Madhya Pradesh High Court
M/S Jai Ambe Petroleum Kendra vs Indian Oil Corporation Limited on 10 March, 2021
Author: Vijay Kumar Shukla
HIGH COURT OF MADHYA PRADESH : JABALPUR
(Division Bench)
W.A. No.1424/2019
M/s Jai Ambe Petroleum Kendra, Raisen
-Versus-
Indian Oil Corporation Limited & Others
Shri Naman Nagrath, Senior Advocate along with Shri Ayur Jain,
Advocate for the appellant.
Shri Aditya Adhikari, Senior Advocate along with
Shri Deepak Tiwari, Advocate for the respondents.
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CORAM :
Hon'ble Shri Justice Mohammad Rafiq, Chief Justice.
Hon'ble Shri Justice Vijay Kumar Shukla, Judge.
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JUDGMENT
(Jabalpur, dtd.10.03.2021)
Per : Vijay Kumar Shukla, J.-
The present intra-court appeal has been filed under
Section 2(1) of the Madhya Pradesh Uchcha Nyayalaya (Khand
Nyaypeeth ko Appeal) Adhiniyam, 2005, being dissatisfied with and
aggrieved by the order dated 27-6-2019 passed by the learned Single
Judge in WP-17088-2018 [M/s Jai Ambe Petroleum Kendra vs.
Indian Oil Corporation Limited and others]. The appellant-
petitioner has called in question the legality and validity of the order
dated 14-12-2017 by which dealership of the appellant was
terminated and the order dated 25-6-2018 whereby the appellate
authority has dismissed the appeal. The writ petition has been
dismissed by the impugned order dated 27-6-2019.
2. The facts which are imperative to be stated are, that the
appellant was appointed as a retail outlet dealer of the respondent,
Indian Oil Corporation [for short, "the IOCL"] for sale and supply of
Petrol/High Speed Diesel (HSD)/Motor Oil/Grease and other
petroleum products, vide agreement dated 22-01-2009. On 10-7-
2017 Sales Officer of the IOCL randomly inspected the retail outlet
of the appellant and found that there was no separate toilet for
men/women. He collected samples of MS and HSD of both tank
lorry and nozzle and sent the same for the BIS specification test to a
laboratory. As per report of the laboratory the samples of MS of both
tank lorry and nozzle failed the test of the BIS specification,
however, the sample of HSD of both tank lorry and nozzle passed the
BIS specification. The said report was communicated to the
appellant vide letter dated 01-8-2017. Pursuant to the report dated
31-7-2017, sale and supply of the outlet of the appellant was
suspended and after recording meter reading of dispensing machines,
the same were sealed.
3. On 24-8-2017 while conducting MDT inspection (toilet
inspection) by Shri Neeraj K. Chhipa, the officer of the IOCL found
that the petrol pump was operational. A report was submitted by him
requesting further investigation in the case. Pursuant to which a
committee was constituted and another inspection was conducted on
8-9-2017. During this inspection the outlet of the appellant was
found operational, despite suspension of sale. The dispensing unit
showing changed reading was video-graphed by the officers of the
IOCL.
4. On 10-10-2017 a show cause notice was issued to the
appellant, as to why action should not be taken against the appellant
including termination of dealership. The appellant putforth its stand
by way of reply dated 23-10-2017. Subsequently, the District Supply
Officer, Raisen again inspected the premises of the appellant on 21-
9-2017 and submitted his report.
5. Being aggrieved by the order of suspension, the appellant
preferred a writ petition forming the subject-matter of WP-17462-
2017. The said writ petition was disposed of with a direction to the
respondent No.1 to take a final decision on the show cause notice
within two weeks. It is alleged that the respondent No.1 instead of
deciding the show cause notice, as directed by this Court on 13-11-
2017, terminated the dealership of the appellant vide letter dated 27-
12-2017. The order of termination, thereafter was assailed by way of
writ petition (WP-604-2018) which was dismissed on 10-01-2018
with liberty to the appellant to prefer an appeal before the appellate
authority. The appellant moved a review petition for recall of the
order, which was dismissed as withdrawn on 28-02-2018. Pursuant
to the order dated 10-01-2018 passed in WP-604-2018 the appellant
filed an appeal before the appellate authority which was dismissed on
25-6-2018, which was subject-matter of challenge in the writ petition
which has been dismissed by the learned Single Judge by the
impugned order.
