M/s. Autopet; Shweta Jayprakash Singh v. Bharat Petroleum Corporation Limited

1. Since pleadings are completed and petition has been lodged on 2nd August 2017, with the consent of the parties, we dispose the petition at this stage. Rule made returnable forthwith.

2. Petitioners seek to quash and set aside an order of termination passed by Respondents, whereby the dealership of Petitioners in respect of petroleum and CNG retail outlet situated at Khira Compound, S. V. Road, Santacruz (West), Mumbai-400054 was terminated (the Outlet). It is Petitioners’ case that the order was passed without jurisdiction, arbitrarily and without fulfillment of mandatory pre-conditions as stated in the Marketing Discipline Guidelines, 2012 3 of 11 (Guidelines).

3. Petitioners had initially filed a Writ Petition bearing Writ Petition No.3107 of 2015 in this Court for quashing the show cause notice dated 20th August 2015. When the matter was circulated, Respondents requested for one week adjournment and, thereafter, during pendency of the said petition, the order of termination was passed. Petitioners withdrew the petition with liberty to file fresh petition against the termination order. Therefore, this is the second round for Petitioners.

4. Petitioners were appointed as dealers by Respondents pursuant to a Dealership Agreement dated 24th October 1994. The dispensers or dispensing units, underground tanks and other equipments at the outlet are installed by Respondents and belong to Respondents. Since October 1994, Petitioners have been carrying on its business without any hindrance and it is Petitioners’ case, without any allegation of irregularities against Petitioners.

5. At the fuel pump, there are three dispensing units that Respondents had installed and all the dispensing units were of Gilbarco make. There are 20 nozzles in the 3 dispensing units, i.e., 2 units had 8 nozzles each and 1 unit had 4 nozzles. Out of 20 nozzles, 12 nozzles are for petrol (MS) and 8 nozzles are for diesel (HSD). 4 of 11

6. On or about 1st August 2015, Officers from the Legal Meteorology Department visited the outlet for inspection and sealed all the 3 dispensing units alleging certain irregularities. Petitioners were also directed not to dispense MS or HSD to any motor vehicle. Petitioners challenged the action by filing Writ Petition (L) No.2370 of

2015. The petition was heard and allowed on 21st August 2015 and the Legal Meteorology Department was directed to forthwith remove the seals. The Department of course was given liberty to take action in accordance with law, in respect of the allegations that were made while drawing a panchnama.

7. On 11th August 2015, in the meanwhile, the representatives of Legal Metrology Department, the Sales Officer of Respondents as well as representatives of Gilbarco Veeder Root India Pvt. Ltd. (Gilbarco) came again to the outlet for inspection. Gilbarco is the Original Equipment Manufacturer (OEM) of the dispensing unit. Inspection was carried out by opening the sensor assembly of the dispensing units and after visual inspection, i.e., 6 Pulsar units from the nozzles were taken away by the officials of Legal Meteorology Department. Before taking away 6 pulsar units, a panchnama was also drawn. Admittedly before the visual inspection, all the seals were checked by the Legal Meteorology Department representatives and found intact. The representatives of the Legal Meteorology Department broke the seals 5 of 11 and all the Electronic Register Assembly (ERA), electronic cards and cables were visually inspected. It is Respondents’ case that on opening the sensor assembly, they observed unauthorised additional fitting in 5 sensor cards and unauthorised rework in 1 sensor card.

8. Therefore, a show cause notice dated 20th August 2015 was issued to Petitioners to which a visual inspection report of Gilbarco dated 12th August 2015 was also enclosed. The relevant extracts of the show cause notice reads as under:- “….. a. Visual inspection was done for the cables and seals. b. All the seals were found intact. c. The seals of the pulsar were broken and all the Electronic Register Assembly (ERA), electronic cards and cables were visually inspected. d. On opening Sensor Assembly, it was observed that there was unauthorized additional fitting in 5 Sensor Cards and unauthorized re-work in one sensor card. e. Total three MS and two HSD nozzles were found with additional fittings. f. One MS nozzle was suspected to have additional unauthorized fittings earlier, but was not found at the time of inspection. g. The MPDs were once again sealed by the Legal Metrology Officers after inspection and six pulsar units were taken by Legal Metrology Official in their custody. …..” 6 of 11

9. Petitioners replied to the show cause notice denying each and every allegation and also took the stand that when all the seals were admittedly found intact how could Petitioners be accused of unauthorised additions to 5 sensor cards and unauthorised re-work in 1 sensor card. Disregarding the stand of Petitioners, the impugned order dated 31st July 2017 came to be passed terminating Petitioners’ Dealership Agreement. In the impugned order, Respondents basically reiterated what is stated in the show cause notice and Gilbarco’s report, where Gilbarco has opined that the unauthorised additional fittings “might” have been placed with an intention to alter the delivery. To a query posted by the Court, Mr. Page in fairness agreed that there was not even a complaint from any party that Petitioners had altered the delivery while dispensing MS or HSD. Mr. Jagtiani submitted, and rightly so, when the seals are intact how could Petitioners be accused of manipulation of the sensors.

