M/s. Satyam Filling Station, Jhansi has filed this petition for quashing the order dated 22nd September, 2008 passed by the General Manager, Indian Oil Corporation Ltd., Lucknow by which the dealership agreement of the petitioner was terminated. The petitioner has also sought the quashing of the order dated 4th April, 2009 by which the appeal filed by the petitioner for setting aside the aforesaid order was dismissed by the Executive Director of the Indian Oil Corporation Ltd.
The petitioner was appointed by the Indian Oil Corporation as its dealer for the retail sale or supply of Petrol /HSD/ Motor Oil/Grease and on 14th March, 2005 the dealership agreement was executed between the petitioner and the Indian Oil Corporation.
On 9th December, 2007 the retail outlet of the petitioner was inspected by M/s. S.G.S. India Pvt. Ltd., the authorised representative of the Indian Oil Corporation for conducting marker tests at retail outlets, and the following irregularities/malpractices were observed:-
1. HSD sample drawn from the Retail Outlet of the petitioner failed in the Marker Test conducted at the retail outlet on December 9, 2007 by M/S SGS India Pvt. Ltd.
2. The last load Tank Truck retention sample was not available at the retail outlet of the petitioner at the time of inspection and the same has been duly acknowledged by the representative of the petitioner present at the retail outlet at the time of inspection.
On the basis of the inspection made on 9th December, 2007, a show cause notice dated 10th December, 2007 was issued to the petitioner and the supply to the retail outlet was also suspended.
In line with the Marketing Guideline, 2005 and the subsequent amendment dated 15th January, 2007, the second sample of HSD collected 2 by M/s. SGS India Pvt. Ltd. from the retail outlet of the petitioner was tested at Kanpur terminal on 17th December, 2007 in the presence of the authorised representatives of the petitioner. This sample also failed the Marker Test. However, the supply location sample at the Kanpur Terminal passed the Marker Test done on 17th December, 2007. Accordingly, another show cause notice dated 20th December, 2007 was issued to the petitioner to file a reply within seven days as to why action be not taken against the petitioner. The petitioner submitted a reply dated 17th March, 2008. A show cause notice dated 2nd May, 2008 was then issued to the petitioner for affording final opportunity to submit a reply and the petitioner submitted a reply dated 9th May, 2008.
The General Manager, U.P. State Office by the order dated 22nd September, 2008 terminated the dealership of the petitioner with immediate effect and the relevant portion of the order is quoted below:-
"At the outset, it is stated with regard to your contention that your representative who was present at the RO at the time of inspection on December 9, 2007 was not competent enough to understand the proceedings i.e. the marker test which was conducted at your RO by M/S SGS, is unfounded and devoid of any merit. It is herein relevant to note that as per clause 46 & 49 of the Dealership Agreement dated March, 14, 2005, the dealer is required to supervise the Retail Outlet activities personally and has to maintain adequate and competent staff to attend to various Retail Outlet activities. Similarly, with respect to your allegation that the signature of your representative was taken on the blank form, it is stated that no person of ordinary and reasonable prudence working at a retail outlet shall sign on a blank form, moreover knowing the fact that this might go against them. So your allegation appears to be unfounded and can not be sustained either by documentary evidence or otherwise.
As far as your contention regarding representatives of M/S SGS India Pvt. Ltd. demanding illegal gratification i.e. money is concerned, it is stated that you have failed to support the same with any documentary evidence or otherwise and hence the same appears to be an afterthought and a deliberate attempt to subserve the main issue.
Further, with respect to your contention that the sample container already had some chemical before the commencement of marker test and it was not rinsed 3 properly, it is stated that you have failed to substantiate your contention with any documentary evidence or otherwise.
Even assuming for a while, that the container in which the marker test was conducted was not rinsed properly and had some chemical in it, it is stated that the same should have resulted in the failure of the MS (motor spirit) sample as well. However, the report of M/S SGS India Pvt. Ltd. dated December 9, 2007 clearly shows that the MS sample drawn from your RO passed the marker test conducted in a similar sample container and hence your allegation is untenable and appears to be misconceived.
