Hon'ble Alok Mathur,J.
Heard Sri Upendra Mishra, learned Counsel for the petitioner and Sri Manish Jauhari, Counsel for the Indian Oil Corporation as well as learned Standing Counsel.
Petitioner, who was a retail petrol pump dealer of Indian Oil Corporation Limited [ in short referred to as the ''IOCL'] has filed the instant writ petition questioning the correctness and validity of the order dated 14.6.2018 passed by the Executive Director (Retail) Indian Oil Corporation Ltd. Mumbai (opposite party no.3) dismissing the appeal preferred by the petitioner against the order dated 14.7.2017 whereby the dealership of the petitioner was terminated.
In short, the facts of the case are that M/s Chaudhary Filling Point is a proprietorship firm of which petitioner no.2- Shamshad Ali Chaudhary is the proprietor. It is said that the petitioner was alloted a Retail Outlet/Petrol Pump dealership (KSK) at Kazipur, district Barabanki and in furtherance of the same, a dealership agreement was executed between the petitioner and IOCL on 12.9.2012. The dealership agreement dated 12.9.2012 was for a period of five years with effect from 30.5.2012 and continued thereafter with regular extensions.
It has been pointed out that in order to ensure that the oil marketing companies work in a systematic manner, the Government of India has issued/ promulgated Marketing Discipline Guidelines (MDG), 2012 with effect from 8.1.2013 which have been made applicable on all public sector oil marketing companies in order to provide for standards/procedure which are to be adopted by the Oil Marketing Companies and the Retail Outlets/Petrol Pump in daily/regular operations. These executive instructions are to be followed mandatorily and any violation thereof either by the Oil Marketing Companies or the retail outlets is impermissible.
According to the petitioner, there were three Dispensing Units installed at the petitioner's Petrol Pump. One unit is of Midco Company which dispenses Petrol while the other two units i.e. one of L & T company and other Double Nozzle unit of Gilbarco company dispenses diesel.
During the monthly visit, the Service Engineer of L & T and Gilbarco, one Shri Kapil Jain inspected the Dispensing Units. The said Engineer certified that the Dispensing Unit of L & T Machine is working properly and all the seals pertaining to the said machines are intact. So far as the Gilbarco Double Nozzle Machine is concerned, one of its Nozzle was not functioning properly and therefore, the petitioner had registered an on-line complaint with Gilbarco, which was attended by the Service Engineer of the Gilbarco, who rectified/repaired and furnished a report in this behalf on 2.6.2017.
It is said that on the same day i.e. 2.6.2017, a joint inspection team comprising officers of the District Supply Office, Senior Inspector ( W & M), Hindustan Petroleum Officials and Engineers of equipments manufacturers inspected the Petrol Pump of the petitioner and after examining all the three dispensing units, prepared an inspection report, which reads as under:-
According to the petitioner, bare perusal of the inspection report dated 2.6.2017 reveals that the Joint Inspection Team did not find any short selling of petroleum products. However, in the Midco and Gilbarco Dispensing Units, the pulsar card has been alleged to be containing an extra wire/soldering marks, but to the utter surprise and in sheer violation of clauses 5.1.4 and 8.5.2 of the MDG, the independent opinion of OEM was not obtained and the dealership was terminated solely on assumption and presumptions, which is highly arbitrary and shows the colourable exercise of powers.
It has also been urged that so far as the totalizer seal of L & T is concerned, the same can be said to have been tampered as per clause 5.1.3 of MDG Guidelines only when there is manipulation of totalizer reading or totalizer is rendered non-functional or non reporting to the OMC but in the inspection report dated 2.6.2017, none of the said conditions have been mentioned and therefore, the illogical finding that the totalizer seal of L & T unit has been tampered, cannot be sustained and the said inspection report can, at best, be said to be vague and cannot be relied upon by the IOCL for taking any action under the MDG.
