Madhya Pradesh High Court
M/S Sonika Automobiles vs Bharat Petroleum Corporation Ltd. on 24 January, 2025
Author: Milind Ramesh Phadke
Bench: Milind Ramesh Phadke
1
IN THE HIGH COURT OF MADHYA PRADESH
AT GWALIOR
BEFORE
HON'BLE SHRI JUSTICE MILIND RAMESH PHADKE
WRIT PETITION No. 1311 of 2007
M/S SONIKA AUTOMOBILES
Versus
BHARAT PETROLEUM CORPORATION LTD. AND
OTHERS
Appearance:
Shri N.K. Gupta, Sr. Advocate with Shri YPS Rathore - Advocate
appeared for the petitioner.
Shri K.N. Gupta, Sr. Advocate with Miss Suhani Dhariwal -
Advocate appeared for the respondents.
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Reserved on 19/12/2024
Delivered on 24/01/2025
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ORDER
The present petition under Article 226 of the Constitution
of India is preferred seeking following reliefs:
"(i) That, this Hon'ble Court may kindly be
pleased to issue an appropriate
writ/order/direction quashing the order dated
24.02.2007 passed by respondent no.2.
(ii) Any other writ/order or direction deemed fit
and proper in the facts and circumstances of the
case necessary be also passed with costs to the
petitioner."
2. Short facts of the case are that the distribution of petroleum
products i.e. M.S and H.S.D is being done by the dispensing units
installed on the retail out-lets of the petitioner. The said
dispensing units are owned by "Bharat Petroleum Corporation
Ltd." for which rent is deducted from the commission received by
the petitioner from the sale of petroleum products. A duly
authorized fitter of the petroleum company is responsible for the
proper functioning and maintenance of the dispensing units. The
dispensing units installed on the retail out-let of the petitioner
have been subjected to maintenance by the concerning fitter on
various occassions. One of such inspection was carried out on
12.09.2006 by the authorized fitter and no irregularity was found
with the dispensing units.
3. As a routine, Officers of Wight and Measure Department
verify the dispensing units of each retail out-let and after verifying
the machines they are sealed and stamped and, thereafter, a
certificate of verification is issued as per Section 24 of Weights
and Measures (Enforcement) Act, 1985. The dispensing unit in
question was verified by the Inspector of Weights and Measures
Department on 10.04.2006 and certificate to that effect was issued
which was valid till 09.04.2007. In the aforesaid regard the
petitioner was also maintaining a register and every inspection so
done by the officers of Weights and Measures Department were
noted in the said register.
4. As per the amended provisions contained under Rule 24 of
the Rules a dealer was required to check delivery of every
dispensing unit in the morning hours and if anything wrong is
found, he was required to close-down the dispensing unit and get
it re-verified immediately and the petitioner in compliance to the
aforesaid rule had got the delivery duly measured in a five liter
measure.
5. On 14.09.2006 an inspection was carried out by the
respondent no.2 along with other companions of the "Bharat
Petroleum Corporation Ltd". During the said inspection, it was
found that display unit attached along with the dispensing unit
was giving erratic display. Respondent no.2 took three deliveries
from the dispensing unit and found that the machine was giving
short delivery, thus, the said dispensing unit was closed-down and
display unit was taken away by the officers.
6. Immediately after the impugned action, the petitioner
communicated to the officers of Weights and Measures
Department requesting for an opinion regarding the condition of
seals of the dispensing units. In response to the communication of
the petitioner, the officer of Weights and Measures Department
again inspected dispensing units in question and stated that the
seals of dispensing units were intact and the delivery of other
dispensing units were also found accurate.
7. Since for no reason the dispensing unit of the petitioner was
closed-down by the respondent no.2 since 14.09.2006 and as the
petitioner was not able to sale the petroleum products and was
sustaining huge loss, a writ petition came to be filed on behalf of
the petitioner which was registered as W.P. No.5577/2006 and as
an interim measure this Court directed respondents to maintain
status quo as on the date of the order. The said writ petition came
for consideration before this Court on 25.01.2007 and while
finally disposing of the petition, this Court was pleased to direct
the petitioner to submt reply to the show-cause notice and
respondents were directed to decide the same within two weeks.
