Jharkhand High Court
M/S Swastik Gas Distributors Having Its ... vs Union Of India Through The Secretary ... on 15 April, 2025
Author: Anubha Rawat Choudhary
Bench: Anubha Rawat Choudhary
IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P.(C) No. 5781 of 2016
M/s Swastik Gas Distributors having its office at College Road, P.O. &
P.S. & District :- Sahibganj, through its Proprietor Bishnu Deo Singh,
S/o Late Sakaldeep Mandal, Resident of Pokharia Sahibganj, P.O.
Sahibganj, P.S.-Jirwabari, District - Sahibganj (Jharkhand)
... ... Petitioner
Versus
1. Union of India through the Secretary [Marketing], Ministry of
Petroleum and Natural Gas, Shastri Bhawan, Dr. Rajendra Prasad
Road, New Delhi :- 110001
2. Indian Oil Corporation Ltd., through its Chairman, Indian Oil
Bhawan, Bandra (East), Mumbai, Maharastra.
3. Executive Director (L.P.G.), Indian Oil Corporation Ltd, Indian Oil
Bhawan, Bandra (East), Mumbai, Maharastra.
4. General Manager, Indian Oil Corporation Ltd., Lok Nayak Bhawan,
5th Floor, Dak Bunglow Chowk, P.O.-G.P.O., P.S.- Kotwali, Patna,
Bihar.
5. Deputy General Manager [L.P.G.], Indian Oil Corporation Ltd., Lok
Nayak Bhawan, 5th Floor, Dak Bunglow Chowk, P.O.-G.P.O., P.S.-
Kotwali, Patna, Bihar.
6. Chief Area Manager, Indian Oil Corporation, Indane Area Office, 2 nd
Floor, Pulsar Plaza, Line Tank Road [Jail Road], P.O.:-. G.P.O., P.S..
Kotwali, District :- Ranchi.
7. Senior Area Manager, Indian Oil Corporation, Indane Area Office,
2nd Floor, Pulsar Plaza, Line Tank Road [Jail Road], P.O.:-. G.P.O.,
P.S.. Kotwali, District :- Ranchi ... ... Respondents
With
W.P.(C) No. 3952 of 2011
M/s. Tara Enterprises, a Partnership Firm having its works and office at
Seth Surajmal Jalan Road, Bompass Town, Deoghar, P.O. and P.S. -
Deoghar, District - Deoghar, through one of its Partners Ram Pravesh
Ram, son of Late Chandra Deep Ram R/o Khorado Road, Bampass
Town, B. Deoghar, P.O. and P.S. - Deoghar, District - Deoghar
... ... Petitioner
Versus
1. Union of India through the Secretary (Marketing), Ministry of
Petroleum and Natural Gas, Shastri Bhawan, Dr. Rajendra Prasad
Road, New Delhi 110001.
2. Indian Oil Corporation Ltd., through its Chairman cum Managing
Director, Indian Oil Bhawan, 254-C, Dr. Annie Besant Road,
PRABHADEVI, Mumbai - 400025. Maharastra.
3. Regional Manager, Indian Oil Corporation Ltd., Eastern Region I,
Shakespeare Sarani, Kolkata - 700016.
4. General Manager, Indian Oil Corporation Ltd., Eastern Region I,
Shakespeare Sarani, Kolkata - 700016.
5. Deputy General Manager (Sales), Indian Oil Corporation Ltd.,
Eastern Region I, Shakespeare Sarani, Kolkata - 700016.
6. Senior Area Manager, Indian Oil Corporation, Main Area Office, 1st
Floor, Kamani Centre, Bistupur, Singhbhum East, Jamshedpur.
7. Manager cum Field Officer, Indian Oil Corporation, Deoghar, Sales
Area, Deoghar.
8. Engine Tirkey, son of not known Manager cum Field Officer, Indian
Oil Corporation, Deoghar, Sales Area, Deoghar at present posted at
Haldia P.O and P.S Haldia District Haldia as Field Officer Indian Oil
Corporation, Haldia. ... ... Respondents
With
W.P.(C) No. 6663 of 2011
M/s. Kusum Gas Agency, a Firm, having its works and office at
Bhagalpur Road, P.O. and P.S. Dumka, -District - Dumka 814101,
through one of its Partners -Rajendra Kumar Bhagat, son of Late Durga
Bhagat, Bhagalpur Road, P.O. and P.S. - Dumka, District - Dumka
814101. ... ... Petitioner
Versus
1. Union of India through the Secretary (Marketing), Ministry of
Petroleum and Natural Gas, Shastri Bhawan, Dr. Rajendra Prasad
Road, New Delhi 110001.
