Dhirpur Multi Center and Another vs Indian Oil Corporation Ltd. and Others

Sudhir Agarwal, J.—Petitioners were running a retail outlet dealership at Mohammadabad, District Farrukhabad of Indian Oil Corporation Ltd. in the name and style of M/s Dhirpur Multi Center. The said dealership has been terminated by order dated 20.12.2007 passed by the General Manager of Indian Oil Corporation Ltd. (hereinafter referred to as "IOC") and the appeal has been rejected by Appellate Authority (respondent No. 3) by order dated 21.7.2009. These are the two orders impugned in this writ petition.

The facts giving rise to the present dispute as stated in the writ petition may be stated as under.

The Petitioner''s dealership commenced in 1976. He was appointed as an authorized dealer of IOC for supply and sale of high speed diesel, motor spirit (Petrol) and other lubricants vide letter dated 16.5.1976. An inspection was made at Petitioner''s premises on 16.8.2006 by the Divisional Engineer. He detected some leakage and that was repaired by person concerned deployed for the said purpose. The Petitioner claimed to have paid an excess sum of Rs. 1,98,433/- to IOC inasmuch the distance from Filling Station, Agra to Moradabad (to and fro) was 240 kilometres but Petitioner was required to deposit by calculating the distance 440 kilometres whereagainst Petitioner repeatedly represented and required the department to refund excess amount. The aforesaid complaint remained unheeded. The Petitioner brought this fact to the notice of a Member of Parliament, Sri Chadra Bhushan Singh, elected from Farrukhabad constituency who raised the question in Parliament also as communicated to Petitioner vide letter dated 26.4.2007. The Respondent-IOC and its officials got prejudiced from Petitioner for this reason. They managed a surprise inspection on 24.5.2007 at 1.00 P.M. without giving any opportunity to Petitioner and pursuant thereto suspended his dealership by order dated 24.5.2007 (Annexure 4 to the writ petition). A show cause notice was issued to Petitioner on 12.6.2007 which was replied by him on 21.6.2007. Petitioner challenged the order of suspension in writ petition No. 42692 of 2007. The Court by order dated 8.12.2007 required Respondent-IOC to inform the final order, if any passed in the matter. The General Manager, thereafter passed order dated 20.12.2007 terminating the dealership. Petitioner challenged the termination order in Writ Petition No. 47182 of 2008, which was dismissed on 10.9.2008 relegating the Petitioner to avail alternative remedy of appeal. Petitioner, thereafter, preferred an appeal vide memo of appeal dated 1.10.2008 which has been rejected by means of the impugned appellate order dated 21.7.2009.

Sri Y.K. Saxena, Learned Counsel for Petitioner contended that the inspection was made by a Committee not competent to do so; the entire proceedings are biased and originated due to claim of the Petitioner asking for refund of price of round trip distance charged in excess from the Petitioner; Petitioner''s appeal was required to be decided within 90 days vide para 6.3 (Note IV) of the guidelines laid down by IOC; but it has been decided after more than nine months rendering the appellate order illegal; there was no illegality on the part of Petitioner; the responsibility to replace crack seal lie upon the Respondent-authorities but to cover up their lapses; the impugned orders have been passed; a report was submitted by the Weights and Measurement Officer by making inspection on 19.6.2007 verifying that there was no tampering with the meter but impugned orders have been passed without giving due consideration thereto; no Show cause notice was ever issued by the General Manager; the order of termination passed by him is illegal and without jurisdiction and also in violation of principles of natural justice; inspection was not made in presence of the Petitioner or his representative and the Inspection Team consisted of Officers who had no authority to make such inspection; the impugned order based on no evidence is perverse and illegal; the appellate authority has looked into certain facts which were not available to the General Manager in passing the order of termination and, therefore, has taken certain aspects into consideration extraneous to the matter vitiating the order of appeal.

