Judgment:
1 IN THE HIGH COURT OF JHARKHAND AT RANCHI W.P.(C)No. 5788 of 2014 M/s Suresh Kumar Patwari (CC182137), a dealer of Bharat Petroleum Corporation Ltd. at Sarwa, Dist. Dumka, through its Proprietor Smt. Puja Patwari, W/O Shree Amit Kumar Patwari, R/O Bhagalpur Road, PO+PS Dumka, Dist Dumka, Jharkhand … …Petitioner Versus 1. Bharat Petroleum Corporation Limted, registered office at Bharat Bhawan, 4 & 6 Currimbhoy Road, Ballard Estate Mumbai400001 2. Head (Retail) East, Easten Regional Office, Bharat Bhawan Plot No. 31 , KIP Scheme no. 118, Prince Ghulam Mohammad Shah Road, Golf Green, Kolkata95 3. Regional General Manager, Eastern Regional Office, Bharat Bhawan Plot No. 31 , KIP Scheme no. 118, Prince Ghulam Mohammad Shah Road, Golf Green, Kolkata95 4. General Manager, Eastern Regional Office, Bharat Bhawan, Plot No. 31 , KIP Scheme no. 118, Prince Ghulam Mohammad Shah Road, Golf Green, Kolkata95 5. Deputy General Manager, Eastern Regional Office, Bharat Bhawan Plot No. 31 , KIP Scheme no. 118, Prince Ghulam Mohammad Shah Road, Golf Green, Kolkata95 6. Territory Manager (Retail), Bharat Petroleum Corporation Limited, Ranchi Territory (Retail), Station Road, PO Chutia, Ranchi … ... Respondents CORAM : HON'BLE MR. JUSTICE SHREE CHANDRASHEKHAR For the Petitioner : Mr. Ajit Kumar, Advocate : Mr. Saket Upadhyay, Advocate For the RespondentB.P.C.L : Mr. M. K. Roy, Advocate 10/30.01.2015 Seeking quashing of order dated 02.08.2014, whereby the suspension of sales and supplies of petroleum products by the oral order dated 09.07.2014 has been affirmed/rectified, the present writ petition has been filed. A further order seeking a direction for lifting the suspension of the 2 sales and supplies of petroleum products vide oral order dated 09.07.2014, has also been made in the writ petition.
2. Briefly stated, an agreement for a Dispensing Pump and Selling License Agreement (Dealership Agreement) was executed on 10.10.2013 granting, licence for sale and supply of petroleum products to the petitioner for 15 years. On 09.07.2014, an inspection was carried out at the petitioner's outlet and the sales and supplies of petroleum products from the retail petroleum outlet of the petitioner was suspended vide oral order dated 09.07.2014. Thereafter, a showcause notice dated 02.08.2014 was issued to the petitioner by the Manager Territory (Retail) Ranchi who further ordered extension of suspension of sales and supplies of petroleum product from the retail outlet of the petitioner till further order and/ or a final decision is taken by the company. The petitioner submitted his detailed reply on 13.08.2014 to the showcause notice dated 02.08.2014 however, no order revoking the suspension of the sales and supplies from the retail outlet of the petitioner was passed. Though, suspension order was liable to be revoked on or after 25.07.2014, inspite of representation made by the petitioner, suspension order was not revoked and instead, notice dated 10.09.2014 was issued to the petitioner for a personal hearing on 17.09.2014. The petitioner accordingly, appeared and filed a reply however, no final decision has been taken by the respondentBharat Petroleum Corporation Ltd. 3 3. On 03.12.2014, notice was issued to the respondents which was accepted by the counsel for the respondents. The respondents were granted 10 days' time for filing counteraffidavit and the matter was posted for hearing on 16.12.2014 however, instead of filing counteraffidavit, the respondents filed I.A. No. 6496 of 2014 for referring the matter for arbitration in terms of the arbitration clause in the agreement. It is stated that the dispute raised by the writ petitioner falls in the ambit of the memorandum of agreement executed between the parties. Since the dispute raised by the writ petitioner involves disputed question of fact and technical in nature, the Director (Marketing) or his nominee would be the most competent person to adjudicate the dispute raised by the petitioner. It is further stated that after the sales of petroleum product from the retail outlet of the petitioner was suspended on 09.07.2014, a showcause notice was issued on 02.08.2014, which was replied by the petitioner and she was called for personal hearing. The hearing in the matter was concluded and a final decision is expected in due course. 4. A counteraffidavit has now been filed by the respondents taking a plea of availability of alternative remedy. It is stated that samples of Motor Spirit and High Speed Diesel were taken in presence of the husband of the dealer and those samples along with supply point sample and one HSD tank lorry retail outlet sample were sent to Budge Budge Laboratory for examination, where MS & HSD samples both failed. There was abnormal high 4 stock variation in MS & HSD and dealer has failed to maintain density register for past 14 days and stock register for past 19 days. It is further stated that the provision under Clause 8.3 of the Marketing Discipline Guidelines would be applicable only when the sample passes quality test. Whenever there is abnormal density or stock variation, the sales and supplies are liable to be suspended. In the present case, the respondentcompany has taken action in terms of Clause 8.2 (i) of the MDG Guidelines, 2012 and principles of natural justice has been followed by the respondentcompany. 5. Heard the learned counsel for the parties.