2. Indian Oil Corporation Ltd., through its Chairman - cum Managing
Director, Indian Oil Bhawan, 254-C, Dr. Annie Besant Road,
PRABHADEVI, Mumbai - 400025, Maharastra.
3. Regional Manager, Indian Oil Corporation Ltd., Eastern Region I,
Shakespeare Sarani, Kolkata - 700016.
4. General Manager, Indian Oil Corporation Ltd., Eastern Region I,
Shakespeare Sarani, Kolkata - 700016.
5. Deputy General Manager (Sales), Indian Oil Corporation Ltd.,
Eastern Region -I, Shakespeare Sarani, Kolkata - 700016.
6. Senior Area Manager, Indian Oil Corporation, Main Area Office, 1st
Floor, Kamani Centre, Bistupur, Singhbhum East, Jamshedpur.
7. Manager - cum - Field Officer, Indian Oil Corporation, Dumka, Sales
Area, Dumka.
8. Engine Tirkey, son of not known Manager - cum - Field Officer,
Indian Oil Corporation, Dumka, Sales Area, Dumka at present posted
at Haldia P.O and P.S Haldia District Haldia as Field Officer Indian
Oil Corporation, Haldia ... ... Respondents
With
W.P.(C) No. 1295 of 2014
M/s Swastik Gas Distributors having its office at College Road, P.O. &
P.S. & District :- Sahibganj, through its Proprietor Bishnu Deo Singh,
S/o Late Sakaldeep Mandal, Resident of Pokharia Sahibganj, P.O.
Sahibganj, P.S.- Jirwabari, District - Sahibganj (Jharkhand).
... ... Petitioner
Versus
1. Union of India through the Secretary [Marketing], Ministry of
Petroleum and Natural Gas, Shastri Bhawan, Dr. Rajendra Prasad
Road, New Delhi :- 110001
2. Indian Oil Corporation Ltd., through its Chairman, Indian Oil
Bhawan, Bandra (East), Mumbai, Maharastra.
2
3. Executive Director (L.P.G.), Indian Oil Corporation Ltd, Indian Oil
Bhawan, Bandra (East), Mumbai, Maharastra.
4. General Manager, Indian Oil Corporation Ltd., Lok Nayak Bhawan,
5th Floor, Dak Bunglow Chowk. PO-G.P.O., P.S.- Kotwali, Patna,
Bihar.
5. Deputy General Manager [L.P.G.], Indian Oil Corporation Ltd., Lok
Nayak Bhawan, 5th Floor, Dak Bunglow Chowk, P.O.-G.P.O., P.S.-
Kotwali, Patna, Bihar.
6. Chief Area Manager, Indian Oil Corporation, Indane Area Office, 2 nd
Floor, Pulsar Plaza, Line Tank Road [Jail Road], P.O.:-. G.P.O., P.S..
Kotwali, District :- Ranchi.
7. Assistant Area Manager. Indian Oil Corporation, Indane Area Office,
2nd Floor, Pulsar Plaza, Line Tank Road [Jail Road], P.O.:-. G.P.O.,
P.S.. Kotwali, District :- Ranchi ... ... Respondents
---
CORAM :HON'BLE MRS. JUSTICE ANUBHA RAWAT CHOUDHARY
---
For the Petitioners : Mr. Rupesh Singh, Advocate
For the IOCL : Mr. Rahul Kr. Gupta, Advocate
: Mr. Rahul Lamba, Advocate
: Mr. Nilesh Modi, Advocate
---
12/15.04.2025 Heard the learned counsels appearing on behalf of the parties.
