TaxTMI 
TaxTMI 
2022 (1) TMI 1484
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....ciation. JUDGMENT PER D. N. PATEL, CHIEF JUSTICE Table of Contents S. No. Contents Para I. SUMMARIUM 1 II. FACTUAL MATRIX 2 III. ARGUMENTS CANVASSED BY LEARNED SOLICITOR GENERAL APPEARING ON BEHALF OF THE APPELLANTS IN ALL THE THREE LETTERS PATENT APPEALS 11 IV. ARGUMENTS CANVASSED ON BEHALF OF RESPONDENT NO.1 AND 2 (ORIGINAL PETITIONERS) IN ALL THE THREE APPEALS 25 V. ARGUMENTS CANVASSED BY THE INTERVENORS 32 VI. REASONS AND ANALYSIS 37 VI A. CLAUSE 43 OF THE DEALERSHIP AGREEMENT 38 VI B. CLAUSE 1.5 -OBSERVANCE OF STATUTORY AND OTHER REGULATIONS 52 VI C. CLAUSE 5.1.2-SHORT DELIVERY OF PRODUCTS 61 VI D. CLAUSE 5.1.18-PAYMENT OF WAGES 67 VI E. CLAUSE 8.3 - MAJOR IRREGULARITIES 71 VI F. CLAUSE 5.1.14(b) - NON-PROVISION OF CLEAN TOILET FACILITY 83 VII. CONCLUSION 86 I. SUMMARIUM 1. Being aggrieved and feeling dissatisfied by the common judgment and order of the learned Single Judge passed in W.P.(C) No. 10334/2017, W.P.(C) No. 10746/2017 and W.P.(C) No. 11246/2017 dated 18.03.2020, Appellants have preferred the present ....
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....ntral Minimum Wages or Statutory Minimum Wages, as notified by the States/UTs, effective from 01.08.2017, as well as benefits such as PF, Bonus, Gratuity etc. It was also clarified that slab-based margins had been introduced in respect of 'Business Return' and 'Manpower' and the non slab-based margins had two components viz. 'Fixed Margin' and 'Variable Margin'. 7. Communication dated 19.09.2017 issued by the OMCs reiterated the aforesaid directions to the Dealers. Additionally, it was directed that payment of wages with effect from August, 2017 were required to be made through e-payment and that the Wage Register and e-payment details were to be kept ready by the RO Dealers, for verification by officials of the OMCs. Employees of the ROs were henceforth, required to be covered, if not already covered, under Pradhan Mantri Suraksha Bima Yojana (PMSBY) and Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY). 8. Accordingly, the OMCs amended MDG-2012 on 03.10.2017, whereby amended/supplemented Clause Nos. 1.5(x), 5.1.2, 5.1.14(b), 5.1.16, 5.1.18, 8.3(vii, viii, ix) and 8.5.7 were incorporated. The said amendments were conveyed by OMCs to their respective Dealers, vide communi....
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....ervices rendered as well as to ensure that benefits of beneficial Legislations, such as the Minimum Wages Act, etc. are made available to the employees, employed by the Dealers. 12. Since the OMCs are empowered by virtue of the contractual provisions to issue MDGs, the issue being purely in a contractual domain cannot be agitated by Respondents No. 1 and 2, by invoking the writ jurisdiction. It is a settled law that in matters relating to contracts between the parties, writ jurisdiction shall not lie and therefore the writ petitions should have been dismissed at the outset, being not maintainable. This aspect of the matter has not been correctly appreciated by the learned Single Judge and the impugned judgment deserves to be quashed and set aside on this ground alone. 13. OMCs/Appellants, in accordance with the changing market scenario, have been reviewing, amending and issuing MDGs for the last four decades in order to maintain discipline and uniformity in action, for operations of the ROs, throughout the Country. MDG-1995 and MDG-1998 were challenged before this Court and the writ petitions were dismissed, by a detailed judgment and order dated 18.08.1999, reported in ....
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.... the Dealers are bound by the obligations under the Dealership Agreement, even otherwise they can raise no objection since the Appellants while issuing the directions to revise the minimum wages, have factored the increase in the wages, into the 'Dealers margins', thereby ensuring that the employees benefit without any pressure on the Dealers. The Dealers' margins include element of salaries and wages, payable to the employees of the ROs and were calculated on the basis of weighted average of minimum wages notified by States/UTs, based on latest available State Government Notifications. Dealers have accepted the revision in Dealers' margin, without any demur, but are objecting to enhancement of wages, payable to the employees, which cannot be accepted. Mr. Mehta, learned Solicitor General had taken this Court to communication dated 19.09.2017, annexed as 'Annexure R-2/5' with the counter affidavit, filed in the writ petition and submitted that there is a clear revision in the Dealers' Margin w.e.f. 01.08.2017. Attention of the Court was also drawn to the fine niceties of the calculations, placed on record, indicating the difference in the earlier margins and the present ones, to br....
