{"id":43364,"date":"2008-10-20T00:00:00","date_gmt":"2008-10-19T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/ms-sai-service-station-vs-indian-oil-corporation-on-20-october-2008"},"modified":"2015-06-29T07:55:50","modified_gmt":"2015-06-29T02:25:50","slug":"ms-sai-service-station-vs-indian-oil-corporation-on-20-october-2008","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/ms-sai-service-station-vs-indian-oil-corporation-on-20-october-2008","title":{"rendered":"M\/S Sai Service Station vs ) Indian Oil Corporation on 20 October, 2008"},"content":{"rendered":"
Chattisgarh High Court<\/div>\n
M\/S Sai Service Station vs ) Indian Oil Corporation on 20 October, 2008<\/div>\n
       \n\n  \n\n  \n\n \n \n                   HIGH COURT OF CHATTISGARH AT BILASPUR    \n\n\n                     Writ Petition C No 4528 of 2008\n\n\n\n\n\n                       M\/s  Sai  Service  Station\n                                               ...Petitioners\n\n\n                         Versus\n\n\n                  1)  Indian  Oil Corporation\n\n                   2)  Indian     Oil     Corporation\n\n                   3)  Sri  Satish Kumar Singh\n                                            ...Respondents<\/pre>\n
!               Mr. Kanak Tiwari, Sr. Advocate with  Mr. Mateen Siddiqui
\n                Advocate for the petitioner<\/p>\n
^               Mr. Sanjay K. Agrawal, Advocate with Shri Sudeep Agrawal
\n                Advocate for the respondents No. 1 and 2<\/span><\/p>\n
               Honble Mr.  Satish K. Agnihotri, J<\/p>\n
               Dated: 20\/10\/2008<\/p>\n
:               Judgement<\/p>\n
 (Writ Petition under Article 226 of the Constitution of<\/p>\n
                         India)<\/p>\n
                    JUDGMENT  & ORDER<\/p>\n
  (Passed on   this     20th   day of  October ,  2008)<\/p>\n
      Challenge  in  this petition is to the  memo\/order<\/p>\n
dated  11-7-2008  (Annexure  P\/1),  whereby  the   sales<\/p>\n
officer of the respondent Corporation  has suspended the<\/p>\n
sale  and  supply  of  the  retail  outlet  (hereinafter<\/p>\n
referred  to  as  “RO”)  of  the  petitioner’s   service<\/p>\n
station.\n<\/p>\n
2)    The indisputable facts, in brief, as projected  by<\/p>\n
the   petitioners   are  that   the  petitioner   is   a<\/p>\n
proprietary  concern and the petitioner was appointed as<\/p>\n
a dealer of the respondent corporation, a public  sector<\/p>\n
oil  company registered under the Indian Companies  Act,<\/p>\n
1956    (for  short  “the  Corporation”),  pursuant   to<\/p>\n
Petrol\/HSD   Pump  Dealer  Agreement  (for  short,  “the<\/p>\n
agreement”)  dated 25-3-2004 (Annexure P\/2).     On  the<\/p>\n
evening  of  9-8-2007 (sic) “9-7-2008” some officers  of<\/p>\n
the   Anti   Adulteration  Cell\/respondent   Corporation<\/p>\n
visited  the  petrol  pump for inspection.    Inspection<\/p>\n
could   not  be  carried  out  on  account  of   certain<\/p>\n
disturbance  created  by some of the persons,  according<\/p>\n
to the petitioner, outsiders.  On 11-7-2008 the site was<\/p>\n
again   visited   by  the  officers  and  the   impugned<\/p>\n
letter\/order  was handed over to the petitioner  stating<\/p>\n
that during  inspection on 9-7-2008  one  unknown person<\/p>\n
entered  into  office  and started  threatening\/creating<\/p>\n
hindrance   in inspection and forcing all IOC   official<\/p>\n
(the  respondent  Corporation)  to vacate  RO  premises.<\/p>\n
It  was further observed that  “he with the help of some<\/p>\n
other  people  have  taken  our  marker  colour,  filled<\/p>\n
sample  box and all paper.  Your support was not as  per<\/p>\n
expectation.”    Thereafter, it was  directed  “all  the<\/p>\n
matter is under investigation.  As per instruction given<\/p>\n
by  MPSO\/RPDO,  your sale and supply is  suspended  with  <\/p>\n
immediate  effect”,    and  thereafter   proceeded  with<\/p>\n
inspection  and  collected  various  samples  from   the<\/p>\n
petitioner’s petrol pump.    The corporation  has issued<\/p>\n
a  show cause notice on 17-7-2008 (Annexure R\/2) without<\/p>\n
any reference to the  order passed on 11-7-2008.   Thus,<\/p>\n
this petition.\n<\/p>\n<\/p>\n
3)    Mr. Kanak Tiwari, learned Senior counsel with  Mr.<\/p>\n
Mateen  Siddiqui,  learned  counsel  appearing  for  the<\/p>\n
petitioner  would  submit that on 10-7-2008 a  complaint<\/p>\n
(Annexure  P\/5)  was  made  by  the  petitioner  against<\/p>\n
unknown  persons  an on the same day  First  Information<\/p>\n
Report  was lodged against brother of the petitioner and<\/p>\n
his  staff  and the investigation is under progress   in<\/p>\n
Crime  No.  306\/2008.  Mr. Tiwari would  further  submit<\/p>\n
that  the   Corporation  has made and  issued  Marketing<\/p>\n
Discipline  Guidelines, 2005 (for  short,  “Guidelines”)<\/p>\n
with  effect   from  1-8-2005.   No source  of  law  has<\/p>\n
either  been  referred to or quoted in  the  guidelines.<\/p>\n
The  allotment of the dealer-ship  to the petitioner  is<\/p>\n
in accordance with the provisions of the agreement.<\/p>\n
4)   Clause 43 of the Agreement reads as under:<\/p>\n
          “43.  The  dealer undertakes  faithfully
\n          and  promptly to carry out, observe  and
\n          perform all directions or rules given or
\n          made   from   time  to   time   by   the
\n          Corporation for the purpose carrying  on
\n          of  the  dealership of the  Corporation.
