JUDGMENT ( 1. ) THE petitioner has approached this Court by this petition under Article 226 of the Constitution of India, calling in question the order dated 1-8-2008, by which the dealership of the retail outlet of the petitioner has been terminated. THE petitioner has also called in question the test reports dated 14-3-2007 and 6-6-2007, by which the samples of the retail outlet of the petitioner were found to be unsatisfactory. It is contended by the petitioner that the respondents have granted a dealership to the petitioner for establishing a petroleum product supply outlet which has been established in the name and style of the petitioner. An agreement was executed in between the petitioner and the Hindustan Petroleum Corporation Limited (hereinafter referred to as the respondent-Corporation for short). THE respondent No. 3, an official of the Corporation conducted an inspection of the retail outlet of the petitioner on 6-2- 2007 and samples were drawn from the retail outlet. At the outlet of the petitioner itself "Marker Test" was conducted, other specifications were filled in, in the inspection report and the copy of the same was provided to the representative of the petitioner. According to the report, the samples had passed the 'Marker Test' meaning thereby no adulteration in the petroleum product was found. It is the contention of the petitioner that since the samples drawn from the outlet of the petitioner have successfully passed the marker test, as per the Notification of the Corporation itself, ho further tests were required. However, by handing over one bottle of the sample drawn from the outlet of the petitioner to the representative of the petitioner, the other samples were taken to the laboratory and a test was said to be conducted. THE petitioner was shocked to receive a show cause indicating that in the laboratory test, the samples drawn from the outlet of the petitioner have not been found upto the marks and, therefore, an explanation was called. After examination of the report, the petitioner found that only in RON test, a negative finding was recorded. THE density test of the samples of the petitioner was said to be not upto the mark though when the finding with respect to the density was recorded at the time of inspection by the authorities of the respondent-Corporation, the same was upto the mark. THE density test of the samples of the petitioner was said to be not upto the mark though when the finding with respect to the density was recorded at the time of inspection by the authorities of the respondent-Corporation, the same was upto the mark. It is the contention of the petitioner that a request was made by the petitioner that samples kept in the custody of the petitioner be tested. Though the test was conducted but the same was highly belated and again a failure report was given. ( 2. ) SINCE the action was initiated for suspension of supply/sale of the petroleum product from the outlet of the petitioner by the respondent- Corporation, a writ petition was filed by the petitioner before this Court being W. P. No. 5034/2007. On 16-7-2007, this Court granted an interim relief to the petitioner directing restoration of supply of petroleum product to the petitioner, by ordering maintaining status-quo. However, since only the interim action was initiated by the respondent-Corporation, the writ petition of the petitioner was finally disposed of vide order dated 1-10-2007, with a direction to decide the matter on merits within fifteen days and to keep the order of suspension of sale in abeyance till that time. The order of this Court was not complied with, expeditiously, but the sale of petroleum product from the outlet of the petitioner resumed only on 28-10-2007. By the impugned order, now since the dealership of the petitioner is terminated, it is alleged by the petitioner that all such actions of the respondents are illegal. It is also contended that during the period when the matter was pending consideration, certain tests of petroleum product at the outlet of petitioner were again conducted and by conducting such test, no irregularity was found in the outlet of the petitioner. It is contended that since the test of the sample retained in the custody of the petitioner was conducted belatedly because of the said report, the order of termination was issued, therefore, the same is bad in law and is liable to be quashed. ( 3. ) THE respondents in response to the notice of the writ petition have filed their exhaustive return. It is categorically contended by the respondents in their return that there was no mala fide intention of taking any action against the petitioner. ( 3. ) THE respondents in response to the notice of the writ petition have filed their exhaustive return. It is categorically contended by the respondents in their return that there was no mala fide intention of taking any action against the petitioner. It is contended that as per the policy guidelines, the test was conducted and it was found that the samples drawn from the outlet of the petitioner have failed and, therefore, earlier the action