# Corporation Ltd. Kheri & Anr v. Indian Oil Corporation Ltd. & Ors

- **Citation:** (2025) 4 ILRA 614
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2025-04-08
- **Case number:** Writ - C No. 4944 of 2023
- **Bench:** Pankaj Bhatia
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/corporation-ltd-kheri-anr-v-indian-oil-corporation-ltd-ors-53183
- **Pages:** 22

## Headnote

out on the petitioner's outlet-order the retail
outlet dealership of the petitioner terminatedclarificatory 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-impugned orders
quashed.

W.P. allowed. (E-9)

Cases Cited:

## Text

_Characters 0–39,891 of 73,534. This is a partial read: ask again with offset=39891 for what follows._

614 INDIAN LAW REPORTS ALLAHABAD SERIES
impugned order shall be returned to the
petitioner within a period of two months
from the date of petitioner moving an
appropriate application.

20. The amount payable to the
petitioner on account of wrongful seizure
of the goods at the time of cancellation of
the license shall be returned to the
petitioner in accordance with the Rules.

21. The petitioner may move an
appropriate
application
before
the
Commissioner, Central Excise for refund of
the money payable in terms of the Rules for
the goods that were seized at the time of
cancellation which shall be decided and if
found payable, shall be paid to the
petitioner within a further period of three
months.

22.
The
writ
petitions
stand
allowed in the above terms.
----------
(2025) 4 ILRA 614
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 08.04.2025

BEFORE

THE HON'BLE PANKAJ BHATIA, J.

Writ - C No. 4944 of 2023

R.S.
Filling
Station
Indian
Oil
Corporation
Ltd.
Kheri
&
Anr.
...Petitioners
Versus
Indian Oil Corporation Ltd. & Ors.

...Respondents

Counsel for the Petitioners:
Abhinav Trivedi, Anshuman Singh, Ashok
Kumar Singh, Geetika Yadav, Radhika
Singh

Counsel for the Respondents:
Manish Jauhari

Opportunity of hearing-The petitioner was
appointed as a retail outlet dealer by Indian
Oil Corporation- inspection was also carried
out on the petitioner's outlet-order the retail
outlet dealership of the petitioner terminatedclarificatory 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-impugned orders
quashed.

W.P. allowed. (E-9)

Cases Cited:

1. St. of Punjab Vs Davinder Pal Singh
Bhullar; (2011) 14 SCC 770

2. Indian Oil Corp. Ltd. Vs Pullareddy Service
Centre (2021) SCC Online AP 2909

3. M/s
Chaudhary
Filling
Point
Kazipur
through its Proprietor & anr. Vs St. of U.P.
through Principal Secretary, Food and Civil
Supplies & ors. decided on 30.01.2019 in
Misc. Bench No.27043 of 2018

4. Indian Oil Corporation Ltd. & ors.Vs M/s
Modern
Service
Station,
decided
on
06.03.2024 in Special Appeal No.456 of 2023

5. M/s Laltu Filling Station Vs U.O.I. & ors.;
2016 SCC Online Cal 626

6. Hindustan Petroleum Corp. Ltd. Vs Super
Highway Services & anr.(2010) 3 SCC 321

7. Writ-C No.20271 of 2018 (M/s Maharashi
Filling Station (Indian Oil Dealer) Vs Indian Oil
Corp. Ltd. U.P. St. Officer & anr.

8. M/s Kisan Sewa Kendra Sarai Dubaulia Vs
U.O.I. & ors.; Writ C No.32973 of 2018

9. M/s Shree Rajendra Agro Service Centre Vs
Indian Oil Corporation Ltd. DB Special Appeal
Writ No.456 of 2023
4 All. R.S. Filling Station Indian Oil Corporation Ltd. Kheri & Anr. Vs. Indian Oil Corporation
 Ltd. & Ors.
615
10. Special Appeal No.215 of 2024 (Executive
Director Retail and Sales Indian Oil Corporation
Ltd. & ors.Vs M/s Mishra Automobiles through
Jagdish Mishra & ors.)

11. Savitri Devi & ors. Vs U.O.I. & ors.; Writ C
No.29859 of 2017

(Delivered by Hon'ble 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."
616 INDIAN LAW REPORTS ALLAHABAD SERIES

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. Subsequently, a show - cause notice
was issued to the petitioner on 30.08.2018.
In the said show - cause notice, first charge
alleged was that during the inspection,
following irregularities were found at the
retail outlet:

"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."