\n          The  Dealer shall scrupulously   observe
\n          and   comply   with  all  laws,   rules,
\n          regulations  and  requisitions   of  the
\n          Central\/State  Governments  and  of  all
\n          authorities  appointed by them or either
\n          of  them  including  in  particular  the
\n          Chief     Inspector    of    Explosives,
\n          Government  of  India, and\/or  Municipal
\n          and\/or  any  other local authority  with
\n          regard  to the storage and sale of  such
\n          petroleum products.”<\/p><\/blockquote>\n
     Thus,  the guidelines have not been made a part  of<\/p>\n
the agreement.\n<\/p>\n
5)     Mr.   Tiwari  would  further  contend  that   the<\/p>\n
obligation  of  the  petitioner  as  contained  in   the<\/p>\n
agreement   and the malpractices defined in the  Control<\/p>\n
Order  2005  and the licensing conditions of  the  State<\/p>\n
Order alone would bind the conduct of the petitioner  as<\/p>\n
a dealer.  The Corporation  has not initiated any action<\/p>\n
or  imposed penalty of suspension of  sale and supply of<\/p>\n
all  products   under the provisions of  the  agreement.<\/p>\n
Thus, any action taken under the guidelines is based  on<\/p>\n
extraneous consideration and fully without jurisdiction.<\/p>\n
In  the  impugned letter\/order dated 11-7-2008 (Annexure<\/p>\n
P\/1),  the reason for  placing the sale and supply under<\/p>\n
suspension was hindrance created  by outsiders and  lack<\/p>\n
of  support  as  per  expectation from  the  proprietor.<\/p>\n
Subsequent   notice   dated   17-7-2008,   whereby   the<\/p>\n
petitioner   has  been asked to submit  his  explanation<\/p>\n
within a period of seven days was not in continuation of<\/p>\n
the  impugned memo\/order dated 11-7-2008 and it  appears <\/p>\n
that  the suspension of sale and supply of all products,<\/p>\n
pursuant to the memo dated 11-7-2008 has nothing  to  do<\/p>\n
with  the notice dated 17-7-2008.  It was next contended<\/p>\n
that  under  the  guidelines, if the dealer  refuses  to<\/p>\n
allow  drawal of sample and\/or carrying out  inspection,<\/p>\n
a  fine  of Rs.50000\/- and suspension of the   sale  and<\/p>\n
supply of all products for a  maximum period of  45 days<\/p>\n
may  be  imposed on the first time.  Thereafter,  second<\/p>\n
time   if  such  irregularity  recurs,  fine  would   be<\/p>\n
increased  to Rs.1,00,000\/- and suspension of  sale  and<\/p>\n
supply  of all productions for a maximum  period  of  90<\/p>\n
days.    If the irregularity is repeated  on third time,<\/p>\n
agreement  may be terminated.   Penalty provision  No.17<\/p>\n
deals  with established cases of discourteous  behaviour<\/p>\n
by dealers and\/or his staff, non producing of complaints<\/p>\n
register wherein  a fine of Rs.10,000\/- first time   and<\/p>\n
recurrence  of the same irregularity   second  time,   a<\/p>\n
fine of Rs.25,000\/- and recurrence of the same  in third<\/p>\n
time,  a  fine  of Rs.50,000\/- and  on fourth  occasion,<\/p>\n
terminating  the  sale and supply of  all  products  are<\/p>\n
contemplated.    The  suspension order  dated  11-7-2008<\/p>\n
makes  it   clear that the petitioner was punished  with<\/p>\n
suspension of sale and supply of all products on account<\/p>\n
of  misbehaviour and  lack of expected support from  the<\/p>\n
dealer,  in  that event,   at the most sale  and  supply<\/p>\n
could have been suspended with fine for a maximum period <\/p>\n
of   45 days.  The suspension order  came into effect on<\/p>\n
11-7-2008 and the period of 45 days has expired on 25-8-<\/p>\n
2008.    Continuation  of  suspension,  thereafter,   is<\/p>\n
without jurisdiction and without any legal basis.<\/p>\n
6)    It  was  contended that under  Clause  56  of  the<\/p>\n
agreement  due  protection is provided  to  RO  that  if<\/p>\n
dealer commits breach of any covenants stipulated in the<\/p>\n
agreement  and failed to remedy  such  beach within four<\/p>\n
days  from the date of receipt of a written notice  from<\/p>\n
the   corporation,  in  that  event  certain   penalties<\/p>\n
including  termination  of the agreement  would  follow.<\/p>\n
There  is no provision for suspension of sale and supply<\/p>\n
to  RO.   Mr.  Tiwari  would further  contend  that  the<\/p>\n
dispute  referred herein does not arise  out  of  or  in<\/p>\n
relation  to  the  agreement.  Thus, Clause  67  of  the<\/p>\n
agreement cannot be invoked.\n<\/p>\n<\/p>\n
7)    Reliance  is  placed on decisions of  the  Hon’ble<\/p>\n
Supreme  Court  in the matter of Harbanslal  Sahnia  and<\/p>\n
another  Vs.  Indian Oil Corporation and  others  1  and<\/p>\n
