Full Judgment Text
IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: July 8, 2010
Decision on: July 22, 2010
W.P. (C) Nos. 14824-26 of 2006 & CM Nos. 15547 of 2007
& 2612 of 2010
DIESEL SERVICE CENTRE & ORS. ..... Petitioners
Through: Mr. A. Maitri, Advocate.
versus
BHARAT PETROLEUM CORPORATION LTD. ..... Respondent
Through: Mr. Sudhir Chandra, Senior Advocate
with Mr. A.K. Mishra, Mr. Parijat Sinha
Mr. Vikram Ganguly and
Mr. T.K. Majumdar, Advocates.
CORAM: JUSTICE S. MURALIDHAR
1. Whether Reporters of local papers may be
allowed to see the judgment? No
2. To be referred to the Reporter or not? Yes
3. Whether the judgment should be reported in Digest? Yes
J U D G M E N T
Background
1. This is the second round of litigation arising out of a communication
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dated 11 August 2005 sent by the Respondent Bharat Petroleum
Corporation Ltd. („BPCL‟) to the Petitioner No. 1 informing it that its
dealership stood terminated. Earlier the Petitioner had challenged the said
letter by filing Writ Petition (C) No. 13298-13300 of 2005 in this Court.
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The said writ petition was disposed of by an order dated 10 November
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2005. While quashing the decision dated 11 August 2005, the Court
held that the BPCL would be free to issue a fresh show cause notice to
the Petitioner and after granting the Petitioner an opportunity of being
heard, would pass a reasoned order. It was left open to the BPCL to take
W.P.(C) No.14824-26 of 2006 page 1 of 21
a decision whether to suspend business till the enquiry is completed. If
an enquiry was initiated, it was directed to be completed within three
months and a reasoned and speaking order be passed.
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2. Challenging the order dated 10 November 2005, BPCL filed LPA No.
30 of 2006 before the Division Bench of this Court. However, no stay
was granted. It may be noted that LPA No. 30 of 2006 later stood
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disposed of by an order dated 23 February 2007 whereby the Division
Bench declined to interfere with the order of the learned Single Judge
except clarifying that the said order should not be treated as a precedent
and that the present writ petition should be decided without being
influenced by any of the observations by the learned Single Judge.
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3. To revert to the narration, consequent upon the order dated 10
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November 2005, a letter dated 9 January 2006 was written by the BPCL
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to the Petitioner asking the Petitioner to treat BPCL‟s letter dated 11
August 2005 as a show cause notice and to furnish a reply thereto. The
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Petitioner No. 1 replied to the said show cause notice on 12 January
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2006. An oral hearing was granted on 3 March 2006. Thereafter by a
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detailed reasoned order dated 17 August 2006, the BPCL concluded that
there was no reason to take a view different from what was expressed in
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its letter dated 11 August 2005. Accordingly, it was decided that the
BPCL would not continue its business relationship and/or agreement with
Petitioner No.1; that the BPCL‟s petroleum products would not be sold to
the Petitioner No.1 for being resold to its retail customers; that the
Petitioner No.1 would not be allowed to retain possession of the BPCL‟s
W.P.(C) No.14824-26 of 2006 page 2 of 21
assets including its signage and/or its logo. The list of such assets was
furnished with the letter with the request that it should be returned to the
BPCL within 15 days. Finally, the Petitioner No.1 was not allowed to
use the BPCL‟s name in any manner whatsoever.
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4. The present writ petition challenges the above letter dated 17 August
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2006. By an order dated 4 October 2006, a learned Single Judge of this
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Court stayed the operation of the order dated 17 August 2006, inter alia,
on account of the fact that the Petitioner‟s dealership had continued for
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the last 27 years and that prior to the incident of 14 July 2005, no
shortcomings were found or communicated to the Petitioner.
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5. In the meanwhile, the term of the agreement came to an end on 19
November, 2005 and was not continued. Therefore, no supplies were
made to the Petitioner by the BPCL. However, with the Respondent
BPCL not being able to enter the premises to recover its assets, it filed
CM No. 15547 of 2007.
Events leading to the filing of this petition
6. Sometime in 1978, an agreement was entered into between the
Petitioner No. 1 firm and the Respondent BPCL whereby licence was
granted to the Petitioner No. 1 to operate a retail outlet of the BPCL at
Karnal for dispensing both high speed diesel (HSD) and motor spirit
(„MS‟). It is stated that a team of the BPCL inspected the retail outlet
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(„RO‟) of the Petitioner No.1 on 14 July 2005. The team comprised of
three senior officials of the BPCL i.e. Mr. J.P. Meena (Deputy Manager
W.P.(C) No.14824-26 of 2006 page 3 of 21
(Sales) Panipat), Mr. K.G. Ghatwai (Manager (Quantity Control Cell -
Northern Region) and Mr. P.S. Bhargava, General Manager (Quality
Control Cell - Central Office). It must be mentioned here that the land on
which the RO was operating belonged to the Petitioner No.1 firm of
which Petitioners 2 and 3 are partners.
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7. There are two versions of what transpired on 14 July 2005 at the RO.
According to the report of the inspection team, a copy of which has been
placed on record as Annexure P-5, the team began its visit at around
11.15 am and introduced themselves to one Mr. Jagjeet Singh Chawla
who was available at the RO. Mr. Chawla then associated himself with
the inspection. While checking the four HSD Dispensing Units with
respect to 5 litres measure (four to five readings were taken for each
Dispensing Unit), the supply from the dispensers was “found to be
erratic”. The short delivery was varying between 40-100 ml and the
excess delivery from the same dispensers was varying upto 50 ml. Since
no apparent reasons could be detected for such variation, the company
technician Mr. Naresh was called for further examination of the
dispensers. It is stated that when two dispensers were opened by Mr.
Naresh, it was observed that “the gears fitted between the metering unit
and totalizer were of non-standard type and one of the gears was loosely
fitted”. It was observed that “the gears were having 19 & 39 teeth as
against a normal design of 20 & 38 teeth respectively”. Photographs of
the gears were taken by the team with the camera and the gears were
taken out for further examination/study by the engineering team. As
regards the MS Dispensing Units, one unit was observed giving short
W.P.(C) No.14824-26 of 2006 page 4 of 21
delivery of 50 ml per 5 litres. In order to prepare a joint statement with
Mr. Chawla on the findings, the team went to the sales room. It is stated
that at that time the people present at the RO entered the sales room and
blocked its door. That group consisted of about 30 persons who were “the
office bearers/members of the local/state petroleum dealers association.”
One of these members was having a camera with which photographs
were taken of the inspecting team. The persons gathered started shouting
and talking loudly among themselves and used foul/abusive language
against the officers of BPCL. One in the group snatched the camera of
the inspecting team and the papers on which the findings of the RO
inspection had been written. The team was unable to prepare a joint
report at the spot and was forced to leave. They were prevented from
taking the non-standard gears fitted to the dispensing units to the BPCL‟s
territory office for further investigation. When the team got into the car
and was about to leave, one car blocked the passage. The assembled
group insisted that “unless a certificate to the effect that everything was
found alright during the inspection was issued, the team would not be
allowed to leave the premises”. In the above mentioned threatening
environment and considering the mood of the group of the people
assembled, an inspection report was prepared forcibly which was signed
by Shri J.P. Meena. Thereafter, the group insisted that the report must be
signed by all the team members and then only the team would be allowed
to leave. Therefore, other team members also signed the said report. A
narration of all the above facts is contained in an undated report of the
inspection team which is at Annexure P-5 to the writ petition.