A copy of the inspection report was
attached with the show - cause notice. It
was also mentioned that the fact finding
letter was issued to which the petitioner had
replied. It was also noticed that in the reply
of the petitioner he had requested not to
take any action till the time test report of
the pulsar card is received. It was also
noticed that the District Supply Officer had
suspended the diesel selling license of the
petitioner. It was indicated in the said show
- cause notice that MIDCO Company had
released/sent a test report vide its letter
dated 15.06.2018 with the following
remarks:

"(I) R1 resistor is found missing
on pulsar PCB.

(II) Additional Solder marks are
observed on C8 capacitor-lead.

(III) Additional solder marks are
observed on L4 location of pulsar PCB."

A copy of the report was attached
alongwith the show - cause notice. It was
further recorded that after going through
the reply dated 15.06.2017, the same
appeared to the respondent to be not
satisfactory/convincing and the attention of
the petitioner was drawn to the Clause Nos.
16, 44, 58(m) and Clause No.5.1.4 of
MDG2012 as amended, which attracts
penal action under Clause 8.2 IV - Critical
Irregularities: Termination of the first
instance. Extract of the report submitted by
the MIDCO is as under:

TEST REPORT
Received

Item No.1 - Midco Sure
Fill Pulsar card for nozzle
No.1

PCB
Design
Reference
Number
Item
No.1
-
MID03323B201003

Tests/Paramete

Result

Remarks

Visual
Inspection

Note:
Visual
inspection has
been
done
without
providing
Power to the
received
materials under
test.

NOT OK
(Refer
Remarks)

Item No.1
(I)
R1
resistor
is
found
missing
on
pulsar PCB.
(II)
Additional
Solder marks
are observed
on
C8
capacitor
lead.
(III)
Additional
Solder marks
are observed
on
L4
location
of
4 All. R.S. Filling Station Indian Oil Corporation Ltd. Kheri & Anr. Vs. Indian Oil Corporation
 Ltd. & Ors.
617
pulsar PCB.
Delivery Test:

NOT
TESTED
(Refer
Remark)

Not
tested
due to non
conformance
to
Midco
design.

Result:
Pulsar card is not found in
conformance with Midco
standard design as per
visual inspection test.

Note:
Tests have been carried out
as per Midco norms only.

The second charge was that the
irregularity has also been widely reported
in the print and electronic media, which has
caused prejudice in the mind of the general
public and the customers and as such has
tarnished the good image and reputation of
the corporation and the same was against
the marketing interest of the corporation.

8. The petitioner was called upon to
file his reply within a period of 15 days. It
is stated that the petitioner submitted a
detailed reply to the said show - cause
notice on 05.10.2018, which is on record. It
is also on record that in the intervening
period, the license of the petitioner, which
was cancelled by the State, was restored on
31.09.2017. It is on record that the 2 pulsar
cards, which were taken into custody by the
inspecting team on 31.05.2017 were
handed over to the District Supply Officer,
however, subsequently, the same were
taken by the corporation from the District
Supply Officer and one of the pulsar
cards was handed over to the Original
Equipment Manufacturer (OEM) MIDCO
for testing on 15.12.2017 and the other
card was handed over to the other OEM
Dreser Wayne on 08.12.2017 for testing
at NOIDA. The said two reports given by
the two OEMs are on record.

9. The report of MIDCO has already
been reproduced hereinabove. In the
report of the other OEM Dreser Wayne,
no signs of damage were found. The said
report
also
observed
that
although
soldiering signs impression have been
observed in the pulsar PCB circuitry,
however, during testing all operations
were found normal.

10. The petitioner in his defense and
to discredit the report of OEM-MIDCO
relied upon the report of the Dreser
Wayne also to impress that merely by eye
estimation, it cannot be presumed that
anything wrong was done, which stood
confirmed by the other Dreser Wayne
(OEM) while recording that although
impressions of soldiering were found on
the pulsar PCB, however, during testing
all operations were found normal. The
report of the other OEM Dreser Wayne
was submitted by the petitioner along
with
supplementary
reply
dated
27.11.2018.