State of  Himachal Pradesh Vs. Gujrat Ambuja Cement 2 . <\/p>\n
8)    Pursuant to the show cause notice dated  17-7-2008<\/p>\n
(Annexure R\/2), the petitioner has filed reply on  27-7-<\/p>\n
2008  (Annexure  R\/3) and as such, the  Corporation  has<\/p>\n
full jurisdiction to consider reply and pass appropriate<\/p>\n
order  as  permissible  under  the  provisions  of   the<\/p>\n
agreement.  It is apparent from para  No. 6.3.5  of  the<\/p>\n
guidelines  that   two  conditions  must  be   satisfied<\/p>\n
before   penal  action  is  taken  against  the  dealer.<\/p>\n
Firstly, show cause notice and secondly  minimum time of<\/p>\n
seven  days  to submit explanation.   Neither  has  been<\/p>\n
done  in the present case before the impugned memo\/order <\/p>\n
was  issued  on  11-7-2008 (Annexure  P\/1).   Thus,  the<\/p>\n
impugned memo\/order deserves to be quashed.   <\/p>\n
9)     Per   contra,  Mr.  Sanjay  K.  Agrawal,  learned<\/p>\n
counsel  with   Mr.  Sandeep  Agrawal,  learned  counsel<\/p>\n
appearing  for the respondents No. 1 and 2 would  submit<\/p>\n
that  the writ petition would not be maintainable  as  a<\/p>\n
show  cause  notice  was issued on 17-7-2008  and  reply<\/p>\n
filed  thereto  is  pending  consideration  before   the<\/p>\n
Corporation.   The  petitioner  has not  challenged  the<\/p>\n
legality and validity of the show cause notice dated 17-<\/p>\n
7-2008,  except   impugned memo\/order  dated  11-7-2008. <\/p>\n
Further  it  was  contended  that   Clause  67  of   the<\/p>\n
dealership   agreement  provides for  reference  to  the<\/p>\n
arbitration in the event of any dispute or difference of<\/p>\n
any   nature   whatsoever  or   regarding   any   right,<\/p>\n
liability,  act,  omission on  account  of  any  of  the<\/p>\n
parties  arising  out  of or in  relation  to  the  said<\/p>\n
agreement.  The dispute  arose on account of  the  order<\/p>\n
passed by the Corporation  and grant of dealership was a<\/p>\n
part of the agreement  and as such, the dispute ought to<\/p>\n
have been referred to the   Arbitration.  This court may<\/p>\n
not  exercise  its  extraordinary jurisdiction  in  this<\/p>\n
case.   Mr.  Agrawal,  would further  contend  that  the<\/p>\n
guidelines  for  Petrol and diesel retail  outlets  have<\/p>\n
been  in  existence  for  long time  to  facilitate  the<\/p>\n
marketing  of petroleum products.  There is a  provision<\/p>\n
for taking punitive action against the dealer on account<\/p>\n
of  irregularities  committed by  the  dealer.    Clause<\/p>\n
6.1.1.  provides  for adulteration of products.   Clause<\/p>\n
6.1.1  (a)  provides that authorized representatives  of<\/p>\n
the  oil  company should carry out density  check\/marker<\/p>\n
check  at  the RO as per prescribed guidelines.   Clause<\/p>\n
6.1.1 (b) provides that if density check or marker check<\/p>\n
indicates a possible adulteration, sale and supplies  of<\/p>\n
all  the  products  would  be suspended  with  immediate<\/p>\n
effect  till  such  investigations  are  complete.   The<\/p>\n
impugned   memo\/order   dated   11-7-2008   was   issued<\/p>\n
following  investigations relating to show cause  notice<\/p>\n
dated  17-7-2008 and thereafter reply of the  petitioner<\/p>\n
was filed on 29-7-2008.  The same is under consideration<\/p>\n
before  the  Corporation.   Thus,  at  this  stage,   no<\/p>\n
interference  is warranted.  The instant  dispute  falls<\/p>\n
within  the realm of private law as contract was entered<\/p>\n
into  between  the  Corporation and   a  private  party.<\/p>\n
Thus,  it  is not a statutory contract and the  same  is<\/p>\n
governed by the Contract Act or Sales of Goods Act.  Mr.<\/p>\n
Agrawal would next contend that the guidelines have been<\/p>\n
issued  and approved by the Central Government  and  the<\/p>\n
same  have been  amended on 15-1-2007  by Annexure B  to   <\/p>\n
the  guidelines.  Thus, the provisions of the guidelines<\/p>\n
are binding on the petitioner (RO) and the Corporation.<\/p>\n
10)   I  have  heard  learned counsel for  the  parties,<\/p>\n
perused the pleadings and documents appended thereto.  <\/p>\n
11)   It is evident that pursuant to the agreement dated<\/p>\n
25-3-2004  (Annexure P\/2)  dealership was  allotted   to<\/p>\n
the petitioner (RO).  On 9-7-2008 a team of officers  of<\/p>\n
the   Anti   Adulteration  Cell\/respondent   Corporation<\/p>\n
visited   the   petrol  pump  of  the   petitioner   for<\/p>\n
inspection.   During  inspection on account  of  certain<\/p>\n
interferences   caused\/hindrances   created    by    the<\/p>\n
consumers   and   other persons, the representatives  of<\/p>\n
