# Anurag Agarwal v. I.O.C. & Ors

- **Citation:** (2026) 2 ILRA 592
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2026-02-25
- **Case number:** Writ C No. 33 of 2020
- **Bench:** Irshad Ali
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/anurag-agarwal-v-i-o-c-ors-54259
- **Pages:** 25

## Text

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592 INDIAN LAW REPORTS ALLAHABAD SERIES

२६. उपसांचालक चकिन्िी ने मौखखक साक्ष्य तथा अभिलेखीय साक्ष्य का सही ववश्लेषण करते हुए याची
जैजुला की ननगरानी को खाररज ककया तथा िन्िोिस्त अधधकारी चकिन्िी के ननणथय को सही माना, जोकक
धारा-४८ चकिन्िी अधधननयम के अन्तगथत उधचत ननणथय है।

२७. वाि के समस्त त्यों एवां पररन्स्थनतयों पर ववचार करने के उपरान्त उपरोक्त वववादित आिेशों को
जो कक हक प्रकिया में पाररत है, को ननरस्त करने का कोई उधचत आधार नहीां िनता है।

२८. तिनुसार वतथमान याधचका र्निस्त की जाती है।

२९. वाि व्यय के िारे में कोई आिेश नहीां ककया जाता है।
----------
(2026) 2 ILRA 592
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 25.02.2026

BEFORE

THE HON'BLE IRSHAD ALI, J.

Writ C No. 33 of 2020

Anurag Agarwal ...Petitioner
Versus
I.O.C. & Ors. ...Respondents

Issue for Consideration
Matter pertains to the legality and validity of termination of petroleum dealership by the respondent Indian Oil
Corporation on allegations of tampering with dispensing units, in the absence of proof of dealer's complicity
and in violation of principles of natural justice due to non-supply of relied upon technical reports.

Headnotes
Indian Penal Code, 1860 - ss. 265, 267, 420, 120-B and 34 - Legal Metrology Act, 2009 - ss. 12
and 30 - The petitioner was appointed as a retail outlet dealer of respondent - Oil Corporation
under a dealership agreement dated 06.12.1996 for the sale of petroleum products - Pursuant to
certain inspections conducted in 2016 and thereafter, the dispensing units at the petitioner's
outlet were initially found to be functioning correctly with intact seals and no deficiency in
delivery, however, a subsequent inspection dated 01.05.2017 alleged the presence of
unauthorized fittings in pulsar of dispensing units and noted stock variations - On the basis of
these allegations, a show cause notice was issued, to which the petitioner submitted a detailed
reply denying any tampering and asserting that the sealed units were beyond his access or
control - Notwithstanding the reply, the competent authority, by order dated 30.01.2018,
terminated the dealership and forfeited the security deposit, primarily relying upon certain OEM
reports which were not furnished to petitioner prior to the decision - The petitioner's statutory
appeal before Dispute Resolution Panel was dismissed on 23.05.2019, leading to institution of
instant writ petition challenging both termination order and appellate order on grounds inter alia
2 All. Anurag Agarwal Vs. I.O.C. & Ors.
593
of absence of cogent evidence, non-supply of material documents, and violation of principles of
natural justice.

Held: In the instant case, the material on record clearly indicates that the termination order has been passed
in breach of procedural safeguards contained in Marketing Discipline Guidelines, 2012 as well as the principles
of natural justice, inasmuch as the petitioner was not supplied with the OEM reports forming the basis of
impugned action prior to passing of termination order - Consequently, the appellate authority, while dismissing
the petitioner's appeal by order dated 23.5.2019, also failed to consider the procedural infirmities and merely
affirmed the decision of original authority without independently examining whether the allegations against
the petitioner had been established in accordance with law - The impugned order dated 30.1.2018 terminating
the petitioner's retail outlet dealership agreement and appellate order dated 23.5.2019 passed by Dispute
Resolution Panel are hereby quashed - The respondents are directed to permit the petitioner to continue to
operate the retail outlet in accordance with law and strictly in terms of the dealership agreement, subject to
compliance of all applicable conditions - It is left open to competent authority of respondent -Corporation to
proceed afresh from the stage of issuance of show cause notice, after supplying to petitioner all documents,
including the reports of Original Equipment Manufacturers - In case show cause notice is issued in accordance
with law, necessary order in accordance with law shall be passed after affording opportunity of hearing to the
petitioner. [Paras 32, 33, 35, 36] (E-13)

Case Law Cited
Indian Oil Corporation Limited v. Pullareddy Service Center [2021 SCC OnLine AP 2909]; M/s Prakash
Automobiles Indian Oil Dealer v. Indian Oil Corporation Ltd. Lucknow [Writ-C No.558 of 2020]; R.S. Filling
Station Indian Oil Corporation Ltd. Kheri v. ICOL and others [Writ-C No.4944 of 2023]; Chaudhary Filling
Point v. State of U.P. [2019 SCC OnLine All 3620]; M/s M.K. Fuel Centre v. IOCL and others [Writ-C
No.31629 of 2021]; M/s Maharashi Filling Station (Indian Oil Dealer) v. Indian Oil Corporation Ltd and
another [Writ-C No.20271 of 2018]; M/s Shree Rajendra Agro Service Centre v. Indian Oil Corporation Ltd.
and others [High Court of Judicature for Rajasthan at Jodhpur (Writ No.456/2023)]; State of U.P. and
others v. Rajit Singh [Civil Appeal Nos.2049-2050 of 2022] - referred to

Indian Oil Corporation Ltd. & another v. T. Natarajan [Civil Appeal No.6748 of 2018]; M/s Kisan Sewa
Kendra v. Union of India and others [Writ-C No.32973 of 2018] - distinguished

List of Acts
Indian Penal Code, 1860; Legal Metrology Act, 2009

List of Keywords
Termination of dealership agreement; Retail outlet dealership; Appellate order; Dispute Resolution Panel;
Show cause notice; Fact finding letter; Inspection report; Random inspection; Forensic Science Laboratory;
Joint inspection team; Unauthorized fittings; Additional wire in pulsar; Tampering of seal; Stock variation;
Short delivery; Seals intact; Weights and measures seals; Legal Metrology Department; OEM report; Test
report; Non-supply of OEM reports; Reply to show cause; Forfeiture of security amount; Violation of principles
of natural justice; Procedural infirmities; Dealership agreement conditions; Marketing Discipline Guidelines
(MDG); Competent authority; Appellate authority; Arbitrariness; Illegality; Fairness in terminating the
dealership agreement; Petition allowed.

Case Arising From
ORIGINAL JURISDICTION: Writ - C No. - 33 of 2020

From the Judgment and Order dated 31.01.2018 passed by respondent No.2 terminating the retail outlet
dealership agreement dated 6.12.1996 and order dated 23.5.2019, passed by Dispute Resolution Panel of Oil
Industry (respondent No.3), dismissing the Appeal No.DRP/ IOC/ RET/0014/2018 filed by petitioner against
the termination order dated 31.1.2018.
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Appearances for Parties
Advs. for the Petitioner:
Subhash Vidyarthi, Anshuman Singh, Ashok Kumar Singh, Geetika Yadav, Prabhat

Adv. for the Respondent:
Manish Jauhari

(Delivered by Hon'ble Irshad Ali, J.)

1. Heard Ms. Geetika Yadav, learned counsel for the petitioner in presence of Mr. Prashant
Chandra, learned Senior Advocate and Mr. Manish Johari, learned counsel for the respondentCorporation.

2. By means of the present writ petition, the petitioner is challenging the order dated
30.1.2018, passed by respondent No.2 (Annexure-1 to the writ petition), terminating the petitioner's
retail outlet dealership agreement dated 6.12.1996 and order dated 23.5.2019, passed by the
Dispute Resolution Panel of Oil Industry (respondent No.3), dismissing the Appeal No.DRP/ IOC/
RET/0014/2018 filed by the petitioner against the termination order dated 30.1.2018.

3. Factual matrix of the case is that the respondent No.1 entered into a petrol/ HSD pump
dealer agreement (Annexure-3 to the writ petition), appointing the petitioner has its dealer for retail
sale of petrol/ high speed diesel/ motor oil/ grease and other petroleum products. On 28.6.2016, the
corporation conducted a random inspection, in which it was found that the weights and measures
seals and the totaliser seals of all the 16 nozzles put on all the four dispensing units installed at the
petitioner's retail outlet were intact and all the 16 nozzles were delivering correct quantities of the
product.