W.P.(C) No.14824-26 of 2006 page 5 of 21
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8. On 11 August 2005, a letter was written to the Petitioners by the
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BPCL referring to the incidents of 14 July, 2005 and the report of the
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inspecting team. It stated that on 18 July 2005, one of the members of
the inspecting team had filed a letter with the Senior Superintendent of
Police, Karnal narrating the incidents as mentioned in the inspecting
team‟s report. Reference was also made to a news item in Hindi
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published on 15 July 2005 in the Dainik Jagaran , Karnal and on 19
July 2005 in the Punjab Kesari , Karnal. Copies of the inspection team‟s
report and the news reports were enclosed with the letter. The Petitioners
were told by the BPCL that they had neither intimated their version of the
incident to the BPCL “nor made any statement in the newspaper
contradicting the news item as reported in the newspapers”. Therefore,
the inaction on the part of the Petitioners suggested that “you were either
a party to the said news item and/or concurred with the contents of the
said news items”. The letter proceeded to state that since the Petitioners
had neither given their version of the incident to the BPCL nor caused
any report to be published in the newspaper contradicting the news item,
the Petitioners intended to communicate to the general public that the
BPCL was not a good company which should be trusted by the public. It
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was thereafter observed in the letter dated 11 August 2005 as under:
“In the circumstances aforesaid, we have reason to
believe that if you had not tampered with the
equipments, as has been mentioned in the
aforesaid report of the inspecting team of BPCL
and the inspecting team of BPCL had really come
to collect a bribe under the pretext of conducting
inspection as hinted in the said news items, you
would have, as BPCL‟s dealer, reported about the
W.P.(C) No.14824-26 of 2006 page 6 of 21
incident to BPCL immediately on 14.07.2005
itself and could have called upon some of the
officers of BPCL to ascertain the position instead
of maligning the name of BPCL in public by
calling other dealers who had nothing to do with
the said retail outlet and/or instigating the
reporters of the said newspapers to malign and
prejudice the good name of BPCL.”
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9. In para 8 of the letter dated 11 August, 2005, the analysis of the facts
as stated in the inspecting team‟s report was set out. Then in para 9, the
summary of the findings of the inspecting team were set out as under:
“After considering all the aforesaid documents and as no action
was taken by you rebutting the reports in the newspapers and/or
intimating us of your version of the incident that had taken place at
the retail outlet on 14.07.2005, we are of the view that the
inspecting team had found that:-
(a) you had tampered with the dispensers and
either by yourself or through your servants or
agents interfered with the working parts of the
outfit or other equipments provided by BPCL.
(b) the gear fitted between the metering unit and
totalizer were of non-standard type and one of the
gears was loosely fitted. These gears were having
19 and 39 as against the correct design of 20 to 38
teeth respectively.
(c) MS dispensing unit was giving short delivery
of 50 ml per 5 litres.
(d) you have continued sale of MS and HSD with
W.P.(C) No.14824-26 of 2006 page 7 of 21
the full knowledge that the metering units were
delivering short or was showing wrong measure of
the quantity and continued to operate the said
defective measuring units.
From the said report, it is clear that you have
committed fraud and/or wrongful gain by
overcharging the customers and your such act is
not only a breach of the agreement between
BPCAL and you but also illegal and violation of
various Acts and laws. We further find that you
prohibited and interfered in the job of the
inspecting team and in fact did not provide
facilities to the said inspecting team for carrying
out their job of inspection and thereby committed
a breach of the agreement.”
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10. The letter dated 11 August, 2005 proceeded to state that the
Petitioners‟ inactions were forbidden by law and were of such a nature
that if permitted, it would defeat the provisions of the law, injure the
customers of the BPCL and would be opposed to public policy.
Consequently, the dealership was terminated as mentioned hereinbefore.
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This letter dated 11 August, 2005 was subsequently treated as the show
cause notice.
11. The Petitioners‟ version of the incident is contained in their reply
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dated 12 January 2006 consequent upon the order passed by this Court
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in terms of which the said letter dated 11 August 2005 was accepted as a
show cause notice. The stand of the Petitioner No.1 firm was that an
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inspection report was signed by Mr. J.P. Meena on 17 June 2005. A
W.P.(C) No.14824-26 of 2006 page 8 of 21
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calibration carried out on 6 June 2005 indicated that all the pumps were
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working satisfactorily. It was maintained that on 14 July 2005 the
inspection team found the seals to be intact and un-tampered and the
dispensing units in proper working order. This is claimed to have
happened in the presence of Mr. Naresh Kumar, the technician.
12. The Petitioners claim that when Petitioner No. 3 sought a copy of the
inspection report, it was refused. It was alleged that the team compelled
Petitioner No.3 to sign certain blank papers stating that “they would
prepare the report at leisure and send a copy thereof to us later”.
Petitioner No. 3 is claimed to have refused to sign such blank
papers/sheets. The Petitioners state that the news of the visit by the
vigilance team at the Petitioner‟s premises had spread amongst the
association members, around five of whom reached the premises. Some
journalists also reached the premises. It is then stated by the Petitioners
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in their letter dated 12 January, 2006 that “it was apparent from the
attitude of the vigilance team that there was a clear attempt to prejudice
our business by implicating us in some issue of misconduct as defined by
the guidelines. My son informed the members of the association about his
apprehensions and they took up the matter with the members of the
vigilance team”. The letter proceeds to state that the vigilance team
“categorically informed that their attitude and demeanour while carrying
out the vigilance check amounts to misconduct and that the association
would take up the matter to the highest level”. It is then stated as under:
“Apparently, the Vigilance team sensed the futility
of carrying forth its unsavory conduct and handed
over to my son, a copy of a satisfactory inspection
W.P.(C) No.14824-26 of 2006 page 9 of 21
report as well as Pump Maintenance Report signed
by Mr. Naresh Kumar, Technician. The members
of the Vigilance Team left thereafter.”
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13. The Petitioners‟ letter dated 12 January, 2006 also states that one
Mr. Shiv Om, Sales Assistant of the BPCL conducted an inspection on
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16 July 2005 and gave a satisfactory report. A copy of the said report
was enclosed with the reply. It is claimed by the Petitioners that since
nothing had gone amiss there was no occasion for them to go to the
police and had the Petitioners been called upon to give their version “they
would have been more than willing to do so”. It was denied that the
news items in the local newspapers were got published by the Petitioners.
Since no explanation was sought from them there was no occasion to
make statement to the Press. It was pointed out that the complaint was
made only 4 days after the alleged incident. It was questioned that if
indeed there was an unsavoury incident, “was it not the boundant ( sic )
duty of the officials of the public sector undertaking to make an
immediate report to the police officials?” It is claimed that upon an
enquiry it was found that the case has been closed as Mr. Ghatwai had
stated that he did not wish any action to be taken in the complaint. As
regards the past relationship, it was claimed that since there had not been
a single complaint either from any customer or the BPCL as to the
Petitioners‟ conduct in business, there was no occasion for loss of trust
and that they were within their rights to give a complaint against the
conduct of a particular official. It is claimed that the tampering of the
seal “was an impossible act” since the seal was put by the BPCL itself
and an additional seal by the Weights & Measures Department. A
W.P.(C) No.14824-26 of 2006 page 10 of 21
detailed reference was made to the Marketing Discipline Guidelines
(„MDG‟) in which there were ambiguities, removal of which was sought
by the Federation of All India Petroleum Traders („FAIPT‟). It was also
pointed out that even assuming that there was tampering of meters or
lesser volume or charging of higher price, the MDG did not envisage the
penalty of termination of dealership.
