1. In present petition the petitioner has prayed that:
"10(a) To hold and declare that the order/action of termination of dealership dated 04.01.2012 at Annexure-K as bad and illegal and arbitrary and thereby be pleased to quash and set aside the impugned order dated 04.01.2012 and further direct the petitioner to carry on their business as per the dealership agreement dated 22.7.1976 at Annexure-B and as per the retail selling license at Annexure-C;
(b) Pending the hearing and final disposal of this writ petition, be pleased to stay the operation, implementation and execution of the impugned order dated 4.1.2012 of the respondent Corporation at Annexure-K to this petition and be further pleased to direct the respondent - BPCL not to stop the supply of all the products as per the dealership agreement which is at Annexure-B;"
1.1. In the facts of the case it is requested by the learned counsel for the petitioner that the petition may be heard finally. The learned counsel for respondent has no objection if the request is accepted and granted. Therefore, at the request of learned advocate for petitioner and with consent of learned advocate for respondent the petition is heard for final decision.
2. So far as the relevant facts involved in present petition are concerned, the petitioner has stated, inter alia, that the petitioner partnership firm was constituted in February 1976. Thereafter, in July 1976, the respondent no.1 granted dealership for retail outlet for sale of petrol, high speed petrol, motor spirit petrol and diesel to the petitioner. It is also claimed that a dealership agreement was entered into on 22nd July 1976 and until the dealership came to be terminated vide impugned order dated 4th January 2012, the dealership agency continued between the petitioner firm and the respondent.
2.1. The petitioner has further claimed that on 14.09.2006 officers of the respondent Corporation visited the retail outlet site at Makarpura, Vadodara and carried out inspection. A test report was prepared. On this count the petitioner has stated, inter alia, that:
"4.5. That on 14.9.2006 the respondent carried out a test report at the Retail Outlet for High Speed Petrol and as per the said report density test which was carried out made with specific standards as prescribed and three motor spirit speed sample of the quantity of one liter each were drawn from the dispensing Unit No.1, labeled and sealed and one sample was handed over to the Dealer for retention and one sample was given to Quality Control Laboratory, Khandla for the RON test in Seal No.105995x6. A copy of the Retail Outlet Test Report dated 14.9.2006 is annexed hereto and marked as Annexure-D.
4.6. That thereafter the sample which was sent to the Quality Control Laboratory at Khandla which was collected on 14.9.2006 was received by the Quality Control Laboratory at Khandla on 13.10.2006 i.e. after a period of almost about one month from the date of sampling instead of sending it within 10 days as per the provisions of section 8 sub-section (4), (5) and (6) of the Motor Spirit & High Speed Diesel (Regulation of Supply, Distribution and Prevention of Malpractices) Order, 2005; which is a mandatory provision. It is stated and submitted to this Hon'ble Court that the sample which was received by Khandla Laboratory on 13.10.2006 was for RON test to be carried out wherein minimum prescribed limit is 88 as per the requirements of Indian Standard 2796:2000. If the Kandla Laboratory Test Report is closely scrutinized it is abundantly clear that the corresponding supply location sample shown reading as 89.6, corresponding tank lorry retention sample shows reading as 88.7 and Retail Outlet sample reading as 86.5. It is abundantly clear from this fact that there is no explanation given either in the show cause notice or in the impugned order with respect to deterioration from the supply location sample to tank lorry sample and from the tank lorry sample to retail outlet sample. It is abundantly clear tat even in the transit from the supply location sample to tank lorry sample there is a deterioration which is abundantly clear from the test report and no explanation worth the name has been given by the respondent authority nor have they considered this fact in the impugned order. A copy of the Khandla Test Report for RON is annexed hereto and marked as Annexure-E."
2.2. The petitioner has also alleged that on the date of inspection the team of officers of respondents also collected samples which were, after delay of almost one month, forwarded to Khandla Laboratory on 13.10.2006. It is claimed that according to the applicable rules the samples are required to be sent for laboratory test within 10 days from the date on which the samples are drawn. The petitioner has alleged that in present case, though the samples were drawn on 14.09.2006, it was sent for laboratory test on 13.10.2006. it is further claimed that the laboratory report is said to have been submitted after about one and half months i.e. on 24th November 2006.
2.3. The petitioner has further alleged that on the basis of the visit dated 14.09.2006 and inspection report dated 14.09.2006 and laboratory report dated 25.11.2006 show cause notice dated 22.12.2006 was issued calling upon the petitioner to show cause as to why action including termination of dealership should not be taken against the petitioner. It is also claimed that the petitioner submitted its reply dated 07.01.2007 and 10.01.2007 in response to the said show cause notice dated 22.12.2006. It is claimed that after some time, vide communication dated 17.12.2009, the respondents stopped supplying stock of High Speed Diesel to the petitioner.
2.4. The petitioner has further alleged that subsequently without giving opportunity of hearing and after delay of almost five years the impugned order terminating dealership agreement came to be passed on 04.01.2012.
2.5. The petitioner is aggrieved by the said communication - order dated 04.01.2012 whereby petitioner's dealership agreement has been terminated. Hence, present petition.
3. Mr.
Joshi, learned Senior Counsel has appeared with Mr. Unwala, learned advocate for petitioner and Mr.Shelat, learned advocate has appeared for Ms. Shah, learned advocate for respondent Corporation.
3.1. The learned Senior Counsel for petitioner assailed the impugned order on diverse grounds contending, inter alia, that the impugned order is arbitrary, unjust, contrary to and in violation of the applicable rules and policy of the respondent. It is alleged and claimed that the impugned order is passed in violation of principles of natural justice and after the petitioner submitted its replies dated 07.01.2007 and 10.01.2007 in response to the show cause notice dated 22.12.2006, the respondents have not granted any opportunity of hearing, much less opportunity of personal hearing and impugned order has been passed abruptly. The impugned order and the action of terminating the dealership agreement is challenged also on ground of delay. It is contended that the impugned order has been passed and the action has been taken five years after the show cause notice was issued in December 2006 and that therefore the impugned action and order are vitiated. The learned Senior Counsel for petitioner has also assailed the procedure and proceedings adopted and conducted by the respondents in respect of drawing samples, forwarding the samples to laboratory , in carrying out the tests and preparing the report and other actions which led to and culminated into impugned order. It is claimed that according to the applicable rules the samples should have been sent for laboratory tests within ten days from the date on which samples are drawn. However, in present case, the action was delayed by one month which has vitiated the laboratory test report. It is also claimed that even after issuing show cause notice in December 2006 for almost five years the agency contract continued and the respondent Corporation continued to supply stock for sale of all products, except High Speed Petrol, and during the said entire period of five years any irregularity was not detected and that therefore there is no justification for the impugned order which, even otherwise, is too harsh, unjust and arbitrary action. The learned Senior Counsel for petitioner reiterated the details of the contentions raised in petition under paragraph 5(H), 5(J), 5(K). The learned Senior Counsel for petitioner also relied on the details mentioned in paragraph Nos.4.13 to 4.15 of petition. The said paragraphs Nos. 5(H), 5(J), 5(K) and paragraph Nos.4.13 to 4.15 read thus:
"5(H). That it would be worthwhile to note at this stage that it is a clear cut case that the Corporation as not considered the matter after applying its mind to the variation shown in the impugned test report i.e. from 89.6 to 88.7 and 88.7 to 86.5. This deterioration of a sample from supply location to tank lorry retention supply sample and from tank lorry retention sample to Retail Outlet sample is not considered nor is it reflected in the impugned order of termination especially when such an action is having element of penal measure for termination of contract normally it should be reflected in the decision itself. In this view of the matter also the respondent Corporation having not considered the aforesaid aspect at all, it vitiates the entire order of termination inasmuch as it clearly goes to show that the relevant material having direct impact and germane to the decision making process has not been considered at all by the respondent Corporation while passing the impugned order and therefore the same is without application of mind.
5(J) It was also incumbent upon the Corporation to have examined the probability of the punishment especially when they are passing the impugned order after a period of 5 years which having not been done renders the impugned order of termination to be bad and illegal and arbitrary and requires to be quashed and set aside.
5(K) That the Corporation could have considered the question of lesser punishment as also the difference of RON contents as well as subsequent conduct of the petitioner, which having not been considered by the respondent Corporation, the impugned order is required to be quashed and set aside.
4.13. It is stated and submitted to this Hon'ble Court that the facts of the present case penal action taken by the respondent authority herein having serious consequences are mainly governed by Motor spirit & High Speed Diesel (Regulation of Supply, Distribution and Prevention of Malpractices) Order, 2005; as also Marketing Discipline Guidelines, 2005 as also MDG 2005 Penal actions for Malpractices/irregularities at retail outlets - M.S./HSD as also by Indian Standards Methods of Test for Petroleum and its products. Copies of the same are annexed hereto and marked as Annexure-L colly.