4. On 7.12.2017, the Legal Metrology Department verified the seals and quantity of products
being delivered from the dispensing units after charging a fee of Rs.16,000/- from the petitioner.
On 1.5.2017, an inspection was carried out by a joint team, which had no representative of
respondent No.1-corporation. During the inspection, the weights and measurement seals were
found to be OK and the team found no irregularity in the quantity of the product being delivered.
After the report had been signed by all the persons, it was inserted at the bottom of the report that a
tampered pulsar having a resistance was taken from the Dresser Wayne dispensing unit and the
pulsar of Midco contained an additional wire.

5. On 1.5.2017, the Regional Food Inspector, who was a member of inspection team,
submitted an inspection report (Annexure-7) to the District Supply Officer, stating that upon stock
verification, it was found that the stock of petrol was less by 2016 litres and the stock of high speed
diesel was less by 1280 litres.

6. On 23.5.2017, the Senior Divisional Retail Sales Manager of the Corporation sent a fact
finding letter (Annexure-8), asking the petitioner to submit reply on the following points :-

(i) Additional/ unauthorised fittings/ gears found in dispensing unit/ tampering with dispensing
unit (violation of clause 5.1.4 of MDG 2012)
2 All. Anurag Agarwal Vs. I.O.C. & Ors.
595

(ii) Stock variation of MS/ HSD (beyond permissible limits) fuels (violation of clause 5.1.11)

7. The petitioner sent a reply on 1.6.2017 that no extra chip/ fitting was found affixed to any of
the machines installed at its outlet during the inspection. The Weights and Measurements
Department seals put on all the machines were found intact at the time of inspection, indicating that
no manipulation had been done by the petitioner. The petitioner is responsible for delivery and
Weights and Measurements Department seals and both were found OK. Since the delivery and
seals were found to be correct, no allegation of manipulation/ tempering of the machines can be
imposed upon him. Regarding stock reconciliation, the petitioner stated that it was not done as per
the norms and specifications of MDG 2012.

8. On 7.7.2017, the Chief Divisional Retail Sales Manager of the respondent-Corporation sent
a show cause notice to the petitioner alleging that at its retail outlet, tampering/ unexpected wires
were found in pulsar. A copy of the inspection report was enclosed with the show cause notice but
copies of the testing report of the Original Equipment Manufacturers were not provided to the
petitioner. The allegation of stock variation, which was there in the fact finding letter, had been
dropped from the show cause notice.

9. On 20.7.2017, the petitioner sent a reply to the show cause notice stating that maintenance
and repairing of the dispensing units was the responsibility of the respondent No.1 as per the
dealership agreement as also as per the Marketing Discipline Guidelines and the allegation of
tampering or the presence of an extra wire in pulsar card cannot be imputed on the petitioner when
the weights and measurement seals were found intact/ perfect at the time of inspection and there
was no allegation of short delivery.

10. On 30.1.2018, the respondent No.2 passed an order (Annexure-1) that the competent
authority has decided to terminate the petitioner's RO agreement and accordingly, the dealership of
the petitioner is terminated with immediate effect and the security amount is forfeited. A copy of
the undated test report issued by Midco was enclosed with the aforesaid order alongwith a covering
letter dated 25.9.2017 and a perusal of the report indicates that it was prepared merely on a visual
inspection of the pulsar without providing power to the received material under test. Although the
test report was prepared on or before 25.9.2017, its copy was not provided to the petitioner prior to
passing of the termination order. The analysis report of the other OEM i.e. Dresser Wayne was
provided to the petitioner only on 24.4.2019 i.e. long after passing of the termination order, during
the pendency of the appeal before the Dispute Resolution Panel.

11. On 27.2.2018, the petitioner filed an appeal before the Executive Director, Retail Sales of
the respondent No.1- corporation. On 1.6.2018, the Deputy Director, Forensic Science Laboratory,
U.P. at Lucknow has written a letter clarifying the procedure for testing of pulsar of petrol pumps,
which was not followed for testing of the pulsar.

12. On 16.1.2018, the Deputy Controller, Legal Metrology, Haryana has informed that the fuel
dispensers should be checked physically and in operational mode and parts are to be checked on
power and the visual checking report is not final as per the Legal Metrology (General) Rules, 2011.
596 INDIAN LAW REPORTS ALLAHABAD SERIES

13. A new dispensing unit was being installed at another retail outlet in which extra fittings (a
wire and a diode) were found on the motherboard that was fitted in the new machine. When
additional fittings have been found in new unused machine, the petitioner cannot be held guilty of
any alleged additional fitting found in a properly sealed machine.

