The court emphasized the necessity of adhering to principles of natural justice in administrative actions, ruling that reliance on undisclosed evidence rendered the termination of the dealership arbitrary.

JUDGMENT :

(Pankaj Bhatia, J.)

1. Heard Ms. Geetika Yadav, learned counsel for the petitioners and Dr L.P. Mishra & Shri Manish Jauhri, learned counsel for the respondents.

2. The present petition has been filed by the petitioner challenging the order dated 12.01.2023 whereby the license of the petitioner for retail outlet dealer of Indian Oil Corporation was terminated as well as the order dated 15.05.2023 by which the appeal preferred against the said order was rejected.

3. The facts, in brief, are that the petitioner was appointed as a retail outlet dealer by Indian Oil Corporation (for short ‘corporation’) by means of an appointment letter dated 02.12.2005 for running a retail outlet at Bariha Taranpur, District Lakhimpur Kheri, which was being run by the petitioner in the name and style of M/S R.S. Filling Station. An agreement was executed in between the parties on 01.04.2006. It is also common ground that the dealership granted to the petitioner is governed by the agreement executed in between the parties and the Marketing Discipline Guidelines (hereinafter referred as “MDG”) issued from time to time.

4. In the month of April, 2017 in pursuance to the directions given by the State Government, inspections were carried out by the authorities as specified in the Government Order across various petrol and diesel outlets and an inspection was also carried out on the petitioner’s outlet on 31.05.2017 by a team of three persons. An inspection report was prepared, which is on record. It is also relevant to note that detailed instructions were issued by the Chief Secretary, State of U.P. vide communication dated 15.06.2017 constituting a team of 5 persons for carrying out the inspections. In the inspection report as prepared, it was recorded that an inspection was carried out and the machines were checked. At the time of inspection, four dispensing units (8 nozzles) were found, out of which 6 nozzles were found in working conditions. From each nozzle, 15 ltrs. each of petrol and diesel were taken out and after inspection, the same were found to be showing proper delivery. 2 nozzles were found to be not in the working conditions. On inspection of pulsar cards of the nozzles, 2 pulsar cards appeared to be suspicious, which were seized and taken into custody and a plastic seal was affixed thereon.

5. Based upon the inspection report dated 31.05.2017, the respondent – corporation issued a letter dated 31.05.2017 calling for the response from the petitioner. The said letter, was termed as “fact finding letter”. It was mentioned that during the inspection following observations were made and the petitioner was called upon to submit his explanation within a period of 15 days as to why action should not be taken as per the MDG/dealership agreement to protect the marketing interest of the corporation:

“2 Pulsar card were found with impression of tempering, due to which 3 Nozzles (2 MS AND 1 HSD) were affected by these 2 Pulsar card.”

6. The petitioner submitted a reply on 15.06.2017 denying the allegations and submitted that no extra chips were found in the machines, the seals of machines were found intact, measurements checked were found in order and the calibration of the machines was done by the Weights and Measurement Officer and a certificate was issued by them, thus, no fault could be attributed to the petitioner.

7.