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TMI Blog2022 (1) TMI 1484X X X X Extracts X X X X X X X X Extracts X X X X ..... CHIEF JUSTICE Table of Contents S. No. Contents Para I. SUMMARIUM 1 II. FACTUAL MATRIX 2 III. ARGUMENTS CANVASSED BY LEARNED SOLICITOR GENERAL APPEARING ON BEHALF OF THE APPELLANTS IN ALL THE THREE LETTERS PATENT APPEALS 11 IV. ARGUMENTS CANVASSED ON BEHALF OF RESPONDENT NO.1 AND 2 (ORIGINAL PETITIONERS) IN ALL THE THREE APPEALS 25 V. ARGUMENTS CANVASSED BY THE INTERVENORS 32 VI. REASONS AND ANALYSIS 37 VI A. CLAUSE 43 OF THE DEALERSHIP AGREEMENT 38 VI B. CLAUSE 1.5 -OBSERVANCE OF STATUTORY AND OTHER REGULATIONS 52 VI C. CLAUSE 5.1.2-SHORT DELIVERY OF PRODUCTS 61 VI D. CLAUSE 5.1.18-PAYMENT OF WAGES 67 VI E. CLAUSE 8.3 - MAJOR IRREGULARITIES 71 VI F. CLAUSE 5.1.14(b) - NON-PROVISION OF CLEAN TOILET FACILITY 83 VII. CONCLUSION 86 I. SUMMARIUM 1. Being aggrieved and feeling dissatisfied by the common judgment and order of the learned Single Judge passed in W.P.(C) No. 10334/2017, W.P.(C) No. 10746/2017 and W.P.(C) No. 11246/2017 dated 18.03.2020, Appellants have preferred the present Letters Patent Appeals. Appellants, herein, were Respondents No. 2 to 4 respectively, in the writ Petitions. For the sake of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nus, Gratuity etc. It was also clarified that slab-based margins had been introduced in respect of 'Business Return' and 'Manpower' and the non slab-based margins had two components viz. 'Fixed Margin' and 'Variable Margin'. 7. Communication dated 19.09.2017 issued by the OMCs reiterated the aforesaid directions to the Dealers. Additionally, it was directed that payment of wages with effect from August, 2017 were required to be made through e-payment and that the Wage Register and e-payment details were to be kept ready by the RO Dealers, for verification by officials of the OMCs. Employees of the ROs were henceforth, required to be covered, if not already covered, under Pradhan Mantri Suraksha Bima Yojana (PMSBY) and Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY). 8. Accordingly, the OMCs amended MDG-2012 on 03.10.2017, whereby amended/supplemented Clause Nos. 1.5(x), 5.1.2, 5.1.14(b), 5.1.16, 5.1.18, 8.3(vii, viii, ix) and 8.5.7 were incorporated. The said amendments were conveyed by OMCs to their respective Dealers, vide communications dated 03.10.2017, 06.10.2017 and 11.10.2017. OMCs also issued the Standard Operating Procedure for "Measure Check of Nozzles at ROs". 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , employed by the Dealers. 12. Since the OMCs are empowered by virtue of the contractual provisions to issue MDGs, the issue being purely in a contractual domain cannot be agitated by Respondents No. 1 and 2, by invoking the writ jurisdiction. It is a settled law that in matters relating to contracts between the parties, writ jurisdiction shall not lie and therefore the writ petitions should have been dismissed at the outset, being not maintainable. This aspect of the matter has not been correctly appreciated by the learned Single Judge and the impugned judgment deserves to be quashed and set aside on this ground alone. 13. OMCs/Appellants, in accordance with the changing market scenario, have been reviewing, amending and issuing MDGs for the last four decades in order to maintain discipline and uniformity in action, for operations of the ROs, throughout the Country. MDG-1995 and MDG-1998 were challenged before this Court and the writ petitions were dismissed, by a detailed judgment and order dated 18.08.1999, reported in Delhi Petrol Dealer Association and Anr. v. Union of India & Ors., (1999) 81 DLT 400. Further, amendments in MDG-2012 were also challenged before various H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions to revise the minimum wages, have factored the increase in the wages, into the 'Dealers margins', thereby ensuring that the employees benefit without any pressure on the Dealers. The Dealers' margins include element of salaries and wages, payable to the employees of the ROs and were calculated on the basis of weighted average of minimum wages notified by States/UTs, based on latest available State Government Notifications. Dealers have accepted the revision in Dealers' margin, without any demur, but are objecting to enhancement of wages, payable to the employees, which cannot be accepted. Mr. Mehta, learned Solicitor General had taken this Court to communication dated 19.09.2017, annexed as 'Annexure R-2/5' with the counter affidavit, filed in the writ petition and submitted that there is a clear revision in the Dealers' Margin w.e.f. 01.08.2017. Attention of the Court was also drawn to the fine niceties of the calculations, placed on record, indicating the difference in the earlier margins and the present ones, to bring home the point that no burden, by increase in the minimum wages, is actually passed on the Dealers. 17. It was further submitted that directing payment of ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e welfare of the employees of the Dealers. It was argued that it is well known that payment of salaries in cash leads to exploitation of employees and payments through the electronic mode would ensure that complete salaries are paid to the workers and would also rule out the commissions that are paid to the middlemen. Currently, most of the banking transactions are online and in fact the Dealers also make payments online for purchase of products from the Appellants. This amendment is also in line with the policies of the Central Government to digitize the economy and will go a long way in making the system of payment to the workers, transparent. To buttress the argument, it was urged that even the employees working under the State and Central Government are paid their salaries, etc. through the electronic mode and no fault can be found with the amendment. Whenever and wherever new systems are introduced, there are bound to be teething problems but that cannot be a reason to interfere in the welfare measures taken in the interest of the larger public good. 20. Defending the amendments with respect to payment of statutory dues, such as Provident Fund, ESIC benefit, Bonus, Annual lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suspension of sales. The power of the OMCs to terminate the contract, for violation of any contractual obligation, exists under the Agreement and where there is a power to impose a major punishment, there is always a power to impose a lesser punishment. 