AI Structured Summary
Not yet generated for this judgment
Judgment
N. Paul Vasanthakumar, J.—Both these writ appeals are preferred by the Hindustan Petroleum Corporation Limited (hereinafter called
''HPCL'') challenging the common order of the learned single Judge made in W.P. Nos. 3914 and 28696 of 2007 dated 11.9.2008 respectively,
wherein the learned single Judge allowed the writ petition filed by the Retail Dealer in Petroleum products, who is the writ petitioner in W.P. No.
28696 of 2007; and forbearing the Corporation from carrying on retail trade in petroleum products from the premises comprised in D. No. 90B,
Bhavani Main Road, Bhavani, or in any manner entering upon the said land in the writ petition filed by the wife of the Retail Dealer, who is the
petitioner in W.P. No. 3914 of 2007.
Both the writ petitioners are husband and wife. The land belongs to the wife and the husband is the Retail Dealer in petroleum products.
The Retail Dealer was granted dealership in petroleum products in the above said premises for the past five decades. Originally the Dealership
Agreement was with ESSO and after merger of ESSO with HPCL, the dealership continued with HPCL.
On 15.11.2006, the Regional Manager, HPCL, Coimbatore issued a show cause notice based on an inspection made by the Mobile Lab
Officer on 21.8.2006, in which sample was taken and sent to the laboratory of the HPCL alleging that it was found that the Retail Dealer failed
positively in ''Octane Number Test''. On 21.8.2006 it was the same officer, who had taken the test sample, after conducting the test of the same
sample, certified that the sample met the specification. Based on the said test report, the Retail Dealer replied to the show cause notice on
20.11.2006 stating that the whole stock was received on 10.8.2006 and therefore the alleged variation found in the inspection report was incorrect
as there cannot be two different results in respect of the same sample. It is also stated by the Retail Dealer that at the time of inspection, he was not
present and no sample was given to the Retail Dealer and on many occasions when tests were conducted, it was found that there was no
adulteration.
Even as per the show cause notice, the inspection was carried out on 21.6.2006, however, the notice was issued on 16.11.2006 and the order
terminating the dealership was passed without considering, either the reply of the Retailer or the fact that the premises where the petroleum retail
outlet is located belongs to the Retailer''s wife, and therefore the Corporation has no right to trespass into the said land. Pointing out all the above
pleadings, the above writ petitions were filed.
It was urged in the writ petition that as the order terminating the dealership is in violation of the principles of the natural justice, the respondents
are under legal obligation to conduct enquiry before passing such order of termination, and failure of the same amounts to interfering with his right
to carry on business, which is against Rule 2.4.4 of the Marketing Discipline Guidelines.
The said writ petitions were opposed by the HPCL mainly on the ground that even if the termination is bad on any reason, the Dealer has got a
remedy for arbitration and without resorting to the said remedy, the writ petition filed under Article 226 of the Constitution of India is not
maintainable. It is also contended that the husband, having been given dealership of retail outlet, the materials of the Corporation are available in the
outlet and even though the said land belongs to the wife of the Retail Dealer, the dealership agreement granted in favour of the husband having been
terminated, the Corporation is entitled to get back the materials, which are available in the land of the wife and therefore the writ petition filed by
the husband challenging the order terminating the retail dealership and the writ petition filed by the wife of the Retail Dealer are liable to be
dismissed.
The learned single Judge taking note of the submissions made by the learned Counsel for the writ petitioner, especially the fact that the sample
was sent to the Laboratory after ten days from the date of its drawal, which is in violation of the statutory rule, which directs sending of sample to
Laboratory within ten days for test, and the respondents having found that there was no adulteration in the sample during mobile test, found that the
HPCL is not justified in relying upon the test report, which was obtained by sending the sample to the Laboratory beyond the prescribed time, as it
is in violation of the procedure contemplated and against the principles of the natural justice. The learned single Judge rejected the contention of the
Corporation with regard to non- availing of arbitration clause and relied upon the judgments of the Supreme Court reported in Harbanslal Sahnia
and Another Vs. Indian Oil Corpn. Ltd. and Others, , M.P. State Agro Industries Development Corporation Ltd. and Another Vs. Jahan Khan, ,
Mrs. Sanjana M. Wig Vs. Hindustan Petro Corporation Ltd., , and rejected the maintainability issue raised in the writ petitions and chosen to go
into the merits of the matter and after prima facie satisfaction, allowed both the writ petitions, against which these writ appeals are filed.
The main contention raised by the learned Counsel for the HPCL is that the learned single Judge ought not to have entertained the writ petition,
challenging the order cancelling the retail dealership dated 31.1.2007 as there is an effective alternate remedy to redress the grievances of the
dealer by invoking the arbitration Clause 68 of the Dealership Agreement and therefore the learned single Judge is not justified in entertaining the
writ petition and allowing the same. On merits the learned Counsel for the HPCL submitted that Clause 8(4) of the Central Order directing to send
the samples within ten days is only directory and not mandatory and Clause 2.5.1 of the Marketing Discipline Guidelines, 2005 clearly clarifies that
the purpose of maintaining time frame for various activities, for example sending sample to the Laboratory, preferably within ten days, is to
streamline the system and therefore the learned single Judge was not justified in quashing the order of termination dated 31.1.2007 on the ground
of not following the time schedule mentioned in Clause 8(4) of the Central Order. The learned Counsel also cited various judgments in support of
his contention that when there is an effective alternative remedy available, the writ petition filed under Article 226 of the Constitution of India is
normally not entertainable and the petitioner is having effective remedy to go before the Arbitrator in terms of Clause 68 of the agreement.
The learned Counsel for the respondents/writ petitioners on the other hand submitted that availablility of alternate remedy is not an absolute bar
to entertain a writ petition, where the facts are not in dispute. The learned Judge having exercised his discretion and entertained the writ petition
and gone into the merits of the matter, and having given a finding on merits and set aside the order of termination, it is not open to the Corporation
to raise the plea of alternate remedy in the writ appeal to set aside the order of the learned Judge. The learned Counsel also submitted that Clause
8(3) of the Central Order issued on 19.12.2005 by the Ministry of Petroleum and Natural Gas is in exercise of powers conferred u/s 3 of the
Essential Commodities Act, 1955, and in supersession of Motor Spirit and High Speed Diesel (Regulation of Supply and Prevention of
Malpractice) Order, 1998, by the Central Government and the same has got statutory force as it is issued under Article 309 of the Constitution of
India and Clause 8(4) clearly states that the sample shall be sent for testing to the Laboratories mentioned in Schedule 3 or to any other
Laboratory notified by the Government, within ten days. The learned Counsel also submitted that the clarification issued on 1.8.2005 is prior to the
issue of the order by the Central Government, that was on 19.12.2005 and therefore the said clarification viz., Clause 2.5.1 of the Marketing
Discipline Guidelines, 2005, has no application. The learned Counsel also cited decisions in support of his contentions.
We have considered the rival submissions of the learned Counsel on either side.
The issues to be decided in these cases are whether the learned single Judge is justified in entertaining the writ petition, when alternate remedy
of moving the Arbitrator to seek remedy by the Retail Dealer is available, and whether the principles of natural justice are violated by the HPCL
while cancelling the Dealership Agreement, and that procedure adopted in sending the sample to the Laboratory test after the period of ten days, is
mandatory or directory.
The Retail Dealer filed the writ petition challenging the order of cancellation of dealership agreement and the same was entertained taking note
of the violations of the principles of natural justice and violations of the procedures in not following the time frame within which the sample shall be
sent for Laboratory test. It is well settled in law that entertaining the writ petition, even if an alternative remedy is available, is a rule of convenience
and it is a self-imposed discipline by the Courts and there is no absolute bar to entertain a writ petition, though other remedy is available to the
person, who approaches the Court, particularly when the facts are not in dispute and no factual finding need be adjudicated upon. In the decision
reported in Harbanslal Sahnia and Another Vs. Indian Oil Corpn. Ltd. and Others, the Supreme Court held that if a mandatory violation is
established, the Court can entertain writ petition in respect of cancellation of termination of dealership. In M.P. State Agro Industries Development
Corporation Ltd. and Another Vs. Jahan Khan, in paragraph 12, the Supreme Court considered in detail the scope of entertaining writ petition,
though alternate remedy is available. Paragraph 12 reads thus,
Before parting with the case, we may also deal with the submission of learned Counsel for the appellants that a remedy by way of an appeal
being available to the respondent, the High Curt ought not to have entertained his petition filed under Articles 226/227 of the Constitution. There is
no gainsaying that in a given case the High Court may not entertain a writ petition under Article 226 of the Constitution on the ground of availability
of an alternative remedy, but the said rule cannot be said to be of universal application. The rule of exclusion of writ jurisdiction due to availability
of an alternative remedy is a rule of discretion and not one of compulsion. In an appropriate case, in spite of the availability of an alternative
remedy, a writ court may still exercise its discretionary jurisdiction of judicial review, in at least three contingencies, namely, (i) where the writ
petition seeks enforcement of any of the fundamental rights; (ii) where there is failure of principles of natural justice; or (iii) where the orders or
proceedings are wholly without jurisdiction or the vires of an Act is challenged. In these circumstances, an alternative remedy does not operate as a
bar. (See Whirlpool Corporation Vs. Registrar of Trade Marks, Mumbai and Others, ; Harbanslal Sahnia and Another Vs. Indian Oil Corpn. Ltd.