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14. By a further letter dated 3 March 2006, soon after the personal
hearing, a letter was written to the BPCL by the Petitioners where inter
alia it was stated that “in the event any BPCL official is perturbed or
disturbed by any averment or allegation on our behalf, we are, still
standing by our version, ready and willing to apologise”. It was requested
that the penalty of termination was not warranted.
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15. The Petitioners on 20 September 2006 filed a compilation of
documents in this petition. This included the leaflets in Hindi and English
issued by the Haryana Petroleum Dealers Association („HPDA‟) which
inter alia referred to the incident that took place in the Petitioners‟ petrol
pump at Karnal. The said pamphlet alleged that “BPCL officers are
habitual of flouting rules”. It is further demanded that “Enquiry on Arjun
Heera, D.S. Bhargava, J.P. Meena, K.G. Ghatwai, Ms. Widhani‟s
property and character should be handed over to the CBI for inquiry”.
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Among the documents filed was a „closure report‟ of the police dated 5
September 2005 which recorded the fact that the officials of the BPCL
informed the police that they were not willing to pursue the matter any
further.
W.P.(C) No.14824-26 of 2006 page 11 of 21
16. In the counter affidavit, it has been pointed out by the BPCL that the
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letter dated 12 January 2006 was referred to Mr. P.S. Bhargava, one of
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the members of the inspecting team, for his comments. He replied on 31
January 2006 in which, inter alia , he reiterated that the inspection report
signed by the three of them stating that a mob had surrounded them,
threatened them, snatched their camera and compelled them to write out a
satisfaction report, was correct. He reiterated that “a threatening
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atmosphere had been created on the site on 14 July 2005 and the
inspecting team was not allowed to go out of the site unless they gave the
so called satisfaction report”. The counter affidavit pointed out that this
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letter dated 31 January 2006 of Mr. Bhargava was served on the
Petitioners to enable them to reply but they did not do so.
Submissions of counsel
17. Mr. Maitri, learned counsel appearing for the Petitioners submitted
that the MDG did not provide for such severe penalty as was handed
down to the Petitioners. According to him, the maximum penalty action
for adulteration of MS/HSD for the first time was a fine of Rs.20,000/-
and suspension of sales and supplies of all products for 30 days. For
short delivery of products, it was a fine of Rs.10,000/- and suspension of
sales for 15 days. It was only on the second time irregularity in the case
of adulteration that the penalty of termination was envisaged. As regards
the over-charging for the first time incident, a fine of Rs.5,000/- and a
suspension of sales for 15 days was envisaged. Mr. Maitri accordingly
submitted that the penalty of termination of dealership was
disproportionate. The supplies to the Petitioners‟ petrol pump was
W.P.(C) No.14824-26 of 2006 page 12 of 21
stopped for nearly five years now and that the Petitioners had suffered
enough. He submitted that there was no justification for the impugned
order of termination.
18. Mr. Maitri then submitted that without prejudice to the above
submissions, the inspection reports, copies of which were given to the
Petitioners and enclosed with the petition clearly showed that the
inspection team did not find anything amiss. It was submitted that it was
on account of the Petitioners not being able to accede to the illegal
gratification demanded by the officials of the BPCL that they were being
harassed. He relied on the judgment of the Supreme Court in Hindustan
Petroleum Corporation Ltd. v. Super Highway Services 2010 STPL
(Web) 136 SC in which the Court emphasized that termination of a
dealership was of a severe consequence and that the procedure followed
must be absolutely fair and just. It was observed that the non-service of
notice to the aggrieved person before termination of his dealership
agreement also offends the well-established principle that no person
should be condemned unheard. It is submitted that despite the orders of
this Court, the procedure adopted was neither just nor fair. Mr. Maitri
submits that where the machines are entirely maintained by the HPCL the
termination of services of the dealer on the ground of tampering of the
machines is not fair. He accordingly prayed that the termination order
should be set aside.
19. Mr. Sudhir Chandra, learned Senior counsel appearing for the BPCL
first submitted that the agreement entered into with the Petitioners had
W.P.(C) No.14824-26 of 2006 page 13 of 21
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already come to an end on 19 November 2005. The agreement was not
renewed. The Petitioner was, therefore, not a dealer anymore and there
could be no mandamus issued to execute a fresh dealership agreement
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with the Petitioner, particularly when on account of the incident of 14
July 2005, the BPCL had lost its confidence and trust in the Petitioner
No. 1 and did not wish to renew the dealership agreement. According to
the BPCL, the FIR lodged still exists but for some reasons has not been
investigated. Mr.Sudhir Chandra disputed the correctness of the closure
report which he termed as a collusive document. He submitted that the
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incident of 14 July 2005 was indeed extraordinary where the inspecting
team was surrounded by a mob instigated by the Petitioners; the mob
snatched the team‟s camera, papers and the notes of inspection; the
members of the inspecting team were threatened, gheraoed and
compelled to write out a satisfaction report. He submitted that the BPCL
could not be expected in the circumstances to condone the acts and
continue the dealership.
20. Mr. Sudhir Chandra submitted that this was a case where the MDG
could be departed from since this was an extraordinary circumstance.
The version of the Petitioners, as released to the press, was that the BPCL
officers had come to the petrol pump to collect bribes and, therefore, this
was clearly done to malign and defame BPCL. The pamphlets issued by
the HPDA of which the Petitioner No.3 was an active member, included
several scandalous imputations about the BPCL officers. Clearly, the
BPCL could not be expected to carry on any business relationship with
the Petitioners.
W.P.(C) No.14824-26 of 2006 page 14 of 21
21. Mr. Sudhir Chandra referred to the judgment of the Supreme Court in
Surya Dev Rai v. Ram Chander Rai (2003) 6 SCC 675 and submitted
that in exercise of its powers under Article 226 of the Constitution, this
Court had only to examine if in the circumstances, the action taken by the
BPCL was just and fair. BPCL could not be compelled to continue the
dealership which, in any event, had come to an end. He pointed out that
an apology had been offered by the Petitioners which clearly indicated
that they were not standing by their own version.
22. Mr. Maitri, in his rejoinder submitted that the Petitioners were not
concerned with what the HPDA did. The Petitioners could not be held
responsible for the press reports either, particularly since the names of the
Petitioners never figured in the said reports. The ground that the
dealership agreement has come to an end and cannot be renewed, was not
pleaded in the earlier round of litigation by the BPCL and, therefore,
could not be used to frustrate the present writ petition. The termination
order pertained to what was alleged to be found during inspection for
which no convincing proof had been produced by the BPCL. Mr. Maitri
submitted that unless something extraordinarily incriminating was found
against a dealer, a contract of dealership was usually renewed. He
submitted that the main object of the BPCL was to somehow get the land
owned by the Petitioners to be given on lease to the BPCL and that since
the Petitioners were not willing to do so, they were falsely implicated by
BPCL.