22. The learned Single Judge has erred in reading down the provisions in the amended MDGs with respect to Clause 5.1.14(b) which relates to non-provision of clean toilet facility. It was urged that the learned Single Judge failed to appreciate that although the RO toilets are essentially meant for use by its employees/staff/customers of the RO, access may be given to walk-in persons, as a matter of courtesy. If the discretion is, however, left to the Manager of the RO, as directed in the impugned judgment, it is open to be exercised arbitrarily and may cause grave inconvenience to the public at large, who are being constantly educated not to befoul public places. It is for this reason that monetary penalties have been prescribed, as in a case of violation of this nature, as an example, an extreme penalty of termination would be highly disproportionate. 23. Learned Solicitor General appearing on behalf of the Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... direction can be passed to pay a uniform wage to the ROs, spread across the Country. To prescribe one wage for all the ROs would tantamount to treating unequals as equals and thus the learned Single Judge has rightly read down Clause 1.5(x) of the amended MDGs. 27. Insofar as provision of toilet facilities is concerned, the direction in the MDGs to ensure that the toilets are not locked and that doing so can entail a penalty is completely illegal and arbitrary. An RO Dealer cannot be compelled to extend the toilet facility to all the passers-by, who are not customers, as this may result in a security issue, besides raising the cost of expenditure to the Dealer. The learned Single Judge has rightly left the issue at the discretion of the concerned dealer and read down Clause 5.1.14(b) of the amendment in MDG-2012. 28. The amendment in MDG-2012 w.e.f. 01.08.2017 to the effect that even where seals are intact, if there is excess or short delivery of the petroleum products, though within the permissible limit, there shall be recalibration and re-stamping, before recommencement of the sales, is contrary to the provision for permissible error under the relevant Statute. The Legal Metr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vailable, there are serious technical issues of connectivity. In so far as the direction for coverage under the PMSBY and PMJJBY Schemes is concerned, by the very nature, the Schemes are voluntary and no dealer can be compelled to mandatorily cover its employees under the said Schemes. It is open to the employees to give their consent to subscribe to the Schemes. 31. Mr. Sanjoy Ghose, learned Senior Counsel appearing on behalf of the Respondent No. 1 in LPA 31/2021 submitted that if the OMCs intended to amend the Guidelines so as to mandate payment of wages higher than the statutory minimum wages, there ought to have been stakeholders' consultation, which admittedly did not take place prior to amendment, in MDG-2012. Learned Senior Counsel relied upon the decision of the Hon'ble Supreme Court reported in Central Inland Water Transport Corporation Ltd & Anr v. Brojo Nath Ganguly & Anr. (1986) 3 SCC 156 and submitted that on account of unequal bargaining powers of the ROs, the OMCs cannot be permitted to unilaterally amend the MDG-2012. Whenever any minimum wage is to be prescribed/revised, sectoral consultation is a must, in accordance with the provisions of the Minimum Wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned Senior Counsel also challenged the imposition of penalties as being contrary to the terms of the Dealership Agreement and beyond the powers of the OMCs. It was submitted that under the guise of Clause 43 of the Dealership Agreement, the contract cannot be re-written by the OMCs and that too, unilaterally. On the aspect of higher wages, it was urged that all the ROs situated in different States cannot be painted with the same brush and directing every Dealer to pay the same wage would be treating unequals as equals. 35. Learned Counsel appearing on behalf of North Bengal Petroleum Dealers Association, submitted that no doubt, the OMCs are empowered to frame Guidelines, i.e. MDGs, from time to time, deriving power from clause 43, however, the same cannot be in subrogation of any statute, rules or regulations, that exist. Any direction which runs contrary to the statutory provision would be void ab initio and untenable in the eyes of law. It was further submitted that there is nothing on record to show how the Dealers' Margins were calculated and factored in, to enable the OMCs to justify the stand that there will be no extra burden on the Dealers, on account of payment of higher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... throughout the country, the Marketing Discipline Guidelines (MDGs) were formulated and issued. These MDGs have been reviewed from time to time. Clause 42 of the model agreement, which has already been upheld by various High Courts, replicates the contents of Clause 43 of the Dealership Agreement, in question. 