Allied Motors Ltd. vs Bharat Petroleum Corporation ...
2004 Latest Caselaw 862 Del

JUDGMENT

Sanjay Kishan Kaul, J.

1. The petitioner entered into an agreement dated 28.01.1971 with the predecessor-in-interest of the respondent company for a dispensing pump and selling license in respect of a petrol pump situated at Vikas Marg, Preet Vihar, New Delhi. The controversy as arisen on account of an inspection carried out at the pump of the petitioner in the early hours of 15.05.2000 where an unauthorised tank lorry was found decanting product and samples were drawn. An FIR was registered and one Mr. Pradeep Gupta was arrested. The said Mr. Pradeep Gupta was managing the petrol pump in pursuance to a management agreement stated to have been executed with the Directors of the petitioner company and Ms. Kanta Talwar dated 28.09.1998.

2. The petitioner claimed to have learnt about the incident on 16.05.2000 and issued a notice to Mr. Pradeep Gupta as to why the management agreement should not be terminated. However, on the said date, the respondent company terminated the dealership agreement with the petitioner on account of sample failing the test. The reasons set out for the same are as under:

''Following irregularities were observed in operation of subject dealership:

(i)We have been informed that the police party of the Crime Branch headed by Shri Azad Singh, Inspector raided the Petrol Pump Premises and caught red handed an unauthorised Tank Lorry having Registration No. DL1GB-4233 decanting product other than products supplied by the company into two underground storage tanks meant for Unleaded Petrol (ULP) unauthorisedly around 4.00 a.m. on 15.5.2000. A FIR no. 193/2000 was also lodged by the local police.

(ii)Further the said unauthorised tank lorry was properly connected through hose pipes to two of underground tanks (meant for storage of ULP at the retail outlet) decanting unauthorised product may be with the view to adulterate ULP product supplied by the company for the purposes of illegal gains at the cost of reputation of the company and cheating public at large or any other reason / intention best known to you.

(iii) One of the sample of tank no. 1 out of the samples taken for laboratory test has failed on specifications of ULP.

From the foregoing it is clear that you have failed in the performance of your obligations under the aforesaid agreement entered by in between us, thereby causing inter-alia a breach of trust.

In the past also a product sample collected from this outlet was found to be failing the specifications. While we were entitled to terminate as per Dispensing Pump Selling license Agreement we had taken lenient view and had given you another chance. With the present instance it is clear that you have completely violated the agreement with you.

We take an extreme serious view of the aforesaid breaches committed by you and in the circumstances referred above, we find no option but to terminate the aforesaid license agreement which is TERMINATED with immediate effect and we are not willing to carry on our business with you any more. In view of above termination, henceforth, you, your agents and your representatives should not enter upon or make any attempt to enter upon the aforesaid retail outlet.''

The petitioner, however, protested against the same vide letter dated 20.05.2000.

3. The samples drawn from the respondent were sent on 15.05.2000 itself to Shakurbasti Lab and the report was submitted on 16.05.2000. The samples failed on one account, which was the Registration Octane Number ( for short, 'RON' ) requirement. There are different test reports for the different samples drawn and six of the samples were tested on 15.05.2000 itself being the date of receipt, but three samples drawn on 15.05.2000 were received by the Lab only on 17.05.2000 and, thus, those reports are date 17.05.2000.

4. A Criminal Writ Petition bearing No. 877/2000 was filed by Mr. Pradeep Gupta, which was disposed of on 06.12.2000 directing that the sample lying in the custody of the police be produced before the trial court and if the trial court is satisfied that the same is not tampered with, the sample be sent to Indian Institute of Petroleum at Dehradun for expert opinion. The sample was accordingly sent in pursuance thereto and a report was submitted under the cover of the letter dated 15.02.2001. The sample as found not to be defective, but surprisingly, the report shows that the test for RON was not done, which was the reason for failing of the sample in the earlier test.

5. The order passed by the Metropolitan Magistrate dated 27.05.2002 on the issue of framing of charges against Mr. Pradeep Gupta has also been placed on record and the same has been relied upon by the petitioner to show that the charges were not framed. The charges were not framed since the FIR was registered under Section 420 read with Section 120-B of the Indian Penal Code and the M.M. found that the case was not made out under the aforesaid provisions of cheating or conspiracy to cheat and rather it was a case of adulteration of petrol for which the provisions of the Essential Commodities Act should have been invoked. This order is stated not to have been challenged further.

6. The petitioner has impugned the letter dated 16.05.2000 seeking to cancel the petitioner's license for running the petrol pump and directing the respondent to hand over possession of the petrol pump to the petitioner while renewing the license since the respondent had deputed its personnel to start running the petrol pump.

7. The submissions of learned counsel for the petitioner are four-fold:

(i)The termination of dealership agreement was without show-cause notice, which is contrary to the Marketing Discipline Guidelines (hereinafter to be referred to as, `the said Guidelines') provided for by the Government of India. Thus, in view of the he being no show-cause notice, the termination of dealership agreement was illegal, especially in view of the judgment of learned Single Judge of this Court on the same issue in Bharat Filling Station and Anr. v. Indian Oil Corporation Ltd., 104 (2003) DLT 01.

