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Madhya Pradesh High Court · body

2016 DIGILAW 1110 (MP)

Shobha Y. Ingole v. Hindustan Petroleum Corporation Limited

2016-12-05

SUJOY PAUL

body2016
ORDER : Sujoy Paul, J. 1. This petition, filed under Article 226 of the Constitution, takes exception to the order of termination of dealership Annexure-P/12 dated 11.10.2013. 2. This is second visit of the petitioner to this Court. The petitioner earlier filed W.P. No. 7601/2011 against the action of the respondents rejecting her claim for sending the sample in question for re-testing. The said writ petition was decided on 01.12.2012 and the writ Court directed the respondents to send the sample of High Speed Diesel (HSD) kept in the custody of the petitioner for re-testing before an appropriate Laboratory and to obtain a report of the same within the stipulated time. The said order of writ Court was unsuccessfully challenged by the Corporation in W.A. No. 314/2012 decided on 29.01.2013. SLP (Civil) No. 13493/ 2013 was also dismissed by Supreme Court with certain observations on 05.08.2013. In turn, the sample of HSD was subjected to a re-test and test report is placed on record as Annexure-P/9 dated 11.03.2013. On the strength of the test report dated 11.03.2013, the respondents issued a show-cause notice dated 23.08.2013 (Annexure- P/10) to the petition. In turn, the petitioner submitted her reply on 05.09.2013 (Annexure-P/11). Thereafter the respondents passed the impugned order dated 11.10.2013 (Annexure-P/12) and terminated the retail outlet dealership agreement dated 03.03.2000 entered into between the petitioner and the Corporation. 3. Shri Dixit, learned counsel for the petitioner criticised the termination order (Annexure-P/12) by contending that: (a) The sample was subjected to re-test after more than ten days from the date it was procured. Thus, in view of AIR 2003 SC 2120 (Harbanslal Sahnia and Another vs. Indian Oil Corporation Ltd. and Others) such sample cannot be a reason for terminating the outlet of the petitioner. (b) As per the report (Annexure-P/9), it is clear that sample of HSD meets the specification as per IS-1460:2005. The question of any adulteration or malpractices on the part of the petitioner is to be tested as per the Motor Spirit and High Speed Diesel (Regulations of Supply, Distribution and Prevention of Malpractices) Order, 2005 (hereinafter referred to as the Order of 2005). To elaborate this, Shri Dixit submits that Clause 2(a) defines adulteration whereas 2(c) defines malpractices. As per the report, Shri Dixit contends that petitioner's case/sample does not fall within the ambit of adulteration or malpractices. To elaborate this, Shri Dixit submits that Clause 2(a) defines adulteration whereas 2(c) defines malpractices. As per the report, Shri Dixit contends that petitioner's case/sample does not fall within the ambit of adulteration or malpractices. (c) Shri Dixit submits that there is no provision which enables the Corporation to compare the sample in question with a reference sample. In detail, it is urged that the respondents have compared the sample prepared by them in the depot with the sample obtained from petitioner's outlet. In absence of any enabling provision, it is totally impermissible. (d) Lastly, reliance is placed on Clause 2(t) which defines "sale of off specification product." It is urged that the sample is to be tested on the anvil of IS-2796-IS-1460. As per admitted position, the sample was cleared as per IS-1460. Thus, there is no justification in terminating the outlet of the petitioner. 4. Shri Anoop Nair, learned counsel for the Corporation submits that the petitioner himself approached this Court in the earlier round of litigation with the prayer of re-testing of the sample. He succeeded in the said round and in obedience of Court's order, retesting was done. In this backdrop, the judgment of Supreme Court in the case of Harbanslal Sahnia (supra) cannot be pressed into service. Reliance is place on 2015 (2) MPLJ 374 (Hindustan Petroleum Corporation Ltd. and Others vs. Royal Highway Services). Shri Nair submits that, admittedly, the petitioner and respondents entered into a memorandum of agreement (Page 15). The parties are bound by this agreement. By taking this Court to the show-cause notice, it is submitted that it was made clear that sample has actually failed. The respondents were at liberty to take action if Clauses 25, 26 and 27 of the Dealership Agreement dated 03.03.2000 are violated. By placing reliance on the report and the show-cause notice, it is submitted that irregularities were found which amount to breach/violation of Clause Nos. 25, 26, 27 & 44 of the Dealership Agreement dated 03.03.2000. Shri Nair contends that merely because the sample was not found to be in violation of IS-1460:2005, it cannot be said that the High Speed Diesel sample has not failed. By placing reliance on the report, it is submitted that the sample had actually failed. 