Madrasdate High Court · 2008

2. The petitioner company was appointed as a dealer forsale of petroleum products of the respondent Corporation from 1962and an agreement was entered into subsequently on 1.6.1981. On14.8.2007, an inspection was conducted in the retail outlet of thepetitioner by M/s.SGS India Private Limited and on test of sample,it was observed that nozzle sample of both MS & HSD have failed inthe Marker Test as they were found to have turned into pink.Thereafter, the nozzle samples of MS/HSD in Marker Test and theTank Truck Retention samples and nozzle samples were collectedfrom the outlet jointly by SGS and the respondent on the same dayand sent for Joint Test. In the Joint Marker Test conducted on17.8.2007, it was observed that MS and HSD drawn from the outletfailed in the Marker Test while the Tank Truck Retention Samplesstood passed the said test. Copies of the Joint Test Reports werealso handed over to the petitioner. According to the petitioner,since the nozzle samples and Tank Truck Retention Samples resultedin variations, the samples should got tested as per the MarketingDiscipline Guidelines as per Three Tier Sampling system. The saidmethod is provided in clause 2.4.4 of the Guidelines. Thecomplaint of the petitioner is that without following the saidguidelines and procedure, the impugned show-cause notice was issuedby the respondent having coming to the premeditated conclusion thatthe petitioner has altered MS and HSD and therefore, the show-causenotice is only an empty formality. 3. The impugned show-cause notice is challenged on variousgrounds including that it is illegal and arbitrary. The testconducted is in violation of clauses 26 and 42 of the agreementsince in the show-cause notice the respondent has observed thatthe nozzle sample has failed and therefore, the conclusion hasalready been arrived at by the respondent and the impugned noticeis vague. Even though the impugned notice is worded as notice, ithas finally determined the issue since the respondent has concludedthat the petitioner has committed adulteration which warrants thetermination of contract as per the terms of contract and it is onlythe premeditated intention of the respondent which would lead toits arbitrary exercise as per clause 55(I) and (K) and it isviolative of Articles 14 and 19(1)(g) of the Constitution of India.4. It is the case of the respondent in the counteraffidavit that the writ petition is not maintainable since it isonly a show-cause notice which is impugned in the writ petition.However, it is stated by the respondent that the petitioner cannotchallenge the issue of show-cause notice after causing provedadulteration of Motor Spirit (MS) and High Speed Diesel (HSD).According to the respondent, the writ petition is not maintainablebecause there is an arbitration clause in the dealership agreementby which any dispute can be referred to the arbitrationproceedings. It is also stated by the respondent that thepetitioner has quoted wrong guidelines while the respondent hasacted as per the amended MDG (Marketing Discipline Guidelines)dated 15.1.2007. It is the further case of the respondent that thepetitioner's case is a proven adulteration of petrol and diesel and https://hcservices.ecourts.gov.in/hcservices/ there is no premeditation in issuing show-cause notice. 4(a). It is the case of the respondent that on 14.8.2007the authorised agent of the respondent viz., M/s.SGS India PrivateLimited conducted the Marker Test at petitioner's retail outlet bytaking nozzle samples of both MS and HSD from dispensing pump onboth tanks 1 and 2. The Marker Test showed that MS and HSD turnedpink. On the same day, viz., 14.8.2007 after prima facie finding byM/s.SGS India Private Limited as stated above in the Marker Test,second nozzle samples of MS and HSD together with Tank TruckRetention (TTR) sample were taken from the petitioner and handedover to the respondent's official who sent them to supply locationfor the Joint Marker Test. The Joint Marker Test was done on17.8.2007 in the presence of the representatives of thepetitioner, respondent and SGS India Private Limited apart from thetransporter. The result was that the nozzle samples again failedand turned pink. However, the Tank Truck Retention sample haspassed the test. Therefore, according to the respondent, it is aproven case of adulteration. 4(b). According to the respondent, clause 2.4.4 of the MDGis not applicable. That clause is applicable to the test done bythe Mobile Lab, whereas, in the present case the Marker Test wasperformed by the authorised agent as per the amended guidelinesdated 15.1.2007 issued by the Ministry of Petroleum and NaturalGas, Government of India. The Government of India have introducedChapter 12 by amending the Marketing Discipline Guidelines, 2005dated 15.1.2007. By the said amendment the Government has decidedto implement the blending of marker in potential adulterations toprevent adulteration of petrol and diesel. Therefore, a specialprocedure was contemplated and with that view, the amendment waseffected. The Marker Test can be done at any time at any retailoutlet and if the test fails, TTR sample retained by the dealerwill also be tested in the presence of marker. If the Marker Testof TTR sample fails, then no action will be taken against thedealer since the responsibility will become that of the carrier.If the Marker Test of TTR samples passes, action will be takenagainst the retail outlet dealer since it is a proven case ofadulteration with kerosene. 