Mr. Justice S. Ravindra Bhat:

1. The writ petitioner challenges an order of the respondent Hindustan Petroleum Corporation Ltd (“HPCL”) terminating its dealership.

2. The facts, briefly, for the purpose of deciding this case are that the petitioner entered into an agreement dated 28.01.1971 with the HPCL’s predecessor-in-interest in respect of a dealership license for a petrol pump at Vikas Marg, Preet Vihar, New Delhi. The said premises were inspected in the early hours of 15.05.2000 where an unauthorized tank lorry was found decanting products; samples were drawn. A first information report (FIR) was registered; one Mr. Pradeep Gupta was arrested. He was managing the petrol pump, consequent upon an arrangement executed with the Directors of the petitioner company and one Ms. Kanta Talwar dated 28.09.1998. The petitioner contends to learning about the incident on 16.05.2000 and issuing a notice to Mr. Pradeep Gupta as to why the management agreement should not be terminated. However, on that date, HPCL terminated the dealership agreement with the petitioner on account of sample failing the test. The reasons given were:-

“Following irregularities were observed in operation of subject dealership:

(i) We have been informed that the police party of the Crime Branch headed by Shri Azad Singh, Inspector raided the Petrol Pump Premises and caught red handed an unauthorized Tank Lorry having Registration No. DL1GB-4233 decanting product other than products supplied by the company into two underground storage tanks meant for Unleaded Petrol (ULP) unauthorisedly around 4.00 a.m. on 15.5.2000. A FIR no.193/2000 was also lodged by the local police.

(ii) Further the said unauthorized tank lorry was properly connected through hose pipes to two of underground tanks (meant for storage of ULP at the retail outlet) decanting unauthorized product may be with the view to adulterate ULP product supplied by the company for the purposes of illegal gains at the cost of reputation of the company and cheating public at large or any other reason/intention best known to you.

(iii) One of the sample of tank no.1 out of the samples taken for laboratory test has failed on specifications of ULP.

From the foregoing it is clear that you have failed in the performance of your obligations under the aforesaid agreement entered by in between us, thereby causing inter-alia a breach of trust.

In the past also a product sample collected from this outlet was found to be failing the specifications. While we were entitled to terminate as per Dispensing Pump Selling Licence Agreement we had taken lenient view and had given you another chance. With the present instance it is clear that you have completely violated the agreement with you.

We take an extreme serious view of the aforesaid breaches committed by you and in the circumstances referred above, we find no option but to terminate the aforesaid licence agreement which is TERMINATED with immediate effect and we are not willing to carry on our business with you any more. In view of above termination, henceforth, you, your agents and your representatives should not enter upon or make any attempt to enter upon the aforesaid retail outlet.”

The petitioner protested against the above, by its letter, dated 20.05.2000.

3. The samples were sent on 15.05.2000 to the laboratory (“lab”) at Shakurbasti; the report was submitted on 16.05.2000. The samples failed on account of the Registration Octane Number (for short, ‘RON’) requirement. There are different test reports for the different samples drawn and six of the samples were tested on 15.05.2000 itself being the date of receipt, but three samples drawn on 15.05.2000 were received by the Lab on 17.05.2000; consequently, those reports are dated 17.05.2000. A Criminal Writ Petition bearing No.877/2000 was filed by Mr. Pradeep Gupta. It was disposed of on 06.12.2000 directing that the sample lying in the custody of the police to be produced before the trial court and if the trial

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