6. Mr. Ajit Kumar, the learned counsel appearing for the petitioner submits that even if allegation of stock variation is accepted, the test report itself establishes that action only in terms of Clause 8.3 of the MDG Guidelines, 2012 can be taken against the petitioner and the suspension order cannot be extended beyond the period of 15 days. The test report discloses that the seals were intact and other parameters were in order. The density of HSD was well within the permissible limit however, density of MS is said to be beyond the variation limit which is contrary to the test report itself. Even the respondent company's own tank lorry retail samples got failed and its own sample reflects the density below the permissible limit. In so far as, the test report for Motor Spirit is concerned, admittedly, the respondent did not take the previous invoices into consideration. If the past three invoices dated 30.05.2014, 14.06.2014 and 5 25.06.2014 are considered, the average density for Motor Spirit would come to 750.3 which is well within the limit of variance. It is further submitted that the petitionerdealer is an illiterate lady and the Pump Station is managed by a Manager. Due to illness of the mother of the Manager, the record of invoices for few days were not maintained however, the respondents were required to consider the previous invoices, samples of which are retained by the respondents themselves. It is contended that the order dated 09.07.2014 suspending the sales and supplies of petroleum product from the retail outlet of the petitioner have been continued illegally, in violation of the MDG Guidelines, 2012. It is further submitted that in view of the Motor Spirit and High Speed Diesel (Regulation of Supply, Distribution and Prevention of Malpractices) Order, 2005, which was amended on 06.05.2014, only when the product does not conforms to the requirements of the Bureau of Indian Standards specification for Motor Spirit and High Speed Diesel, the product can be said to be adulterated. In the present case, the test report itself confirms that the samples drawn from the retail outlet of the petitioner conforms to the requirement of IS2796 and therefore, no action under Clause 8.2(i) can be taken against the petitioner. Referring to Clause 8.8 in the MDG Guidelines, 2012 and decision in “The Purtabpore Co., Ltd. vs. Cane Commissioner of Bihar and others”, reported in (1969) 1 SCC 308 and in “Joint Action Committee of Air Line Pilots' Association of India (ALPAI) and others vs. Director General of Civil Aviation and others”, reported in 6 (2011) 5 SCC 435, jurisdiction of Manager Territorial (Retail) has been challenged by the learned counsel for the petitioner.
7. Per contra, the learned counsel for the respondents reiterated the stand taken in the counteraffidavit and I.A. No. 6496 of 2014 and submitted that in view of sample test report, no interference is required in the matter. Referring to Clause 2.3, 2.5(H), 5.1.9, 5.1.11 and 8.2, the learned counsel for the respondents submits that since there was large stock variation and the sample of Motor Spirit failed the lab test, action under Clause 8.2 has been taken against the petitioner. The learned counsel has extensively read out the showcause notice issued to the petitioner and provisions of MDG guidelines, 2012.
8. I have carefully considered the submissions of the learned counsel for the parties and perused the documents on record. 9. In view of the facts disclosed in the present proceeding and also, in view of the fact that the respondents have concluded the hearing pursuant to showcause notice dated 02.08.2014, the objection taken in I.A. No. 6496 of 2014 is rejected.