4.14. It would also be worthwhile to note at this stage that pursuant to the representations and complaints received from Retail Outlet Dealers the Government of India, Ministry of Petroleum and N.G.New Delhi, by its directions dated 12.9.1994 given to Secretary, Department of Food and Civil Supplies, Government of all States and Union Territories has directed that only if the density is not found in order then only in such cases the sample would be drawn and sent to the laboratory for test purposes immediately and latest within 10 days of the drawal thereof. The said time limit was fixed under the Order ad emphasised in order to obviate chances of error in the test results due to loss of lighter formation of the product with the passage of time. A copy of the said directions dated 12.9.1994 given by the Ministry of Petroleum, N.G.New Delhi is annexed hereto and marked as Annexure-M.
4.15. It is further stated and submitted to this Hon'ble Court that in almost an identical fact situation s which are very similar to the factual background of the present case of the petitioner, this Hon'ble High Court was called upon to adjudicate the issue with respect to variance in the contents of RON which has remained unexplained in the whole process of decision making by the respondent Corporation. This Hon'ble Court by its decision dated 3-4/2/2010 passed in Special Civil Application No.9548/2009 has been pleased to hold that on account of non consideration of the relevant fact germane to exercise of power the decision for termination of contract is vitiated and such a decision will be required to be quashed and set aside. But considering the peculiar facts and circumstances and the decision rendered is illegal or arbitrary, because of the non consideration of the fact which had direct bearing and germane to exercise of power the Hon'ble court directed that the matter will have to be reconsidered by the respondent Corporation in the light of the observation made in the said judgment and a fresh decision will have to be taken on the aspects as to whether to terminate the contract or impose lesser punishment or continue the contract. Accordingly in view of the said observations and discussions, the impugned decision of the respondent Corporation of that particular case was quashed and set aside with a direction to the respondent Corporation to reconsider the matter and take appropriate decision n the light of the observations made herein above in accordance with law within a period of four weeks from the date of receipt of order of this Court. A copy of the oral judgment dated 3-4/2/2010 rendered in SCA No.9548/2009 is annexed hereto and marked as Annexure-N."
3.2. The learned Senior Counsel for petitioner has relied on the decision in case of Harbanslal Sahnia & Another v. Indian Oil Corporation Ltd. & Others [(2003) 2 SCC 107], in case of Hindustan Petroleum Corporation Limited & Ors v. Super Highway Services & Another [(2010) 3 SCC 321] and in case of Allied Motors Ltd. v. Bharat Petroleum Corporation Ltd. [(2012) 2 SCC 1].
4. Per contra, Mr. Shelat for Ms. Shah for respondent Corporation has vehemently opposed the petition. He submitted that the petitioner has committed breach of the terms and conditions of the contract i.e. dealership agreement which render the petitioner liable for action as per the terms and conditions of the agreement. Learned counsel for the respondent relied on the diverse terms and conditions of the dealership agreement, and particularly, clause 13 of the said agreement and submitted that the agreement provides, inter alia, that the agreement can be terminated in the event of breach of any of the terms of the agreement. Learned counsel for the respondent submitted that in breach of the terms of agreement the petitioner not only indulged in adulteration of petroleum products which were sold to the customers but the petitioner, in breach of the agreement, also used premises for other business activity though impermissible under the agreement. So as to point out the petitioner's action amounting to breach of agreement the learned advocate for respondent Corporation relied on the details mentioned in the show cause notice dated 22.12.2006. He also claimed that the petitioner unauthorizedly and in breach of the terms of the agreement had also caused change in the partnership without prior permission or intimation to the Corporation. The learned advocate for respondent also resisted maintainability of petition on the ground that the petition involves disputed questions of fact and the dispute relates to breach of contract and therefore petition should not be entertained and that petition suffers from suppression of material facts and that in past also the petitioner was involved in similar irregularities. Mr. Shelat heavily relied on the details mentioned in the reply affidavit particularly the details mentioned in paragraph No.5, 6(F), 6(H), 6(J) & 6(M) (page 595) of reply affidavit dated 22.01.2012. Mr. Shelat also claimed that the laboratory test report established that the product supplied to the petitioner from supply location to the petitioner's retail outlet was not the same at the time of inspection on 14.9.2006 which means that it was adulterated. As regards the contention that the alleged adulteration was found only at Makarpura outlet and that therefore the dealership with regard to the outlet at Vermana should not have been terminated, more particularly because neither any adulteration was found at the said other outlet nor any show cause notice in respect of the said other outlet was issued, Mr. Shelat, learned counsel for respondent submitted that both retail outlets are governed by the same dealership agreement dated 22.07.1976 and that therefore the action by the respondent is legal and permissible.