for suspending the sale from the outlet of the petitioner was taken and, thereafter on the request of the petitioner when the samples kept in the custody of the petitioner was examined/tested in the laboratory and the report again came in negative, the action was initiated for termination of the dealership of the petitioner, it is putforth in the return that only because the sample drawn from the outlet of the petitioner has successfully passed the Marker test, it cannot be said that the same was not required to be sent for testing for other deficiencies. It is contended that the Marker test is only for the purposes of verifying whether there was any adulteration in the product or not. If no adulteration is found on account of successfully passing the Marker test, it could not be said that product stored in the outlet of the petitioner has cleared all other tests, which are to be conducted at the laboratory. For the density test, it is contended that the measurement of the same may be varied. THE measurement of density is to be taken by following the procedure manually and there may be differences in two measurements taken on two different places. However, the sample of the petitioner was not said to be unsatisfactory only because of the density test, but it had failed the RON test which was never conducted at the site where the sample was drawn. THErefore, to say that mala fidely, the dealership of the petitioner is terminated, is not correct. THE contentions raised in each para of the petition have been replied by the respondents. ( 4. ) A rejoinder has been filed by the petitioner reiterating whatever is stated in the petition. However, the new fact which the petitioner has brought on record is only the guidelines issued by the respondent-Corporation for the purposes of conducting the test. THE contentions raised in each para of the petition have been replied by the respondents. ( 4. ) A rejoinder has been filed by the petitioner reiterating whatever is stated in the petition. However, the new fact which the petitioner has brought on record is only the guidelines issued by the respondent-Corporation for the purposes of conducting the test. It is reiterated by the petitioner that as per the guidelines, the sample drawn from the outlet of the petitioner was not required to be sent for test in the laboratory because the same has passed the Marker test. In the additional return filed by the respondents, these aspects have been denied and again it is reiterated that only because of satisfactory Market test, the action was not to be abandoned and the sample was required to be tested in the laboratory. ( 5. ) LEARNED counsel for the petitioner has placed the reliance on various cases and has contended that if the action of the respondents is tested in view of the law laid down by the Apex Court and this Court, it will be clear that mala fidely action was taken against the petitioner. Firstly, relying in the case of Harbanslal Sahnia and another vs. Indian Oil Corporation and others, AIR 2003 SC 2120 , it is contended that in view of the specific finding given in the test report, when the sample of the petitioner was tested on the spot immediately after its drawal, there was no sufficient material to indicate that there was no adulteration or a tampering was done with the sample and, therefore, the subsequent reports obtained from the laboratory were not to be relied. Since there was no sufficient material to prove such a conduct available with the respondent- Corporation, the order terminating the agency of the petitioner was illegal. Further placing reliance in case of Hindustan Petroleum Corporation and others vs. Super Highway Services and another, (2010) 3 SCC 321 , the learned counsel for the petitioner has contended that the law is well settled now that at the time of testing of a sample in the laboratory, a notice is required to be given. Further placing reliance in case of Hindustan Petroleum Corporation and others vs. Super Highway Services and another, (2010) 3 SCC 321 , the learned counsel for the petitioner has contended that the law is well settled now that at the time of testing of a sample in the laboratory, a notice is required to be given. Why it was so necessary because in the guidelines, it is provided that on the spot, if the Marker test is conducted on the sample drawn from the outlet and the sample has passed the Marker test, no further test is required to be conducted. Only because of reports obtained on such a test, it is contended that the law well settled by the Apex Court is that such an action is not to be accepted as just and proper. Drawing the attention of this Court to the specific finding recorded by the Apex Court it is contended that in the sense of all fairness, the petitioner should have been given a notice or intimation regarding sending of the sample drawn from the outlet of the petitioner for the laboratory test so that a representative of the petitioner may have attended such test. It is contended that in view of the aforesaid, it cannot be said that the action of the respondents was justified. ( 