2. W.P.(C) No. 5781 of 2016 has been filed for the following
reliefs:
"For quashing of the order as contained in Reference RAO/SGD dated
30.08.2016 issued by the Respondent No.7 whereby and whereunder a
penalty of Rs.63,669/- [ Rupees Sixty three thousand six hundred sixty nine]
has been imposed on the alleged grounds of discrepancies/irregularities in
the supply of the L.P.G. Cylinders by the petitioner- Agency purportedly in
exercise of powers under "Marketing Discipline Guidelines, 2015" for
L.P.G. as approved by the Ministry of Petroleum and Natural Gas,
Government of India for taking the penal action in cases of established
irregularities by the concerned officer-in-Charge of the area which is
wholly arbitrary, in violation of natural justice and in pursuance of
Inspection Report dated 27.05.2016;
b. For direction upon the Official respondent, commanding upon them to
act in accordance with law in the matter of imposition of penalty of alleged
irregularities against the petitioner after due observance of principles of
natural justice and not to act in a vindictive manner on the basis of
Inspection Report dated 27.05.2016;
C. For quashing of the "Marketing Discipline Guidelines, 2015 for
L.P.G." issued by the Ministry of Petroleum and Natural Gas, Government
of India containing the proposed penalties for major/ minor irregularities by
L.P.G. Distributors as the said guidelines are arbitrary and without
jurisdiction and in the teeth of settled principles laid down by the Hon'ble
Supreme Court of India as the penalty proposed to be levied under the said
guidelines does not contain any provision for mandatory opportunity of
personal hearing to the effected persons before taking any action, no
procedure for determining the fault/ irregularities prescribed therein and
the said guidelines does not contain any provision of appeal either against
the action taken under the impugned guidelines to the aggrieved persons
against such punitive action in the nature of quasi penal charge and
punishment; thereby being bad in law;.
AND/ORDS
Any other relief or reliefs as Your Lordships may deem fit and proper for
which the petitioner is very much entitled under the facts and circumstances
of the case."
3. W.P.(C) No. 3952 of 2011 has been filed for the following
reliefs:
"For issuance of appropriate writ(s), order(s), direction(s) or writ in the
nature of certiorari quashing the Order contained in Letter No.
Ref.J/LPG/RMDG/2010-11 /TARA Dated 30.04.2011 issued under the
signature of Mr. R.N. Maulick, Senior Area Manager, Indian Oil
Corporation Ltd. whereby and whereunder, a penalty of Rs.27,56,418/-(Rs.
Twenty Seven Lakh Fifty Six Thousand Four Hundred and Eighteen only)
has been imposed on the alleged grounds of discrepancies/ irregularities in
the supply of L.P.G. Cylinders by the petitioner agency purportedly in
exercise of the powers under "Marketing Discipline Guidelines 2001 for
L.P.G." as approved by the Government of India for taking the penal action
in cases of established irregularities by the concerned Officer incharge of
the Area/Territory, which is wholly arbitrary, illegal and in violation of
principles of natural justice on the malafide report of the private respondent
Mr. Engine Tirkey and based on no established facts.
(ii) For issuance of appropriate writ(s), order(s), direction(s) upon the
official respondents commanding upon the official respondents of the Indian
Oil Corporation to act in accordance with law in the matter of imposition of
any penalty of alleged irregularities against the petitioner after giving
notice and full opportunity of personal hearing and not to act in a vindictive
manner against the petitioner on the basis of motivated and unsubstantiated
report of the then Field Manager who had personal grudge to settle against
the petitioner for objecting to his demand for personal favours.
(iii) For issuance of appropriate writ(s), order(s), direction(s) or writ in the
nature of certiorari quashing the "Marketing Discipline Guidelines - 2001
for L.P.G." issued by the Ministry of Petroleum and Natural Gas,
Government of India containing the proposed penalties for established
major/ minor irregularities committed by the L.P.G. Distributors as the said
Guidelines are arbitrary and without jurisdiction and in teeth of the well
settled legal principles laid down by the Hon'ble Supreme Court of India as
the penalty proposed to be levied under the said Guidelines against the
erring L.P.G. Distributor does not contain any provisions for mandatory
opportunity of personal hearing to the person concerned before taking any
action, no procedure for determining the fault/irregularities is prescribed
therein and the said Guidelines do not contain any provision of Appeal
either against any action taken under the impugned Guidelines to the
aggrieved person against such punitive action in the nature of quasi penal
charge and punishment and is therefore, bad in law.
AND/OR
(iv) For issuance of any other relief(s) as the petitioner may be found
entitled in law."
4. W.P.(C) No. 6663 of 2011 has been filed for the following
reliefs:
"(i) For issuance of appropriate writ(s), order(s), direction(s) or writ in the
nature of certiorari quashing the Order contained in Letter No.
Ref.J/LPG/RMDG/2010-11 /KUSUM Dated 25.04.2011 issued under the
signature of Mr. R.N. Maulick, Senior Area Manager, Indian Oil
Corporation Ltd. whereby and whereunder, a penalty of Rs. 13,31,771/-
(Rupees Thirteen Lac Thirty One Thousand Seven Hundred Seventy One
only) has been imposed on the alleged grounds of discrepancies/
irregularities in the supply of L.P.G. Cylinders by the petitioner agency
purportedly in exercise of the powers under "Marketing Discipline
Guidelines - 2001 for L.P.G." as approved by the Government of India for
taking the penal action in cases of established irregularities by the
concerned Officer incharge of the Area/Territory, which is wholly arbitrary,
illegal and in violation of principles of natural justice on the malafide report
of the private respondent Mr. Engine Tirkey and based on no established
facts.
