Judgment:
Sanjib Banerjee, J.
1. An order of the appellate authority under the marketing discipline guidelines of nationalised oil companies is under challenge; and, through it, the conduct of the Indian Oil Corporation in terminating an agreement with the petitioner firm for operating a retail outlet.
2. On December 23, 1970 the firm was permitted to operate a retail outlet under a dealership agreement. A subsequent agreement was entered into between the firm and the Corporation on January 9, 1997. During the currency of the 1997 agreement the firm was found to have adulterated the petrol stored in the underground tanks at the retail outlet. The Corporation says that on December 24, 2007 its authorised agent detected an irregularity in the petrol stored at the outlet. On December 27, 2007 such authorised agent performed a marker test on the petrol at the outlet and the sample tested indicated adulteration. A report was filed to such effect.
3. On the same day the authorised agent required the petitioner firm to provide the tank truck retention sample. By a notice of December 29, 2007 the firm was informed by the Corporation that the samples of the petrol would be tested at a laboratory in Haldia on January 1, 2008.
4. The petitioners were represented at the time that the tests were to be conducted at the laboratory. It is their case that the bottle containing the sample from the retail outlet collected on December 27, 2007 produced for the contents thereof to be tested at the laboratory, bore a 'different seal and there was no trace of the voucher containing the signature of the petitioners' representative which was used as a seal' when the sample was drawn. The petitioners allege that their representative protested immediately but the laboratory tests were conducted without the dissent being attended to. At 2.30 pm on January 1, 2008 the petitioners issued a letter to the Corporation bringing such alleged anomaly formally to its notice. The petitioners say that though their representative had signed the attendance sheet on January 1, 2008, but this was done prior to the sample being produced.
5. The laboratory test report indicated that the sample said to have been drawn from the retail outlet turned pink upon the test being conducted. The sample drawn from the tanker that transported the petrol produced a normal result.
6. On January 16, 2008 the petitioners complained to the Corporation that the sample that was found to be adulterated in course of the laboratory test was not the one that had been collected from their outlet. In the words of the letter,
Be it mention herein that only one sample of products (Petrol) of I.O.C. Ltd. has been collected by SGS India Pvt. Ltd. by a can without air tied and the sample has not been properly collected & sealed and the persons of SGS India Pvt. Ltd. collected the sample very hurriedly and asked our Manger to sign on format papers and on the request of the persons of SGS India Pvt. Ltd., our Manager put his signatures on the papers, which was covered on the mouth of the Can, affixed by Cellotap.
7. A show-cause notice was issued by the Corporation on February 21, 2008, the material charges against the outlet appearing in the following paragraphs thereof:
The Retail Outlet sample and TT retention sample were tested on 01/01/08 at our Haldia Laboratory in presence of your Representative, M/s. SGS - Representative, Transporter's Representative, our Laboratory's representative, our Supply Location's Representative and our Representative. In the Market Test, your Retail Outlet sample appeared 'Pink' (positive) while TT Retention sample appeared 'Not Pink' (negative). The Retail Outlet sample failed and TT Retention sample passed in the Test. Hence, it is clear that Motor Spirit of your Retail Outlet was adulterated at your Retail Outlet.
From the above, it reveals that you have violated the Marketing Discipline Guidelines, 2005 (clause No. 6.1.1c under chapter - (6) and amendment to MDG 2005 issued by MOP & NG dated 15/01/07 on Market Testing and also violated the clause No. 5 of the Dealership Agreement dated 23/12/1970.
The above mentioned acts committed by you or your servants or agents in the opinion of the General Manager of the Corporation, West Bengal State Office, Kolkata have been and are prejudicial to the interest and good reputation of the Corporation.
From the above, it is clearly evident that you have failed to perform in terms of the aforesaid Marketing Discipline Guidelines, 2005, which has tarnished the image of the Corporation thereby grossly violating the terms and conditions under which you have been allowed to operate this dealership.
8. In the petitioners' response to the notice by the firm's letter of March 7, 2008, they complained that the firm had requested the Corporation to redraw a sample and further that the bottle said to contain the sample from the petitioners' retail outlet had a different seal than the one used when the bottle had been sealed in the presence of the petitioners' representative at the petrol station.
9. A hearing was thereafter given by the Corporation and an order was made on June 12, 2008 terminating the dealership. The chief regional sales manager of the Corporation held that since the petitioners' representative had 'signed the testing of retention samples in laboratory ... before the marker test of (the retail outlet) sample at Haldia laboratory' was conducted, the objection relating to the sample not being the one drawn from the retail outlet was not tenable. The order of termination of the retail outlet dealership informed the firm that an appeal could be preferred to the executive director (retail sales) of the Corporation.
10. The petitioners carried the matter in appeal to Mumbai and urged several grounds including the authority of the officer who had issued the letter of termination. The petitioners contended that the order of termination was nonspeaking in nature and that the specific allegation of the wrong sample having been tested at the laboratory had not been addressed. The petitioners also urged that there was no justification for the Corporation to refuse fresh samples to be drawn though the same could be done from the retail outlet over which the petitioners retained possession.
11. The petitioners had brought an earlier petition, WP No. 26129 (W) of 2008, before this Court challenging the order of termination. The writ petition was disposed of by an order of October 1, 2008 by expediting the pending appeal. The order of October 1, 2008 was assailed in an appeal which was disposed of on November 12, 2008 by giving leave to the petitioners to approach the Court against the order of the appellate authority, in the event they were so advised.