6. ) FURTHER relying on a decision of the Apex Court in the case of M/s Allied Motors Limited vs. M/s Bharat Petroleum Corporation Limited, C. A. No. 11200/2011, decided on 16-12-2011, it is contended that the action of respondents of not giving opportunity to the petitioner to get the sample tested immediately as soon as the sample drawn from the outlet, taken by the respondent-Corporation was not found upto the mark is totally unjustified, it is contended that the law is well settled that within a period of ten days, the sample kept in the custody of the petitioner should have been sent for the test. It is contended by the learned counsel that a prayer was made to this effect, but the same was exceeded to after much delay and again it was said that the samples drawn were found on spec. It is only because of this that the dealership of the petitioner is terminated, therefore, such an action is bad in law. It is contended by the learned counsel that a prayer was made to this effect, but the same was exceeded to after much delay and again it was said that the samples drawn were found on spec. It is only because of this that the dealership of the petitioner is terminated, therefore, such an action is bad in law. FURTHER, reliance has been placed by the petitioner on a decision of a co-ordinate Bench of this Court in Writ Petition No. 14039/2009, M/s Swantika vs. Indian Oil Corporation and others decided on 15-2-2011, [since reported in 2011(4) MPLJ 210 ] and it is contended that such an action has been found to be illegal, unjustified and arbitrary and, therefore, the order of termination has been quashed by this Court on the same set of circumstances, therefore, the petitioner is entitled to the relief claimed. ( 7. ) LEARNED counsel for respondents has refuted all such submissions and has contended that since on the request of the petitioner, the sample kept in the custody of the petitioner was also sent for test and the report was again the same, therefore, justified action was taken against the petitioner and the dealership of the petitioner has rightly been terminated. It is contended that the facts and circumstances in each case are required to be examined and since facts in the present case are different than those which were before the Apex Court and this Court in the aforesaid cases relied by the petitioner, therefore, the case in hand is distinguishable and no interference in the order of termination of dealership is called for. ( 8. ) HEARD learned counsel for parties at length and perused the record. ( 9. ) THE first question for consideration in this writ petition is whether because of passing of the Marker test by the sample drawn from the outlet of the petitioner, further tests were required to be conducted or not ? THE guidelines relied by the petitioner and placed on record along with the rejoinder issued by the respondent-Corporation are in different parts. THE first part deals with the provisions for security at the retail outlet. THE second part deals with the procedure for taking the samples from the retail outlet. THE third part deals with the procedure for Marker test at retail outlet. THE first part deals with the provisions for security at the retail outlet. THE second part deals with the procedure for taking the samples from the retail outlet. THE third part deals with the procedure for Marker test at retail outlet. In this third part in paragraphs, it is provided that out of the two samples collected in different containers, one is required to be sealed immediately in the presence of the dealer or his representative of the outlet and the other container will be used for the purposes of Marker test. After conducting the Marker test, if the Marker test is successful, a report is to be drawn in this respect, the inspecting official of the respondent- Corporation and the dealer or his representative is required to sign on the report and the other container is to be immediately returned to the dealer. In case, the Marker test is negative, the selling of the petroleum product from the outlet is to be stopped immediately. Dispensing pumps and tanks are required to be sealed, Paragraph 6 of this part of the guidelines contains that if on earlier occasion any testing is done and negative report is found, the Marker test is to be conducted and in case the samples passed the Marker test, then against the dealer no action is required to be taken. ( 10. ) IT is further seen from the report of the respondent-Corporation that when the inspection was conducted on 6-2-2007 at the retail outlet of the petitioner and samples were drawn, the Marker test conducted immediately on the spot. The report duly signed by the authorized official of the respondents clearly says that the samples passed the test. As far as this part of the required action thereafter is concerned, if the submission of the learned counsel for respondents is accepted that the Marker test is only for the purposes of testing adulteration in the petroleum product and it has nothing to do with other test, the purpose of making a specific guidelines in this