4(c). According to the respondent, fresh sample test willnot apply. It is the case of the respondent that the Tank TruckRetention sample was very much in possession of the petitionerthroughout. Therefore, there is no question of fresh sample test.Inasmuch as in TTR sample there was no adulteration, no such freshtest is warranted. It is also the case of the respondent thatunder some of the clauses of the Guidelines, the respondent cansuspend the supply of products immediately and also take penalaction. Therefore, according to the respondent, the impugned show-cause notice is perfectly in order and not with any premeditatedintention. https://hcservices.ecourts.gov.in/hcservices/

5. Mr.AR.L.Sundaresan, learned senior counsel appearing forthe petitioner would submit at the first instance, even though theimpugned notice is captioned as show-cause notice, a reading ofthe entire contents shows that the same has been issued withpredetermined notion and therefore, it cannot be stated that thewrit petition is not maintainable against show-cause notice on thefactual situation here. He would rely upon the judgement inSiemens Ltd. v. State of Maharashtra (2007 (1) CTC 844). He wouldalso rely upon an unreported judgement of the Hon'ble First Benchof this Court in W.A. No.731 of 2006 to show that when thearbitration is not effective, the Court can always interfere underArticle 226 of the Constitution of India. According to him, asit is seen in the impugned notice itself, there is a gross errorregarding the method of sampling and by committing gross mistake,the respondent has come to a conclusion as if the petitioner is aproven adulterator. In such circumstances, the writ petition isthe only effective remedy. He would also rely upon the judgementsin Harbanslal Sahnia v. Indian Oil Corporation Ltd. (2003 (1) CTC189) and State of Jharkhand v. Ambay Cements (2004(5) CTC 515). 5(a). According to him, the impugned notice suffers fornot following the principles of natural justice and it is in totalviolation of the Marketing Discipline Guidelines issued by therespondent itself. He would insist that as per clause 2.4.4 of thesaid guidelines which have come into effect from August 1, 2005,the procedure of drawal of samples by mobile laboratories has beenmentioned which also speak about the clinical test of nozzlesamples of MS and HSD taken from all tanks and if the samplefails, thereafter, the mobile lab will take six one-litre samplesin respect of MS from each of the concerned tanks where the productfailed; two to be given to the dealer; two for the concerned oilcompany for retention; and the last two to be given to theconcerned oil company for testing and in respect of HSD, threeone-litre samples are taken from each of the concerned tanks wherethe product failed; one to be given to the dealer; one for theconcerned oil company for retention and the other to oil companyconcerned for testing and thereafter the samples are sent tolaboratory within 10 days of collection and appropriate actionwill be taken based on the test results. 5(b). According to the learned senior counsel, when thatis the procedure, which has to be followed scrupulously, therespondent has resorted to marker test by a third party, viz.,M/s.SGS India Private Limited which has no connection with therespondent at all and there is no possibility for the respondent todelegate its powers to such an agency under the law and therefore,the entire procedure is not in accordance with the guidelinesissued by the respondent. He would submit that even if thesubsequent amendment is applied, SGS India Private Limited whichis not connected with the respondent, has no right whatsoever totake any sample and therefore, the process is totallyunsustainable. He would also submit that such a delegation whichis not permissible is bad in law. He would rely upon the judgement https://hcservices.ecourts.gov.in/hcservices/ reported in State of M.P. v. Bhupendra Singh (2000 (1) CTC 554) tosubstantiate his contention that the delegation is not valid andunder section 3 of the Essential Commodities Act, the Control Orderpassed by the Central Government has to specifically conferauthority on the concerned officer and inasmuch as SGS IndiaPrivate Limited is not an authority contemplated under the law aswell as the guidelines issued by the Government of India, suchsamples taken by SGS India Private Limited cannot be held to bevalid. 