the  Corporation  could  not  collect  the  samples  and<\/p>\n
certain   articles   were   snatched   away   from   the<\/p>\n
representatives  of  the Corporation.   The  Corporation<\/p>\n
issued a memo\/order dated 11-7-2008 suspending sale  and  <\/p>\n
supply  of  all  products to the  petitioner  RO  on   a<\/p>\n
specific ground that excepted cooperation  did not  come<\/p>\n
forward from the dealer and  hindrances created  by  the<\/p>\n
persons.   It  was mentioned that the matter  was  under<\/p>\n
investigation.  It is apparent that  sale and supply was<\/p>\n
not  on account of possible adulteration, but on account<\/p>\n
of   non-co-operation  of  the   dealer  and  hindrances<\/p>\n
created  by other persons.  The representatives  of  the<\/p>\n
Corporation performed their inspection on 11-7-2008  and<\/p>\n
subsequent thereupon issued show cause notice  on  11-7- <\/p>\n
2008  calling  upon  the dealer to  submit  explanation.<\/p>\n
Thereafter,  explanation\/reply  was  submitted  by   the<\/p>\n
dealer RO which is under consideration.<\/p>\n
12)  Without going into the merits of the case which  is<\/p>\n
under consideration by  the Corporation as the same  may<\/p>\n
prejudice    case   of  the  parties,   I   confine   my<\/p>\n
consideration only to the  impugned memo\/order dated 11-<\/p>\n
7-2008.  There is no reference of  the memo\/order  dated<\/p>\n
11-7-2008  in  the   show cause notice dated  17-7-2008.<\/p>\n
Thus,  it can safely be held that the notice dated 17-7-<\/p>\n
2008 was issued, pursuant to the inspection carried  out<\/p>\n
on  11-7-2008.   The impugned memo\/order dated 11-7-2008  <\/p>\n
was  on  account of hindrances created by other  persons<\/p>\n
and for want of expected support from the dealer.<\/p>\n
13)   It is further admitted that agreement provides for<\/p>\n
disputes arising out of or in relation to the agreement.<\/p>\n
There  is  no provision in t he agreement for suspension<\/p>\n
of  sale  and  supply of all  products.   However,   the<\/p>\n
guidelines  provide for prevention of irregularities  at<\/p>\n
Retail Outlets in Chapter -6.  Clause 6.1.1 Adulteration<\/p>\n
of Product reads as under:\n<\/p>\n
   “6.1.1  Adulteration of Product:\n<\/p>\n
   Definition:\n<\/p>\n
   “Adulteration”  means the  introduction  of  any
\n   foreign  substance into Motor Spirit\/High  Speed
\n   Diesel  illegally  or  unauthorizedly  with  the
\n   result that the product does not conform to  the
\n   requirements  of  Bureau  of  Indian   Standards
\n   specification number IS: 2796 and IS:  1460  for
\n   Motor    Spirit    and   High   Speed    diesel,
\n   respectively, and amendments thereon, and\/or.<\/p>\n
   Under  the  3  –  tier sampling scheme,  if  the
\n   observations  on the sample under  scrutiny  and
\n   the  reference  sample do not  fall  within  the
\n   reproducibility\/permissible limits of  the  test
\n   method  for  which  the  samples  are  examined,
\n   and\/or.\n<\/p>\n
   Any   other  requirement  for  the  purpose   to
\n   identify  adulteration, issued by the  Competent
\n   Authority from time to time.\n<\/p>\n
   Penal  action  to  be taken against  the  erring
\n   Retail     Outlet\/SKO-LDO    dealerships     for
\n   adulteration              and              other
\n   malpractices\/irregularities   are    given    in
\n   Appendix-I.\n<\/p>\n
   a.   Individual Oil Company Officers or their authorized
\n   representatives should carry out density checks and
\n   marker\/furfural checks (wherever applicable) at the
\n   Retail Outlets as per the prescribed guidelines.
\n   Moreover, on random basis, at the discretion of the
\n   Inspecting Officer, samples may be drawn for clinical
\n   tests\/RON, even if the density variation is within
\n   permissible limits.\n<\/p>\n
   b.   If density check or Marker\/furfural check (wherever
\n   applicable) indicates possible adulteration:
\n   Sale  and supply of all products to be suspended
\n   immediately  till  such time investigations  are
\n   completed.   Meter  and dip readings  should  be
\n   recorded  in  the Inspection Report duly  signed
\n   by  the  Dealer  or his representative  together
\n   with  rubber stamp of dealership and  each  page
\n   of  the inspection report shall be initialed  by
\n   Inspecting     officer    and    Dealer\/Dealer’s
\n   representative.   Dispending  Pumps  and   Tanks
\n   should be sealed.\n<\/p>\n
          Wherever   samples  are   drawn,   either
\n   pursuant  to random checks or where adulteration
\n   is  suspected, samples should be collected  from
\n   each  tank  at the RO and got tested as  per  3-
\n   tier sampling system  (explained in Chapter-2).