4.1. The learned advocate for respondent Corporation also relied on the details mentioned in paragraph Nos. 2(D) (Page 621 to 623) and paragraph No.2(M) (page 632) of sur-rejoinder affidavit dated 18.02.2012 which read thus:
"2(D) With respect to paragraph 4 of affidavit in rejoinder BPCL states that the contents of the same are denied and the petitioner is put to the strict proof thereof. BPCL states that the contentions of the petitioner that a nursery and the hotel (DHABA) were non existent at the time of execution of the dealership agreement on 22.07.1976 is totally false and not supported by any evidence. It is also denied that a nursery and the hotel are owned by the BPCL and not the petitioner. BPCL has in its affidavit in reply in para-4 stated that the land licensed to the petitioner for the purpose of running a Retail Outlet is being unauthorizedly used for running a nursery by the petitioner. BPCL states that under the provisions of the Petroleum Act 1934 it is mandatory to take to license of the premises for storage of petroleum product from which the retail outlet is tobe operated. BPCL states that the Chief Controller of Explosives has ear marked the area for which the explosives license is issued. Accordingly, as per the explosives drawing approved by the concerned Explosives Department the Explosives licence is granted for a total area admeasuring 76.25m x 76.25m i.e. 5814.06 sq. mtrs. Large portion of the said premises approx. 2751 Sq. Mtrs. (out of total area of 5814.06 sq. mtrs.) is being sued for Nursery by the petitioner. Accordingly, the contention of the petitioner that the nursery was also existing prior to his appointment as a R.O. dealer is false and incorrect as the details of the existence of the nursery are not reflecting in the approved drawing. Therefore, the nursery that is existing in the premises covered under the Explosives area is unauthorized. BPCL further states that as per the information the Hotel is running on the premises in the name and style Durga is also being run by a third party and therefore, in allowing a third party to enter the premises by the petitioner and permitting business of hotel is also illegal and unauthorized. BPCL states that in the Affidavit cum undertaking given by the Petitioner to BPCL it has been stated by the petitioner admitting that the area mentioned in the Schedule to the Agreement dated 27.07.1976 was changed to 3063 sq.mtr. As per the drawings enclosed therewith and that the petitioner would stop all OTHER BUSINESS AND ACTIVITIES CARRIED OUT FROM THE REMAINING AREA OF 2751 SQ. MTRS. And that BPCL was free to use or deal with the same in manner it deemed fit. It is also admitted by the petitioner in the said undertaking dated 2/5/2001 that the premises of BPCL shall be used only for the sale of BPCL products as per the written instruction of the BPCL and have further stated that if the undertaking is not followed then BPCL would be permitted to take action for the breach of the terms of the dealership agreement including termination of dealership and that the petitioner would not have any claim whatsoever against BPCL. It is also stated that the nursery would be shifted within 3 months thereof. BPCL states that as evident from the show cause notice dated 22.12.2006, one of the grounds for contemplating an action of termination of the dealership against the Petitioner was the unauthorized use of the premises for activity/business other than stocking and selling of the products of BPCL. Hereto annexed and marked Annexure A to this rejoinder is the copy of the plan approved by the Explosives Department and the photographs evidencing the existence of the nursery and the Hotel.
(M) With respect to paragraph 11 of the affidavit in rejoinder BPCL reiterates what is stated in para 6-K and para 6-L of the affidavit in reply. BPCL states that the dealership agreement contemplates any breach of its terms in respect of the petroleum products sold by the petitioner. BPCL states that even a single breach committed by the petitioner would warrant termination. The petitioner has admitted in the affidavit and the undertaking submitted to BPCL had agreed that BPCL would be at liberty to terminate if the terms are not honoured by the petitioner."
4.2. Learned counsel for respondent submitted that even one irregularity or breach of one condition of the agreement is enough to justify the decision and action of the termination and action of the agreement and that therefore the contentions raised by the petitioner may not be accepted. He also submitted that the subject matter is related to contract between the parties and that therefore petition may not be entertained.
5. So as to appreciate the rival contentions it is necessary to take into account the show cause notice dated 22.12.2006 under which the petitioner was conveyed the allegations against it and petitioner's explanation was called for. The relevant part of the show cause notice reads thus:
"I. You are aware that by Dispensing pump and Selling Licence dated 22nd July, 1976 signed between you (M/s. Paras Service Station, Makarpura, Dist. Vadodara (Gujarat) and us, we, at your request agreed to permit you to use Motor Spirit and/or HSD pump/s of the design from time to time adopted by the Corporation including storage tanks, pipes and fittings belonging thereto for storage and sale of the Company's petroleum products, viz. ULP and/or HSD, Motor Oils, Greases, Lubricants and other Motor Accessories in the manner and upon the terms and conditions referred therein.