and Others, ; State of H.P. v. Gujarat Ambuja Cement Ltd. (2005) 6 SCC 499 and Mrs. Sanjana M. Wig Vs. Hindustan Petro Corporation Ltd.,
.
The same principle is reiterated in the recent decision of the Supreme Court reported in Satwati Deswal Vs. State of Haryana and Others, .
In some cases the Supreme Court held that Court can refuse to entertain writ petition when there is an effective alternate remedy. The said
principle cannot be applied universally and it depends upon the facts and circumstances of each case and discretion is given to the Courts either to
entertain or not to entertain the writ petition, even if alternate remedy is available. Thus, the contention of the appellants that the writ petition ought
not to have been entertained by the learned single Judge and the writ petition ought to have been dismissed on the ground of availability of alternate
remedy cannot be sustained. The learned single Judge has rightly overruled the said objection raised by the appellant and decided the matter on
merits. We fail to see any reason to differ with the said findings.
Insofar as the merits of the case are concerned, as rightly contended by the learned Counsel for the respondents/writ petitioners, the Central
Order viz., Motor Spirit and High Speed Diesel (Regulation of Supply, Distribution and Prevention of Malpractices) Order, 2005 issued on
19.12.2005 by the Ministry of Petroleum and Natural Gas in GSR.729(E) in exercise of powers conferred u/s 3 of the Essential Commodities Act,
1955 (Act 10 of 1955) and in supersession of Motor Spirit and High Speed Diesel (Regulation of Supply, Distribution and Prevention of
Malpractices) Order, 1998, except in respect of things done or omitted to be done before such supersession, the Central Government made the
order under Article 309 of the Constitution of India and it extends to the whole of India and it is published in the official gazette. The Appellant
Corporation is also bound by the said statutory provisions, which prescribes methods of taking sample of products, etc. Clause 8 of the order
reads as follows:
Sampling of product.
(1) The authorised under Clause 7 shall draw the sample from the tank, nozzle, vehicle or receptacle as the case may be, in clean aluminium
containers, to check whether density and other parameters of the product conform to the requirements of Bureau of Indian Standards
specifications number IS 2796 and IS 1460 for motor spirit and high speed diesel respectively. Where samples are drawn from retail outlet, the
relevant tank truck sample retained by the dealer as per Clause 3(b) would also be collected for laboratory analysis.
(2) The authorised officer shall take and seal six samples of 1 litre each of the motor spirit or three samples of 1 litre each of the High speed diesel.
Two samples of motor spirit or one of high speed diesel would be given to the dealer or transporter or concerned person under acknowledgement
with instruction to preserve the sample in his safe custody till the testing or investigations are completed. Two samples of Motor Spirit or one of
High Speed Diesel shall be kept by the concerned oil company or department and the remaining two samples of Motor spirit or one of High Speed
Diesel would be used for laboratory analysis;
(3) The sample label shall be jointly signed by the authorised officer who has drawn the sample, and the dealer or transporter or concerned person
or his representative and the sample label shall contain information as regards the product, name of retail outlet, quantity of sample, date, name of
the authorised officer, name of the dealer or transporter or concerned person or his representative;
(4) The authorised officer shall forward the sample of the product taken within ten days to any of the laboratories mentioned in Schedule III or to
any other such laboratory when it may be notified by the Government in the Official Gazette for this purpose, for analysing with a view to checking
whether the density and other parameters of the product conform to the requirements of Bureau of Indian Standards specifications number IS
2796 and IS 1460 for motor spirit and high speed diesel respectively.
