REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 8257 OF 2019 (ARISING OUT OF SLP (CIVIL) NO. 25746 OF 2018)

INDIAN OIL CORPORATION LTD. & ORS. .....APPELLANT(S)

VERSUS M/S. R.M. SERVICE CENTRE & ANR. .....RESPONDENT(S)

J U D G M E N T

HEMANT GUPTA, J.

1) The challenge in the present appeal is to an order of the Division Bench of the Gauhati High Court passed in writ appeal on 20^th February, 2018 maintaining an order of the Single Bench of the High Court whereby termination of dealership of respondent No. 11 for violation of Marketing Discipline Guidelines, 2012, [for short, ‘Guidelines’] was set aside.

2) The dealer was granted retail dealership for sale of motor spirit (petrol), High Speed Diesel, motor oil and grease as a physical

1 for short, ‘dealer’

disabled person on a depot located at Ghograpar, National Highway -31 in the District of Nalbari, Assam. The sale and supply from the retail outlet of the dealer was suspended by the appellants on 6^th May, 2013 when it was found, on the joint inspection, variation of stock of High Speed Diesel beyond permissible limit; density of Tank No. 2 was not available and that tanker truck retention of the corresponding tank was not available at the time of inspection. The appellant had drawn three samples from Tank No. 2. One sample was sent for testing, another sample was retained by the Field Survey OfÏcer and the third sample was handed over to the dealer. A show cause notice was issued to the dealer on 6^th May, 2013, alleging violation of Clauses 5.1.9 and 5.1.11 of the Guidelines. The dealer submitted his explanation on 21^st May, 2013, inter alia, stating that dispensing unit was not working properly and, therefore, wrong readings were shown.

3) The dealer was informed on 27^th June, 2013 that test report of High-Speed Diesel samples drawn from the tank on 6^th May, 2013 had been received. The report was that the samples failed to meet the specifications. Thereafter, in response to a show cause notice dated 27^th June, 2013 to explain the non-conformities detected, the dealer vide letter dated 17^th July, 2013 requested to seek retesting of the umpire sample which was drawn on the same day, sealed, and certified by the appellants. The stand of the dealer was that the dispensing unit was 20 years old and due to lack of maintenance on account of the road-widening project, the totalizer had been showing wrong readings.

4) The request of the dealer for retest was accepted on 6^th August, 2013. The retest was carried out in the Laboratory of the appellants on two sets of samples including the one retained by the Field Survey OfÏcer of the appellants. The report of the aforesaid two sets of samples was issued on 19^th August, 2013. The report of the sample which was retained by Field Survey OfÏcer of the appellants was that it did not meet the BIS III specifications whereas, the sample of the dealer was not fit for testing due to presence of sludge.

5) On the basis of the test reports dated 29^th May, 2013 and 19^th August, 2013, the dealership was terminated on 25^th April, 2014 after serving another show cause notice dated 10^th December, 2013 wherein, it has been stated that deviation was observed during inspection pertaining to stock variation and non-availability of reference density. The appellants have mentioned details of non-conformity and the violation of the Clauses in the letter of termination dated 25^th April, 2014, which read as under:

6) It was also pointed out that out of three samples drawn from Tank No. 2 on 6^th May, 2013, one sample was sent to the Laboratory, another was retained by the Field Survey OfÏcer and the third sample was handed over to the dealer. The result of the three samples is as under: