LexBHARAT PETROLEUM CORPORATION LTD. versus M/S JAGANNATH & CO. & ORS.
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A B [2013) 2 S.C.R. 828 BHARAT PETROLEUM CORPORATION LTD. v. M/S JAGANNATH & CO. & ORS. (Civil Appeal Nos. 3838-3839 of 2013) APRIL 12, 2013 [P. SATHASIVAM AND M.Y. EQBAL, JJ.] PETROLEUM ACT, 1934: c s.20 read with Marketing Discipline Guidelines, 2005 - Dealership licence - Cancellation of - Held: Cancellation of dealership agreement is a serious matter and cannot be taken lightly - In the instant case, the Guidelines with regard to taking of samples, numbering them, and sending the same 0 to Laboratory in the manner prescribed have not been followed by Inspecting Officer - Further, provision of s. 20 was also not complied with - High Court, after considering all the specific claims of contesting respondents, rightly interfered with the order of termination of dealership agreement/licence. E and quashed the same - . Appellants are directed to ·implement the directions given by High Court in impugned judgment - Marketing Discipline Guidelines, 2005 - Para 2.4. 5. Respondent no. 1-firm, a licensed dealer of the appellant-BPCL, was engaged in selling petroleum F products from its retail outlet. Duri~g an inspection conducted on 22.8.2005, samples of MSIULPISPEED and HSD were taken, sale of all the products was suspended and dispensing units and tanks were sealed. By order dated 18.1.2006, the TerritoriaLManager of the appellant G terminated the dealership agreement/licence of the respondents with immediate effect The respondent-firm filed a writ petition before the High Court, which allowed the same, quashed the order dated 18.1.2006 and directed the appellant BPCL to restore the dealership. H 828 BHARAT PETROLEUM CORPORATION LTD. v. 829 JAGANNATH & CO. & ORS. Dismissing the appeal, the Court A HELD: 1.1 As per clause (c) of para 2.4.5 of the Marketing Discipline Guidelines, 2005, the samples so collected would be sealed and labeled and the labels so .. pasted over the containers must have batch number and 8 other details enumerated therein. As per clause (a) of para 2.4.5, the Inspecting Officer has to draw three samples from one tank and all the three containers must have the same batch numbers. It is the complaint of the contesting respondents that the Inspecting Officer C allotted three different numbers to the containers containing samples from the same tank. It is further pointed out that the numbers shown in the photocopies of the labels pasted over 7 sealed containers do not co- relate with the container numbers purported to have been sent by the Inspecting Officer to the Laboratory because D all the three containers containing samples from the same tank had been differently numbered. It is also demonstrated by the contesting respondents that out of 8 samples so collected, only 5 samples were tested by the Company Laboratory. Also, no explanation was given E about the other three samples. It is also hignlighted that the Laboratory in its report has also not indicated the numbers of the containers so tested. In such circumstances, it is impossible to know which sample has been tested by the Laboratory. [para 7-8] [835-C-H; F 836-A-D] 1.2 In order to ensure fairness in testing the s.amples, it has been provided in clause (D) of para 2.5 of the Guidelines that in case of sample failure, in the event of G request for testing by the dealer, the same shall be tested at Company's Laboratory in the presence of representative(s) of the dealer. In the instant case, the tests were conducted in the company's laboratory itself. Therefore, in order to satisfy the conscience of the dealer about the authenticity of the tests so conducted, it has H 830 SUPREME COURT REPORTS [2013] 2 S.C.R. A been contemplated in the Guidelines that on the request of the dealer, the test(s) could be conducted in his presence. This Court has held in Super Highway Services* that the dealer should be given prior notice regarding the test. Strict adherence to the said B requirement is essential. It was further held that the cancellation of dealership agreement of a party is a serious business and cannot be taken lightly. [para 10) [836-G; 837-C-D, F-G] *Hindustan Petroleum Corporation Ltd. & Ors. vs. Mis C Super Highway Services & Anr., 2010 (2) SCR 1053 = (2010) 3 sec 321 - relied on. 1.3 In view of the Dealership Agreement, particularly, · clause 10(k), the Petroleum Act, 1934 is applicable in the D instant case. In terms of s. 20 of the Act, the
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