(5) The laboratory mentioned in Sub-clause (4) shall furnish the test report to the authorised officer within twenty days of receipt of sample at the
laboratory.
(6) The authorised officer shall communicate the test result to the dealer or transporter or concerned person and the oil company, as the case may
be, within five days of receipt of test results from the laboratory for appropriate action.
Clause 9 states that the Central Government may by a general or special order, issue directions from time to time and the dealer is bound by the
same. Clause 10 of the order further states that the provisions of the said order shall have overriding effect.
On a perusal of the above order, particularly Clause 8(4), it is evident that the authorised officer shall forward the sample of the product within
ten days to any of the laboratories mentioned in schedule 3 or to any other such laboratory, which may be notified by the Government in the official
gazette for the purpose of analysing with a view to check whether the density and other parameters of the product conforms the Bureau of Indian
Standard Specification Nos. IS-2796 and IS-1460 for Motor Spirit and Highspeed Diesel respectively.
Admittedly, in this case the sample was taken on 21.8.2006 and the sample was sent for testing to the Laboratory only on 18.9.2006 and the
test was conducted on 25.9.2006. Thus, there is statutory violation in not sending the sample within ten days to the Laboratory. The sample having
been taken on 21.8.2006, the same should have been sent to the Laboratory for test on or before 30.8.2006. The language in Clause 8(4) is very
clear that ""the authorised officer shall forward the sample of the product taken within ten days ...."". There is no dispute with regard to the fact of
sending of sample for testing on 18.9.2006 and the sample was tested in the Laboratory only on 25.9.2006. The Honourable Supreme Court in
(2002) 3 SCC 107 (Harbans Lal Sahnia v. Indian Oil Corporation Ltd.) in paragraph 5 considered the effect of not adhering to the mandatory
procedures while taking sample. Paragraph 5 reads thus,
It is submitted by Shri P.P. Malhotra, the learned senior counsel for the appellants that the dealership has been terminated on irrelevant and non-
existent grounds and, therefore, the order of termination is liable to be set aside. The Government of Uttar Pradesh has issued directions to all the
District Magistrates of the State in the matter of taking of samples and carrying out tests. There are two Government orders issued, namely, No.
1459/19-7-97-731-PP dated 25.4.1997 and No. 2722/29-7-2000-PP/2000. The orders state inter alia that the strength/frictions of petrol and
diesel change after ten days and therefore a time-limit of ten days is fixed for testing of such products. It is also emphasized that in the interest of
natural justice, the inspecting officials should test the sample for quality and density at the retail outlet itself in the presence of the dealer with
necessary equipments such as filter paper, hydrometer, thermometer, jar and the conversion table which are available at the retail outlets and
record density thereat only in the presence of the dealer....
From the perusal of Clause 8(4) and having regard to the nature of the language used, we are of the view that the procedure contemplated in
the said clause is mandatory to safeguard the interest of the dealer, and it is a procedural safeguard which has to be strictly adhered to, to find out
the actual nature of the product stored/sold. The clarification relied on by the learned Counsel for the Corporation is dated 1.8.2005 to show that
ten days time is to streamline the system and in no way related to quality of product, cannot be sustained in the nature of the order issued by the
Central Government in exercise of its statutory power u/s 3 of the Essential Commodities Act. It is well settled in law that when statute prescribes
certain things to be done in a particular manner, the same shall be done only in that manner and not in any other manner. The appellant having failed
to follow the above statutory rule issued by the Central Government, is not justified in relying upon the test report, which was obtained by sending
the sample beyond the prescribed period and hence the termination of retail dealership licence issued to the Retail Dealer was rightly set aside by
the learned single Judge. We are fully in agreement with the decision arrived at by the learned single Judge.
In view of our decision upholding the order of the learned single Judge in setting aside the order cancelling the dealership of the Retail Dealer in
W.P. No. 28696 of 2007, the writ petition filed by the wife of the Retail Dealer seeking mandamus is also sustainable and the order of the learned
single Judge in W.P. 3914 of 2007 is also confirmed. There are no merits in both the writ appeals and consequently both the writ appeals are
dismissed. No costs. Connected miscellaneous petitions are also dismissed.