14. Submission of learned counsel for the petitioner is that when additional fitting has been
found in new unused machine, the petitioner cannot be held guilty of any alleged additional fitting
found in a properly sealed machine. She next submitted that the officers of the respondent No.1-
corporation made e-mail correspondence with the Original Equipment Manufacturer Company
regarding the additional wire found on the motherboard of a new machine and the representative of
the OEM admitted having installed an additional wire.

15. Learned counsel for the petitioner submitted that the petitioner has been acquitted in a
complaint case under Sections 12/30 and 26 of the Legal Metrology Act on the same allegations as
are contained in the inspection note dated 1.5.2017. On the same allegations as are mentioned in the
inspection report dated 1.5.2017, a First Information Report was registered in Police Station PGI,
Lucknow under Sections 265, 267, 420, 120-B and 34 IPC and Sections 12 and 30 of the Legal
Metrology Act, which was registered as Case Crime No.401/2017. After investigation, the police
has filed the final report in the court of First Additional Chief Judicial Magistrate, Court No.25,
Lucknow and the Supply Inspector also filed an application requesting that the final report be
accepted. On 24.7.2019, the final report was accepted.

16. It is also submitted by petitioner's counsel that upon inspection at the petitioner's outlet, the
weights and measurement seals were found OK and the inspection team found no irregularity in the
quantity of the product being delivered. Without tampering with the seals put by Legal Metrology
Department, the petitioner did not have access to any part inside the unit and he was not liable for
any alleged tampering found inside the sealed unit. Further submission is that while issuing show
cause notice to the petitioner, no OEM report was made available to the petitioner, therefore, the
petitioner could not reply properly in regard to the allegations levelled. It is next submitted that on
the date of making inspection, the testing reports were not supplied to the petitioner. Her
submission is that due to not supplying the OEM report, the principles of natural justice have been
violated, therefore, the impugned orders ware liable to be set aside. It has also been submitted that
the appellate court has also not considered this aspect of the matter that report of OEM was not
made available to the petitioner while issuing the show cause notice.

17. In support of the submissions advanced, learned counsel for the petitioner placed reliance
upon the following judgments :-

(i) Indian Oil Corporation Limited Vs. Pullareddy Service Center [2021 SCC OnLine AP
2909]. Relevant paragraphs 16, 18 to 27 are being quoted below :-

"16. The whole controversy centers around the crucial observation in the inspection
report dated 05.02.2015 about the presence of additional/double gear, which is not in dispute.
While it is the contention of the appellants that since the dispensing unit and other equipment are in
the care and custody of the petitioner/dealer, the responsibility lies with it and the benefit by virtue
2 All. Anurag Agarwal Vs. I.O.C. & Ors.
597
of such additional gear coupled with variations in stock would enure to the dealer, the same is
opposed by the petitioner contending that it is well-nigh impossible to meddle with the dispensing
unit when there is no allegation of tampering of seals, which in fact, undisputedly are intact, as per
the inspection report. Further, the dealer cannot be held responsible for the presence of additional
equipment as it is the authorities alone who have access to the dispensing unit.

18. In Ram Lal Agarwal's case (referred 2 supra), wherein reliance was placed on the
judgment in P. Laxmikanth Rao's case (referred 1 supra) which was later upheld by the Division
Bench in W.A. No. 318 of 2011, the learned Single Judge was examining more or less similar
factual situation, but there is no allegation of stock variation as pointed out by the learned Senior
Counsel. In the said case, the Inspecting Team observed the presence of double gear in one of the
dispensing units. However, they did not find any irregularity or illegality in the functioning of the
dispensing units, no differentiation was noted in dispensing of fuel nor the quantity of petroleum
products was found to be deficient in any manner. It was inter alia contended on behalf of the Oil
Company/respondent therein that mere existence of double gear in the dispensing unit is sufficient
to hold a dealer responsible as double gear gets installed only to manipulate delivery and actual
shortage of delivery is not material.

19. The learned Single Judge while interpreting Clause 5.1.4 of MDG which is pressed
into service in the present case also, opined that double gear in dispensing unit would assume
critical irregularity only if deficiency is noticed in the quantity of fuel dispensed with. The said
clause reads thus:

"5.1.4 Additional/unauthorized fittings/gears found in dispensing unit/tampering with
dispensing unit:

Any mechanism/fittings/gear found fitted in the dispensing unit with the intention of
manipulating the delivery..."