As far as your contention regarding the fact that M/S SGS India Pvt. Ltd. in their inspection report dated December 9, 2007 have mentioned the invoice date of last receipt as November 30, 2007 whereas it should have been December 4, 2007, it is stated that the same appears to be a result of oversight and which has no bearing whatsoever upon the outcome of the marker test of the product drawn and tested in the presence of your representative at your retail outlet on December 9, 2007. It is also clarified that the 2"d sample drawn from your retail outlet was re-tested in the presence of your representative at our Kanpur Terminal Laboratory on December 17, 2007 along with the supply location sample drawn on December 4, 2007 i.e. the same at that of the sample drawn from your RO failed again.
Further, your contention that the last load TT retention sample was available at the RO but was neither demanded nor collected by the representatives of M/S SGS India Pvt. Ltd., is devoid of any merit as the fact about non-availability of last load TT retention sample has been specifically endorsed by the representatives of M/S SGS India Pvt. Ltd. in their inspection report dated December 9, 2007 and the same has been duly acknowledged by your representative present at the retail outlet. In this context it is also worthwhile stating that our concerned official who visited your RO on the next day of the inspection i.e. on December 10, 2007 has confirmed that the sample shown by your representative and purportedly belonging to the last load supply was in improper condition as the same didn't bear the signature of the TT driver and your representative on the sample box and also the name of your RO was not mentioned on the stickers of the sample.
Lastly, as regard your contention of re-drawing and re-testing of samples from your retail outlet is concerned, it is stated that re-sampling and re-testing of 4 samples is not permissible under the laid down Marker Testing Procedures. It is further clarified that action as per the Marker Testing Procedure shall only be applicable in the subject case, since the product has failed during the marker test and there is no provision under the Marker Testing Procedure wherein subsequent to failure of product in the marker test conducted at the retail outlet, a fresh sample can be re-drawn.
In the light of the above, I find no irregularity in the marker test conducted at your retail outlet and you have failed to substantiate any of your allegations and contentions with any documentary evidence or otherwise.
In view of the failure of HSD sample in the Marker Test conducted at your RO on December 9, 2007 as well as of the 2nd HSD sample collected from your retail outlet in the marker test conducted at Kanpur Terminal Laboratory on December 17, 2007, adulteration of product at your RO with an intention to cheat customers has been proved beyond reasonable doubt.
Therefore, in line with clause (1), Appendix-I of MDG-2005 &, more specifically covered under clause 58
(i) & (m) of the dealership agreement, your dealership is hereby terminated with immediate effect."
The petitioner filed an appeal before the Executive Director raising these grounds:-
1. HSD sample was taken in a container in which some material was already there.
2. TT retention samples were available but were not taken by SGS.
3. The last load was of challan-dated 04.12.2007 but SGS reported date as 30.11.07 in the marker test report.
4. On 12.06.2008 an Officer from UPSOI visited the RO along with F.O. and took photograph of the TT sample in question.
5. MDG provides that if for any reason, the sample could not pass the prescribed specification, then resampling should done after three months.
6. As per section 20 of Petroleum Act, on the request of dealer, testing of fresh sample should be allowed.
7. As required under MDG, R.O. sample should have been compared with depot sample.
These grounds were considered and rejected by the Appellate Authority in the following manner:-
1. There is nothing on record to substantiate the appellant's contention that HSD sample was taken by SGS in a container in which some material was already there.
2. The contention of the appellant that TT retention samples were available but were not taken by SGS is contrary to records. As per the marker test report of 09.12.07 acknowledged by the appellant's representative TT retention sample was not available.
3. SGS mentioning challan no. & date of load of 30.11.2007 instead of challan no. & date of load of 04.12.2007 as last load has no bearing on the merit of the case as no TT retention sample was produced by the appellant RO.
4. As per clause 2.5 F of MDG 2005, in case TT retention sample is not made available at the time of drawl of sample it would not be accepted later.
...............
Moreover, as per the termination letter, the Corporation officials who visited appellant RO on the next day of the inspection i.e. on December 10, 2007 confirmed that the sample shown by the appellant's representative and purportedly belonging to the last load supply was in improper condition as the same didn't bear the signature of the TT driver and RO representative on the sample box and also the name of RO was not mentioned on the stickers of the sample.
5. There is no provision in MDG 2005 for taking and testing fresh sample when adulteration by RO has been established.
6. The appellant has stated that as per section 20 of Petroleum Act, on the request of dealer, testing of fresh sample should be allowed.
