Smt. Anuradha Saxena vs The State Of Madhya Pradesh

This intra court appeal has been filed against order dated 09.12.2016 (Annexure A/1) passed in Writ Petition No.9473/2014, whereby the learned Writ Court has quashed termination order dated 13.03.2014 regarding dealership of the respondent and order dated 17.12.2014 by which the Appellate Authority has dismissed the appeal and restored the dealership of the respondent.

Facts of the case are that respondent - M/s. Govind Saraf Kisan Seva Kendra was a licencee of Kisan Seva Kendra Retail Outlet established by the Indian Oil Corporation Limited and ran Kisan Seva Kendra Retail Outlet at Machalpur, District Rajgarh (Biaora) in the name and style of "M/s. Govind Saraf Kisan Seva Kendra". The covenants of respondent''s license were incorporated in a dealership agreement executed between the respondent and the appellant - Indian Oil Corporation Limited on 21.11.2008.

In the year 2012, a machine named as "MIDCO S. No.1136 Midco 980 C" was installed in the respondent''s petrol pump by way of transfer from M/s. Digendra Fuel & Service Station Petrol Pump. The said machine was installed on "as it is" basis. The verification report was prepared on 11.10.2012. At the time of installation, the reading of meter of machine was 2808681.

The Officers of the appellant oil company conducted random investigation on 08.02.2013 and 11.07.2013 and found no violation of Marketing Discipline Guideline 2013.

On 21.08.2013, Authorized Officer of the Corporation i.e. from Department of Anti Adulteration Cell visited on the aforesaid Retail Outlet i.e. M/s. Govind Saraf Kisa Seva Kendra for its surprise inspection. The Officers of the Anti Adulteration Cell inspected the Retail Outlet of the respondent in presence of the respondent / his representation. During inspection, they made the following observation and prepared a panchnama:- "1. There is stock variation of (+) 1241 liter beyond permissible limit in MS and (-) 2505 liter in HSD. Samples of MS and HSD from one tank each drawn. TT1 and TT2 retention samples not collected since there is no plastic seal on inner Aluminum Container.

There is stock variation of (+) 1241 Liter beyond permissible limit in MS and (-) 2505 liter in HSD. Samples of MS and HSD drawn as per MDG. TT1 and TT2 retention samples are not sealed with no plastic seal for inner container hence not collected. Advised dealer to stock and suspend seal and supplies of all products. Closing motor reading and dip stock is given above.

GVR Sr.No.130-1PO585 is being operated without W/M seal. There is no calibration and stamping done b W/M and no certificate is available. On the unit there is only seal of GVR which is put at factory at the time of manufacture.

MS DU MIDCO Sr. No.1136 is having double gear mechanism in metering unit. Photograph of double gear is taken. This is an additional and unauthorized fitting. Divisional Office to take action as per clause 5.1.4 of MDG 2012. DU sealed with AAC holograms."

As the discrepancies found by the Ante Adulteration Cell Team were of critical nature, the respondent was immediately directed to stop the sale of petroleum products from the Retail Outlet. The investigation report was submitted by the inspection team on 21.08.2013 (Annexure P/8). Thereafter, looking to the gravity of the discrepancies, appellant No.1 sought an explanation of the respondent for the following irregularities found by the Ante Adulteration Cell Team during their inspection vide Fact Finding Letter dated 04.09.2013 (Annexure P/9): - (i) Seals of the metering unit found tampered in the dispensing pumps.

(ii) Additional / unauthorized fitting and gears inside the dispensing units / tampering with dispensing units.

(iii) Positive stock variation beyond permissible limits but sample passing quality tests.

(iv) Negative stock variation beyond permissible limits but sample passing quality tests.

