Hon'ble Pankaj Bhatia,J.
(Delivered by Hon'ble Pankaj Bhatia,J.) Heard Sri Atul Dayal, learned Advocate, assisted by Sri Shiv Kumar, learned counsel for the petitioner and Sri Vikas Budhwar, learned counsel appeared on behalf of respondent nos. 1 and 2.
The petitioner has filed the present petition seeking the following relief:
(i) Issue a writ, order or direction in the nature of certiorari quashing the order dated 20.7.2017 passed by the respondent no. 2/Chief Regi8onal Manager, Varanasi Retail Region, Hindustan Petroleum Corporation Ltd. Varanasi (Annexure-2 to the writ petition).
The facts in brief leading to the filing of the present writ petition are as follows:
The petitioner is a firm and has been a dealer of Hindustan Petroleum Corporation Ltd. for the last about 50 years at Bisheswarganj, Ghazipur City. The agreement executed between the petitioner and the respondents is placed as Annexure-3 to the writ petition.
It is stated that there has never been any complaint against the petitioner with regard to dispensing at the retail outlet. The retail outlet has three dispensing units which were manufactured by M/s Gilbarco Veeder-Root. It is stated that on 05.05.2017 an inspection was carried out at the retail unit of the petitioners by 5 member team and during the inspection the team took five litres of motor spirit from each dispensing unit and thereafter checked the quantities wherein nothing wrong was found thereafter the team opened the seal of the dispensing unit to check the Pulsar reading and on the said inspection it was found that out of the three dispensing units two were found to be correct but in respect of the third unit it was suspected that there was some internal wires. Copy of the inspection report dated 05.05.2017 is filed as Annexure-4 to the writ petition.
The said inspection team sealed the machines on the date of the inspection. It is also stated that prior to the said inspection regular checks were carried out by the respondent authorities wherein nothing wrong have ever been found.
On the basis of the said inspection carried out the respondent-Corporation sent a letter dated 18.5.2017 and stated in the letter that the irregularities pointed out by the inspection team are in violation of the dealership agreement and are very serious in nature and the petitioner was asked to submit his explanation in that regard. The petitioner is said to have replied to the said letter dated 18.5.2017 by filing a reply dated 22.5.2017 stating that nothing wrong has been done by the petitioner and, in fact, the dispensing unit was taken by the erstwhile dealer. The petitioner also relied upon the provisions of Chapter-V and Chapter-VIII of the Marking Discipline Guidelines and requested that the same may be resorted to ascertain the true facts. It was also stated that there was nothing wrong found even by the inspection team when the quantity was measured.
It is stated that on 06.06.2017 a show cause notice was issued by the respondent Corporation only relying upon the said inspection report and called upon explanation from the petitioner. The petitioner states that on 23.6.2017 he gave a detailed reply to the said show cause notice and again relied upon Chapter V and Chapter-VIII of the Marketing Discipline Guidelines. He also requested that a report be called from the manufacturing company to ascertain the truth and the same may be provided to the petitioner before taking any action against the petitioner as proposed in the show cause notice.
The petitioner then filed a writ petition before this Hon'ble Court against the actions taken by the respondent Corporation which was disposed off with the directions to the respondent to decide the show cause notice on or before 01.8.2017. Copy of the said order passed on 13.7.2017 in Writ C No. 29791 of 2017 (M/s Ghazipur Petrol Supply Co. HPCL Petrol Pump vs. Hindustan Petroleum Corp. Ltd. And 2 others) is on record as Annexure-1 to the writ petition.
The respondent-Corporation vide an order dated 28.7.2017 passed an order against the petitioner (Annexure-2 to the writ petition) whereby the dealership agreement of the petitioner was terminated only on the ground of the observations made by the inspection team on 05.05.2017. The said order was passed without giving any opportunity of hearing or even without referring to the certificate of the manufacturing company. In the impugned order, nothing adverse was recorded against petitioner except what was recorded in the report dated 05.05.2017. Aggrieved against the said order dated 20.7.2017, the petitioner has filed the present petition.
The petitioner has specifically argued that any action that ought to have been taken against the petitioner should have been decided only in terms of the Marketing Discipline Guidelines. Sri Atul Dayal, learned counsel for the petitioner, has extensively relied upon the provisions of Chapter V and Chapter VIII of the said Marketing Discipline Guidelines. Sri Dayal has argued that while passing the impugned order, the respondent-company did not obtain the opinion of the original equipment manufacturer which was in violation of Clause 5.1.4. Sri Dayal stressed that Clause 8.5.6 provides that show case notice will be issued within 30 days from the date of inspection indicating there irregularities and the said show cause notice should be accompanied by the specific allegations of irregularities and no such notice was issued within 30 days in fact in the present case the show cause notice was issued on 06.06.2017 which is beyond 30 days of the inspection, which was carried out on 05.05.2017. It is thus argued that the entire proceedings are illegal and deserves to be set aside on that ground alone.
