Petitioner has approached this court questioning the validity of the order dated 17.6.2008 passed by the Territory Manager (Retail), Bharat Petroleum Corporation Ltd cancelling dealership agreement dated 31.12.2001 of M/s Sainik Fuelling Station Bodhi Pokhri, District Chitrakook and orders of its affirmance in appeal decided on 6.7.2009 passed by the Executive Director, (Retail) Bharat Petroleum Corporation Ltd, Regd, Office Bharat Bhawan, 4 & 6 Currimbhoy Road, Ballard Estate Mumbai.
Brief background of the case is that petitioner has been awarded a Retail Outlet dealership in the name and style of M/s Sainik Fuelling Station Bodhi Pokhri, District Banda now District Chitrakook for sales of Motor Spirit and High Speed Diesel under Ex-Army Personal category vide dealership agreement dated 31.12.2001 by Bharat Petroleum Corporation Ltd, hereinafter called B.P.C.L. Petitioner has stated that on 21.6.2006 an inspection has been carried out at the business premises of the petitioner and on the said date in presence of Assistant Manager, Shri Ram Lal (Sales) of BPCL sample of Motor Spirit and High Speed Diesel were taken and sent to the Quality Control Laboratory Mughal Sarai for the clinical test. Thereafter Quality Control Laboratory Mughal Sarai submitted its report dated 8.7.2006. Said report reflects that three tier sample testing procedure was followed and (RO) Retail Outlet sample was tested along with the corresponding samples of the Supply Location (SL) as well as Tank Lorry (TL). The RO sample along with the corresponding TL retention samples were received by the laboratory on 22.6.2006, the SLK sample was received on 1.7.2006. The samples were analysed on 8.7.2006. On testing, the HSD sample failed to meet HSD BSII specification with respect to total sulphur (720). Besides, Kinematic Viscosity (2.06) was found to be very low and beyond reproducibility limit as compared to Tank Lorry Sample and test results were not in line with TL sample. After report had been received, show cause notice dated 6.9.2006 had been sent. Petitioner after receiving the said show cause notice, submitted his reply on 22.9.2006 and thereafter, order in question has been passed on 17.6.2008 cancelling the dealership agreement of the petitioner. Thereafter petitioner preferred Civil Misc. Writ Petition No. 31507 of 2008 before this court and this court on 14.8.2008 relegated the petitioner to remedy of appeal. Petitioner thereafter preferred appeal, same has also been dismissed on 6.7.2007. At this juncture present writ petition has been filed.
Sri Kshetresh Chandra Shukla, Advocate, learned counsel for the petitioner contended with vehemence that in the present case adulteration is not at all substantiated as no foreign material had been introduced in the Motor Spirit or High Speed Diesel Oil and further no mal practice whatsoever has been committed, and on account of mere variation of Sulphur content adulteration can not be presumed, in such a situation action which has been taken is unsustainable and contrary to the provisions as contained in Marketing Discipline Guidelines, 2005, and as such present writ petition deserves to be allowed.
Countering the said submission, Sri P. Padia, Advocate representing Oil Company on the other hand contended that product in question after sample was taken was sent to the Laboratory in question and product in question was not at all conforming to the requirements of Bureau of Indian standard specification Numbers IS 2796 and IS 1460 as prescribed for Motor spirit and High Speed Diesel respectively and in such a situation it was clear that there has been introduction of foreign substance on account of which it was not at all conforming to the requirement of standard fixed, as such present writ petition deserves to be dismissed.