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....earned Single Judge has erred in holding that the Dealers cannot be compelled to do so. It was submitted by learned Solicitor General that the said amendment is for the welfare of the employees of the Dealers. It was argued that it is well known that payment of salaries in cash leads to exploitation of employees and payments through the electronic mode would ensure that complete salaries are paid to the workers and would also rule out the commissions that are paid to the middlemen. Currently, most of the banking transactions are online and in fact the Dealers also make payments online for purchase of products from the Appellants. This amendment is also in line with the policies of the Central Government to digitize the economy and will go a long way in making the system of payment to the workers, transparent. To buttress the argument, it was urged that even the employees working under the State and Central Government are paid their salaries, etc. through the electronic mode and no fault can be found with the amendment. Whenever and wherever new systems are introduced, there are bound to be teething problems but that cannot be a reason to interfere in the welfare measures taken in t....
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.... the customers. It is for this reason that for irregularities/malpractices or violations of MDGs, penalties have been provided which include monetary penalties as well as suspension of sales. The power of the OMCs to terminate the contract, for violation of any contractual obligation, exists under the Agreement and where there is a power to impose a major punishment, there is always a power to impose a lesser punishment. 22. The learned Single Judge has erred in reading down the provisions in the amended MDGs with respect to Clause 5.1.14(b) which relates to non-provision of clean toilet facility. It was urged that the learned Single Judge failed to appreciate that although the RO toilets are essentially meant for use by its employees/staff/customers of the RO, access may be given to walk-in persons, as a matter of courtesy. If the discretion is, however, left to the Manager of the RO, as directed in the impugned judgment, it is open to be exercised arbitrarily and may cause grave inconvenience to the public at large, who are being constantly educated not to befoul public places. It is for this reason that monetary penalties have been prescribed, as in a case of viol....
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....d above the minimum wages, in accordance with the Statute can at best be a voluntary offer on the part of the ROs, but the Dealers cannot be compelled to do so. Minimum wages vary from State to State and therefore no direction can be passed to pay a uniform wage to the ROs, spread across the Country. To prescribe one wage for all the ROs would tantamount to treating unequals as equals and thus the learned Single Judge has rightly read down Clause 1.5(x) of the amended MDGs. 27. Insofar as provision of toilet facilities is concerned, the direction in the MDGs to ensure that the toilets are not locked and that doing so can entail a penalty is completely illegal and arbitrary. An RO Dealer cannot be compelled to extend the toilet facility to all the passers-by, who are not customers, as this may result in a security issue, besides raising the cost of expenditure to the Dealer. The learned Single Judge has rightly left the issue at the discretion of the concerned dealer and read down Clause 5.1.14(b) of the amendment in MDG-2012. 28. The amendment in MDG-2012 w.e.f. 01.08.2017 to the effect that even where seals are intact, if there is excess or short delivery of the petroleum pr....
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.....e.f. 01.08.2017 have mandated e-payments to all the employees of the ROs, which, besides being arbitrary is impracticable, as several ROs are located in remote areas, where internet facilities are not available or even if available, there are serious technical issues of connectivity. In so far as the direction for coverage under the PMSBY and PMJJBY Schemes is concerned, by the very nature, the Schemes are voluntary and no dealer can be compelled to mandatorily cover its employees under the said Schemes. It is open to the employees to give their consent to subscribe to the Schemes. 31. Mr. Sanjoy Ghose, learned Senior Counsel appearing on behalf of the Respondent No. 1 in LPA 31/2021 submitted that if the OMCs intended to amend the Guidelines so as to mandate payment of wages higher than the statutory minimum wages, there ought to have been stakeholders' consultation, which admittedly did not take place prior to amendment, in MDG-2012. Learned Senior Counsel relied upon the decision of the Hon'ble Supreme Court reported in Central Inland Water Transport Corporation Ltd & Anr v. Brojo Nath Ganguly & Anr. (1986) 3 SCC 156 and submitted that on account of unequal bargaini....
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....ners submitted that the Dealers cannot be compelled into making e-payments of the salaries, etc. on account of lack of internet facilities and/or connectivity issues in various areas of the Country, where the ROs may be located. Learned Senior Counsel also challenged the imposition of penalties as being contrary to the terms of the Dealership Agreement and beyond the powers of the OMCs. It was submitted that under the guise of Clause 43 of the Dealership Agreement, the contract cannot be re-written by the OMCs and that too, unilaterally. On the aspect of higher wages, it was urged that all the ROs situated in different States cannot be painted with the same brush and directing every Dealer to pay the same wage would be treating unequals as equals. 35. Learned Counsel appearing on behalf of North Bengal Petroleum Dealers Association, submitted that no doubt, the OMCs are empowered to frame Guidelines, i.e. MDGs, from time to time, deriving power from clause 43, however, the same cannot be in subrogation of any statute, rules or regulations, that exist. Any direction which runs contrary to the statutory provision would be void ab initio and untenable in the eyes of law. It was fur....