20. At para 27 of the judgment, the learned Single Judge opined as follows:

"......If the material available on record does not necessarily lead to the conclusion that
the tampering and tinkering has taken place at the hands of the writ petitioner, it will be totally
unjust to penalize him. It is a fundamental principle of law that no innocent person should be
penalized for no fault of his. That would be contrary to cannons of justice. In the absence of linkage
of the presence of the additional gear with 39 teeth in the equipment at the premises of the retail
outlet run by the petitioner to him, it will not be safe to infer that he is guilty of tampering with the
equipment. If there is no reasonable substratum to a conclusion that the petitioner is guilty of
tampering with the equipment, no adverse action of termination of his dealership agreement could
have been drawn against him. The petitioner therefore could not have been faulted unnecessarily."

21. It may be trite to observe here that it is not the case of the appellants that by virtue of
presence/or help of double gear, less quantity of petrol/diesel is dispensed with on testing at the
time of the inspection conducted on 05.02.2015. No doubt, no satisfactory explanation is
forthcoming with regard to the stock variations. However, in the absence of any evidence to the
effect that additional gear was inserted by/or at the behest of the petitioner/dealer and as a result
of the same, there was stock variation which reaps benefit to the petitioner, no conclusion can be
arrived at for penalizing the petitioner. In this regard, it may be apt to refer to the judgment of the
Division Bench cited by Mr. N. Ashwani Kumar in support of his contentions. In W.A. No. 318 of
598 INDIAN LAW REPORTS ALLAHABAD SERIES
2011, the Hon'ble Division Bench while confirming the orders of the learned Single Judge in P.
Laxmikanth Rao's case (referred 1 supra) vide orders dated 21.07.2011 elaborately dealt with the
similar issues. In the said case, the dealership of the petitioner therein was terminated on the
allegation that a spurious gear was found to have been introduced into the unit resulting in the
short supply of High Speed Diesel (HSD). It is the case of the Oil Company that the dealer
committed malpractice/irregularity of short supply by tampering with the Corporation's equipment,
namely, dispensing unit by using unauthorized fittings/gears and that the said act of the dealer
putting additional gear to the dispensing unit resulting in short supply tantamount to tampering
with the dispensing unit. It was contended before the learned Single Judge that once the seal is
found to be intact, the dealer cannot be held responsible for any error or defect as to the
measurement and further that the dealer has no control over the dispensing unit and the
Corporation and the Maintenance Agency are in complete control over the units.

22. While upholding the judgment of the learned Single Judge, the Division Bench held as
follows:

"On the basis of the charge, it is appropriate that before any conclusion as to misconduct
or malpractice or tampering by the dealer is arrived at, it must be demonstrated by the appellants
by the standards of preponderance of probabilities (no lesser standard known to law exists) that
the dealer could access the internal mechanism of the unit and could introduce the spurious gear.
Alternatively, a compelling inference as to tampering by or on behalf of the dealer could have
perhaps been legitimately arrived at if the respondents could establish that proper gear was in fact
installed in the unit on an earlier occasion and the dealer or his agents could have substituted the
gear with a spurious one, even while the seal to the unit was intact. In the absence of officials of
Weights and Measures Department and by obtaining only their telephonic approval, the seals were
broken by agents of the appellants and the Metering Unit opened. It is the admitted factual
scenario that the seals of the dispensing unit were intact and as observed by the learned Single
Judge it is not the case of the appellants that the dealer or any other individual could gain access
to the unit where the ?spurious gear? was introduced even while the seal of the unit was intact. It is
not the case of the appellants that the seals of the unit were tampered with or duplicate seals
substituted for the seals put by officials of the Legal Metrology Department. Neither the show cause
notice nor the final order impugned in the writ petition unravels the mystery of the closed unit and
metaphysical entry of the spurious gear into the unit. This was a fatal error in the order of
termination of the dealership, on account of which the learned Single Judge was persuaded to
invalidate the order of termination of the respondent's dealership, by the appellants."