It has been averred in the writ petition that after the inspection, a show cause notice dated 20.6.2017 was issued by the IOCL to the petitioner to show cause as to why the dealership agreement be not terminated on account of the alleged irregularities committed by the petitioner to which the petitioner tendered his reply mentioning therein that the Inspection Team had not acted in consonance with the prevailing GOs and the MDG and no specific details of alleged Tampering or even independent opinion of W & M department and OEM as mandated in the clause 5.1.2.(b), 5.1.4 and 8.5.2 of the MDG regarding the alleged tampering were obtained. However, the Corporation being not satisfied with the reply, terminated the dealership agreement vide order dated 14.7.2017.
Being aggrieved by the order of termination of dealership, the petitioner preferred an Appeal as provided in Clause 8.9 of the MDG, which according to the petitioner was to be decided within a period of 90 days from the date of filing of appeal but the same remained pending for more than nine months without any justification and as such the petitioner preferred a writ petition bearing no. 5326 (MB) of 2018, which was disposed of vide judgment and order dated 2.5.2018 with the direction to the appellate authority to decide the appeal on merits by a speaking and reasoned order within a period of one month.
The Appellate Authority vide its order dated 14.6.2018 upheld the termination order and rejected the appeal preferred by the petitioner, which has been assailed by the petitioner in this writ petition in addition to the order of termination.
It has also been averred in the writ petition that after termination of the dealership, a First Information Report was also lodged on 25.6.2017 bearing case Crime No. 232 of 2017 under Section 419/420/409 IPC read with Section 3 and 7 of the Legal Metrology Act against the petitioner.
Counsel for the petitioner has vehemently argued that the impugned order of termination has been passed in blatant disregard of the principles of natural justice and statutory procedure as laid down in the MDG-2012. The entire exercise of termination was a sham transaction as the OEM report dated 10.2.2018 and 30.4.2018 came into existence much after the passing of the order of termination. Moreover, the constitution of Inspection Team for inspecting the RO was not in accordance with the provision of Government Order dated 5.8.2008 read with the Government Order dated 2.5.2017 and as such it has been asserted that the alleged Inspection and the consequential action for cancellation of the applicant's dealership is patently in breach of the aforesaid Government Orders.
Pointing out the defect in the termination order, it has been urged that in sheer violation of clause 5.1.4 of MDG, no independent opinion of OEM regarding the alleged extra wire and extra soldering marks in the pulsar card of the Midco and Gilbaro was obtained prior to taking punitive action against the petitioner. Moreover, the allegation of tampering of seal as levelled by the Weight and Measurement Department was not found correct by the competent court as the charges under Section 26 and 44 of the Legal Metrology Act were not found proved and the complaint filed by the Department was rejected by the competent court vide order dated 16.8.2018. The defects/irregularities which have been pointed out by the Counsel for the petitioner can be summarized as under:
1. The allegation of tampering of W & M seal was not made in accordance with Clause 5.1.2(b) of MDG inasmuch as the allegation in the show cause notice did not specifically provide as to under which of the three types of tampering of seal as provided in clause 5.1.2(b) is applicable on the petitioner.
2. Prior to issuance of the termination order of the petitioner's RO independent opinion of the W & M authorities was not taken by IOCL, which is clear violation of clause 5.1.2(B) of the MDG.
3. Similarly, prior to issuance of the termination order of the petitioner's retail out, independent opinion of the OEM as provided in clause 5.1.4 of the MDG was not obtained by the IOCL and the dealership was terminated solely on the basis of the joint inspection report itself.
4. In Clause 8.5.2 of the MDG, it has been provided that "all cases of irregularities need to be established before any action is taken against a dealer", however prior to terminating the petitioner's RO no steps were taken by the IOCL for establishing any irregularity and merely on the basis of the inspection report dated 2.6.2017, the exercise of termination was undertaken.
5. The IOCL authorities, did not provide any "pre decisional hearing" to the petitioner, which is mandated in clause 8.6 of the MDG and stipulates that in case of critical irregularities leading to termination, like that of seal tampering, the Head of the State Office/Regional Office/Zonal Office of the concerned OMC or their nominee before recommending/approving the termination of Dealership will provide a personal hearing to the signatories of the dealership or their nominees.
