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2008 DIGILAW 1127 (ALL)

GABHANA OIL COMPANY v. STATE OF U. P.

2008-05-23

ANJANI KUMAR, SUDHIR AGARWAL

body2008
JUDGMENT Hon’ble Sudhir Agarwal, J.—The petitioners have approached this Court under Article 226 of the Constitution assailing show cause notice dated 31.1.2008, Annexure-9 to the writ petition issued by Senior Divisional Retail Sales Manager, Indian Oil Corporation Limited. 2. The facts in brief, giving rise to the present petition, are as under : 3. Petitioner No. 1-M/s Gabhana Oil Company, a proprietorship concern, is dealing in wholesale of kerosene oil having its premises at village Jawan, Tahasil Gabhana, District Aligarh. The petitioner No. 2 is its proprietor. The petitioner No. 1 has been issued a licence under U.P. Kerosene Control Order, 1962 (hereinafter referred to as “Order 1962”) is an agent of kerosene oil as defined under Clause 2(a) of Order 1962. The Indian Oil Corporation (hereinafter referred to as “IOC”) is supplier of kerosene oil to the petitioner No. 1. The State Government vide Government Order dated 13.10.2005 launched a scheme known as Jan Kerosene Pariyojna (Pilot Project), whereunder the delivery of kerosene oil is to be made by the oil company through their own transporters to the whole sellers. The IOC in pursuance to the said scheme selected several whole sellers wherein the petitioner was also one of them, who was to be supplied kerosene oil by IOC through its own transporters. The IOC, accordingly, entered into contract with certain transporters for supply of kerosene oil to the underground tanks of the whole sellers. On 16.1.2008, 20 kilolitre of kerosene oil was despatched vide tanker No. UP 81 W-9231 and invoice No. 623217131 at 14.02 hrs. At about 19.00 hrs. on the same date, i.e., 16.1.2008, the officials of Supply Department raided M/s Agrawal Automobiles Petrol Pump at Khair, District Aligarh, where it found the aforesaid tanker filled with the kerosene oil inside the premises. The first information report was lodged against the dealer M/s Agrawal Automobiles as well as driver of the aforesaid tanker and registered as case crime No. 10 of 2008 under Section 3/7, Essential Commodities Act, 1955 at police station Khair, District Aligarh. The District Supply Officer, Aligarh (hereinafter referred to as the D.S.O.), however, after enquiry, found that the aforesaid kerosene oil was to be delivered to the petitioner and, therefore suspended licence of the petitioner vide order dated 17.1.2008, Annexure-7 to the writ petition. The District Supply Officer, Aligarh (hereinafter referred to as the D.S.O.), however, after enquiry, found that the aforesaid kerosene oil was to be delivered to the petitioner and, therefore suspended licence of the petitioner vide order dated 17.1.2008, Annexure-7 to the writ petition. Pursuant to the aforesaid order of suspension, the respondent No. 3 issued impugned show cause notice to the petitioner alleging that the aforesaid tanker ought not to have been found at any premises other than that of the petitioner and this amounts to violation of Marketing Discipline Guidelines, 2005. The petitioner was called upon to explain the above irregularity within 7 days failing which suitable action is to be taken against the petitioner’s dealership. The show cause notice refers to the suspension of petitioner’s licence by D.S.O. The petitioner submitted reply on 14.2.2008 and it is said that no order has been passed by respondent No. 3 till date. However, in the meantime, the D.S.O. made enquiry from the IOC and on coming to know that the responsibility of delivery of kerosene oil was that of IOC, the tanker and transporter were in contract with IOC and petitioner had no control upon them, found no reason to keep the licence of the petitioner under suspension and, consequently, vide order dated 13.2.2008 (Annexure-8 to the writ petition) revoked the suspension. The learned counsel for the petitioner submitted that normally it is true that against mere show cause notice, the writ petition is not to be entertained but in the present case, it is evident that respondent No. 3 has issued the aforesaid notice without any application of mind and probably to cover up its own laches or negligence. Non supply of kerosene oil to the petitioner since 17.1.2008 is wholly illegal particularly, when the order of suspension of licence of the petitioner has also been revoked by the D.S.O. vide order dated 13.2.2008 and at least from then, the respondents have no reason or justification for not supplying kerosene oil to the petitioner and keeping his business closed is causing irreparable loss to the petitioner. It is said that the impugned show cause notice, being wholly arbitrary, is liable to be set aside since it also infringes the petitioner’s fundamental rights under Articles 14 and 19 (1)(g) of the Constitution. 4. It is said that the impugned show cause notice, being wholly arbitrary, is liable to be set aside since it also infringes the petitioner’s fundamental rights under Articles 14 and 19 (1)(g) of the Constitution. 