23. Further, with regard to the presence of the spurious gear, the Hon'ble Court recorded
its conclusions as follows:

"Responding to a query from this Court as to how the appellants could explain the
curious case of the spurious gear inside a locked unit, the learned senior counsel would urge that
since the authorized dealer of the gears supplied by Larsen and Turbo had through a letter, dated
10.05.2010, informed the appellants that the gear found in the dealer's unit was an unauthorized
gear and not manufactured and supplied by the authorized supplier, the inference is compelling
that since it was only the dealer who stood to gain from short delivery of HSD, he must have
introduced the gear notwithstanding that the unit was sealed and despite absence of an explanation
2 All. Anurag Agarwal Vs. I.O.C. & Ors.
599
as to how a spurious gear could have been introduced into the sealed unit. His contention does not
commend acceptance by this Court as it suffers from the logical fallacy of an undistributed middle.
The letter of the supplier to the appellants, dated 10.05.2010, is not conclusive of the fact that a
standard gear was in place till the inspection nor it is to be construed by any principle of law that a
spurious gear was not installed.

Since the HSD vended by the dealer is clearly found to be in short supply and that is an
undisputed fact, and since a spurious gear having 39 teeth instead of 38 was also found embedded
inside the HSD unit, the conclusion is irresistible in a world governed by physical laws that
someone or some agent introduced a non-standard gear into the HSD unit. But from this fact to
take a logical leap to infer that it was introduced by the dealer, is irrational. The chain of
circumstances is not complete and merely because the dealer alone would stand to benefit from the
short supply, no such inference could legitimately be drawn.

It is the admitted position that the supplier of the gears is a private agent. Neither the
State nor an instrumentality of the State is the accredited supplying agent of the appellants. There
is nothing in the pleadings, including in the counter affidavit of the appellants herein before the
learned Single Judge that establishes that the introduction or replacement of the gears is by the
respondent dealer."

24. While disposing of the writ appeal, the Division Bench opined that "the conclusion as
to the dealer's malfeasance was arrived at by the appellants therein on the singular fact that there
was short supply of HSD and on the opening of the seal of the unit after breaking it, the spurious
gear was found.? It was further observed that ?the basis of these two facts found is inadequate and
is flawed for the reason that the fact that a spurious gear was introduced by the dealer was not
legitimately inferred and the fact of the external seals of the unit being intact was not adverted to
nor explained in the order of termination."

25. This Court is of the considered view that the above said judgment of the Hon'ble
Division Bench applies to the facts of the case in principle and is, therefore, not persuaded to take
any different view in the facts and circumstances of the case, wherein no material/evidence was
brought on record to the effect that the additional gear was inserted by the dealer with a view to
manipulate the delivery of petrol/diesel. It is neither the case of the appellants that unauthorized
fittings/additional gears in the dispensing units were inserted by the dealer in collusion with the
authorities nor any such allegations were made to that effect. In the absence of which, nothing
adverse against the petitioner/dealer can be inferred. This Court is, therefore, inclined to uphold
the submissions made by the learned counsel for the respondent and reject the contentions contra
of the learned Senior Counsel for the appellant No. 1/Corporation.

26. In Indian Oil Corporation's case relied on by the learned counsel for the appellants,
the Hon'ble Supreme Court looking to the facts and circumstances of the case and on perusing the
material on record held that acknowledgment of inspection report by putting seal and signature
cannot be allowed to be resiled on the ground that the same were signed in good faith and the
officials of the Oil Company cannot take advantage of the same. The said Judgment, in the
considered view of this Court, is not applicable to the facts of the present case. Signing of the
600 INDIAN LAW REPORTS ALLAHABAD SERIES
inspection report acknowledging the presence of additional gear would not ipso facto amount to
accepting the insertion of the same by the petitioner. The burden lies on the appellants to establish
that the same was inserted to manipulate the delivery of the fuel. In the present case, respondent
No. 3/the Original authority arrived at the conclusions to the effect that being custodian of the
outlet/equipment, the petitioner is responsible for presence of additional/unauthorized gear without
adverting to the plea that it is not possible to do so when seals are intact. Even the appellant No.
2/appellate authority based its findings on assumptions and presumptions while opining that
termination of the dealership was based on established fact of unauthorized fitting alone and the
issue of excess stock of MS and negative stock in HSD is of no further consequence, is not being
dealt with. As pointed out by the Division Bench, no finding was recorded as to how a spurious
gear can be inserted in the dispensing unit when the seals are intact. It may be pertinent to note
here that Clause 8.5.2 of MDG provides as follows:

"All cases of irregularities needs to be established before any action is taken against a
dealer."