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....unicipal and/ or any other local authority with regard to the storage and sale of such petroleum products." (emphasis supplied) 39. Right from the year 1981-82, to maintain discipline in the operation of retail network of thousands of Petrol (MS) and Diesel (HSD) Retail Outlets of OMCs/Oil Companies, throughout the country, the Marketing Discipline Guidelines (MDGs) were formulated and issued. These MDGs have been reviewed from time to time. Clause 42 of the model agreement, which has already been upheld by various High Courts, replicates the contents of Clause 43 of the Dealership Agreement, in question. 40. By virtue of powers conferred by Clause 43, the MDGs have been issued. Thus, this provision is the source of power of the OMCs to formulate the MDGs. 41. Power of the OMCs, under the earlier MDGs, was subject matter of challenge in several writ petitions in various High Courts, including this Court and was upheld, holding that OMCs have the power and jurisdiction to issue MDGs, to regulate the ROs and that the RO Dealers are bound by these Guidelines. 42. This Court in Delhi Petrol Dealer Association and Anr. v. Union of India & Ors reported in (1999) 81 DLT 400....
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....e Corporation in this regard. In the subsequent judgment between the same parties in Reserve Bank of India v. Peerless General Finance and Investment Company Ltd., (1996) 1 SCC 642, the Supreme Court further elaborated the law on the subject and reiterated the findings earlier recorded that the Reserve Bank was within its powers to issue directions and the same were not ultra-vires the powers conferred on the Bank by Section 45-K(3) of the Reserve Bank of India Act. 21. The learned Counsel for the petitioners have not denied that directions could be issued provided the powers are vested in the authorities in terms of the Agreement entered into between the parties. Clause 43, it is contended, does not confer any such powers to impose major and minor penalties particularly when such action violates the rule of law and principles of natural justice as no opportunity is provided to the petitioners to show cause. This argument is misconceived as more drastic remedy such as termination is provided in the various statutes and the various clauses of the agreement such as Clauses 43 and 56 provide ample powers in the respondents to frame the guidelines as have been framed in the pr....
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....ership of the Corporation. The dealer shall also scrupulously observe and comply with all lays, rules, regulations and requisitions of the Central/State Government and of all authorities appointed by them or either of them including particular the Chief Controller of Explosives. Government of India and/or any other local authority with regard to the safe practices." 12. Learned counsel for the contesting respondents (dealers) is not disputing the incorporation of Clause 42 of model agreement in most of the dealership agreement. The writ petitioners have also produced certain dealership agreements, which shows Clause 42 of the model agreement is also included. Such dealers cannot contend before the Court that the oil corporations have no power to issue instructions, directions, guidelines from time to time on safe practices and marketing discipline for the purpose of carrying on of the dealership of the corporations. It is also mentioned in Clause 42 of the model agreement that the dealers were scrupulously observed and comply with all laws, rules, regulations and requisitions of the Central/State Government and all authorities appointed by them or either of them which incl....
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....elling less than 170 Kl/p.m., special care has been taken to alleviate the same. 3. Central Minimum Wages has been considered for the revision in Dealers' Margin. Consequently, all manpower employed in your retail outlet are required to be paid at least minimum wages as applicable under Central Minimum Wages (applicable for Construction workers) or statutory minimum wages as noticed by State, whichever is higher, effective 1.8.2017. Needless to mention that the order statutory requirements like PF, Bonus etc. are to be complied with. 4. Enhanced amount of Business Return (in lieu of earlier known Dealers' remuneration) is included in the Dealers' Margin. 5. Revision in Return on Net Fixed Assets (NFA - i.e. Return on investments made in the RO), as recommended by IIM Bangalore has been implemented. This has resulted in further increase in Dealers' Margin. 6. The recommendation of IIP Dehradun on revision in HSD Loss norms has been implemented. 7. The operating cost elements are revised based on AICPI. Electricity cost has been revised on the basis of weighted average. 8. The Bank charges are revised as per the SBI circular. ....