Thus, it is crystal clear that the IOCL authorities have disregarded and blatantly violated the mandatory procedure prescribed in the MDG and the appellate authority before whom all these pleas were raised has also rejected the appeal in a cursory manner without appreciating all these aspects of the matter in its correct prospective, has not applied its independent mind and upheld the order of termination in a cursory manner.
Refuting the assertion of the petitioner, learned Counsel for the Indian Oil Corporation submitted that on 2.6.2017 when the inspection team checked the retail outlet of the petitioner, several irregularities were found for which a fact finding letter dated 3.6.2017 was issued to the petitioner together with the Inspection note to which no reply was tendered and as such a show cause notice dated 20.6.2017 was issued to show cause why his retail outlet dealership may not be terminated. The petitioner responded to the said show cause notice by tendering reply on 3.7.2017 which was duly considered by the competent authority, who did not find the reply submitted by the petitioner to be satisfactory with regard to breaking/tamper of W & M seal of meter assembly, which is a serious irregularity. Thus, the petitioner/retailer committed breach of clause 5.1.2(b) and clause 15,16,19 & 44 read with clause 58 of dealership agreement and as the reply was not found satisfactory, the impugned order of termination was passed.
It has been urged that the pleas which have been raised by the petitioner have been considered by the appellate authority, who after considering the evidences has come to the conclusion that the termination of the dealership is in accordance with the provisions of MDG -2012 and clauses of dealership agreement. It has also been added that the appeal was decided after giving opportunity of hearing. Therefore, there is no illegality or irregularity in the impugned orders and the writ petition is liable to be dismissed.
First of all, we would like to mention that the very purpose of enacting Marketing Discipline Guidelines was to maintain discipline in the operation of retail network and provide high customer service standards. For the First time, the Marketing Discipline Guidelines (MDG) were formulated in the 1981-82. Recently, when the Government as well as Industry felt the need to review the MDG in view of the changing circumstances and market scenario, Marketing Discipline Guidelines-2012 were introduced.
The aforesaid Marketing Discipline Guidelines-2012 (MDG) promulgated by the Government of India for regulating the inspections of Retail Outlet and standards of maintenance of uniform standards of quality and dispensation of fuel are uniformly binding in respect of any raids/inspections conducted at the retail outlets/petrol pumps under the dealership of all the oil marketing companies (OMCs) and are also to be strictly followed before taking any action of suspension or termination of sales/supplies or dealership. These guidelines contain the complete procedure for various aspects of functioning of a retail outlet/petrol pump.
Chapter 5 of the MDG deals with the provisions relating to irregularities at retail outlets/petrol pumps wherein a detailed procedure is prescribed for checking 'short delivery of products' when the tampering of seals of W & M department are found and also when unauthorized fittings in dispensing units are found during inspection. Chapter 8 of the MDG provides the actions which can be taken by the Oil Marketing Companies under the MDG. In Clause 8.5.2, it has been provided that irregularities provided in the MDG need to be established 'before' any action is taken by the Oil Marketing Companies and similarly it is provided in clause 8.6 of the MDG that in case of critical irregularities like tampering in dispensing units etc., the Company may terminate the dealership. However, before recommending termination of dealership, the Company will provide a pre-decisional personal hearing to the retail outlet/petrol pump owner and under Clause 8.5.2, it is provided that unless the critical irregularities are established by the Company after necessarily taking the opinion of the W & M department and the OEM under Clause 5.1.2 (b) and 5.1.4, no action would be taken against the dealer. Clause 8.9 of the MDG contains provision for appeal before the Executive Director (Retail) against the orders passed in cases of critical irregularities as defined in the MDG which includes cases like tampering with the seals etc. The aforesaid appeal is required to be disposed off by the appellate authority, preferably within a period of 90 days from the date of filing of appeal.
During the course of arguments, the Counsel for the Corporation has urged that the appeal preferred by the petitioner was not the proper remedy, and the proper course available to him was to initiate arbitration proceedings under Clause 69 of the dealership agreement dated 12.9.2012. This assertion of the respondent has been rebutted with vehemence by the petitioner, who stated that the stand taken by the respondents regarding the applicability of arbitration in view of clause 60 of the dealership agreement dated 12.9.2012 in the case of termination is completely misplaced because of the fact that it is beyond the scope and ambit of arbitral forum to restore a dealership after it is terminated. Therefore, the remedy of arbitration in a case like this is redundant and ineffective and the petitioners cannot be forced to avail a redundant remedy in law.