11. It is on record that after the
inspection, an FIR was also lodged
against the petitioner under Section 3/7 of
Essential Commodities Act, however,
subsequently,
a
final
report
was
submitted by the Investigating Officer on
26.12.2018, which was also accepted by
the trial Court. It is on record that
subsequent to the FIR coming to an end
and the supply license being restored by
the
District
Supply
Officer
on
13.09.2017, the sale of petrol etc., was
supplied by the respondents and the
operation continued from 01.07.2017
uninterrupted and the supply of HSD was
resumed w.e.f 13.09.2017.
618 INDIAN LAW REPORTS ALLAHABAD SERIES

12. On 14.03.2019 the respondent -
corporation passed an order terminating the
retail outlet dealership of the petitioner. A
copy of the said termination order is on
record.

13. Aggrieved against the termination
order dated 14.03.2019, the petitioner
preferred a writ petition being Writ Petition
No.9062 (MB) of 2019 (R.S. Filling Station
v. Indian Oil Corporation & Ors.) before
this Court wherein this Court granted an
interim
indulgence
by
staying
the
implementation of the termination order till
the disposal of the application for interim
relief by the appellate forum and the
petitioner was relegated for filing an appeal
before the Disputes Resolution Panel.

14. The petitioner preferred an appeal
challenging the termination order dated
14.03.2019. The said appeal was disposed
off vide order dated 15.10.2019 whereby
the
appellate
authority
noticing
the
contention of the petitioner remanded the
matter solely on the ground that the
petitioner was denied an opportunity of
hearing before passing of the order dated
14.03.2019 with a direction to proceed with
the matter from the stage of granting of
personal hearing as provided under Clause
8.6 of MDG. The order dated 14.03.2019
was set aside.

15. The said order of the appellate
Court was challenged by the petitioner by
filing a writ petition being Writ - C
No.21992 of 2020, however, during the
course of pendency of the said writ
petition, a personal hearing letter was
issued to the petitioner by respondent no.4
fixing 02.01.2020 for grant of personal
hearing in terms of the remand order dated
15.10.2019. The petitioner vide his letter
dated
27.12.2019
requested
for
an
adjournment in view of the fact that
petitioner could not contact his legal
adviser on account of winter vacations,
however, an order came to be passed on
19.10.2020 once again cancelling the
dealership agreement of the petitioner. The
said termination order was made subject to
the final outcome of Writ Petition No.1262
(MS) of 2020, which was pending.

16. As the order was passed during the
pendency
of
the
writ
petition,
an
amendment application was filed which
was allowed permitting the petitioner to
amend the writ petition and it is also
noticed that earlier Writ - C No.21992 of
2020 was withdrawn by the petitioner in
view of the subsequent developments.

17. The order of cancellation was also
challenged by the petitioner in Writ-C
No.1262 of 2020. This court, heard the
matter and vide judgment dated 31.05.2022
allowed the writ petition. The said
judgment dated 31.05.2022 was challenged
by the Corporation by preferring a Special
Appeal No.307 of 2022 before the Division
Bench of this Court. The said Special
Appeal was disposed off vide judgment
dated 07.09.2022 wherein the Division
Bench held that they were upholding the
decision of the Single Judge and on the
basis of the observations made above,
directed the authority concerned to decide
the matter afresh in the following terms :

"28. For the reasons aforesaid,
we are not inclined to interfere in the
judgment and order dated 31.05.2022
passed by the learned Single Judge. We
accordingly affirm the same.

29. However, before parting with
the case, we also find it appropriate to
direct
the
appellant-Corporation
to
reconsider the entire matter in the light of
4 All. R.S. Filling Station Indian Oil Corporation Ltd. Kheri & Anr. Vs. Indian Oil Corporation
 Ltd. & Ors.
619
the observations made herein above
considering all relevant material, including
the second report dated 12.10.2018 and
take decision afresh.

30. The competent authority of
the respondent-corporation, thus, shall
decide the matter afresh as observed above
within two months from the date a certified
copy of this order is submitted by the
respondent no.1-petitioner before it.

31. We are issuing the direction
to
the
appellant-Corporation
for
reconsideration of the entire matter afresh
for the reason that the exact purport of the
second report dated 12.10.2018 can be
analyzed and effect of the said report can
be considered only by the experts of the
area for the reason that the report is
technical in nature which lies in the
exclusive realm of the technical experts.