(ii)The termination letter is dated 16.05.2004 while some of the samples have been tested only on 17.05.2004 There was, thus, a pre-conceived mind since even without receipt of the report on all the samples, the dealership agreement was terminated.

(iii)The subsequent sampling in pursuance to the directions passed on 06.12.2000 in Crl.W.P. No. 877/2000 showed that the sample was clear and had passed.

(iv)The FIR registered against Mr. Pradeep Gupta did not even result in framing of charges in terms of the order of the learned M.M. dated 27.05.2002.

8. All the aforesaid pleas were opposed by learned senior counsel for the respondent and I consider it appropriate to consider these pleas in reverse order for the reason that really there is only one contentious issue between the parties.

9. The fourth issue arising from the order of the learned M.M. dated 27.05.2002 cannot be of much assistance to the petitioner since it is neither a case of clean acquittal nor of charges not being framed on account of no material being found. The charge have not been framed because the learned M.M. found that wrong provisions of law had been invoked and the prosecution should have been initiated under the Essential Commodities Act.

10. Similarly, on the third issue of the sample being cleared, it is to be noticed that the direction passed by the Division Bench in Crl.W.P. No.877/2000 was not in the presence of the respondent herein. Be that as it may, the report submitted in pursuance thereto shows that no test had been done for RON which is the basis for failing of the sample of the petitioner as per the earlier test. If the said test had not been done, the report cannot be of use to show that the sample is cleared.

11. The second plea raised by the petitioner is that the sample had been tested after the termination. However, as noticed above, six out of nine samples were sent on the same date of being drawn, i.e., 15.05.2000 and the report was received on 16.05.200 and the termination decision was taken on the same date soon thereafter. No doubt, three of the samples were sent two days later and tested only on 17.05.2000 when the report was received. Be that as it may, once majority of six of the samples had failed out of nine samples drawn, the absence of the report on other three samples cannot preclude the respondent from taking the decision nor can it be said that the decision has been taken in the absence of any adverse report of sampling.

12. The crux of the dispute is the first issue on account of the admitted absence of show-cause notice. Learned counsel for the petitioner strongly relied upon the judgment in Bharat Filling Station's case (supra), which took into consideration the said guidelines and came to the conclusion that since the said Guidelines itself provided for such show-cause notice, no decision for termination could be taken in the absence of such show-cause notice. In that case, learned Single Judge while dealing with the said Guidelines observed in para 9 as under:

''As noted above, IOC, whenever enters into dealership agreement, executes memorandum of agreement which lays down standard terms and conditions. These conditions, inter alia, include provision 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. These Guidelines are laid down in order to ensure that retail outlets are carried on the principles of highest business ethics and excellent customer service and customers receive product of the right quality and quantity. The purpose is also to ensure that dealers follow the correct and safe practices in handling and dispensing petroleum products, show courteous behavior to customers and provision of uniform code of conduct and discipline is enforced throughout the country dealership network of the industry. For ensuring uniform code of conduct and discipline, the Guidelines also enumerate the nature of irregularities which may be committed by such dealers and the action which is required for such irregularities. Chapter 6 of these Guidelines titled ''Prevention of Irregularities at Retail Outlets''stipulates major as well as minor irregularities and provides for the penalties for such major and minor irregularities. At the end of Chapter 6, nine notes are given. ... ... ...'' .

Note (ii) referred to above is as under:

"(ii) Every punitive action would be taken after show-cause notice of minimum seven days."

13. In that case, learned Single Judge considered the impact of providing for the said Guidelines and the note referring to the pre-requisite of a show-cause notice and came to the conclusion that once the said Guidelines exist, which prescribed the procedure, the said procedure should be followed. A reference was also made to Full Bench judgment of this Court in M/s J.T. (India) Exports v. Union of India and Anr., 2001 (78) ECC 677 (Del.) dealing with the issue of principles of natural justice. It would be useful to reproduce the discussion on this aspect by learned Single Judge in paras 11 to 16:

''11.As per Note no.(ii) before taking punitive action show-cause notice of minimum seven days would be served. When the respondents have themselves provided for detailed procedure to take action in case a dealer is found to have committed some irregularity as per which the show-cause notice has to be served, the respondents cannot be permitted to say that such procedure is not to be followed. Mr. Kalra, learned counsel for the petitioner relied upon Note no.(i) to say that these Guidelines were of general nature and the respondent no.2 was authorised to take appropriate higher punitive action against the erring dealer including termination in the first or any instance. That may be so. It cannot be denied that the kinds of penalties which are provided are to be generally followed and in exceptional cases, if the respondent no.2 is of the opinion that higher penalty than the normal penalty prescribed in the Guidelines is to be given, the respondent no.2 is not powerless to inflict such penalty. However, at this stage we are dealing with the question as to whether before imposing the penalty principles of natural justice are required to be observed. As pointed out above, respondents' own guidelines prescribed this procedure. It is trite law that any action, even administrative, which visits person with penal or civil consequences, before taking such action principles of natural justice are generally to be followed unless the legislature has by incorporating a statutory provision specifically excluded the observance thereof. In the instant case, there is no such exclusion. On the contrary the respondents have themselves provided for the mechanism for taking such action and have rather incorporated the provision for issuing of show-cause notice. In act, even as per the argument of Mr. Kalra, the respondents would be required to serve such a show-cause notice. The penalties which are to be given in case of such irregularities are already mentioned above. Mr. Kalra submits that the respondent-IOC has right to take appropriate highest punitive action even in the first or any instance. That means in a given case the respondent no.2 can depart from the normal penalties. If respondents want to take such action, they will have to justify the same on the facts and circumstances of a particular case and this itself necessitated observance of principles of natural justice by putting the dealer to notice that going by the serious irregularity in a given case, the respondent propose to terminate the dealership and therefore such a dealer will have to be given an opportunity to show cause against such a proposed action. When normally from the guidelines a dealer is put to notice for any irregularity, like in the instant case, the first instance which would visit is the penalty of suspension for a few days and some fine in monetary terms.