6. The respondents filed a detailed reply contending inter
alia, that the Marketing Discipline Guidelines, 2012 (for brevity, "the
MDG 2012") provides for termination of the dealership in case of
critical (Clause 8.2) and major (Clause 8.3) irregularities by the
dealer. It is stated that the appellant has violated Clauses 5.1.6, 5.1.8,
5.1.9, 5.1.12, 5.1.13 and continued sale of adulterated products even
after the sale/purchase was suspended. It is further alleged that the
appellant deceived the Assistant Supply Officer by fraudulently
changing the reading of totalizer and also overcharged the customer
and failed to maintain the records. It remained deliberately absent
from the investigation and refused to sign any document. It is stated
that the appellant was given a notice to show cause and afforded
opportunity of personal hearing and thereafter the impugned order
was passed in accordance with law.
7. The learned counsel for the appellant before the learned
Single Judge argued that the show cause notice was not as per the
provisions of the MDG 2012. It is argued that the suspension order
itself was arbitrary and malafide, as the Authority itself found the
adulteration not proved, as both the retail outlet sample as well as TL
sample for MS failed and hence, the dealer cannot be held
responsible for adulteration. It is further argued that the termination
letter is based on allegations, which were not part of the show cause
notice, therefore, cannot be made basis for termination of the
dealership. It is strenuousl urged that there was no evidence to
demonstrate that the appellant was involved in unauthorized
sales/purchase nor is there an evidence that it overcharged the
customer.
8. Learned counsel appearing for the respondents submitted
that the appellant is bound by the terms and conditions of the MDG
2012. It is submitted that the final termination of dealership was not
on the ground of adulteration, but due to critical irregularities
committed by the appellant. It is putforth that a detailed show cause
notice was served on the petitioner with all Annexures including bill
books, photos and videos. Once the sale was suspended the appellant
was required to comply with the directions, however, it was caught in
operation by the Committee on 8-9-2017 and by the transporter on
10-9-2017, who also video-graphed the operation. It is further
argued that bill books seized from the appellant on 8-9-2017 show
that the sales continued even after the order of suspension dated 3-8-
2017.
9. Learned counsel for the appellant assiduously urged that
two major critical irregularities were alleged against the appellant,
adulteration of MS/HSD (5.1.1), where as the adulteration was not
found to be proved in the present case. It is further submitted that in
regard to other irregularities regarding unauthorized sale/purchase of
product (5.1.6) after the suspension order, was also not found proved
by the appellate authority. It is argued that the learned Single Judge
has failed to appreciate operation of the order of the appellate
authority.
10. We have heard the learned counsel for the parties and
bestowed our anxious consideration on the arguments advanced.
11. It is not in dispute that the appellant was appointed as
retail outlet dealer by the respondents for sale and supply of
Petrol/HSD/Motor Oil/Grease etc., vide agreement dated 22-01-
2009. Clauses 15, 43 and 45(a)(l)(m)(n) provide procedure for
initiating action against a dealer, in case of breach of terms and
conditions of the agreement. Retail outlet dealership is regulated by
Marketing Discipline Guidelines. Chapter 8 of the MDG 2012
provides action to be taken by the OMC under the Guidelines.
Clause 8.2 postulates critical irregularities for termination of
dealership at the first instance. It reads thus :
"8.2. Critical irregularities : The following
irregularities are classified as critical irregularities :
i. Adulteration of MS/HSD (5.1.1)
ii. Seals of the metering unit found tampered in
the dispensing pumps [5..1.2(b)].
iii. Totalizer seal of dispensing unit tampered or
deliberately making the totalizer non-functional or not
reporting to the company if totalizer is not working.
(5.1.3 read with 5.1.20.
iv. Additional/unauthorized
fittings/gears/electronic component found in
dispensing units/tampering with dispensing unit.
[5.1.4(a), (b), (c)].
v. Unauthorized storage facilities (5.1.5)
vi. Unauthorized purchase/sales of products
(5.1.6)
vii. Tank lorry carrying unauthorized product
found under decantation at the RO (5.1.7)."