32. The Special Appeal is, thus,
disposed of in the aforesaid terms."

18. That the corporation aggrieved
against the said judgment preferred a
Special Leave Petition No.17686 of 2022
which was disposed off with the following
observations :

"Since the impugned order only
directs reconsideration on remand, we are
not inclined to interfere with the same. The
special
leave
petition
is
dismissed
accordingly.

However, we clarify that the
respondents
shall
cooperate
in
the
expeditious disposal of the enquiry on
remand and shall remain present, as and
when called upon to do so.

Needless to state that while
conducting the enquiry, the competent
authority shall consider the effect of both
the reports.

We further clarify that
the
competent authority shall proceed without
being influenced by any observation made
in the impugned judgment of learned single
Judge or the Division Bench."

19. That in terms of the liberty given
by the Division Bench of this Court as well
as the observations made by the Hon'ble
Supreme Court, a fresh order came to be
passed on 12.01.2023 terminating the
dealership of the petitioner. The petitioner
challenged the said order dated 12.01.2023
by preferring an appeal, which was decided
by the appellate authority vide judgment
dated 15.05.2023 whereby the appeal was
dismissed. The impugned orders dated
12.01.2023 and 15.05.2023 are subject
matter of the present writ petition.

20. The counsel for the petitioner
argues that the order dated 04.11.2022
passed by the Hon'ble Supreme Court were
to be complied with, however the report of
the two OEMs were not placed before the
technical experts for their opinion and
findings have been recorded without there
being any material alleged to that effect in
the show cause notice or there being any
material to corroborate. She argues that it
has been recorded that the petitioner must
have been involved in manipulation of the
delivery, which was neither reported by the
OEMs nor was any show cause notice
served to that effect. She further argues that
the reports of the OEMs were not submitted
for any examination of technical experts as
was directed by the Division Bench as well
as the Supreme Court. She further argues
that in both the orders, it has been wrongly
recorded that as there was no direction by
the Supreme Court to consider the fresh
submissions made by the petitioner, no
consideration was accorded to the same.
She further argues that the sole report
against the petitioner was submitted by the
OEM, MIDCO, which itself is based upon
620 INDIAN LAW REPORTS ALLAHABAD SERIES
visual inspection without there being any
technical examination, whereas the report
of other OEM Dresser and Wayne is based
upon a technical examination and after
conducting the lab tests on the seized pulsar
cards. She further argues that MIDCO is
not a government approved testing agency.
It is further argued that the respondent
Corporation has tried to supplant the joint
inspection report as well the report by the
Dresser and Wayne by alleging that as it
was reported that a chip has been removed,
as such, when the testing was done by the
Dresser and Wayne, all operations were
found to be normal.

21. The counsel for the petitioner
further argues that the said finding is
without any basis and without any material
and thus perverse to that extent. She further
argues that even the directions of the
Supreme Court for consideration of both
the reports has not been complied with. It is
further
argued
that
reliance
on
the
clarificatory e-mail dated 20.06.2018, sent
by MIDCO to the respondent corporation,
was never served upon the petitioner nor
was it made a subject matter of relied upon
documents in the show cause notice. She
further argues that the said e-mail by
MIDCO (relied upon in the impugned
orders) is a procured document as the same
is not in consonance with the report of the
MIDCO. She further argues that the said
email is in the teeth of the joint inspection
report. She further argues that the Supreme
Court in its judgment directed that while
conducting the enquiry, the authority shall
consider the effect of the both the reports
and it was further held that the competent
authority shall proceed without being
influenced by any observations made in the
judgment of the learned Single Judge or the
Division Bench. Thus, it was incumbent
upon the authority to consider the effect of
both the reports afresh, whereas in the
present case, order has been passed on the
considerations of reports other than the two
reports as well as on the personal view
expressed in the orders.

22. It is further argued that the same
appellate authority, who has passed the
order impugned, took a different view in
another case while deciding the similar
matter as an appellate authority in the case
of Firozabad Fuels and Services Versus
Indian Oil Corporation Limited Agra
and thus, the two orders passed by the
Appellate Authority are contradictory to
each other insofar as the effect of the report
of OEM is concerned. It is further argued
that in terms of the Clause 8.5.6 of the
MDG, it is incumbent that a show cause
notice be issued within a period of thirty
days, whereas the show cause notice was
issued after about more than two and a half
months, which itself makes the entire
proceedings void ab-initio.