12. A Full Bench of this Court in the case of M/s J.T. (India) Exports Vs. Union of India and Anr. reported in 2001 (78) ECC 677 (Del.) recapitulated the legal position on this aspect after scanning important case law, Indian as well as English. Arijit Pasayat, CJ (as he then was) speaking for the court formulated the legal position in the following manner: .

"Para 4: The expression `natural justice and legal justice' do not present a water-tight classification. It is the substance of justice which is to be secured by both, and whenever legal justice fails to achieve this solemn purpose, natural justice is called in aid of legal justice. Natural justice relieves legal justice from unnecessary technicality, grammatical pedantry or logical prevarication. It supplies the omissions of a formulated law.

Para 5: The adherence to principle of natural justice as recognised by all civilised States is of supreme importance when a quasi-juridical body embarks on determining disputes between the parties. These principles are well-settled. The first and foremost principle is what is commonly known as audi alteram partem rule. It says that none should be condemned unheard. Notice is the first limb of this principle. It must be precise and unambiguous. It should appraise the party determinatively the case he has to meet. Time given for the purpose should be adequate so as to enable him to make his representation. In the absence of a notice of the kind and such reasonable opportunity, the order passed against the person in absentia becomes wholly vitiated. Thus it is but essential that a party should be put on notice of the case before any adverse order is passed against him. This is one of the most important principles of natural justice. It is after all an approval rule of fair play.

Para 6: Principles of natural justice are those rules which have been laid down by the Courts as being the minimum protection of the rights of the individual against the arbitrary procedure that may be adopted by a judicial quasi-judicial authority while making an order affecting those rights. These rules are intended to prevent such authority from doing in justice."

13. The court, thereafter, concluded from some leading judgments of court in England including Board of Education Vs. Rice, 1911 AC 179 and Earl of Solbourne, LO in Spackman v. Plumstead District Board of Works, 1985 (10) AC 229 and expressed in the following manner as to how concept of principles of natural justice had shaped over a period of time:

"Para 11: Concept of natural justice has undergone a great deal of change in recent years. Rules of natural justice are not rules embodied always expressly in a statute or in rules framed there under. They may be implied from the nature of the duty to be performed under a statute. What particular rule of natural justice should be implied and what its context should be in a given case must depend to a great extent on the fact and circumstances of that case, the framework of the statute under which the enquiry is held. The old distinction between a judicial act and an administrative act has withered away. Even an administrative order which involves civil consequences must be consistent with the rules of natural justice. Expression `civil consequences' encompasses in fraction of not merely property or personal rights but of civil liberties, material deprivations, and non-pecuniary damages. In its wide umbrella comes everything that affects a citizen in his civil life.

Para 12: Natural justice has been variously defined by different Judges. A few instances will suffice. In Drew v. Drew and Lebura, 1855 (2) Macg. 1.8, Lord Cranworth defined it as `universial justice'. In James Dunber Smith v. Her Majesty the Queen, ( 877-78 (3) App. Case 614, 623 JC) Sir Robort P.Collier, speaking for the judicial committee of Privy Council, used the phrase `the requirements of substantial justice', while in Arthur John Specman v.Plumstead District Board of Works, 91884-85 (10) Applase 229, 240), Earl of Salbourne, S.C. Preferred the phrase ''The substantial requirement of justice'. In Vionet v. Barrett, 1885 (55) LJRD 39, 41, Lord Fasher, M.R. defined natural justice as `the natural sense of what is right and wrong'. While, however, deciding Hookings v. Smethwick Local Board of Health, (1890 (24) QBD 712), Lord Fasher, M.R. instead of using the definition given earlier by him in Vionet v. Barret (supra) chose to define natural justice as `fundamental justice'. In Ridge v. Bald in, (1963(1) WB 569, 578) Harman LJ, in the Court of Appeal described natural justice as `fairplay in action'. This was noted in Maneka Gandhi v. Union of India, . In re R.N. (An Infaot) (1967(2) B 617, 530) Lord Parker, CJ, preferred to describe natural justice as `a duty to act fairly'. In Fairmount Investments Ltd. v. Secretary to State for Environment, (1976 WLR 1255) Lord Russell of Willowan somewhat picturesquely described natural justice as `a fair crack of the whip' while Geffrey Lane, LJ in Regina v. Secretary of State for Home Affairs Exparte Hosenball, 1977 (1) WLR 766, preferred the homely phrase `common fairness'.