W.P.(C) No.14824-26 of 2006 page 15 of 21
Loss of mutual trust and non-continuation of dealership
23. It must be noticed at the outset that there is no prayer by the
Petitioners that a mandamus should be issued to BPCL to renew the
dealership agreement. The challenge is principally to BPCL‟s decision to
terminate the dealership of Petitioner No.1 which in turn was essentially
based on what happened at the RO licenced Petitioner No.1 at Karnal on
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14 July 2005. Although there is a wide divergence in the version of the
Petitioners on the one hand and the BPCL on the other as to what
transpired, it is plain that an unpleasant incident did take place at the RO
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on 14 July 2005. Both in the present writ petition as well as in the
earlier writ petition, the Petitioners do not deny the fact that the members
of the HPDA reached the premises upon hearing of the “news of the visit
by the vigilance team at the Petitioners‟ premises” and also that “some
journalists also reached the premises by this time”. The statement that
“the vigilance team was categorically informed that their attitude and
demeanour while carrying out the vigilance check amounts to misconduct
and that the association would take up the matter to the highest level”
does indicate that even according to the Petitioners what happened at the
RO at Karnal was not a pleasant one. Clearly, there was a confrontation.
It is not difficult to visualise a scenario of the three BPCL officers being
surrounded by the members of the HPDA, with journalists watching and
the vigilance team being “categorically” told that the vigilance team was
allegedly committing misconduct.
24. The printed pamphlets of the HPDA, which has been placed on
record by the Petitioners themselves, also corroborate the fact that the
W.P.(C) No.14824-26 of 2006 page 16 of 21
members of the HPDA were indeed openly accusing the BPCL‟s officers
and in particular the members of the vigilance team of misconduct. The
pamphlet referred to the incident at Karnal, and demanded a CBI enquiry
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against these officers. It called for a dharna on 16 August 2005 outside
the Panipat office of the BPCL. The statements made in the pamphlets
issued by the HPDA, which have not been denied by the Petitioners as
they have themselves placed it on record, are prima facie scandalous.
However, this Court is not called upon to determine if these allegations
were justified or not. What is plain from the pamphlets, however, is that
the Petitioners and the members of the HPDA did not repose any faith or
trust in the BPCL.
25. Therefore, the submission of the learned counsel for the Petitioners
that the Petitioners have nothing to do with the HPDA and that somehow
this Court should accept that the Petitioners continue to repose faith and
trust in the BPCL is not at all convincing. In fact, even during the course
of his submissions, learned counsel for the Petitioners stated that the
BPCL somehow tried to get the Petitioners to give the land owned by
them on lease to the BPCL and since they were refusing to do so, a false
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report about the incident of 14 July 2005 was put forward in revenge by
the officers of the BPCL. Apart from the fact that such an allegation finds
no mention in the pleadings, this Court fails to appreciate why the BPCL
would want “revenge” to be taken against the licencee of a RO because
the licencee is unwilling to give the land on lease to the BPCL. In any
event, this further demonstrates the complete lack of trust between the
parties.
W.P.(C) No.14824-26 of 2006 page 17 of 21
26. There is merit in the contention of Mr. Sudhir Chandra, learned
Senior counsel appearing for the BPCL that independent of the impugned
decision to terminate, the dealership agreement having come to an end on
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19 November 2005 and the Petitioner No. 1 no longer continuing as a
dealer, no mandamus can possibly be issued to the BPCL to continue the
dealership. To require the BPCL to continue its dealership agreement five
years after it has come to an end is, apart from being legally untenable,
also rendered implausible with neither party reposing trust in the other.
Is the termination of the dealership arbitrary?
27. The only question, therefore, that survives is whether the impugned
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letter of termination dated 17 August 2006 , which reaffirms the earlier
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letter dated 11 August 2005 issued by the BPCL, is arbitrary and
therefore invalid as contended by the Petitioners. The scope of the
powers and jurisdiction of this Court under Article 226 of the
Constitution is limited. The Court is, in this petition, essentially
concerned with the question whether the procedure adopted by the BPCL
in arriving at the impugned decision was just and fair. A further question
that arises is whether the termination of the dealership was, in the
circumstances, a „disproportionate‟ measure.
28. As regards the procedure, any grievance that the Petitioners may have
had on that score does not survive after the previous order by this Court.
Although it was contended that even the procedure followed thereafter
was not fair, this Court finds that an oral hearing was also given to the
Petitioners thereafter. This court is not able to agree with the contention
W.P.(C) No.14824-26 of 2006 page 18 of 21
of the Petitioners that there has been any procedural unfairness on the
part of the BPCL. The issue, therefore, boils down to the reasonableness
of the impugned order of termination.
29. The question whether the Petitioners were overcharging for the
products sold by them or whether there was a tampering with the seals of
the dispensing units, are disputed questions of fact. Therefore this Court
proposes to confine itself to examining whether, arising out of the
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incident of 14 July 2005, as spoken to by the parties, the BPCL was
justified in proceeding to terminate its dealership agreement with
Petitioner No.1 .
30. This Court is conscious of the fact that there are divergent versions of
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what happened on 14 July 2005. Still, as noticed hereinbefore, the fact
that there was a collection of members of the HPDA and journalists on
the spot and that there were unpleasant exchanges between them and the
vigilance team and that even at that stage the vigilance team was accused
of indulging in misconduct, clearly shows that the atmosphere was a
hostile one. The calling of journalists at the RO office of the Petitioner
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No.1 on 14 July 2005 and the statements made to them by the
Petitioners is a further pointer to the fact that that there was a breakdown
of the relationship between the parties. The fact that an FIR was lodged
after four days is also not denied. That the BPCL officers were unwilling
to go back thereafter to make further statements to the local police as
stated in the „closure‟ report is also not difficult to appreciate. In this
W.P.(C) No.14824-26 of 2006 page 19 of 21
scenario, if the BPCL took a decision to stand by its officers who had
undertaken the inspection, such decision cannot be termed arbitrary or
unreasonable. It is indeed difficult to accept, in the absence of any
material in support, that the officials of the BPCL fabricated the
inspection report which is Annexure P-5. This version has been
reaffirmed by way of an additional affidavit filed in this Court by the
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BPCL describing in detail what transpired on 14 July 2005.
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31. The incident of 14 July 2005 was indeed an extraordinary one. This
Court is unable to accept the submissions of the learned counsel
appearing for the Petitioners that such an incident like this should be
evaluated in terms of the MDG. The MDG does not envisage any such
situation. It talks of particular instances of „irregularity‟ and misconduct
like overcharging of products, tampering of seals, adulteration and so on.
The response by the BPCL to such incident also, therefore, cannot be
evaluated with reference to the MDG. It was in the discretion of the
BPCL to decide whether in the light of the incident where its officers
were gheraoed, criminally intimidated and threatened the dealership
agreement should be continued. BPCL‟s decision to terminate the
dealership cannot, in the circumstances noticed hereinbefore, be
characterized as arbitrary or disproportionate.
32. This Court, therefore, concludes that the impugned decision dated
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17 August 2006 of the BPCL, reaffirming its earlier decision dated 11
August 2005, does not suffer from any legal infirmity warranting any
W.P.(C) No.14824-26 of 2006 page 20 of 21
interference by this Court.
33. It is expected that since the dealership agreement even otherwise
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came to an end on 19 November 2005, consistent with their obligations
therein the Petitioners will permit the BPCL to remove their assets from
the premises. If for some reason that does not happen, it will be open to
the BPCL to take recourse to such measures as are available to it in
accordance with law.
34. For the aforementioned reasons, the writ petition is dismissed with
costs of Rs.10,000/- which will be paid by the Petitioners to the
Respondent BPCL within a period of four weeks. The pending
applications are disposed of.