23. She further argues that the joint
inspection
committee
having
been
constituted in pursuance of the Government
Order dated 02.05.2017 and not under the
provisions of MDG, mandates procedure
under clause 8.7 of the MDG to be
followed before taking any action against
the petitioner. Clause 8.7 provides that in
cases where inspection has been conducted
by
authorities
other
than
the
Oil
Companies, action against erring Retail
Outlets
will
only
be
taken
when
malpractice or irregularity is "established
by such authorities" and any action taken
would be "on receipt of advice from such
authority". However, in the case of the
petitioner, despite a Final Report having
been submitted by the Investigating Officer
and accepted by the learned Magistrate, for
some unfathomable reason, the Respondent
4 All. R.S. Filling Station Indian Oil Corporation Ltd. Kheri & Anr. Vs. Indian Oil Corporation
 Ltd. & Ors.
621
Corporation in a hurry to assume the charge
of the investigation has taken punitive
action against the petitioner in blatant
violation of clause 8.7 of the MDG.

24. The counsel for the petitioner
specifically draws the attention of this court
to Clause 5.1.4 of the MDG to argue that in
terms of the said provision, the 'addition',
'removal', 'replacement' or 'manipulation'
alleged should be in conjunction with the
'liklihood of manipulating delivery in order
to gain undue benefit', whereas in the case
of the petitioner, admittedly there was no
short selling ,manipulation of delivery nor
were the same alleged also, and thus
reliance on clause 5.1.4 is misplaced. It is
also argued by the petitioner that the predeposit of 50% made for preferring the
appeal is also liable to be refunded to the
petitioner.

25. The petitioner has placed reliance
on the judgment of the Supreme Court in
the case of State of Punjab vs. Davinder
Pal Singh Bhullar; 2011 (14) SCC 770, in
support of her arguments that when the
foundation falls, the entire superstructure
falls. She argues that when the initial
inspection was de-hors the Government
Order
dated
02.05.2017,
no
further
proceedings could be maintained on the
basis of the said inspection. She further
argues that as the seals on the retail outlet
were put by the Weights and Measurement
Department, there being no allegation of
tempering with the said seals, no wrong on
that ground could have been attributed to
the petitioner as the petitioner could never
gain access to the machinery without
tampering the seals in that regard. Reliance
is placed upon the judgment in the case of
Indian Oil Corporation Limited vs.
Pullareddy Service Center; 2021 SCC
Online AP 2909 and M/s Chaudhary
Filling Point and State of U.P. [ Misc.
Bench No.2703 of 2018] and IOCL vs.
M/s Modern Service Station [Special
Appeal No.456 of 2023].

26. She further agues that the test
carried out is contrary to the provisions
contained in Legal Metrology Act, 2009
and the Essential Commodities Act, 1955.
She lastly argues that the manner in which
the dealership has been terminated is
contrary to the law and affects the
livelihood of the petitioner thus, the same
requires strict interpretation as held in the
case
of
Hindustan
Petroleum
Corporation Limited vs. Super Highway
Services (2010) 3 SCC 321. In the light of
the said, it is argued that the writ petition
deserves to be allowed.

27. The counsel for the respondents
Corporation Dr. L.P. Mishra assisted by Sri
Manish Jauhari argues that in the light of
the directions given by this Court in Public
Interest Litigation (Civil) No.10652 of
2017, State wide drive inspections were
carried out including at the dealership of
the petitioner. It is argued that in the joint
inspection, in two Dispensing Units, primafacie, tampering was found in the Pulsar
Cards as was indicated in the show cause
notice. It is further argued that two Pulsar
Cards, which were found to be suspicious,
were taken for testing and a fact finding
letter was also served upon the petitioner. It
is submitted that the reports were obtained
by the OEM MIDCO who had recorded its
finding, as have been also relied upon by
the counsel for the petitioner.

28. The other arguments with regard to
the filing of the Writ Petition, Special
Appeal as well as Special Leave Petition
are reiterated by the counsel for the
respondents. It is argued that in compliance
622 INDIAN LAW REPORTS ALLAHABAD SERIES
of the Supreme Court judgement, the order
dated 12.01.2023, adequately considered
the affect of both the reports in details as
are evident from the impugned orders. It is
further argued that the argument that no
opinion was taken from the expert, was an
observation made by the High Court in its
order passed in Special Appeal whereas the
Supreme Court had specifically held, that
the Corporation will not be influenced by
any observations made by the learned
Single Judge or the Division Bench.

