HON’BLE SRI JUSTICE P.NAVEEN RAO WRIT PETITION No. 30723 OF 2013 Date: 29-04-2014 Between :
M/s. Rao’s Fuel Station, Indian Oil Dealers, NH-214, Veeravasaram, West Godavari District, Rep.by its Proprietor, K.Dharmendra Kumar.
…. Petitioner And Indian Oil Corporation Ltd., Marketing Division Visakha Divisional Office, 8th Floor, LIC Building, Visakhapatnam, rep.by its Chief Divisional Retail Sales Manager and another.
…. Respondents This Court made the following:
HON’BLE SRI JUSTICE P.NAVEEN RAO WRIT PETITION No. 30723 OF 2013 ORDER:
The petitioner is a retail dealership outlet of Indian Oil Corporation Limited (for short “IOCL”). Inspection was conducted on 10.08.2013. Samples of MS (Motor Spirit) and HSD (High Speed Diesel Oil) were drawn from the underground tanks and density test of the products was conducted. Density test was normal. Samples collected were subjected to clinical test in the Vizag laboratory. Alleging that the sample test failed, by order dated 31.08.2013 the supplies of the petitioner outlet were suspended. Challenging the same this writ petition is instituted.
2. By notice dated 12.09.2013 the petitioner was called on to submit explanation alleging that HSD sample drawn from the petitioner outlet failed to meet specification in clinical tests and therefore it was established that the product has been adulterated, thereby violating the conditions of dealership agreement. Denying allegations petitioner submitted a detailed explanation on 10.10.2013. In the said explanation dated 10.10.2013 the petitioner has also requested for retesting the samples drawn.
3. The request of the petitioner was acceded and the petitioner was asked to participate in conducting of second clinical test. During the pendency of the writ petition the sample which was kept with the petitioner was subjected to clinical test, and in this test the result yielded in favour of the petitioner. Thus, two clinical tests have given two different results. The impact of two different reports of two different clinical tests is a matter to be independently considered.
4. Learned counsel for petitioner challenged the suspension of the supplies on two grounds.
5. That the petitioner is a Scheduled Caste candidate and the outlet granted to him was reserved to be filled up by Scheduled Caste person. In accordance with Marketing Discipline Guidelines (8.8) in respect of Scheduled Caste/Scheduled Tribe category dealerships termination should be approved by the Director (Marketing) at Headquarters. It is, therefore, contended that special protection is provided to Scheduled Caste category dealerships whereas the order impugned is passed by the Assistant Manager. The provision relied by the petitioner is applicable at the time of termination of dealership and hence said contention is rejected.
6. It is further contended that the sample which was drawn on 10.08.2013 was subjected to clinical test on 29.08.2013 i.e., beyond 10 days and, therefore, subjecting the sample collected on 10.08.2013 to the clinical test beyond 10 days is illegal and contrary to the Motor Spirit and High Speed Diesel (Regulation of Supply and Distribution and Prevention of Malpractices) Order, 1990 (Control Order), and therefore the said clinical report cannot be the basis to place the supplies under suspension.
7. In support of the second contention the learned counsel placed reliance on the decision of this Court in M/s. Premodaya rep. by its
[1]
Managing Partner Vs. Bharat Petroleum Corporation Limited .
8. Learned Standing Counsel representing the respondent Corporation submitted that two dispensing units of MIDCO MMS from which the delivery was suspended were delivering short by 20 millilitres for every 5 litres of delivery and the suspension was till further rectification of the units. It is further contended that only density test was conducted at the retail outlet and the product has passed the density test. The density test is only indicative test and is not a full specification test. A full specification test has to be conducted to ascertain the quality of the product in totality and such test can be conducted in a certified laboratory. The test conducted in Vizag laboratory reported that the sample was not meeting the specification with respect to Sulphur content. Therefore, according to the Corporation’s procedure the supplies were suspended. The learned Standing Counsel therefore justifies the suspension of supplies.
9. Chapter 2 of the Marketing Discipline Guidelines, 2012, deals with Industry Guidelines for sample collection and testing. According to clause 2.5(e) in case of sample failure and if the dealer requests for testing his retained sample, his sample along with the counter sample retained by the oil company to be tested at any PSU laboratory of the choice of the dealer. In accordance with this provision the petitioner requested for second test. Clause 2.5(h) provides that in case of failure of density test, clinical test by mobile lab, sales and supply of all products should be suspended and samples should be drawn and sent for testing on priority basis. In this case, the petitioner outlet has not failed in the density test nor in clinical test by mobile lab. According to this clause the sales and supply should be suspended only if the density test is failed or a clinical test by the mobile lab is failed. Both conditions are not satisfied. Chapter 7 deals with the Mobile Laboratory. Chapter 7.4 deals with testing of samples. Point II appended to 7.4 makes it further clear what is incorporated in clause 2.5(h) that sales and supplies are to be suspended by Mobile Lab in the event of failure of sample in laboratory test. A combined reading of these two provisions makes it clear that the provision of suspension is available in case of failure of the density test or clinical test conducted in mobile laboratory. Both conditions are not satisfied in the present case.
10. According to clause 7.6.1 (b) if the sample fails, the meter reading of all the dispensing units and the dip readings of the Tank(s) of the concerned product should be recorded in the Report and the dealer should be advised to suspend the sales of the concerned product. To suspend the operations of the petitioner reliance is placed on this clause. In the instant case, the petitioner was not suspended on the day of inspection, but was suspended based on the report of the Visakhapatnam Laboratory.
11. Therefore, the question for consideration is whether the sample was correctly drawn and subject to clinical test in the laboratory in accordance with clause 5(5) of the Control Order. As per clause 5(5) of the Control Order the samples collected by the inspecting officer should be sent to the designated laboratory within 10 days from the date of taking sample and one sample should be kept with the dealer. The provisions of the Control Order were considered by this Court in M/s. Premodaya (1 supra). This Court held that if the sample taken is not subjected to laboratory test within 10 days as mandated by clause 5 of the Control Order all consequential proceedings are void. This Court held that safeguards contained therein were mandatory because as per DPSL any breach of covenants by the licensee would entail in the cancellation of licence itself. In the said case the sample which was taken on 19.01.2001 was received at the laboratory on 01.02.2001. This Court held that sending the sample within 10 days is mandatory and the same was flouted. The contention of the learned counsel for the petitioner that the sample which was taken on 10.08.2013 was actually subject to clinical test on 29.08.2013 is not denied and no contrary material is placed on record to show that the sample was subjected to clinical test within 10 days as mandated by clause 5 of Control Order. In his explanation dated 10.10.2013 while asking for second clinical test, the petitioner specifically pointed out that sample drawn on 10.08.2013 was tested on 29.08.2013 and therefore there was a gap of 19 days in conducting the clinical test.
Supply of petroleum products to petitioner retail outlet were suspended relying on the first laboratory report. As the sample collected on 10.08.2013 was tested beyond 10 days, as held by this Court in M/s.Premodaya (1st supra), such report is not valid and hence the consequential suspension is illegal. The stand of the petitioner against suspension is fortified in view of second sample test.
12. In the result, the order impugned is set aside and the writ petition is allowed. No costs.
Miscellaneous Petitions, if any, pending in this Appeal shall also stand dismissed.
JUSTICE P.NAVEEN RAO DATE: 29.04.2014 Mva/kkm HON’BLE SRI JUSTICE P.NAVEEN RAO WRIT PETITION No. 30723 OF 2013 Date: 29-04-2014 Mva/kkm
[1] 2008 (6) ALT 550