40. By virtue of powers conferred by Clause 43, the MDGs have been issued. Thus, this provision is the source of power of the OMCs to formulate the MDGs. 41. Power of the OMCs, under the earlier MDGs, was subject matter of challenge in several writ petitions in various High Courts, including this Court and was upheld, holding that OMCs have the power and jurisdiction to issue MDGs, to regulate the ROs and that the RO Dealers are bound by these Guidelines. 42. This Court in Delhi Petrol Dealer Association and Anr. v. Union of India & Ors reported in (1999) 81 DLT 400, held as follows, in paragraphs 18,20,21 and 23:- "18. The reading of the above will lay down the principles which necessitated the framing of the guidelines of 1982, 1995 and 1998 respectively. There is no challenge to the guidelines of 1982 though the challenge is made to 1995 guidelines alongwith 1998 guide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue directions and the same were not ultra-vires the powers conferred on the Bank by Section 45-K(3) of the Reserve Bank of India Act. 21. The learned Counsel for the petitioners have not denied that directions could be issued provided the powers are vested in the authorities in terms of the Agreement entered into between the parties. Clause 43, it is contended, does not confer any such powers to impose major and minor penalties particularly when such action violates the rule of law and principles of natural justice as no opportunity is provided to the petitioners to show cause. This argument is misconceived as more drastic remedy such as termination is provided in the various statutes and the various clauses of the agreement such as Clauses 43 and 56 provide ample powers in the respondents to frame the guidelines as have been framed in the present case. The reading of the punishments as prescribed for major and minor penalties could also show that the explanation of the dealer is always called for and action is only taken when it is not found to be satisfactory. In appropriate cases the members of the petitioner association can also ask for a personal hearing and the same ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12. Learned counsel for the contesting respondents (dealers) is not disputing the incorporation of Clause 42 of model agreement in most of the dealership agreement. The writ petitioners have also produced certain dealership agreements, which shows Clause 42 of the model agreement is also included. Such dealers cannot contend before the Court that the oil corporations have no power to issue instructions, directions, guidelines from time to time on safe practices and marketing discipline for the purpose of carrying on of the dealership of the corporations. It is also mentioned in Clause 42 of the model agreement that the dealers were scrupulously observed and comply with all laws, rules, regulations and requisitions of the Central/State Government and all authorities appointed by them or either of them which includes the corporations, which granted licence. The learned Single Judge without considering the effect of Clause 42 of the said agreement has allowed the writ petitions in toto, which according to us is an error committed by the learned Single Judge. 13. In the dealership agreement, if Clause 42 of the model agreement is included, in such circumstance, dealers cannot conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.8.2017. Needless to mention that the order statutory requirements like PF, Bonus etc. are to be complied with. 4. Enhanced amount of Business Return (in lieu of earlier known Dealers' remuneration) is included in the Dealers' Margin. 5. Revision in Return on Net Fixed Assets (NFA - i.e. Return on investments made in the RO), as recommended by IIM Bangalore has been implemented. This has resulted in further increase in Dealers' Margin. 6. The recommendation of IIP Dehradun on revision in HSD Loss norms has been implemented. 7. The operating cost elements are revised based on AICPI. Electricity cost has been revised on the basis of weighted average. 8. The Bank charges are revised as per the SBI circular. In view of the above revisions w.e.f. 1.8.17, you will be entitled, for a volume given below, an approximate upward revision of dealer margin as under (net of LFR): Sales Volume of June 2017 (MS+HSD) In Rs. Dealer Margin ...... (as per pre revised) for sales volume of June 17 in Rs. Dealer Margin as revised for Sales w.e.f. .......... similar sales volume of June 17 (in Rs. ) Total Increase in Dealer Margin (in Rs. ) 120 215767 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BPCL" (emphasis supplied) 47. Reference may be made to another communication dated 19.09.2017, issued by the OMCs, to their respective RO Dealers, which is annexed as "Annexure R-2/5" to the counter affidavit filed in W.P.(C) 10334/2017 and reads as under:- " 19th September 2017 Dear BPCL Dealer, Revision in Dealers' Margin with effect from 1.8.2017 : Clarification Dear Madam/Sir, This is further to our email dated 26.8,2017 on the subject matter, wherein we had outlined the wage payment to your retail outlet employees. We would like to answer the queries received from a number of dealers in this regard, which are as under: 1. You are required to pay minimum wages and meet other statutory obligations as notified under Minimum Wages Act of your State, to all employees of your retail outlet. 