29. As regards the submission that the
same appellate authority has taken two
contradictory view in two appeals decided
by him, it is argued that the same was in
different facts. It is further argued that in
any case, the petitioner cannot plead
negative equality with the other order
passed by the same appellate forum. He
further argues that even in the report of
Dresser and Wayne, it is crystal clear that
the
said
OEM
has
made
specific
observation that there was tampering in the
Pulsar Unit and it was not the same product
which has been original installed by the
Company. He further argues that the
clarificatory e-mail issued by the MIDCO
was communicated to the petitioner while
they were contesting the matter before the
appellate authority in the year 2019 and
proper opportunity was given to the
petitioner to reply to the contents of the
clarification e-mail but the petitioner did
not respond.

30. The counsel for the respondents
have placed reliance on the following
judgments :

i. Civil Appeal No.6748 of 2018
arising out of SLP (C) No.33100 of 2015
(Indian Oil Corporation Ltd. and another
vs. T. Natrajan).

ii. 2017 SCC Online All 2912;
(2018) 127 ALR 692; ECI SPIC SMO
MCML (JV) vs. Central Organization for
Railway Electrification and Another.

iii. Writ C No.20271 of 2018;
M/s Maharashi Filling Station (Indian Oil
Dealer) vs. Indian Oil Corporation Ltd. UP
State Officer and Another.

iv. Writ-C No. 32973 of 2018;
M/s Kisan Sewa Kendra, Sarai Dubaulia
vs. Union of India and 3 others.

v. High Court of Judicature for
Rajasthan at Jodhpur; DB Special Appeal
Writ No.456 of 2023 (M/s Shree Rajendra
Agro Service Centre through its Proprietor
vs. Indian Oil Corporation Ltd. through its
Chief Manager and 02 others.

vi. Special Appeal No.215 of
2024 (Executive Director Retail And Sales
Indian Oil Co. Ltd. and 2 others vs. M/s
Mishra
Auto-mobiles through
Jagdish
Mishra and 2 others.

vii. Writ-C No.29859 of 2017
(Savitri Devi and others vs. Union of India
and four others).

viii. Writ-C No.16611 of 2021;
(S.J. Lal Filling Station Indian Oil Retail
Outlet
and
Another
vs.
Indian
Oil
Corporation Ltd. and another).

31.
In
the
light
of
the
said
submissions, it is argued that the writ
petition is bound to be dismissed and
should be accordingly dismissed.

32. Before adverting to the arguments
raised at the bar, it is essential to notice that
the contract in between the parties was
executed which provided for applicability
of the provisions of Marketing Discipline
Guidelines
(MDG)
affected
w.e.f.
08.01.2013 as amended on 03.08.2018, the
same are also relied upon by the petitioner
and has been filed as Annexure no.4. In the
counter affidavit, there is no pleading that
4 All. R.S. Filling Station Indian Oil Corporation Ltd. Kheri & Anr. Vs. Indian Oil Corporation
 Ltd. & Ors.
623
the said MDG dated 08.01.2013 amended
on 03.08.2018 is not applicable. Specific
assertions to that effect is made by the
petitioner in para 10 of the writ petition and
in para 30 of the counter affidavit, it has
been recorded that the said paragraph needs
no reply.

33. Para 5.1.4 of the Marketing
Discipline Guidelines is being quoted
herein as under :

5.1.4
ADDITIONAL
/
UNAUTHORISED FITTINGS / GEARS
FOUND
IN
DISPENSING
UNITS
/TAMPERING WITH DISPENSING UNIT
-

Any mechanism / fittings / gear
found fitted in the dispensing unit which is
likely to manipulate the delivery.

Addition, Removal, replacement
or manipulation of any part of the
Dispensing Unit including any mechanism,
gear, microprocessor chip/electronic parts/
OEM
software
will
be
deemed
as
tampering of the dispensing unit.

In
such
cases,
views
and
independent
opinion
of
the
original
equipment manufacturer would be obtained
and suitable decision taken.

