Subrata Talukdar, J. - (1.) In this writ application the petitioner challenges the order of the Appellate Authority of the Indian Oil Corporation Ltd. (for short IOCL) upholding the order of termination of the dealership of the petitioner entered into between the parties on the 26th of March, 1999. By the order dated 12th August, 2008 the dealership was terminated by IOCL on the ground that pursuant to an inspection by a team of IOCL Officers on 22nd September, 2006, the totalizer seal of the High Speed Diesel Unit No. 2 (for short HSD -2) was found to be broken.
(2.) Sri Sundaranda Pal, Ld. Senior Counsel assisted by Sri Subhas Chandra Karar, Ld. Counsel raises the following points: - - "a) That the petitioner is a retail outlet being operated on a sole proprietorship basis under the Corpus Fund Scheme of IOCL (hereinafter referred to for short as the said retail outlet or the said dealership). The said dealership was granted under the Scheduled Caste category in favour of the writ petitioner in March, 1999. b) Sri Pal submits that on 22nd September, 2006 a team of IOCL officers inspected the retail outlet and found the following irregularities: - - i) Totalizer seal of HSD -2 was found to be broken; ii) The observed density of the HSD sample collected from the tank was found to be 801.8 against the last recorded density of 835.8 and, such variation was beyond the permissible limit. c) Sri Pal submits that the petitioner in his reply submitted to IOCL pointed out that the said retail outlet was lying without stock of supplies for at least three months prior to the inspection. Elaborating his submissions, Sri Pal points out that on 10th of August, 2006 on behalf of the petitioner it was communicated to the Inspector of the Legal Metrology Department (for short LMD) that the retail outlet was out of service and therefore stamping and calibration of the seals could not be done on time. According to the documents on record, the last check of the seals was done by LMD on 15th September, 2005. However, Sri Pal clarifies that from the correspondence between the petitioner and the LMD it will be evident that the re -verification of the seals and stamping was postponed by LMD on the prayer of the petitioner on the ground that such would be done after supplies are resumed in favour of the said dealership. Such postponement was intimated by LMD on 18th September, 2006 and, before the re -calibration and stamping could take place, IOCL conducted the surprise inspection on 22nd September, 2006. d) On the basis of the above noted factual presentation, Sri Pal argues that the totalizer seal already stood broken and rusted at the time of inspection. Therefore, when the inspecting officer of IOCL attempted to roughly handle the seal, the same got broken. Sri Pal therefore submits that there is no question of the seal being tampered with by the writ petitioner since no supplies could be effected from the retail outlet for several months due to lack of supplies from IOCL. e) The second defence taken by the petitioner to the show cause relates to the fact that since the outlet was not functioning, there could be no cause for deliberate variation in the density of the product. Furthermore, the samples of the product were collected by the inspecting officers by adopting an arbitrary method of using a bottle from a local medical shop. Sri Pal argues that, in the absence of supplies, IOCL could not have proceeded with the show cause against the petitioner by citing discrepancies qua the product. f) Sri Pal also argues that the petitioner was urged to sign on the dotted line of the inspection report and, had no opportunity to record his objections thereto. g) Sri Pal further adopts the legal stand that in the facts of this case there was a gross abuse of due process since the LMD, being the statutory authority under The Standard of Weights and Measures (Enforcement Act), 1985 (for short the 1985 Act), was not consulted at all in connection with the allegedly broken totalizer seal. In support of his argument, Sri Pal relies upon the unreported judgment of the Hon'ble High Court at Delhi in M/s. Bharat Filing Station & Anr. v/s. IOCL & Anr. being WP (C) 9432 -33 of 2005. h) Relying on the decisions in : AIR 1985 SC 1147 in the matter of Ram and Shyam Company v/s. State of Haryana & Ors.; : 2007 (9) SCC 593 in the matter of Popcorn Entertainment & Anr. v/s. City Industrial Development Corporation & Anr.; and : AIR 1965 SC 1321 in the matter of Municipal Council, Khurai & Anr. v/s. Kamal Kumar & Anr., Sri Pal argues that it is by now judicially settled that the exhaustion of an alternative remedy either by way of an appeal or by way of an arbitration does not afford, in all cases, a complete relief. A writ application is therefore maintainable when the action of the respondent is de hors the statute, in violation of the principles of natural justice and, to the fundamental rights of the writ petitioner. i) Sri Pal argues that in the facts of the present case having regard to the 1985 Act and, in spite of the provisions of such Act, the LMD has been completely bypassed by IOCL while fixing responsibility on the petitioner in respect of the broken totalizer seal with reference to the contemporaneous correspondence between the petitioner and the LMD read with the fact that the retail outlet was lying comparatively dry for a substantial period of time as well as to avoid an arbitrary decision and, to identify the reasons behind the broken seal, IOCL ought to have referred the matter to the LMD. By not doing so IOCL has violated the statutory mandate under the 1985 Act and, proceeded to finalise the penalty under the Marketing Discipline Guidelines, 2005 (for short MDG -2005), thereby creating room for relief by way of this writ petition."