II. The said agreement inter - alia provides as under:-
1. The Company hereby grants license unto the licnesees as from 19.03.1976 and during the continuance of this license to enter upon the said premises and to use the MS and/or HSD pumps, storage tanks, pips & fittings and all other facilities erected and provided by the Company upon the said premises and also any additional facilities at any time during the continuance of this License provided by the company upon the said premises (all of which are hereinafter for brevity referred to as "the said facilities" for the purpose of the sale of MS & HSD, Motor Oils, Greases and the Licensees of the Company.
The company expressly reserves to itself the right to take back the whole or any portion of the said premises or the said facilities or alter them at any time during the continuance of this License at its sole discretion.
4. The said premises and the said facilities shall at all times during the continuance of this License remain the absolute property and in sole possession of the company and no part of the said facilities shall be removed by the licensees nor shall the possession of the constituent part thereof or of the said premises be changed or altered without the previous consent of the company.
5. The premises and said facilities hereby licensed to the Licensess shall only be used for stocking and selling/dispensing the petroleum products of the Company and shall not be used for any other purpose except as may be permitted in writing by the Company.
10. The Licensees hereby covenant and agree with the Company as follows:
(g) Not to adulterate the Petroleum Products supplied by the Company and at all times to take all reasonable precautions to ensure that the Motor Spirit or HSD is kept free from water, dirt and other impurities and served from the pumps in such condition.
(j) Not to do or permit to be done on the said premises any act or thing which may (i)endanger the grant or continuance of the Government License under the authority of which Motor Spirit or HSD may be stored, or sold, upon the paid premises, or(ii) be contrary to the terms and conditions on which the said premises are held by the Company.
13. (a) Not withstanding anything to the contrary herein contained the Company shall be at liberty to terminate this agreement forthwith upon or at any time on the happening of any of the events following:-
(vii) If the Licensees shall be guilty of a breach of any of the covenants and stipulations on their part contained in this agreement.
(d) That if Licensees commit breach of any covenant and/or stipulation in this Licnese, the Company shall not be bound to observe and perform its obligations hereunder.
III IRREGULARITIES i. During routine inspection or Retail Outlet, on 14.09.2006 by our PFS Mobile Lab, in the presence of your available representative, Shri Kamlesh H. Merai sample of Speed was drawn which upon testing has failed to meet specification in terms of RON and Performance Test of Branded Fuels. A copy of test report is enclosed.
ii. Although, the entire premises admeasuring approx. 5810 sqm (62500sqft) is required to be used for the purpose of stocking and selling company's products, we have been noticing that a large portion of the said premises admeasuring approx. 2751 sqm in the rear site of the plot is being used for running the Nursery. Moreover, about 4000 sq.ft land in the southern part of our subject plot is being used by one M/s. Durga hotel for running the 'Dhaba'. Furthermore you have also failed to honor the commitment/undertaking/affidavit given by you dated 22.05.01 and 09.07.01 in this regard.
IV From the foregoing it is clear that you have failed in the performance of your obligations under the aforesaid agreement entered by in between us, thereby causing inter alia, a breach of trust.
We take serious view of the aforesaid breaches committed by you and in the circumstances referred above, you are therefore directed to show cause within a period of seven days from the date of receipt of this letter as to why action should not be taken against you including termination of the dealership, failing which we shall be constrained to assume that you have no explanation/justification to offer and we shall be at liberty to take action as deemed fit."
5.1. In the said show cause notice the respondent authorities also mentioned three past instances when irregularities were alleged against the petitioner.
6. On perusal of the said show cause notice it clearly comes out that a show cause notice has been issued and allegations are made only in respect of "M/s. Paras Service Station, Makarpura, District Vadodara (Gujarat)".
6.1. From paragraph Nos. 4 and 5 of the said notice as well as from the allegations contained in sub clause (i) and sub clause (ii) in para (III) (under heading of "IRREGULARITIES") it clearly emerges that all allegations and details mentioned in the notice are related only to the retail outlet at Makarpura and any allegation with regard to the retail outlet at Vermana are not made in the said show cause notice.
6.2. Not only this, according to the said notice, the other outlet at Vermana was not even visited and any samples were also not drawn.
6.3. Besides this, it also does not appear from entire record that any allegation about use of the leased premises for purpose other than the purpose mentioned in the dealership agreement i.e. for retail outlet, was being made at the said other outlet viz at Vermana.