In case of this irregularity sales
from the concerned dispensing unit to be
suspended, DU sealed. Samples to be
drawn of all the products and send to lab
for testing."

34. It is also essential to notice that in
terms
of
the
Marketing
Discipline
Guidelines,
which
are
admittedly
applicable to the agreement executed in
between the parties and is the foundation
for taking the decision. It is also essential to
notice the provisions of para 8.7 of the
MDG which are as under :

"Under existing laws, Control
Orders etc., various authorities, Acts/Rules
of Central Government/State Government
in addition to Oil Company Officers are
empowered to carry out checks of the
dealership for determining and securing
compliance with such laws/Control Order.
If any "malpractice or irregularity" is
established by such authorities after
checking, the same would also be taken as
a "malpractice or irregularity" under these
guidelines and prescribed action would be
taken by the Oil Company, on receipt of
advice from such authority."

35. In terms of MDG Corporation is
authorised to take action, which is triggered
in two manners, the first being the action
taken by the State Government when they
notice malpractice or irregularity, based
upon the receipt of the advice from such
authority in terms of the prescription under
the MDG action can be taken. The other
manner in which the proceedings can be
initiated, is by the Corporation itself, when
malpractice or irregularity are brought to its
notice.

36. In the present case, although the
State Government had conducted the first
proceedings
and
had
noticed
the
malpractice or irregularity, however the
action in the present case against the
petitioner
has
been
taken
by
the
Corporation, based upon the materials
available with them in terms of the
provisions contained in para 5.1.4 of the
MDG, thus to that extent the first
submission of the counsel for the petitioner
that the constitution of the Committee,
which had done the inspection at the first
instance, was not properly constituted as
prescribed under the Government Order,
merits rejection and is accordingly rejected.
624 INDIAN LAW REPORTS ALLAHABAD SERIES

37. The second issue which arises for
consideration is the mandate of the
Supreme Court while remanding the
matter. On perusal of the three orders
passed in the earlier round of litigation,
what transpires is that by means of a
judgment dated 31.05.2022, the writ
petition was allowed. In the judgment of
the Special Appeal dated 07.09.2022, the
Special Appeal Court had noticed and had
affirmed the judgment of the learned Single
Judge, however, a liberty was given to the
Corporation to reconsider the entire
matter in the light of the observations
made and after considering the all
materials including the second report
dated 21.10.2018 was at liberty to take a
decision afresh.

38. The Supreme Court in its
judgment dated 04.11.2022, as recorded
in paragraph above, makes it clear that in
addition to the direction given by the
Special Appellate Court, it was clarified
that the authority shall consider the effect
of both the reports and shall not be
influenced by any observations made in
the impugned judgment.

39. The net effect of the judgment
passed by the Hon'ble Supreme Court is
that while the Supreme Court had
expressed that it had no inclination to
interfere
with
the
Special
Appeal
judgment,
however,
by
way
of
clarification, it was directed that on
remand,
the
appropriate
authority
would be competent to consider the
effect of both the reports and would
not be influenced by any of the
observations of Writ Court or Special
Appeal Court.

40. In terms of the said clarification as
well as the directions given by the Special
Appellate Court, it was open for the
corporation to pass fresh orders.

41. The order passed by the licensing
authority at the first instance records the
entire materials that had led to passing of
the order of the Special Appeal Court as
well as the Supreme Court and while
considering
the
additional
written
submissions that were filed by the
petitioner, although it was observed that
although the assessing authority was not
bound to consider the additional written
arguments, however for the sake of
avoiding any multiplicity, the same were
being reconsidered. The order also held that
in the show cause notice that was issued to
the petitioner at the first instance, the same
was based upon the report of the MIDCO
and the Corporation did not take any action
against the petitioner on the basis of the
second report although it was legally
entitled to do so. The order further records
that the action was being taken on the basis
of the report given by the MIDCO as well
as the further clarification given by the
OEM MIDCO through its clarificatory email.