In pursuance to the aforesaid directives, the petitioner submitted
his reply and stated that a day before the dispensing unit was
subjected to repair by the authorized fitter of the company,
nothing wrong was found and if there would have been some
defect, he would have pointed it out and had there been any defect
lateron, the same can not be attributed to the petitioner.
8. The respondent no.2 on 24.02.2007 called the petitioner at
the depo and sent a team along with the police force to remove the
machines and other fixtures behind his back from the retail out-
let. As and when the said information reached to the petitioner, the
team had broken various fittings of the petrol pumps and had
taken away along with them and also had caused loss and damage
to various fixtures and on the same day the petitioner was served
with the copy of the order dated 24.02.2007, whereby the
dealership agreement was cancelled. Alleging the impugned
action taken by the respondents in terminating the dealership of
the petitioner without considering the reply to be highly illegal,
arbitrary and amounting to serious violation of constitutional
rights of the petitioner, the present petition has been filed.
ARGUMENTS.
9. Learned Sr. counsel, Shri N.K. Gupta along with Shri YPS
Rathore, had argued before this Court that the impugned action
taken by the respondents is self indicative of the fact that the
intention of the respondents was to prevent the petitioner from
approaching the Court of law to seek protection against
termination and get a stay order and as it was pre-mediated, before
serving the copy of the impugned order with the help of local
police the respondents had removed all the fixtures and machines
installed at the out-let of the petitioner which is apparently
malafide exercise of powers.
10. It was further argued that respondents had not considered
reply preferred by the petitioner in which he had categorically
stated that he is not responsible for the malfunctioning of the
dispensing units as the dispensing units belong to the company
and were inspected a day prior to the inspection done by the
respondents by the authorized fitter of the company and were
found to be working properly and mere mentioning of the fact that
at the time of inspection the fitter had not touched the display
units is without any basis and is an effort to saddle the liability
upon the petitioner.
11. It was further argued that as per Section 26 of the Weights
and Measures (Enforcement) Act, 1985 the presumptions in
respect of confirmation of standards of Weights and Measures can
be drawn if the machine is duly verified and as the said machine
was verified on 10.04.2006 and certificate of the said inspection
being valid up to 09.04.2007 was issued, in view of Section 26 of
the Act of 1985, the dispensing unit confirmed the standards of
Weights and Measures.
12. It was further argued that because dispensing units installed
on the retail outlet of the petitioner were owned by respondent
no.1 for which the petitioner is paying rent and all the dispensing
units were subjected to maintenance by the duly authorized fitter
of the company and when no irregularity was found at the time of
investigation/inspection on 12.09.2006, the petitioner cannot be
saddled with the liability in case any irregularity was found by the
respondent department.
13. It was further argued that officers of Weights and Measures
Department puts seal on the place which may be used for
tempering the delivery of the machines, but those seals were
found intact and no tempering was found therein, therefore, any
erratic reading shown by the dispensing units with regard to short
delivery cannot be attributed to the petitioner.
14. It was further argued that even the authorized fitters of the
company has also affixed a seal above and over the seal fixed by
the Weights and Measures Department and that seal was also
found intact, therefore, no role can be said to have been played by
the petitioner for short delivery found in the machine and since
out of the three dispensing units installed over the retail outlet of
the petitioner, two units were found to be giving correct measure,
thus, were not sent for inspection and only one dispensing unit
was sent for further inspection proves the very innocense of the
petitioner.
15. Referring to the guidelines published by the various oil
companies known as M.D.G.2005, it was argued that various
penalties have been prescribed for the malpractices carried out by
the dealer, but in case of short deliveries and machine having seals
intact, it has been mentioned that the dealer would be required to
re-calibrate the dispensing unit in question and herein case as the
dispensing units has given short delivery having seals intact, then
the inspecting officers ought to have directed the petitioner to get
the dispensing units re-calibrated and re-stamped by the officers
of the Weights and Measures Department which has not been
done and the petitioner is accounted and harrased for no fault on
his part.
