IN THE HIGH COURT OF KERALA AT ERNAKULAM
OP.No. 22544 of 2002(H)
1. M/S.JANATHA TRADING COMPANY,
... Petitioner
Vs
1. INDIAN OIL CORPORATION LTD.,
... Respondent
2. THE DEPUTY GENERAL MANAGER (MARKETTING)
3. THE SENIOR DIVISIONAL MANAGER
For Petitioner :SRI.K.JAJU BABU
For Respondent :SRI.E.K.NANDAKUMAR
The Hon'ble MR. Justice S.SIRI JAGAN
Dated :14/01/2009
O R D E R
S. Siri Jagan, J.
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O.P. No. 22544 of 2002
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Dated this, the 14th January, 2009.
J U D G M E N T
Petitioner is a dealer of the 1st respondent-Oil Company for sale
of petroleum products manufactured by the 1st respondent
Company. By Ext. P1, the petitioner was directed to show cause why
action should not be taken against the petitioner under the dealership
agreement/Marketing Discipline Guidelines, on account of the
samples taken by the Anti Adulteration Cell from the retail outlet of
the petitioner having tested negative in quality. The petitioner filed
Ext. P2 reply to the same in which, inter alia, he requested that the
tank lorry sample and retention sample from the supply point in
respect of the product supplied to the petitioner also may be
subjected to lab test and compared with the test report of the
sample taken from the retail outlet on 19-1-2002, before taking any
further action. In the same, he also requested for a re-test of the
sample taken from the outlet. Although, by Ext. P4, re-test of the
second sample taken from the petitioner’s outlet was ordered, the
other request of the petitioner to subject the sample from the tanker
lorry and the supply point to lab test was not acceded to. Thereafter,
by Ext. P6, the dealership agreement with the petitioner was
terminated on the ground that the petitioner was found guilty of
adulteration of the petroleum products supplied to them on the basis
of the test report forwarded by the Anti-Adulteration Cell. The
petitioner is challenging Ext. P6 in this original petition and seeking
the following reliefs:
“i) Issue a writ of certiorari or other appropriate writ, order or
direction, calling for the records leading to Ext. P6 and quash the
same;
O.P. No. 22544/2002 -: 2 :-
ii) direct the respondents to restore the dealership and supply
and sales to the petitioner’s retail outlet forthwith;
iii) stay the operation of Ext. P6 and restore supply and sales to
the petitioner’s retail outlet, pending disposal of the original
petition.”
2. The contention of the petitioner is that the action against the
petitioner being under Marketing Discipline Guidelines, a copy of
which has been produced as Ext. P8, the procedure prescribed in Ext.
P8 should also be complied with before finding the petitioner guilty.
He points out that the Marketing Discipline Guidelines contemplated
testing of three samples, namely, the sample drawn from the outlet,
sample taken from the tanker lorry and the samples kept at the supply
point in respect of the particular supply to the dealer through the
tanker lorry and compare the results of all the three before a dealer
can be found guilty of adulteration. According to him, in this case,
only one sample has been tested, that was from the outlet alone.
There is no comparison of the results of the tests of the other two
samples in this case. But, he frankly admits that in so far as the
tanker lorry sample kept by him was not properly sealed, he cannot
now validly claim that the test results of the tanker lorry sample
should also be compared with now. But he submits that the
respondents were bound to compare the test results of the supply
location sample with the test result of the sample from the outlet
before the petitioner can be found guilty under the Marketing
Discipline Guidelines.
3. The prayers of the petitioner are stoutly opposed by the
learned standing counsel for the respondents with the help of a
counter affidavit and an additional counter affidavit filed in this case.