12. Clause 8.3 provides for termination of dealership at the
third instance in the case of major irregularities, which reads as
follows :
"8.3. Major irregularities : The following
irregularities are classified as major irregularities :
i. Refusal by the dealer to allow drawl of
samples/carry out inspections (5.1.8).
ii. Non-availability of reference density at the
time of inspection (5.1.9).
iii. Selling of normal MS/HSD as branded fuels.
(5.1.10).
iv. Stock variation beyond permissible limits but
sample passing quality tests. (5.1.11).
v. Non-maintenance of records since last
inspection. (5.1.12).
vi. Overcharging of MS/HSD/CNG/Auto LPG
(5.1.13)
vii. Non-provision of clean toilet facility.
(5.1.14.b).
viii. Automated retail outlets : 5.1.16(a), (b), (c)
ix. Non-payment of salary, wages and other
benefits (as per clause 5.1.18) to the manpower employed
at the ROs.
x. Short delivery of products with W & M seals
intact. 5.1.2(a)"
13. In the present case, the learned Single Judge noted that
sales of the KSK was suspended on 3-8-2017 with immediate effect
as per provisions of MDG 2012 with the totalizer reading MS =
22905 and 6889, HSD = 311511 and 23395. However, on 8-9-2017,
the Committee while inspection found different totalizer reading of
504486.220 and 155005.510 of one Dual Du, which is evident from
document Annexure R-1/1 on record. As per the report, the other DU
could not be checked, as power was disconnected by KSK staff.
However, when the District Supply Officer inspected the retail outlet
on 8-9-2017, he found the totalizer reading for MS=229051 and
6889, HSD =311511 and 23395, which was identical to the reading
when the sales was suspended on 03-8-2017. The Committee further
noticed that HPCL tanker standing in the premises of KSK. It also
confiscated the bill book and videographed the entire operation.
Copy of the bills was filed as Annexure R-1/5 which clearly reveals
that the sail continued even after 3.8.2017, i.e. the order of
suspension.
14. The aforesaid facts makes it clear that the sales continued
even after it was suspended, but the appellant manipulated/tampered
with the dispensing units, which amounts to 'critical irregularity' and
as per Clause 8.2 of the MDG 2012, and provides for termination of
dealership at the first instance. The learned Single Judge has rightly
noted that the findings of the appellate authority that it was wrong on
the part of the IOCL to suspend the sales and supplies of all products
will have no effect on the termination, as the termination order was
not based upon failure of MS samples to meet BIS specification but
on the conduct of the appellant in unauthorizedly selling the
petroleum products and manipulating and tampering with the
dispensing units which falls under 'critical irregularity' provided in
Clause 8.2(vi) [5.1.6] and other major irregularities mentioned in the
show cause notice.
15. Before passing the order of termination of dealership, a
detailed show cause notice was issued to the appellant which was
replied in detail by the appellant. Apart from that, opportunity of
personal hearing was also afforded to the appellant and there was no
violation of principle of natural justice. The learned counsel for the
appellant endeavoured hard to canvass that certain parts of the order
of the appellate authority have not been taken into consideration by
the learned Single Judge. Those points were not argued before the
learned Single Judge, therefore, in an intra-court the learned counsel
for the appellant cannot be permitted to raise the aforesaid
contention. Even otherwise, in para 18 of the order the learned
Single Judge has taken note of the order passed by the appellate
authority in proper perspective. The learned Single Judge has rightly
declined to interfere under Article 226 of the Constitution of India in
the administrative decision of the respondents.
16. In the case of Baddula Lakshmaiah and others vs. Sri
Anjaneya Swami Temple and others, (1996) 3 SCC 52, the Apex
Court ruled, that in an intra-court appeal the appellate Court is a
Court of Correction which corrects its own orders, in exercise of the
same jurisdiction as was vested in the Single Bench. Such is not an
appeal against an order of subordinate court. In such appellate
jurisdiction the High Court exercises the powers of a Court of Error.
17. We do not perceive any illegality in the order passed by
the learned Single Judge and the findings ascribed in the impugned
order are impeccable and the same do not warrant any interference in
the present intra-court appeal. The writ appeal, being sans merit,
is dismissed. There shall be no order as to costs.
(Mohammad Rafiq) (Vijay Kumar Shukla)
Chief Justice Judge
ac.
Digitally signed by AJAY KUMAR CHATURVEDI
Date: 2021.03.10 17:46:16 +05'30'