S. MURALIDHAR, J.
JULY 22, 2010
dn
W.P.(C) No.14824-26 of 2006 page 21 of 21
Reserved on: July 8, 2010
Decision on: July 22, 2010
W.P. (C) Nos. 14824-26 of 2006 & CM Nos. 15547 of 2007
& 2612 of 2010
DIESEL SERVICE CENTRE & ORS. ..... Petitioners
Through: Mr. A. Maitri, Advocate.
versus
BHARAT PETROLEUM CORPORATION LTD. ..... Respondent
Through: Mr. Sudhir Chandra, Senior Advocate
with Mr. A.K. Mishra, Mr. Parijat Sinha
Mr. Vikram Ganguly and
Mr. T.K. Majumdar, Advocates.
CORAM: JUSTICE S. MURALIDHAR
1. Whether Reporters of local papers may be
allowed to see the judgment? No
2. To be referred to the Reporter or not? Yes
3. Whether the judgment should be reported in Digest? Yes
J U D G M E N T
Background
1. This is the second round of litigation arising out of a communication
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dated 11 August 2005 sent by the Respondent Bharat Petroleum
Corporation Ltd. („BPCL‟) to the Petitioner No. 1 informing it that its
dealership stood terminated. Earlier the Petitioner had challenged the said
letter by filing Writ Petition (C) No. 13298-13300 of 2005 in this Court.
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The said writ petition was disposed of by an order dated 10 November
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2005. While quashing the decision dated 11 August 2005, the Court
held that the BPCL would be free to issue a fresh show cause notice to
the Petitioner and after granting the Petitioner an opportunity of being
heard, would pass a reasoned order. It was left open to the BPCL to take
W.P.(C) No.14824-26 of 2006 page 1 of 21
a decision whether to suspend business till the enquiry is completed. If
an enquiry was initiated, it was directed to be completed within three
months and a reasoned and speaking order be passed.
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2. Challenging the order dated 10 November 2005, BPCL filed LPA No.
30 of 2006 before the Division Bench of this Court. However, no stay
was granted. It may be noted that LPA No. 30 of 2006 later stood
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disposed of by an order dated 23 February 2007 whereby the Division
Bench declined to interfere with the order of the learned Single Judge
except clarifying that the said order should not be treated as a precedent
and that the present writ petition should be decided without being
influenced by any of the observations by the learned Single Judge.
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3. To revert to the narration, consequent upon the order dated 10
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November 2005, a letter dated 9 January 2006 was written by the BPCL
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to the Petitioner asking the Petitioner to treat BPCL‟s letter dated 11
August 2005 as a show cause notice and to furnish a reply thereto. The
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Petitioner No. 1 replied to the said show cause notice on 12 January
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2006. An oral hearing was granted on 3 March 2006. Thereafter by a
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detailed reasoned order dated 17 August 2006, the BPCL concluded that
there was no reason to take a view different from what was expressed in
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its letter dated 11 August 2005. Accordingly, it was decided that the
BPCL would not continue its business relationship and/or agreement with
Petitioner No.1; that the BPCL‟s petroleum products would not be sold to
the Petitioner No.1 for being resold to its retail customers; that the
Petitioner No.1 would not be allowed to retain possession of the BPCL‟s
W.P.(C) No.14824-26 of 2006 page 2 of 21
assets including its signage and/or its logo. The list of such assets was
furnished with the letter with the request that it should be returned to the
BPCL within 15 days. Finally, the Petitioner No.1 was not allowed to
use the BPCL‟s name in any manner whatsoever.
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4. The present writ petition challenges the above letter dated 17 August
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2006. By an order dated 4 October 2006, a learned Single Judge of this
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Court stayed the operation of the order dated 17 August 2006, inter alia,
on account of the fact that the Petitioner‟s dealership had continued for
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the last 27 years and that prior to the incident of 14 July 2005, no
shortcomings were found or communicated to the Petitioner.
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5. In the meanwhile, the term of the agreement came to an end on 19
November, 2005 and was not continued. Therefore, no supplies were
made to the Petitioner by the BPCL. However, with the Respondent
BPCL not being able to enter the premises to recover its assets, it filed
CM No. 15547 of 2007.
Events leading to the filing of this petition
6. Sometime in 1978, an agreement was entered into between the
Petitioner No. 1 firm and the Respondent BPCL whereby licence was
granted to the Petitioner No. 1 to operate a retail outlet of the BPCL at
Karnal for dispensing both high speed diesel (HSD) and motor spirit
(„MS‟). It is stated that a team of the BPCL inspected the retail outlet
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(„RO‟) of the Petitioner No.1 on 14 July 2005. The team comprised of
three senior officials of the BPCL i.e. Mr. J.P. Meena (Deputy Manager
W.P.(C) No.14824-26 of 2006 page 3 of 21
(Sales) Panipat), Mr. K.G. Ghatwai (Manager (Quantity Control Cell -
Northern Region) and Mr. P.S. Bhargava, General Manager (Quality
Control Cell - Central Office). It must be mentioned here that the land on
which the RO was operating belonged to the Petitioner No.1 firm of
which Petitioners 2 and 3 are partners.
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7. There are two versions of what transpired on 14 July 2005 at the RO.
According to the report of the inspection team, a copy of which has been
placed on record as Annexure P-5, the team began its visit at around
11.15 am and introduced themselves to one Mr. Jagjeet Singh Chawla
who was available at the RO. Mr. Chawla then associated himself with
the inspection. While checking the four HSD Dispensing Units with
respect to 5 litres measure (four to five readings were taken for each
Dispensing Unit), the supply from the dispensers was “found to be
erratic”. The short delivery was varying between 40-100 ml and the
excess delivery from the same dispensers was varying upto 50 ml. Since
no apparent reasons could be detected for such variation, the company
technician Mr. Naresh was called for further examination of the
dispensers. It is stated that when two dispensers were opened by Mr.
Naresh, it was observed that “the gears fitted between the metering unit
and totalizer were of non-standard type and one of the gears was loosely
fitted”. It was observed that “the gears were having 19 & 39 teeth as
against a normal design of 20 & 38 teeth respectively”. Photographs of
the gears were taken by the team with the camera and the gears were
taken out for further examination/study by the engineering team. As
regards the MS Dispensing Units, one unit was observed giving short
W.P.(C) No.14824-26 of 2006 page 4 of 21
delivery of 50 ml per 5 litres. In order to prepare a joint statement with
Mr. Chawla on the findings, the team went to the sales room. It is stated
that at that time the people present at the RO entered the sales room and
blocked its door. That group consisted of about 30 persons who were “the
office bearers/members of the local/state petroleum dealers association.”
One of these members was having a camera with which photographs
were taken of the inspecting team. The persons gathered started shouting
and talking loudly among themselves and used foul/abusive language
against the officers of BPCL. One in the group snatched the camera of
the inspecting team and the papers on which the findings of the RO
inspection had been written. The team was unable to prepare a joint
report at the spot and was forced to leave. They were prevented from
taking the non-standard gears fitted to the dispensing units to the BPCL‟s
territory office for further investigation. When the team got into the car
and was about to leave, one car blocked the passage. The assembled
group insisted that “unless a certificate to the effect that everything was
found alright during the inspection was issued, the team would not be
allowed to leave the premises”. In the above mentioned threatening
environment and considering the mood of the group of the people
assembled, an inspection report was prepared forcibly which was signed
by Shri J.P. Meena. Thereafter, the group insisted that the report must be
signed by all the team members and then only the team would be allowed
to leave. Therefore, other team members also signed the said report. A
narration of all the above facts is contained in an undated report of the
inspection team which is at Annexure P-5 to the writ petition.
