlet but once an objection was raised on the ground that the petitioners have alternative remedy to approach the Arbitrator in terms of agreement, then said injunction was vacated and consequently, the present Writ Petition is preferred. So far as running of the petrol pump is concerned, the same has not been disputed as the same has been restored. He further apprised this Court that till date, no other report of malpractices by the petitioners' outlet has been reported to the Corporation.

8. Considering the factual aspect of the matter, the subsequent report of the OEM and the judgment of Ghazipur Petrol Supply Co. (Supra), we are of the considered view that the order dated 27.07.2017 is wholly arbitrary and is liable to be set-aside.

9. Accordingly, order dated 27.07.2017 is set-aside and respondents are directed to forthwith restore the dealership agreement dated 26.09.2003.

10. The Writ Petition stands allowed in terms of the said order.

Order Date :- 18.5.2023

A. Mandhani