6.4. Moreover, these aspects are not addressed and are not taken care of in the impugned order.
7. Likewise, any allegation with reference to alleged change in constitution of the partnership is also not made in the said show cause notice. Moreover, even as per the respondent's affidavit it appears that the alleged change in partnership took place way back in 1979 and that therefore the said aspect could not have been made base for impugned notice or impugned action after more than 25 years in 2006.
8. It is not in dispute that the retail outlet was visited and samples were drawn on 14.09.2006.
8.1. It is also not in dispute that the samples were forwarded to and received by the Laboratory on 13.10.2006 (i.e. after one month).
8.2. In this context, it is also relevant to take into account the provision under Rule 8 of "Motor Spirit and High Speed Diesle (Regulation of Supply, Distribution and Prevention of Malpractices) Order, 2005. The said Rule 8 reads thus:
8. Sampling of Product.- (1) The authorised officer under clause 7 shall draw the sample from the tank, nozzle, vehicle or receptacle, as the case may be, in clean aluminum containers, to check whether density and other parameters of the product conform to the requirements of Bureau of Indian Standard specifications number IS 2796 and IS 1460 for motor spirit and high speed diesel respectively. Where samples are drawn from retail outlet, the relevant tank-truck sample retained by the dealer as per clause 3(b) would also be collected for laboratory analysis.
(2) ........
(3) ........
(4) The authorised officer shall forward the sample of the product taken within ten days to any of the laboratories mentioned in Schedule III or to any other such laboratory when it may be notified by the Government in the Official Gazette for this purpose, for analysing with a view to checking whether the density and other parameters of the product conform to the requirements of Bureau of Indian Standard specifications number IS 2796 and IS 1460 for motor spirit and high speed diesel respectively.
(5) The laboratory mentioned in sub-clause (4) shall furnish the test report to the authorised officer within twenty days of receipt of sample at the laboratory.
(6) The authorised officer shall communicate the test result to the dealer or transporter or concerned person and the oil company, as the case may be, within five days of receipt of test results from the laboratory for appropriate action." (emphasis supplied) 8.3. The said aspect is required to be examined in light of the provisions contained in Rule 8(4) which provides, inter alia, that the authorized officers shall forward the sample of the product taken within 10 days to any of the Laboratories mentioned in Schedule 3.
8.4. Thus, the said provision was undisputedly not complied.
8.5. Moreover, it is also not in dispute that the test report was prepared and submitted on 25.11.2006 i.e. after about 42 days, whereas, the provision under Rule 8(5) provides that, the Laboratory should furnish the test report within 21 days.
8.6. Thus, the said provision was also not complied. The details regarding the abovementioned dates are evident from the document at page 41 (Annexure E).
8.7. Thus, the prescribed procedure was not followed and it was breached while conducting the process of drawing samples, forwarding the samples to laboratory, conducting test and submission of laboratory report and thereupon issued notice. These irregularities translate into defect in procedure and in breach of applicable Rules/Provisions.
8.8. When a person is visited with civil consequences and/or penalty then the applicable Rules prescribing the procedure must be diligently followed. In instant case this aspect is not complied.
8.9. Moreover, these aspects/contentions are not even addressed and are not even dealt with by the competent authority in the impugned order. Thus, this is another defect in the order which vitiates the order and final action.
9. So far as the use of the premises for purpose other than the purpose mentioned in the agreement is concerned, it appears from the record, including respondent's reply affidavit that the premises in question was being used for the said other purpose (viz. nursery) even before the dealership agreement was executed and the said fact was within knowledge of the respondent Corporation and that therefore the petitioner was asked to execute certain undertaking. However no action was taken for all the past years.
10. From the record including the impugned order and from the rival submissions it emerges that the respondents have not granted opportunity of hearing/personal hearing to the petitioner and the respondents merely permitted the petitioner to only file reply to the notice but thereafter any intimation for purpose of hearing and any opportunity of being heard is not granted and the said singular opportunity i.e. the opportunity to submit reply to the show cause notice is considered as compliance of audi alteram partem rule. Thus, the impugned proceedings, order and final action are vitiated for not granting reasonable and sufficient opportunity of effective defence.
11. It has also emerged from the record including the impugned order and from the rival submissions that the competent authority of the respondent Corporation has not at all considered and dealt with the contentions/objections raised on ground of:-
(a) delay in forwarding samples (after the samples were drawn on 14.09.2006) to the laboratory within 10 days as per the provision prescribed under the Rules.
(b) the competent authority of the respondent Corporation has, thus, not dealt with the contention raised in light of and on strength of the provision under sub-rule 4 of rule 8 of the said Rules, and that because of the breach of provision under sub rule 4 of rule 8, the proceedings and the impugned order are vitiated and rendered unsustainable (on account of the delay and breach of the provision under sub rule 4 of rule 8).