\n   c.   If the sample passes the lab test, sale and supply
\n   of all products, if suspended earlier,  will be resumed
\n   to the dealer immediately.\n<\/p>\n
   If  the  sample is certified to be  adulterated,
\n   after   laboratory  test,  a  show-cause  notice
\n   should  be  served on the dealer and explanation
\n   of  the  dealer  sought within  7  days  of  the
\n   receipt  of  the  show-cause  notice.   If   the
\n   explanation  of dealer is not satisfactory,  the
\n   Company  should take penal action  as  given  in
\n   Appendix -1.”\n<\/p>\n
14)   Appendix-1  to the guidelines provides  for  penal<\/p>\n
action.  Serial Numbers 12, 14, 15, 16, 17, 18,  19  and<\/p>\n
20 deals with suspension of sale an supply which read as<\/p>\n
under:\n<\/p>\n
Sl. Nature         of             MDG 2005\n    irregularity       1st        Penal          3rd\n                                  Action\n                                        2nd\n\n12  Non   maintenance  Fine    of Fine     of Terminatio\n    of                 Rs.25,000  Rs.50,000   n\n    inspection\/stock\/  &          &\n<\/pre>\n
    sales records and  suspension suspension
\n    other records      of    sale of     sale
\n                       and supply and  supply
\n                       of     all of      all
\n                       products   products
\n                       for     15 for      30
\n                       days       days\n<\/p>\n
14. Over charging  of  Fine    of Fine     of Terminatio
\n    MS\/HSD             Rs.25000 & Rs.50,000   n
\n                       suspension &
\n                       of    sale suspension
\n                       and supply of     sale
\n                       of     all and  supply
\n                       products   of      all
\n                       for     15 products
\n                       days       for      30
\n                                  days
\n15  Non-observance of  Fine    of Fine     of Terminatio
\n    Govt. regulations  Rs.25,000  Rs.50,000   n.\n<\/p>\n
                       &          &\n                       suspension suspension\n                       of    sale of     sale\n                       and supply and  supply\n                       of     all of      all\n                       products   products\n                       for     15 for      30\n                       days.      days.\n16  Refusal by dealer  Fine    of Fine     of Terminatio\n<\/pre>\n
    to  allow  drawal  Rs.50000 & Rs.1,00,00  n
\n    of  sample and\/or  suspension 0         &
\n    carrying  out  of  of    sale suspension
\n    inspection         and supply of     sale
\n                       of     all and  supply
\n                       products   of      all
\n                       for     45 products
\n                       days.      for      90
\n                                  days.\n<\/p>\n
17. Established cases  Fine    of Fine     of Fine    of
\n    of   discourteous  Rs.10,000\/-Rs.25,000\/- Rs.50,000\/-\n<\/p>\n
    behaviour      by                         -\n    dealers    and\/or                         Terminatio\n    his  staff,  non-                         n  in case\n    producing      of                         of     4th\n    complaints                                instance.\n    register\n18. Non-provision  of  Fine    of Fine     of Fine    of\n<\/pre>\n
    free   Air   with  Rs.10,000  Rs.25,000   Rs.1,00,00
\n    caliberated   Air                         0        &
\n    Guage,   Drinking                         suspension
\n    water,   Radiator                         of    sale
\n    Water,      Clean                         and supply
\n    Toilet                                    of     all
\n    Facilities,                               products
\n    telephone,  First                         for     45
\n    Aid    box   with                         days   for
\n    current                                   3rd      &
\n    medicines,    PUC                         subsequent
\n    (where                                    instances.\n<\/p>\n
    applicable)\n<\/p>\n
19. Established cases  Fine    of Fine     of Fine    of
\n    of   issuance  of  Rs.25,000  Rs.50,000   Rs.1,00,00
\n    fake          PUC  &          &           0\/-      &
\n    Certificates   by  suspension suspension  suspension
\n    dealers    having  of    sale of     sale of    sale
\n    PUC facility       and supply and  supply and supply
\n                       of     all of      all of     all
\n                       products   products    products
\n                       for     15 for      45 for     45
\n                       days.      days        days   for
\n                                              3rd      &
\n                                              subsequent
\n                                              instances\n<\/p>\n
20. Non  Display   of  Fine    of Fine     of Fine    of
\n    authorized Retail  Rs.10,000  Rs.25,000   Rs.50,000\/-\n<\/p>\n
    selling price  of                         &\n    MS\/HSD                                    suspension\n                                              of    sale\n                                              and supply\n                                              of     all\n                                              products\n                                              for     15\n                                              days   for\n                                              3rd      &\n                                              subsequent\n                                              instances\"\n\n\n\n\n15)        On  perusal  of the above provisions  of  the\n\n<\/pre>\n
suspension, it is apparent that this is not  a  case  of<\/p>\n
non-maintenance  of Inspection\/Stock\/Sales  Records  and <\/p>\n
other  records  or  over  charging  of  MS\/HSD  or  non-<\/p>\n
observance  of  Government regulations  or non-provision<\/p>\n
of  free  Air  with caliberated Air Guage or established<\/p>\n