In this regard, we would like to mention that Clause 8.9 of the MDG provides for remedy of appeal to the Executive Director, Retail in the Headquarter, which has to be decided by him within a period of 90 days from the date of filing of the appeal. Clause 8.9 of the unamended MDG, 2012, reads as under:-
"8.9 Appellate proceedings :
1. In case of orders in critical irregularities, the dealer will have the right to appeal within a period of 30 days from the date of receipt of order, before the appropriate authority who will be empowered to decide the matter and the appeal shall be disposed off preferably within 90 days from the date of filing the appeal in the office of the appellate authority.
2. For all appeals in case of critical irregularities, except termination in case of SC/ST dealerships, the appellate authority will be the ED (Retail) in the Head Quarters or any other ED level officer at the Head Quarter so nominated by the company. For all cases of termination of SC/ST dealerships, the appellate authority will be a Director other than Director (Mktg.) of the OMC.
The amended Clause 8.9 of the MDG, which has come into force recently reads as under:-
"8.9 Appellate proceedings: 1. In case of termination arising out of invocation of MDG, the dealer will have the right to appeal within a period of 30 days from the date of receipt of order, before the Appellate Authority, through the concerned Divisional / Territory / Regional office of the Oil Marketing Company (OMC). The Appellate Authority is empowered to decide the matter and the appeal shall be disposed of preferably within 90 days from the date of filing the appeal in the Divisional / Territory / Regional office of the concerned Oil Marketing Company (OMC).
2. For all appeals in case of termination arising out of invocation of MDG, the Appellate Authority will be the Dispute Resolution Panel (DRP) nominated by the OMC. The Dispute Resolution Panel (DRP) will comprise of the following members:- i) A retired Judge of the High Court - Member 1. ii) A retired Government servant who held post not below the rank of Joint Secretary in Govt. of India or equivalent rank - Member 2. iii) A retired official of PSU Oil Marketing Companies who held the post not below the rank of Director - Member 3. The Retired Judge of the High Court in the Committee will be the Chairperson. The terminated dealer preferring appeal would be required to deposit Non-refundable Appeal fee of Rs.5 lakhs along with their appeal to the concerned OMC. In case of SC/ST dealer, Rs.2 lakhs Non-refundable Appeal fee is required to be paid along with their appeal. However, if appeal results in verdict in restoration of the Dealership, 50% of Appeal fee amount shall be refunded."
Therefore, it is wrong to say that preferring an Appeal by the petitioner against the order of termination was unfruitful exercise, is wholly unacceptable. If a forum has been created in the Rules/Guidelines then the proper course would be to exhaust that forum. Moreover, such an objection was not raised by the Corporation at the Appellate Forum and as such, legally, it cannot be raised here.
As regard the Arbitration, it has rightly been asserted that the Arbitrator has no power to restore the distributorship, in the event the termination is found unlawful. The Apex Court in the case of IOCL vs. Amritsar Gas Service (1991) 1 SCC 533; E. Venkat Krishna Vs. IOCL and anor (2000)7 SCC 764 and Sanjana M. Wig Vs. HPCL; (2005) 8 SCC 242 has held in explicit words that an arbitration forum does not have the jurisdiction for the restoration of dealership, which was earlier terminated. All that the arbitrator could do, if he found that the termination of the distributorship was unlawful, was to award damages, as any civil court would have done in a suit. In Civil Misc. Writ Petition No. 51972 OF 2008 M/s Navin Filling Station vs. Indian Oil Corporation Ltd & Ors, this court observed as under:
"The presence of the arbitration clause, is not to drive away a genuine grievance arising out of disproportionate action of the Corporation, to the arbitral tribunal which in any case will not have the authority to give an award to restore the dealership. In the present case the Indian Oil Corporation terminated the agreement relying upon the clauses, which were not attracted and on the Marketing Discipline Guidelines framed for facilitating the marketing of the petroleum products on the principles of good governance and excellent customary service. The preamble to the guidelines itself provide that the guidelines need to be constantly updated to meet the customer satisfaction and to the discipline dealership network and for preventing malpractices in the sale of petroleum products."