respect would be meaningless. If the guideline says that after passing of the Marker test, no further tests are required to be conducted or on the passing of the Marker test, no action is required to be taken against the dealer even if the sample fails certain other test, the same has to be adhered to. If the guideline says that after passing of the Marker test, no further tests are required to be conducted or on the passing of the Marker test, no action is required to be taken against the dealer even if the sample fails certain other test, the same has to be adhered to. After passing of the marker test, what other test were required to be conducted on the sample drawn from the outlet of the petitioner, has not been specifically stated in the report. As far as the density is concerned, the same was also upto the mark. Therefore, if further test were required to be conducted, intimation of such test was required to be given to the petitioner. As has been held in the case of Hindustan Petroleum Corporation (supra), the Apex Court has categorically pointed out such a requirement in paragraphs 31, 32 and 33 of report which reads thus :- "31. The cancellation of dealership agreement of a party is a serious business and cannot be taken lightly. In order to justify the action taken to terminate such an agreement, the authority concerned has to act fairly and in complete adherence to the rules/guidelines framed for the said purpose. The non-service of notice to the aggrieved person before the termination of his dealership agreement also offends the well-established principle that no person should be condemned unheard. IT was the duty of the petitioner to ensure that Respondent 1 was given a hearing or at least serious attempts were made to serve him with notice of the proceedings before terminating his agreement. 32. In the instant case, we are inclined to agree with Mr. Bhatt's submissions that the High Court did not commit any error in allowing the writ petition filed by Respondent 1 herein, upon holding that notice of the laboratory test to be conducted at Barauni Terminal had not been served upon Respondent 1, which has caused severe prejudice to the said respondent since its dealership agreement was terminated on the basis of the findings of such test. Admittedly the dealership agreement was terminated on the ground that the product supplied by the petitioner Corporation was contaminated by the respondent. Such contamination was sought to be proved by testing the TT retention sample in the laboratory at Barauni Terminal. 33. Admittedly the dealership agreement was terminated on the ground that the product supplied by the petitioner Corporation was contaminated by the respondent. Such contamination was sought to be proved by testing the TT retention sample in the laboratory at Barauni Terminal. 33. The guidelines being followed by the Corporation require that the dealer should be given prior notice regarding the test so that he or his representative also can be present when the test is conducted. The said requirement is in accordance with the principles of natural justice and the need for fairness in the matter of terminating the dealership agreement and it cannot be made an empty formality. Notice should be served on the dealer sufficiently early so as to give him adequate time and opportunity to arrange for his presence during the test and there should be admissible evidence for such service of notice on the dealer. Strict adherence to the above requirement is essential, in view of the possibility of manipulation in the conduct of the test, if it is conducted behind the back of the dealer." ( 11. ) THE Apex Court has categorically held that cancellation of dealership agreement of a party is a serious business and cannot be taken lightly. It is necessary to demonstrate by the respondents that the agreement has been terminated after taking justified action against the petitioner or the dealer. It is also held by the Apex Court that if the sample drawn is required to be sent for testing, the date was required to be intimated to the dealer, the petitioner herein so that the dealer may make proper arrangement to send representative to remain present when the test is conducted. It is also held that the said requirement is in accordance to the principles of natural justice and the need for fairness in the matter of terminating the dealership agreement. It is seen from the record that no notice of intimation of the fact that the sample drawn from the outlet of the petitioner was being sent for testing, was given to the petitioner. At least, there is no averment in this respect made in the return of the respondents nor any such notice has been annexed with the return. It is seen from the record that no notice of intimation of the fact that the sample drawn from the outlet of the petitioner was being sent for testing, was given to the petitioner. At least, there is no averment in this respect made in the return of the respondents nor any such notice has been annexed with the return. When asked, it is contended by the learned counsel for respondents