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....may please be opened immediately, if not already done. 3. You are requested to keep the wage register and e-payment details ready all the time for verification by officials of the Corporation. 4. Further, your employees of the Retail outlets are to be covered immediately, if not done already, for the following: a. PMSBY (Pradhan Mantri Suraksha Bima Yojana). b. PMJJBY (Pradhan Mantri Jeevan Jyoti Bima Yojana) Hope this will motivate your employees and result in improved customer services at your Retail Outlet. Thanking you Yours faithfully, Team Retail, BPCL" (emphasis supplied) 47. Reference may be made to another communication dated 19.09.2017, issued by the OMCs, to their respective RO Dealers, which is annexed as "Annexure R-2/5" to the counter affidavit filed in W.P.(C) 10334/2017 and reads as under:- " 19th September 2017 Dear BPCL Dealer, Revision in Dealers' Margin with effect from 1.8.2017 : Clarification Dear Madam/Sir, This is further to our email dated 26.8,2017 on the subject matter, wherein we had ou....
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....ri Suraksha Bima Yojana). ii. PMJJBY (Pradhan Mantri Jeevan Jyoti Bima Yojana). In case the wages paid to employees for August 2017 is less than the amount notified by BPCL, as per the foregoing, the differential amount may please be paid latest by 26.9.17, positively. Trust this will motivate your employees and shall result in improved customer services at your Retail Outlet" (emphasis supplied) 48. From a combined reading of the aforesaid communications, it is evident that four directions were issued :- (a) Payment of wages, as notified by OMCs from time to time or statutory minimum wages as notified by the respective State Governments/UTs, whichever is higher. (b) Payment of salary through e-payment mode. (c) To maintain the wage register and e-payment details and (d) The employees of ROs be covered under:- (1) Pradhan Mantri Suraksha Bima Yojana (PMSBY) (2) Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) 49. It is further evident that in order to maintain the marketing discipline in operations of the retail network of licenses of Petrol and Diesel outlets, OMCs had contemplate....
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....ced wages, which have been duly factored in the margins. For a ready reference, the tabular chart is as under:- Increase/Decrease in various components of Dealers' Margin w.e.f. 1.8.2017 (for 170 Kls RO (Rs. Per KL)} Elements After revision Rs. /Kl Before revision Rs. /Kl Increase/decrease Rs. /Kl Reason for revision MS HSD MS HSD MS HSD Return on NFA 393.74 332.18 46.00 39.00 755.96 751.74 As per study report from IIM Bangalore Return on WC 72.86 49.06 72.88 49.06 -0.03 0.01 Slight variation in Wt. Avg. Product prices Product Losses 501.76 95.74 501.93 101.36 -0.03 -5.54 Slight variation in Wt. Avg. Product prices Operating cost 345.86 256.19 345.68 256.06 0.05 0.05 Variation in AICPI (- 0.36%) Bank charges 50.96 37.74 123.01 91.12 -58.57 -58.58 Revision of bank charges by SBI Business Return 201.77 149.46 183.42 135.87....
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....12 1. CLAUSE NO. 5.1.2. SHORT DELIVERY OF PRODUCTS a) With Weights & Measures Department Seals intact Sales through the concerned dispensing unit to be suspended forthwith and recalibration and re-stamping to be done before recommencement of sales. (Even if short/excess delivery is found within permissible limit, recalibration and re-stamping to be done before recommencement of sales.) Penalty in case of short delivery beyond permissible limit: ii. First instance: Rs. 25,000/- per nozzle found delivering short beyond permissible limit as specified in Legal Metrology Act/Rule. iii. Second instance within one year of 1st instance: Rs. 50,000/- per nozzle found delivering short beyond permissible limit as specified in Legal Metrology Act/Rule & suspension of Sales and supplies for 15 days. iv. Third instance within one year of 1st instance: Termination of the dealership. CLAUSE NO.5.1.16 : AUTOMATED ROS (a) Dealer Operating the automated RO in Manual mode without authorization Where automation has been completed at a Retail outlet and if any dispensing unit/MPD there has been found to b....
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....er is higher and b) suspension of Sales and supplies for 7 days or rectification of the defect in toilet, whichever is later. 3. CLAUSE NO. 1.5 OBSERVANCE OF STATUTORY AND OTHER REGULATIONS x) Dealers shall make payment of minimum wages as notified by Oil Marketing Companies (OMCs) from time to time or statutory minimum wages as notified by the respective State Government, whichever is higher to the manpower employed at ROs, Other benefits as notified by OMCs/Statute shall also be paid to the manpower employed at ROs. 4. CLAUSE NO. 5.1.18 : PAYMENT OF WAGES Dealers shall make payment of minimum wages as notified by Oil Marketing Companies (OMCs) from time to time or statutory minimum wages as notified by the respective State Government, whichever is higher to the manpower employed at ROs. Other benefits viz. PF, ESIC, Bonus, Earned/Annual Leave and Gratuity as notified by OMC/Statute shall also be paid. Dealers to ensure that: a) Salaries & Wages are paid through e-Payment. b) PF, ESIC, Bonus, Earned/Annual Leave and Gratuity are paid as notified by OMCs/Statute. c) All Employees are covered under: i. ....
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....contract to pay higher wages. It is always open to the Dealers to enter or not to enter into a Dealership Agreement, if the terms thereof are not suitable, but it is not open to seek a direction to make a contract tailor made to suit the Dealers. Certainly, a party can challenge an action of an employer, if the wages paid to the employee are lesser than the prescribed minimum wages as in that case there will be a clear violation of the Statutory provisions under the Minimum Wages Act, which is not the case here. (c) As mentioned hereinabove, Clause 43 of the Dealership Agreement, empowers and enables the OMCs to issue Marketing Discipline Guidelines to regulate the functioning of the ROs and the directives issued under these MDGs bind the RO Dealers and can be legally enforced by the Appellants. This Court finds no reason to interfere with the direction in the amended MDGs to pay the wages, as directed. This is in the realm of a contractual relationship under the Dealership Agreements, consciously entered into by the RO Dealers and calls for no interference. (d) The matter can be looked at from yet another angle, in order to deal with the contention of the Respond....
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....d in the International Labour Code. The Minimum Wages Act is said to have been passed with a view to give effect to these resolutions [Vide SI Est etc. v. State of Madras, (1954) 1 MLJ 518 at page 521]. If the labourers are to be secured in the enjoyment of minimum wages and they are to be protected against exploitation by their employers, it is absolutely necessary that restraints should be imposed upon their freedom of contract and such restrictions cannot in any sense be said to be unreasonable. On the other hand, the employers cannot be heard to complain if they are compelled to pay minimum wages to their labourers even though the labourers, on account of their poverty and helplessness are willing to work on lesser wages." (emphasis supplied) 55. In the light of the Directive under Article 43 of the Constitution and the aforementioned judgment, there is no merit in the contention of the Respondents that OMCs, not being privy to the contracts between R.O. Dealers and their employees, cannot dictate the terms of their service conditions. In the light of the Directive Principles, reasonable conditions/ Regulations/Guidelines can certainly be issued by the Appellants to ensur....
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....ier noticed the circumstances under which the Act came to be enacted. Its main object is to prevent sweated labour as well as exploitation of unorganised labour. It proceeds on the basis that it is the duty of the State to see that at least minimum wages are paid to the employees irrespective of the capacity of the industry or unit to pay the same. The mandate of Article 43 of the Constitution is that the State should endeavour to secure by suitable legislation or economic organisation or in any other way, to all workers, agricultural, industrial or otherwise work, a living wage, conditions of work ensuring a decent standard of life and full enjoyment of leisure and social and cultural opportunities. The fixing of minimum wages is just the first step in that direction. In course of time the State has to take many more steps to implement that mandate. As seen earlier that resolutions of the Geneva Convention of 1928, which had been accepted by this country called upon the covenanting States to fix minimum wages for the employees in employments where the labour is unorganised or where the wages paid are low. Minimum wages does not mean wage just sufficient for bare sustenance. At pre....
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....e of another employment it may not be in possession of sufficient data. Therefore it might be necessary for it to constitute a committee to collect the data and tender its advice. If the Government is satisfied that it has enough material before it to enable it to proceed under Section 5(1)(b) it can very well do so. Which procedure should be adopted in any particular employment depends on the nature of the employment and the information the Government has in its possession about that employment. Hence the powers conferred on the Government cannot be considered as either unguided or arbitrary. In the instant case as seen earlier the question of fixing wages for the various categories of employees in residential hotels and eating houses was before the Government from 1960 and the Government had taken various steps in that regard. It is reasonable to assume that by the time the Government published the proposals in pursuance of which the impugned notification was issued it had before it adequate material on the basis of which it could formulate its proposals. Before publishing those proposals, the Government had consulted the advisory committee constituted under Section 7. Under thos....
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.... Directive Principles in making laws. No doubt the Act, according to its preamble, was enacted to provide for fixing minimum rates of wages, but that does not necessarily mean that the language of Rule 25 should not be construed according to its ordinary, plain meaning, provided of course, such construction is not inconsistent with the provisions of the Act and there is no other compelling reason for adopting a different construction. A preamble though a key to open the mind of the Legislature, cannot be used to control or qualify the precise and unambiguous language of the enactment. It is only in case of doubt or ambiguity that recourse may be had to the preamble to ascertain the reason for the enactment in order to discover the true legislative intendment. By using the phrase "double the ordinary rate of wages" the rule-making authority seems to us to have intended that the worker should be the recipient of double the remuneration which he, in fact, ordinarily receives and not double the rate of minimum wages fixed for him under the Act. Had it been intended to provide for merely double the minimum rate of wages fixed under the Act the rule-making authority could have so express....