.....................
From perusal of the above stated clause 19 & 20 of the Petroleum Act, 1934 it is evident that these pertain to ascertaining class of petroleum by Competent Authority under the Act and right of the owner of the petroleum to require retest in case he is dissatisfied with the class so ascertained for his product. Class of a petroleum product is required to be ascertained because for each class of petroleum product separate guidelines in respect of storage, transportation and handling is laid down. Clauses 19/20 of the Act have nothing to do with quality of MS/HSD being sold by a Retail Outlet. Therefore, a Retail Outlet dealer, whose MS/HSD sample has failed, cannot require retest under clause 20 of the Act.
7. The appellant has submitted that, in absence of TT retention sample, R.O. sample should have been compared with depot sample. As stated above, both RO retention samples as well as corresponding supply location sample were tested and their test result was compared.
The contention of the appellant that MOP&NG stopped Marker test due to dishonesty of SGS is not correct."
After having recorded the aforesaid findings, the Appellate Authority concluded as follows:-
"The HSD sample of the RO failed in marker test on 09.12.2007. RO retention sample also failed in lab test on 17.12.2007 while the corresponding supply location sample of last receipt (of challan dated 04.12.07) passed the test. TT retention sample was not available as recorded on the marker test report of 09.12.07 acknowledged by the appellant's representative. Thus, under the guidelines, adulteration by the appellant RO has been established.
The termination of the appellant dealership for adulteration is in accordance with MDG 2005 & amendment thereof in January 2007. There is nothing to interfere with the Order dated 22.09.2008 of the Corporation. Accordingly the appeal stands dismissed."
Sri Ramendra Asthana, learned counsel for the petitioner placed reliance upon the note submitted by Sri S.K. Behera, the Deputy Manager (RS) Kanpur which mentions that a two member Committee be constituted to investigate the petitioner's claim regarding availability of last load tank lorry retention sample and submitted that such a Committee was not constituted and a decision was taken against the petitioner.
He has also placed reliance upon Section 20 of the Petroleum Act and submitted that in terms of the said Section he had asked the Corporation to have fresh samples of petroleum for testing again but this was not done in support of this contention he has placed reliance upon the judgment of this Court rendered on 9th October, 2009 in Writ Petition No.26181 of 2006 (M/s. Jagannath & Co. & Ors. Vs. Union of India & Ors.).
Learned counsel for the petitioner further submitted that in the inspection note of M/s. SGS India Pvt. Ltd. it has been mentioned that the invoice date of the last receipt is 30th November, 2007 but the actual date was 4th December, 2007 and this makes everything suspicious and casts a serious doubt about the transparency of the proceedings giving rise to the impugned orders.
Learned counsel for the petitioner has also placed reliance upon the affidavit filed on behalf of Bharat Petroleum Corporation in Writ Petition 7 (PIL) No.9140 of 2008 in the Delhi High Court wherein it was mentioned that the marker test was not reliable.
Learned counsel for the petitioner also submitted that the dealership cannot be terminated on irrelevant or nonexistent grounds and in support of this contention he has placed reliance upon the decision of the Supreme Court in Harbans Lal Sahnia & Anr. Vs. Indian Oil Corporation Ltd. & Ors., (2003) 2 SCC 107.
Sri Prakash Padia, learned counsel appearing for the respondent Corporation, however, submitted that good and sufficient reasons had been given for cancellation of the dealership agreement and for dismissing the appeal and while exercising powers of judicial review, the jurisdiction of the Court is limited and the Court will not re-appreciate the evidence. He further submitted that Section 20 of the Petroleum Act is not applicable in the facts and circumstances of the case and in support of his contention he has placed reliance upon the decision of this Court in Mitthan Lal Gupta Vs. District Magistrate, Etah & Anr., 2000 (3) AWC 2019. He further submitted that mere mistake in the mention of the invoice date of the last receipt as 30th November, 2007 instead of 4th December, 2007 has no bearing on the outcome of the marker test and that factum to appoint the Committee as observed in the note of the Deputy Manager does not vitiate the order.
I have carefully considered the submissions advanced by the learned counsel for the parties.