25, 26, 27 & 44 of the Dealership Agreement dated 03.03.2000. Shri Nair contends that merely because the sample was not found to be in violation of IS-1460:2005, it cannot be said that the High Speed Diesel sample has not failed. By placing reliance on the report, it is submitted that the sample had actually failed. Shri Nair also placed reliance on the Control Order of 2005 to contend that the action of the Corporation is in consonance with the Control Order. It is submitted that the Corporation has successfully established that the sample has failed and in that event, no interference is warranted. 5. Lastly, Shri Nair contended that reference sample was the same which was supplied to the petitioner from the depot of the Corporation and, therefore, comparison has to be made from the said sample. 6. Although the petitioner in the relief clause of petition challenged Annexure-P/9 and P/10, no arguments are advanced to assail the same during the course of arguments. 7. No other point is pressed by the learned counsel for the parties. 8. Before dealing with the rival contentions advanced, it is apt to quote Clause 2(a)(f)(p) & (t) of the Control Order of 2005. The same read as under: "2. 7. No other point is pressed by the learned counsel for the parties. 8. Before dealing with the rival contentions advanced, it is apt to quote Clause 2(a)(f)(p) & (t) of the Control Order of 2005. The same read as under: "2. Definitions" In this Order, unless the context otherwise requires:- (a) "adulteration" means the introduction of any foreign substance into motor spirit or high speed diesel illegally or unauthorisedly with the result that the product does not conform to the requirements of the Bureau of Indian Standards specification number IS 2796 and IS 1460 for motor spirit and high speed diesel respectively or any other requirement notified by the Central Government from time to time: (b) xxx xxx xxx (c) xxx xxx xxx (d) xxx xxx xxx (e) xxx xxx xxx (f) "malpractices" shall include the following acts of omission and commission in respect of Motor Spirit and High Speed Diesel:- (i) adulteration (ii) pilferage (iii) stock variation (iv) unauthorised exchange (v) unauthorised purchase (vi) unauthorised sale (vii) unauthorised possession (viii) over-charging (ix) sale of off-specification product (x) short delivery (g) xxx xxx xxx (h) xxx xxx xxx (i) xxx xxx xxx (j) xxx xxx xxx (k) xxx xxx xxx (l) xxx xxx xxx (m) xxx xxx xxx (n) xxx xxx xxx (o) xxx xxx xxx (p) "unauthorized purchase" means purchase of the product from sources other than those authorised by the oil companies; (q) xxx xxx xxx (r) xxx xxx xxx (s) xxx xxx xxx (t) "sale of off specification product" means sale of motor spirit or high speed diesel by dealer of quality not conforming to Bureau of Indian Standards specification number IS 2796 and IS 1460 for motor spirit and high speed diesel respectively." (Emphasis Supplied) 9. Similarly, for ready reference, it is apt to refer Clause 25, 26, 27 and 44 of the agreement. The same read as under: "25. The quantities of petroleum and other allied products stated to be delivered by the Corporation as measured by the Corporation's measuring devices or means shall be final and binding upon the parties hereto. The property in the products shall pass from the Corporation to the dealer at the time of delivery of the product to the dealer or his representative and the Corporation shall not in any way be responsible for loss or shortage thereafter. The property in the products shall pass from the Corporation to the dealer at the time of delivery of the product to the dealer or his representative and the Corporation shall not in any way be responsible for loss or shortage thereafter. A receipt signed by or on behalf of the dealer at the time of delivery of petroleum product by the Corporation will be conclusive evidence that the petroleum products mentioned therein were in fact delivered to the dealer, that such product were in accordance with the specification, therefor mentioned here in under and that the quantities of such products mentioned in the receipt or correct, and the dealer shall thereafter be precluded from making any claim against the Corporation or compensation or otherwise on the ground of short delivery or contamination of such products. 