2. To motivate the employees of Retail Outlets to provide better quality of service standards and to deliver the assurances given to customers in terms of quality, quantity, cleanliness and behaviour on forecourt, it has been decided that you pay BPCL notified, wage [arrived on the basis of weighted average of Minimum Wages as applicable fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e register and e-payment details and (d) The employees of ROs be covered under:- (1) Pradhan Mantri Suraksha Bima Yojana (PMSBY) (2) Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) 49. It is further evident that in order to maintain the marketing discipline in operations of the retail network of licenses of Petrol and Diesel outlets, OMCs had contemplated amendment in MDG-2012 and at the same time the communications also reveal that due care was taken to ensure that the Dealers are duly compensated and do not suffer losses, due to increase in wages, etc., by factoring the revisions in the Dealers' margins, effective from 01.08.2017. 50. A tabular representation was furnished by the Appellants, as "Annexure R-2/3" with the counter affidavit in W.P.(C) 10334/2017. The chart was referred to and explained by the learned Solicitor General, during the course of arguments, to support the stand, that while issuing directions to pay higher wages, the OMCs had factored the rise in wages in the Dealers' margin. By providing for higher wages, on one hand, it was ensured that the employees are motivated to work and consequently quality service shall be provided to the customers and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.19 345.68 256.06 0.05 0.05 Variation in AICPI (- 0.36%) Bank charges 50.96 37.74 123.01 91.12 -58.57 -58.58 Revision of bank charges by SBI Business Return 201.77 149.46 183.42 135.87 10.00 10.00 Business return increased by 10% Salaries & wages 1958.66 1450.86 1315.83 974.69 48.85 48.85 Implementation of wages in line with Central Wages (OMC notified wages) GST on LFR 103.42 86.18 12.04 10.08 758.95 754.97 Consequent to revision in NFA/LFR elements as per IIM-B study Total 3629.03 2457.41 2600.79 1657.24 39.54 48.28 Gross increase 1028.23 800.17 Net increase CC/A site Ros DC/B site Ros Current Dlr. Margin Net of LFR / GST 3156.26 2063.44 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irregularity. (b) In case ATG is switched off / non-operational without authorization from the competent authority. (c) Any deliberate action on the part of Dealership or their staff or any other agency to make any component of automation system (excluding MPDs / Dispensing Units /ATGs) dysfunctional, partly or fully without authorization from competent authority. (Authorization through e-mail be signed letter from Company official only will be admissible.) Penalty in case (a), (b) & (c) above: i. Penalty of Rs. 1,00,000/- (one lakh only) for the first irregularity. ii. Second offence would lead to suspension of sales and supplies for 7days and penalty of Rs. 2,00,000/- (two lakhs only). iii. Third offence would lead to termination of the dealership. 2. CLAUSE NO. 5.1.14(b) NON PROVISION OF CLEAN TOILET FACILITY Dealers should check daily and ensure the following;- a) Toilets are clean all the time. b) Proper lighting is available. c) Flush (wherever provided) is working properly. d) Water is available. e) Working latch is available on the toilet door. f) Signage is available. g) Toilet door found to be locked. The above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 (ix) : Non-payment of Salary, Wages, other Benefits &Insurance as per clause5.1.18 for the manpower employed at ROs. Action in case of 8.3 (ix) would be as under:- i. First instance : 20% of the monthly dealer margin (based on average of last 3 months); ii. Second instance : 30% of the monthly dealer margin (based on average of last 3 months); iii. Third & subsequent instances : 40% of the monthly dealer margin (based on average of last 3 months) & suspension of sales and supplies for 15 days. 5. CLAUSE NO. 8.5.7: The dealer would have a period of 10 days to reply from the date of issuance of Show Cause notice." (emphasis supplied) VI B. CLAUSE 1.5 52. Looking to the arguments canvassed by the learned Senior Counsels appearing for the Respondents, the main grievance ventilated is that the RO Dealers cannot be compelled to pay wages to their employees at a rate higher than the minimum wages notified by the respective States/UTs. The said contention cannot be accepted for the following reasons :- (a) As per Clause 1.5 of the amendment to MDG-2012 w.e.f. 01.08.2017, especially, sub-Clause (x) thereof, which mandates observance of Statutory and other Regulations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elfare State. As held by the Hon'ble Supreme Court in K.T. Plantation (P) Ltd. vs. State of Karnataka, (2011) 9 SCC 1, Directive Principles of State Policy lay down the Fundamental Principles for governance of the Country and through these principles, State is required to take steps to sub-serve the common good. In this context, Article 43 of the Constitution of India is relevant and reads as under:- "43. Living wage, etc., for workers. - The State shall endeavour to secure, by suitable legislation or economic organisation or in any other way, to all workers, agricultural, industrial or otherwise, work, a living wage, conditions of work ensuring a decent standard of life and full enjoyment of leisure and social and cultural opportunities and, in particular, the State shall endeavour to promote cottage industries on an individual or co-operative basis in rural areas." 