W.P.(C) No.14824-26 of 2006 page 5 of 21
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8. On 11 August 2005, a letter was written to the Petitioners by the
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BPCL referring to the incidents of 14 July, 2005 and the report of the
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inspecting team. It stated that on 18 July 2005, one of the members of
the inspecting team had filed a letter with the Senior Superintendent of
Police, Karnal narrating the incidents as mentioned in the inspecting
team‟s report. Reference was also made to a news item in Hindi
th th
published on 15 July 2005 in the Dainik Jagaran , Karnal and on 19
July 2005 in the Punjab Kesari , Karnal. Copies of the inspection team‟s
report and the news reports were enclosed with the letter. The Petitioners
were told by the BPCL that they had neither intimated their version of the
incident to the BPCL “nor made any statement in the newspaper
contradicting the news item as reported in the newspapers”. Therefore,
the inaction on the part of the Petitioners suggested that “you were either
a party to the said news item and/or concurred with the contents of the
said news items”. The letter proceeded to state that since the Petitioners
had neither given their version of the incident to the BPCL nor caused
any report to be published in the newspaper contradicting the news item,
the Petitioners intended to communicate to the general public that the
BPCL was not a good company which should be trusted by the public. It
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was thereafter observed in the letter dated 11 August 2005 as under:
“In the circumstances aforesaid, we have reason to
believe that if you had not tampered with the
equipments, as has been mentioned in the
aforesaid report of the inspecting team of BPCL
and the inspecting team of BPCL had really come
to collect a bribe under the pretext of conducting
inspection as hinted in the said news items, you
would have, as BPCL‟s dealer, reported about the
W.P.(C) No.14824-26 of 2006 page 6 of 21
incident to BPCL immediately on 14.07.2005
itself and could have called upon some of the
officers of BPCL to ascertain the position instead
of maligning the name of BPCL in public by
calling other dealers who had nothing to do with
the said retail outlet and/or instigating the
reporters of the said newspapers to malign and
prejudice the good name of BPCL.”
th
9. In para 8 of the letter dated 11 August, 2005, the analysis of the facts
as stated in the inspecting team‟s report was set out. Then in para 9, the
summary of the findings of the inspecting team were set out as under:
“After considering all the aforesaid documents and as no action
was taken by you rebutting the reports in the newspapers and/or
intimating us of your version of the incident that had taken place at
the retail outlet on 14.07.2005, we are of the view that the
inspecting team had found that:-
(a) you had tampered with the dispensers and
either by yourself or through your servants or
agents interfered with the working parts of the
outfit or other equipments provided by BPCL.
(b) the gear fitted between the metering unit and
totalizer were of non-standard type and one of the
gears was loosely fitted. These gears were having
19 and 39 as against the correct design of 20 to 38
teeth respectively.
(c) MS dispensing unit was giving short delivery
of 50 ml per 5 litres.
(d) you have continued sale of MS and HSD with
W.P.(C) No.14824-26 of 2006 page 7 of 21
the full knowledge that the metering units were
delivering short or was showing wrong measure of
the quantity and continued to operate the said
defective measuring units.
From the said report, it is clear that you have
committed fraud and/or wrongful gain by
overcharging the customers and your such act is
not only a breach of the agreement between
BPCAL and you but also illegal and violation of
various Acts and laws. We further find that you
prohibited and interfered in the job of the
inspecting team and in fact did not provide
facilities to the said inspecting team for carrying
out their job of inspection and thereby committed
a breach of the agreement.”
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10. The letter dated 11 August, 2005 proceeded to state that the
Petitioners‟ inactions were forbidden by law and were of such a nature
that if permitted, it would defeat the provisions of the law, injure the
customers of the BPCL and would be opposed to public policy.
Consequently, the dealership was terminated as mentioned hereinbefore.
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This letter dated 11 August, 2005 was subsequently treated as the show
cause notice.
11. The Petitioners‟ version of the incident is contained in their reply
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dated 12 January 2006 consequent upon the order passed by this Court
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in terms of which the said letter dated 11 August 2005 was accepted as a
show cause notice. The stand of the Petitioner No.1 firm was that an
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inspection report was signed by Mr. J.P. Meena on 17 June 2005. A
W.P.(C) No.14824-26 of 2006 page 8 of 21
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calibration carried out on 6 June 2005 indicated that all the pumps were
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working satisfactorily. It was maintained that on 14 July 2005 the
inspection team found the seals to be intact and un-tampered and the
dispensing units in proper working order. This is claimed to have
happened in the presence of Mr. Naresh Kumar, the technician.
12. The Petitioners claim that when Petitioner No. 3 sought a copy of the
inspection report, it was refused. It was alleged that the team compelled
Petitioner No.3 to sign certain blank papers stating that “they would
prepare the report at leisure and send a copy thereof to us later”.
Petitioner No. 3 is claimed to have refused to sign such blank
papers/sheets. The Petitioners state that the news of the visit by the
vigilance team at the Petitioner‟s premises had spread amongst the
association members, around five of whom reached the premises. Some
journalists also reached the premises. It is then stated by the Petitioners
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in their letter dated 12 January, 2006 that “it was apparent from the
attitude of the vigilance team that there was a clear attempt to prejudice
our business by implicating us in some issue of misconduct as defined by
the guidelines. My son informed the members of the association about his
apprehensions and they took up the matter with the members of the
vigilance team”. The letter proceeds to state that the vigilance team
“categorically informed that their attitude and demeanour while carrying
out the vigilance check amounts to misconduct and that the association
would take up the matter to the highest level”. It is then stated as under:
“Apparently, the Vigilance team sensed the futility
of carrying forth its unsavory conduct and handed
over to my son, a copy of a satisfactory inspection
W.P.(C) No.14824-26 of 2006 page 9 of 21
report as well as Pump Maintenance Report signed
by Mr. Naresh Kumar, Technician. The members
of the Vigilance Team left thereafter.”
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13. The Petitioners‟ letter dated 12 January, 2006 also states that one
Mr. Shiv Om, Sales Assistant of the BPCL conducted an inspection on
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16 July 2005 and gave a satisfactory report. A copy of the said report
was enclosed with the reply. It is claimed by the Petitioners that since
nothing had gone amiss there was no occasion for them to go to the
police and had the Petitioners been called upon to give their version “they
would have been more than willing to do so”. It was denied that the
news items in the local newspapers were got published by the Petitioners.
Since no explanation was sought from them there was no occasion to
make statement to the Press. It was pointed out that the complaint was
made only 4 days after the alleged incident. It was questioned that if
indeed there was an unsavoury incident, “was it not the boundant ( sic )
duty of the officials of the public sector undertaking to make an
immediate report to the police officials?” It is claimed that upon an
enquiry it was found that the case has been closed as Mr. Ghatwai had
stated that he did not wish any action to be taken in the complaint. As
regards the past relationship, it was claimed that since there had not been
a single complaint either from any customer or the BPCL as to the
Petitioners‟ conduct in business, there was no occasion for loss of trust
and that they were within their rights to give a complaint against the
conduct of a particular official. It is claimed that the tampering of the
seal “was an impossible act” since the seal was put by the BPCL itself
and an additional seal by the Weights & Measures Department. A
W.P.(C) No.14824-26 of 2006 page 10 of 21
detailed reference was made to the Marketing Discipline Guidelines
(„MDG‟) in which there were ambiguities, removal of which was sought
by the Federation of All India Petroleum Traders („FAIPT‟). It was also
pointed out that even assuming that there was tampering of meters or
lesser volume or charging of higher price, the MDG did not envisage the
penalty of termination of dealership.
