Hindustan Petroleum Corporation ... vs Kanta Garasiya
2022 Latest Caselaw 12057 Raj

                                          (1 of 8)                     [SAW-407/2022]


      HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
                       JODHPUR


                  D.B. Spl. Appeal Writ No. 407/2022

1.      Hindustan     Petroleum         Corporation          Ltd.,    Through    Its
        Chairman And Managing Director, 17 Jamsedji Road,
        Mumbai.
2.      The Regional Manager, Hindustan Petroleum Corporation
        Ltd, Saheli Nagar, New Polo Ground Road, Udaipur.
3.      Officer Re And Mis, Udaipur Regional Office, 50 Saheli
        Nagar, New Polo Ground Road, Udaipur.
                                                                      ----Appellants
                                    Versus
Kanta Garasiya D/o Shri Heera Bhai, R/o Sarda Nagar, Banswara.
                                                                     ----Respondent



For Appellant(s)          :     Mr. Manoj Bhandari, Senior Advocate,
                                assisted by Mr. Govind Suthar
For Respondent(s)         :     Mr. Siddharth Joshi



           HON'BLE MR. JUSTICE SANDEEP MEHTA
           HON'BLE MR. JUSTICE KULDEEP MATHUR

                                 Judgment



Date of pronouncement : 30/09/2022


Judgment reserved on : 06/09/2022


BY THE COURT : PER HON'BLE MEHTA, J.

The instant intra court appeal has been preferred by

the appellant Hindustan Petroleum Corporation Ltd. being

aggrieved of the order dated 21.02.2022 passed by the learned

Single Bench accepting S.B. Civil Writ Petition No.10115/2019 and

(2 of 8) [SAW-407/2022]

restraining the appellants from terminating the retail petrol and

diesel outlet dealership allotted to the writ petitioner (respondent

in this appeal) by the appellant Corporation.

Brief facts relevant and essential for disposal of the

appeal are noted hereinbelow :-

The respondent writ petitioner was awarded dealership

of Hindustan Petroleum Corporation Ltd. for retail petrol and diesel

outlet vide dealership agreement dated 31.12.2007 and was

operating the same in the name and style of Akshay Automobile at

location Navania, Udaipur.

An inspection was conducted by the company officers at

the outlet of the respondent writ petitioner on 27.06.2017, during

the course whereof, it was found that six out of eight nozzles were

releasing lesser quantity of fuel in the range of 30 ml to 60 ml in

both Motor Spirit (MS) and High Speed Diesel (HSD). The

inspection team prepared a report and forwarded the dispensing

unit to the O.E.M., i.e. Moderate Insightful Disciplined Congenial

Opinionated (for short, hereinafter referred to as 'MIDCO') for

technical assessment. Panchnama was also prepared on the same

day. The unit was examined by MIDCO, which issued a report

dated 03.01.2018 indicating that :

"pulsar assembly is not found in conformance with

MIDCO standard design as per delivery test."

A show cause notice dated 08.05.2018 was issued to

the writ petitioner requiring her to show cause as to why the

dealership be not terminated on account of violation of clauses

(3 of 8) [SAW-407/2022]

4(a), 6(f), 20(a), 31(a) and 31(1) of the dealership agreement

and for committing irregularities as described in the Marketing

Discipline Guidelines (MDG). The respondent submitted a reply

denying the allegations set out in the show cause notice and

challenged the same by filing S.B. Civil Writ Petition

No.3816/2019. While the said writ petition was pending, the

respondent was given an opportunity of hearing and thereafter the

dealership was terminated vide order dated 06.03.2019, which

was assailed by the respondent writ petitioner through S.B. Civil

Writ Petition No.10115/2019. The writ petition aforesaid came to

be allowed by the learned Single Bench vide order dated

21.02.2022, which is assailed in this intra court appeal.

Mr. Manoj Bhandari, learned Senior Advocate, assisted

by Mr. Govind Suthar, representing the appellants, vehemently

and fervently contended that the view taken by the learned Single

Bench based on the report of MIDCO that the errors found at the

retail outlet of the respondent were not critical and were covered

under 'major irregularities', which would have the consequence of

suspension of sale and supply by 15 days only is absolutely

unjustified. Mr. Bhandari submitted that the view taken by the

learned Single Bench that the test report indicates lack of physical

damage and interference in the external component of the

hardware and thus, the deficiency would be covered by category

8.3 (Major Irregularities) is absolutely unwarranted and amounts

to a misreading of the MIDCO test report. He urged that MIDCO,

which is the original equipment manufacturer and an independent

assessment agency, concluded in its report that the discharge

(4 of 8) [SAW-407/2022]

from six out of eight nozzles of the outlet of the respondent writ

petitioner were reduced and this conclusion by itself would give

rise to a 'critical irregularity' within the meaning of Clause 8.2.iii of

the Marketing Discipline Guidelines, which reads:-

8.2 Critical Irregularities:

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 5.1.2)

He submitted that in addition to the fact that the discharge from

six out of eight dispensing nozzles was reduced, the dealer did not

report the shortfall in discharge to the company. This serious

suppression would as a necessary repercussion make the dealer

liable for critical irregularity by virtue of the aforesaid clause of the

guidelines and the only consequence thereof would be

termination of dealership.

Mr. Bhandari submitted that as the circuit of the

dispenser unit is electronic, it is clear that for reducing the

discharge, the dealer indulged in software manipulation leading to

discrepancy noticed during inspection. He referred to the

following extract from report of the MIDCO Lab :-

"Pulsar assembly is not found in conformance with

Midco standard design as per Delivery tests."