16. It was further argued that the respondents have given wrong
justification while terminating the dealership of the petitioner that
the panchnama has been signed by the petitioner, which shows
that he has agreed to the contents thereof whereas no where in the
panchana it is written that some unauthorized fitting was found in
the machine for which the petitioner could be held liable for
signing without protest and from bare perusal of the panchnama it
could be revealled that the display unit was taken away by
inspection team and the said unit was neither sealed or signatures
of the petitioner was ever taken on such seal, therefore, in absence
of any seal on the envelop containing the display unit the chances
of tempering during the transit cannot be ruled out and the
petitioner cannot be held liable for the lapses on the part of
officers of the company.
17. It was also argued that law regarding search and seizure is
well settled, and if such seizure is made, then it sould be sealed in
such a manner so that chance of tempering may not be there and
the actual thing must reach to the authority intact who is going to
test the truth, but herein case the display unit was not at all sealed,
therefore, possibility of it being tempered after it was taken out
from the machine cannot be ruled out.
18. Lastly, it was argued that while passing the impugned order
the respondents have taken the recourse to the provisions of M.S
and HSD (Regulation and supply, distribution and prevention of
malpractice) Control Order, 2005 and the aforesaid control order
no where provides for any penal provisions like that of
termination of dealership in case of any of the eventualities,
therefore, the ill intentions of the respondents are crystal clear that
by hook and crook they wanted to terminate the dealership of the
petitioner which is not permissible.
19. Learned Sr. counsel while referring to the joint observation
report dated 14.09.2006 has argued that the three electronic
display assembly units were removed and were sealed in a khadi
envelope and signed jointly by the members making the
observation along with one Mr. A.F.A. Khan, retail Technicial
Gwalior, but instead of sending all the display units which were
siezed for further investigation, one controller cum display card
(PCB No.89-C 51 KT) was sent for investigation which would be
evident from Annexure R-9, which is a document depicting that
the said card which was received from the QCC Team, which was
with regard to investigation carried out on the subjected out-let,
was opened in the presence of four member committee on
25.09.2006 and when the entire dispensing unit bearing serial
No.OIC3560 was siezed, then how an electronic display card was
received by the investigation committee in the said sealed envelop
which clearly goes to show that the said card was taken out from
the display unit which was originally siezed and sealed, but,
thereafter, the said electronic display card was taken out from the
said dispensing unit that too in absence of the petitioner, thus, it
cannot be ruled out that any tempering could not have been done
during the transit and in the order impugned there is no
explanation as to how the said electronic display card emerged
from the sealed envelop when the entire dispensing unit was
siezed.
20. Further referring to Annexure R-4 which is testing report of
controller card no.89 C 51 KT received from BPCL, it was argued
that the report issued by the display unit manufacturing company
i.e. MIDCO Ltd after inspection has observed that the software
present in the said card was not installed by MIDCO Ltd and
when it is not the case of the respondents that by tempering the
dispensing unit the said software was installed by the petitioner
externally after it was installed in the machine, saddling the
liability over the petitioner of tempering the display unit is not
justifiable.
21. On the basis of the aforesaid arguments, it was submitted
that the very order by which the dealership of the petitioner has
been terminated is bad in law, thus, it deserves to be quashed.
22. On the other hand, learned counsel for the
respondent/corporation had argued that execution of the
agreement permitting for sale of petroleum products to the
petitioner is not in dispute, but the said sale was to be strictly in-
consonance with the terms and conditions set out in the
agreement. It was further argued that in the agreement it was
specifically mentioned that in the event of breach of any terms
and conditions mentioned therein the corporation will have right
to revoke the agreement and since malpractice was observed by
the corporation, the said agreement was rightly terminated.
Further it has been argued that since it is purely a contractual
dispute which needs enquiry, therefore, the same cannot be
agitated in the writ jurisdiction and the remedy available to the
petitioner would be by filing civil suit against the termination of
the agreement and in wake of the said remedy the present petition
is not maintainable.