The respondent vide his reply dated 16.09.2013 (Annexure P/10) accepted the aforesaid irregularity found at the time of investigation and submitted his detailed clarification / reply on all the discrepancies raised by the Corporation vide their letter dated 04.09.2013 (Annexure P/9). The submission of the respondent on Irregularities No.(i), (iii) and (iv) were found satisfactory. Thus the said discrepancies recorded by the Ante Adulteration Cell Team during their inspection were dropped against the respondent. However, by his reply dated 16.09.2013 the respondent just tried to wash off his hands and tried to shift his responsibility from Irregularity No.(ii) of putting an additional fitting in the Dispensing Unit, stating an unacceptable reason that this dispensing unit was shifted on his Retail Outlet from the other Retail Outlet namely Digendra Auto, thus he is totally unaware of any fitting in the unit and further stated that the maintenance and protection of the Dispensing Units installed at his Retail Outlet was not his responsibility. Respondent did not submit a satisfactory reply for Irregularity No.(ii) found at the time of investigation, which was made in his presence.

Thereafter, a show cause notice dated 05.12.2013 (Annexure P/11) was issued to the respondent, seeking his reply why dealership agreement dated 21.11.2008 (Annexure P/1) should not be terminated in violation of Clause 5.1.4 of the MDG and Clause 15, 16 and 46 of the dealership agreement. On 26.12.2013 (Annexure P/12) respondent submitted his reply on the pretext that MS Dispensing Unit Sr. No.1136 (MIDCO) is not maintained by the respondent and the said DU was brought from some other Retail Outlet and has been inspected many times since the date of its installation at the respondent''s Retail Outlet and having latent defect prior to being shifted which could not be visible through reasonable care and caution. The aforesaid reasons submitted by the respondent were found unsatisfactory and baseless as the report of the Anti Adulteration Cell Team is very much clear that the double gears arrangement was available inside the metering unit, which is clearly visible from the pictures taken at the time of investigation (Annexure R/1).

The General Manager of the Madhya Pradesh State Office of Appellate Corporation considered the entire material placed before him and after granting personal hearing to the respondent and after giving careful consideration to the submissions made by the respondent, came to the conclusion that respondent''s action / inaction amounts to violation of Clause 15, 16 and 46 of the Dealership Agreement read with Clause 5.1.4 of MDG 2013, as dispensing unit is having double gera mechanism in metering unit which falls under the category of an additional and unauthorized fitting. This cause was prejudicial to the interests of the Corporation and tarnished the image of the Corporation. On the basis of these facts, it was decided that the dealership of the respondent should be terminated and consequently termination letter dated 13.03.2014 (Annexure P/13) was issued to the respondent.

The respondent preferred an appeal challenging termination letter dated 13.03.2014 (Annexure P/13) before the Appellate Authority of the appellant - Indian Oil Corporation Limited, as prescribed under Clause 8.9 (i) of the Marketing Discipline Guidelines, 2013. The Appellate Authority provided an opportunity of personal hearing to the respondent on 28.10.2014 in the matter and thereafter considered the entire case and recorded the finding that the dispensing unit is having double gear mechanism in metering unit which falls under the category of an additional and unauthorized fitting found in the metering unit of the Dispensing Unit and affirmed the letter / order of termination dated 13.03.2014 (Annexure P/13) by dismissing the appeal on 17.12.2014 (Annexure P/14).

The respondent challenged the aforesaid orders by filing a writ petition under Article 226 of the Constitution of India. A detail reply to the writ petition was filed by the appellant and prayed for dismissal of the writ petition on the ground of making incorrect statement in the writ petition regarding non providing an opportunity of hearing to the respondent (writ petitioner).

Learned Writ Court by impugned order quashed the order of terminating the dealership and allowed the writ petition and restored the dealership of the respondent. Paragraphs No.18 and 19 of the order reads, as under: - "18. In the present case, there is no such material available on record to proof that due to double gear mechanism, there was any shortage in delivery. No finding was recorded by the authority, who has terminated the agreement as well by the appellate authority. This clause further provides that in case of those irregularities sale from the concerned dispensing unit DU would be sealed and send to the laboratory for the testing. In the present case, the DU was not sealed and did not send to the laboratory for testing. There is no lab testing report available on the record. The petitioner''s request for obtaining report about short delivery or the gear is active or dead has been turned down by the authorities, therefore, there is no material or satisfaction of the authority that because of gear, there was any intention of manipulating the delivery by the petitioner, coupled with the fact that the machine was installed by the company itself by way of transfer from another fuel station.