Mr. Bhandari referred to Clause 5.1.3 of the MDG,

which reads as below :-

"5.1.3 TOTALISER SEALS FOUND TAMPERED WITH Totaliser seals will also be construed as tempered If it allows manipulation of Totaliser reading; deliberately

(5 of 8) [SAW-407/2022]

making the totaliser non functional or not reporting to the OMC if totaliser Is not working.

In such cases, views and opinion of W & M authorities would be obtained and the opinion rendered by the W&M department should be final.

In case of this irregularity, sales from the concerned dispensing unit to be suspended & DU sealed. Samples to be drawn of all the products and sent to lab for testing."

In support of his contentions, Mr. Bhandari placed

reliance on the following judgments :-

1. Natvarlal & Son through Partner Vs. Bharat Petroleum Corporation Ltd. through Managing Director [Letters Patent Appeal No.540/2011 decided on 19.09.2014] [Gujarat High Court]

2. M/s. Anvita Highway Services Vs. Bharat Petroleum Corporation & Ors. [Writ Petition No.11330/2011 decided on 19.04.2012] [Bombay High Court]

He, thus, implored the court to accept the appeal, set

aside the impugned order and affirm the decision taken by the

company to terminate the dealership of the respondent writ

petitioner.

Per contra, Mr. Siddharth Joshi, learned counsel

representing the respondent, vehemently and fervently opposed

the submissions advanced by the petitioner's counsel. He urged

that admittedly, neither any physical damage was noticed on the

MMS Pulsar Assembly nor any alien or external component/

hardware was found in any of the items received as per the

MIDCO report. Thus, he urged that the discrepancy noticed at the

(6 of 8) [SAW-407/2022]

retail outlet was covered under Clause 8.3 (Major Irregularities)

and not under Clause 8.2 (Critical Irregularities) and hence, the

consequence of termination of dealership could not have been

inflicted upon the dealer. He urged that the view taken by the

learned Single Bench is just and legal and does not warrant

interference.

We have given our thoughtful consideration to the

submissions advanced at bar and have gone through the material

available on record.

Learned Single Bench, after considering the controversy

held that though short delivery was noticed in the nozzles but

since the weights and measures seals were intact, the irregularity

was covered under Clause 8.3 (x) and not under clause 8.2 of the

MDG. However, we are not in agreement with the said conclusion

drawn by the learned Single Bench. It is an admitted position that

Pulsar Assembly seized from the retail outlet was examined in the

lab of the original equipment manufacturer MIDCO. The test

report dated 03.01.2018 clearly indicates that the Pulsar Assembly

was not found in conformance with MIDCO standard design as per

Delivery tests. Thus, unquestionably, there was tampering with

the unit. As the assembly is having electronic design, the

tampering is possible through software hacks, which would not

require any external tinkering. In addition thereto, it is an

admitted position that the discharge of fuel from six out of eight

nozzles at the retail outlet of the respondent was deficient when

physical inspection was undertaken, which leads to short delivery

of fuel. As per clause 8.2 (iii) referred to supra, such tampering

(7 of 8) [SAW-407/2022]

amounts to deliberately making the totaliser non-functional.

Furthermore, the respondent writ petitioner did not report the

short delivery to the company, which clearly brings the mischief

under the definition of Critical Irregularities, which entails the only

consequence of termination of dealership. The test report dated

03.01.2018 reveals that Pulsar Assembly works on electronic

circuits and as there was shortfall in delivery, it is apparent that

these circuits were tampered by electronic means. It is trife

knowledge that electronic circuits can be hacked/converted

without changing the external design. The fact that there was

shortfall in discharge, which was not reported by the respondent

dealer, would lead to a direct inference of tampering by electronic

means. This court is convinced that the incident of short delivery

of motor spirit and high speed diesel beyond the permissible limits

observed at the writ petitioner's retail outlet is a malpractice as

defined under the Motor Spirit and High Speed Diesel (Regulation

of Supply, Distribution and Prevention of Malpractices) Order,

2005. Needless to say that it is the respondent writ petitioner,

who would stand to gain by the short delivery, and the losers

would be the public at large utilizing the services offered at the

retail outlet of the writ petitioner unaware of the short delivery of

Motor Spirit and High Speed Diesel by the dispensing units.

MIDCO is the original equipment manufacturer and an

independent agency. Thus, it would not be open for this court,

while exercising the extraordinary writ jurisdiction to substitute its

own wisdom over the conclusions drawn by the MIDCO in the test

report. The controversy at hand is squarely covered by the

judgment rendered by the Hon'ble Gujarat High Court in the case

(8 of 8) [SAW-407/2022]

of Natvarlal & Son through Partner Vs. Bharat Petroleum

Corporation Ltd. through Managing Director (supra). We

are, therefore, of the firm opinion that the dealer tampered the

Pulsar Assembly, which is covered under the definition of critical

irregularity and hence, the appellant Corporation was perfectly

justified in terminating the dealership of the respondent writ

petitioner by order dated 06.03.2019, which does not suffer from

any infirmity whatsoever. Consequently, the impugned order

dated 21.02.2022 passed by the learned Single Bench is

unsustainable and is hereby reversed.

The appeal is allowed, accordingly.

                                   (KULDEEP MATHUR),J                                      (SANDEEP MEHTA),J


                                    Pramod/-









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