The first contention advanced by the learned counsel for the petitioner that on the basis of the note prepared by the Deputy Manager, the two member Committee should have been constituted to investigate the petitioner's claim regarding availability of last load tank lorry retention sample cannot be accepted.
As noticed hereinabove, the Retail Outlet of the petitioner was inspected by the authorised representative of the Indian Oil Corporation for conducting the marker test on 9th December, 2007. It was found that the last load tank truck retention sample was not available at the Retail Outlet of the petitioner at the time of inspection and this fact was duly acknowledged by the representative of the petitioner present at the Retail Outlet. Subsequently, the petitioner set up a case that the last load tank truck retention sample was available at the Retail Outlet but it was not demanded by the authorised 8 representative. This contention was rejected by the General Manager by the impugned order dated 22nd September, 2008 holding that when the officials visited the Retail Outlet on the next day i.e. 10th December, 2009, the sample shown by the petitioner representative purportedly belonging to the last load supply was not in proper condition and did not bear the signature of the tank truck driver and the name of the Retail Outlet was also not mentioned on the sticker of the sample. This finding has been confirmed by the Appellate Authority because Clause 2.5(F) of the guidelines issued by the Ministry of Petroleum and Natural Gas provides that in case the sample is not made available at the time of drawl of sample from the Retail Outlet, the same will not be considered for testing at a later stage and in such a case, the result of the Retail Outlet sample will be compared with the supply point sample.
In the present case, as the sample was not made available at the time of inspection on 9th December, 2007, the second sample drawn from the petitioner Retail Outlet was retested in the presence of the representative of the petitioner at the Kanpur Terminal Laboratory 17th December, 2007 along with the supply location sample but the sample drawn from the petitioner Retail Outlet failed the marker test again. In such circumstances, the notings made by the Deputy Manager for seeking approval for constituting a two member Committee to investigate this claim of the petitioner will, therefore, not vitiate the order if approval was not granted to constitute such a Committee. In this connection reference may be made to the decision of the Supreme Court in Sethi Auto Service Station & Anr. Vs. Delhi Development Authority & Ors., (2009) 1 SCC 180, wherein the Supreme Court held that notings in the departmental files do not have the sanction of law to be an effective order and the relevant observations are as follows:- :
"............It is, thus, plain that though the proposals had the recommendations of th State Level Coordinator (Oil Industry) and the Technical Committee but these did not ultimately fructify into an order or decision of DD conferring any legal rights upon the appellants. Mere favourable recommendations at some level of the decision-making process, in our view, are of no consequence and shall not bind DDA. We are, therefore, in complete agreement with the High Court that the notings in the file did not confer any right upon the appellants as long as they remained as such......................."
The next contention of the learned counsel for the petitioner is with regard to the provisions of Section 20 of the Petroleum Act. It is the contention of the learned counsel for the petitioner that the petitioner had asked to have fresh sample of petroleum for testing again in terms of Section 20 of the said Act but that was not done. This contention cannot been accepted in view of the Division Bench Judgment of this Court in Mitthan Lal Gupta Vs. District Magistrate, Etah & Anr., 2000 (3) AWC 2019, wherein it was observed :-
"Learned counsel lastly urged that a right to get the sample tested again is conferred by Section 20 of the Petroleum Act and consequently the prayer made by the petitioner deserves to be allowed. Section 20 finds place in part II of Petroleum Act, which deals with the subject of testing of petroleum. A perusal of the relevant provisions in this chapter would show that it basically deals with the testing of petroleum which is being imported, transported, stored, produced, refined or blended. It does not at all deals with the dealers who are selling diesel either through a retail outlet or as a petty diesel dealer. Sub-section (1) of Section 20 of the Petroleum Act, 1934, lays down that owner of any petroleum, or his agent, who is dissatisfied with the result of the test of the petroleum may, within seven days from the date on which he received intimation of the result of the test, apply to the officer empowered under Section 14 to have fresh samples of the petroleum taken and tested.