(c) the competent officer of the respondent Corporation has, in the impugned order, also not addressed and dealt with the contention about the consequences which would arise and follow the delay caused in forwarding samples to the laboratory more than 10 days after the samples were drawn. The authority has not discussed the said aspect and not recorded any findings whatsoever as to whether such delay would affect the testing of the samples and/or test report in any manner, or not.
(d) that the competent authority of the respondent has also not addressed and dealt with petitioner's objection and contention in light of and on the strength of the provisions under sub rule 5 of rule 8 which prescribes time limit for completing the laboratory testing and for submitting the test report. The authority has not at all addressed the said objection and has not recorded any conclusion about the said breach.
(e) it is also not addressed and not considered as to whether the delay in forwarding the samples within 10 days in breach of Rule 8(4) and delay in conducting the test and consuming more time than the time limit prescribed under rule 8(5) would in any manner affect the result of the test or not and whether it would be prejudicial to the petitioner or not.
(f) even the issue/aspect that the said delay and breach of provision under sub rule 5 of rule 8 has vitiated the proceedings and the impugned order and rendered the same unsustainable is also not addressed and decided by the competent authority in the impugned order and any conclusion and supporting reasons are not recorded.
12. Actually, none of the said contentions and objections are at all addressed and discussed by the competent authority before and while passing the impugned order.
12.1.Thus, besides the said irregularities, the impugned order suffers from vice of non-application of mind to the relevant aspects involved in the matter and/or the contentions raised by the petitioner.
12.2.In this context, it is appropriate at this stage to make reference of the decision in case of Hindustan Petroleum Corporation Ltd. & Ors. v. Super Highway Services & Anr. [(2010) 3 SCC 321] wherein the Hon'ble Apex Court has observed that:
"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 concerned authority 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 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 the Respondent No.1 was given a hearing or at least serious attempts were made to serve him with notice of the proceedings before terminating his agreement.
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."
12.2.
In the decision in case of Allied Motors Limited v. Bharat Petroleum Corporation Limited [(2012) 2 SCC Page 1], the Apex Court has observed that:
"58.
In the instant case, samples were taken on 15th May, 2000.
On the very next day i.e. on 16th May, 2000, without even giving a show-cause notice and/or giving an opportunity of hearing, the respondent-Corporation terminated the dealership of the appellant. The appellant had been operating the petrol pump for the respondent for the last 30 years and was given 10 awards declaring its dealership as the best petrol pump in the entire State of NCT Delhi. During this period, on 29 a number of occasions, samples were tested by the respondent and were found to be as per specifications.
59. In the instant case, the haste in which 30 years old dealership was terminated even without giving show-cause notice and/or giving an opportunity of hearing clearly indicates that the entire exercise was carried out by the respondent Corporation non-existent, irrelevant and on extraneous considerations. There has been a total violation of the provisions of law and the principles of natural justice. Samples were collected in complete violation of the procedural laws and in non-adherence of the guidelines of the respondent Corporation."
13. It has also emerged from the record including the impugned order and from the rival submissions that the competent officer has also not considered, addressed and dealt with the aspect/issue about inordinate delay caused in proceedings and in passing the impugned order.
14. It is noticed that the team of the respondent Corporation visited the retail outlet on 14.09.2006 and the samples were drawn on 14.09.2006. Thereafter, the test report was submitted on 13.10.2006. However, the show cause notice came to be issued on 22.12.2006 and impugned order came to be passed on 04.01.2012 i.e. after delay of almost 5 years.
14.1.However, the competent authority of the respondent Corporation has not dealt with the said aspect of the matter and/or with the petitioner's objection and contention that the said delay of five years has vitiated the proceedings and more particularly the impugned order.
14.2.
In present case, the authority has not even addressed the issue as to whether the delay and the breach of the said provision affected the result of the test or not.
14.3.It has also emerged from the record including the impugned order and from the rival submissions that the competent authority of the respondent Corporation has also not considered the submission that the alleged irregularities were found in respect of the outlet at Makarpura and that therefore the dealership agreement with regard to the outlet at Varmana should not have been terminated. The order does not contain any discussion or conclusion with reference to the said contention.
15. It is obligatory for the authority to consider, address and deal with the objection and contention and to record its own findings as well as reasons in support of the findings, more particularly when the order entails civil consequences and/or penalty as per applicable Rules (in present case termination of dealership agreement).