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14. By a further letter dated 3 March 2006, soon after the personal
hearing, a letter was written to the BPCL by the Petitioners where inter
alia it was stated that “in the event any BPCL official is perturbed or
disturbed by any averment or allegation on our behalf, we are, still
standing by our version, ready and willing to apologise”. It was requested
that the penalty of termination was not warranted.
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15. The Petitioners on 20 September 2006 filed a compilation of
documents in this petition. This included the leaflets in Hindi and English
issued by the Haryana Petroleum Dealers Association („HPDA‟) which
inter alia referred to the incident that took place in the Petitioners‟ petrol
pump at Karnal. The said pamphlet alleged that “BPCL officers are
habitual of flouting rules”. It is further demanded that “Enquiry on Arjun
Heera, D.S. Bhargava, J.P. Meena, K.G. Ghatwai, Ms. Widhani‟s
property and character should be handed over to the CBI for inquiry”.
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Among the documents filed was a „closure report‟ of the police dated 5
September 2005 which recorded the fact that the officials of the BPCL
informed the police that they were not willing to pursue the matter any
further.
W.P.(C) No.14824-26 of 2006 page 11 of 21
16. In the counter affidavit, it has been pointed out by the BPCL that the
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letter dated 12 January 2006 was referred to Mr. P.S. Bhargava, one of
st
the members of the inspecting team, for his comments. He replied on 31
January 2006 in which, inter alia , he reiterated that the inspection report
signed by the three of them stating that a mob had surrounded them,
threatened them, snatched their camera and compelled them to write out a
satisfaction report, was correct. He reiterated that “a threatening
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atmosphere had been created on the site on 14 July 2005 and the
inspecting team was not allowed to go out of the site unless they gave the
so called satisfaction report”. The counter affidavit pointed out that this
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letter dated 31 January 2006 of Mr. Bhargava was served on the
Petitioners to enable them to reply but they did not do so.
Submissions of counsel
17. Mr. Maitri, learned counsel appearing for the Petitioners submitted
that the MDG did not provide for such severe penalty as was handed
down to the Petitioners. According to him, the maximum penalty action
for adulteration of MS/HSD for the first time was a fine of Rs.20,000/-
and suspension of sales and supplies of all products for 30 days. For
short delivery of products, it was a fine of Rs.10,000/- and suspension of
sales for 15 days. It was only on the second time irregularity in the case
of adulteration that the penalty of termination was envisaged. As regards
the over-charging for the first time incident, a fine of Rs.5,000/- and a
suspension of sales for 15 days was envisaged. Mr. Maitri accordingly
submitted that the penalty of termination of dealership was
disproportionate. The supplies to the Petitioners‟ petrol pump was
W.P.(C) No.14824-26 of 2006 page 12 of 21
stopped for nearly five years now and that the Petitioners had suffered
enough. He submitted that there was no justification for the impugned
order of termination.
18. Mr. Maitri then submitted that without prejudice to the above
submissions, the inspection reports, copies of which were given to the
Petitioners and enclosed with the petition clearly showed that the
inspection team did not find anything amiss. It was submitted that it was
on account of the Petitioners not being able to accede to the illegal
gratification demanded by the officials of the BPCL that they were being
harassed. He relied on the judgment of the Supreme Court in Hindustan
Petroleum Corporation Ltd. v. Super Highway Services 2010 STPL
(Web) 136 SC in which the Court emphasized that termination of a
dealership was of a severe consequence and that the procedure followed
must be absolutely fair and just. It was observed that the non-service of
notice to the aggrieved person before termination of his dealership
agreement also offends the well-established principle that no person
should be condemned unheard. It is submitted that despite the orders of
this Court, the procedure adopted was neither just nor fair. Mr. Maitri
submits that where the machines are entirely maintained by the HPCL the
termination of services of the dealer on the ground of tampering of the
machines is not fair. He accordingly prayed that the termination order
should be set aside.
19. Mr. Sudhir Chandra, learned Senior counsel appearing for the BPCL
first submitted that the agreement entered into with the Petitioners had
W.P.(C) No.14824-26 of 2006 page 13 of 21
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already come to an end on 19 November 2005. The agreement was not
renewed. The Petitioner was, therefore, not a dealer anymore and there
could be no mandamus issued to execute a fresh dealership agreement
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with the Petitioner, particularly when on account of the incident of 14
July 2005, the BPCL had lost its confidence and trust in the Petitioner
No. 1 and did not wish to renew the dealership agreement. According to
the BPCL, the FIR lodged still exists but for some reasons has not been
investigated. Mr.Sudhir Chandra disputed the correctness of the closure
report which he termed as a collusive document. He submitted that the
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incident of 14 July 2005 was indeed extraordinary where the inspecting
team was surrounded by a mob instigated by the Petitioners; the mob
snatched the team‟s camera, papers and the notes of inspection; the
members of the inspecting team were threatened, gheraoed and
compelled to write out a satisfaction report. He submitted that the BPCL
could not be expected in the circumstances to condone the acts and
continue the dealership.
20. Mr. Sudhir Chandra submitted that this was a case where the MDG
could be departed from since this was an extraordinary circumstance.
The version of the Petitioners, as released to the press, was that the BPCL
officers had come to the petrol pump to collect bribes and, therefore, this
was clearly done to malign and defame BPCL. The pamphlets issued by
the HPDA of which the Petitioner No.3 was an active member, included
several scandalous imputations about the BPCL officers. Clearly, the
BPCL could not be expected to carry on any business relationship with
the Petitioners.
W.P.(C) No.14824-26 of 2006 page 14 of 21
21. Mr. Sudhir Chandra referred to the judgment of the Supreme Court in
Surya Dev Rai v. Ram Chander Rai (2003) 6 SCC 675 and submitted
that in exercise of its powers under Article 226 of the Constitution, this
Court had only to examine if in the circumstances, the action taken by the
BPCL was just and fair. BPCL could not be compelled to continue the
dealership which, in any event, had come to an end. He pointed out that
an apology had been offered by the Petitioners which clearly indicated
that they were not standing by their own version.
22. Mr. Maitri, in his rejoinder submitted that the Petitioners were not
concerned with what the HPDA did. The Petitioners could not be held
responsible for the press reports either, particularly since the names of the
Petitioners never figured in the said reports. The ground that the
dealership agreement has come to an end and cannot be renewed, was not
pleaded in the earlier round of litigation by the BPCL and, therefore,
could not be used to frustrate the present writ petition. The termination
order pertained to what was alleged to be found during inspection for
which no convincing proof had been produced by the BPCL. Mr. Maitri
submitted that unless something extraordinarily incriminating was found
against a dealer, a contract of dealership was usually renewed. He
submitted that the main object of the BPCL was to somehow get the land
owned by the Petitioners to be given on lease to the BPCL and that since
the Petitioners were not willing to do so, they were falsely implicated by
BPCL.