that no such averments have been made in the petition, therefore, the facts have not been stated in the return. Whatever is the law laid down by the Apex Court in this respect, it has to be adhered to. Further, as per the Scheme and the guidelines of the respondents themselves since the sample drawn from the outlet of the petitioner has successfully passed the Marker test, it was believed by the petitioner that no further test would be conducted. This was not required to be shown in the petition, but was required to be shown by the respondents that such a course or the requirement was fulfilled by the respondents by calling a representative of the petitioner to remain present at the time of testing of the sample drawn from the outlet of the petitioner. This was not done and, therefore, it is to be held that if the Marker test was conducted after taking the sample from the outlet of petitioner and the sample has passed the Marker test successfully, there was no need for conducting other test as per the guidelines. Even if any such laboratory test was required to be conducted, a notice of such an intention was required to be given to the petitioner, intimating the date, time and place of such test so that the petitioner could make arrangement of sending a representative to remain present at the time of test. ( 12. ) NOW to deal with other aspect that the second test of sample kept in the custody of petitioner also failed, it is to be seen that there was inordinate delay in conducting the second test of the said sample. It was necessary for the respondents to send the second sample kept in the custody of the petitioner for testing immediately as soon as the request was made. It was necessary for the respondents to send the second sample kept in the custody of the petitioner for testing immediately as soon as the request was made. The fact indicates that the request was made by the petitioner for sending the sample for retest after the receipt of the show cause as the petitioner was not satisfied with the first test report. It is clear that the second test was conducted on 6-6-2007 and only the retained sample was used for conducting the test. Neither, the tank, lorry nor the depot sample were sent for testing. Though on the first occasion, when the test was conducted and the report Annx.P/5 was given, the Depot retention and T.T. retention samples were also sent for testing. The RON test which was conducted at the earlier occasion indicates that the Depot Retention and T.T. retention sample were available and were put to test, but the same were not sent at the time of second test. Only because of this report obtained on second test, it was said that the sample drawn from the outlet of the petitioner has failed the test. Such could not be said to be just and proper action taken by the respondents. This Court while dealing with such a situation in somewhat similar circumstances, has treated such act as an arbitrary act of the respondent-Corporation in case of M/s Swantika (supra). Recording a finding in paragraphs 38 and 39 of the order, this Court has categorically held that in view of the law laid down by the Apex Court, such an act is grossly violative of fundamental rights enshrined under Article 14, 19(1)(g) and 21 of the Constitution of India. This Court has considered these aspects in the aforesaid paragraphs which reads thus :- "38. The Supreme Court in its latest pronouncement Mohd. Yunus Khan vs. State of Uttar Pradesh and others, (2010) 10 SCC 539 , in para 21 has held that statutory authority is not permitted to act whimsically/ arbitrarily. Its action should be guided by the principles of reasonableness and fairness and the authority cannot be permitted to abuse the law or to use it unfairly. For better understanding entire para 21 is reproduced:- 21. Thus, the requirement of morale, discipline and justice have to be reconciled. Its action should be guided by the principles of reasonableness and fairness and the authority cannot be permitted to abuse the law or to use it unfairly. For better understanding entire para 21 is reproduced:- 21. Thus, the requirement of morale, discipline and justice have to be reconciled. There is no scarcity of examples in history, and we see it in day-to-day life also that even in disciplined forces, forced morale and discipline without assured justice breeds defiance and belligerency. Our Constitution protects not only the life and liberty but also the dignity of every person. Life convicts and hardcore criminals deprived of personal liberty are also not wholly denuded of their constitutional rights. Arbitrariness is an anathema to the principles of reasonableness and fairness enshrined in our constitutional provisions. The rule of law prohibits the exercise of power in an arbitrary manner and/or in a manner that travels beyond the boundaries of reasonableness. Thus a statutory authority is not permitted to act whimsically/arbitrarily. Its action should be guided by the principles of reasonableness and fairness and the authority cannot be permitted to abuse the law or to use it unfairly. 