This provision gives a right to the owner of petroleum to apply to the officer empowered under Section 14 of the Act to have fresh samples of the petroleum taken and tested. This clearly envisages taking of a fresh sample and, thereafter, to test it again. It does not at all contemplate a situation where a part of the sample taken from the possession of a dealer which is being retained by him may be sent for reanalysis or fresh analysis. If Section 20 is read along with other provisions of Chapter II of the Act, it can have no application to the prayer made by a petty diesel dealer for analysis of the third part of the sample being retained by him." (emphasis supplied) Learned counsel for the petitioner has placed reliance upon another Division Bench judgment of this Court in Writ Petition No. 26181 of 2006 (M/s Jagannath & Co. & Ors. Vs. Union of India & Ors.) decided on 9th October, 2009, wherein it was observed :-
"Petitioner relies on Section 20 of the Petroleum Act, 1934 wherein the petitioner had a right to have fresh 10 samples drawn and get the same retested within 7 days of the intimation of the test results. In the present case, the lab test report was intimated to the petitioner only after it was filed before the trial court on 02.09.2005. The petitioner, immediately on 07.09.2005 moved an application before the trial court to get the fresh samples from his dispensing units redrawn and retested. An endorsement by the respondent's counsel asserting his objection and seeking time to file the written objection was made, but the same was never filed. Hence it is evident that the petitioner timely exercised the right available to him in law.
The contention of the respondent corporation alleging that there is no provision for drawing fresh samples and only the samples earlier drawn can be retested stands in clear contradiction with the mandate of Section 20 of the Petroleum Act, 1934. Further, the pleadings taken by respondent contradict each other, where once they assert there is no provision of taking fresh samples, on the other hand, while insisting on the time limit for application for retesting of samples, in the impugned order they accept and assert the mandate of Section 20 of the Petroleum Act, 1934."
The subsequent Division Bench judgment of this Court has not taken into consideration the earlier decision rendered by the Division Bench in the case of Mitthan Lal Gupta (supra) wherein the provisions of the Act have been analysed in detail. In view of the Division Bench judgment of this Court in Mitthan Lal Gupta (supra) it is not possible to accept this contention of the learned counsel for the petitioner.
The third contention of the learned counsel for the petitioner is about the invoice date of the last receipt mentioned in the investigation note of M/S. SGS India Pvt. Ltd. Learned counsel for the petitioner submitted that the invoice date of the last receipt mentioned in the investigation note is not 30th December, 2007 but 4th December, 2007 and since this fact has also been admitted by the Indian Oil Corporation, a serious doubt arises about the manner in which the inspection was carried out.
This contention of the learned counsel for the petitioner cannot also be accepted. The General Manager in his order dated 22nd September, 2008 has dealt with this issue holding that the same appears to be a result of oversight and has no bearing on the outcome of the marker test. This finding has been confirmed by the Appellate Authority. Learned counsel for the petitioner has 11 also not been able to substantiate as to how such wrong mention of the date will have any effect on the marker test.
Learned counsel for the petitioner has also place reliance upon the affidavit filed on behalf of Bharat Petroleum Corporation in the Delhi High Court that marker test was not reliable. A perusal of the said affidavit which has been annexed as Annexure SA-6 to the Supplementary Affidavit shows that the petition that was filed in the Delhi High Court was for a direction for continuance of the "marker" system for which the contract had expired on 31st December, 2008 and bids for "marker" system pursuant to fresh notice inviting tenders on technical evaluation had failed to meet the product specifications. It is in this connection that it was stated in the affidavit that marker system that was introduced in February, 2007 has been discontinued by the order dated 31st December, 2008 issued by the Ministry of Petroleum and Natural Gas and the reasons for discontinuance was mentioned. Amongst the various reasons mentioned it was stated that the complaints had been received that it was possible to launder/remove or clear such "marker" from kerosene. Thus, it was not that the test was defective but because it was found that initially it was quite effective in detecting adulteration in petrol and diesel but subsequently as human brain was very inventive, complaints had been received that it was possible to remove the existing marker from the kerosene.
The last contention of the learned counsel for the petitioner is that the dealership cannot be terminated on irrelevant or non-existent grounds. Learned counsel for the petitioner has placed reliance upon the decision of the Supreme Court in Harbans Lal Sahnia (supra). In this case the Supreme Court noticed that general allegations had been made by the Corporation against the dealer. In the present case, there are specific allegations against the petitioner. This decision, therefore, does not help the petitioner.
There is, therefore, no merit in any of the contention advanced by the learned counsel for the petitioner.
The writ petition is, accordingly, dismissed. Date: 01.02.2010 GS