26. That dealer shall responsible all loss, contamination, damage or shortage or to the products, whether partial or entire and no claim will be entitled by the Corporation, therefor under any circumstances except in cases where the Corporation is satisfied that loss arose from leakage from underground tanks or pipes which the dealer could not reasonably have discovered and of which the dealer gave immediate notice in writing to the Corporation on discovery. Corporation will consider compensation only from the date of receipt of notice till leakage is rectified. 27. All the products supplied by the Corporation to the dealer hereunder shall be in accordance with the specification laid down by the Corporation from time to time. The dealer shall take every possible precaution against contamination of the Corporation's products by water, dirt or other things injurious to their quality and shall not in any way directly or indirectly alter the specification of the said products as delivered. The Corporation shall have the right to exercise at its discretion at any time and from time to time. Quality control measures for products marketed by the Corporation and lying with the dealer, the opinion of the Regional Manager for the time being at the Corporation's Regional Office at Bhopal as to whether any product of the Corporation has been contaminated shall be final and binding upon the dealer. Quality control measures for products marketed by the Corporation and lying with the dealer, the opinion of the Regional Manager for the time being at the Corporation's Regional Office at Bhopal as to whether any product of the Corporation has been contaminated shall be final and binding upon the dealer. In the event of the said Regional Manager finding that the contamination has been due to any act or default of the dealer or of his servants or agents, the Corporation shall have the right, without being bound to do so. To remove the contaminated product and to destroy or otherwise to deal with the same without making any payment therefor to the dealer and without prejudice to the Corporation's right to terminate the agreement forthwith. 44. The dealer undertakes faithfully and promptly to carry out, observe and perform all directions or rules given or made from time to time by the Corporation for the proper carrying. On of the dealership of the Corporation, the dealer shall scrupulously observe and comply with all laws, rules, regulations and requisitions of the Central/State Government and of all authorities appointed by them or either of them including in particular the Chief Controller of explosive, Government of India and/or Municipal and/or any other local authority with regard to the storage and sale of such petroleum products." (Emphasis Supplied) 10. This Court deems it proper to deal with the contentions raised by the petitioner point-wise in the same order in which they were advanced. 11. As to point (a): As noticed, the present petitioner herself approached this Court in the earlier round of litigation with a prayer to send the sample for re-testing. On her request, re-testing was done in her presence. In similar circumstances, after considering the judgment of Harbanslal Sahnia (supra), a Division Bench of this Court opined that "In the instant case, as stated supra, re-testing of the sample was conducted on the basis of request made by the respondent and in his presence. It is relevant to mention here that respondent did not raise any objection whatsoever on any ground at the time of re-testing of the sample. Therefore, aforesaid decision is of no assistance to the respondent in the facts of the case. It is relevant to mention here that respondent did not raise any objection whatsoever on any ground at the time of re-testing of the sample. Therefore, aforesaid decision is of no assistance to the respondent in the facts of the case. The case relied upon by the respondent, namely, Hindustan Petroleum Corporation Limited (supra) has no application to the obtaining factual matrix of the case, as in that case action of termination of dealership was taken without giving proper notice to the dealer which is not the case here." This Court opined that the respondent therein cannot be allowed to approbate and reprobate. He is estopped by his conduct from challenging the procedure adopted by the Corporation for re-testing the sample. For this reason, the point (a) is rejected. 12. As to points (b), (c) & (d): These points are interrelated. The Control Order of 2005 has a statutory force because it came into being in exercise of power conferred by Section 3 of the Essential Commodities Act, 1955. In this Control Order, the Government has defined the word adulteration. Shri Dixit contended that as per this definition, no fault could be found in the sample because it could successfully pass the litmus test of IS 1460; whereas the stand of Shri Anoop Nair is that the sample was in violation of Clauses 25, 26, 27 and 44 of the agreement. These points require serious consideration. It is apt to quote the relevant portion of the test report which became foundation for issuance of the impugned order. The relevant portion of Annexure-P/ 9 dated 11.03.2013 reads as under: "3. Retail Outlet Sample (in possession of Regional Office): Not provided for testing. 