The petitioner further argued that Clause 8.5.6 of the guidelines clearly provides that a personal hearing is to be given prior to passing the order, which the petitioners state were not given and, thus, the same is violative of the guidelines as well as against the principles of natural justice and thus liable to be set aside. It is further argued that Clause 8.5.8 of the guidelines require that on receipt of the reply to the show cause notice the charges levelled are required to be reviewed in view of the reply received and a speaking order is required to be passed giving the complete details of the irregularities committed, the reply of the dealer and the detailed reason as to why the replies are not acceptable to the person passing the order, Sri Dayal argued that the reply was not considered and the same was discarded as immaterial and the order was passed without assigning any reasons.
At last, the petitioners argue that the entire foundation based upon which the order dated 20.7.2017 was passed, has vanished, and, thus, the petitioner is entitled to restoration of the agreement and the dispensing unit.
The petitioner has placed on record the report of the original equipment manufacturer as Annexure-11 to the writ petition wherein the OEM has recorded that nothing wrong was found in the dispensing units. The petitioner has also placed on record that after the report of OEM he has requested the respondent-Corporation vide his letter dated 05.03.2018 to reopen the retail unit, however, the same was not done as such the petitioner was constrained to file the present petition.
The petitioner has also placed reliance on two judgements of the Hon'ble Supreme Court in case of E. Venkatakrishna vs. Indian Oil Corporation and another, (2000) 7 SCC 764, Harbanslal Sahnia and another vs. Indian Oil Corporation Ltd. and others, (2003) 2 SCC 107 and a judgement of this Court in M/S Kamal Kant Automobiles And Another vs. Hindustan Petroleum Corporation Ltd. And 2 Others, 2019 (3) ADJ 307 (DB).
Sri Vikas Budhwar, learned counsel for the Corporation fairly argued that points urged by the petitioner and the relief sought by the petitioner are squarely covered by the judgement of this Court in the case of M/S Kamal Kant Automobiles And Another vs. Hindustan Petroleum Corporation Ltd. And 2 Others, 2019(3)ADJ 307 (DB).
This Court in the judgement passed in the case of M/s Kamal Kant Automobiles (supra) had framed three questions:
(1) Whether the order dated 24.7.2017 passed by the Corporation terminating the agreement is perverse and based on no material and contrary to the Marketing Discipline Guidelines?
(2) Whether this Court should exercise its power under Article 226 of the Constitution of India in view of Arbitration Clause in the agreement? and;
(3) Whether the petitioner is entitled to restitution of the dealership?
This Court while deciding the question no. 1 relying upon the judgement of Food Corporation of India Vs. Kamdhenu Cattle Feed Industries Ltd. 1993(1) SCC 71, Hindustan Petroleum Corporation Limited and others vs. Super Highway Services and another, (2010) 3 SCC 321 and Bharat Petroleum Corporation Limited vs. Jagannath and Company and others, (2013) 12 SCC 278 held that orders passed without complying with the provisions of Marketing Discipline Guidelines and in violation of principles of natural justice are bad in law. This Court also considered the effect of the arbitration clause and held that in view of the fact that order suffered from non-observance of principles of natural justice, arbitration clause could be of no avail and it was also held that the arbitration clause would not provide an effective and efficacious remedy as the arbitrator was not empowered to grant the relief of restoration of dealership. This Court ultimately had set aside a similar order of termination of dealership and issued mandamus for restoration of the agreement and for restoration of supplies.
Considering the averments made at the bar, we are of the view that the facts of the present case are similar to the facts as urged in the case of M/s Kamal Kant Automobiles (supra) and, thus, the findings recorded therein would squarely apply to the facts of the present case. Considering the factual averments, the subsequent report of the OEM and the judgement of M/s Kamal Kant Automobiles, we have no hesitation in holding that the order dated 20.7.2017 is in complete disregard to the Marketing Discipline Guidelines and principles of natural justice and is thus wholly arbitrary, illegal and is liable to be set aside.
Accordingly, the order dated 20.7.2017 is set aside and the respondents are directed to forthwith restore the agreement dated 28.9.2015 and to restore the supplies to the petitioner's retail outlet within a period of two months from today subject to the petitioner having all requisites statutory permissions.
The writ petition is allowed in terms of the said order.
No order as to costs.
Order Date :- 26.4.2019 Puspendra