Para 14: Even if grant of an opportunity is not specifically provided for it has to be read into the unoccupied interestices and unless specifically excluded principles of natural justice have to be applied. Even if a statute is silent and there are no positive words in the Act or Rules spelling out the need to hear the party whose rights and interests are likely to be affected, the requirement to follow the fair procedure before taking a decision must be read into the statute, unless the statute provides otherwise. Reference is accordingly disposed of.

14. Once it is held that the principles of natural justice are to be normally followed before taking such an action next question which falls for determination is as to whether observance of principles of natural justice can be dispensed with in general public interest, when the offence alleged is of very serious nature. In support of this proposition, as pointed above, Mr. Kalra had referred to the judgment of Supreme Court in the case of Maneka Gandhi (supra) and Tulsi Ram Patel (supra).

15. What would be the position when very emergent and immediate action is to be taken keeping in view the serious and/or sensitive nature of allegations against a particular contractor/supplier and observance of principles of natural justice and time consumed therein may defeat the very purpose for which emergent action is required?

16. There could be two answers to this question which are as follows:

(a)In a given case the Government can justify that principles of natural justice are not required to be observed at all. In the judgment dated 7th January, 2003 in CWP No.5475/2002, the court held that based on dictum laid down in the cases of R.S. Dass v. Union of India and others reported in 1986 (Supp) SCC 617, Shiv Sagar Tewari Vs. Union of India , the position which emerges is that the court would not compel observance of rules with natural justice in cases:

(i) where giving of notice would obstruct taking of prompt action and the matter is urgent and requires prompt action. Inaction or delay would paralyse the administrative process / machinery.

(ii) where on indisputable or admitted facts, only one conclusion was possible and it would be futile to issue a writ or compel observance of principles of natural justice.

(iii) where observance of principles of natural justice is excluded by express provisions of statute or by implication.

Thus if the Government is able to bring its case within the sweep of any of the aforesaid situation, it can justify giving go-by to the observance of rules of natural justice. Further in a given case the court can still deny relief in exercise of writ jurisdiction even though the impugned order was not sustainable if the Government is able to justify that giving relief would do greater harm to the society and would be prejudicial to public interest.

(b)If the action to be taken is of such an emergent nature that pre-decisional hearing would not be possible, purpose can be achieved by giving post-decisional hearing as held in the case of Liberty Oil Mills and others v. Union of India and others , wherein the court observed:

"...Does it mean that the principle of natural justice of procedural fairness is to be altogether excluded when action is taken under Clause 8-B? We do not think so. We do not think that it is permissible to interpret any statutory instrument so as to exclude natural justice, unless the language of the instrument leaves no option to the Court. Procedural fairness embodying natural justice is to be implied whenever action is taken affecting the rights of parties. It may be that the opportunity to be heard may not be pre-decisional; it may necessarily have to be post-decisional where the danger to be averted or the act to be prevented is imminent or where the action to be taken can brook no delay. If an area is devastated by flood, one cannot wait to issue show cause notices for requisitioning vehicles to evacuate population. If there is an out-break of epidemic, we presume one does not have to issue show cause notices to requisition beds in hospitals, public or private. In such situations, it may be enough to issue post-decisional notices providing for an opportunity."

It, however, gave example of such emergent cases where pre-decisional hearing may not be necessary and post-decisional hearing would serve the purpose by making these remarks:

''...It may be that the opportunity to be heard may not be pre-decisional; it may necessarily have to be post-decisional where the danger to be averted or the act to be prevented is imminent or where the action to be taken can brook no delay. If an area is devastated by flood, one cannot wait to issue show cause notices for requisitioning vehicles to evacuate population. If there is an out-break of epidemic, we presume one does not have to issue show cause notices to requisition beds in hospitals, public or private. In such situations, it may be enough to issue post-decisional notices providing for an opportunity. It may not even be necessary in some situations to issue such notices, but it would be sufficient but obligatory to consider any representation that may be made by the aggrieved person and that would satisfy the requirements of procedural fairness and natural justice. ..."

14. Learned Single Judge further referred to judgment of the Supreme Court in Harbanslal Sahnia and Anr. v. Indian Oil Corporation Limited and Ors., , which was a case of the termination of dealership agreement by the respondent, Indian Oil Corporation. The Supreme Court negated the contention of the respondent IOC that the writ petition was not maintainable on account of there being a contractual relationship containing an arbitration clause. Thus, in the case of Bharat Filling Station's case (supra), learned Single Judge, in fact, restored possession of the petrol pump to the petitioner therein on account of the termination order being quashed.

15. Learned counsel for the petitioner, thus, submitted that the same relief is entitled to be granted in the present petition, especially in view of the fact that in terms of the interim orders dated 25.09.2002, no third-party interest was to be created and the petrol pump is being run by the respondent company itself.

16. Learned senior counsel for the respondent, however, made elaborate submissions in this behalf referring to a number of judgments to show that certain judgments were not brought to the notice of learned Single Judge in Bharat Filling Station's case (supra). Further, it was submitted that at best the said judgment would apply in the facts and circumstances of the said case since the allegation which resulted in the termination of dealership agreement was of an extra switch being installed which was not part of the original agreement and which resulted in short supply. The present case being one of adulteration, similar relief should not be granted to the petitioner.

