ORDER
R.L. Sudhir, Member
1. On a complaint received from one Shri Satya Priya Dixit, District Kanpur, U.P. alleging short filling and over-charging by respondent No. 1, the Director General of Investigation and Registration (DG for short), investigated the matter and found that the respondent No. 1 was manipulating the conditions of delivery/supply of petroleum products and that it was also charging prices higher than the maximum retail price. Based on the aforesaid investigation, the DG filed an application under Section 10(a)(iii) of the MRTP Act, 1969 (referred to as the MRTP Act hereafter).
2. The respondent No. 1, named above, is a dealer of respondent No. 2, namely, M/s. Indian Oil Corporation Ltd. and is engaged in the business of retail sale and distribution of petroleum products, lubricants, etc. The respondent No. 2 is a Government Company and is engaged in the business of sale and distribution of petroleum products and other accessories to the consumers through its dealers all over the country.
3. During the spot inspection carried out by the DG, it was noticed that the morning meter readings of Motor Spirit (M.S.) as per P.G. Register were 19437, 3494238 and 697095 litres whereas the meter readings of M.S, at the time of spot investigation were 20638, 3494402 and 697639 litres. During the inspection it was also found that as per meter reading, the sale of M.S. was 1929 litres and the actual stock of M.S. as per dip reading was 21812 (7978 + 13834 = 21812) whereas the opening stock of the same in the tank as per P.G. Register was shown as 24625 litres (15670 + 8955 = 24625). In other words while the sale of M.S. was 2813 litres (24625–21812 = 2813) as per dip reading, the sale of M.S. as per meter reading was 1909 litres. Thus, there was an unexplained excess of 884 litres in the stock of M.S.
4. Similarly, the morning meter reading of HSD was 5406446 litres whereas the meter reading of HSD at the time of spot investigation was 5407423 litres. As per meter reading, sale of HSD was 977 litres although sale vouchers were issued only for 429 litres. It was further noticed that the actual stock of HSp at the time of spot investigation as per dip reading was 4938 litres, whereas the opening stock of the same as per P.G. Register was 6067 litres. In other words, the sale of HSD was 1129 litres (i.e. 6067–4938 = 1129) as per dip reading. Thus, there was an excess stock of 152 litres (1129–277 = 152).
5. From the facts, given above, it has been concluded by the DG that the respondent is creating an artificial shortage of petroleum products and is manipulating the prices/supply of these goods. The manager of respondent No. 1 who was present at the time of spot investigation could not explain the discrepancy.
6. DG has alleged that the respondent No. 1 having manipulated the conditions of delivery/supply of petroleum products and also prices by charging prices higher than the maximum retail price, is guilty of restrictive trade practice within the meaning of Section 2(o) of the MRTP Act. It is further alleged that since the respondent No. 2 required to exercise proper control and supervision on the respondent No. 1 in the matter of sale and distribution of goods, it cannot be absolved from the responsibility of restrictive trade practices indulged in by the respondent No. 1.
7. A Notice of Enquiry was issued to respondent. In their replies, the respondents have denied the allegation of restrictive trade practice and have also objected to the spot inspection carried out by the DG on a gazetted holiday. The DG filed a rejoinder in which various points raised in the reply of the respondents have been answered. Based on the pleadings, the following issues were framed :
(1) Whether the respondent(s) or any of the respondents have/has indulged in the restrictive trade practice(s) as alleged in the Notice of Enquiry or the application filed by the DG ?
(2) If issue No. 2 is in affirmative, whether such practice is not prejudicial to the public interest ?
(3) Relief ?
8. The parties filed their respective affidavits of evidence. DG relied entirely on the documentary evidence and did not lead any oral evidence. The respondent, however, produced Shri Hari Shankar Aggarwal for cross-examination, which is on record. Final arguments were heard on 25th September, 2000.
9. We have heard the submissions made by the learned Counsels for the parties and have also perused the relevant record.
10. Learned Counsel for the DG, Mr. R.D. Makheeja did not press the issue relating to manipulating of prices. He, however, forcefully contended that the respondent No. 1 was guilty of manipulating the supply and distribution of petroleum products which he stated was evident from the sale figures read in conjunction with the opening and closing stocks of petrol and diesel. He also invited our attention to the Government instructions with regard to permissible variation of 4% between the meter-sale and the dip-sale.
11. Learned Counsel for the respondents, Mr. Aditya Narain stated, firstly, that the surprise inspection carried out by the DG on a gazetted holiday was uncalled for. Secondly, he also pointed out that the complainant/ informant did not appear as a witness for cross-examination. He further argued that the permissible variation of 4% related to the stock of oil which was well within that limit.
12. We do not find any substance in the argument of the respondents that the surprise inspection was uncalled for as it was carried out on a gazetted holiday. Similarly, the non-appearance of the complainant as a witness also does not vitiate the proceedings as it does not alter the facts of the case which came to light at the time of surprise inspection. Perusal of instructions relating to the permissible variation of 4% supports the contention of DG that it relates to sale and not the stock of oil. Para-2 of the Appendix attached to the guidelines dated 17.12.1985 reads as follows :
“If the above mentioned inspection shows any difference between meter-sale and dip-sale, concession will be given according to marketing discipline guideline which is given below, and if the difference remains even after concession, only then action will be taken.
A .Petrol–4 percent of actual stock on the date of inspection which is according to mathematical calibration in tank below the earth. Therefore, concession is given on 4 percent stock on the basis of experience…….
‘B. Diesel–4 percent of actual stock on the date of inspection, which is according to mathematical calibration in tank below the earth. Therefore, concession is given on the basis of experiences…..’.”
13. From the above instructions, it is abundantly clear that 4% variation relates to the difference between the meter-sale and the dip-sale. During the spot inspection, the difference between the meter-sale and the dip-sale, both in respect of petrol and diesel was found to be much more than the permissible limit of 4%. This clearly shows that the meters of the respondent No. 1 were not correctly calibrated. Hence it is a clear case of manipulation of supply and distribution of petroleum products amounting to restrictive trade practice within the meaning of Section 2(o) of the MRTP Act. This malpractice is prejudicial to public interest as it deprives the consumers of getting the right quantity of petrol/diesel for the price they pay and it also imposes unjustified costs on the consumers which is against the basic canons of free and fair competition.
14. Accordingly, we order respondent No. 1 to cease the aforesaid restrictive trade practice forthwith and desist from repeating the same in future. Since respondent No. 1 was operating under the supervision and control of respondent No. 2, it cannot be absolved of its responsibility, albeit indirect. Respondent No. 2 is, therefore, directed to be more careful in future in exercising proper control and supervision over the dealers so that the malpractices indulged in by respondent No. 1 are not repeated in future.