4. On behalf of the respondents No. 2 and 3 a counter affidavit has been filed sworn by Sri Rahul Jairath, Assistant Manager (Retail Sales), IOC, Etawah. He has raised a preliminary objection that since Union of India has not been impleaded, therefore, the writ petition is liable to be dismissed for non-joinder of necessary parties. On merits, however, it admits that the delivery of kerosene supply is being made by IOC through its own appointed Tankers/Transport companies. It is further stated that the aforementioned tanker was under the contract with IOC for making delivery of supplies ex Mathura Terminal. However, the case of the respondents No. 2 and 3 is that the kerosene oil agency is also responsible to report to IOC about the arrival of kerosene oil and delivery by the transporting tanker within a reasonable time so that there is no chance of enroute pilferage of kerosene oil. The scheme of supply of kerosene oil directly by the oil companies has been launched with the aforesaid object. In the present case, petitioner did not inform IOC about non-arrival of kerosene oil within reasonable time. However, it is said that the matter is still under investigation and the petitioner’s reply is also being considered, therefore, the writ petition, at this stage, is premature and is liable to be dismissed. This affidavit has been sworn on 3.3.2008 and filed before the Court on 20.3.2008. The petitioner has filed its rejoinder affidavit sworn on 23.3.2008 and it is specifically stated therein that no order has been passed by the respondent No. 3 in the aforesaid matter and petitioner is still not being supplied any kerosene oil by respondents No. 2 and 3. Even on the date of hearing, the position remained the same. 5. We have heard learned counsel for the parties and perused the record. Even on the date of hearing, the position remained the same. 5. We have heard learned counsel for the parties and perused the record. It is no doubt true that normally when a show cause notice is issued, one is not supposed to be permitted to rush to this Court invoking extra ordinary jurisdiction under Article 226 of the Constitution instead of submitting his reply to the said show cause notice and waiting for the appropriate order to be passed by the authority concerned. However, the aforesaid principle cannot be said to be a total bar against entertaining a writ petition under Article 226 of the Constitution but it is a self restraint imposed by the High Courts for not entertaining the matters, which have not attained finality and are still in process of investigation/enquiry. A show cause notice by itself may not constitute to be an action adverse to the interest of the person concerned to whom it is issued and, therefore, this Court, normally prefer not to entertain a writ petition under Article 226 of the Constitution and instead require the person concerned to reply the notice and await final decision. However, where it is found that a show cause notice has been issued in a most rackless and negligent manner, showing total non-application of mind and causing serious prejudice to the person concerned as the case in hand, where the petitioner’ business is made standstill by stopping supply of kerosene oil to the petitioner, the Court is not prevented from looking into the legality and genuineness of the notice and to find out whether there is even a prima facie case made out by the respondents concerned for issuing such notice. If this Court finds that there is some matter which prima facie shows involvement of the person concerned and the matter requires investigation justifying show cause notice, no further enquiry would be made and this Court would relegate the parties to await final decision in the matter, but if it is found that a show cause notice has been issued on a mere drop of the hat without showing any iota of culpability of the person concerned and in fact nothing has been found even prima facie against the person concerned, this Court would be failing in its constitutional obligation of protecting such a person from avoidable harassment and violation of his legal and constitutional rights in the hands of the respondents, if it still declines to interfere only on the ground that the order impugned is a show cause notice. 6. From the facts narrated above, the admitted position, as borne out, is that the tanker was under the contract with IOC. The petitioner, under the said scheme, would have come into picture only when the tanker would have reached its premises and would have delivered kerosene oil in its underground tank. The transport company being in contract with IOC, obviously, is not under any guidance, control or supervision of the petitioner, but, on the contrary, the entire control vests in IOC. There is nothing on record to show that the driver of the tanker or the transporter concerned loaded with 20 kilolitres of kerosene oil reached M/s Agrawal Automobiles on the instruction or direction of the petitioner to deliver the said kerosene oil at M/s Agrawal Automobiles. Even in the first information report, there is no such assertion and in the counter affidavit, which has been filed on behalf of the respondents on 20.3.2008, it is nowhere stated that the subsequent investigation has revealed involvement of the petitioner for diverting the route of the tanker to M/s Agrawal Automobiles. The contract of IOC with