17. Learned senior counsel vehemently contended that if a contract is wrongfully terminated, as claimed by the petitioner, the remedy lay by filing a civil suit. It was submitted that RON was required to be 87 and a number of samples had failed on this parameter. The show-cause notice was claimed not to be required as the petitioner had been caught red-handed and even possession was taken over on 20.05.2000 in pursuance to the cancellation letter dated 16.05.2000. The writ petition was filed only on 04.12.2001 after the lapse of almost one and a half years and, thus, that would also defeat the claim of the petitioner for any such relief of restoration of possession.

18. Learned senior counsel submitted that the principles of natural justice cannot be put in a straight jacket and the same vary from case to case. It was, thus, submitted that there was nothing more the petitioner could add than what was submitted before this Court on the factual matrix. It was also emphasized that there was a past history where inspection of the outlet had been carried out on 12.12.1998 and Lubes samples were collected which were found off-specifications. However, a lenient view was taken in terms of the letter dated 27.02.1999 / 01.03.1999 and instead of terminating the agreement forthwith, a direction was made for stopping sale and supply of all petroleum products for 15 days.

19. Learned senior counsel also referred to the fact that against the judgment of learned Single Judge in Bharat Filling Station's case (supra), an appeal being LPA No. 299/2003 was filed. However, in the meantime, enquiry had been conducted and a post-decisional hearing had been given resulting in the order dated 14.07.2003. The parties were, thus, granted liberty to raise all the contentions / questions raised in the appeal and since the order dated 14.07.2003 was to be impugned and the appeal had become infructuous. This was in terms of the Order dated 18.07.2003 of the Division Bench of this Court.

20. Now, it would be appropriate to discuss all the judgments cited by learned senior counsel for the respondent. The first judgment is Indian Oil Corporation Ltd. v. Amritsar Gas Services and Ors., where the grant of relief by the Arbitrator for restoration of possession was held not to be sustainable since the distribution agreement could be terminated in terms of the agreement itself if and when the occasion arises. It was, thus, held in view of the provisions of sub-section (1) of Section 14 of the Specific Relief Act, which specifies that the contracts, which cannot be specifically enforced, include the one which contract in its nature is a determinable.

21.It may, however, be noticed that the aforesaid finding was arrived at on the basis that the provisions in the agreement themselves provided for determination of the agreement when an occasion arises. However, in the present case, clause 12 of the agrement provides for termination of the agreement by either party giving not less than 90 days notice and clause 13 provides for liberty to terminate the agreement on the eventualities mentioned in the said clause where the licensee is in default as per the terms specified there under. There are also the said Guidelines, which have been brought into force to bring a uniform practice and, thus, in my considered view, it cannot be said that in all eventualities, the possession cannot be restored even if the termination is illegal. In this behalf, the matter is clear in view of the judgment of the Supreme Court in Harbanslal Sahnia's case (supra) and the judgment of learned Single Judge of this Court in Bharat Filling Station's case (supra).

22.Learned senior counsel next relied upon judgment of the Supreme Court in Kerala State Electricity Board and Anr. v. Kurien E. Kalathil and Ors., to contend that the remedy under Article 226 of the Constitution of India would not be the proper forum for resolution of the disputes where an alternative remedy is provided for and contractual or commercial activities of a statutory body need not necessarily raise issues of public law. It was observed in para 11 as under:

'' 11.A statute may expressly or impliedly confer power on a statutory body to enter into contracts in order to enable it to discharge its functions. Dispute arising out of the terms of such contracts or alleged breaches have to be settled by the ordinary principles of law of contract. The facts that one of the parties to the agreement is a statutory or public body will not by itself affect the principles to be applied. The disputes about the meaning of a covenant in a contract or its enforceability have to be determined according to the usual principles of the Contract Act. Every act of a statutory body need not necessarily involve an exercise of statutory power. Statutory bodies, like private parties, have power to contract or deal with property. Such activities may not raise any issue of public law. In the present case, it has not been shown how the contract is statutory. The contract between the parties is in the realm of private law. It is not a statutory contract. The disputes relating to interpretation of the terms and conditions of such a contract could not have been agitated in a petition under Article 226 of the Constitution of India. That is a matter for adjudication by a civil court or in arbitration if provided for in the contract.

Whether any amount is due and if so, how much and refusal of the appellant to pay it is justified or not, are not the matters which could have been agitated and decided in a writ petition. The contractor should have relegated to other remedies.''

23.In the present case, however, the issue is one of observation of the said Guidelines, which admittedly apply and the consequences arising from violation of the said Guidelines, which have been framed to facilitate a uniform practice by all the oil companies. The Supreme Court itself had entertained a petition in the case of Harbanslal Sahnia's case (supra). Thus, the judgment in Kerala State Electricity Board's case (supra) would not be of much assistance in the given facts of the case.

24.Learned counsel next sought to contend that non-statutory guidelines cannot be invoked for such a relief and relied upon the judgments of the Supreme Court in Union of India and Ors. v. S.L. Abbas, and J.R. Raghupathi etc. v. State of A.P. and Ors., .