(3.) Sri M.S. Yadav, Ld. Counsel appearing for IOCL submits as follows: - - "i) That natural justice was extended to the writ petitioner by granting an opportunity to reply to the show cause. Thereafter the writ petitioner was afforded the opportunity of personal hearing on the 29th of December, 2006. The writ petitioner also preferred an appeal before the Appellate Authority, which was disposed on by a detailed order upholding the termination on the ground of alleged tampering of the seal. ii) Sri Yadav points out that by the order of termination dated 12th August, 2008 the IOCL did not proceed against the petitioner on the aspect of mis -match of density. However, on the first aspect of tampering with the totalizer seal, Sri Yadav argues that the defence of the writ petitioner that the seal was broken ought to have been taken at the first instance while appending his signature to the Inspection Report (for short IR). However, the petitioner signed on the IR without recording any objection. Therefore, the writ petitioner's version of a broken seal is an afterthought. iii) Taking this Court to the provisions of the MDG -2005, Sri Yadav points out that it is the duty of the dealer to take every step to maintain the regulatory and purity of supplies. The presence of the broken seal raises the presumption of tampering and such tampering is punishable at the first instance with termination of the dealership, irrespective of delivery being short/correct/excess vide Clause 3 of Appendix I of MDG -2005. iv) Taking this Court to the orders of termination and of the Appellate Authority respectively, Sri Yadav points out that even in the past the petitioner was cautioned on several occasions with regard to the functioning of the retail outlet. Under the Corpus Fund Scheme the land on which the retail outlet is situated and, the infrastructure attached thereto entirely belongs to IOCL and the submission of the petitioner that he dealt with the items on credit is not acceptable since the dealership was required to be operated on a cash and carry basis. The petitioner owed the IOCL at the time of termination a total amount of Rs. 5,52,092.39/ -. v) Taking this Court to the IR, Sri Yadav clarifies that the contents with regard to the seals and delivery as well as the density test were correctly recorded and countersigned on behalf of the writ petitioner by the proprietor himself without raising any objection. Sri Yadav relies on the following decisions in support of the point that where an arbitration clause exists, such as in the agreement between the writ petitioner and IOCL, the writ court has a mandatory duty to refer the disputes to an arbitrator. Sri Yadav cites the reference of : 2003 (6) SCC 503 in the matter of Hindustan Petroleum Corporation Ltd. v/s. Pinkcity Midway Petroleums at Paragraphs 18 and 19 which read as follows: - - "18. It was argued before the courts below as also before us that the mis -conduct, if any, pertaining to short -supply of petroleum products or tampering with the seals would be a criminal offence under the 1985 Act. Therefore, the investigation into such conduct of the dealer can only be conducted by such offices and in a manner so specified in the said Act, and it is not open to the appellant to arrogate to itself such statutory power of search and seizure by relying on some contractual terms in the Dealership Agreement. it is further argued that such disputes involving penal consequences can only be tried by a court of competent jurisdiction and cannot be decided by an arbitrator. 19. Having considered the above arguments addressed on behalf of the respondent as also the findings of the courts below, we are of the opinion that the same cannot be accepted because the appellant is neither exercising the power of search and seizure conferred on a competent authority under the 1985 Act nor does the Dealership Agreement contemplate the arbitrator to exercise the power of a criminal court while arbitrating on a dispute which has arisen between the contracting parties. This is clear from the terms of the Dealership Agreement. In our opinion, the findings of the courts below in this regard run counter to the clauses of the said Agreement, as could be seen from the following clauses of the Dealership Agreement which read thus: "20. Dealer to comply with provisions of Acts, Rules & Regulations (a) The Dealer shall at all times faithfully, promptly and diligently observe and perform and carry out at all times, all directions, orders, rules, terms and conditions as may be issued by the Corporation or its representatives from time to time on safe practices and marketing discipline and for the proper carrying on of the Dealership of the Corporation. (b) The Dealer shall observe