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2009 DIGILAW 558 (CAL)

Friends (H. P) Station v. Senior Regional Manager (Retail), HPCL

2009-07-30

G.C.GUPTA

body2009
Judgment :- (1) The subject matter of challenge in this writ petition is an order dated 26th February 2009 passed by the Senior Regional Manager (Retail), Hindustan Petroleum Corporation Limited (hereinafter referred to as the HPCL for brevity), terminating dealership of the writ petitioner No. 1 which is a partnership firm of which the writ petitioner No. 2 is a partner. The undisputed facts and circumstances of the case are as follows :- On 27th August 2008 an inspection was conducted at the petrol pump run by the writ petitioner No. 2 amongst others under the name and style of Messers Friends HP Station at Purba Bishnupur in the district of 24 Parganas (South). Samples were drawn and sent to the laboratory for testing. By a letter dated 10th November 2008 the test report was furnished to the writ petitioners which indicated that the ingredient RON" in the motor sprit: BS III was found to be 83.6 whereas the minimum requirement was 91. It is on this basis that by the letter dated 10th November, 2008 sales and supplies from the aforesaid retail outlet was suspended and the writ petitioners were asked to offer their explanation. By a letter dated 19th November 2008 the writ petitioners replied by stating that they had no explanation to offer and insisted upon re-test of the NOZZLE sample as also the TT sample retained at the outlet. To be specific the contents of the letter dated 19th November 2008, insofar as the same is relevant for our purpose is as follows :- "In view of the above fact there is no word to explain about the failure of MS NOZZLE sample, though the MS density in my Density Register matches with the Challan Density with in variation. I fail to understand how the results of RON Test has failed. The variation of test result of Nozzle samples with respect to test result to depo sample is also surprising to me. I fail to understand how the results of RON Test has failed. The variation of test result of Nozzle samples with respect to test result to depo sample is also surprising to me. So, I humbly request you to Re-test the MS Nozzle sample and also the T.T. sample which is sealed and signed by Sales Manager and kept in our outlet So, I will be very grateful to you if you do the necessary steps regarding my application as early as possible." (2) By a letter dated 12th January 2009 HPCL refused to accede to the prayer for retesting because of the huge gap between the required minimum of RON and the actual percentage of RON found upon analysis which led them to conclude that it was a clear case of adulteration. The reasons assigned, for refusing the prayer for re-testing, in the letter dated 12th January 2009 to be precise are as follows :- "The gap between Retail outlet Nozzle sample report and Supply Location sample/TT sample report is very wide. RON for the supply location sample and TT retention sample is observed as 94.3 and 94.4 respectively whereas for retain outlet nozzle sample is 83.6. Similarly Sulphur content in Supply location sample and TT sample is found to be 44 ppm and 39 ppm respectively whereas Retail outlet nozzle sample is found to be 147 ppm. Recovery at 70 deg C for Retail Outlet nozzle sample is only 17% whereas for supply location sample, it is 30% and for TT retention sample, it is 7%. Recovery at 100 deg C also is observed only 47% for Retail outlet nozzle sample whereas it is 57% and 56% respectively for supply location and TT retention sample. Since the gap is very huge, your request vide letter dated 19.11.2008 for re-testing cannot be entertained as it is a clear case of adulteration." (3) By the aforesaid letter the writ petitioners were also called upon to explain as to why necessary action should not be taken against them. The writ petitioners by their letter dated 28th February 2009 replied reiterating their prayer for re-testing. HPCL by a letter dated 26th February 2009 terminated the dealership. It is this order which is under challenge. (4) Mr. Saktinath Mukherjee, learned senior Advocate appearing in support of the writ petitioners advanced the following submissions :- The sample was drawn on 27th August 2008. HPCL by a letter dated 26th February 2009 terminated the dealership. It is this order which is under challenge. (4) Mr. Saktinath Mukherjee, learned senior Advocate appearing in support of the writ petitioners advanced the following submissions :- The sample was drawn on 27th August 2008. It was received by the laboratory on 30th August, 2008 and was tested on 27th October 2008 as would appear from page 59 of the writ petition. He submitted that the long delay in testing the sample was clearly in violation of the guideline which required the sample to be tested within 30 days from the date of drawing the specimen. He added that it is not for nothing that a time limit has been provided for testing the sample. The reason behind the same is that by lapse of time petrol changes colour as noticed by the Supreme Court in the case of Harbanslal v. Indian Oil Corporation Limited reported in (2003)2 SCC 107 . According to him the delay in testing the sample has rendered the test report incredible and therefore no step on that basis and far less termination of the dealership can be justified. (5) Mr. Kundu, learned Advocate appearing for the respondents drew my attention to the selfsame guidelines for contending that delay in conducting the test does not vitiate the report. He drew my attention to article 2, 5 clause (1) which provides as follows :- "The purpose of mentioning time frame for various activities e.g. sending samples to lab preferably within 10 days etc. is to streamline the system and is no way related to quality/result of the product." (6) He added that the judgment in the case of Harbanslal cited by Mr. Mukherjee has no manner of application to the facts and circumstances of this case. (7) The second point urged by Mr. Mukherjee was that there is no satisfactory evidence to indicate that the sample drawn by the officials of HPCL from the outlet of the writ petitioners was, in fact examined in the laboratory. Mr. Kundu replied by saying that this is a question of fact and can be decided only on the basis of evidence to be led by the parties. He added that the contract between the parties contains an Arbitration Clause and the writ petitioners are at liberty to challenge the order of termination by having recourse to arbitration. Mr. Kundu replied by saying that this is a question of fact and can be decided only on the basis of evidence to be led by the parties. He added that the contract between the parties contains an Arbitration Clause and the writ petitioners are at liberty to challenge the order of termination by having recourse to arbitration. He in this regard relied on an unreported judgment delivered by me in WP No.2535 of 2002 (Indian Trading Oil Co. and Ors. v. Regional Director (East) and Ors) for the proposition that the disputed questions of fact cannot be gone into by the Writ Court. He added that the said judgment was upheld by the Appellate Court which is reported in (2008)1 Cal LJ (Cal) 763. (8) The third and the last submission advanced by Mr. Mukherjee was that the refusal on the part of the HPCL to re-test the sample was arbitrary and therefore the termination of the dealership is equally arbitrary as also offending Article 14 of the Constitution of India. He submitted that in the case of Harbanslal (supra) Their Lordships held that the dealership of the petitioner which is their bread and butter could not have been terminated for irrelevant or non-existent cause and therefore High Court should have intervened. (9) Mr. Kundu replied by stating that the observations made in the case of Harbanslal have no manner of application to the facts and circumstances of this case which do not bear any resemblance with the facts and circumstances involved in the case of Harbanslal. He also disputed that the refusal to accede to the prayer for re-testing was arbitrary or that for that reason the termination is bad. (10) The points which arise for determination in this case, in my view, are as follows :a) Does the order dated 26th February 2009 terminating the dealership of the writ petitioners offend Article 14 of the Constitution of India? b) Is the alternative remedy a bar in this case? (11) At the threshold it can be clarified that the judgment in the case of Harbanslal (supra) relied upon by Mr. b) Is the alternative remedy a bar in this case? (11) At the threshold it can be clarified that the judgment in the case of Harbanslal (supra) relied upon by Mr. Mukherjee can have no manner of application to the facts and circumstances of this case because in that case "The only infirmity found in the sample was that automatic viscosity at 40 degree should have been within the range of 1.8 to 5,0 but was bound to be 1.758". In the present case the infirmity is huge. The minimum requirement of the ingredient RON is 91 whereas actual percentage found was 83.6. In the case of Harbanslal in an appeal the order of suspension had been set aside by the Appellate Court. Nonetheless the order of termination was passed. Therefore the judgment in that case can have no manner of application to the facts and circumstances of this case. Refusal to accede to the prayer for re-testing is backed by adequate reasons. The delay in conducting the test even according to the guideline does not affect the result as regards the quality of the sample tested which I already have noticed. Adequate opportunities were given to the writ petitioners at every stage to explain their conduct and I already have noticed that they had none to offer except for making a prayer for re-testing which was refused apparently for sufficient reasons. It is therefore not possible to hold that the order of termination offends Article 14 of the Constitution of India. It is not a case where the bread and butter of the writ petitioners were taken away for an irrelevant or a non-existent cause. The writ petitioners may however in an appropriate proceedings succeed in proving that the sample drawn was not in fact tested which is denied by the respondents. If that is true then it can be held that the bread and butter of the writ petitioners were taken away for a non-existent cause. That the writ petitioners can do only by invoking the Arbitration Clause. This disputed question of fact cannot be decided by the writ Court. In the case of India Trading Oil Company and Ors. v. Regional Direction (East) and Ors. (supra) I had occasion to consider this question which was answered as follows :- "There is yet another weightier reason why the petition must be dismissed. This disputed question of fact cannot be decided by the writ Court. In the case of India Trading Oil Company and Ors. v. Regional Direction (East) and Ors. (supra) I had occasion to consider this question which was answered as follows :- "There is yet another weightier reason why the petition must be dismissed. The arbitration agreement provides that dispute or difference of any nature whatsoever............... shall be referred to the sole Arbitrator................. The first submission of Mr. Sen, noticed above, is with regard to a dispute referrable to arbitration. In the case of Har Shankar reported in 1975 (1) SCC 737 it was held that Article 226 was not intended to facilitate avoidance of obligation voluntarily incurred to refer the dispute to arbitration. Section 5 of the 1996 Act is even more peremptory. Judicial intervention is prohibited thereunder except where otherwise provided. Mr. Sen wants this Court to strike out the step taken by the respondent No. 3 suspending the dispensing unit and calling for an explanation because the inspection note according to him is incorrect. The respondent No. 3 is disputing this submission. There is thus a dispute. The dispute because of the Arbitration Clause can only be decided by recourse to arbitration and not otherwise. For the aforesaid reasons, I am of the view that the steps taken by the respondent No.3 suspending the dispensing unit and thereafter calling for an explanation were not an unauthorised act or acts. Whether the basis for doing so is factually correct is however in the domain of the arbitrator." (12) That judgment was affirmed by the Appellate Court. For the reasons aforesaid the first issue is answered in the negative and the second is answered in the affirmative. The writ petition thus fails and is dismissed. It is however clarified that these finding are for the purpose of this petition and shall not bind the arbitrator. There shall be no order as to costs. (13) Urgent xerox certified copy of this judgment be made available to the learned Advocates for the parties, if applied for, upon, compliance of all formalities.