(ii) For issuance of appropriate writ(s), order(s), direction(s) upon the
official respondents commanding upon the official respondents of the Indian
Oil Corporation to act in accordance with law in the matter of imposition of
any penalty of alleged irregularities against the petitioner after giving
notice and full opportunity of personal hearing and not to act in a vindictive
manner against the petitioner on the basis of motivated and unsubstantiated
report of the then Field Manager who had personal grudge to settle against
the petitioner for objecting to his demand for personal favours.
(iii) For issuance of appropriate writ(s), order(s), direction(s) or writ in the
nature of certiorari quashing the "Marketing Discipline Guidelines - 2001
for L.P.G." issued by the Ministry of Petroleum and Natural Gas,
Government of India containing the proposed penalties for established
major/ minor irregularities committed by the L.P.G. Distributors as the said
Guidelines are arbitrary and without jurisdiction and in teeth of the well
settled legal principles laid down by the Hon'ble Supreme Court of India as
the penalty proposed to be levied under the said Guidelines against the
erring L.P.G. Distributor does not contain any provisions for mandatory
opportunity of personal hearing to the person concerned before taking any
action, no procedure for determining the fault/irregularities is prescribed
therein and the said Guidelines do not contain any provision of Appeal
either against any action taken under the impugned Guidelines to the
aggrieved person against such punitive action in the nature of quasi penal
charge and punishment and is therefore, bad in law.
AND/OR
(iv) For issuance of any other relief(s) as the petitioner may be found
entitled in law."
5. W.P.(C) No. 1295 of 2014 has been filed for the following
reliefs:
"a. For quashing of the order as contained in Reference No.RNC / LPG
/601 dated 25.02.2014 issued by the Respondent No.6 whereby and
whereunder a penalty of Rs.41,830/- [ Rupees Forty one thousand eight
hundred thirty] has been imposed on the alleged grounds of discrepancies/
irregularities in the supply of the L.P.G. Cylinders by the petitioner- Agency
purportedly in exercise of powers under "Marketing Discipline Guidelines,
2001" for L.P.G. as approved by the Ministry of Petroleum and Natural
Gas, Government of India for taking the penal action in cases of established
irregularities by the concerned officer-in-Charge of the area which is
wholly arbitrary, in violation of natural justice and in pursuance of joint
Inspection Report dated 20.01.2014 under the signature of Assistant Area
Manager;
b. For a direction upon the Official respondent, commanding upon them to
act in accordance with law in the matter of imposition of penalty of alleged
irregularities against the petitioner after due observance of principles of
natural justice and not to act in a vindictive manner on the basis of Joint
Inspection Report dated 20.01.2014, which on the face of it does not
indicate the alleged irregularities forming the basis of order of penalty
dated 25.02.2014;
c. For quashing of the "Marketing Discipline Guidelines, 2001 for L.P.G."
issued by the Ministry of Petroleum and Natural Gas, Government of India
containing the proposed penalties for major/ minor irregularities by L.P.G.
Distributors as the said guidelines are arbitrary and without jurisdiction
and in the teeth of settled principles laid down by the Hon'ble Supreme
Court of India as the penalty proposed to be levied under the said guidelines
does not contain any provision for mandatory opportunity of personal
hearing to the effected persons before taking any action, no procedure for
determining the fault/ irregularities prescribed therein and the said
guidelines does not contain any provision of appeal either against the action
taken under the impugned guidelines to the aggrieved persons against such
punitive action in the nature of quashi penal charge and punishment;
thereby being bad in law,.
AND/OR
Any other relief or reliefs as Your Lordships may deem fit and proper for
which the petitioner is very much entitled under the facts and circumstances
of the case."
Arguments of the Petitioner(s)
6. The learned counsel for the petitioner(s) has submitted that
these cases have been tagged as because the Marketing Discipline
Guideline (hereinafter referred to as the "MDG") framed by the
respondents is under challenge and the only distinguishing feature is
that in W.P.(C) No.5781 of 2016, the MDG of the year 2015 is under
challenge and in rest of the cases, MDG of the year 2001 is under
challenge. However, he submits that the validity of MDG, be it of the
year 2001 or 2015, is under challenge essentially on the ground that
the MDG itself is without jurisdiction inasmuch as the MDG is de
hors of the provisions of the Essential Commodities Act, 1955 and the
Liquefied Petroleum Gas (Regulation of Supply and Distribution)
Order, 2000 and these guidelines are not referrable to any source of
power.