53. The Constitution framers kept the wordings of Article 43 expansive by including the phrase "or in any other way". This expression allows the State and its Instrumentalities to secure the ideals enshrined in Article 43 viz. living wage and in our view, would apply to the OMCs. The Appellants are thus justified i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Directive Principles of State Policy and that this command of the Constitution must be ever present in the minds of Judges when interpreting Statutes which concerns themselves directly or indirectly with matters set out in the Directive Principles. Relevant passage is as under : "5. Before examining the rival contentions, we remind ourselves that the Constitution has expressed a deep concern for the welfare of workers and has provided in Article 42 that the State shall make provision for securing just and humane conditions of work and in Article 43 that the State shall endeavour to secure, by suitable legislation or economic organisation or in any other way, to all workers agricultural, industrial or otherwise, work, a living wage, conditions of work ensuring a decent standard of life and full enjoyment of leisure etc. These are among the "Directive Principles of State Policy". The mandate of Article 37 of the Constitution is that while the Directive Principles of State Policy shall not be enforceable by any Court, the principles are 'nevertheless fundamental in the governance of the country' and 'it shall be the duty of the State to apply these principles in making laws'. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es etc., see Unnicheyi and Others v. State of Kerala [(1962) 1 SCR 946]. The concept of minimum wage is likely to undergo a change with the growth of our economy and with the change in the standard of living. It is not a static concept. Its concomitants (sic) must necessarily increase with the progress of the society. It is likely to differ from place to place and from industry to industry. That is clear from the provisions of the Act itself and is inherent in the very concept. That being the case it is absolutely impossible for the legislature to undertake the task of fixing minimum wages in respect of any industry much less in respect of an employment. That process must necessarily be left to the Government. Before minimum wages in any employment can be fixed it will be necessary to collect considerable data. That cannot be done by the legislature. It can be best done by the Government. The legislature has determined the legislative policy and formulated the same as a binding rule of conduct. The legislative policy is enumerated with sufficient clearness. The Government is merely charged with the duty of implementing that policy. There is no basis for saying that the legislature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st deal with this question. The Act which was enacted in 1948 has its roots in the recommendation adopted by the International Labour Conference in 1928. The object of the Act as stated in the preamble is to provide for fixing minimum rates of wages in certain employments and this seems to us to be clearly directed against exploitation of the ignorant, less organised and less privileged members of the society by the capitalist class. This anxiety on the part of the society for improving the general economic condition of some of its less favoured members appears to be in supersession of the old principle of absolute freedom of contract and the doctrine of laissez faire and in recognition of the new principles of social welfare and common good. Prior to our Constitution this principle was advocated by the movement for liberal employment in civilised countries and the Act which is a preConstitution measure was the offspring of that movement. Under our present Constitution the State is now expressly directed to endeavour to secure to all workers (whether agricultural, industrial or otherwise) not only bare physical subsistence but a living wage and conditions of work ensuring a decent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount to recasting this phrase in Rule 25 for which we find no justification. This rule calls for practical construction which should ensure to the worker an actual increase in the wages which come into his hands for his use and not increase calculated in terms of the amount assured to him as a minimum wage under the Act. The interpretation suggested on behalf of the respondents would have the effect of depriving most of the workers who are actually getting more than the minimum wages fixed under the Act of the full benefit of the plain language of Rule 25 and in case those workers are actually getting more than or equal to double the minimum wages fixed, this provision would be of no benefit at all. This construction not only creates a mere illusory benefit but would also deprive the workers of all inducement to willingly undertake overtime work with the result that it would to that extent fail to advance and promote the cause of increased production. We are, therefore, clearly of the view that Rule 25 contemplates for overtime work double the rate of wages which the worker actually receives, including the casual requisites and other advantages mentioned in the explanation. This r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approach rather than a doctrinaire or technical legalistic approach. The contract rate is not being touched by holding that Rule 25 contemplates double the rate of wages which actually come into the workman's hands any more than it is touched by fixing the minimum rate of wages under Sections 3, 4 and 5 of the Act. The decision of the Mysore High Court in Municipal Borough, Bijapur v. Gundawan (M.N.) and Others [AIR 1965 Mys 317] and of the Madras High Court in Chairman of the Madras Port Trust v. Claims Authority and Others [AIR 1957 Mad 69] also take the same view as the Bombay High Court does. We need not, therefore, deal with them separately." (emphasis supplied) 59. In M/s. Polychem Ltd. v. R.D. Tulpule, Industrial Tribunal, Bombay, (1972) 