5(c). He would also submit that when law prescribes aparticular method of action, the same has to be followed, byrelying upon the judgement of the Supreme Court in State ofJharkhand v. Ambay Cements (2004(5) CTC 515). He would also submitthat such executive instructions given by the Government by way ofguidelines must be in conformity with the Rules, by placingreliance on the judgement of the Supreme Court in Union of India v.Central Electrical & Mechanical Engineering Service (CE & MES)Group 'A' (Direct Recruits) Assn. (2007 (8) SCJ 269.6. On the other hand, Mr.Ravi Anantha Padmanabhan, learnedcounsel appearing for the respondent would submit that thejudgement relied upon by the learned senior counsel for thepetitioner in Harbanslal Sahnia v. Indian Oil Corporation Ltd.(2003 (1) CTC 189) relates to an order of termination. He wouldalso submit that the judgement in Whirlpool Corpn. v. Registrar ofTrade Marks [(1998) 8 SCC 1] based on which the judgement inHarbanslal Sahnia v. Indian Oil Corporation Ltd. (2003 (1) CTC 189)was given, was a case without jurisdiction and therefore, thejudgements are not applicable to the case on hand. 6(a). He would also submit that by the impugned show-causenotice, the respondent was only prima facie satisfied that thepetitioner is an adulterator and it does not mean as if a decisionhas been arrived at. He would also submit that the judgementrelied upon in Siemens Ltd. v. State of Maharashtra (2007 (1) CTC844) has no application to the present case. His contention isthat the contract entered into between the petitioner and therespondent is non-statutory in nature and therefore, thearbitration clause which is available under the contract has to beenforced and the writ petition is not maintainable. His submissionis that the marker sample was taken only based on the amendmentwhich was introduced to the Marketing Discipline Guidelines whichcame into effect from 12.1.2007, and it is, as per the amendmenteffected, the marker test has been introduced and three samplesystems which are applicable to mobile laboratories have been givenup. 6(b). According to the learned counsel for the respondent,SGS India Private Limited is a business partner of the respondentand it is the supplier of markers, which is a chemical, throughoutthe world, specifically approved by the Government of India and theduty of SGS India Private Limited is to make inspection since https://hcservices.ecourts.gov.in/hcservices/ large number of petrol bunks are in operations, the respondent isnot in a position to carry out inspection by itself. His furthersubmission is that whenever SGS India Private Limited takes apreliminary inspection and in the marker test, if samples arefound to be positive, then, the procedure of taking samples andinspecting in the presence of concerned dealer will be followed onthe same day. 6(c). He would submit that as per clause 42 of theDealership Agreement, all actions taken by the respondent arebinding upon the petitioner. He would also rely upon clause 55(H)and (I) to substantiate his contention. His contention is that itis only a show-cause notice and the writ petition is notmaintainable. His submission is that the decision of SGS IndiaPrivate Limited is not a final conclusion and it is only a basisfor further test that can be made by giving samples to the dealerand therefore, the dealer's interest is protected. In the presentcase, the first marker test was done by the SGS India PrivateLimited on 14.8.2007 and immediately on finding that the markertest was positive, samples were taken and the same were given tothe petitioner/dealer also and other samples were sent for test andthe test was done in the presence of representatives of thepetitioner as well as the carrier apart from the respondent andSGS India Private Limited. He would heavily rely upon theamendment introduced to the guidelines which are statutory innature and submit that the respondent has only acted as per theamendment since as per the contract entered into between thepetitioner and the respondent, the petitioner is bound by any otheramendment which are introduced subsequently to the MarketingDiscipline Guidelines.7. I have heard the learned senior counsel for thepetitioner and the learned counsel for the respondent and perusedthe entire records. 8. On the basis of the contentions raised by both thecounsel, it is necessary to decide as to whether the writ petitionis maintainable, at this stage on the grounds; (i) the impugnednotice is only a show-cause notice directing the petitioner toshow-cause as to why termination of dealership should not beeffected as per the terms of agreement; and (ii) when there is anarbitration clause in the agreement, how the writ petition can beentertained. 