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2022 (1) TMI 1484 - HC - Indian LawsAmendments to the Marketing Discipline Guidelines (MDGs) 2012 - detection of large scale malpractices in some States at the time of supply and dispensation of petroleum products to the customers by manipulating software/hardware - HELD THAT - The relationship between the Dealers and the Appellants is guided by Dealership Agreement subsisting between them. The said agreement provides for certain obligations on the part of Dealers and in terms of breach of such terms the Appellants have a right to take action including termination of Dealership Agreement. The civil right under the agreement is obviously in addition to and not in substitution to right of various State Authorities or their Instrumentalities to take action against the Dealers for violation of the terms of the Agreement or the directions issued to them under the MDGs. Appellants have formulated common Guidelines to provide for uniform and consistent practices and action against the Dealers in the form of MDGs. The provisions of MDGs are essentially between the Appellants and the Dealers covering their rights and obligations on various counts such as methodology of sampling filling and decantation of tank lorries maintenance of equipment at Retail Outlets and other aspects of purely commercial nature and linked with the Dealership Agreement - The MDGs for Retail Outlets/SKO Dealerships which have been in existence for last 3 decades facilitate marketing of petroleum products (MS/HSD/SKO) by the Dealers on the principles of highest business ethics and excellent customer service. Penalties are imposed where malpractices and/or violation of Guidelines are established as the Dealers are expected to carry on business on the principles of highest business ethics and excellent customer service complying with the Guidelines. Conclusion - i) The amendments to the MDGs upheld affirming the OMCs authority to enforce them under the Dealership Agreement. ii) The imposition of penalties for major irregularities upheld rejecting the argument that OMCs cannot levy penalties under the Indian Contract Act. Appeal allowed in part.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered in this judgment revolve around the amendments to the Marketing Discipline Guidelines (MDGs) 2012, specifically:
2. ISSUE-WISE DETAILED ANALYSIS Clause 43 of the Dealership Agreement The Court analyzed the authority of OMCs under Clause 43 of the Dealership Agreement, which empowers them to issue and amend MDGs. This clause obligates dealers to comply with all directions and rules made by the OMCs for proper dealership management. The Court upheld this authority, citing previous judgments affirming the OMCs' power to regulate ROs through MDGs. Payment of Higher Wages (Clause 1.5) The Court examined the requirement for ROs to pay higher wages than the statutory minimum, as directed by OMCs. It concluded that this directive does not violate the Minimum Wages Act, as there is no prohibition against paying wages above the statutory minimum. The Court emphasized the OMCs' role as State instrumentalities to ensure a living wage, aligning with the Directive Principles of State Policy under Article 43 of the Constitution. The Court found that the Dealers' Margins were adjusted to accommodate higher wages, thus not imposing an undue burden on dealers. Short Delivery of Products (Clause 5.1.2) The Court upheld the requirement for recalibration and re-stamping of dispensing units even when delivery is within permissible limits. It reasoned that the Legal Metrology Act allows for higher standards to be set by OMCs to minimize errors, serving the public interest. The Court rejected the Single Judge's suggestion to impose a 12-hour timeline for recalibration, noting potential manipulation by dealers and logistical challenges. Payment of Wages through E-Payment (Clause 5.1.18) The Court supported the mandate for e-payment of wages, viewing it as a welfare measure ensuring transparency and preventing exploitation. It dismissed concerns about internet connectivity, suggesting that exceptions could be made for remote areas. The Court also upheld the requirement for ROs to provide statutory benefits like PF, ESIC, and insurance coverage under government schemes, emphasizing these as welfare measures factored into the Dealers' Margins. Non-Provision of Clean Toilet Facility (Clause 5.1.14(b)) The Court agreed with the Single Judge that access to toilet facilities should be at the discretion of the RO Manager, primarily for employees and customers, considering safety and security concerns. Penalties for Major Irregularities (Clause 8.3) The Court upheld the imposition of penalties for major irregularities, rejecting the argument that OMCs cannot levy penalties under the Indian Contract Act. It reasoned that having the power to terminate a dealership implies the authority to impose lesser penalties, which serve as deterrents without resorting to termination. 3. SIGNIFICANT HOLDINGS The Court upheld the amendments to the MDGs, affirming the OMCs' authority to enforce them under the Dealership Agreement. It emphasized the role of OMCs in ensuring fair wages and welfare measures for RO employees, aligning with constitutional principles. The Court validated the imposition of penalties for non-compliance, recognizing them as necessary to maintain standards and discipline among dealers. The judgment partly set aside the Single Judge's decision, except for allowing discretion in toilet facility access, thereby reinforcing the amendments to MDG-2012 as legally enforceable and in the public interest.
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