The entire plea of the petitioner was rejected only on the ground of double gear was found in DU machine. There is no finding of deliberate insertion or shortage of delivery and whether double gear was active or dead. Similar issue came up before the High Court of Andhra Pradesh in the case of Ram Lal Agrawal (Supra) and the action of the respondent was found to be arbitrary exercise of power and the writ petition was allowed."

Shri B.L. Pavecha, learned Senior Counsel for the appellants has drawn our attention to paragraph No.5 and paragraph No.6 (c) of the writ petition. In paragraph No.5, the respondent (writ petitioner) has very categorically stated that reply to the first and second show cause notices was filed, but in Paragraph No.5 (l) of the writ petition, he stated that appellant No.2 (respondent No.2), without properly considering the reply and rules, terminated his dealership vide letter dated 13.03.2014. He in paragraph No.5 (m) stated that the appeal dated 12.04.2014 preferred by him was also dismissed by order dated 17.12.2014, but in paragraph No.6 (c) of the ground, he stated that no opportunity of hearing was granted by the appellant - Corporation before passing the impugned order of termination and while dismissing the appeal, which suggests violation of sacrosanct principles of natural justice

Learned Senior Counsel for the appellants has drawn our attention to paragraph No.11 of the impugned order where this question has been considered by the learned Writ Court and submitted that the learned Writ Court com mitted a grave error of law in recording erroneous finding that the respondent has not made statement of not providing an opportunity of hearing in the grounds or in facts of writ petition; the learned Writ Court should have seen that the respondent made such baseless and ill founded statement in the petition memo, whether mentioned in the facts or under grounds will not make a difference as the same was done by the respondent with a motive to mislead the Court and to gain wrongful sympathy. The finding recorded by the learned Writ Court that the respondent has himself submitted show cause notice and reply submitted by him along with the writ petition, goes to show that the respondent did not intend to hide the material facts from the learned Writ Court of providing an opportunity of hearing by the appellant - Corporation is in itself contradictory to the statement made by the respondent in the writ petition. The learned Writ Court should have seen that the appellant - Corporation never violated principle of natural justice and it was the respondent who did not come up with clean hands and it is the respondent who has made false and baseless statements in the writ petition.

He also submitted that the learned Writ Court has committed grave error of law and facts in recording a finding in the impugned order that the respondent may have intention to say that opportunity of hearing provided to him by the appellant was not adequate and meaningful. The finding recorded by the learned Writ Court is solely based upon assumption, no statement in this regard was made by the respondent in the rejoinder nor at the time of final arguments. It is also submitted that the learned Writ Court should have also seen that any averment made in the writ petition whether raised at the time of final arguments or not should be treated as pleading of the respondent and he cannot be permitted to put false pleadings in the writ petition. He submitted that the act of the respondent goes to show that the respondent has betrayed the confidence of the Court.

To appreciate the aforesaid submissions, we quote paragraph No.11 of the impugned order and relevant paragraph No.7 of decision dated 29.04.1987 of the Division Bench of the High Court of Madhya Pradesh, Bench at Indore in the case of Jagdish s/o Hiralal Mali v. State of MP & others, Miscellaneous Petition No.400/1987, which read, as under: - "11. That the respondent has alleged that the petitioner has made misleading as well as incorrect statement in the writ petition about the fact that he was not given any opportunity of hearing before passing the impugned order. The said statement was made by the petitioner in ground No. C, but in para 5 of memo of petition where the facts of the case are pleaded, the petitioner did not made any statement that he was not given any opportunity of hearing. On the contrary, he has stated that he received first and second show cause notice and submitted the replies in response to those show cause notices. The petitioner has filed copy of show cause notice as well as copy of replies in the writ petition, therefore, it cannot be alleged that he has given incorrect statement or tried to suppress the fact about issuance of show cause notice and denial of opportunity of hearing. The petitioner may have intention to say that adequate & meaning full opportunity of hearing was not given to him. At the time of argument also, Shri Kutumble did not argued on the point that the petitioner was not given any opportunity of hearing, therefore, the averment made in Clause 6 does not came under the category of misleading or making incorrect statement."

