Anil Rawtel vs Indian Oil Corporation Limited
2023 Latest Caselaw 15531 MP

                                                              1
                                IN THE HIGH COURT OF MADHYA PRADESH
                                            AT JABALPUR
                                                      BEFORE
                                        HON'BLE SHRI JUSTICE VIVEK AGARWAL
                                             ON THE 21 st OF SEPTEMBER, 2023
                                                 WRIT PETITION No. 19648 of 2018

                           BETWEEN:-
                           ANIL RAWTEL S/O LATE SHRI RAMKHILAWAN
                           RAWTEL, AGED ABOUT 42 YEARS, OCCUPATION:
                           PROPRIETOR OF M/S OM INDANE R/O NEAR NAGAR
                           NIGAM ZONAL OFFICE, RANJHI, JABALPUR TEHSIL
                           AND DIST. JABALPUR (MADHYA PRADESH)

                                                                                            .....PETITIONER
                           (BY SHRI ACHYUT GOVINDAM TIWARI - ADVOCATE)

                           AND
                           INDIAN OIL CORPORATION LIMITED THROUGH ITS
                           CHIEF AREA MANAGER R/O 2 nd FLOOR, BLOCK NO. 09,
                           CIVIL CENTRE, MARHATAL, JABALPUR (MADHYA
                           PRADESH)

                                                                                         .....RESPONDENTS
                           (BY SHRI ADITYA ADHIKARI - SENIOR ADVOCATE ASSISTED BY MS.
                           SHIVANI SINGH SENGAR - ADVOCATE)

                                 This petition coming on for admission this day, th e court passed the

                           following:
                                                               ORDER

This writ petition under Article 226 of the Constitution of India is filed by the petitioner-LPG dealer of respondent Indian Oil Corporation Ltd. being aggrieved of the order dated 16.08.2018 (Annexure P-1), whereby in terms of the guidelines issued from time to time and for not meeting the TDT guidelines i.e. Targeted Delivery Time, penalty of Rs.54,177/- is imposed on the petitioner (inclusive of GST).

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2. Shri Achyut Govindam Tiwari, learned counsel for the petitioner submits Signed by: PUSHPENDRA PATEL Signing time: 21-09-2023 18:38:34

that the relationship between the petitioner and the respondent is that of principal to principal basis. It is pointed out that the concerned guidelines

requiring imposition of penalty came into force w.e.f. 15 th September, 2017 and there is a specific provision under para 4.2 (v)(a) that if it is established that the

distributorship is at 'Poor' rating in 1st or 2nd quarter during the period of first six months from the implementation of MDG, a Warning-cum-guidance letter shall be issued to the distributor.

3. It is also submitted that after moratorium period of six months expires which according to Shri Achyut Govindam Tiwari will expire on 30.06.2018 then only fine can be imposed which is equivalent to 25% of one month's

distributor's commission.

4. Shri Achyut Govindam Tiwari has read provisions contained in Article 299 of the Constitution to point out that since Indian Oil Corporation is a 80% holding subsidiary of the Union of India, therefore, all the contracts entered into by the Indian Oil Corporation with the petitioner will fall within the definition of 'Contracts' defined under Article 299 of the Constitution and thus, by implication provisions of Part 3 of the Constitution will be applicable.

5. It is further submitted that respondent could not have been judge in their own cause, inasmuch as, for violation of any of the conditions, they could not impose penalty and they being an interested party and going to be benefited with the amount of penalty, penalty could not have been imposed by Indian Oil Corporation. Thus, it is submitted that penalty is bad in law and it be set aside.

6. Shri Aditya Adhikari, learned Senior Counsel appearing for the respondent-Indian Oil Corporation Ltd., in his turn, submits that MDG is invoked since 1982. It is pointed out that as per Annexure P-4 which are the Signature Not Verified Signed by: PUSHPENDRA PATEL Signing time: 21-09-2023 18:38:34

Revised Marketing Discipline Guidelines, 2017 for LPG distributorship in para 4.2 (i) it is mentioned as under:-

''4.2 (i) The norms on TDT compliance came into vogue from the beginning of July-September, 14 quarter, i.e. from 01.07.2014. In case of new distributors commissioned, the TDT norms came into effect from the quarter following the quarter in which the distributorship is commission.''