39. The Supreme Court in Harbanslal Sahnia (supra) has taken note of Arbitration Clause in similar type of situation as, the case was between the Indian Oil Corporation and Harbanslal (appellant therein) that despite there is an arbitration clause available to appellants, the High Court still can exercise its jurisdiction in at-least three contingencies (i) where the writ petition seeks enforcement of any of the fundamental rights; (ii) where there is failure of principles of natural justice; or (iii) where the orders or proceedings are wholly without jurisdiction or vires of Act is challenges. Since the action of Oil Corporation terminating the dealership of retail outlet is found to be arbitrary, according to me, the fundamental right of petitioner enshrined under Articles 19(1)(g) and 21 as well as Article 14 are jeopardised, this writ petition is maintainable and relief can be granted and the Supreme Court by allowing the appeal of the Proprietor of Retail Outlet Dealer, set aside the judgment of High Court and quashed the order of Indian Oil Corporation terminating dealership of appellant. According to me, this decision governs the field of this case also." Again if the action of respondent-Corporation is tested on these parameters, it is clear that causing delay in accepting the request of petitioner for sending the sample kept in the custody of petitioner for test, was an arbitrary act of the respondent-Corporation. Firstly, the request though made timely, was not accepted immediately. Secondly, again no notice intimating date, time and place for such a test was given to petitioner. Thus, this test report was also not to be relied by the respondent-Corporation for terminating dealership of the petitioner. ( 13. ) NOW it is to be seen whether only because the sample drawn from the outlet of the petitioner has failed the RON test, a severe action like termination of the dealership was required to be taken. The Apex Court in the case of M/s Allied Motors (supra) has categorically held that there are marketing discipline guidelines provided by the Corporation. It is provided in the guidelines that on first instance, a fine upto Rs. 1 lakh and suspension of sale and supply for 45 days should be the penalty imposed if any irregularity is found or if the test report of the sample drawn from the outlet are negative. Termination of the dealership is the penalty for second instance. Whether such a guideline is also applicable in the respondent-Corporation or not, but it appears to be justified policy as the sample of the dealer if has failed on first occasion, a lenient step is required to be taken unless it is found that the dealer was involved in supplying the adulterated petroleum product. As has been categorically found, there was no adulteration in the petroleum product at the retail outlet of the petitioner. At least, the tests in this respect were negative. Only because there was a failure to successfully pass the RON test, the dealership of the petitioner should not have been terminated. On the other hand, the petitioner should have been afforded an opportunity to improve. It appears that this was the intention of the respondent- Corporation when the order of suspension of supply and sale from the retail outlet of the petitioner was ordered. On the other hand, the petitioner should have been afforded an opportunity to improve. It appears that this was the intention of the respondent- Corporation when the order of suspension of supply and sale from the retail outlet of the petitioner was ordered. It is not that on second occasion also after conducting the test, it was found that there was no improvement and the sample obtained from the outlet of the petitioner again failed and, therefore, there was no option but to terminate the dealership of the petitioner. In view of the findings of the Apex Court in this respect, this Court is of the considered view that such a harsh and severe action should not have been taken against the petitioner. On the other hand, the respondents authorities should have given thoughtful consideration of the reply of show cause submitted by the petitioner. Since this has not been done, the order impugned cannot be sustained in the eye of law. ( 14. ) IN view of foregoing discussions, the order impugned dated 1-8-2008 (Annx.P/11) is hereby quashed. The dealership of the retail outlet of the petitioner is restored. The supply and sale of the petroleum product from the retail outlet of the petitioner be restarted. However, it will be open to the respondents authorities to consider the reply of the petitioner to the show cause notice and to pass an order in case it is felt by the respondent No. 1 that on account of failure of the sample drawn from the outlet of the petitioner, some other penalty is required to be imposed. For that purposes, a fresh show cause notice be given to the petitioner and after affording full opportunity of hearing, the order afresh may be passed. ( 15. ) IN the result, the writ petition is allowed to the extent indicated herein above, but with no order as to costs, Petition allowed.