M/S Shree Ram Fuel Centre vs. The Bharat Petroleum Corporation LTD.

Facts

The petitioner, M/s Shree Ram Fuel Centre, a proprietorship firm engaged in transporting petroleum products, filed a writ petition challenging a decision by the Deputy General Manager, Transport (DGM, Transport) of Bharat Petroleum Corporation Ltd. (BPCL). This decision, communicated via a letter dated August 20, 2020, blacklisted the petitioner's tank lorry (BR09 GA 5576) for two years and imposed a penalty of Rs. 1 lakh, including 18% GST. The blacklisting was based on terms of the transport agreement and clause 8.1 of the Industry Transport Discipline Guidelines (ITDG). The dispute arose after a consignment of High Speed Diesel (HSD) loaded on July 7, 2020, reached its destination on July 18, 2020, eleven days later, leading to refusal by the consignee. The lorry was diverted, and upon quality checks at a new destination, a density mismatch in the HSD was observed. A show-cause notice was issued, to which the petitioner replied, requesting further sampling. Fresh sampling was conducted on July 27, 2020, in the presence of the petitioner's representative, and the samples were tested. The lab report indicated that while some chambers met HSD requirements, others showed density variations beyond permissible limits compared to the supply location sample, and one chamber failed to meet HSD (VI) requirements.

Held

The Court held that the plea regarding non-compliance with the principles of natural justice is not tenable. The density samples failed in the presence of the petitioner's representative on July 27, 2020, and no objection was raised by the petitioner at that time. The samples were collected, sealed, and sent for testing in her presence, making the failure a 'fait accompli'. The Court relied on the Supreme Court's decision in Dharampal Satyapal Ltd. v. CCE, (2015) 8 SCC 519, particularly paragraph 39, which states that there may be situations where a fair hearing would make no difference to the ultimate conclusion, and thus no legal duty to supply a hearing arises. The Court found this to be such a case, as the testing was conducted in the petitioner's presence, and the failure was observed without demur. The Court also noted that the ITDG mandates density checking if the security locking system is found intact, as it was in this case. The Court concluded that the decision-making process was not flawed and that there was no legal basis for interference in exercise of judicial review. The writ petition was accordingly dismissed.

Key Issues

1. Whether the blacklisting of the tank lorry and imposition of penalty by the DGM, Transport, BPCL, was in violation of the principles of natural justice due to the alleged non-issuance of a show-cause notice after the fresh sampling on July 27, 2020? (Question of law) 2. Whether the petitioner can be held liable for the observed density variations in the HSD, considering the petitioner's arguments that the security locking system was not tampered with and that the sampling was conducted at an incorrect temperature? Petitioner's arguments: - No interference with the security locking system of the tank lorry occurred. - No show-cause notice was issued after the sampling on July 27, 2020, thus violating the principles of natural justice. - The density sampling was done at temperatures between 30°C to 32°C, not at the required 15°C as per ITDG. BPCL's arguments: - The ITDG, issued with the advice of the Ministry of Petroleum and Natural Gas, provides a uniform mechanism for ensuring the supply of quality MS and HSD to the public. - The ITDG forms part of the contract between BPCL and the petitioner, as stipulated in the Letter of Intent (LOI) dated October 29, 2018.