and comply with the provisions of Petroleum Act, 1934, Explosives Act, 1884, Weights & Measures Act, 1976, etc., and all rules and regulations made thereunder. (c) The Dealer shall faithfully observe and perform all the obligations, duties and requirements under the licences required or obtained for running the dealership and shall promptly renew all licences from time to time. (d) The Dealer shall be solely responsible for any breach or contravention by them, their employees, of any Acts, rules, regulations or bye -laws of the Central and/or State Governments and/or Municipal, Local and/or other authorities as may be applicable to the Retail Outlet business and the Corporation shall not be responsible in any manner for any of the liabilities arising out of non -compliance by the Dealer, their employees, their agents and sub -agents. (e) The Corporation will obtain in its name a storage licence from the Controller of Explosives for the storage of petroleum products at the said premises and the dealer shall faithfully observe and perform all the terms and conditions of such licence(s). (f) The dealer shall obtain any or every licence(s) necessary for the storage/sale of petroleum and other products at the said premises required under any Central/State Government or local enactment for the time being in force and shall faithfully observe and perform all the terms and conditions for such licence(s) and shall promptly renew the same from time to time. (g) The dealer shall be solely responsible for any breach or contravention by them, their servants or agents of any laws, rules, regulations or bye -laws passed or made by the Central and/or State Government and/or Municipal local and/or other Authorities as may be applicable from time to time to the business including without prejudice to the generality of the foregoing. The concerned Authorities respectively appointed under the Petroleum Act, Payment of Wages Act, Shops & Establishment Act, Factories Act and the Workmen's Compensation Act or any statutory modifications or re -enactments of the said statues or rules and the Corporation shall not be responsible in any manner for any liability out of non -compliance by the dealer with the same. The dealer shall at all times indemnify and keep indemnified the Corporation against all actions, proceedings, claims and demands made against it by the Central and/or State Government and/or Municipal Local and/or other Authorities and/or by any customer of the product and/or any other third party as a result of or in consequence of any act or omission of whatsoever nature of the dealer, his servants or agents, including, without prejudice to the generality of the foregoing, any accident or loss or damage arising out of the storage, handling and/or sale of the products or attributable to the use of the said premises for the aforesaid purposes whether or not such act or omission or accident or loss or damage was due to any negligence, want of care or skill or any misconduct of the dealers, their servants or agents. (h) The dealer shall indemnify and save harmless the Corporation from all losses, damages, claims, suits or actions which may arise out of or result from any injury to any person or property or from violation of any statutory enactments, rules or regulations or other written orders or other laws or caused by or resulting from non -observance by the dealer of the provisions of this Agreement."" vi) On the point of natural justice, Sri Yadav submits that although factually the show cause notice followed by the subsequent hearing in respect of such show cause notice, thereafter followed by disposal of the appeal were dealt with by three separate officers of IOCL, the petitioner was not denied the right of institutional hearing since all three officers were institutionally empowered by IOCL to carry out both the enquiry and the hearing. Such institutional hearing has been upheld by the Hon'ble Apex Court in : 2013 (5) SCC 252 in the matter of Kalinga Mining Corporation v/s. Union of India & Ors.. vii) Relying on the decisions reported in : 2008 (8) SCC 172 in the matter of Pimpri Chinchwad Municipal Corporation & Ors. v/s. Gayatri Construction Company & Anr. and, : AIR 1996 SC 3515 in the matter of State of UP & Ors. v/s. Bridge & Roof Company (India) Ltd., as well as an unreported judgment of an Hon'ble Single Bench of this Court in WP 1618(W) of 2012 in the matter of M/s. Hazra Filling Station v/s. Indian Oil Corporation & Ors., Sri Yadav argues that there should be no interference in contractual matters by writ courts in exercise of jurisdiction under Article 226 of the Constitution of India. The Court must look towards the remedy provided for in the contract itself for settlement of the disputes.";