After respective arguments have been advanced, undisputed factual position, which is emerging in the present case is that at the premises of petitioner, special inspection was conducted by the Assistant Manager Ram Lal and during the said course of inspection being made samples were taken of Motor Spirit/ High Speed Diesel and said sample was sent to the Quality Control Laboratory Mughal Sariai for clinical test. Three samples namely supply location sample, Tank Lorry sample as well as retail outlet sample were analyzed on 8.7.2006. On testing, High Speed Diesel sample failed to meet H.S.D. (BSU) specification with respect to total Sulphur (720), besides, Kinematic Viscosity (2.06) was found to be very low and beyond reproducibility limit as compared to Tank Lorry Sample and test results were not in line with TL sample whereas the corresponding SL and TL samples were found to meet the requirement of HSD (BSII specifications. Laboratory test showd following result i.e. (i) Corresponding Supply Location (SL) sample meeting the requirements of HSD(BSII) (ii) Corresponding Tank Lorry Retained)TL Samples meeting the requirements of HSD (BSII),(iii) Retail Outlet (RO) sample fails to meet HSD (BSII) having requirement, total Sulphur (720) as against BSII requirement of 500 (max), besides , Kinematic Vocosity (2.06) being very low and beyond reproducibility limit as compared to TL sample and test results were not at all in line with TL sample. Based on the same, show cause notice was given to petitioner and at no point of time after show cause notice was given, petitioner at any point of time ever made request for re-testing of the sample in question as is provided for in Marketing Discipline Guidelines, 2005 in his presence as well as in presence of officials. In general points to be observed in all cases under Marketing Discipline Guidelines, 2005 it has been clearly provided for that after sample testing in the event of sample failure on request of dealer, same be retested by the State Office and in the present case at no point of time petitioner ever come forward to make any request for retesting of the sample in question as per clause 2.5 (D) of Marketing Discipline Guidelines, 2005.
Division Bench of this Court in the case of Krishna Kumar and another Vs. Senior Superintendent of Police, Bulandshahr and others 1998 ALL. L.J. 1579 has taken the view that report of laboratory to the effect that petroleum is adulterated is sufficient to hold that dealer has indulged in malpractice of adulteration. Details have also been dealt with qua the manner in which tests are to be carried out along with density test like determination of flash point recovery at different temperatures, viscosity and flow etc. Yet another Division Bench of this Court in the case of M/S Vindhya Service Station vs. U.O.I 2008 (10)ADJ 663 has taken the note of Marketing Discipline Guidelines, wherein Clause 6.1.1 defines adulteration, and the fact that marker check having indicated possible adulteration the Corporation acted well within its right in prohibiting sales by dealer.
This Court in the case of Vinay Kumar Goyal Vs. Chairman and Managing Director, Hindustan Petroleum Corporation Ltd. and others, decided on 06.09.2010 has taken the view that where opinion has been formed by the authority qua indulgence of petitioner in adulteration and the same is substantiated by laboratory reports, then in exercise of authority of judicial review no interference is feasible.
The Parliament enacted Bureau of Indian Standards Act 1986 (Act No. 63 of 1986) to provide for the establishment of a Bureau for the harmonious development of the activities of standardisation making and quality certification of goods and for matters connected therewith or incidental thereto. The Central Government established the Bureau for Indian Standards Institution in exercise of power conferred by Section 3 of this Act. Under sub-section (a) of Section 10(1), the Bureau has been conferred the power to establish, publish and promote in such manner as may be prescribed the Indian Standard in relation to any article or process and under sub-section (b) power has been conferred to recognise as an Indian Standard in such manner as may be prescribed, any standard established by any other Institution in India or else where, in relation to any article or process. The specification for Diesel Fuels as laid down by Bureau of Indian Standards (known as Is-1400.
Petrol diesel and kerosene are all hydrocarbons having different carbon contents. The carbon contents of petrol is C4-10 of Kerosene C10-14 and that of diesel C14-20. In the process of refining crude oil they are produced at different stages and therefore their basic ingredient is more or less similar. They do not have absolutely fixed standards like the food items. There is variation in their flash point, recovery at different temperatures, viscosity and density etc. The analysis can only show that one item is mixed with another like the presence of kerosene in diesel can be found out with certainty. However it is not possible to find out the precise content or extent of adulteration if one is mixed with another. Sulphur occurs naturally in crude oil and thus also in diesel and petrol also unless fuel has been desulphrised . Diesel and petrol have different level of sulphur because different fractions of crude is used in the production process. The resulting natural sulphur level is marginalised by using several technologies to de-sulphurise petrol and diesel at the refinery, such as hydro treating or sulphur absorption. Keeping such objective in mind petroleum products are produce at refineries as per BIS specification which are further tested in labs as per Bureau of Indian Standards Specifications.
Test report clearly shows that corresponding supply location, and TL samples were found to meet the requirement of HSD(BSII) specified. Retail outlet sample was also required to be as per the standard prescribed by Bureau of Indian standard specification No. IS 2796 and IS 1460 for Motor spirit and High Speed Diesel respectively and as per Marketing Discipline Guidelines, 2005. Adulteration of product has been provided for under Clause 6.1.1. Relevant extract of the same is being extracted below 6.1.1 ADULTERATION OF PRODUCT Definition.
