TaxTMI 
TaxTMI 
2024 (6) TMI 39
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....dent's petrol pump and took samples of High Speed Diesel (HSD) and Motor Spirit (MS). 3.3 The appellant issued show cause notice against the respondent dated 20th August, 2007, wherein the respondent was asked to submit a response to the alleged irregularities within a period of 7 days. 3.4 On the basis of the Preliminary Test Report, the Senior Sales Officer, Durgapur Sales Area informed the respondent of the suspension of supply with immediate effect. 3.5 The authorities of the appellant(s) conducted Joint Marker Test and the sample failed on such re-test as well. This is evident from the Analysis Report At page 164 of the paper book. 3.6 The authority of the Agency to conduct such collection of samples was questioned by the respondent at the Regional Office of the appellant(s). However, it is alleged that without considering the same Marker Test was conducted on such samples. 3.7 Being aggrieved by the order of suspension of supply, the writ petition which eventually gave rise to the present proceedings was filed. 4. In allowing the writ petition filed on behalf of the present respondent, the Learned Single Judge observed as under:....
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.... total, five clauses of the Agreement - Clauses 26, 27, 44, 58(i) and (m) and as such the same was terminated; (iv) It was contended that the Agency had the authority to conduct the tests in question as Clause 2.2.2.3 of Marketing Discipline Guidelines MDG dated 1st August 2005 issued by the Government of India, provides that apart from oil company officials, mobile labs and 'agencies authorized by oil companies' were permitted to draw samples. (v) It was in furtherance of such guidelines that vide Circular dated 3rd November 2006 the Agency was appointed to carry out audits and Market Tests. (vi) The provisions of the Control Order do not apply to the present case as the respondent is not prosecuted for its violation and instead, the Agreement stands terminated for breach of the terms and conditions of the Agreement. (vii) It is also submitted that Clause 8 of the Control Order makes clear that there is no bar to appoint an outside agency to conduct the Marker Test. (viii) Reliance is placed on Indian Oil Corporation Ltd. v. R.M. Service Centre (2019) 19 SCC 662, and more specifically para 14 thereof. B. Respondent (i) The M....
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....wers to a third party (agency) would be illegal. (ix) The said judgment does not lay down the correct position in law and non-adherence to the control order would vitiate the entire process. (x) In furtherance of the above submissions, the learned senior counsel for the respondent further relies on Harbanslal Sahnia v. Indian Oil Corporation Ltd. (2003) 2 SCC 107; Hindustan Petroleum Corporation & Ors. v. Super Highway Services & Anr. (2010) 3 SCC 321; Allied Motors Ltd. v. Bharat Petroleum Corporation (2012) 2 SCC 1; and Nazir Ahmad v. The King Emperor 1936 SCC OnLine PC 41, and certain other decisions. 8. It is necessary to refer to certain Rules, Regulations/provisions of documents for being part of the record to examine the issue in the present lis. For ease of reference, they are extracted hereunder : Provisions of the Agreement and other relevant documents I. Agreement inter se parties Certain clauses of the agreement between the parties dated 1.2.1997, relevant to the present dispute: "4. The licence and permission granted as aforesaid for the use of the outfit shall terminate immediately on the termination of this Agreement or on any b....
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.... receipts, for all payments which it is dealer's duty to make whether under the terms of this agreement or otherwise. x x x x 44. The dealer undertakes faithfully and promptly to carry out, observe and perform all directions, or rules given or made from time to time by the corporation for the proper carrying on of the dealership of the corporation. The dealer shall scrupulously observe and comply with all laws, rules regulations and requisitions of the central/state government and of all authorities appointed by them or either of them including in particular the chief controller of explosives, government of India, and/or municipal and/or any other local authority with regard to the storage and sale of such petroleum products. x x x x 58. Notwithstanding anything to the contrary herein contained, the Corporation shall also be at liberty to terminate this Agreement forthwith on or at any time after the happening of any of the following events, namely : x x x x H) If the dealer does not adhere to the instructions issued from time to time by the corporation in connection with safe practices to be followed by him in the supply/storag....
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....samples of the product and seize any of the stocks of the product and the vehicle or receptacle or any other conveyance used or suspected to be used for carrying such stocks and thereafter take or authorize the taking all measures necessary for securing the production of stocks or items so seized before the Collector or District Magistrate having jurisdiction under the provisions of the Essential Commodities Act, 1955 and for their safe custody pending such production; (d) inspect, seize and remove with, such aid or assistance as may be necessary, books, registers, any other records or documents of the dealer, transporter, consumer or any other person suspected to be an employee or agent of the dealer, transporter or consumer; (2) While exercising the power of seizure provided under subclauses (c) and (d) above, the authorized officer shall record in writing the reasons for doing so and a copy of such recording shall be provided to the dealer, transporter, consumer or any other concerned person, as the case may be. (3) The provisions of S. 100 of the Code of Criminal Procedure, 1973 (2 of 1974), relating to search and seizure shall, as far as may be, appl....
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.... Section 6-A of the Act provides for confiscation of the essential commodity whereas, Section 7 of the Act makes any person who contravenes any order made under Section 3 liable for criminal prosecution. Therefore, we find that the effect of issuance of the Control Order is that in the event of violation of such Control Order, any person who contravenes any order made under Section 3 of the Act i.e. the Control Order, he is liable to be punished by a court. Therefore, the violation of the Control Order has penal consequences leading to conviction. The provisions of search and seizure contained in Clause 7 read with Section 100 of the Code will come into play only in the event a person is sought to be prosecuted for violation of the provisions of the Control Order. Admittedly, in the present case, the dealer is not sought to be prosecuted for the violation of the Guidelines, therefore, the procedure for drawing of samples which is a necessary precondition under the Control Order for prosecuting an offender does not arise for consideration. 15. The dealer has entered into an agreement on 20-12-1995. It is not disputed that the dealer is bound by the Guidelines issued by the ....
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....of the respondent herein. 13. In Hindustan Petroleum Corporation Limited & Ors. v. Super Highway Services & Anr. (2010) 3 SCC 321 this Court observed as under : "31. The cancellation of dealership agreement of a party is a serious business and cannot be taken lightly. In order to justify the action taken to terminate such an agreement, the authority concerned has to act fairly and in complete adherence to the rules/guidelines framed for the said purpose. The non-service of notice to the aggrieved person before the termination of his dealership agreement also offends the wellestablished principle that no person should be condemned unheard. It was the duty of the petitioner to ensure that Respondent 1 was given a hearing or at least serious attempts were made to serve him with notice of the proceedings before terminating his agreement. x x x x x 33. The guidelines being followed by the Corporation require that the dealer should be given prior notice regarding the test so that he or his representative also can be present when the test is conducted. The said requirement is in accordance with the principles of natural justice and the need for fairness in th....