25.In the case of S.L. Abbas (supra), the matter was relating to service law where while dealing with the issue of transfer, it was observed that it is for the appropriate authority to decide this aspect unless the order of transfer is vitiated by malafade or is made in the violation of any statutory provisions. The guidelines issued by the Government on this subject have to be kept in mind, but they do not confer upon the Government employee a legal enforceable right, especially as the guidelines provided that husband and wife are to be posted in the same place `as far as possible'. Here again, I see really no application of the said judgment to the facts of the present case. In the said case, the matter in issue was one of service jurisprudence and of transfer where the guidelines themselves provided that the same should be implemented `as far as possible'. There was no mandate in the guidelines.

26.In J.R. Raghupathy's case (supra), the issue was relating to the Government's decision to locate Mandal Headquarters in a particular place. Para 18 of the said judgment was relied upon, which is in the nature of contentions advanced on behalf of the respondent State Government. The guidelines were observed to be merely in the nature of instructions issued by the State Government to the Collector regulating the manner in which they should formulate the proposals for formation of a Revenue Mandal or for location of its Headquarters. The Guidelines in the present case are actually Marketing Discipline Guidelines formulated by the Government of India, which are uniformly followed by all the oil companies. It, thus, cannot be said that the said Guidelines having been formulated, the same can be violated with impunity.

27.Learned senior counsel next referred to certain judgments on the principles of natural justice and the requirement of a show-cause notice. Learned senior counsel referred to judgment of the State of Gujarat and Ors. v. Meghji Pethraj Shah Charitable Trust and Ors., where it was observed in para 22 as under:

''22.We are unable to see any substance in the argument that the termination of arrangement without observing the principle of natural justice (audi alteram partem) is void. The termination is not a quasi-judicial act by any stretch of imagination; hence it was not necessary to observe the principles of natural justice. It is not also an executive or administrative act to attract the duty to act fairly. It was - as has been repeatedly urged by Shri Ramaswamy - a matter governed by a contract / agreement between the parties. If the matter is governed by a contract, the writ petition is not maintainable since it is a public law remedy and is not available in private law field, e.g., where the matter is governed by a non-statutory contract. Be that as it may, in view of our opinion on the main question, it is not necessary to pursue this reasoning further.''

28.Learned senior counsel also referred to judgment of the Supreme Court in Aligarh Muslim University and Ors. v. Mansoor Ali Khan, . The matter again relates to one of service jurisprudence and the right of the respondent therein to a show-cause notice before his termination as a permanent employee. The case was one of absence without sanction leave and one of the clauses provided that in case of absence for a period beyond five years, the employee should be deemed to have resigned and cased to be in service. In para 23 of the said judgment, reference was made to the case of S.L. Kapoor v. Jagmohan, and it was observed as under:

'' 23.Chinnappa Reddy, J. in S.L. Kapoor case laid down two exceptions namely, if upon admitted or indisputable facts only one conclusion was possible, then in such a case, the principle that breach of natural justice was in itself prejudice, would not apply. In other words, if no other conclusion was possible on admitted on indisputable facts, it is not necessary to quash the order which was passed in violation of natural justice. Of course, this being an exception, great care must be taken in applying this exception.

24.The principle that in addition to breach of natural justice, prejudice must also be proved has been developed in several cases. In K.L. Tripathi v. State Bank of India, , Sabyasachi Mukharji, J. (as he then was) also laid down the principle that nor mere violation of natural justice but de facto prejudice (other than non-issue of notice) had to be proved. It was observed, quoting Wade's Administrative Law (5th Edn., pp. 472-75), as follows:

'' It is not possible to lay down rigid rules as to when the principles of natural justice are to apply, nor as to their scope and extent. ... There must also have been some real prejudice to the complainant; there is no such thing as a merely technical infringement of natural justice. The requirements of natural justice must depend on the facts and circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject-matter to be dealt with, and so forth.''

Since then, this Court has consistently applied the principle of prejudice in several cases. The above ruling and various ruling taking the same view have been exhaustively referred to in State Bank of Patiala v. S.K. Sharma, . In that case, the principle of '' prejudice'' has been further elaborated. The same principle has been reiterated again in Rajendra Singh v. State of M.P., .

25.The '' useless formality'' theory, it must be noted, is an exception. Apart from the class of cases of ''admitted or indisputable facts leading only to one conclusion'' referred to above, there has been considerable debate on the application of that theory in other cases. The divergent views expressed in regard to this theory have been elaborately considered by this Court in M.C. Mehta referred to above. This Court surveyed the views expressed in various judgments in England by Lord Reid, Lord Wilberforce, Lord Woolf, Lord Bingham, Megarry, J. and Straughton, L.J. Etc. in various cases and also views expressed by leading writers like Profts. Garner, Craig, de Smith, Wade D.H. Clark etc. Some of them have said that orders passed in violation must always be quashed for otherwise the court will be prejudging the issue. Some others have said that there is no such absolute rule and prejudice must be shown. Yet, some others have applied via media rules. We do not think it necessary in this case to deeper into these issues. In the ultimate analysis, it may depend on the facts of a particular case.