4. Retail Outlet Nozzle sample (in possession of Dealer), Lab Sr. No. IND/12-13/MDG/746, meets the specifications as per IS-1460:2005 but test results are found outside reproducibility/ permissible limits with the Reference Sample on following parameters: (i) Kinematic Viscosity at 40oC, cSt Hence the sample is deemed to have FAILED." 13. In the relevant clauses on which reliance is placed by the Corporation, it is mentioned that the action may be taken when the product of Corporation kept with the dealer is found to be 'contaminated'. In other words, the dealer is obliged to maintain the quantity and quality of the product supplied to it by the Corporation. In the relevant clauses on which reliance is placed by the Corporation, it is mentioned that the action may be taken when the product of Corporation kept with the dealer is found to be 'contaminated'. In other words, the dealer is obliged to maintain the quantity and quality of the product supplied to it by the Corporation. However, the said clauses nowhere prescribe the definition of 'contamination' nor it prescribes the test/method/criteria to determine as to how a product can be said to be contaminated. In the context, the word 'contamination' and 'adulteration' are used in the agreement and in Control Order, in my view, these are synonymous in nature. In Black's Law Dictionary, the adulteration is defined as "The act of mixing something impure or spurious with something pure or genuine, or an inferior article with a superior one of the same kind". In the same dictionary, the meaning of contamination is "Condition of impurity resulting from mixture or contact with foreign substance." By dictionary meaning also I find support in my view that for the same purpose the words contamination and adulteration are used. Since in the agreement no methodology/test is prescribed to determine as to how a product should be treated as adulterated/contaminated, in my view, the yardstick/test would be one which is prescribed in the Control Order. The definition of 'adulteration' mentioned in the Control Order makes it clear that only such product which does not conform to the requirements to the Bureau of Indian Standards Specification No. IS 2796 and IS 1460 for Motor Spirit and HSD respectively, or any other requirement notified by the Central Government shall be treated as adulterated. Clause (f) prescribes malpractices. The only alleged malpractice on the part of the petitioner is adulteration. Clause (t) makes it further clear that a product can be termed as "off specification product" when it does not conform to the same standards mentioned in Clause 2(a) of the Control Order. Thus, in my considered opinion, for the purpose of deciding whether a product is contaminated/adulterated or not, the test should be restricted to the extent it is prescribed in Clause 2(a) and 2(t) of the Control Order. If test report goes against the dealer, it may have penal/civil consequences. The dealership can be terminated. Such provision which may have penal consequences, must receive strict construction/interpretation. If test report goes against the dealer, it may have penal/civil consequences. The dealership can be terminated. Such provision which may have penal consequences, must receive strict construction/interpretation. Accordingly, the sample in question can be declared as failed only if it is found to be in violation of Clause 2(a) and (t) of the Control Order. In the present case, the test report shows that sample was found to be in conformity with specification as per IS-1460:2005. The other test result which became reason for declaring the sample as failed is not founded upon any provision of the Control Order. 14. Resultantly, for that reason, it cannot be said that sample has failed. It is noteworthy that in case in case of Royal Highway Services (supra), the sample was not found in conformity with the Control Order (Para 12 of the said judgment). In the present case, the sample was found to be in conformity with the requirement of Clause 2(a) of the Control Order. Hence, these points are decided in favour of the petitioner. 15. On the basis of foregoing analysis, the action of respondents in passing the order dated 11.10.2013 (Annexure-P/12) cannot be countenanced. This order is accordingly set aside. 16. Petition is allowed. No costs.