9. As per the dealership agreement between the petitionerand the respondent dated 1.6.1981, the petitioner gets the right ofdealership to sell the products of the respondent. Clause 37 of theagreement enables the respondent Corporation or any of its dulyauthorised representatives to enter and inspect the petitionerpremises at any time. The said clause 37 reads as under:"37. The Corporation will be entitled at all times toenter into and inspect the management of the retail https://hcservices.ecourts.gov.in/hcservices/ outlet by the said dealer in all respects and the dealershall be bound to render all assistance and give allinformation to the corporation and its duly authorisedrepresentatives in that behalf."In clause 42 of the agreement, the petitioner being the dealer hasundertaken to follow and carry out all directions or rules givenor made from time to time by the Corporation. The said clause is asfollows:"42. The dealer undertakes faithfully and promptly tocarry out, observe and perform all directions or rulesgiven or made from time to time by the Corporation forthe proper carrying on of the dealership of theCorporation. The dealer shall scrupulously observe andcomply with all laws, rules, regulations and requisitionsof the Central/State Government and of all authoritiesappointed by them or either of them including inparticular the Chief Controller of Explosives, Governmentof India, and/or Municipal and/or any other localauthority with regard to the storage and sale of suchpetroleum products."Under clause 55(H), (I) and (K), the respondent is given libertyto terminate the agreement, if the petitioner being the dealer doesnot adhere to the instructions from time to time issued by theCorporation or where the petitioner contaminates or tampers withthe quality of any of the products supplied by the Corporation.The said clauses are as follows:"55. Notwithstanding anything to the contrary hereincontained, the Corporation shall be at liberty toterminate this agreement forthwith upon or at any timeafter the happening of any of the following, namely:(A) to (G) xxx(H) If the dealer does not adhere to the instructionsissued from time to time by the Corporation in connectionwith safe practices to be followed by him in thesupply/storage of the Corporation's products orotherwise.(I) If the dealer shall contaminate or tamper with thequality of any of the products, supplied by theCorporation.(J) xxx(K) If the dealer shall either by himself or by hisservants or agents commit or suffer to be committed anyact which, in the opinion of the District Manager of theCorporation for the time being in Madras, whose decisionshall be final, is prejudicial to the interest or good https://hcservices.ecourts.gov.in/hcservices/ name of the Corporation or its products the DistrictManager shall not be bound to give reason for suchdecision."10. The clause 66 of the agreement provides for arbitrationwhich is as follows:"66. Any dispute or difference of any nature whatsoeveror regarding any right, liability, act, omission oraccount of any of the parties hereto arising out of orin relation to this agreement shall be referred to thesole arbitration of the Managing Director of theCorporation or of some officer of the Corporation who maybe nominated by the Managing Director. The dealer willnot be entitled to raise any objection to any sucharbitrator on the ground that the arbitrator is anofficer of the Corporation or that he has to deal withthe matters to which the contract relates or that inthe course of his duties as an officer of the Corporationhe had expressed views on all or any of the matters indispute or difference. In the event of the arbitrator towhom the matter is originally referred being transferredor vacating his office or being unable to act for anyreason the Managing Director as aforesaid at the time ofsuch transfer, vacation of officer or inability to act,shall designate another person to act as arbitrator inaccordance with the terms of the agreement. Such personshall be entitled to proceed with the reference from thepoint at which it was left by his predecessor. It is alsoa term of this contract that no person other than theManaging Director or a person nominated by such ManagingDirector of the Corporation as aforesaid shall act asarbitrator hereunder. The award of the arbitrator soappointed shall be final, conclusive and binding on allparties to the agreement subject to the provisions of theArbitration Act,1940 or any statutory modification of orre-enactment thereof and the rules made thereunder andfor the time being in force shall apply to thearbitration proceedings under this clause." 11. By virtue of clause 42 of the agreement, there is nodoubt that the petitioner being a dealer under the respondent isbound by the Marketing Discipline Guidelines (MDG) issued by theGovernment of India by a Gazette Notification. 