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....d of the Directive Principles contained in our Constitution the minimum rates of wages for overtime work need not as a matter of law be confined to double the minimum wages fixed but may justly be fixed at double the wages ordinarily received by the workmen as a fact. The Bombay High Court has no doubt held in Union of India v. B.D. Rathi (supra), that "ordinary rate of wages" in Rule 25 means the minimum rate for normal work fixed under the Act. The learned Judges sought support for this view from Section 14 of the Act and Rule 5 of the Railway Servants (Hours of Employment) Rules, 1951. The workers there were employees of the Central Railway. With all respect we are unable to agree with the approach of the Bombay High Court. Section 14 of the Act merely lays down that when the employee, whose minimum rate of wages is fixed by a prescribed wage period, works in excess of that period the employer shall pay him for the period so worked in excess at the overtime rate fixed under the Act. This section does not militate against the view taken by us. Nor does a provision like Rule 5 of the Railway Rules which merely provides for fifty-four hours employment in a week on the average in an....
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....es. Guided by this principle, if the financial capacity of the industry permits, the workers should, broadly speaking, be allowed their due share in the prosperity of the industry, to which they have contributed by their labour, so as to enable them, within reasonable limits, to improve their standard of living." (emphasis supplied) 60. From the above-stated judicial pronouncements, the following conclusions can be drawn : i. State can impose reasonable conditions/restrictions in freedom of contract and trade. ii. Courts are duty bound to affirm and adopt principles of interpretation which will further and not hinder the goals set out in the Directive Principles of State Policy. iii. Article 43 of the Constitution mandates that the State should endeavour to secure by a suitable Legislations or economic organization or in any other way, to all workers, a living wage and fixing of the minimum wage is the first step in that direction. Minimum wage does not mean wage just sufficient for bare sustenance but includes other expenses necessary for the primary needs of the workman and his family such as medical, education, transport, etc.&n....
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.... for ready reference :- "Clause 5.1.2 a) With Weights & Measures Department Seals intact Sales through the concerned dispensing unit to be suspended forthwith and recalibration and re-stamping to be done before recommencement of sales. (Even if short/excess delivery is found within permissible limit, recalibration and re-stamping to be done before recommencement of sales.) Penalty in case of short delivery beyond permissible limit: i. First instance: Rs. 25,000/- per nozzle found delivering short beyond permissible limit as specified in Legal Metrology Act/Rule. ii. Second instance within one year of 1st instance: Rs. 50,000/- per nozzle found delivering short beyond permissible limit as specified in Legal Metrology Act/Rule & suspension of Sales and supplies for 15 days. iii. Third instance within one year of 1st instance: Termination of the dealership." 62. Having examined the rival contentions, we are of the view that the stand of the Respondents cannot be accepted for the following reasons :- (a) The objective of the Legal Metrology Act, 2009 is clearly to ensure that a certain s....
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....companies affecting entire public at large at large throughout the State, was unearthed by Special Task Force (hereinafter referred to as, 'STF') when it made surprise checking on certain petrol pumps at capital city, Lucknow, in State of Uttar Pradesh and has detected a chain of crime, which involve a very large number of persons, different agencies, wings and also the departments of Government, continuing with impunity, defrauding and cheating the innocent customers of oil in the State. 18. Dr. Ashok Nigam pointed out that as a result of aforesaid indication given by State Government, things immediately slowed down. STF went on back foot. It is in this backdrop, we find it really difficult to appreciate how Government, which is expected to show a rock like strength in such situation, so as to give a clear and straight message to all wrong doers that there is no tolerance whatsoever at the end of a welfare of State, is tolerating and even giving relaxations to the persons indulged in cheating with people at large. Hence on 22.05.2017, we passed following order: "1. A disturbing and disappointing picture has emerged from so-called affidavit of compliance filed by ....
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....should go to all such persons not to indulge in such activities. 4. Let Chief Secretary himself appear on 25.05.2017 alongwith a personal affidavit stating, why this kind of direction has been issued (like Government Order dated 02.05.2017)that no action shall be taken against Petrol Pump owners/occupiers but only concerned dispensing unit(s) shall be sealed. It appears that at some level, there is something wrong on the part of Government also and somebody is trying to protect erring Petrol Pump owners by avoiding/deferring strict action against them. 5. Respondent Oil Companies, respondents 5 and 6, have also not disclosed as to what action they have taken in the matter against erring Petrol Pump owners. 6. Let respective counsels appearing for respondents5 and 6 also inform about the steps taken by them as also the time schedule within which entire matter shall be dealt with and concluded. 7. Dr. L.P. Mishra, learned counsel appearing for respondent 5 expressed his apprehension that Petrol Pump owners may create a panic by closing Petrol Pumps, as they had done earlier also, and that is how creating a huge chaos and public inconvenience and it....