7. The learned counsel has also submitted that so far as MDG of
2001 is concerned, the same reveals that it was circulated after
approval of the Government of India vide letter dated 10.05.2001
addressed to all the Indane Distributors of respondent Indian Oil
Corporation. He submits that once the MDG is approved by the
Government of India, then it has to have some source of power
ingrained in any statute which governs the distribution of LPG or
directly under the constitution of India. He submits that the
distribution of LPG is governed by the Essential Commodities Act,
1955 or the order framed thereunder and since MDG is not referrable
to the Essential Commodities Act, 1955 and/or the order framed
thereunder, the MDG are wholly without jurisdiction. He has relied
upon the judgement passed by the Hon'ble Supreme Court, reported in
(2014) 10 SCC 673 (Gulf Goans Hotels Company Limited and Anr.
Vs. Union of India and Ors.), paragraphs 15, 16, 19, and 21 to submit
that the executive action has to be undertaken in terms of the
provisions of the Constitution of India, and such MDG are not backed
by the source of law, and therefore, any action taken under MDG as
involved in all these cases, are also without jurisdiction.
8. The learned counsel has submitted that if the MDG, which are
under challenge in all these writ petitions are set aside, then all the
proceedings which have been undertaken thereunder leading to
termination of dealership of the petitioners would also not survive.
9. The learned counsel has further submitted that the show-cause
notices which have been issued to the petitioners were malicious,
motivated, and not specific, and the responses which were submitted
by the individual petitioners to the show-cause notices were also not
appropriately appreciated and dealt with all fairness and transparency.
It has also been submitted that the respondent-Indian Oil Corporation
has not led any documentary or oral evidence in support of the
allegations made in the concerned show-cause notices.
10. The learned counsel has submitted that there has been violation
of principles of natural justice and the petitioners have not been
treated fairly by the respondent-Indian Oil Corporation. Therefore, the
writ petitions are otherwise also maintainable irrespective of the
alternative remedy of arbitration provided under the agreement
entered into between the parties. The learned counsel has also
submitted that so far as MDG is concerned, there is no arbitration
clause mentioned therein.
11. The learned counsel has placed the provisions of Essential
Commodities Act, 1955 and referred to Section 3, which deals with
"power to control production, supply, distribution, etc. of essential
commodities" and submits that the said section deals with all the
circumstances relating to maintaining or increasing supplies of any
essential commodity or for securing equitable distribution at fair price
and takes care of all the relevant aspects for the purposes of dealing
with essential commodities and it also has the provisions for
delegation of power and has the power for confiscation. He has in
particular referred that the violation of the provisions of Essential
Commodities Act, 1955 results in imposition of penalty by way of fine
and there is also provision for imprisonment, etc.
12. The learned counsel has also referred to the Liquefied
Petroleum Gas (Regulation of Supply and Distribution) Order, 2000
[hereinafter referred to as LPG Order] , which has been framed
under Section 3 of Essential Commodities Act, 1955 and submitted
that under clause 11(4) - Schedule VII [Paragraph 6] of the LPG
Order there is a provision of MDG titled "Marketing Discipline and
Guidelines proposed to be adopted" and submits that MDG is
contemplated under the provision of Essential Commodities Act, 1955
read with the LPG Order, and therefore, the MDG framed and
imposed by the respondents is not sustainable in the eyes of law.
13. The learned counsel has submitted that the MDG lacks
legislative competence and authority and is not enforceable. He
submits that MDG of the 2001 does not even contain a provision of
appeal whereas the MDG of the year 2015 provides for an appeal only
in exceptional cases i.e. in case of termination of dealership or
distributorship. He has further submitted that in MDG of the year
2001, there is no requirement for the respondent-Indian Oil
Corporation to furnish documents in support of the charges made in
show cause notice and there is no procedure for any personal hearing
to the affected party before imposition of penalty in the nature of fine
which is ex-proprietary and confiscatory in nature and such fine is
recovered by the respondent-Indian Oil Corporation from the security
deposit or advance deposit made by the dealers like the petitioners.