On behalf of the Respondents, a detailed counter affidavit has been filed denying all these allegations. It is said that in the inspection made at Petitioner''s outlet on 24.5.2007, several irregularities were reflected which were found proved and hence the impugned orders were passed. The entire procedure has been followed in accordance with relevant guidelines and no interference is called for.

I have heard Sri Y.K. Saxena, Learned Counsel for Petitioners and Prakash Padia for the Respondents and perused the record as also relevant provisions and the authorities cited at the bar.

The inspection team on 24.5.2007 recorded following discrepancies at Petitioner''s retail outlet:

One Avery make HSD DU was found connected to two tanks (one 20 KL & one 15 KL) with the help of two values fitted on top of the tanks.

W&M seals of HSD DU Avery make on meter assembly found broken.

The Totalizer seals of MS & HSD DUs were not proper.

The retention samples of MS & HSD were not available.

Petitioner, in his reply, did not dispute the discrepancy No. 1 but tried to explain that it was already disconnected and probably the disconnected line could not be removed, hence, was lying thereon. Regarding discrepancy No. 2, the Petitioners explained that it was not broken but only cracked. Explaining the nature of crack, Petitioners relied on inspection report dated 19.6.2007 of Weights and Measurement Inspector which shows that HSD DU Avery''s W&M Seal was not tampered but show cracks which could have been due to atmospheric reasons like sunlight, water etc. It has not been tampered by any person. With respect to Totalizer Seals of MS & DVS, i.e. discrepancy No. 3, Petitioners said that the same are in position like the same were affixed by Weights and Measurement department and in respect to discrepancy No. 4, the Petitioners admitted that there were samples at his outlet which did not mention company seal for the reason that appropriate seals had already been consumed and despite demand made on 13.5.2007, valid seals were not made available. Besides, Petitioner also stated in his reply dated 21.6.2007 that considering the facts in his reply, his fault/irregularities be condoned.

The irregularities were not condoned by General Manager. He also disbelieved Petitioner''s statement that the seal mentioned in discrepancy No. 2 was not broken and hence he terminated the dealership.

Thecontention of Learned Counsel for Petitioner that the inspection was made in absence of Petitioners or their representative is not correct for the reason that copy of inspection report (Annexure 4 to the writ petition) contains signature along with seal of the firm-petitioner No. 1. It is not stated anywhere in the writ petition that signature shown in the inspection report do not relate to any person belong to Petitioner. In fact, in reply dated 21.6.2007 Petitioners did not raise any such objection that inspection was not made in presence of Petitioners or any of their representative. Nothing has been shown to this Court that the General Manager, IOC, was not competent to pass order of termination. Para 5.2 of the guidelines empowers the Management of the Company to constitute a team to carry out inspection of retail outlets. Besides, different officers at different points of time are supposed to make inspection of retail outlet vide para 5.1 of the guidelines. It therefore cannot be said that IOC Management could not have constituted a joint team for inspection on 24.5.2007 and, therefore, the aforesaid inspection cannot be said to be vitiated in law in any manner. Petitioner''s own statement in reply dated 21.6.2007 shows that he was aware of irregularities and it is for this reason he requested the authorities to condone irregularities in the light of explanation submitted by him. Existence of irregularities, therefore, was clearly admitted by Petitioner. It is true that in reply dated 21.6.2007 the Petitioners tried to explain irregularities but in the checking report, he has not endorsed anything to discredit any finding recorded therein and to challenge the same incorrect. Since no dispute of correctness of discrepancies mentioned in checking report was raised while signing the same, any unsubstantiated explanation if not believed by authority cannot be said to be perverse or illegal or arbitrator.