7. Thus, reading from the aforesaid, it is submitted that when there is a Star rating provision for classifying various distributorship under 5 categories starting from 5 Star i.e. the highest where 85% deliveries are made in less than 2 days to 1 Star where 85% deliveries are made over a period of greater than 8 days then the TDT norms will be applicable from 01.07.2014 and the holiday of six months will come to an end on 31.12.2014 and thus, the argument which has been advanced by Shri Achyut Govindam Tiwari, is not applicable to the facts and circumstances of the present case.

8. Reading from paragraph 11 of the Distributorship Agreement, it is pointed out that it is provided in Clause 11 that the provisions contained in 'Indane Manual' and all other directions of the corporation are binding on the distributor. It is further pointed out that along with his reply, he has enclosed policy guidelines for LPG Marketing, Volume II as Annexure R-5, wherein in Chapter 12, there is a provision for Inspection : Regular/Surprise, Control and

Marketing Discipline Guidelines. Thus, it is pointed out that the moratorium of six months is to commence from 01.07.2014 and not from 15.09.2017. Thus, the submission made by Shri Achyut Govindam Tiwari, is not in consonance with proper reading of MDG.

9. Reliance is placed by Shri Aditya Adhikari, learned Senior Counsel on Signature Not Verified Signed by: PUSHPENDRA PATEL Signing time: 21-09-2023 18:38:34

the judgment of Hon'ble Supreme Court in case of Construction and Design Services Vs. Delhi Development Authority, (2015) 14 SCC 263 , wherein referring to Sections 73 and 74 of the Indian Contract Act, 1872, it is held that remedies for breach of contract, Damages, Stipulated Damages, Penalty Clauses and Earnest money deposits - Stipulated damages clause - Severability

- it can always be held that a part of the stipulated damages amount to reasonable compensation and a part would be penalty in terms of the provisions contained in Sections 73 and 74 of the Indian Contract Act, 1872. Thus, placing reliance on this judgment, it is submitted that there is no illegality in imposition of the penalty.

10. After hearing learned counsel for the parties and going through the record, two main issues emerge in this case, namely, whether the Revised Marketing Discipline Guidelines, 2017 as referred to by Shri Achyut Govindam Tiwari will have application and are in continuation of the earlier guidelines of

2014 which came into effect from 1st July, 2014 or they are to be read separately. Second issue is that whether respondent can impose such fine for recovery of certain fine from the commission payable to the dealer on account of 'Poor' TDT. An ancillary issue also emerges that how this amount of fine should be utilized by the Indian Oil Corporation.

11. As far as first two issues are concerned, there is no hesitation in holding that Annexure P-4 that is the Revised Marketing Discipline Guidelines, 2017 are extension of earlier guidelines. First guidelines were introduced in 1982 and they were subsequently revised in 1988, 1994, 2001 and, thereafter, in 2014 then some amendments were already made in 2015. In the guidelines of 2014 also, there is a provision for TDT. Thus, provision of TDT being made applicable from 2014, the moratorium of six months is to be read for a period Signature Not Verified Signed by: PUSHPENDRA PATEL Signing time: 21-09-2023 18:38:34

starting from 01.07.2014 when the MDG of 2014 were introduced and they have been only amended in the year 2017. Thus, petitioner's contention that these guidelines of 2017 will not be applicable for first two quarters of 2018, is not made out.

12. Second issue that since Indian Oil Corporation is a substantially financed company of Government of India, provisions of Article 299 of Constitution will be applicable, is also not made out, inasmuch as, from the agreement it is evident that agreement is neither signed on behalf of the President of India or on behalf of the Governor of the State.

13. Third point which needs to be considered is that it is a commercial contract and it is not a statutory contract and, therefore, on that count also, provisions contained in Article 299 of the Constitution will not be applicable.

14. Once there is a contract and parties have decided to adhere to certain norms and then violation of those norms prescribes certain consequences as have been mentioned in regard to payment of fine for continuous default over two quarters for showing 'Poor' TDT, then the impugned order imposing fine can also not be said to be arbitrary or illegal in the light of the judgment of Hon'ble Supreme Court in case of Construction and Design Services (supra).

15. As far as the issue of utilization of fine amount collected at the cost of the consumer from the dealers is concerned, since this issue has not been raised in the present writ petition, this ancillary issue is left open for Indian Oil Corporation to deliberate and take a policy decision that whether such fund should be utilized for consumer education and betterment of the consumer because it is the non delivery of timely services which has resulted in imposition

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of fine and thus, the ultimate receiver of poor service is the consumer.

16. Leaving the aforesaid ancillary issue open, this writ petition is disposed of.

(VIVEK AGARWAL) JUDGE pp

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