15.1.It is relevant to notice that the procedure for drawing samples, the procedure for forwarding the samples for testing to the laboratories, the procedure and time for completing the testing and such other relevant aspects are governed by regulations framed in exercise of powers conferred by Section 3 of Essential Commodities Act, 1955 and that therefore its diligent compliance is sine-qua-non.
15.2.Further, in view of the fact that the procedure is governed by Rules framed in exercise of powers conferred under a statute the relationship between the dealer and the respondent Corporation as well as the actions against the dealer under the Rules are not purely in the realm of any other ordinary contract of agency between two private parties or any other ordinary dealership agreement between two private parties, but it is an agreement with instrumentality of State and it is governed by the Rules framed and issued under the Act and therefore the procedure prescribed by the Rules must be followed for taking any action in connection with such agreement.
16. At this stage and in present petition the Court would refrain from making any observation or recording any conclusion as regards the effect, if any, of the delay, and/or of the breach of the said provisions, on the result of the laboratory test since any findings as regards the said aspect are yet not recorded by the competent authority who passed the impugned order.
16.1.However, the authority should not have overlooked and ignored the requirement of recording conclusions along with supporting reasons after considering and addressing the issue as to whether the delay caused in forwarding the samples and/or in conducting the test and submitting report adversely affected the result of the test or not.
16.2.The competent authority has not considered and dealt with the aspects mentioned hereinabove in paragraph 11(1) to 11(f) and has not recorded any conclusions in respect of the said issues. The competent authority's failure to consider and address the said issues and aspects and/or the contentions/objections raised by the petitioner has vitiated the proceedings and the impugned order.
16.3.The respondent Corporation has tried to fill up the gaps in the impugned order by mentioning details and reasons in the reply affidavit. However, what is not addressed and recorded by the authority in the order and what does not emerge from the order cannot be supplemented by and/or improved upon and gaps cannot be filled by mentioning details, reasons etc. in subsequent affidavit [see Mohinder Singh Gill v. The Chief Election Commissioner, New Delhi (AIR 1978 SC 851)]
17. Therefore, it appears relevant, appropriate and necessary to remit the matter to the competent authority for fresh decision after addressing and dealing with the said contentions/objections and in light of the relevant factual backdrop.
18. While the Court is conscious about the limitation attached to the process of judicial review of the orders such as the one which is impugned in the present petition and also about the settled position that the Court would not enter into the process of re-appreciation of evidence and/or sit in appeal over the decision of the Appellate Authority, however when it is ex facie apparent from the order that opportunity of hearing, despite request has not been granted and the contentions regarding breach of the provision under the Rules are not addressed and any conclusions are not recorded then the Court would be compelled to interfere and set aside such orders which suffer from such inherent and basic infirmities and remit the matter for fresh decision by the authority after hearing the aggrieved party/the noticee for fresh decision containing necessary conclusions and reasons in support of conclusions.
19. Therefore having regard to the above discussed aspects and having regard to the infirmities in the order the Court is constrained to set aside the impugned order and remit the order to the competent authority for fresh decision. Hence, below mentioned order is passed.
20. The impugned order dated 04.01.2012 is set aside and the matter is remitted to the competent authority of the respondent Corporation for fresh decision on merits after hearing the present petitioner. It is clarified that this Court has not examined and evaluated the evidence on record and not entered into the merits of the conclusion recorded in the test report which is relied upon by the authority. It will be for the authority to independently decide the relevant aspects and the objections/contentions of the petitioner, however, without being influenced by the said order dated 04.01.2012 and/or present order. It is also clarified that this order shall not be construed as expression of any view or opinion of the court on the merits of the allegations against the petitioner and/or as view or opinion on merits of the impugned order. The order is set aside only for the above mentioned limited reasons. The competent authority shall pass fresh order on merits after hearing the petitioner as expeditiously as possible and preferably within six weeks after the service of certified copy of present order. The petitioner shall cooperate in early hearing and conclusion of the proceedings and shall not make request for unnecessary and avoidable adjournments. If the petitioner delays the proceedings for unjustified reasons and/or does not attend the hearing despite previous intimation about date and time of hearing, without any compelling and justifiable reason then it will be open to the authority to proceed to pass appropriate order on merits. The authority shall pass a reasoned and speaking order after considering and addressing the objections raised by the petitioner.
20.1.It is also clarified that if on earlier occasion the dealership agreement or supply of the products to the retail outlet in question was suspended before passing the order (but after the show cause notice) then it will be open to continue the suspension which will be subject to the final order that may be passed by the authority.
21. With the aforesaid clarification, observation and direction the petition is disposed of.
(K.M.THAKER, J.) jani