In these circumstances, we find force in the arguments advanced by the learned Counsel for the petitioner that Arbitration between the parties is not an efficacious and proper remedy in such cases.
Now, we proceed to examine the validity of the order of termination and the appellate order.
The aforesaid MDG-2012 classifies three kinds of irregularities, which can result in appropriate penal action i.e., critical irregularity (8.2), major irregularity (8.3) and minor irregularity (8.4). The violation of clause 5.1.4 would attract critical irregularity (8.2 (iv)). Refusal by the dealer to allow drawl of sample or carry out inspection and non-availability of reference density at the time of inspection are classified as major irregularities. Major irregularity would attract suspension of sales and supplies for 15 days for the first irregularity, 30 days for the second irregularity and would invite termination of dealership, if such offences are committed for the third time. Poor housekeeping, driveway salesmen at the ROs not in uniform/wearing badges are classified as minor irregularities, which would attract warning and guidance in the first instance, imposing of fine of Rs.10,000/- on second instance and Rs.25,000/- per irregularity on occurrence of third instance onwards.
A perusal of the record shows that on 2.6.2017 itself, the inspection of the Dispensing Units was conducted by the Service Engineer of Original Equipment Manufacturer (OEM) and a report dated 2.6.2017 regarding the intactness of all seals and proper working of the Dispensing Units (DUs) was issued and no irregularity was detected. In contrast, on the same day, the joint inspection was held and a report dated 2.6.2017 was prepared, which are in conflict with each other.
A perusal of the termination order dated 14.7.2017 reveals that the termination of the petitioner's petrol pump has allegedly been done as per clause 15,16,19 and 44 read with clause 58 of the dealership agreement dated 12.9.2012. However, a mere reading of clause 15,16,19 and 44 reveals that these clauses, in general, pertain to the requirements of the dealer taking care of the retail outlet as a prudent businessman and dealer is to be held responsible for all losses. Clause-16 of the dealership agreement stipulates that no repairs to the outfit can be done by dealer as he shall not interfere with or attempt to adjust any equipment and should only ensure that the outfit is working in a proper order and deliver full and proper measures at all times. However, no concrete evidence whatsoever was collected to establish the allegations which were levelled in the show cause notice dated 20.6.2017, which is in total breach of clause 5.1.4 and 8.5.2 of the MDG-2012.
Further, the main reason for terminating the dealership of the petitioner has been stated that there was wide publicity in the media pertaining to incidents of short selling of fuel to the consumers. The termination order dated 14.7.2017 reveals that the IOCL has alleged that from the irregularities, only the petitioner was beneficiary but this ground is not substantiated by any documentary evidence as no case of short selling of fuel was found at the petitioner's retail outlet. It is pertinent to add that when the order of termination dated 14.7.2017 was passed, the report of OEMs were not available. The appellate authority in its impugned order had admitted that OEM Gilbarco in its report dated 10.2.2018 have clearly concluded that the pulsar card is working "Normal" and " there is no additional attachment found to alter the delivery". Similarly, the OEM Midco in its report dated 30.4.2018 has reported that the "pulsar card is as per the Midco standard design" and " no physical damage was found on any of the received item" and "no alien or external component/hardware found on any of the received item." In the backdrop of the aforesaid fact, it was observed by the Appellate Authority that "this ground of termination is no more valid."
Here, it is also relevant to point out that a show cause notice dated 16.6.2017 was issued by the Weight & Meteorology Department to show cause as to why a case be not registered under Section 26 and 44 of the Legal Metrology Act to which reply was also tendered by the petitioner. However, the Senior Inspector W & M filed a case no. 1078 of 2017 in the Court of Chief Judicial Magistrate, Barabanki. However, the competent court acquitted the accused and observed that W & M seal was not tampered, and therefore no case under Section 26 and 44 of the Legal Metrology Act is made out. The Appellate Authority has fell into error in not considering this important fact and as such the finding recorded by the appellate authority are not based on correct appreciation of evidence/materials on record and shows that independent application of mind has not been made.