1 SCC 885, the Hon'ble Supreme Court held as under: "7. Wage policy relating to workmen appears to be a complex and sensitive area of public policy. The reason is plain. The relative status of workmen in the society, their commitment to industry and their attitude towards the management, their motivation towards productivity and their standard and way of life, are all conditioned by wages. It is accordingly not a purely econo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "living wage" for the workers employed by the R.O Dealers. In any event, Dealers have no reason to object, having accepted the revisions in their margins, which is plainly evident from the tabular chart, referred to above, which reflects the difference in the Dealers' margins, pre-01.08.2017 and post-01.08.2017. vi. The nature of the amendment directing payment of higher wages is for the welfare of the employees of the ROs. It is in the nature of a fair wage, which can be prescribed as a term of the contract. In the present case, interest of the RO Dealers has been adequately protected by increase in the "Dealers' Margin". It would not be wrong to hold that if the Dealers do not disburse the higher wages after having received higher margins, it would amount to "Unjust Enrichment" on the part of the Dealers. vii. The aforesaid aspects of the matter, in our view, have not been correctly appreciated by the learned Single Judge and there is merit in the contentions raised by the Appellants. VI C. CLAUSE 5.1.2 - SHORT DELIVERY OF PRODUCTS 61. Learned Solicitor General and learned Senior Counsels representing the respective sides have read and re-rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsumers and therefore, recalibration is required to be done when the error is above +/- 10 ml per 5 litres. Further, when the permissible error prescribed by the OMCs is not just (-)10 ml per 5 litres but also (+)10 ml per 5 litres i.e. when the dispensing units dispense more than the desired quantity of sale, causing loss to the Dealers, even their recalibration is provided for as the OMCs do not want even the Dealers to suffer any loss. We find force in the said argument of the Appellants. There is no reason why the OMCs should be deprived of their right to impose stringent standards to ensure that the errors are minimized. (b) Clause 43 of the Dealership Agreement enables the Appellants to issue the Marketing Discipline Guidelines and amendments thereto. Thus, the obligations cast on the Dealers by the directions issued in the form of MDGs are in the nature of a contractual relationship and the terms of contract, needless to state, are binding on the parties to the contract. By amending the MDGs and directing the RO Dealers to maintain higher standards of delivery of products in larger public interest, failing which the sales shall be suspended, followed by recalibration and r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us which shows that now, instead of Special Task Force, checking of Petrol Pumps/Diesel Pumps shall be made by a Committee which shall be constituted by concerned District Magistrate in every District and it shall consist of one Executive Magistrate, District Supply Officer, Supply Inspector, a Police Officer not below the rank of Inspector, Senior Inspector/Inspector Weight and Measurement Department and one officer of concerned Oil Company. 2. The role of Weight and Measurement Officer and Supply Officer is already suspicious when electronic devices were found in the dispensing units of Petrol Pumps inasmuch such chips could not have been installed without opening machine and disturbing seals put by Weight and Measurement Department etc. Therefore, prima facie their collusion was already there and yet they have been made part of checking team. 3. The most interesting thing is that now Chief Secretary has directed all the Officers in State of U.P. that in case electronic device or short supply of fuel or any other kind of irregularity is found at a Petrol Pump, only concerned dispensing unit shall be sealed and no other dispensing units. Meaning thereby, no action shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to learned Standing Counsel for communication to concerned authorities and compliance, by tomorrow." 30. It is true that oil companies in majority are owned and controlled by Central Government but in this case their involvement also cannot be excluded since they are under the obligation, under terms and conditions of marketing disciplines, for a regular periodical inspection. But here also we find an attempt to show a self disclosure of cleanliness instead of nabbing erratic and offending officials who do not work impartially, objectively and judiciously. They are indulged in nefarious criminal acts. We can understand frustration and helplessness which officials of STF must be facing. Though in the affidavit filed by Chief Secretary, it is stated that STF's hands have not been tied or stopped, but language and message of order dated 02.05.2017 is self speaking and explainable, fortified from the fact that from 03.05.2017 and onward, we find no registration of FIR against any erring petrol pumps. That has been done in words and what has been instructed between the lines, is evident and easily discernible. Any person of ordinary prudence can easily decipher message underlyin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd further suggesting a timeline of 12 hours cannot be sustained. There is yet another aspect of the matter. Once the Dealers are aware that there are no time limits prescribed for recalibration and re-stamping, after the sales are suspended, the Dealers would make every endeavour to ensure that the dispensing units work