transport company has been admitted in para-11 and 17 of the Counter affidavit, which are reproduced as under : “11. That in respect of the contents of paragraph 13 of the writ petition, it is respectfully submitted that the Tanker No. U.P. 8, W. 9231 is under contact with Indian Oil Corporation Ltd. for making delivery of supplies ex Mathura terminal and action is being taken by the Corporation against the transporter. That in respect of the contents of paragraph 13 of the writ petition, it is respectfully submitted that the Tanker No. U.P. 8, W. 9231 is under contact with Indian Oil Corporation Ltd. for making delivery of supplies ex Mathura terminal and action is being taken by the Corporation against the transporter. It is true that all Jan Kerosene Pariyojana are delivered supplies and the TT should reach the agency premises and not in other premises, which has no relation with the SKO. ........................................ 17. That in reply to the contents of paragraph 19 of the writ petition, it is respectfully submitted that it is true that the delivery of the supplies are made by Indian Oil Corporation Ltd. through its appointed TTC. However, the respective SKO Agency to whom supplies are made are also responsible to report to the Corporation of the subject TT not reaching their premises within reasonable time frame to ensure that there is no chance of enroute of pilfration. Jan Pariyojna Kerosene (delivered SKO) is one of the major steps taken by Government of India through MOP and NG for ensuring correct delivery of product at the SKO premises and also issuance of correct quantity to the customers.” 7. The only allegation made in the counter affidavit against the petitioner is that he should have informed IOC about non-arrival of tanker within reasonable time so that enroute pilferage could have been avoided. However, there is nothing on record nor any averment in the counter affidavit that the petitioner was informed by the respondents No. 2 and 3 about despatch of 20 kilolitres kerosene oil through the aforesaid tanker on 16.1.2008 and if such information was given, the time at which the same was made available to the petitioner. In the absence of any such information, it is inconceivable to expect any kerosene oil dealer to inform the oil company about non-arrival of tanker within a reasonable time. The D.S.O., it is true, at the first instance suspended the licence of the petitioner on 17.1.2008 but after making enquiry, when it found that the tanker was under the contract and control of IOC and the petitioner had no control over it, it also found no justification to keep the licence of the petitioner under suspension. The D.S.O., it is true, at the first instance suspended the licence of the petitioner on 17.1.2008 but after making enquiry, when it found that the tanker was under the contract and control of IOC and the petitioner had no control over it, it also found no justification to keep the licence of the petitioner under suspension. In the circumstances, we find no justification on the part of respondents No. 2 and 3 to keep the matter pending by not passing any order pursuant to the impugned show cause notice and deprive the petitioners from supply of kerosene oil without there being any valid and just reason. 8. The impugned show cause notice, in our view, is also vitiated having been issued in a mechanical manner without any application of mind and justification, particularly, in the facts and circumstances of the case, as discussed above. Even prima facie, in our view, no person of ordinary prudence may have inferred from the above mentioned facts that the petitioners had any sort of responsibility or culpability in the matter warranting any action against them. We have also perused the entire show cause notice and assuming that the facts stated therein are correct, still it does not show any wrong having been committed by the petitioners, at least, in the matter. The allegations are, in their entirety, either against the transporter concerned or M/s Agrawal Automobiles, but nothing has been said against the petitioner. In fact, it appears that respondent No. 3, having referred to the suspension order dated 17.1.2008 passed by D.S.O. has inferred therefrom only that the petitioners have violated Clause 3 of Order 1962 and the Government Regulation regarding sale and supply of kerosene which is also violation of Marketing Discipline Guidelines, 2005. The suspension of licence having been revoked vide order dated 13.2.2008 by D.S.O., the entire edifice of show cause notice, thereafter disappear. 9. Moreover, reading the entire show cause notice along with the scheme of Jan Kerosene Pariyojna, we are not able to link the petitioners in any manner with the violation of any condition of supply and delivery of kerosene oil. In fact, the learned counsel for IOC also failed to point out any such irregularity on the part of the petitioners except that the matter is under investigation and the authorities have yet to pass a final order. In fact, the learned counsel for IOC also failed to point out any such irregularity on the part of the petitioners except that the matter is under investigation and the authorities have yet to pass a final order. Such a show cause notice, in our view, cannot be allowed to persist any longer. 