23. It was further argued that dealership of the petitioner is to
be dealt with as per provisions contained in Motor Spirit and High
Diesel (Regulation Supply and Distribution Prevention of
Malpractice) Control Order 2005 along with terms and conditions
of the agreement. In wake of the aforesaid control order and the
agreement, the representatives of Quality Control Cell of
respondent no.1 consisting of execution of Director, Quality
Control Cell, Managing Quality Control Cell and Execution
Quality Control Cell along with Assistant Manager, Sales and
Engineer Gwalior, had carried out inspection of the dispensing
unit installed at petitioner's retail outlet including dispensing unit
bearing no.OIC3560 MIDCO Ltd. (Merchantile and Industrial
Development Corporation Ltd). During the checking of
dispensing unit shortfall below permissible limits were found
when the pump was operated on flash mode 5555 and such short
delivery besides being in violation of the terms of the agreement
is also covered under the definition of malpractice as defined in
clause 2 (f) (x) of Control Order, 2005.
24. It was further argued that as all the short deliveries were
beyond permissible limits, therefore, the petitioner and its
proprietor were instructed to suspect the delivery from the said
dispensing unit and the electronic display assembly of control
card no.89 C 51 KT of the said dispensing unit was removed for
further analysis/inspection and on the spot inspection report was
prepared, signatures of the proprietor of the petitioner was taken
without any objection and after inspection report, the said
electronic display assembly was sent for further
analysis/inspection to the MIDCO from where report was received
that the same was neither manufactured nor supplied by MIDCO.
25. It was further argued that on receiving the testing report it
was beyond doubt that the petitioner has committed malpractice
by manipulating dispensing unit on speed service by affixing
different software in the electronic register assembly (ERA) which
has resulted in short delivery to the extent of 440 ml to 450 ml in
every 5 litres of calibrated measure found in the flash mode of
5555 and since said unauthorized fitting found in the dispending
unit had made the petitioner liable for penal action, therefore, a
show-cause notice was issued for the same and he was show-
caused as to why the dealership agreement be not terminated.
After receiving reply to the said show-cause notice and
considering the same, the respondents came to the conclusion that
malpractice has been done by the petitioner, therefore, vide order
dated 24.02.2007 the dealership agreement was terminated which
cannot be faulted in any manner.
26. To bolster his submissions reliance was placed in the matter
of Indian Oil Corporation Ltd and Another vs T. Natarajan
reported in 2018 (9) SCC 235 and in the matter of Indian Oil
Corporation and Ors vs. Bapu Ji Fuels reported in 2018 (11)
SCC 778.
27. On the basis of the aforesaid premise it was argued that the
present petition has no sum and substance and the same deserves
to be dismissed.
28. Heard the counsels for the parties and perused the record.
DISCUSSION AND CONCLUSION.
29. After considering the arguments as well as the material
available on record, this Court finds the controversy to be boiled
down to as to whether the petitioner is responsible for tempering
with the control card no.89 C 51 KT which contained a software
which was not installed by the manufacturer i.e. MIDCO and
whether the said control card was taken out at the time of
preparation of the joint observation report and was sealed in an
envelop which was jointly signed by the members of the joint
observation committee.
30. In the aforesaid regard show-cause notice dated 09.11.2006
is required to be seen in which on the basis of the irregularities
found during the surprise inspection of the retail outlet on
14.09.2006 by Quality Control Cell (QCC) and the report of
MIDCO, the manufacturer of the dispensing unit, on the basis of
which the petitioner was show-caused as to why an action
including termination of the agreement be not taken against the
petitioner. From the said show-cause notice it could be seen that
apart from some other irregularities, while mentioning the report
of the manufacturer of dispensing unit MIDCO Ltd, who tested
the control card no.89 C 51 KT, it was also mentioned that display
circuit of the electronic display assembly was also tested and was
found that the software present in the Electronic Register
Assembly (ERA) was neither manufactured nor supplied by
MIDCO. In this context if annexure R-4 which is the report
submitted by MIDCO manufacturer of the dispensing unit is seen,
the very heading of the said report finds mention "Testing Report
of Controller Card No.89C51KT received from BPCL" and there
is no mention of display circuit of electronic display assembly.