The contention of the respondents is that the action taken against the
petitioner is not under the Marketing Discipline Guidelines. The
O.P. No. 22544/2002 -: 3 :-
inspection of the petitioner’s outlet and drawing of samples were by
the Anti Adulteration Cell under the Motor Spirit and High Speed
Diesel (Regulation of Supply, Distribution and Prevention of
Malpractices) Order, 2005, which is the successor of the earlier order
of 1998. According to counsel for the respondents, the said order
does not contemplate testing of the supply location sample as
provided in the Marketing Discipline Guidelines. The Anti
Adulteration Cell team inspected the petitioner’s outlet, took samples
from the petitioner’s outlet, tested the same, found it to be negative
for quality and forwarded it to the respondents for appropriate action
under the Marketing Discipline Guidelines. Since the test result
proved that there was adulteration in the sample, Ext. P1 show cause
notice was issued and after considering the contentions of the
petitioner and taking into account the fact that earlier also, the
petitioner was found guilty of adulteration of LDS on 13-10-2001, the
dealership agreement with the petitioner was terminated. According
to learned counsel for the respondents, the procedure prescribed
under the Marketing Discipline Guidelines is not applicable to the
action initiated by the Anti Adulteration Cell under the order
mentioned above. The said order prescribes a separate procedure of
sampling and testing and the Anti Adulteration Cell is expected to
follow only that procedure and following that procedure, the test
results of the samples from the petitioner’s outlet was forwarded to
the respondents, on which action was taken. According to counsel,
once the Anti Adulteration Cell forwards the results, the respondents
are expected only to take further action on the basis of that report and
further there is no question of complying with any other procedure
prescribed under the Marketing Discipline Guidelines. He further
submits that this Court, in the decision in Pratheesh Fuels v.
O.P. No. 22544/2002 -: 4 :-
Indian Oil Corporation, 2002(1) KLJ 186 held that even principles
of natural justice have to be subservient to public interest as the well
being of citizens are the ultimate aim of the regulations. He points
out that the entire action taken by the respondents is for the purpose
of ensuring that the interests of the citizens are protected and
therefore public interest demands that for non-compliance with any
procedure under the Marketing Discipline Guidelines, if at all
applicable, which itself is disputed, the petitioner should not be
absolved of the misconduct committed by him in selling adulterated
fuel to the public.
4. Counsel for the petitioner points out that the reliance on the
2005 order itself is misplaced in so far as the sampling in this case
was on 19-1-2002 at which time what was applicable was the 1998
order, which did not even contemplate forwarding of any test report
by the Anti-Adulteration Cell to the respondents for any action under
the Marketing Discipline Guidelines and as such the contention of the
respondents that they are bound to accept the test result forwarded
by the Anti-Adulteration Cell itself cannot be accepted at all.
5. I have considered the rival contentions in detail.
6. From Ext. P2 reply of the petitioner to Ext. P1 notice, I find
that immediately on receipt of Ext. P1 show cause notice itself, the
petitioner had submitted Ext. P2, in which there was a categoric
request that the tank lorry sample and supply point samples should be
subjected to test and its report should be compared with the test
report of the outlet sample. It is not disputed before me by the
respondents that the supply location sample had not been tested and
compared with the test report forwarded by the Anti Adulteration Cell
to the respondents. It is also not disputed before me by the
respondents that in Ext. P8 Marketing Discipline Guidelines, a
O.P. No. 22544/2002 -: 5 :-
procedure of comparing the test result of the outlet sample with the
supply location sample is contemplated before action is taken under
Marketing Discipline Guidelines. If the respondents themselves had
initiated the proceedings against the petitioner under the Marketing
Discipline Guidelines, they could not have found the petitioner guilty,
unless they compared the test result of the outlet sample with the
supply location sample and found that both of them tallied.
7. Ext. R3(b) produced by the respondents is the
communication from the Anti Adulteration Cell to the respondents
which reads thus:
“This has reference to the inspection carried out at your Retail
Outlet, Janatha Trading Co., Vadakkencherry, Palghat Dist., Kerala
on 19.01.2002.
We are enclosing herewith the copies of the test reports of
MS/HSD samples drawn from the RO. HSD sample drawn failed
in distillation test. Therefore, necessary action may be taken as
per MDG-2001.