14. The learned counsel has also submitted that the respondent-
Indian Oil Corporation have sought to justify the MDG by referring to
the 'faithful performance clause', but such reference is not
permissible in the eyes of law as the respondents are not competent to
impose penalty which imposition is essentially quasi-criminal in the
form of fines. He has further submitted that the breach of any
agreement may result in civil consequences in the form of damages,
recovery of loss, compensation, etc., but so far as imposition of
penalty is concerned, the same is in the nature of fine and has roots in
Section 53 Indian Penal Code being one of the punishments for the
offences committed therein, and therefore, the respondents do not
have any jurisdiction to impose penalty in the nature of fine. A
reliance has been placed to the judgment passed by the Hon'ble
Supreme Court reported in (1965) SCC OnLine SC 18 (S.A.L.
Narayan Row v. Ishwarlal Bhagwandas) by submitting that it has
been held in the aforesaid judgment, that criminal proceeding
ordinarily concludes by imposition of sentence and fine or forfeiture
of property is also prescribe sentence under the Criminal
Jurisprudence, but so far as civil proceedings are concerned, the same
is followed by payment of debt, damages, compensation, and delivery
of a specific property. He has further referred to the judgment passed
by the Hon'ble Supreme Court reported in (1975) 2 SCC 22 (Khemka
& Co. (Agencies) (P) Ltd. v. State of Maharashtra) to submit that, it
has been held that imposition of pecuniary liability is comparable to a
punishment for commission of an offence and, in the instant case,
penalty is in the nature of fine which has been created by the
respondents themselves through MDG which is not backed by any
enactment and, therefore, the provision of penalty in the nature of fine
in MDG is itself wholly without jurisdiction.
15. He has submitted that under the provisions of Essential
Commodities Act,1955 there is clear provision for imposition of fine
or even sentence for violation and the case is to be tried by a court of
Judicial Magistrate and LPG Order is a delegated legislation under
Section 3 of the Essential Commodities Act and the LPG Order and
essential commodities taken altogether prescribes for action which are
permissible and which are not permissible, both by the distributors and
oil companies, dealing with petroleum products including LPG.
16. By again referring to the aforesaid judgment reported in (2014)
10 SCC 673 (Gulf Goans Hotels Co. Ltd. v. Union of India), the
learned counsel has submitted that it has been clearly held that any
executive action must conform to the prescription of Article 77 or
Article 166 of the Constitution of India to have a recourse of law and
all executive action of the Government either at the Union or the State
level are to be taken in the name of the President or the Governor as
the case may be and is required to be published in the Official Gazette.
He has further submitted that in absence of any publication in the
Official Gazette, such MDG are otherwise also not enforceable.
However, during the course of argument, the learned counsel has
fairly submitted that the point regarding requirement of publication of
MDG has not been taken in the writ petition or in any of the pleadings
filed in this case.
17. The learned counsel has further referred to the judgment
reported in 1967 SCC Online SC 21 (Satwant Singh Sawhney v. D.
Ramarathnam) to submit that every executive action has to be
supported by some legislative authority and the Essential
Commodities Act, 1955 read with the LPG Order clearly covers the
field when a distributor can be punished with imposition of penalty in
the nature of fine and has laid down the procedure to be adopted for
such infliction of punishment. However, the MDG has given a
complete go-by to the procedure which has been prescribed under the
Essential Commodities Act, 1955 and the LPG Order. He has
submitted that what legislature could not do, even the executive
cannot do. If the legislature could not impose a penalty of fine without
adhering to the procedure contained in the Essential Commodities
Act,1955 the respondent-Indian Oil Corporation also cannot impose
penalty of fine on the basis of MDG.
18. The learned counsel has also referred to the judgement passed
by the Hon'ble Supreme Court reported in (1969) 2 SCC 262 (A.K.
Kraipak v. Union of India) to submit that all quasi-judicial enquiry
must be held in good faith, without bias, and what particular rules of
natural justice should apply to a given case would depend to a great
extent on the facts and circumstances of each case. The learned
counsel has submitted that there is no legal framework to support the
MDG and the respondent-Indian Oil Corporation has usurped upon
themselves the power and authority to carry out the exercise of
imposition of punishment of fine. He submits that the fine being
punishment in criminal jurisprudence could not be enforced under any
civil dispute arising out of alleged violation of MDG and cannot be
relatable to 'faithful performance clause' of the contract governing
the parties.
19. He has further referred to the judgement passed by the Hon'ble
Supreme Court reported in (1981) 1 SCC 664 (Swadeshi Cotton Mills
v. Union of India) to submit that prior hearing is better than the
subsequent hearing, but subsequent hearing is better than no hearing at
all. The learned counsel has also submitted that the judgment passed
by the Hon'ble Supreme Court which has been relied upon by the
respondents reported in (2019) 19 SCC 662 (Indian Oil Corpn. Ltd. v.