12. The appeal before the executive director of the Corporation was dismissed by an order of December 31, 2008 which is the subject matter of the immediate challenge. The appellate authority found that since the sample failed the marker test conducted by the authorised agent of the Corporation and also failed in course of the laboratory test on January 1, 2008, while the tanker's retention sample passed the test, the adulteration at the retail outlet had been proved. The appellate authority considered the procedure followed by the Corporation and concluded that there was no irregularity therein and that the petitioners' representation had also been taken into consideration before a speaking order of termination was passed.
13. The petitioners now raise three major issues. It is their argument that there was no justification for the Corporation to refuse to draw a second sample and test the same; that their grievance that the sample tested at the laboratory was not the one drawn from the retail outlet had not been adequately addressed; and, that the entire exercise was a premeditated charade since the show-cause notice revealed that the general manager of the West Bengal State office of the Corporation had opined that the acts committed by the retail outlet were prejudicial to the interest of the Corporation. They further claim that the provision of the appeal is meaningless since it is no more than one from Caesar to Caesar's wife.
14. The petitioners rely on the judgments reported at : AIR 1984 SC 1361 A.L. Kalra v. P. & E. Corpn. of India Ltd. and : AIR 1989 SC 997 State of U.P. v. Maharaja Dharmander Prasad Singh for the proposition that adequate reasons are required to be furnished upon independent application of mind before an order having civil consequence is made by any authority answering to the description under Article 12 of the Constitution. The petitioners say that the order of termination recorded the petitioners' objections, both on the ground of another sample not being drawn and on an erroneous sample tested at the laboratory, without proffering any reason to discard such objections. The petitioners also rely on a judgment reported at : AIR 1985 SC 1147 Ram and Shyam Company v. State of Haryana and place paragraph 9 thereof for the oft- quoted line therein that an appeal from Caesar to Caesar's wife is only bettered by an appeal from one's own order to oneself.
15. The respondents have produced the records, including the document signed by the petitioners' representative at the laboratory on January 1, 2008. It clearly appears from such document that there was a number relating to the seal on the sample obtained from the retail outlet. There was no objection raised as to the sample and the seal at the time that the petitioners' representative signed the document. The laboratory report reflects the same seal number, 004135. There does not, in the circumstances, appear to be any merit in the petitioners' insinuation that the sample had been switched before it was presented at the laboratory. Though such reason is not specifically recorded in either the order of termination of June 12, 2008 or in the appellate order now impugned, it has been indicated in either order that upon the petitioners' representative signing the document at the laboratory, the objection was not tenable.
16. There may have been greater credence attached to such charge if a more serious case of mala fides had been made out. There is nothing in the contemporaneous correspondence issued by the petitioners to suggest that there was some sinister motive with which the Corporation had proceeded against the petitioners. If the petitioners' representative could sign the document which carried the description of the sample and the serial number of its seal without any reservation, the subsequent objection that the sample did not appear to be from the petitioners' retail outlet appears to be without basis.
17. The petitioners' submission that adequate reasons had not been given in the order of termination or by the appellate authority, does not appeal. The adequacy of the reasons furnished depends on the gravity of issue that is deliberated on. The only matter of any consequence that the petitioners had urged was that the sample had apparently been tampered with. It may be presumed that the records relating to the laboratory test and the two relevant documents were before the Corporation's officer who issued the order of termination and before the appellate authority. On a perusal of the two documents it would be obvious that the contention on such score was without any merit and probably an afterthought.
18. The petitioners' grievance that a second sample was not drawn would have been significant if there had been any other shortcoming in the procedure adopted by the Corporation or its authorised agent. Since the procedure adopted appears to have been transparent and fair and the petitioners were afforded a chance to be represented at the time that the tests were conducted at the laboratory, there are no incidental irregularities that would have warranted a second sample to be drawn.
19. The appellate provision in the marketing discipline guidelines should not be viewed in the context of a statutory appeal. The relationship between a dealer and the Corporation is contractual and, subject to the terms of the agreement, the same may be terminated. The nationalised oil companies have got together and devised a common set of rules and, to obviate a charge of bias or discrimination, an internal mechanism has been formulated for certain orders carrying serious consequences to be permitted to be vetted by a superior officer. The underlying philosophy in the recognition of the futility of an appeal from Caesar to Caesar's wife is that the aggrieved person is not afforded any opportunity to air his grievance. The analogy would be inapposite in the present case if it is appreciated that a dual process has been included in the relevant guidelines to ensure an internal check before a final decision even on a contractual matter is taken by the Corporation. There is an arbitration agreement in the dealership agreement and it was open for the petitioners to carry the appellate decision to arbitration and follow the route thereafter under the Arbitration and Conciliation Act, 1996. The fallacy of the procedure in an appeal from Caesar to Caesar's wife applies to a case where the appeal to Caesar's wife is the end of the road. In a dealership agreement of the kind presented here, that is not so.
20. On the point of the predisposition apparently evident from both the show- cause notice and the order of termination which referred to the opinion of the general manager that the petitioners' conduct had tarnished the Corporation's image, there does not appear to have been any prejudice occasioned to the petitioners. The order of termination had reasons to offer as to why the agreement was liable to be determined and the petitioners' objection disregarded. The reasoning did not rest on any general manager's opinion. The reasons indicated an independent application of mind in the assessment of the material before such officer. Finally, the order of termination was endorsed by an officer of the Corporation who was superior to the general manager and who need not have been overly burdened by the weight of the general manager's estimation.
21. WP No. 4461 (W) of 2009 fails. The petitioners will pay costs assessed at 1500 GM.
22. Urgent certified photostat copies of this judgment, if applied for, be supplied to the parties upon compliance with all requisite formalities.