efficiently and there are least possible errors in dispensing the petroleum products. This is the normal and expected human conduct. Non-provision of the timeline, therefore, in our opinion, will act as a deterrent and would bring greater discipline amongst the RO Dealers, which is the very purpose of the MDGs. 65. The OMCs with their expertise in the field have taken a conscious decision to refrain from stipulating any timelines and the logic explained by the Appellants does not seem unreasonable. Each case would depend on its own facts and circumstances and fixation of a time limit would complicate matters and make the system unworkable. Once the Expert Bodies, after due deliberation, have framed Clause 5.1.2, it is not for this Court, exercising jurisdiction in judicial review to frame the Guidelines for the working of the RO Dealers or suggest a time limit and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0. None of the two contentions, in our view, merit acceptance for the following reasons :- (a) It bears repetition to state that by virtue of Clause 43 of the Dealership Agreement, the Dealers have undertaken to faithfully and promptly carry out, observe and perform all directions made by the Corporation, from time to time for proper carrying out of the dealership. Respondents cannot therefore escape the contractual obligations cast upon them coupled with the assurance and undertaking to scrupulously and faithfully follow all directions issued by the Appellants, in furtherance of the Dealership Agreement. (b) Payment of salaries and wages by e-payment mode is a welfare measure since it ensures that complete wages are disbursed to the employees, as reflected in the books of accounts and the employees do not suffer on account of any malpractice on the part of the Dealers of paying lesser wages than due. Payment through the electronic mode would make the system transparent and certainly reduce the chances of exploitation of the employees at hands of the RO Dealers. (c) Payment of salaries and wages by e-payment mode would go a long way in resolving several issues under the Labou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as a threshold under the respective Statutes to be covered by the concerned Acts, however, in such exceptional cases the contract between the parties, being the Dealership Agreements, will hold the field, enabling the Appellants to issue directions to pay Provident Fund, etc. in the interest and welfare of the employees, as is sought to be done by them. Thus, even in the absence of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, Payment of Bonus Act, 1965 and Payment of Gratuity Act, 1972 being applicable, the objective that the said Statutes seek to achieve can be adopted by the Appellants including the methodology of calculations of the dues there-under. In so far as the argument of privity of contract, strenuously urged by the Respondents, is concerned, suffice would it be to state that the Appellants are an Instrumentality of the State and as brought out in the earlier part of the judgment, it is their Constitutional obligation, as enshrined in Article 43 of the Constitution of India, to enforce the Directive Principles of State Policy and ensure that the employees employed by the RO Dealers are given the benefits of Provident Fund, etc. as the wage ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Solicitor General had also pointed out that not a single employee has approached the OMCs, resisting coverage under the PMSBY or PMJJBY Schemes. Learned Single Judge while agreeing with the fact that the object of the provision is altruistic, was of the view that making the coverage compulsory, is problematic in law and the premiums being on the lower side would make no difference. The learned Single Judge also opined that the same purpose would be achieved, if the OMCs were to call for the details of the employees and hand over the consent forms to enable them to join the Schemes. Wherever the employees consented, the OMCs can directly make the annual contribution on their behalf to enable them to join the Schemes. Having considered the said part of the judgment, we cannot agree with the learned Single Judge. As brought out above, the premiums payable under the Schemes have already been factored in the Dealers' margin and the benefits of the revision have been reaped by the Dealers and non-disbursement of the amounts would be unjust enrichment. Secondly, being in the nature of insurance Schemes, with premiums in the affordable range, they would go a long way towards the welfare ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce: Suspension of sales and supplies for15days. Second instance: Suspension of sales and supplies for30days. Third instance: Termination of the dealership. Action in case of(iii) above would be asunder:- First instance: Penalty of recovery of differential price since last inspection. Second instance: Termination of the dealership. Action in case of(vii) above would be asunder:- First instance: Penalty of Rs.15,000 (Rupees Fifteen Thousand). Second instance: Penalty of Rs.25,000 (Rupees Twenty Five Thousand) Third & subsequent instances: (a) Rs. 35,000 or 45% of the monthly dealer margin (based on average of last 6 months), whichever is higher; and (b) Suspension of Sales and supplies for 7 days or rectification of the defect in toilet, whichever is later. Action in case of (viii) above would be as under:- First instance: Penalty of Rs. 1,00,000 (Rupees one lakh only) Second instance: Penalty of Rs. 2,00,000 (Rupees two lakhs only) and suspension of sales and supplies for 7 days. Third instance: Termination of the dealership. Action in case of (ix) above would be as under:- First instance: Penalty of 20% of the monthly d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all dealerships or atleast to a large extent, which is an avoidable situation. 