Tampering with equipment leading to malpractice and critical irregularities justifies termination of dealership.

JUDGMENT

Sandeep Mehta, J. - The instant intra court appeal has been preferred by the appellant Hindustan Petroleum Corporation Ltd. being aggrieved of the order dated 21.02.2022 passed by the learned Single Bench accepting S.B. Civil Writ Petition No. 10115/2019 and restraining the appellants from terminating the retail petrol and diesel outlet dealership allotted to the writ petitioner (respondent in this appeal) by the appellant Corporation.

2. Brief facts relevant and essential for disposal of the appeal are noted herein below:-

3. The respondent writ petitioner was awarded dealership of Hindustan Petroleum Corporation Ltd. for retail petrol and diesel outlet vide dealership agreement dated 31.12.2007 and was operating the same in the name and style of Akshay Automobile at location Navania, Udaipur.

4. An inspection was conducted by the company officers at the outlet of the respondent writ petitioner on 27.06.2017, during the course whereof, it was found that six out of eight nozzles were releasing lesser quantity of fuel in the range of 30 ml to 60 ml in both Motor Spirit (MS) and High Speed Diesel (HSD). The inspection team prepared a report and forwarded the dispensing unit to the O.E.M., i.e. Moderate Insightful Disciplined Congenial Opinionated (for short, hereinafter referred to as 'MIDCO') for technical assessment. Panchnama was also prepared on the same day. The unit was examined by MIDCO, which issued a report dated 03.01.2018 indicating that:

"pulsar assembly is not found in conformance with MIDCO standard design as per delivery test."

5. A show cause notice dated 08.05.2018 was issued to the writ petitioner requiring her to show cause as to why the dealership be not terminated on account of violation of clauses 4(a), 6(f), 20(a), 31(a) and 31(1) of the dealership agreement and for committing irregularities as described in the Marketing Discipline Guidelines (MDG). The respondent submitted a reply denying the allegations set out in the show cause notice and challenged the same by filing S.B. Civil Writ Petition No. 3816/2019. While the said writ petition was pending, the respondent was given an opportunity of hearing and thereafter the dealership was terminated vide order dated 06.03.2019, which was assailed by the respondent writ petitioner through S.B. Civil Writ Petition No. 10115/2019. The writ petition aforesaid came to be allowed by the learned Single Bench vide order dated 21.02.2022, which is assailed in this intra court appeal.

6. Mr. Manoj Bhandari, learned Senior Advocate, assisted by Mr. Govind Suthar, representing the appellants, vehemently and fervently contended that the view taken by the learned Single Bench based on the report of MIDCO that the errors found at the retail outlet of the respondent were not critical and were covered under 'major irregularities', which would have the consequence of suspension of sale and supply by 15 days only is absolutely unjustified. Mr. Bhandari submitted that the view taken by the learned Single Bench that the test report indicates lack of physical damage and interference in the external component of the hardware and thus, the deficiency would be covered by category 8.3 (Major Irregularities) is absolutely unwarranted and amounts to a misreading of the MIDCO test report. He urged that MIDCO, which is the original equipment manufacturer and an independent assessment agency, concluded in its report that the discharge from six out of eight nozzles of the outlet of the respondent writ petitioner were reduced and this conclusion by itself would give rise to a 'critical irregularity' within the meaning of Clause 8.2. iii of the Marketing Discipline Guidelines, which reads:-

8.2 Critical Irregularities:

iii. Totalizer seal of dispensing unit tampered or deliberately making the totalizer non functional or not reporting to the company if totalizer is not working (5.1.3 read with 5.1.2)

He submitted that in addition to the fact that the discharge from six out of eight dispensing no