26.It will be sufficient, for the purpose of the case of Mr. Mansoor Ali Khan to show that his case will fall within the exceptions stated by Chinnappa Reddy, J. in S.L. Kapoor v. Jagmohan, namely, that on the admitted or indisputable facts, only one view is possible. In that event no prejudice can be said to have been caused to Mr. Mansoor Ali Khan though notice has not been issued.''

29.On the aforesaid aspect, learned senior counsel also relied upon judgment of the Supreme Court in Canara Bank and Ors. v. Debasis Das and Ors., , which is again a matter dealing with service jurisprudence. The useless formality theory was again considered in the said judgment. It was observed in paras 22 and 23 as under:

''22. What is known as '' useless formality theory'' has received consideration of this Court in M.C. Mehta v. Union of India, . It was observed as under:

''22.Before we go into the final aspects of this contention, we would like to state that cases relating to breach of natural justice do also occur where all facts are not admitted or are not all beyond dispute. In the context of those cases there is a considerable case-law and literate as to whether relief can be refused even if the court thinks that the case of the applicant is not one of `real substance' or that there is no substantial possibility of his success or that the result will not be different, even if natural justice is followed see Malloch v. Aberdeen Corpn., (1971) 2 All ER 1278 : (1971) 1 WLR 1578 (HL) (per Lord Reid and Lord Wilberforce), Glynn v. Keele University, (1971) 2 All ER 89 : (1971) 1 WLR 487, Cinnamond v. British Airports Authority, (1980) 2 All ER 368 : (1980) 1 WLR 582 (CA) and other cases where such a view has been held. The latest addition to this view is R. v. Ealing Magistrates' Court, ex p Fannaran, (1996) 8 Admn LR 351 (see de Smith, Suppl. p.89 (1998) doubt' that the result would have been different. Lord Woolf in Lloyd v. McMahon, (1987) 1 All ER 1118 : 1987 AC 625 : (1987) 2 WLR 821 (CA) has also not disfavored refusal of discretion in certain cases of breach of natural justice. The New Zealand Court in McCarthy v. Grant, 1959 NZLR 1014 however goes halfway when it says that (as in the case of bias), it is sufficient for the applicant to show that there is `real likelihood - not certainty - of prejudice'. On the other hand, Garner's Administrative Law (8th Edn. 1996, pp. 271-72) says that slight proof that the result would have been different is sufficient. On the other side of the argument, we have apart from Ridge v. Baldwin, 1964 AC 40 : (1963) 2 All ER 66 : (1963) 2 WLR 935 (HL), Megarry, J. in John v. Re s, (1969) 2 All ER 274 : 1970 Ch 345 : (1969) 2 WLR 1294 stating that there are always `open and shut cases' and no absolute rule of proof of prejudice can be laid down. Merits are not for the court but for the authority to consider. Ackner, J. has said that the `useless formality theory' is a dangerous one and, however inconvenient, natural justice must be followed. His Lordship, observed that `convenience and justice are often not on speaking terms'. More recently, Lord Bingham has deprecated the useless formality theory' in R. v. Chief Constable of the Thames Valley Police Forces, ex p Cotton, 1990 IRLR 334 by giving six reasons. (See also his article `Should Public Law Remedies be Discretionary?' 1991 PL p. 64) A detailed and emphatic criticism of the `useless formality theory' has been made much earlier in `Natural Justice, Substance or Shadow' by Prof. D.H. Clark of Canada (see 1975 PL, pp. 27-63) contending that Malloch and Glynn were wrongly decided. Foulkes (Administrative Law, 8th Edn., 1996, p. 323), Craig (Administrative Law, 3rd Edn., p. 596) and others say that the court cannot prejudice what is to be decided by the decision-making authority. De Smith (5th Edn., 1994, paras 10.031 to 10.036) says courts have not yet committed themselves to any one view though discretion is always with the court. Wade (Administrative Law, 5th Edn., 1994, pp. 526-30) says that while futile writs may not be issued, a distinction has to be made according to the nature of the decision. Thus, in relation to cases other than those relating to admitted or indisputable facts, there is a considerable divergence of opinion whether the applicant can be compelled to prove that the outcome will be in his favor or he has to prove a case of substance or if he can prove a `real likelihood' of success or if he is entitled to relief even if there is some remote chance of success. We may, however, point out that even in cases where the facts are not all admitted or beyond dispute, there is a considerable unanimity that the courts can, in exercise of their `discretion', refuse certiorati, prohibition, mandamus or injunction even though natural justice is not followed. We may also state that there is yet another line of cases as in State Bank of Patiala v. S.K. Sharma , Rajendra Singh v. State of M.P., that even in relation to statutory provisions requiring notice, a distinction is to be made between cases where the provision is intended for individual benefit an where a provision is intended to protect public interest. In the former case, it can be waived while in the case of the latter, it cannot be waived.

23.We do not propose to express any opinion on the correctness or otherwise of the `useless formality' theory and leave the matter for decision in an appropriate case, inasmuch as in the case before us, `admitted and indisputable' facts show that grant of a writ will be in vain as pointed out by Chinnappa Reddy, J.''

