Petrol Pump Dealership Can't Be Cancelled On Mere Suspicion Of Tampering With Fuel Dispensing Unit: Allahabad High Court
The Allahabad High Court has held that a petrol pump dealership cannot be terminated on mere suspicion of tampering with fuel dispensing unit.Justice Irshad Ali added that the dealership cannot be terminated unless it is established with evidence that the alleged irregularity was capable of manipulating fuel delivery to the consumers, and that such manipulation was attributable to the...
The Allahabad High Court has held that a petrol pump dealership cannot be terminated on mere suspicion of tampering with fuel dispensing unit.
Justice Irshad Ali added that the dealership cannot be terminated unless it is established with evidence that the alleged irregularity was capable of manipulating fuel delivery to the consumers, and that such manipulation was attributable to the dealer.
The observation was made in the backdrop of Clause 5.1.4 of the Marketing Discipline Guidelines, 2012 which treats any additional or unauthorized fitting or gear in a dispensing unit, which is likely to manipulate delivery of the fuel, as a 'critical irregularity'.
In the present case, during a joint inspection at Petitioner's Indian Oil petrol pump, certain pulsar cables were found joined by adhesive tape and a joint was noticed in the Weights and Measures seal affixed to the motherboard. Weights and Measures seal of the pulsar was also found broken.
For context, pulsar is the electronic component inside a fuel dispenser that measures the volume of fuel being pumped. Pulsar manipulation cables are used to hack this component and manipulate fuel measurements.
The inspection report also recorded that no additional electronic device, chip or unauthorized fitting was found inside the fuel dispensing unit and that no discrepancy in the quantity of fuel delivered was detected.
While the Petitioner claimed that the fuel dispensing unit had remained out of order since a few months, the competent authority eventually terminated its dealership. The statutory appeal preferred against termination was also dismissed.
Before the High Court, Petitioner contended that the dispensing machines and their internal components belonged exclusively to the terminated Corporation, and that their installation, calibration, repair and sealing were carried out only by the Corporation, its authorized agencies and the Weights and Measures Department.
It was argued that Petitioner had no access or control over the internal mechanism and the competent authority could not draw a presumption of tampering against it.
It was further submitted that no additional device was recovered and no short delivery or adulteration was detected. Moreover, no laboratory or expert examination had established tampering despite seizure of the components.
The Corporation submitted that the broken Weights and Measures seal and the taped joint in the pulsar cable were critical irregularities under the 2012 Guidelines. It was argued that past satisfactory conduct and periodic calibration certificates could not rule out subsequent tampering.
The High Court at the outset observed that proceedings against a petrol pump retailer under Clause 5.1.4 of the Marketing Discipline Guidelines are substantially penal in nature and consequently, the burden lies upon the Corporation to establish by credible material that the dispensing unit had in fact been tampered with in a manner capable of manipulating fuel delivery and that such manipulation could reasonably be attributed to the dealer.
It relied on Chairman, Indian Oil Corporation v. M/s Lallite Filling Centre, Indian Oil Corporation Ltd. v. M/s Modern Service Station, M/s Aliganj Kisan Seva Kendra and another Vs. Indian Oil Corporation Ltd. and others and M/s Prakash Automobiles and another Vs. Indian Oil Corporation Ltd. where the High Court had itself held that mere soldering marks, foreign components or joints do not establish manipulation unless it is shown when the tampering occurred, how the dealer gained unauthorized access to the equipment and how the alteration affected delivery of fuel.
In the case at hand, the Court noted that no additional device had been recovered, no discrepancy in delivery of the fuel had been detected, and the dispensing unit was non-functional on the date of inspection. It observed that despite seizure of the components, no laboratory or scientific examination had been undertaken.
“The respondents have proceeded on the premise that because a taped joint ought not to exist, it necessarily follows that the same was introduced for manipulating delivery. Such an inference, in the absence of supporting technical evidence, cannot be accepted as a substitute for proof,” the Court said.
It added that since proceedings under Clause 5.1.4 are penal in nature, Corporation must satisfy a standard higher than 'mere suspicion'. It observed that the presence of taped joints in the pulsar cables and irregularities in the Weights and Measures seals were not accompanied by any additional electronic device, any short delivery or any scientific proof of manipulation. Thus, the charge of tampering could not be proved.
The Court held that not every irregularity noticed in a fuel dispensing unit amounts to tampering. It observed that the clause contemplates unauthorized manipulation of the dispensing mechanism or an alteration capable of affecting the quantity of fuel delivered, and since termination visits the dealer with serious civil consequences, its ingredients must be established by cogent and reliable material.
“The Corporation was required to establish, through cogent technical evidence, that the alleged irregularities were capable of manipulating delivery and that such manipulation was attributable to the petitioner. No such evidence is forthcoming.”
Accordingly, the writ petition was allowed and the termination order ws quashed.
Case Title: M/s Sardar Baldev Singh and Co. Thru. Prop. Sri Karamjeet Singh v. Indian Oil Corporation Ltd. Thru. Executive Director and Ors. 2026 LiveLaw (AB) 398
Case Citation : 2026 LiveLaw (AB) 398