Kindly confirm action taken to DG, AAC, New Delhi with a copy to
us.”
(Underlining supplied)
Therefore, what was under contemplation by the Anti Adulteration
Cell was further proceedings as per Marketing Discipline Guidelines,
2001. In fact, Ext. P1 show cause notice was issued to the petitioner
for action as per the dealership agreement/Marketing Discipline
Guidelines.
8. In this connection, it must be noted that the supply location
sample is to be mandatorily preserved by the respondents themselves
in respect of every supply made from the supply location to the
dealers. That sampling could not have been done by the Anti
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Adulteration Cell for obvious reasons. Therefore, when the Anti
Adulteration Cell forwarded the test result of the outlet sample for
further action under the Marketing Discipline Guidelines, I am of
opinion that such action could have been completed only after
following the procedure prescribed in the Marketing Discipline
Guidelines for action by the respondents themselves, if they had
initiated action before the petitioner could have been found guilty of
any adulteration. One of the conditions mentioned in the Marketing
Discipline Guidelines, Ext. P8, admittedly, is that the supply location
sample test results have to be compared with the test result of the
outlet sample. In spite of repeated assertion by the counsel for the
respondents that in so far as the 2005 order or the 1998 order does
not contemplate such a procedure, I am unable to accept that
contention in view of the fact that the respondents could not have
taken any action against the petitioner except under the Marketing
Discipline Guidelines. In fact, in this connection, the contention of the
petitioner that what was applicable was not the 2005 order but the
1998 order, which did not even contemplate forwarding of the test
result by the Anti-Adulteration Cell to the respondents for any action,
but, only contemplated prosecution by the Anti-Adulteration Cell by
themselves, which the Anti-Adulteration Cell had not chosen to do in
this case. Therefore, admittedly, the petitioner was found guilty of
adulteration without complying with the procedure prescribed under
the Marketing Discipline Guidelines, which I have already held the
respondents should have mandatorily complied with before the
petitioner could have been found guilty. The reliance by the
respondents on the decision in Pratheesh Fuels’ case (supra) is
misplaced. The facts of that case are not at all comparable with the
facts of this case. There, the contention was that the very same
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samples were not subjected to a fresh laboratory test and the
petitioner in that case was not intimated about the results. Further,
counsel for the petitioner relies on the Supreme Court decision in
Harbanslal Sahnia & another v. Indian Oil Corporation Ltd. &
others, (2003) 2 SCC 107 to show that where there is failure of
principles of natural justice in cases of termination of dealership
which is the bread and butter of the dealer, the court should
necessarily interfere. Here is a case where the petitioner has been
found guilty without complying with the procedure prescribed by the
respondents themselves in their own Marketing Discipline Guidelines.
The very intention of prescribing comparison between the test result
of the supply location sample with that of the outlet sample is to
obviate the possibility of any manufacturing defect at the supply point
itself. Therefore, the respondents themselves had in their
contemplation a possibility of the supply itself being defective. When
they themselves contemplate ruling out such a possibility before
finding a dealer guilty of adulteration, I do not think that the
petitioner could have been found guilty without ruling out that
possibility, especially when the respondents themselves had
prescribed such elaborate procedure for finding a dealer guilty.
Further, nothing prevented the respondents from testing the supply
location sample also because all along that sample was in their
possession and nothing whatsoever prevented them from testing the
same also and comparing the result with the result forwarded by the
Anti-Adulteration Cell. In the above circumstances, in the absence of
test result of the supply location sample, I am satisfied that the
petitioner could not have been found guilty of adulteration as has
been done by Ext. P6.
In the above circumstances Ext. P6 is quashed. The
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respondents are directed to re-start the supply and sales to the
petitioner’s retail outlet within a period of one month from the date of
receipt of a copy of this judgment.
The original petition is allowed as above.
S. Siri Jagan, Judge.
Tds/