12. For dealing with the question of maintainability of thewrit petition against show-cause notice, it is necessary toconsider the terms of the impugned notice wherein the marker testconducted on 14.8.2007 by M/s.SGS India Private Limited andthereafter the joint marker test conducted on 17.8.2007 werereferred to. Before referring to various clauses of the agreement,in the impugned notice it is stated, https://hcservices.ecourts.gov.in/hcservices/ "Please note that failure of Nozzle Samples ofMS/HSD in the Market Test tantamount to Adulteration ofMS/HSD which is violative of Clause Nos.26, 42 and liablefor auction under clause Nos.55(I) & 55(K) of the subjectAgreement dated 01.06.1981".13. In the counter affidavit filed by the respondent inSeptember, 2007, the respondent has clearly stated that thepetitioner has committed proved adulteration of Motor Spirit andHigh Speed Diesel in para-2 as follows:"After causing proved adulteration of MotorSpirit (MS) and High Speed Diesel (HSD), the petitionerchallenges the issuance of our show cause notice dated1.9.2007 without even giving a reply to it."Certainly, the said clause in the impugned notice along with theabove contents of the counter affidavit supports the case of thepetitioner that there is a predetermination by the respondent evenat the time when the show-cause notice is issued on the basis of atest conducted by the respondent said to have been done by itsagent M/s.SGS India Private Limited.14. In a similar circumstance, in Seimens Ltd. v. State ofMaharashtra (2007 (1) CTC 844) the Supreme Court, while dealingwith a case of show-cause notice wherein the authority has directedto make payment of cess with interest in respect of alleged supplyof goods from the appellant's factory to parties in Navi Mumbai, inthe light of the contents in the counter affidavit a reading ofwhich shows that the respondent has made up its mind while issuingthe show-cause notice, held that the writ petition is maintainableby referring to various judgements, in the following words:"10. Although ordinarily a Writ Court may notexercise its discretionary jurisdiction in entertaining aWrit petition questioning a notice to show cause unless thesame inter alia appears to have been without jurisdiction ashas been held by this Court in some decisions includingState of Uttar Pradesh v. Brahm Datt Sharma and Anr., AIR1987 SC 943, Special Director and Another v. Mohd. GhulamGhouse and Another, 2004 (3) SCC 440 and Union of India andanother v. Kunisetty Satyanarayana, 2006 (12) SCALE 262, butthe question herein has to be considered from a differentangle, viz., when a notice is issued with pre-meditation, aWrit petition would be maintainable. In such an event, evenif the Court directs the statutory authority to hear thematter afresh, ordinarily such hearing would not yield anyfruitful purpose. See K.I.Shephard and Others v. Union ofIndia and Others, 1987 (4) SCC 431: AIR 1988 SC 686. It isevident in the instant case that the respondent has clearlymade up its mind. It explicitly said so both in the counteraffidavit as also in its purported show cause. https://hcservices.ecourts.gov.in/hcservices/

11. The said principle has been followed by thisCourt in V.C.Banaras Hindu University and Ors. v. Shrikant,2006 (6) SCALE 66, stating:'The Vice Chancellor appears to have made up his mind toimpose the punishment of dismissal on the respondentherein. A post decisional hearing given by the HighCourt was illusory in this case'.In K.I.Shephard & Ors., etc. etc. v. Union of India & Ors.AIR 1988 SC 686, this Court held:'It is common experience that once a decision has beentaken, there is tendency to uphold it and arepresentation may not really yield any fruitfulpurpose.'12. See also Shri Shekhar Ghosh v. Union of India &Anr. 2007 (1) SCC 331 and Rajesh Kumar & Ors. v. D.C.L.T. &Or. 2006 (11) SCALE 409.13. A bare perusal of the order impugned before theHigh Court as also the statements made before us in thecounter affidavit filed by the respondents, we are satisfiedthat the statutory authority has already applied its mindand has formed an opinion as regards the liability orotherwise of the appellant. If in passing the order therespondent has already determined the liability of theappellant and the only question which remains for itsconsideration is quantification thereof, the same does notremain in the realm of a show cause notice. The writpetition, in our opinion, was maintainable."15. While considering the question whether the alternativeremedy available under the contract can exclude the jurisdiction ofthe High Court under Article 226 of the Constitution of India, theSupreme Court held that in cases where a party seeks enforcement offundamental rights or there is a failure of the principles ofnatural justice or when the orders or proceedings are whollywithout jurisdiction or where the vires of the Act is challenged,there is no need to drive the party to the arbitrationproceedings. That was the decision of the Supreme Court inHarbanslal Sahnia v. Indian Oil Corporation Ltd. (2003 (1) CTC189). Even though it was a case relating to termination of contractand not relating to show-cause notice, it is relevant to point outthat the Supreme Court in the said case has held, by following thejudgement in Whirlpool Corporation v. Registrar of Trade Marks,Mumbai and others, 1998 (8) SCC 1, that such arbitration