R.M. Service Centre) is not applicable to the facts of the present case
in as much as in paragraph 15 of the said judgment, the parties to
litigation before the Hon'ble Supreme Court never disputed that they
are not governed by MDG as applicable upon them. The learned
counsel submits that the respondent-Indian Oil Corporation cannot be
permitted to run a parallel governance in the garb of MDG and impose
punishment in the nature of fine falling under the criminal
jurisprudence. Such action is without authority of law and legislative
competence and also in the absence of any clear and unambiguous
statutory declaration of power to that effect. The respondents cannot
be permitted to impose quasi criminal penalty of fine by way of ex-
proprietary confiscatory followed by extraction from the security
deposit and advances.
20. The learned counsel has stated that the alternative remedy of
arbitration is not applicable to MDG as the MDG by itself does not
contain any arbitration clause. The arbitration clause is there in the
agreement between the parties. The learned counsel has also submitted
that the law is well settled that the action may have both civil and
criminal wrong but the penalty being in the nature of fine is criminal
in nature and therefore the respondents did not have any power and
jurisdiction to impose fine and such fine is only covered by the
provisions of Essential Commodities Act, 1955 and the orders framed
thereunder.
Arguments of the Respondents
21. The learned counsel appearing on behalf of the respondents
while opposing the prayer has submitted that the MDG has root to the
'faithful performance clause' which has been provided in the
agreement itself. They have further submitted that the dispute arises
essentially out of contract between the respondent-Indian Oil
Corporation and the petitioners, and therefore, for framing and
applying MDG, there is no need for any statutory backing. MDG is
arising out of 'faithful performance clause'and some uniformity is
maintained amongst the persons dealing with LPG through MDG
which is applicable to all the distributors of LPG- an essential
commodity.
22. The learned counsel has also submitted that the petitioners have
signed the agreement between the parties with open eyes, conscious of
the fact that there is a 'faithful performance clause'in the agreement
and the MDG of the year 2015 has specifically referred to 'faithful
performance clause' and mutual obligation of the respective parties.
He has referred to the introduction to MDG as annexed in the records
of writ petition being W.P.(C) No. 5781 of 2016. The learned counsel
has further submitted that merely because MDG of the year 2001 was
ultimately said to have been approved by the Government of India, the
same does not mean that it is beyond the contractual liabilities of the
parties arising out of agreement. He has submitted that there is no
legal bar in government entering into the contract and the contractual
liabilities are not governed by the provisions of Articles 77, 162, and
166 of the Constitution of India and therefore neither any plea has
been raised in connection with publication of MDG nor there is any
such requirement. He has submitted that there is no pleading of the
petitioner in connection with the requirement of any publication nor
the petitioner has raised any objection in connection with any
violation of Articles 77, 162 or 166 of the Constitution of India.
23. The learned counsel has also submitted that the point of
alternative remedy has been specifically kept open vide order dated
18.01.2023. The learned counsel submits that so far as legality of
MDG is concerned, the same may not have alternative remedy but if
this Court finds that MDG does not call for any interference and is
otherwise valid in the eyes of law, then so far as merits of individual
cases are concerned, where there are different show cause notices on
the basis of different sets of allegations, and response by each of the
parties were called for which is followed by final order, the petitioners
can still avail the remedy in accordance with law and in terms of the
arbitration clause which has been provided in all the agreements
involved in these cases .
24. The learned counsel has submitted that MDG need not have a
separate arbitration clause as the relationship between the parties is
essentially guided by the agreement entered into between the parties
having 'faithful performance clause' and the petitioners are
distributors by virtue of the agreement and not by virtue of MDG.
25. The learned counsel has submitted that so far as MDG of the
year 2001 is concerned, the same does not have a remedy of appeal
and MDG of the year 2015 has a remedy of appeal but all the
agreements admittedly have the remedy through arbitration.
26. The learned counsel has further submitted that so far as the
argument of the petitioners that LPG order as well as the MDG cover
the same field and there is some overlap with regards to nature of
violation but they operate in different fields and accordingly have
different impacts; violation of the LPG order is visited with
fine/imprisonment, whereas the purpose of MDG is to impose
monetary consequences by way of penalty to regulate and discipline
the distributors so that the LPG consumers ultimately get timely and
quality service. The learned counsel has thereafter referred to the
Section 3 of the Essential Commodities Act,1955 and submitted that
the MDG and the LPG order serve different purpose altogether and the
purpose of MDG has been enumerated in the introduction to MDG of
the year 2015, which is quoted as under:
"Mdg guidelines have been issued for regulating the large
network of LPG distributors in the country so that they can give
quality services to the ultimate consumer.