"07. Even if the allegation now made by the petitioners are to be believed, as urged on behalf of the petitioners, the petitioners should have disclosed all those facts in their application for grant of ad-interim writ. They suppressed all these facts and led the Court to believe that they were not dispossessed by the authorities concerned from the land in question. The conclusion is irresistible that the petitioners did not come to the Court with clean hands. In AIR 1951 Nagpur 17 (Nikar s/o Yusuf v. The Government of Madhya Pradesh), a Division Bench of this Court has held that where the Court has reason to be satisfied that there has been a willful concealment of facts so as to deceive it, the Court will decline to consider the merits of the petition. As observed in AIR 1951 Nagpur 17 (supra), the reason for adoption of this rule is not to arm an applicant''s opponent with a weapon of technicality but to provide an essential safeguard against abuse of the process of the Court. A person invoking the assistance of a Court by way of one of the high prerogative writs is required to exhibit complete candour and if he suppresses material facts, it would amount to lack of good faith on the part of the petitioner. In these circumstances, therefore, the petitions are liable to be dismissed on the short ground that the conduct of the petitioners in suppressing material facts was improper. In this view of the matter, it is not necessary to decide the other questions raised in these petitioners."

Learned Senior Counsel for the appellant has drawn our attention to paragraph No.17 of the impugned order wherein the learned Writ Court, after considering Clause 5.1.4 of MDG - 8 th January, 2013, came to the conclusion that mere finding of gear in the dispensing unit is not sufficient, there has to be a material before the authorities to establish that by insertion of such mechanism / gear, the delivery of the dispensing unit was affected or reduced. The learned Writ Court also observed that there is no such material available on record to proof that due to double gear mechanism, there was any shortage in delivery. No finding was recorded by the authority. He also gave a finding that DU was not sealed and did not send to the laboratory for testing. The request of the respondent for obtaining report about short delivery or the gear is active or dead has been turned down by the authorities and gave finding that there is no material or satisfaction of the authority that because of gear, there was any intention of manipulating the delivery by the respondent, coupled with the fact that the machine was installed by the company itself by way of transfer from another fuel station.

Learned Senior Counsel for the appellants has submitted that delivery from the said Dispensing Unit could not have been checked by the appellants, as the said Dispensing Unit was out of order on the date of inspection. He submitted that the finding of additional fitting gear in the Dispensing Unit was enough to proceed against the respondent and to find a prima facie case against the respondent that the said gears were fitted by the respondent with an intention of manipulating the delivery from the Dispensing Unit. The learned Writ Court should have also seen that no additional gears were found in the Dispensing Unit at the time of earlier two inspections as conducted by the officers of the appellant - Oil Corporation and the same was found at the time of last inspection which clearly depicts that the said gears were inserted in the Dispensing Unit before the said inspection and were not in the Dispensing Unit since the time of its installation at the Retail Outlet of the respon- dent. He submitted that the learned Writ Court has erroneously recorded observation that mere finding of gears in the unit will not be sufficient to establish that the respondent has manipulated the delivery from the Dispensing Unit. He submitted that the learned Writ Court should have considered the relevant clause and should have accordingly hold that there could not have been any other reason for fitting the gears in the Dispensing Unit then to wrongfully gain monetary benefits by way of manipulating the delivery.

His third ground of attack is that as per Clause (2) of the agreement dated 21.11.2008 (Annexure P/1) either of the parties have a right to terminate the agreement earlier by giving three months notice in writing to the other of its intention to terminate the agreement and upon the expiration of any such notice, the agreement shall stand cancelled and revoked.

He has also drawn our attention to Clause 45 (a), (l) and (p) of the agreement dated 21.11.2008 (Annexure P/1) and submitted that if the dealer shall commit a breach of any of the terms, conditions, convenants and stipulations contained in this Agreement, the appellant - Oil Corporation has every right to terminate the contract. He submitted that if any dispute or difference of any nature whatsoever arises between the parties, then either party may invoke arbitration clause, as provided under Clause 62 (a) of the agreement (Annexure P/1).