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....with the finding of the learned Single Judge that the OMCs would do well to provide a defined timeline by which recalibration and re-stamping are carried out, failing which, they should permit RO Dealers to recommence sales, if the error in delivery is within the permissible limits and that a period of 12 hours from the time the defect is noticed, should be ideal. 64. Clause 5.1.2 of the amended MDGs provides that in case of short/excess delivery within permissible limit, after suspension of the sale, recalibration and re-stamping is required to be done. It is true that no time limit has been provided in the MDGs, within which the said action is required to be carried out and as a sequitur, there is no provision permitting the Dealers to recommence sales, prior to completion of recalibration and re-stamping. The reason for not providing defined timelines, is not far to see. It is rightly pointed out by the Appellants that if the timeline is stipulated, it would give a handle to the Dealers to put any time of defect, since it would be the Dealer who would be the first to notice the defect and would perhaps be the one to note the timing. In such an event, whenever an issue would a....
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.... sales would not only affect the business of the RO Dealers but would also have a deleterious effect on the consumers. VI D. CLAUSE 5.1.18-PAYMENT OF WAGES 67. For ready reference, Clause 5.1.18 of the amendment in MDG-2012 made effective from 01.08.2017 reads as under:- "Dealers shall make payment of minimum wages as notified by Oil Marketing Companies (OMCs) from time to time or statutory minimum wages as notified by the respective State Governments, whichever is higher, to the manpower employed at ROs. Other benefits viz. PF, ESIC, Bonus, Earned/Annual Leave and Gratuity as notified by OMCs/Statute shall also be paid. Dealers to ensure that: a) Salaries & wages are paid through e-Payment. b) PF, ESIC Bonus, Annual Leave and Gratuity are paid as notified by OMCs/Statute. c) All Employees are covered under: i) Pradhan Mantri Suraksha Bima Yojana (PMSBY), ii) Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), Dealers are required to maintain records and the records should be made available at the retail outlet for inspection, at all times." 68. First part of this Clause concerns payment of higher wages,....
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....oducts from the Appellants, as brought out by the learned Solicitor General. Surely, if online transactions can be done for the other purposes, the salaries can also be disbursed online. In any case, every RO Dealer would have a bank account and most of the Banks in the current times have online facilities. The Dealers can therefore easily transact and make e-payments through their bankers. There may be certain remote areas in the Country where the Dealers may not have access to internet facilities and in such exceptional cases, it will always be open to the concerned Dealer to find an alternate method of payment after due intimation to and exemption from the Appellants. This, however, will only be an exception and not the Rule. Payments through electronic mode is a step forward for the welfare of the employees of the ROs with the advancement of technology and this Court finds no reason to interfere in the said mandate. (e) Clause 5.1.18(b) directs the RO Dealers to disburse the benefits of Provident Fund, Employees State Insurance Bonus, Annual Leave and Gratuity to their respective employees. Challenge to the same, in our view, is untenable in law. First and foremost, th....
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....n, at all times. (h) The grievance of the Respondents in this regard is that the Schemes are voluntary in nature and in case the employees refuse to subscribe under them, the Dealers cannot compel them to be members of the Schemes. This contention also cannot be accepted for the following reasons :- (i) As per Clause 5.1.18(c), the Dealer is required to ensure that the employees are covered under the two Schemes, namely PMSBY and PMJJBY. Appellants have taken a categorical stand in the tabulation presented to the Court during the course of hearing and which was not rebutted by the Respondents that the cost towards the premium under the two Schemes has been factored in the revised Dealers' Margin/Commission and is as under :- "Further, the Pradhan Mantri Suraksha Bima Yojana (PMSBY) is an insurance scheme with affordable premium of just Rs. 12 per employee per annum and the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) is an insurance having a premium of Rs. 330 per employee per annum. It is submitted that the direction to ensure that the employees are covered under the said two insurance schemes is merely a welfare measure. In fact, the cost ....
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....every RO, situated across the Country. (iv) Payment of premium under PMSBY and PMJJBY Schemes is a welfare measure in the interest of the employees of the RO Dealers. The Dealers/Respondents are dealing in sale of petroleum products and in a way have a monopoly in the business. In order to maintain minimum standards of the ROs coupled with balancing the measures for welfare of the employees to motivate them in rendering quality services, we are of the view that under the Dealership Agreements, contractual obligations can always be cast on the Dealers in the nature of directions issued under Clauses 5.1.18(a), (b) and (c). (v) In our view, the directions issued in Clauses 5.1.18(a), (b) and (c) are a step forward in the direction of welfare of the employees of the ROs at the same time balancing the same with the interest of the Dealers by ensuring that Dealers' Margins are increased and no loss is caused. This Court finds no reason to strike down the said Clause. VI E. CLAUSE 8.3 - MAJOR IRREGULARITIES 71. For ready reference, Clause 8.3, as amended, reads as under:- "Clause 8.3:- 8.3 Major Irregularities: The following irregulariti....