10. The main issue involved in the present writ petition is whether the respondents could have initiated action in terms of Clause 8.2 for “critical irregularities” or the action could have been taken against the petitioner under Clause 8.3 for “major irregularities” and for that purpose, definition of adulteration under Section 2(a) of the Motor Spirit and High Speed Diesel (Regulation of Supply, Distribution and Prevention of 7 Malpractices) Order, 2005, is required to be noticed. The respondents have contended that there was stock variation beyond the permissible limit and sample of Motor Spirit failed the lab test and thus, it is a case of adulteration of the Motor Spirit which is classified as “critical irregularities” under Clause 8.2.1 of the MDG guidelines, 2012. Referring to test report dated 16.07.2014, the learned counsel appearing for the petitioner submitted that the test report clearly indicates that the variation was within the permissible limit and therefore, the product cannot be said to be adulterated. Section 2(a) of the Motor Spirit and High Speed Diesel (Regulation of Supply, Distribution and Prevention of Malpractices) Order, 2005 is reproduced below :
2. a) “adulteration” means [***] the introduction of any foreign substance into motor spirit or high speed diesel illegally or unauthorizedly with the result that the product does not conform to the requirements of the Bureau of Indian Standards specifications number, IS 2796 and IS 1460 for motor spirit and high speed diesel respectively or any other requirement notified by the Central Government from, time to time.
11. It is not disputed that the Motor Spirit and High Speed Diesel (Regulation of Supply, Distribution and Prevention of Malpractices) Order, 2005, is binding on the respondents. Section 2(a) clearly provides that in case of motor spirit, the 8 product should conforms to the requirement of Bureau of Indian Standards specification IS2796. In the present proceeding, no material has been brought on record to indicate that definition of adulteration under Section 2(a) of the 2005Order has been amended and the requirement of the Bureau of Indian Standards specification IS2796 is no longer applicable. From the test report dated 16.07.2014, it is apparent that the density of the sample of motor spirit drawn from the retail outlet of the petitioner on 09.07.2014 has been found 749.5 at laboratory and 750.2 by the inspecting officer. The IS2796 specification provides permissible variation between 720775 and thus, the density observed at laboratory and by the inspecting officer were well within the permissible limit. Similarly, the result of other tests indicated in report dated 16.07.2014 clearly indicates that the sample drawn from the retail outlet of the petitioner conforms to IS2796 specification. 12. However, in the test report it is stated that there is density variation of 6.6 kg per M3 between lab density 749.5 kg/M3 and invoice density (755.1 kg/m3) and the product is not the same as supplied by supplied location. Relying on the said observation, the learned counsel appearing for the respondents contends that sample drawn from the retail outlet of the petitioner has been held adulterated. However, to a pointed quarry how the sample drawn from the retail outlet of the petitioner can be said to be adulterated if the variation is found within the permissible limit, the learned counsel appearing for 9 the respondents is unable to explain the same. In view of the permissible variation limit prescribed under IS2796, I am of the opinion that the sample of Motor Spirit drawn from the retail outlet of the petitioner cannot be said to be adulterated. The learned counsel appearing for the petitioner has rightly contended that even if it is found that the stock variation is beyond the permissible limit, action under Clause 8.3 only, could have been taken against the petitioner. I find that for major irregularities under Clause 8.3, suspension of sales and supplies for 15 days for the first irregularities can be taken by the respondentBPCL. Admittedly, this was the first irregularity allegedly committed by the petitioner and therefore, order of suspension of sales and supplies could not have been extended beyond 15 days however, on the allegation of adulteration, order dated 02.08.2014 has been passed. The petitioner has contended that in violation of the MDG guidelines, 2012, the suspension order has continued for more than six months and the learned counsel for the respondents has submitted that hearing in the matter has been concluded and a final decision is awaited. Though, the learned counsel appearing for the parties are unable to confirm the date on which the hearing has concluded, it appears that the hearing in the matter was concluded much before 15.12.2014, when I.A. No. 6496 of 2014 was filed. 13. In view of the above facts and circumstances, a direction is issued to the respondentBPCL to pass final order keeping in 10 view the Motor Spirit and High Speed Diesel (Regulation of Supply, Distribution and Prevention of Malpractices) Order, 2005 and also the findings recorded in this order, within a period of 10 days, failing which the order suspending sales and supplies from the retail outlet of the petitioner shall stand revoked.
14. The writ petition stands disposed of, in the above terms and I.A. No. 6496 of 2014 is dismissed.
15. Let a copy of this order be given to the learned counsel for the parties. (Shree Chandrashekhar, J.) Tanuj/