cases  of  issuance of fake PUC certificates by  dealers<\/p>\n
having PUC facility and non display of authorized retail<\/p>\n
selling  price  of MS\/HSD.    The present dispute  which<\/p>\n
arose on 9-7-2008 comes within penalty provisions. 16 an<\/p>\n
17  i.e.,  refusal by dealer to allow drawal  of  sample<\/p>\n
and\/or  carrying  out  of  inspection  and   established<\/p>\n
cases  of  discourteous behaviour by dealers and\/or  his<\/p>\n
staff  and  non-producing of complaints  register.    In<\/p>\n
case  of penalty No.16 penal action  provided for having<\/p>\n
committed the irregularity  as prescribed  is imposition<\/p>\n
of   fine of Rs.50,000 and suspension of sale and supply<\/p>\n
of  all  products for 45 days.  If the same is  repeated<\/p>\n
second  time,  fine of Rs.1,00,000\/- and  suspension  of<\/p>\n
sale  and  supply of all the products for 90, days.   If<\/p>\n
the   irregularity is repeated on third time,  agreement<\/p>\n
may   lead  to termination.    The Corporation  has  not<\/p>\n
imposed  a  fine of Rs.50,000\/-, but has  suspended  the<\/p>\n
sale   an  supply  of  all  the  products.   Thus,  even<\/p>\n
otherwise,  since the period of 45 days has come  to  an<\/p>\n
end, the suspension may not continue  but the inspection<\/p>\n
on the ground of adulteration  or investigation on other<\/p>\n
ground is not the reason for passing the order dated  11-<\/p>\n
7-2008 as is clear from perusal of the memo\/order  dated<\/p>\n
11-7-2008.\n<\/p>\n<\/p>\n
16)   With  regard to the maintainability  of  the  writ<\/p>\n
petition, admittedly, the petitioner is not granted four<\/p>\n
days  time to make good the default as prescribed  under<\/p>\n
the   Clause  56  of  the  agreement.   Therefore,   the<\/p>\n
provision of the  agreement was not invoked and as  such<\/p>\n
the dispute has not arisen out of or in relation to  the<\/p>\n
agreement,  which  may be referred  to  the  Arbitrator.<\/p>\n
This  Court  may exercise its discretionary jurisdiction<\/p>\n
under  Article 226 of the Constitution, particularly  in<\/p>\n
case  of  discrimination,   arbitrariness and  violation<\/p>\n
of  principles  of  natural justice,  which  amounts  to<\/p>\n
violation  of Article 14 of the Constitution  and   look<\/p>\n
into the matter and take judicial review of the dispute.<\/p>\n
17)   Strictly  speaking,  it cannot be  held  that  the<\/p>\n
dispute falls within the realm of private law,  as   the<\/p>\n
Corporation  is a public sector undertaking   registered<\/p>\n
under  the  Companies Act, 1956  deals  with  public  at<\/p>\n
large , it does not come within the realm of public law.<\/p>\n
Thus,  this Court has full jurisdiction to take judicial<\/p>\n
review  of any omission or commission of the authorities<\/p>\n
of the Corporation.\n<\/p>\n<\/p>\n
18)  In the matter of Mahabir Auto Stores and others Vs.<\/p>\n
Indian  Oil  Corporation  and  others3,  wherein   Their<\/p>\n
Lordships  of  the  Supreme  Court  have  settled  legal<\/p>\n
position with regard to status of Indian Oil Corporation<\/p>\n
that  the   Indian  Oil  Corporation  is  an  organ   or<\/p>\n
instrumentality   of  the State  as  contemplated  under<\/p>\n
Article 12 of the Constitution.\n<\/p>\n<\/p>\n
19)   In  the matter of  Harbanslal Sahnia  and  another<\/p>\n
(supra),  the  facts  were  identical.   There  was   an<\/p>\n
agreement  between the Indian Oil Corporation   and  the<\/p>\n
dealer,  whereby  the  appellants  were   appointed   as<\/p>\n
dealers  in Petroleum Products.  On 15-12-1999  officers<\/p>\n
of  the  Corporation  visited RO of the  appellants  for<\/p>\n
inspection of the dealership.  The Corporation issued  a<\/p>\n
show   cause   notice  thereafter  and   requiring   the<\/p>\n
appellants  to  explain  why  density  record  was   not<\/p>\n
maintained.  Secondly, the dealer did not cooperate with<\/p>\n
the  officers who had come to inspect the retail  outlet<\/p>\n
and  rather used unparliamentary language and  displayed<\/p>\n
discourteous behaviour.  Hon’ble the Supreme Court  held<\/p>\n
that  the cancellation was founded solely on the failure<\/p>\n
of    the   dealer’s   sample.    Non-cooperation    and<\/p>\n
discourteous behaviour of the dealer  has been held in a<\/p>\n
very  general way without specifying what was  the  non-<\/p>\n
cooperation  and what was the discourtesy shown  to  the<\/p>\n
officers of the Indian Oil Corporation.<\/p>\n
20)  Hon’ble the Supreme Court in  the matter Harbanslal<\/p>\n
Sahnia  and another (supra), observed as under:<\/p>\n
        “7.  So far as the view taken by the  High
\n        Court  that the remedy by way of  recourse
\n        to  arbitration  clause was  available  to
\n        the  appellants  and  therefore  the  writ
\n        petition  filed  by  the  appellants   was
\n        liable   to  be  dismissed  is  concerned,
\n        suffice  it  to observe that the  rule  of
\n        exclusion   of   writ   jurisdiction    by
\n        availability of an alternative  remedy  is
\n        a  rule  of  discretion  and  not  one  of
\n        compulsion.   In an appropriate  case,  in
\n        spite  of  availability of the alternative
\n        remedy,  the High Court may still exercise
\n        its  writ  jurisdiction in at least  three
\n        contingencies:   (i)   where   the    writ
\n        petition seeks enforcement of any  of  the
\n        fundamental rights;  (ii) where  there  is
\n        failure  of principles of natural justice;
\n        or  (iii)  where the orders or proceedings
\n        are  wholly  without jurisdiction  or  the
\n        vires   of  an  Act  is  challenged   (See
\n        Whirlpool  Corpn  v.  Registrar  of  Trade
\n        Marks<\/a>   1).   The  present  case  attracts
\n        applicability    of    the    first    two
\n        contingencies.  Moreover,  as  noted,  the
\n        petitioners’  dealership, which  is  their
\n        bread  and  butter, came to be  terminated
\n        for  an irrelevant and non-existent cause.