10. The Apex Court in M/s East India Commercial Co. Ltd. v. Collector of Customs, AIR 1962 SC 1893 has observed in para-27 as under : “If on a reading of the said notice, it is manifest that on the assumption that the facts alleged or allegations made therein were true, none of the conditions laid down in the specified Sections was contravened, the respondent would have no jurisdiction to initiate proceedings pursuant to that notice. To state it differently, if on a true construction of the provisions of the said two Sections the respondent has no jurisdiction to initiate proceedings or make an inquiry under the said Sections in respect of certain acts alleged to have been done by the appellants, the respondent can certainly be prohibited from proceeding with the same. We, therefore, reject this preliminary contention.” 11. Again in Union of India and another v. M/s. Brij Fertilizers Pvt. Ltd. and others, JT 1993 (3) SC 403, in para-8 of the judgment, the Apex Court held as under: “Failing in his effort to assail the order on merits the learned Additional Solicitor General vehemently urged that the department was not precluded from issuing show cause notice and requiring the manufacturers to appear and explain their claim. It was urged that the High Court was not justified in quashing the show cause notice and issuing the directions for paying the subsidy without giving an opportunity to the department to verify if the respondents had in fact complied with Control Order. True, the High Court should normally not interfere at the stage of show cause notice. It was urged that the High Court was not justified in quashing the show cause notice and issuing the directions for paying the subsidy without giving an opportunity to the department to verify if the respondents had in fact complied with Control Order. True, the High Court should normally not interfere at the stage of show cause notice. But where, from the facts it is apparent that there was not material available with the department to doubt the statement on behalf of the respondents and their own officers at every point of time had issued the certificate the correctness of which could not be disputed or doubted except by raising unfounded suspicion or drawing an imagination it would be failing to exercise jurisdiction if the Court does not discharge its constitutional obligation of protecting the manufacturers who, as is apparent from the various letters issued from different authorities are in perilous condition as they are not able to meet their liabilities to pay to financial institutions and various other authorities and are facing proceedings on various counts and have virtually closed their unit. We are pained to say that the authorities did not realise either the purpose of granting subsidy or the harassment to which the manufacturers have been exposed. Entire litigation appears to be a sad plight for those who have set up small scale units in the hope that they will stand on their own on the subsidy given by the government as admittedly the price of manufacturing fertilizers is much more than the price fixed by the government for which it assured to pay subsidy.” 12. In our view, what has been seriously castigated by the Apex Court in para-8 of the judgment in Brij Fertilizers (supra) equally applies with full force to the facts of the present case also. 13. The learned counsel for the respondents despite our repeated query could not reply as to how and in what manner, the so called enquiry could not have completed though more than a month has elapsed since then and the petitioner’s business is lying standstill for last more than one and half month. In a case, where the action of the respondents has resulted in closure of entire business, the matter should have been dealt with much more sincerity, expediency, showing care to possible inconvenience to public at large also. In a case, where the action of the respondents has resulted in closure of entire business, the matter should have been dealt with much more sincerity, expediency, showing care to possible inconvenience to public at large also. It, however, appears that the respondents, in the case in hand, have sat tight over the matter in a most casual manner leaving the petitioner to run here and there. In our view, this is a fit case where this Court should not non suit the petitioner only on the ground that the order impugned in this writ petition is a show cause notice, particularly, in view of the facts discussed above, which show a complete recklessness and casual approach on the part of the respondents in the entire matter. 14. In the result, the writ petition succeeds and is allowed. The impugned show cause notice dated 31.1.2008, Annexure-9 to the writ petition, is hereby quashed. The respondents 2 and 3 are directed to restore supply of kerosene oil to the petitioner forthwith. However, we make it clear that this order shall not affect the proceedings pending against other persons pursuant to raid conducted on 16.1.2008 and the respondents may proceed in respect thereto in accordance with law. Petitioners shall be entitled to cost which is quantified to Rs. ten thousand. ————