clausecannot exclude the writ jurisdiction on the basis that availing ofalternative remedy is a rule of discretion and not one ofcompulsion. The Supreme Court has held as follows:"So far as the view taken by the High Court thatthe remedy by way of recourse to arbitration clause was https://hcservices.ecourts.gov.in/hcservices/ available to the appellants and therefore the writpetition filed by the appellants was liable to bedismissed, suffice it to observe that the rule ofexclusion of writ jurisdiction by availability of analternative remedy is a rule of discretion and not oneof compulsion. In an appropriate case, in spite ofavailability of the alternative remedy, the High Courtmay still exercise its writ jurisdiction in at leastthree contingencies; (i)where the writ petition seeksenforcement of any of the Fundamental Rights; (ii) wherethere is failure of principles of natural justice or,(iii) where the orders or proceedings are wholly withoutjurisdiction or the vires of an Act and is challenged.See Whirlpool Corporation vs. Registrar of Trade Marks,Mumbai and others, 1998 (8) SCC 1. The present caseattracts applicability of first two contingencies.Moreover, as noted the petitioner's dealership, which istheir bread and butter, came to he terminated for anirrelevant and non-existent cause. In suchcircumstances, we feel that the appellants should havebeen allowed relief by the High Court itself instead ofdriving them to the need of initiating arbitrationproceedings."16. That was also followed by the Hon'ble First Bench ofthis Court in W.A.No.731 of 2006 by judgement dated 20.6.2006stating that in cases where the lis involved is of public lawcharacter, public law remedy would not be denied. The relevantportion of the judgement is as follows:"The only question which arises for ourconsideration is whether the discretionary jurisdictionunder Article 226 of the Constitution of India could berefused to be exercised only on the ground of existenceof an alternative remedy, which is not efficacious. Itis well settled that access to justice by way of publiclaw remedy would not be denied when a lis involves publiclaw character and when the forum chosen by the partieswould not be in a position to grant appropriate relief."17. In the present case, looking into the issue involved asa whole, the questions that arise for consideration are, whetherthe Marketing Discipline Guidelines issued by the Government ofIndia in the year 2005 regarding the procedure to be followed foridentifying the adulteration have to be applied or the amendmentsought to have been made by the Government with effect from12.1.2007 to the said guidelines by introducing Marker Test has tobe applied; whether the procedure prescribed in the saidguidelines has been followed by the respondent which is a publicauthority; it cannot be said that the writ petition is notmaintainable either because the impugned notice is a show-causenotice or because an alternative remedy of arbitration is availableunder the agreement. https://hcservices.ecourts.gov.in/hcservices/

18. Having decided the question of maintainability of thewrit petition in favour of the petitioner, the next issue to bedecided is regarding the guidelines to be followed, to find outwhether the procedure has been properly followed while issuing theshow-cause notice. Even though the learned senior counsel for thepetitioner, Mr.AR.L.Sundaresan, has relied upon the MarketingDiscipline Guidelines issued by the respondent which came intoeffect from August, 2005 to substantiate his contention that theprocedure followed by the respondent in taking nozzle samples isagainst clause 2.4.4, Mr.Ravi Anantha Padmanabhan, learned counselfor the respondent submitted that there are statutory orders framedby the Government of India in exercise of its powers conferredunder section 3 of the Essential Commodities Act, 1955 and inpursuance of such statutory orders, it may not be necessary torefer to the said guidelines and the above said clause isapplicable only to mobile laboratories.19. It is seen that the Government of India in supersessionof Motor Spirit and High Speed Diesel (Regulation of Supply,Distribution and Prevention of Malpractices) Order, 1998, haspassed the Motor Spirit and High Speed Diesel (Regulation ofSupply, Distribution and Prevention of Malpractices) Order, 2005,by the exercise of its powers under section 3 of the EssentialCommodities Act, 1955, which has come into effect from 19.12.2005.The said statutory order stood amended by Motor Spirit and HighSpeed Diesel (Regulation of Supply, Distribution and Prevention ofMalpractices) Amendment Order, 2007. It is by the said amendmentwhich came into existence from 12.1.2007, the abovesaid originalorder, 2005 stood modified relating to certain aspects introducingmarker system by including clause (fl) in section 2 and alsointroducing a new term, 'test kit' by including clause (ml). Thatapart, in clause 8 of the Order, 2005 before sub-clause (1), a newclause (1A) was inserted. The term 'adulteration' is defined inclause 2(a) as per Order, as amended by the Amendment Order, 2007,as follows:" 'adulteration' means the presence of marker inMotor Spirit and High Speed diesel and/or theintroduction of any foreign substance into motor spiritor high speed diesel illegally or unauthorisedly with theresult that the product does not conform to therequirements of the bureau of Indian Standardsspecifications number IS2796 and IS1460 for motor spiritand high speed diesel respectively or any otherrequirement notified by the Central Government from timeto time." Under clause 2(b), 'authorised officer' is defined to mean anofficer authorised under the provisions of clause 7. The term,'authorised officer' as per clause-7, prescribed in Order,2005 hasnot been changed by the Amendment Order. At this juncture, it isrelevant to incorporate clause-7 which is as follows: https://hcservices.ecourts.gov.in/hcservices/ "7.Power of search and seizure - (1) Any Gazetted Officer of the Central Government or aState Government or any police officer not below the rankof Deputy Superintendent of Police duly authorised, bygeneral or special order of the Central Government or aState Government, as the case may be, or any officer ofthe oil company, not below the rank of sales officer,may, with a view to securing compliance with theprovisions of this Order, or for the purpose ofsatisfying himself that this Order or any order madethereunder has been complied with or there is reason tobelieve that all or any of the provisions of this Order have been and are being or are about to be contravened."Therefore, it is clear that 'authorised officer' explained underclause 2(b) means any Gazetted Officer of the Government of Indiaor the State Government or any police officer not below the rank ofDeputy Superintendent of Police duly authorised by general orspecial order of the Central or State Government as the case maybe, or any officer of the oil company not below the rank of salesofficer. 20. The term, 'high speed diesel' defined in clause 2(e) ofOrder, 2005, as amended by the Amendment Order, 2007 means "anyhydrocarbon oil, excluding mineral colza oil and turpentinesubstitute, which meets the requirements of Bureau of IndianStandards specification number IS1460 and also does not contain anytraces of marker." After clause 2(f) which defines 'malpractices'a new clause, viz., clause (f1) is introduced defining 'marker' tomean a chemical substance approved by the Central Government fromtime to time for blending in kerosene and other petroleum productswith the objective of preventing their diversion or adulteration ofmotor spirit or high speed diesel. While defining 'motor spirit' inclause 2(g) of Order 2005 as amended in Amendment Order, 2007, itis stated that it means any hydrocarbon oil, excluding crudemineral oil, which meets the requirements of Bureau of IndianStandards specification number IS2796 and also does not contain anytraces of marker. 21. After the definition of 'stock variation' in clause 2(m) a new clause (m1) had been inserted to define the term 'testkit' which is as follows:" 'test kit' means a set of equipment used todetermine the presence of marker in kerosene, motorspirit, high speed diesel & other petroleum products."Likewise, in clause 2(t) the term 'sale of off specificationproduct' is defined to mean sale of motor spirit or high speeddiesel by dealer of having traces of marker and/or quality notconforming to Bureau of Indian Standards specifications number https://hcservices.ecourts.gov.in/hcservices/ IS2796 and IS1460 for motor spirit and high speed dieselrespectively.22. The clause 8 which stood as 'sampling of product' inOrder,2005 was changed as 'sampling of product and testing' inthe Amendment Order, 2007. Further, under clause 8, before sub-clause (1) a new clause (1A) was inserted as follows:"(1A) The authorised officer under clause 7 shalldraw the sample from the tank, nozzle, vehicle orreceptacle, as the case may be, in the test kit and testthe product with the aid of test kit, to check whetherthe product contains any traces of marker. If suchtraces are found in the product, the authorised officer shall record the same in triplicate which shall bejointly signed by him and the dealer or transporter orconcerned person or his representative, as the case maybe, and given one copy of such recording to the dealer ortransporter or concerned person or his representative andanother copy to the oil company concerned, as the casemay be".Likewise, in clause 8(1), for the words 'the authorised', thewords, 'where the product does not contain marker under sub clause(1A), the 'authorised officer' are inserted.