\n        In  such  circumstances, we feel that  the
\n        appellants   should  have   been   allowed
\n        relief  by  the High Court itself  instead
\n        of  driving them to the need of initiating
\n        arbitration proceedings.”\n<\/p><\/blockquote>\n
21)  In the matter of State of H.P.  and others (supra),<\/p>\n
in  respect of power relating to alternative remedy,  it<\/p>\n
was  held  that alternative remedy is a   rule of  self-<\/p>\n
imposed  limitation, a rule of policy,  convenience  and<\/p>\n
discretion and never a rule of law.\n<\/p>\n<\/p>\n
22)   Reliance of Mr. Sanjay K. Agrawal  on the decision<\/p>\n
in  the matter of Special Director and another Vs. Mohd.<\/p>\n
Ghulam Ghouse and another4      is not relevant as there<\/p>\n
is no challenge to the legality of the show cause notice<\/p>\n
dated  17-7-2008 and the court is not dealing  with  the<\/p>\n
legality of the show cause notice.\n<\/p>\n<\/p>\n
23)   The decision in the matter  Smt. Rukmanibai  Gupta<\/p>\n
Vs.  Collector, Jabalpur and others 5 relied upon by the<\/p>\n
counsel  for the respondent  Corporation is not relevant<\/p>\n
as   the   High   Court  exercising  its   discretionary<\/p>\n
jurisdiction declined to entertain the writ petition  on<\/p>\n
the  ground  of  availability of alternative  remedy  of<\/p>\n
referring the dispute to the Arbitration.  In  the  case<\/p>\n
on  hand,  the dispute did not arise from the provisions<\/p>\n
of the agreement.\n<\/p>\n<\/p>\n
24)   Hon’ble the Supreme Court in the matter of  Empire<\/p>\n
Jute  Co.  Ltd. & others Vs. Jute Corporation  of  India<\/p>\n
Ltd. & another 6   observed as under:\n<\/p>\n
        “21.   Relying  on  some  of  the  earlier
\n        decisions of this Court, this Court held:
\n        “It  may be true that in a given case when
\n        an  action  of  the party  is  dehors  the
\n        terms  and  conditions  contained  in   an
\n        agreement  as  also beyond the  scope  and
\n        ambit   of  the  domestic  forum   created
\n        therefore, the writ petition may  be  held
\n        to   be   maintainable;  but  indisputably
\n        therefore such a case has to be made  out.
\n        It  may  also be true, as has been held by
\n        this  Court  in Amritstar Gas Service  and
\n        E.  Ventkatakrishna  that  the  arbitrator
\n        may  not  have  the requisite jurisdiction
\n        to  direct  restoration of distributorship
\n        having  regard to the provisions contained
\n        in  Section 14 of the Specific Relief Act,
\n        1963;   but  while  entertaining  a   writ
\n        petition  eve  in such a case,  the  court
\n        may  not lose sight of the fact that if  a
\n        serious  disputed  question  of  fact   is
\n        involved  arising out of  a  contract  qua
\n        contract,   ordinarily  a  writ   petition
\n        would   not   be  entertained.    A   writ
\n        petition,  however,  will  be  entertained
\n        when  it  involves a public law  character
\n        or  involves  a  question arising  out  of
\n        public  law functions on the part  of  the
\n        respondent.”\n<\/p><\/blockquote>\n
25)   In  the  matter  of Agri Gold Exims  Ltd  Vs.  Sri<\/p>\n
Lakshmi Knits & Wovens and others7, relied upon  by  Mr.<\/p>\n
Sanjay  K.  Agrawal, the Hon’ble Supreme Court  observed<\/p>\n
as under:\n<\/p>\n
        “22.   Section  8  of  the  1996  Act   is
\n        peremptory  in nature.  In  a  case  where
\n        there  exists  an  arbitration  agreement,
\n        the  court  is under obligation  to  refer
\n        the  parties  to arbitration in  terms  of
\n        the     arbitration    agreement.     (See
\n        Hindustan   Petroleum   Corpn.   Ltd.   V.\n<\/p><\/blockquote>\n
        Pinkcity    Midway    Petroleums2      and
\n        Rashtriya  Ispat Nigam Ltd3).   No  issue,
\n        therefore,  would remain to be decided  in
\n        a    suit.    Existence   of   arbitration
\n        agreement  is  not  disputed.   The   High
\n        Court,  therefore,  in  our  opinion,  was
\n        right  in  referring the  dispute  between
\n        the parties to arbitration.”\n<\/p><\/blockquote>\n
26)   The  decision  of Bharat Sews  Sansthan  vs.  U.P.<\/p>\n
Electronics Corporation Limited8,<\/a>   relied upon by   Mr.<\/p>\n
Agrawal, may not be relevant to the facts of the present<\/p>\n
case  as no dispute has arisen out of or in relation  to<\/p>\n
the provisions of the agreement.\n<\/p>\n<\/p>\n
27)    In  the  matter  of  Pimpri  Chinchwad  Municipal<\/p>\n
Corporation  and  others Vs.  M\/s. Gayatri  Construction<\/p>\n
Company and another9,   relied upon by Mr. Agrawal,  the<\/p>\n