27. Against the back ground of the above stated factual and legal position, the orders
impugned in the writ petition cannot stand to legal scrutiny."

(ii) M/s Prakash Automobiles Indian Oil Dealer Vs. Indian Oil Corporation Ltd.
Lucknow [Writ-C No.558 of 2020]. Relevant paragraphs 12, 14 to 24, 25, 26, 27, 29 are being
quoted below :-

"12. The facts in between the parties is not much in dispute. It is not disputed that on
17.04.2017 a maintenance report was generated by the OEM, a copy of which is on record as
Annexure no. 5 which did not find anything suspicious addition or party or fitting in the DUs nor
there was any material to indicate that any of the DUs were making short delivery.

14. It is also not disputed that during the inspection on 04.05.2017, the seals placed by
the Department of Weights and Measures were found to be intact.

15. It is also not disputed that the petitioner was issued with a show cause notice on
13.06.2017, a copy of which is on record as Annexure 8 WRIT C No. - 558 of 2020 no. 10 and
apart from the copy of the inspection report, no other document was annexed with the show cause
notice nor any other report was provided to the petitioner which was sought to be relied upon by
the respondents while taking a decision.

16. It is also not disputed that the petitioner submitted his reply on 30.06.2017 and it was
only in context with the points raised in the show cause notice and by that given time it was only
the inspection dated 04.05.2017 which had been provided to the petitioner to respond.

17. Later, the petitioner was required to be present at the Lab of the OEM where the
pulsar cards were to be examined and in this regard it was stated that the petitioner was present
but in his presence no such inspection was done and on 30.01.2018, the termination order was
passed along with which the report dated 26.07.2017 issued by Gilbarco Veeder Root (GVR) was
2 All. Anurag Agarwal Vs. I.O.C. & Ors.
601
provided to the petitioner. Admittedly, the said report was never provided to the petitioner prior to
the passing of the order.

18. It is also not disputed that the petitioner filed an appeal where these issues were
raised regarding not providing of the copy of the report which was relied upon by the Authorities
while passing the termination order yet it did not find favour with the appellant.

19. Now, in the aforesaid background, the copy of the analysis report dated 26.07.2017
issued by the OEM GVR, a copy of which has been placed on record at running page 204 to 205 of
the paper-book, at the outset, would indicate that on visual inspection, it appeared that a replaced
micro controller had been placed on the pulsar which could lead to variation in delivery. It also
concluded that the said micro controller was not part of the OEM and the same can lead to
variation in the delivery.

20. In so far as the other report of the OEM dated 24.11.2017 which is at running page
206 to 212 is concerned, it would reveal that though it observed that there was an
alternation/addition in the pulsar card, however, it was further observed that there were some
technical aspects i.e. to say an 8 pin SMD IC has been mounted (glued) on the PCB and jumper
wires from that IC were connected to pulsar sensors. This was found in two pulsars and for the
remaining three pulsars, there was no malfunctions or abnormality detected.

21. It also noticed that all operational pulsar units were checked for accuracy test and it
was found to be in permissible limits and finally it concluded that it could not be said whether any
abnormality could affect the delivery.

22. In the given fact scenario, what this Court finds that admittedly the seals of the
Weights and Measures Department were found to be intact. There was no material to suggest that
the petitioner had tampered with the seal or could have tampered with the pulsar cards.

23. In order for the Corporation to have terminated the dealership of the petitioner on the
aforesaid ground, it was necessary to have established that the petitioner had tampered with the
seals and was responsible for incorporating any additional part which is not part of the OEM in
the pulsar cards, coupled with the fact that such anomaly could have affected the delivery.

24. It is also relevant to notice that the only basis for passing the impugned orders is the
report by the OEM and as noticed above, the report of the OEM is also inconclusive for the reason
the OEM also could not state with certainty that the said alien part as detected in the pulsar card
was responsible for any short delivery. The report merely draws a conclusion but it does not
indicate how and what tests were done to arrive at such a conclusion, apart from the fact that the
said report of the OEM was not even put or given to the petitioner before passing of the impugned
order of termination.