He has drawn our attention to Clause (c), Sub-Section (1) of Section 14 of the Specific Relief Act, 1963 and sub- mitted that at the most the respondent is entitled for compensation by way of damages for a period of three months and drawn our attention to paragraph No.14 of the decision of the Apex Court in the case of Indian Oil Corporation Limited v. Amritsar Gas Agency reported in 1991 (1) SC 533. He submitted that the learned Writ Court granted relief of specific performance of contract, which is barred under Clause (c), Sub-Section (1) of Section 14 of the Specific Relief Act, 1963.

Relevant Clause 45 (a) (l) and (m) and Clause 62 (a) of the agreement dated 21.11.2008 (Annexure P/1), read as under: - "45. Notwithstanding anything to the contrary herein contained, the Corporation shall be at liberty at its entire discretion to terminate this Agreement forthwith upon or at any time fter the happening of any of the following events namely: -

(a) If the Dealer shall commit a breach or default of any of the terms, conditions, convenants and stipulations contained in this Agreement.

(l) If the Dealer does not adhere to the instructions / guidelines issued from time to time by the corporation in connection with Marketing Discipline and / or safe practices to be followed by him in the sale or supply and storage of the Corporation''s products or otherwise.

(m)If the Dealer shall contaminate / adulterate or tamper with the quality of any of the products supplied by the Corporation.

62 (a) Any dispute or difference of any nature whatsoever, any claim, cross claim, counter-claim or set-off or regarding any right, liability, act omission or account of any of the parties hereto arising out of or in relation to this agreement shall be referred to the sole arbitration of the Director (Marketing) of the Corporation who may either himself act as the Arbitrator or nominate some other officer of the Corporation to act as the Arbitrator. The Dealer will not be entitled to raise any objection to any such Arbitrator on the ground that the Arbitrator is an officer of the Corporation."

Learned Senior Counsel for the appellant submitted that in view of arbitration clause, the learned Writ Court should have referred the matter to the Arbitrator by invoking the arbitration clause; the writ petition filed by the respondent was barred by suppression of material fact as well as alternative remedy available to him; these questions cannot be decided in the writ proceedings; and prayed that the impugned order be set aside.

Shri Pavecha, learned Senior counsel has invited our attention to the facts mentioned in para 6 (c) of the writ petition wherein the respondent - writ petitioner has made totally false and misleading statement regarding violation of natural justice by not giving any opportunity of hearing, before passing the impugned order of termination and while dismissing the appeal whereas as per record after receipt of show cause, opportunity of personal hearing was accorded on 16.1.2014 and thereafter order dated 13.3.2014 was passed even before dismissing the appeal on 17.12.2014, an opportunity of personal hearing was accorded to the respondent.

The Hon''ble Supreme Court in the case of Hari Narain V/s. Badri Das (supra) has observed that it is of utmost importance that in making material statements and setting forth grounds in applications for special leave care must be taken not to make any statements which are inaccurate, untrue or misleading. In dealing with applications for special leave, the Court naturally takes statements of fact and grounds of fact contained in the petitions at their face value and it would be unfair to betray the confidence of the Court by making statements which are untrue and misleading. The remedy of writ which is discretionary relief and whatever may be merit of the case in the peculiar facts and circumstances, the court may refuse to exercise its jurisdiction and we accept the contention of the learned Senior counsel for the appellant that the writ petition was liable to be dismissed even without dealing with the merits of the case. Para 14 of the decision of the Apex court in the case of Indian Oil Corporation Ltd. V/s. Amritsar Gas Agency (supra) is relevant which reads as under :- "14. The question now is of the relief which could be granted by the arbitrator on its finding that termination of the distributorship was not validly made under clause 27 of the agreement. No doubt, the notice of termination of distributorship dated March 11, 1983 specified the several acts of the distrbutor on which the termination was based and there were complaints to that effect made against the distributor which had the effect of prejudicing the repuration of the appellant - Corporation; and such acts would permit exercise of the right of termination of distributorship under clause 27. However, the arbitrator having held that clause 27 was not available to the appellant - Corporation, the question of grant of relief on that finding has to proceed on that basis. In such a situation, the agreement being revokable by either party in accordance with clause 28 by giving 30 days'' notice, the only relief which could be granted was the award of compensation for the period of notice, that is, 30 days. The plaintiff-respondent 1 is, therefore, entitled to compensation being the loss of earnings for the notice period of 30 days instead of restoration of the distributorship. The award has, therefore, to be modified accordingly. The compensation for 30 days notice period from March 11, 1983 is to be calculated on the basis of earnings during that period disclosed from the records of the Indian Oil Corporation Ltd."