"Adulteration" means the introduction of any foreign substance into Motor Spirit/High Speed Diesel illegally or unauthorizedly with the result that the product does not conform to the requirements of Bureau of Indian Standards specification number IS:2796 and IS: 1460 for Motor Spirit and High Speed diesel, respectively, and amendments thereon, and /or.
Under the 3- tier sampling scheme, if the observations on the sample under scrutiny and the reference sample do not fall within reproducibility/permissible limits of the test method for which the samples are examined, and/or Any other requirement for the purpose to identify adulteration, issued by the Competent Authority from time to time.
Penal action to be taken against the erring Retail Outlet/SKO-LDO dealerships for adulteration and other malpractices/irregularities are given in Appendix-I.
Sales and supplies of all products to be suspended immediately till such time investigations are completed. Meter and dip readings should be recorded in the Inspection Report duly signed by the Dealer or his representative together with rubber stamp of dealership and each page of the inspection report shall be initiat3d by Inspecting Officer and Dealer/Dealer's representative Dispensing Pumps and Tanks should be sealed.
Wherever samples are drawn, either pursuant to random checks of where adulteration is suspected, samples should be collected from each tank at the RO and got tested as per 3 -tier sampling system (explained in Chapter-2).
C. If the samples passes the lab test, sales and supplies of all products, if suspended earlier, will be resumed to the dealer immediately.
If the sample is certified to be adulterated, after laboratory test, a show cause notice should be served on the dealer and explanation of the dealer sought within 7 days of the receipt of the show cause notice. If the explanation of dealer is not satisfactory, the Company should take penal action given in Appendix-1 Coupled with this adulteration and malpractice has been defined under Clause 2(a) & (f) of Motor Spirit and High Speed Diesel (Regulation of Supply and Distribution Prevention of Malpractice) Order 2005 as follows:
Clause 2(a) "Adulteration" means the introduction of any foreign substance into the motor spirit or high speed diesel illegally or unauthorized with the result that the product does not conform to the requirements of the Bureau of Indian Standards specification number IS 2766 and IS 1460 for motor spirit and high speed respectively or any other requirement notified by the Central Government from time to time".
Similarly the term "malpractices" is defined by Clause 2(f) and the same reads as follows:-
"Malpractices" shall include the following acts of omission and commission in respect of motor spirit and high speed diesel"
Here keeping in view of Bureau of Indian Standard specification Numbers IS 2796 and IS 1460 for Motor spirit and High Speed Diesel, test has been carried out wherein contents of Sulphur has been shown on higher side i.e. 720 which is far beyond the prescribed limit of 500 (maximum) whereas in reference to the corresponding supply location and corresponding tank Lorry sample, both have met the specification provided for. As far as Kinematic Viscosity is concern requirement mentioned shows to be ranking in between 2 to 5 as in the result it was found 2.06, same on its face value appears to be well within the range prescribed. Sample of HSD collected from retail outlet clearly failed to meet the requirement of HSD (BSII) on Sulphur front, as Sulphur content was much more than prescribed limit. Once such was the report of the test in question conducted at the laboratory of Bharat Petroleum Corporation Ltd (Government of India Undertaking)/Quality Control, then there is no reason to doubt the said report which clearly showed that sample was not at all meeting the requirement specification. Once product handed over to petitioner from supply location and by way of tank lorry was conforming requirement of Bureau of Indian standard specification Numbers IS 2796 and IS 1460 for Motor Spirit and High Speed Diesel, then qua failure of sample drawn from retail outlet it has to be accepted that it was a case wherein mal practice had been committed and product in question clearly reflected that foreign material had been added in the shape of hydrocarbon containing higher sulphur, clearly substantiating sample was taken was adulterated product. Petitioner in the present case has miserably failed to show cause for the said sample failure, and the cause furnished has been found unsustainable, that unlocked tank lorry was transporting products to retail outlet and the driver transporting the vehicle may have adulterated . Categorical finding has been arrived that supplies were transported in sealed tank lorry and the tank lorry sample has passed and met HSD BSII requirement. The plea of earlier load of different densities having contributed to sample failure has also been considered, by clearly mentioning that sample will not fail, even if load were of different densities.
Consequently, present writ petition is dismissed.
Dt. 18.01.2011 T.S.