That being so, the discrepancies and irregularities noticed in the inspection report dated 24.4.2007 cannot be ignored. The appellate authority has also relied on the aforesaid admission of the Petitioner and in my view correctly. The only thing now remained to be considered is the effect and consequences of the report dated 19.6.2007 of the Weights and Measurement Inspector. The said report has not been given any credit by the IOC to discredit their findings recorded in the inspection report dated 24.5.2007. Having given anxious consideration to this aspect, in my view, the approach of Respondent-authorities cannot be said to be faulty or erroneous in any manner. From the inspection report dated 19.6.2007 of Weights and Measurement Inspector it transpires that the same was conducted on an application submitted by Petitioner on 15.6.2007. No notice for such inspection was given to the IOC or its officials. The entire attempt on the part of the Weights and Measurement Inspector was to stress upon the fact that the HSD DU Avery''s seal is only cracked and not tampered and the crack was for natural climatic reasons and not due to human efforts. It is, therefore, clearly a document obtained by Petitioners in defence. This document was obtained by Petitioners after more than 20 days from the date of inspection. When there was already a checking made by officials of IOC, if the Petitioners wanted to have a second look of the matter, he could have requested the officials of IOC to make further inspection regarding the position of HSD DU Avery''s seal which they did not. Even if they wanted to have inspection from Weight and Measurement Inspector, they could have requested IOC officials to remain present on the date of such inspection. Here also no such information was given by the Petitioners to officials of IOC. In the above facts and circumstances, the Respondents, in my view, have not committed any error apparent on face of record in disbelieving/discrediting the inspection report of Weights and Measurement Inspector and I do not find any reason to interfere therewith.

Sri Saxena, Learned Counsel for Petitioner, vehemently argued that the appeal was filed on 1.10.2008 and the same has been decided on 21.7.2009 i.e. almost after 9 years after its filing. In the guidelines, it is provided that the appeal shall be decided by the appellate authority within 90 days. Therefore, he submits that the appeal having been decided beyond 90 days renders the appellate order illegal and without jurisdiction. In my view, the submission lacks substance. To test the submission, I enquired from the Learned Counsel that in case appeal is not decided within 90 days, what shall be consequence: whether the it will stand dismissed or allowed. Counsel for the Petitioner also could not give any reply to this, though suggested but faintly that in case appeal is not decided within 90 days, it should be deemed as if it has been allowed. This is clearly doing violence to the scheme. No consequence is provided in the scheme of the guidelines if the appeal is not decided within 90 days. Principles of interpretation in such cases indicate that such a provisions should be treated to be directory one. Unless the appeal is decided in a particular manner, it cannot be treated to be either dismissed or allowed unless provided by the statute. The order of competent authority is existing on record deciding the matter in a particular way and unless it is set aside by the competent authority in appeal or otherwise, the earlier order would continue to operate. Here also the appeal was filed and it had to attain a particular result. This Court cannot add several words in the scheme of guidelines so as to provide a particular consequence to the pending appeal not decided within ninety days. In my view, therefore, if the appeal is not decided within 90 days, that would not take away the appellate authority''s jurisdiction to decide the appeal thereafter. The intention of the competent authority laying down the provision is to require various authorities exercising powers in the guidelines not to delay the manner unnecessarily and take a decision within reason time. In absence of any indication about the consequence however none can be read in the statute in a particular manner. The argument thus is negatived.

Learned Counsel for Petitioner placed reliance on certain authorities which now I propose to refer hereat.

In support of his contentions that guidelines for inspection etc laid down by IOC are mandatory and without giving opportunity to dealer, termination of dealership is illegal, Sri Saxena placed reliance on Hindustan Petroleum Corporation Limited and Ors. v. Super Highway Service and Anr. (2010) 3 SCC 321 wherein para 31 of the judgment, the Court said:

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 authority concerned 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 the 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 Respondent 1 was given a hearing or at least serious attempts were made to serve him with notice of the proceedings before terminating his agreement.

Therein it is evident from the facts of the case that Corporation submitted that notice for testing of the sample was deemed served since the dealer refused to accept the same but this was not accepted by the Court. Here is not a case like this. The inspection report contains signature of Petitioner(s) or representative. The Petitioners submitted reply to the show cause notice and thereafter order of termination was passed. The aforesaid judgment, therefore, in my view does not help the Petitioner in any manner.