The order of termination has also been attacked with vehemence on the ground of not affording opportunity of oral hearing before passing the said order. There is no denial of the said fact by the IOCL. Surprisingly, the appellate authority has observed that as the termination has been done pursuant to the terms and conditions as laid down in the dealership agreement dated 12.9.2012, therefore, clause 8.6. of the MDG is not applicable. This finding of the Appellate Authority is wholly erroneous and per se bad in law. It is settled principle of law that any order which entails civil consequences, must be in conformity with the principle of natural justice. In D.K.Yadav v. J.M.A. Industries Ltd. (1993) 3 SCC 259 it has been held that an order involving civil consequences must be made consistently with the rules of natural justice. Clause 8.6 of the MDG-2012 provides in clear words that in case of critical irregularities leading to termination, like that of seal tampering, the Head of the State Office/Regional Office/Zonal Office of the concerned Oil Manufacturing Company or their nominee before recommending/approving the termination of Dealership will provide personal hearing to the signatories of dealership or their nominee.
Principles of natural justice require that a person must be allowed an adequate opportunity to present their case where certain interests and rights may be adversely affected by a decision-maker.
Thus, there is clear non compliance of Clause 8.6 of the MDG by the respondent-authorities. Moreover, the respondents have failed to show any rule or regulation to show that when the dealership is terminated as per terms and conditions of the agreement, provisions of the MDG-2012 would not be applicable. It may be clarified that a perusal of the appellate order would show that the appellate authority has rejected the appeal on the ground that dealership has been terminated as per the terms and conditions of the agreement and as such clause no 8.6 of the MDG is not applicable.
The MDG has been enacted for such dealership agreements as the one involved in the instant case and therefore, we are of the view that these guidelines need to be strictly construed by both the parties. Further any dealership agreement cancelled by the respondent corporation cannot be effected on the basis of dealership agreement itself as the MDG have to be followed while taking recourse to such action. The respondent corporation cannot act arbitrarily at its sweet will and, like a private individual, deal with any person it pleases, but its action must be in conformity with standards or norms which are not irrational or irrelevant. Therefore, respondents cannot be exempted from the application of MDG merely by following the dealership agreement. Surprisingly, the appellate authority while passing the impugned order at some places has taken the shelter of the MDG-2012 in rejecting certain pleas as raised by the petitioner.
It may be observed here that the respondent has departed from the standard norms laid down in the Marketing Discipline Guidelines and the standard norms of natural justice and fair play and such departure was clearly unreasonable and discriminatory. It may be noted that once the manufacturer of the unit calibrates the equipment ensuring proper delivery of the product, the relevant part of the machinery is sealed by the department of legal metrology, after verification of the accuracy. The very purpose of sealing of the equipment by the department of legal metrology is to ensure that the dealer does not tamper with the same.
As seen from the reading of the impugned order, the only reason assigned for being not satisfied with the explanation offered by the petitioner was that there was tampering in the DU and pulsar card contains certain soldering marks. However, what was not considered by the competent authority was that at what point of time this unauthorized tampering/soldering was done in the dispensing unit and how the dealer is manipulating the distribution of fuel. No material, much less credible one has been brought on record by the respondents to disclose the unauthorized access to the equipment by the petitioner. It was specific stand of the petitioner that periodically the Weights and Measurements Department officials inspected the seals and they were found to be intact. Further more, what is the impact on tampering/soldering in delivery unit is not disclosed. How the dealer can manipulate delivery of fuel by inserting such unit is not explained. The only objective of a dealer to tamper with dispensing unit is to manipulate delivery of fuel. In this case, the delivery of fuel was found to be accurate prior to checking of unit and after the checking. Furthermore, the defence of the petitioner that it is possible that the supplier himself might have done soldering while repairing for proper functioning of the unit by supplier himself cannot be brushed aside.