W.P.(C) No.14824-26 of 2006 page 15 of 21
Loss of mutual trust and non-continuation of dealership
23. It must be noticed at the outset that there is no prayer by the
Petitioners that a mandamus should be issued to BPCL to renew the
dealership agreement. The challenge is principally to BPCL‟s decision to
terminate the dealership of Petitioner No.1 which in turn was essentially
based on what happened at the RO licenced Petitioner No.1 at Karnal on
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14 July 2005. Although there is a wide divergence in the version of the
Petitioners on the one hand and the BPCL on the other as to what
transpired, it is plain that an unpleasant incident did take place at the RO
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on 14 July 2005. Both in the present writ petition as well as in the
earlier writ petition, the Petitioners do not deny the fact that the members
of the HPDA reached the premises upon hearing of the “news of the visit
by the vigilance team at the Petitioners‟ premises” and also that “some
journalists also reached the premises by this time”. The statement that
“the vigilance team was categorically informed that their attitude and
demeanour while carrying out the vigilance check amounts to misconduct
and that the association would take up the matter to the highest level”
does indicate that even according to the Petitioners what happened at the
RO at Karnal was not a pleasant one. Clearly, there was a confrontation.
It is not difficult to visualise a scenario of the three BPCL officers being
surrounded by the members of the HPDA, with journalists watching and
the vigilance team being “categorically” told that the vigilance team was
allegedly committing misconduct.
24. The printed pamphlets of the HPDA, which has been placed on
record by the Petitioners themselves, also corroborate the fact that the
W.P.(C) No.14824-26 of 2006 page 16 of 21
members of the HPDA were indeed openly accusing the BPCL‟s officers
and in particular the members of the vigilance team of misconduct. The
pamphlet referred to the incident at Karnal, and demanded a CBI enquiry
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against these officers. It called for a dharna on 16 August 2005 outside
the Panipat office of the BPCL. The statements made in the pamphlets
issued by the HPDA, which have not been denied by the Petitioners as
they have themselves placed it on record, are prima facie scandalous.
However, this Court is not called upon to determine if these allegations
were justified or not. What is plain from the pamphlets, however, is that
the Petitioners and the members of the HPDA did not repose any faith or
trust in the BPCL.
25. Therefore, the submission of the learned counsel for the Petitioners
that the Petitioners have nothing to do with the HPDA and that somehow
this Court should accept that the Petitioners continue to repose faith and
trust in the BPCL is not at all convincing. In fact, even during the course
of his submissions, learned counsel for the Petitioners stated that the
BPCL somehow tried to get the Petitioners to give the land owned by
them on lease to the BPCL and since they were refusing to do so, a false
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report about the incident of 14 July 2005 was put forward in revenge by
the officers of the BPCL. Apart from the fact that such an allegation finds
no mention in the pleadings, this Court fails to appreciate why the BPCL
would want “revenge” to be taken against the licencee of a RO because
the licencee is unwilling to give the land on lease to the BPCL. In any
event, this further demonstrates the complete lack of trust between the
parties.
W.P.(C) No.14824-26 of 2006 page 17 of 21
26. There is merit in the contention of Mr. Sudhir Chandra, learned
Senior counsel appearing for the BPCL that independent of the impugned
decision to terminate, the dealership agreement having come to an end on
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19 November 2005 and the Petitioner No. 1 no longer continuing as a
dealer, no mandamus can possibly be issued to the BPCL to continue the
dealership. To require the BPCL to continue its dealership agreement five
years after it has come to an end is, apart from being legally untenable,
also rendered implausible with neither party reposing trust in the other.
Is the termination of the dealership arbitrary?
27. The only question, therefore, that survives is whether the impugned
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letter of termination dated 17 August 2006 , which reaffirms the earlier
th
letter dated 11 August 2005 issued by the BPCL, is arbitrary and
therefore invalid as contended by the Petitioners. The scope of the
powers and jurisdiction of this Court under Article 226 of the
Constitution is limited. The Court is, in this petition, essentially
concerned with the question whether the procedure adopted by the BPCL
in arriving at the impugned decision was just and fair. A further question
that arises is whether the termination of the dealership was, in the
circumstances, a „disproportionate‟ measure.
28. As regards the procedure, any grievance that the Petitioners may have
had on that score does not survive after the previous order by this Court.
Although it was contended that even the procedure followed thereafter
was not fair, this Court finds that an oral hearing was also given to the
Petitioners thereafter. This court is not able to agree with the contention
W.P.(C) No.14824-26 of 2006 page 18 of 21
of the Petitioners that there has been any procedural unfairness on the
part of the BPCL. The issue, therefore, boils down to the reasonableness
of the impugned order of termination.
29. The question whether the Petitioners were overcharging for the
products sold by them or whether there was a tampering with the seals of
the dispensing units, are disputed questions of fact. Therefore this Court
proposes to confine itself to examining whether, arising out of the
th
incident of 14 July 2005, as spoken to by the parties, the BPCL was
justified in proceeding to terminate its dealership agreement with
Petitioner No.1 .
30. This Court is conscious of the fact that there are divergent versions of
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what happened on 14 July 2005. Still, as noticed hereinbefore, the fact
that there was a collection of members of the HPDA and journalists on
the spot and that there were unpleasant exchanges between them and the
vigilance team and that even at that stage the vigilance team was accused
of indulging in misconduct, clearly shows that the atmosphere was a
hostile one. The calling of journalists at the RO office of the Petitioner
th
No.1 on 14 July 2005 and the statements made to them by the
Petitioners is a further pointer to the fact that that there was a breakdown
of the relationship between the parties. The fact that an FIR was lodged
after four days is also not denied. That the BPCL officers were unwilling
to go back thereafter to make further statements to the local police as
stated in the „closure‟ report is also not difficult to appreciate. In this
W.P.(C) No.14824-26 of 2006 page 19 of 21
scenario, if the BPCL took a decision to stand by its officers who had
undertaken the inspection, such decision cannot be termed arbitrary or
unreasonable. It is indeed difficult to accept, in the absence of any
material in support, that the officials of the BPCL fabricated the
inspection report which is Annexure P-5. This version has been
reaffirmed by way of an additional affidavit filed in this Court by the
th
BPCL describing in detail what transpired on 14 July 2005.
th
31. The incident of 14 July 2005 was indeed an extraordinary one. This
Court is unable to accept the submissions of the learned counsel
appearing for the Petitioners that such an incident like this should be
evaluated in terms of the MDG. The MDG does not envisage any such
situation. It talks of particular instances of „irregularity‟ and misconduct
like overcharging of products, tampering of seals, adulteration and so on.
The response by the BPCL to such incident also, therefore, cannot be
evaluated with reference to the MDG. It was in the discretion of the
BPCL to decide whether in the light of the incident where its officers
were gheraoed, criminally intimidated and threatened the dealership
agreement should be continued. BPCL‟s decision to terminate the
dealership cannot, in the circumstances noticed hereinbefore, be
characterized as arbitrary or disproportionate.
32. This Court, therefore, concludes that the impugned decision dated
th th
17 August 2006 of the BPCL, reaffirming its earlier decision dated 11
August 2005, does not suffer from any legal infirmity warranting any
W.P.(C) No.14824-26 of 2006 page 20 of 21
interference by this Court.
33. It is expected that since the dealership agreement even otherwise
th
came to an end on 19 November 2005, consistent with their obligations
therein the Petitioners will permit the BPCL to remove their assets from
the premises. If for some reason that does not happen, it will be open to
the BPCL to take recourse to such measures as are available to it in
accordance with law.
34. For the aforementioned reasons, the writ petition is dismissed with
costs of Rs.10,000/- which will be paid by the Petitioners to the
Respondent BPCL within a period of four weeks. The pending
applications are disposed of.
S. MURALIDHAR, J.
JULY 22, 2010
dn
W.P.(C) No.14824-26 of 2006 page 21 of 21