75. In any case, it hardly needs a mention that once the Competent Authority has the power to impose a major penalty, it would have the power and jurisdiction to impose lesser penalties. In this context, we may refer to the judgment of the Hon'ble Supreme Court in State of Madhya Pradesh v. Ram Ratan, 1980 Supp SCC 198, relevant paras of which are as under :- "7. In service jurisprudence for different types of misconduct various penalties are prescribed in service rules. 1966 Rules prescribe as many as 9 penalties which can be awarded for good and sufficient reasons. In the list of penalties the first three are styled as "minor penalties" and the remaining six are styled as "major penalties". Compulsory retirement is one of the major penalties. Similarly, removal from service which shall not be a disqualification for future appointment in Government service and dismissal from service which shall ordinarily be a disqualification for future employment under the Government are the other two major penalties. The disciplinary authority keeping in view the gravity of misconduct committed by the Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "On a careful consideration of the report, and in particular of the conclusions reached by the Enquiry Officer in respect of the charges framed against you the President is provisionally of opinion that a major penalty viz. dismissal, removal or reduction should be enforced on you..." Ultimately, after taking into consideration the representation made by the concerned Government servant penalty of removal from service was imposed upon him. It was contended before this Court that in view of the decision of the Privy Council in High Commissioner for India and High Commissioner for Pakistan v. I.M. Lall [AIR 1948 PC 121 : (1948) 75 IA 225] and Khem Chand v. Union of India [AIR 1958 SC 300 : 1958 SCR 1080 : (1959) 1 LLJ 167] it is well-settled that the punishing authority must either specify the "actual punishment" or "particular punishment" in the second showcause notice otherwise the notice would be bad. Repelling this contention this Court observed as under: "Let us examine a little more carefully what consequences will follow if Article 311(2) requires in every case that the "exact" or "actual" punishment to be inflicted on the Government servant concerned must be mention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her disqualification which may have some repercussion on terminal benefits. It was not disputed before us that in comparison to removal from service compulsory retirement is a lesser penalty. Therefore, when in the second show-cause notice major penalty of removal from service was tentatively proposed, it did comprehend within its fold every other minor penalty which can be imposed on the delinquent Government servant. That having been done, no exception can be taken to it." (emphasis supplied) 76. 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. 77. Appellants have formulated common Guidelines to provide for uniform and consistent pract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, as has been stipulated in Clause 8.3 of the MDG-2017. For ready reference, Clause 56 of the Dealership Agreement is extracted hereunder:- "56. Notwithstanding anything to the contrary herein contained the Corporation shall be at liberty to terminate this Agreement upon or at any time after the happening of any of the following events namely:- a. If the dealer shall commit a breach of any of the covenants and stipulations contained in the agreement and fail to remedy such breach within four days of the receipts of a written notice from the Corporation in that regard. b. Upon i. The death or adjudication as insolvent of the dealer if he an individual. ii. The dissolution of the partnership of the dealer's firm or the death or adjudication as insolvent of any partner of the firm if the dealer be a firm. iii. The liquidation whether voluntary or otherwise of the passing of an effective resolution for winding up, if the dealer be a company or co-operation society. c. If any attachment is levied and continued to be levied for a period of seven days upon the effects of the dealer or any individual partner for the time being of the Dealer's firm or any member of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ejudice or affect the right of the corporation to revoke and/or enforce the termination of this agreement and the license and the license granted hereunder." (emphasis supplied) VI F. CLAUSE 5.1.14(b) - NON-PROVISION OF CLEAN TOILET FACILITY 83. Clause 5.1.14(b), which is incorporated by an amendment to MDG-2012 w.e.f. 01.08.2017 reads as under:- "CLAUSE 5.1.14 (b): NON PROVISION OF CLEAN TOILET FACILITY Dealers should check daily and ensure the following: a) Toilets are clean at all time. b) Proper lighting is available. c) Flush (whenever provided) is working properly. d)Water is available. e) Working latch is available on the toilet door. f) Signage is available. g) Toilet door found to be locked. The above protocol is to be prominently displayed near the toilet. Maintenance sheet is to be maintained and displayed. If OMC officials observe during the inspection that (a) Toilet is found to be not clean or (b) Water is not available or (c) Latch on the toilet door is not available/not working or (d) Toilet door found to be locked at any outlet, a photograph of the toilet shall be taken and letter shall be issued instantly listing the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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