Thus, the report submitted by the manufacturer of dispensing unit
was only with regard to controller card no more or no less. Now
the question arises as to whether at the time of joint observation
conducted by the Quality Control Cell who had seized dispensing
unit bearing no.OIC3560, MIDCO the controller card no.
89C51KT was removed and seized in front of the petitioner or its
officials. From the joint observation report especially para 6 and 7
it could be seen that the electronic display assembly (three display
assemblies) were removed by Mr. A.F.A. Khan, retail technician
and were sealed in one khaki envelop which was jointly signed by
the members making the observation report along with Mr. A.F.A.
Khan, retail technician and no where in the report it is mentioned
that from the dispensing unit controller card no.89C51KT was
removed and sealed.
31. Apart from the aforesaid fact annexure R/9 also strengthens
the fact that when the said envelop which was duly sealed by
QCC team was sent for further investigation to the head office,
which was opened in the presence of four responsible officers of
the company on 25.09.2006 only controller cum display card
no.PCB89C51KT was found therein, to the contrary of the siezed
and sealed dispensing unit by the QCC team.
32. Though in the reply filed on behalf of the corporation, it has
been averred that the said controller cum display card was
removed from the dispensing unit at the time of surprise
inspection on 04.09.2006, but the said joint observation report
does not reflect so. Thus, the fact of extraction of the controller
cum display card from the dispensing unit admittedly was not at
the time of the surprise inspection and must have been at a later
stage.
33. It is also noteworthy that there is nothing on record placed
by the respondents to show that the controller cum display card
PCB No.89C51KT was the same card which was extracted from
the dispensing unit no.OIC3560, MIDCO though the respondents
had tried to justify the aforesaid aspect by filing an affidavit of
one of the team members in front of whom the sealed envelop sent
by the QCC team was opened on 25.09.2006 i.e. Anurag Mittal
who was working as Deputy Manager, Retail Engineer in Western
Region, Bharat Petroleum Corporation, Mumbai, but from bare
contents of the said affidavit it could be seen that the said affidavit
had been furnished just to cover up the anamolies as discussed
above as at the time of opening of the sealed envelop on
25.09.2006, the document refers that the sealed envelop contained
controller cum display card (PCB No.89C51KT) whereas in the
affidavit it has been mentioned that on opening of the sealed cover
electronic display assembly (Electronic Register Assembly) was
found and on opening of the said electronic display assembly
further, controlling card no.PCB No.89C51KT was found affixed
in it. Thus, the very effort to cover up the discrepency creates
doubt so also if electronic display assembly was found in the
sealed envelop, then it was in the absence of the petitioner that the
said electronic display assembly was opened and the controller
card no.89C51KT was extracted/removed. Thus, it can be said
that the opportunity of fair play as required to be provided to the
petitioner was not granted.
34. Apart from the aforesaid facts, it is also not the case of the
respondents that by some external means the petitioner had got
installed certain software in the controller card, thus, had given
effect to the malpractice of short delivery or in any way had
tempered the dispensing unit to give effect to such malpractice,
therefore, merely finding of some software not installed by the
manufacturer of the dispensing unit cannot prove that said
irregularity has been committed by the petitioner or its officials.
35. In light of the aforesaid discussion, this Court finds that
though certain irregularities were found in relation to the
dispensing unit, but it cannot be attributed to the petitioner as the
same has not been proved beyond doubt that the same was
committed by the petitioner.
36. Accordingly, the present petition is hereby allowed, the
order dated 24.02.2007 passed by respondent no.2, whereby the
dealership agreement has been terminated is hereby set aside.
37. When the respondents could not prove and establish that
there was a breach of condition of dealership agreement, the
judgment cited by the counsel for the respondents would not have
any applicability, therefore the same are hereby discarded.
38. The petition is allowed in above terms.
(Milind Ramesh Phadke)
Judge
chandni/ 24/01/2025
CHANDNI
NARWARIYA
2025.01.25
12:01:09
+05'30'