In view of the above, merely on assumptions that the tampering/soldering was found in the delivery unit of the dealer premises, the petitioner dealer cannot be visited with severe consequence of termination of dealership and that too when the OEM report does not support or corroborate the version of the respondents. Thus, the action of the respondent-Corporation, in the facts of this case, in terminating the dealership of the petitioner no.1 on the sole ground that soldering/tampering was found in the Dispensing Units is illegal, unreasonable, excessive and made in arbitrary exercise of power and hence unsustainable, more particularly when performance of the petitioner-dealer all along has been appreciated.
Another point which has been canvassed by the petitioner is that a perusal of the show cause notice dated 16.06.2017 would indicate that the basis for the entire proceedings initiated against the petitioner is the inspection note dated 02.06.2017 and there was no other material before the competent authority to proceed against the petitioner. He has submitted that the inspection note dated 02.06.2017 has been made a sole basis of passing the impugned orders, which was in fact no "actionable evidence", since the allegations contained therein were mere suspicions raised by the authorities and has not been verified by the Experts before the impugned termination order was passed.
We have examined the show cause notice. A perusal of the show- cause notice would indicate that petitioner was asked to reply to the allegations regarding the dispensing Unit of Midco, wherein an extra wire was found as well as the Dispensing Unit of Gilbarco where a soldering was discovered in the Pulsar Card and lastly with regard to the Z-line, L&T wherein tampering were found. Inspection report did not itself make any short selling of fuel by the petitioner and it is an admitted fact that subsequently further examination of the aforesaid facts were conducted by the "Original Equipment Manufacturer" (herein after referred to as OEM), wherein the Expert report did not find any irregularity which could lead to the culpability of the petitioner with regard to the tampering of machine for shot selling of the fuel.
When the findings of the inspection report were subjected to further inquiry and verification by an Expert, it means the respondents should have waited for the results of such Expert's opinion, but they proceeded to initiate proceedings for termination of dealership of the petitioner only on the basis of the Expert's report which in the present set of facts seems was per-mature and arbitrary action on the part of the respondents. The inspection report could not have been made a basis for initiating proceedings against the petitioner, inasmuch as from the said report it could not have been concluded that petitioner was involved in any action which could be said to be infringement of the guidelines with regard to the tampering of the machines and short selling of the fuel.
Had the aforesaid allegations as mentioned in the inspection report dated 02.06.2017 being corroborated by the Original Equipment Manufacturer as provided in Clause 5.1.2(b), 5.1.3 and 5.1.4 and 8.5.2 there could have been some substance in the allegations, for which the respondents could have proceeded against the petitioner, but in absence of any such finding or the report of the OEM, the proceedings initiated against the petitioner were clearly pre-mature and lacking in substance. It is important to mention that during the pendency of the petitioner's Appeal, the reports of the OEM were received, which finds mentioned in the appellate order, wherein they have stated that the Pulsar Card is working "Normal" and "there is no additional attachment found to alter the delivery" and similarly the OEM and Midco in its report dated 30.04.2018 has concluded /remark that the "Pulsar Card is as per the Midco standard design" and "no physical damage was found on any of the received item"
In these circumstances, the entire inquiry proceedings against the petitioner were vitiated on the ground that the Expert's opinion was obtained subsequent to the order of termination. In the finding, the Appellate Authority has also stated that "this ground of termination is not more valid", but still proceeded to hold the petitioner guilty on the basis of the inspection report. The appellate order is clearly, perverse and irrational in light of the reports submitted by the OEM, wherein they did not confirm any finding as mentioned in the inspection report dated 02.06.2017. Therefore, the termination order also suffers from infirmities and is arbitrary being based on the inspection report which could not have been made the basis of proceedings against the petitioner in absence of any Expert's opinion confirming the said findings. Thus the termination order as well as the appellate order are liable to be set-aside.
As the impugned orders cannot be sustained legally in view of the aforesaid discussion, we are not entering into other aspects of the matter as raised by the parties Counsel.
Taking the holistic view of the matter, the writ petition is allowed and the impugned order of termination dated 14.7.2017 as well as the appellate order dated 14.6.2018 are hereby quashed. The opposite parties are directed to resume supply of the petitioner's RO within a week from today. All miscellaneous pending applications stand closed accordingly.
Parties to bear their own costs.
Order Date: 30th January, 2019 ashok/MH