Per contra, Shir Ashok S. Kutumbale, learned Senior Counsel for the respondent has submitted that machine was installed by the appellants, and therefore, there was no manipulation and no presumption can be drawn because unit was out of order. He submitted that the contract cannot be terminated on the basis of panchnama dated 21.08.2013. The learned Writ Court rightly considered the objections raised by the learned counsel for the appellants and dismissed the writ petition. He mainly placed reliance on paragraphs No.28, 29 and 30 of the decision of the Andhra Pradesh High Court in the case of Ram Lal Agrawal v. Indian Oil Corporation Limited reported in 2014 (4) ALD 139, Ranjith Filling Station v. Indian Oil Corporation Limited reported in 2014 (6) ALD 640, P. Laxmikanth Rao v. Union of India reported in 2011 (3) ALD 505 = 2011 (3) ALT 221. He submitted that the learned Writ Court in the case of Ram Lal Agrawal v. Indina Oil Corporation Limited (supra), after considering the judgment of the Division Bench dated 21.07.2011 passed in Writ Appeal No.318/2011 allowed the writ petition; the situation in the present case and the aforesaid case is identical; and prayed for dismissal of the writ appeal.

From the record, it is clear that the respondent gave its reply to first and second show cause notice. Thereafter, in third show cause notice / inspection report dated 21.08.2013, an opportunity of personal hearing was accorded and the respondent personally appeared before the Competent Authority of the appellant - Corporation on 16.01.2014 and thereafter order dated 13.03.2014 passed. He totally on false and misleading statement made in paragraph No.6 (c) of the writ petition regarding violation of principles of the natural justice by not giving any opportunity of hearing, renders the petition liable to be dismissed. In an appeal also, personal hearing was provided by the Appellate Authority to the respondent on 28.10.2014 and thereafter order dated 17.12.2014 (Annexure P/14) was passed.

This question was considered by the Apex Court in paragraph No.9 in the case of Nari Narain v. Badri Das reported in AIR 1963 SC 1558 and in paragraph No.7 of the Division Bench of Madhya Pradesh High Court at Indore in the case of Jagdish s/o Harilal Mali v. State of MP & others (supra). Even if allegation now made by the appellant - Oil Corporation is to be believed, as urged, the respondent should have disclosed all these facts in their writ petition. In the writ petition, the respondent suppressed all these facts and led the Court to believe that no opportunity of hearing was granted to him before passing order dated 13.03.2014 and 17.12.2014, the conclusion is irresistible, that the respondent did not come to the Writ Court with clean hands. Thus, we are of the view that if there has to be a will- ful concealment of facts by the respondent, then he is not entitled for any relief under Article 226 of the Constitution of India.

It is not in dispute that the contract can be revoked at the instance of either party in accordance with Clause 2 and 45 of the agreement and only relief which can be granted on finding breach of contract, is damage for the notice period i.e. for a period of ninety days and no more.

In view of clause of termination, as provided in the agreement, the appellant - Oil Corporation has every right to terminate the contract and once the contract is terminated by invoking Clause 2 and 45 of Agreement dated 21.11.2008 (Annexure P/1), then relief of restoration of contract cannot be granted, as the same is accountable to the expressed provision of Section 14 of the Specific Relief Act, 1963.

For these reasons, we are of the view that order dated 09.12.2016 passed in Writ Petition No.9473/2014 is liable to be set aside and is hereby set aside.

Accordingly, Writ Appeal No.72/2017 is allowed. No costs.