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....equent instances: Penalty of 40% of the monthly dealer margin (based on average of last 3 months) & suspension of sales and supplies for 15 days. Action in case of (x) above would be as under: First instance: Rs. 25,000 (Rupees twenty five thousand only) per nozzle found delivering short beyond permissible limit as specified in Legal Metrology Act/Rule. Second instance: (within one year of 1st instance) : Rs. 50,000 (Rupees fifty thousand only) per nozzle found delivering short beyond permissible limit as specified in Legal Metrology Act/Rule & suspension of Sales and supplies for 15 days. Third instance (within one year of 1st instance): Termination of the dealership." 72. Much was argued by learned Senior Counsel appearing for the Respondents and Interveners that Appellants have no power, jurisdiction and authority to levy the monetary penalties, for violation of the directions issued under various Clauses of the MDGs and/or committing major irregularities thereunder. It was also contended that Section 74 of the Indian Contract Act, 1872 prohibits imposition of penalties and in case of breach of any of the provisi....
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....usness of misconduct will ordinarily determine the penalty keeping in view the degree of harm that each penalty can inflict upon the Government servant. Before serving the second show-cause notice the disciplinary authority will determine tentatively the penalty keeping in view the seriousness of misconduct. But this is a tentative decision. On receipt of representation in response to notice, the disciplinary authority will apply its mind to it, take into account any extenuating or mitigating circumstances pleaded in the representation and finally determine what should be the penalty that would be commensurate with the circumstances of the case. Now, if a major penalty was tentatively decided upon and a lesser or minor penalty cannot be awarded on the view taken by the High Court because this was not the specified penalty, the Government servant to whom a notice proposing major penalty is served would run the risk of being awarded major penalty because it would not be open to award a lesser or a minor penalty than the one specified in the show-cause notice. Such a view runs counter to the principle of penology. In criminal and quasi-criminal jurisprudence where the penalties are pr....
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....y says so, that the purpose of the issue of a show-cause notice at the second stage is to give the Government servant concerned a reasonable opportunity of showing cause why the proposed punishment should not be inflicted on him; for example, if the proposed punishment is dismissal, it is open to the Government servant concerned to say in his representation that even though the charges have been proved against him, he does not merit the extreme penalty of dismissal but merits a lesser punishment, such as removal or reduction in rank. If it is obligatory on the punishing authority to state in the showcause notice at the second stage the "exact" or "particular" punishment which is to be inflicted, then a third notice will be necessary if the State Government accepts the representation of the Government servant concerned. This will be against the very purpose for which the second show-cause notice was issued. .. If in the present case the show-cause notice had merely stated the punishment of dismissal without mentioning the other two punishments, it would still be open to the punishing authority to impose any of the two lesser punishments of removal or reduction in rank and n....
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....MDGs are essentially between the Appellants and the Dealers, covering their rights and obligations, on various counts such as, methodology of sampling, filling and decantation of tank lorries, maintenance of equipment at Retail Outlets and other aspects of purely commercial nature and linked with the Dealership Agreement. 78. The MDGs for Retail Outlets/SKO Dealerships, which have been in existence for last 3 decades, facilitate marketing of petroleum products (MS/HSD/SKO) by the Dealers on the principles of highest business ethics and excellent customer service. 79. These Guidelines are updated/amended from time to time to meet the growing customer expectations, ensuring quality & quantity of products and service, enforcing discipline amongst the Dealers' network and preventing malpractices in the sale of petroleum products. MDGs aim to bring consistency amongst the OMCs with respect to implementation of various marketing practices and different cases of malpractices for taking civil action under dealership agreements. 80. Penalties are imposed where malpractices and/or violation of Guidelines are established as the Dealers are expected to carry on business on the princip....
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....ociety. d. If the Dealer or any partner in the dealer's firm or any member of the Co-operative society appointed as dealer hereunder shall be convicted of a criminal offence. e. If a receiver shall be appointed of any property or assets of the dealer or of any partner in the dealer's firm of any member of the dealer Co-operative society. f. If the license issued to the dealer by the relevant authorities for the storage of petroleum products supplied by the corporation is cancelled or revoked. g. If the dealer shall for any reason make default in payment to the corporation in full or his outstanding as appearing in corporation's books of account beyond 4 days of demand by the corporation. 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/storage of the corporation products or otherwise. i. If the dealer shall deliberately contaminate of temper with the quality of any of the corporation's products. j. If the dealer shall sell the corporation's products at prices higher than those fixed b....