Hon’ble  Supreme Court observed that in case of question<\/p>\n
of  construction  of contract,  if a term of contract is<\/p>\n
violated, ordinarily the remedy is not the writ petition<\/p>\n
under Article 226 if the contract falls in  realm of the<\/p>\n
private  law.   The  decision is not applicable  to  the<\/p>\n
facts  of the present case as the Hon’ble Supreme  Court<\/p>\n
held  (supra)  that Indian Oil Corporation  is  a  state<\/p>\n
within  Article 12 of the Constitution.<\/p>\n
28)   A  common  thread  running into  the  above  cited<\/p>\n
decision  is that in case of arbitration agreement,  the<\/p>\n
writ  court  should  not exercise its jurisdiction  when<\/p>\n
there is a clear provision for reference of a dispute to<\/p>\n
the  arbitrator.  Secondly, in the contract  which falls<\/p>\n
within  the  realm  of  the  private  law  may  not   be<\/p>\n
entertained  by the High Court in exercise of  its  writ<\/p>\n
jurisdiction.   The  facts  of  the  instant  case   are<\/p>\n
entirely  different.  The agreement between  the  dealer<\/p>\n
and the Corporation provided for grant of four days time<\/p>\n
to  make  good the  irregularity allegedly committed  by<\/p>\n
the dealer.  The corporation has not invoked that remedy<\/p>\n
and  has taken recourse to the guidelines which provides<\/p>\n
for  suspension  of sale and supply of all  products  in<\/p>\n
case  of   refusal by dealer to allow drawal  of  sample<\/p>\n
and\/or  carrying  out  of inspection  and   discourteous<\/p>\n
behaviour by dealers and\/or his staff, non producing  of<\/p>\n
complaints register.\n<\/p>\n<\/p>\n
29)   It is well settled principles of law that no order<\/p>\n
visiting  with civil (evil)  consequences can be  passed<\/p>\n
without  affording  an opportunity  of  hearing  to  the<\/p>\n
aggrieved  party.   In the case on  hand,  the  impugned<\/p>\n
memo\/order  dated  11-7-2008 was passed,  admittedly  on <\/p>\n
account of hindrances created by other persons and short<\/p>\n
of expected cooperation of the dealer, without affording<\/p>\n
an  opportunity  of  hearing to  the  petitioner\/dealer.<\/p>\n
Subsequent  show  cause notice dated  17-7-2008  has  no <\/p>\n
reference  to  the impugned memo\/order dated  11-7-2008.<\/p>\n
Serial No. 16 and 17 of the Appendix 1 to the guidelines<\/p>\n
provides  that  in case of irregularity  of  the  nature<\/p>\n
involved in the subject matter of the petition   entails<\/p>\n
imposition of  penalty of Rs.50,000\/- and suspension  of<\/p>\n
sale and supply of all products for a maximum period  of<\/p>\n
45  days.  Thus, suspension  of sale and supply  of  all<\/p>\n
products  cannot survive after expiry of 45  days.   The<\/p>\n
suspension order came into effect on 11-7-2008  and  the<\/p>\n
period of 45 days has expired on 25-8-2008.<\/p>\n
30). Without expressing any opinion on the investigation<\/p>\n
which is under consideration, pursuant to the show cause<\/p>\n
notice  dated 17-7-2008, this Court is of the considered<\/p>\n
opinion that the impugned memo\/order dated 11-7-2008 can <\/p>\n
not  sustain  after completion of 45  days.   Thus,  the<\/p>\n
impugned  memo\/order dated 11-7-2008 (Annexure  P\/1)  is <\/p>\n
quashed.   The respondent Corporation is at  liberty  to<\/p>\n
continue with investigation as initiated by issuing show<\/p>\n
cause notice dated 17-7-2008 and take appropriate action<\/p>\n
or  otherwise whatever permissible under the  provisions<\/p>\n
of the contract agreement or law.\n<\/p>\n<\/p>\n
31)    For  the  reasons  mentioned  hereinabove,   this<\/p>\n
petition  is allowed.  The impugned memo\/dated 11-7-2008<\/p>\n
(Annexure P\/1) is quashed.  No order asto costs.<\/p>\n
                                        JUDGE<\/p>\n","protected":false},"excerpt":{"rendered":"
Chattisgarh High Court M\/S Sai Service Station vs ) Indian Oil Corporation on 20 October, 2008 HIGH COURT OF CHATTISGARH AT BILASPUR Writ Petition C No 4528 of 2008 M\/s Sai Service Station …Petitioners Versus 1) Indian Oil Corporation 2) Indian Oil Corporation 3) Sri Satish Kumar Singh …Respondents ! Mr. Kanak Tiwari, Sr. Advocate […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[12,8],"tags":[],"class_list":["post-43364","post","type-post","status-publish","format-standard","hentry","category-chattisgarh-high-court","category-high-court"],"yoast_head":"\nM\/S Sai Service Station vs ) Indian Oil Corporation on 20 October, 2008 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/ms-sai-service-station-vs-indian-oil-corporation-on-20-october-2008\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"M\/S Sai Service Station vs ) Indian Oil Corporation on 20 October, 2008 - 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