Relying on the Apex Court decision in A.K. Kraipak and Others Vs. Union of India (UOI) and Others, it was contended that principles of natural justice are applicable even in administrative and quasi judicial orders. The proposition admits no exception but in the case in hand, I do not find any violation of principle of natural justice and at least none could be substantiated by the Petitioner.

Then comes the plea of fraud that there appears to be some fraud on the part of authorities of IOC but what I have discussed above, even this plea I do not find to have been substantiated by the Petitioneres.

Lastly it is contended that if there is some irrelevant consideration taken into account, the order would be vitiated since it would be difficult to differentiate irrelevant consideration from the relevant one and that shall vitiate the entire order. Reliance for this proposition, Sri Saxena placed reliance on Apex Court''s decision in Collector v. Raja Ram Jaiswal 1985 All.L.J. 887 (SC) but even this judgment, in my view, has no application to the facts of the present case which are very straight and quite simple.

It is lastly contended that cancellation of dealership is very serious in nature and every irregularity, irrespective of its nature, ought not be treated to be fatal justifying termination of dealership since the Government should not act like private individuals. Reliance was placed on Union of India and others Vs. Hindustan Development Corpn. and others, . The argument appears to be slightly attractive but failed to impress upon the Court for the reason that irregularities noticed at Petitioner''s premises, if are correct, which the authorities have actually found proved, would go to show that the Petitioners had indulged in some illegal activities of wider consequences. The Respondent-authorities are well conversant of all these matter and in their wisdom have found these irregularities to be serious enough warranting termination of dealership. In absence of any allegation of mala fide against any individual, and that too having not been substantiated at all, I do not find any reason to interfere with the decision taken by the Respondent-competent authority.

Though in pleading, a case of mala fide has been sought to be pleaded but neither anyone has been impleaded eo nomine nor sufficient material has been placed to substantiate such allegations. It is well settled that plea of mala fide shall not be entertained by the Court unless the person against whom the mala fide is alleged is impleaded eo nomine.

In State of Bihar and Another Vs. P.P. Sharma, IAS and Another, in para 55 of the judgment, the Apex Court said:

It is a settled law that the person against whom mala fides or bias was imputed should be impleaded eo nominee as a party Respondent to the proceedings and given an opportunity to meet those allegations. In his/her absence no enquiry into those allegations would be made. Otherwise it itself is violative of the principles of natural justice as it amounts to condemning a person without an opportunity. Admittedly, both R.K. Singh and G.N. Sharma were not impleaded. On this ground alone the High Court should have stopped enquiry into the allegation of mala fides or bias alleged against them.

In AIR 1996 SC 326 J.N. Banavalikar v. Municipal Corporation of Delhi, in para 21 of the judgment, it has been held:

Further in the absence of impleadment of the?.the person who had allegedly passed mala fide order in order to favour such junior doctor, any contention of mala fide action in fact i.e. malice in fact should not be countenanced by the Court.

In All India State Bank Officers'' Federation and Others Vs. Union of India (UOI) and Others, , the Hon?ble Apex Court has said where a person, who has passed the order and against whom the plea of mala fide has been taken has not been impleaded, the Petitioner cannot be allowed to raise the allegations of mala fide. The relevant observation of the Apex Court relevant are reproduced as under:

The person against whom mala fides are alleged must be made a party to the proceeding. Board of Directors of the Bank sought to favour Respondents 4 and 5 and, therefore, agreed to the proposal put before it. Neither the Chairman nor the Directors, who were present in the said meeting, have been impleaded as Respondents. This being so the Petitioners cannot be allowed to raise the allegations of mala fide, which allegations, in fact, are without merit.

In Federation of Railway Officers Association and Others Vs. Union of India (UOI), it has been held:

That allegations regarding mala fides cannot be vaguely made and it must be specified and clear. In this context, the concerned Minister who is stated to be involved in the formation of new Zone at Hazipur is not made a party who can meet the allegations.

In view of above discussion, I do not find any error apparent on

face of record in the impugned orders warranting interference.

The writ petition, in the result, lacks merit and is dismissed.

No costs.