42. The contention of the petitioner,
placing reliance on the report of the NIT
Karnataka was rejected. The report of the
OEM MIDCO was analysed and held that
the
perusal
of
the
remarks/comments/conclusion of the Test
Report
dated
15.06.2018
and
the
clarificatory
e-mail
dated
20.06.2018
makes it clear that there was a definite
tampering in the MIDCO make Pulsar
Card. The report of the other OEM was
also considered, although the same was not
the basis for passing the cancellation order.
The OEM report of M/s Dresser Wayne
was considered and it was observed as
under :
4 All. R.S. Filling Station Indian Oil Corporation Ltd. Kheri & Anr. Vs. Indian Oil Corporation
 Ltd. & Ors.
625

"Further,
as
regards
the
observations made by the OEM - Dresser
Wayne (i.e. GEMS) that 'during testing all
operations were found normal, it is
noteworthy that the electronic chips had
gained popularity amongst defaulting or
errant dealers for precisely the same
reason that unless the dealer used the
remote in his possession to make short
delivery, the delivery and function of the
pulsar card was normal. The dealers used
to control the functions with the help of the
remote, which was discovered in the raids
made by STF. However, when the said
raids were widely publicized in media, the
errant dealers removed the electronic chips
which left soldering marks/ signs, as found
on the Pulsar Cards in the present case.
Therefore, when the Dresser Wayne Pulsar
card was tested in the lab without there
being a spurious electronic chip over it, all
the operations were found normal. Simply
because the testing was found normal, it
would not mean that no tampering with the
Pulsar Card had taken place. It is
reiterated that the OEM - Dresser Wayne
had opined (only after seeing the test
results of the pulsar card) that the
soldering signs on the pulsar card indicate
that an external wiring was soldered and
removed from its pulsar card. Thus, making
it clear that the Dresser Wayne Pulsar
Card
was
tampered
with
and
the
appropriate action (i.e. termination) may
be taken against your dealership under the
MDG & Dealership Agreement.

In view of the aforementioned two
separate test reports given by two different
OEMs as regards their own equipments (ie.
Pulsar Card), it is clear that:

(a) Both the said reports are
completely distinct and independent of each
other and there cannot be any overlapping
between them.

(b)
Both
the
OEMs
have
independently
carried
out
their
testing/inspection of the two separate
Pulsar cards supplied to them, after which
both the OEMs have opined/concluded that
there
has
been
some
manipulation/
tampering with the Pulsar Cards.

(c) Each of the said reports
clearly indicate that there has been
tampering in the pulsar cards of both the
said units and soldering marks/signs were
found in the pulsar cards of both the said
units thereby clearly indicating that a chip
had been removed from the Pulsar Cards
and the place from where the said chip was
removed / replaced had thereafter been
soldered.

(d) Each report constitutes a
separate and independent cause of action
in itself, for which the action (i.e.
termination) under Clause 5.1.4 & 8.2 iv.
of the MDG read with Clause 15, 16, 44,
58 (i) & (m) may be taken separately
and/or cumulatively."

It was further observed that in
terms of the test report of MIDCO and the
clarificatory e-mail received on 20.06.2018,
the first show cause notice could be issued
by the Corporation on 30.08.2018. It was
also observed that the tampering of an
electronic component of the DU would be
deemed as tampering under clause 5.1.4 of
MDG, as such, fresh order came to be
passed on 12.01.2023 terminating the
dealership. The report of MIDCO and the
clarificatory email are essentially the
foundation for passing the order of
cancellation.

43. The appellate order records the
submission and was decided by Sri Vigyan
Kumar, the Executive Director of the
Corporation as an Appellate Authority
626 INDIAN LAW REPORTS ALLAHABAD SERIES
while rejecting the appeal for the following
reasons:

A. From the above discussions, it
is clear that the instant case pertains to the
irregularities mentioned in Cl. 5.1.4 of the
MDG and that the saíd irregularities stand
established by the OEMs as reflected in
their reports. No new fact pertaining to the
two reports of the two OEMs has been
produced by the Appellant-Dealer. No
doubt an RO dealer is the custodian of
equipments including DUs provided by
the Corporation and any tampering found
in DU is RO dealers' responsibility and
no one other than the dealer is benefited
with the tampering of the same. Infact,
the general public stands to loose and is
cheated because of the said tampering,
leading to loss of goodwill of the
Respondent Corporation. Tampering with
DU is à critical irregularity defined in
MDG 2012. If any kind of tampering is
observed in any DU then action needs to
be taken as per dealership agreement as
well MDG 2012 irrespective of the make
and model of the DU.

B. The dealer has to operate the
retail outlet in accordance with the terms
of the dealership agreement executed
between the parties.