(The underlined portions areeffected by the Amendment Order,2007).23. Therefore, the sampling of product and testing must bedone by the authorised officer. As I have enumerated above, underClause 7 even by the Amendment Order,2007, the term "authorisedofficer" remains unamended, so as to include any other agent whomay be nominated by the Central Government. In the present case,it is the admitted case of the respondent, as it is seen in theimpugned order itself that M/s.SGS India Private Ltd., hasconducted an audit and tested the nozzle samples of MS and HSD on14.08.2007 before the nozzle samples were taken for joint markertests. It cannot be the case of the respondent that the saidM/s.SGS India Private Ltd., is an "authorised officer" under theabove said Order,2005 as amended by the Amendment Order,2007.24. After Amendment Order,2007, Clause 8(1A) of the Ordermakes it very clear that authorised officer under Clause 7 aloneshall draw sample from tank nozzle in the test kit and test theproduct with the aid of test kit and check whether the productcontains any traces of marker. Inasmuch as M/s.SGS India PrivateLtd., cannot be termed as "authorised officer" as per clause 2(b)of the Order,2005 as amended by the Amendment Order 2007, themarker test stated to have been done by the said M/s.SGS IndiaPrivate Ltd., on 14.08.2007 in the retail outlet of the petitionercannot be said to be an authorised one, by any stretch ofimagination. https://hcservices.ecourts.gov.in/hcservices/

25. The contention of the learned counsel for therespondent that M/s.SGS India Private Ltd., is a renowned companyin the manufacture of marker and chemicals and it has been engagedby the Government of India throughout, is not a ground for thepurpose of validating an invalid act done by a person who is notauthorised under the above said statutory orders.26. In my view, this is sufficient to hold that basicallythe test done by an outsider cannot be a ground for the purpose ofissuing the impugned show-cause notice. If the contention of therespondent that the respondent being the Oil Company, has delegatedits powers to M/s.SGS India Private Ltd., for the purpose ofconducting the marker test, in the absence of any power to therespondent to delegate and applying the principle of "Delegatus nonpotest delegare", such delegation is not permissible in law. Inthis regard, it is relevant to refer to the judgement of theSupreme Court in State of M.P. v. Bhupendra Singh (2000(1) CTC554). In that case, the Central Government which is the authorityfor granting consent under Section 7 the Explosive SubstancesAct,1908 has delegated its powers to the District Magistrate andthe State Government has further delegated the function of DistrictMagistrate to Additional District Magistrate and in suchcircumstances, it was held that the State Government is notcompetent to further delegate to the Additional District Magistratea power of the Central Government which the Central Government hasdelegated to the District Magistrate. The operative portion of thejudgement is as follows:"5. It is difficult to accept the submission.The power of granting consent under section 7 of the saidAct rests with the Central Government. The CentralGovernment has delegated it to the District Magistrate.It is, in our view, not competent for the StateGovernment to further delegate to the Additional DistrictMagistrate a power of the Central Government which theCentral Government has delegated to the DistrictMagistrate. 6.The decision of this Court in Hari ChandAggarwal v. Batala Engg.Co.Ltd., AIR 1969 SC 483: 1969Cri LJ 803 is also of some relevance. This Court saidthat where, by virtue of a notification under section 20of the Defence of India Act, the Central Government haddelegated its powers under section 29 to a DistrictMagistrate, an Additional District Magistrate was notcompetent to requisition property under section 29 simplybecause he had been invested with all the powers of aDistrict Magistrate under Section 10(2)."27. Therefore, even though I am not in agreement with thelearned senior counsel for the petitioner that there is violationof Marketing Discipline Guidelines issued by the respondent, on the https://hcservices.ecourts.gov.in/hcservices/ factual and legal aspects which I have narrated above, there isabsolutely no difficulty to come to the conclusion that theimpugned show cause notice which proceeds on the basis of markertests conducted by M/s.SGS India Private Ltd., who is notauthorised under the Motor Spirit and High Speed Diesel (Regulationof Supply, Distribution and Prevention of Malpractices) Order cannever stand to the test of law.In view of the same, the writ petition stands allowed,consequently, the impugned show cause notice is set aside.However, it does not prevent the respondent to take any appropriateaction in the manner known to law. No costs.Sd/-Asst. Registrar./true copy/Sub Asst. Registrar.khToThe Chief Regional Manager and duly Constituted AttorneyHindustan Petroleum Corporation Ltd.Chennai Retail Regional Office3rd Floor Thalamuthu Natarajan BuildingNo.1, Gandhi Irwin RoadEgmore, Chennai 600 008.+ one cc to Ms. AL Ganthimathi, Advocate, SR.11534+ one cc to Mr. K. Ravi Anantha Padmanaban, Advocate, SR.11120VSV(CO)RP 06.03.08 W.P.No.29561 of 2007