MDG guidelines provides as to how Government Oil
Company would deal with its LPG distributors whereas LPG
Order is general in nature.
MDG guideline is part of the contract by reference.
Legislature cannot be expected to make law even as to how the
government oil companies would be dealing with their
distributors.
MDG guidelines are part of the agreement itself whereas
LPG order is part of the statute.
MDG guidelines only provides for monetary consequences or
termination of distributorship agreement in order to regulate or
maintain discipline amongst the distributors whereas LPG order
provides for punishment in the shape of imprisonment.
Essentially, MDG guidelines provides for a civil wrong and
the LPG Control Order provides for a criminal wrong.
Most of the irregularities/wrongs provided in the MDG are
not provided in the LPG Order. Chart detailing the same is
available.
It is only few irregularities/wrongs provided in the MDG
which are provided in the LPG Order. But that by itself does not
make the MDG as illegal or without authority.
There is no prohibition in law that a criminal wrong cannot
be a civil wrong. On the contrary it is a settled law that a wrong
can be both a criminal wrong and civil wrong.
Thus, merely there are some wrongs, which are provided in
the LPG order (Criminal Wrong) and also provided in the MDG
Order (Civil Wrong), cannot make the MDG as illegal or without
authority."
27. The learned counsel has submitted that on the face of Section 3
of the Essential Commodities Act, 1955, under which the LPG order
has been issued, it is meant for maintaining or increasing supplies of
any essential commodities at fair price and for regulating or
prohibiting the production, supply and distribution thereof and trade
and commerce therein. The learned counsel submits that so far as the
MDG is concerned, it is to ensure that the public at large are served
properly and the distributors work within the four corners of law.
28. The learned counsel has relied upon the judgement passed by
Hon'ble Supreme Court reported in (2019) 19 SCC 662 (supra) and
submitted that the judgement is to be read as a whole and in the said
judgement, since the dealer was not being prosecuted for violation of
Essential Commodities Act,1955 and was being proceeded on account
of violation of MDG, the Hon'ble Supreme Court was of the view that
the provision of search and seizure is applicable for the control order
and Section 3 of the Essential Commodities Act,1955 and the
provisions of Code of Criminal Procedure as applicable for search and
seizure are not required to be followed when it comes to violation of
MDG. The learned counsel has submitted that the Hon'ble Supreme
Court has kept the violation under MDG distinct and different from
that of violation under the Essential Commodities Act, 1955 and the
orders framed thereunder. The learned counsel has also referred to
paragraph 15 thereof and has submitted that it has been held that the
dealer having entered into agreement, it was not disputed that dealer
was bound by MDG issued by public sector oil marketing companies.
The learned counsel submits that the dealer having entered into the
agreement is certainly bound by MDG in the matter of distribution and
marketing of LPG gas cylinder which is an essential commodity. He
has also referred to paragraph 16 to submit that some of the provisions
of MDG has been considered and it has been observed that the
guidelines are to streamline the functioning i.e. oil companies and the
oil companies should not send the sample for testing at their sweet
will, arbitrarily or without any justification.
29. The learned counsel has also referred to paragraph 14 of the
aforesaid judgment to submit that the effect and consequence of the
control order and the violation of the provision of Essential
Commodities Act has been duly considered and the consequence is to
have penal consequences leading to conviction and in the said case the
dealer was not sought to be prosecuted for violation of Essential
Commodities Act or orders framed thereunder. The learned counsel
has submitted that for the purposes of proceeding for violation of
MDG, the Essential Commodities Act is not attracted.
30. The learned counsel has submitted that if MDG are upheld by
this Court, then under such circumstances other issues may not be
gone into as they involve disputed questions of facts and arbitrator is
the appropriate authority to deal with it if the petitioner chooses to
invoke the arbitration clause. The learned counsel has also submitted
that in all the cases, the principles of natural justice has been complied
in as much as show cause notice was issued, the response was taken
and then the appropriate order was passed considering the response
furnished by the petitioners and since there was no request for
personal hearing, no personal hearing was granted. He has referred to
the judgment reported in (2012) 11 SCC 257 (Patel Engg. Ltd. v.
Union of India) paragraph 38.
31. As the Court's time is over, post this case for further dictation
on 23.04.2025.
(Anubha Rawat Choudhary, J.)
Saurav/-