25. Learned counsel for the IOC could not dispute that the show cause notice was based
merely on the basis of the inspection report and at that point of time, the report of the OEM was
not there and the show cause notice also did not indicate that the Corporation would be relying
602 INDIAN LAW REPORTS ALLAHABAD SERIES
upon the said report and even if they proposed to do so then it was a duty of the Corporation to
have provided the copy of the report to the petitioner prior to the passing of the order to enable the
petitioner to meet the reasons or contest the same and having not done so it has resulted in
deprivation of an opportunity of hearing especially when the proposed action was in the nature of
termination which impacted the rights of the petitioner to run the dealership which was a right to
do business and earn livelihood.

26. The submission of learned counsel for the respondents Corporation that the
additional part was responsible for manipulation in the pulsar card and it was beneficial for the
petitioner, hence, it should be held against him, is also misconceived for the reason that the pulsar
card could not have been inserted in the DU without the presence of theofficials of the OEM and
the representative of the IOC as well as the officials of the Department of Weights and Measures
and no such material or evidence was brought on record to indicate the complicity of the petitioner
in the said act of manipulation of the pulsar cards.

27. The seals of the Weights and Measures Department was found to be intact and once
the position was so obtained then any anomaly or irregularity found in the pulsar card ought to
have been explained by the respondent corporation and establish as to what material was available
with them which could give rise to a clear finding with sufficient certainty that in a particular
manner the dealer could have tampered with the pulsar card which had a direct impact on short
delivery of the petrol and this is conspicuously absent. Thus, for the aforesaid reason, this Court is
not inclined to accept the submission of the learned counsel for the IOC regarding the involvement
of the petitioner in manipulation without any cogent material.

29. Similarly, another coordinate Bench of this Court in R.S. Filling Station Indian Oil
Corporation Ltd. Vs. Indian Oil Corporation; 2025:AHC-LKO:19838, after taking note of the
relevant clauses of the MDG and taking note of a decision of Andhra Pradesh High Court in Indian
Oil Corporation Vs. Pullareddy Service Centre (2021) SCC Online AP 2909 and more specifically
paragraphs 18 to 27 and then concluded in paragraph 60 as under:-

"60. In the present case, as expressed above, the orders impugned cannot be sustained
for the following reasons:

(i). the clarificatory e-mail, relied upon in the two orders was never supplied to the
petitioner and was never made a relied upon document in the show cause notice although the same
was available prior to the issuance of the show cause notice as claimed by the respondents;

(ii). the finding recorded by the first authority while considering the report of the OEM
Dreser Wayne, as noticed in para 42 above, were without any material either alleged in the show
cause notice or made available during the course of the proceedings, the said view appears to be a
personal view and is perverse in absence of any material to justify the said view.

(iii). the appellate authority while invoking the 'deeming provisions' in para 5.1.4 of the
MDG has taken two diametric views in respect of similar reports submitted by the OEM and the
2 All. Anurag Agarwal Vs. I.O.C. & Ors.
603
second view taken by the appellate authority in the case of M/s Firozabad Fuels has been accepted
by the Corporation and thus, two different views interpreting a similar provision are arbitrary; and

(iv). the Para 5.1.4 of the MDG, is divided into two parts, the first being there being an
additional, removal, replacement of manipulation, however the same has to be read in conjunction
with the likelihood of manipulating delivery in order to gain undue benefit, to substantiate the
second part of clause 5.1.4, no material exists except the clarificatory e-mail which was never
made a part of the show cause notice and was never proposed to be relied upon.""

(iii) R.S. Filling Station Indian Oil Corporation Ltd. Kheri Vs. ICOL and others
[Writ-C No.4944 of 2023]. Relevant paragraphs 47, 48, 54, 60 are being quoted below :-

"47. It is also essential to notice at this stage that para 5.1.4 of the MDG, prescribes that
if any unauthorised fittings etc. are found in the dispensing unit, which are likely to manipulate the
delivery, the material should be existent to demonstrate that the irregularities noticed in the pulsar
card could have led to manipulation of delivery. To substantiate on the said allegations with regard
to second part of para 5.1.4 of the MDG, the Corporation has founded the two impugned orders,
based upon the clarificatory e-mail of MIDCO, referred to in the order as well the opinion
expressed by the licensing authority while analysing the report of Dresser Wayne, as extracted
above. The clarificatory e-mail, even as per the orders impugned, was available with the
Corporation before the issuance of the first show cause notice, however, the same was not made a
'relied upon document' or 'document proposed to be relied upon' in the show cause notice, which
is evident from the perusal of the show cause notice.