23.As was observed by this Court we need not go into '' useless formality theory'' in detail; in view of the fact that no prejudice has been shown. As is rightly pointed out by learned counsel for the appellants, unless failure of justice is occasional or that it would not be in public interest to dismiss a petition on the fact situation of a case, this Court may refuse to exercise the said jurisdiction (see Gadde Venkateswara Rao v. Govt. of A.P., ). It is to be noted that legal formulations cannot be divorced from the fact situation of the case. Personal hearing was granted by the Appellate Authority, though not statutorily prescribed. In a given case post-decisional hearing can obliterate the procedural deficiency of a pre-decisional hearing. (See Charan Lal Sahu v. Union of India, .

30. Learned senior counsel, thus, sought to contend that there is only one admitted or indisputable conclusion which was possible and that the show-cause notice would be a useless formality in the given facts and circumstances.

31. I am unable to accept the aforesaid contention. The sample has failed only one on account of RON. The re-testing done did not go into this aspect. Further, RON has not failed in all the test reports of Shakurbasti Lab. The Government of India has framed the said Guidelines to avoid inconsistency and arbitrariness in action. Note (ii) of the said Guidelines provided for a minimum seven days show-cause notice unless there is grave urgency. These Guidelines are uniformly followed. No such grave urgency was shown whereby there could not be suspension of sale and opportunity to show-cause notice of seven days as provided in the said Guidelines. It, thus, cannot be said that a show-cause notice would be futile exercise in the present case.

32. Learned senior counsel next referred to judgment of the Supreme Court in Union of India and Anr. v. S.B. Vohra and Ors., . The judgment was also in respect of a service jurisprudence and while dealing with the aspect of judicial review, it was observed that it was trite that the Court will not exercise its jurisdiction to entertain a writ application wherein public law element is not involved and the modern trend also points to judicial restraint in administrative action. It was, however observed that the question as to whether the Court would permit judicial review and, if any, to what extent would vary from case to case and no broad principles could be laid down therefore. The aforesaid judgment only emphasises that there cannot be a hard and fast rule in this behalf and would depend on the facts and circumstances of each case.

33. A reference was made to judgment in Harbanslal Sahnia's case (supra) to say the same could be distinguishable. This judgment was relied upon in Bharat Filling Station's case (supra). The Supreme Court observed that the rule of exclusion of writ juridiction by availability of alternative remedy is a rule of discretion and not one of compulsion. Interestingly, this case itself dealt with the termination of dealership by an oil company and it was found that the sample tests carried out were in violation of instructions contained in Government orders. Thus, the failure of the sample became irrelevant and non-existing fact and could not be relied upon for cancelling the appellant's license. The order of termination was quashed.

34. In my considered view, there is no manner of doubt that the principles of law as applied to the given facts of the present case are squarely covered by judgment of the Supreme Court in Harbanslal Sahnia's case (supra) and judgment of learned Single Judge of this Court in Bharat Filling Station's case (supra). In Bharat Filling Station's case (supra), learned Single Judge very succinctly set out that once the respondents' own Guidelines prescribed the procedure and civil consequences are likely to flow to the petitioner as a consequence of the action of the respondent, before taking such action, principles of natural justice are to be followed. There can be no exclusion in such a case since in its own wisdom, the Government of India and the oil companies have agreed to follow the said Guidelines. Even otherwise, there is no justification placed on record whether there were any peculiar facts of the case as a consequence of which such principles of natural justice were liable to be dispensed with when the said Guidelines itself provided for the same. There was no such urgency which could require the dispensation with the principles.

35. It may be noticed that it is not open to the petitioner to make a grievance that Directors of the petitioner company were not available at site since admittedly as per the management arrangement arrived at by the Directors of the petitioner company and Ms. Kanta Talwar, it is Mr. Pradeep Gupta who was managing the petrol pump.

36. In view of the aforesaid, I am of the considered view that the impugned order dated 16.05.2000 of the respondent company cannot be sustained and is liable to be quashed in the absence of any show-cause notice.

37. The last question, which arises, is what is the consequential relief to be granted to the petitioner. Should the petitioner be restored possession or should a post-decisional hearing be granted? There is no doubt that in Bharat Filling Station's case (supra), the possession was restored. However, the material aspect in the present case is the delay on the part of the petitioner in approaching this Court, which is almost one and a half years after the decision was taken. Interim protection has been available during pendency of the writ petition to the extent that no third-party interests have been created and the pump is being run by the respondent company itself.

38. In view of the aforesaid facts and circumstances of the case, I am of the considered view that the ends of justice would be met if a hearing is now granted to the petitioner and the impugned order dated 16.05.2000 is taken as an intent on the part of the respondent to take action against the petitioner. The petitioner is granted 4 weeks' time to make a detailed representation and the petitioner shall be granted a personal hearing through its representative. A reasoned order shall be passed after hearing the petitioner and the process be completed within a maximum period of 2 months of the petitioner making the representation. The interim order restraining the respondent from creating any third-party interest shall continue to ensure for the benefit of the petitioner during this period of time and in the case of an adverse order against the petitioner, for a further period of one month of the receipt of communication of such decision, in order to enable the petitioner to take recourse to legal remedy has may be advised. It is made clear that if a favorable decision is arrived at, nothing precludes the respondent from restoring possession of the petrol pump to the petitioner.

39. The writ petition is allowed in the aforesaid terms leaving the parties to bear their own costs.