INDIAN OIL CORPORATION LTD. & ORS. versus M/S. R.M. SERVICE CENTRE & ANR.

Citation: [2019] 13 S.C.R. 1113 · Decided: 07-11-2019 · Supreme Court of India · Bench: L. NAGESWARA RAO · Disposal: Appeal(s) allowed

cites 2 · see the full citation network in Lexace

Judgment (excerpt)

A
B
C
D
E
F
G
H
1113
INDIAN OIL CORPORATION LTD. & ORS.
v.
M/S. R.M. SERVICE CENTRE & ANR.
(Civil Appeal No. 8257 of 2019)
NOVEMBER 07, 2019
[L. NAGESWARA RAO AND HEMANT GUPTA, JJ.]
Marketing Discipline Guidelines, 2012 – Cl.5.1.11, 5.1.9, 8.2
and sub-cl.I of cl.2.5 – Termination of the dealership – Respondent
No.1-dealer had retail dealership for sale of motor spirit (petrol),
High Speed Diesel, motor oil and grease – A joint inspection was
conducted by the appellants and it was found that there was
variation of stock of High Speed Diesel beyond permissible limit
and non-availability of reference density was also observed –
Samples were drawn and sent for testing – The samples failed to
meet the specifications – The dealer was informed of the result –
Thereafter, dealership was terminated – Writ petition by the dealer
– The Single Judge of the High Court allowed the writ petition and
held that there was non-compliance of the timeline fixed for
submitting the samples for testing in laboratory – The samples were
required to reach the laboratory preferably within ten days whereas,
the first sample was sent and tested after ten days and the umpire
sample was tested even later – Decision of the Single Judge of the
High Court was upheld by the Division Bench of the High Court –
On appeal, held: In the instant case, there was a delay of 5 days –
Since the guidelines use the timeline as a preferred timeline, it cannot
be said that the timeline mentioned has to be strictly adhered to and
is mandatory – The language, the purport and the effect of testing
do not warrant to read the word ‘preferably’ as mandatory timeline
– There was variation in stock beyond permissible limits – In case
of positive stock variation beyond permissible limits and on account
of  failure of sample, action in line with that of adulteration was to
be initiated – The adulteration in these circumstances was a critical
irregularity falling in Cl.8.2 of the guidelines and the action required
to be taken was termination of the dealership – The action was
rightly taken to terminate the dealership of the respondent no.1 –
Consequently, the order passed by the High Court set aside.
 [2019] 13 S.C.R. 1113
1113
A
B
C
D
E
F
G
H
1114
SUPREME COURT REPORTS
[2019] 13 S.C.R.
Allowing the appeal, the Court
HELD: 1. The dealer was granted retail dealership for sale
of motor spirit (petrol), High Speed Diesel, motor oil and grease.
It is not disputed that the dealer is bound by the Marketing
Discipline Guidelines, 2012 issued by the Public Sector Oil
Marketing Companies. Clause 2.4.4 of the Guidelines provides
for procedure for drawing of samples. Note 2 provides that the
samples drawn should reach the laboratory for testing “preferably
within ten days of the collection of the samples”. Similarly, sub-
clause A of Clause 2.5 of the Guidelines provides that all samples
should be suitably coded before sending them to the laboratory
for testing ‘preferably’ within ten days of drawing the samples.
Sub-clause I of Clause 2.5 of the Guidelines is that the purpose
of mentioning time frame for various activities such as sending
samples to the laboratory preferably within ten days is to
streamline the system and is in no way related to quality/result of
the product.  In view of the language of the Guidelines, the findings
recorded by the High Court that the time line is to be strictly
adhered to cannot be sustained. [Paras 2 and 14][1116-F; 1124-
G-H; 1125-A]
2. The Guidelines as mentioned in sub-clause I of Clause
2.5 of the Guidelines is to streamline the functioning i.e. the oil
companies should not arbitrarily or without any justification send
the sample for testing at their sweet will. In the present case,
there was a delay of 5 days. Since the Guidelines use the time
line as a preferred time line, it cannot be said that the time line
mentioned has to be strictly adhered to and is mandatory. The
language, the purport and the effect of testing do not warrant to
read the word ‘preferably’ as mandatory time line. It is not the
case of the dealer that the sample sent after five days will lose its
efficacy as the umpire sample would be sent only after the first
report is confronted to the dealer. Still further, the dealer has not
raised any objections regarding delay in sending the sample in
the two replies submitted by him. The argument that the umpire
sample in the hands of the dealer could not be tested because of
sludge and to doubt the other two samples is totally untenab

Excerpt shown. Read the full judgment & AI analysis in Lexace.