10. Mr. Page basically reiterated what is stated in the Affidavit-inreply of Sharmik Panchal, T.C. (Retail) affirmed on 29th October 2018. Mr. Page submitted, the fact that the seals were found to be intact does not supplant the fact that foreign additional fittings were discovered which were not provided by the OEM or Respondents or any other authority. But what really surprises us is that there is no finding and infact there is not even an attempt to find out how the sensors could 7 of 11 have been placed inside the dispensers when the seals were still intact. It is not even Respondents’ case that the seals were found to have been tampered with. There is a positive finding of Gilbarco that the seals of its original equipment was found intact. Mr. Jagtiani stated that these were the same nozzles which came to be installed way back in 1994 and there has been regular inspection by Respondents to see if the seals were intact. Mr. Jagtiani stated that even on 1st August 2015, when the Legal Meteorology representatives visited the outlet for inspection, they found the seals to be intact. In our view, it is not only sufficient for Respondents to say that they found unauthorised additional fitting in 5 sensor cards and unauthorised rework in 1 sensor, but it was necessary for Respondents to give a clear finding to show that there was unauthorised additional fitting in 5 sensor cards and unauthorised reworking in 1 sensor and those were made by Petitioners. As noted earlier, there is not even an attempt made to find out how those unauthorised 5 sensor cards could have been fitted or 1 sensor could have been reworked when the seals were intact.

11. In these circumstances, we should also note that even in the impugned order, it is admitted that the seals were found intact. The relevant portion of paragraph 5 and 7 reads as under:- “5. …… It was also found that when the seal was intact, it was necessary for the respondents to obtain appropriate enquiry report from 8 of 11 the Weights and Measures Department and take necessary action after giving an opportunity. ….. It has been further found that the said metering unit could not have been tampered with without de-sealing the Government seal. It can thus be seen that the Weights and Measures Unit has merely found that the meter was sealed and intact and tampering therein could not be found unless the seal was removed.

7. ….. There is a specific finding of the Weight and Measures Department that the metering unit was having intact seal and that unless the Government seal is removed or the wire is broken, it is not possible to put additional gear. In that view of the matter, when the seal as fixed by the Weight and Measures Department is intact and there is a specific finding that putting additional gear on the same is not possible without the said seal being removed, we find that relegating the petition to the appellate authority would serve no purpose.”

12. Mr. Page submitted that Petitioners should be directed to file a suit or any other proceedings and this Court should not exercise its jurisdiction under Article 226 of the Constitution of India. We reject this submission because Respondent No.1 is a State under Article 12 of the Constitution of India and having considered the pleadings and heard the counsels we are satisfied that the action of Respondent No.1 is arbitrary. Moreover, the Apex Court held in Harbanslal Sahnia & Anr. Vs. Indian Oil Corporation Ltd. & Ors.[1] as under: “The rule of exclusion of writ jurisdiction by availability of an alternative remedy is a rule of discretion and not one of compulsion. In an appropriate case in spite of availability of the alternative remedy, the High Court may still exercise its writ jurisdiction in at least three contingencies: (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 and is challenged. The present case attracts applicability of first two contingencies. Moreover, the petitioners' dealership, which is their bread and butter, came to be terminated for an irrelevant and non-existent cause. ”

9 of 11 Also the Apex Court in paragraph 19 of the judgment Hindustan Petroleum Corporation Ltd. & Ors. Vs. Super Highway Services & Anr.[2] observed as under:- “Mr. Lalit, however, pointed out that a differing view had been taken by this Court in State of Himachal Pradesh & Ors. Vs. Gujarat Ambuja Cement Ltd. & Anr. Reported in (2005) 6 SCC 499 in which the question as to whether the High Court should interfere under Article 226 of the Constitution, when an alternative remedy was available, fell for consideration and it was held that the power relating to alternative remedy is a rule of self- imposed limitation. It is essentially a rule of policy, convenience and discretion and never a rule of law. It was also held that despite the existence of an alternative remedy it is within the discretion of the High Court to grant relief under Article 226 of the Constitution, though, it should not interfere if an adequate efficacious alternative remedy was available.”