Allahabad High Quashes Show Cause Notice Against Fuel Dealer, Holds 30-Day Deadline In Marketing Discipline Guidelines 2012 Is Mandatory

The Allahabad High Court has ruled that the 30-day deadline for issuing a show cause notice, as prescribed under Clause 8.5.6 of the Marketing Discipline Guidelines (MDG), 2012, framed by Oil Marketing Companies (OMCs), is mandatory and must be strictly followed.

The Division Bench of Justice Shekhar B. Saraf and Justice Vipin Chandra Dixit delivered this ruling while allowing a writ petition filed by fuel dealer Gyanendra Kumar, challenging a show cause notice issued against him on September 8, 2023, over alleged discrepancies found during a joint inspection of his retail outlet.

"From the perusal of the said clause, it is patently clear that show cause notice is required to be issued within 30 days from the date of inspection and if the samples are taken during the inspection, this show cause notice is required to be issued 30 days from the date of test results but in the present case, show cause notice has been issued after more than 2 months from the date of receipt of test results," the Court observed.

Clause 8.5.6 of Marketing Discipline Guidelines, 2012 reads as follows :

"8.5.6 in respect of all cases of irregularities, a show cause notice within 30 days from the date of inspection will be issued to the dealer indicating all the irregularities. However, in case samples of MS/HSD were drawn during inspection, then the show cause notice will be issued within 30 days of test results. The show cause notice should be issued along with all reports and other documents, etc., which forms the basis of the notice."

Advocate Saurabh Srivastava appeared for the Petitioner, while Advocate Komal Mehrotra appeared for the Respondent.

Public Sector OMCs have implemented the MDG to regulate irregularities and malpractices at retail dealerships. As part of this process, OMC officials conduct periodic inspections, and any discrepancies found lead to action under the guidelines and dealership agreements.

In Kumar’s case, an inspection was conducted on March 4, 2023, and the test results of fuel samples were received on June 23, 2023. However, authorities delayed issuing the show cause notice until September 8, 2023—well beyond the mandatory 30-day deadline stipulated under Clause 8.5.6 of the MDG 2012.

Kumar challenged this delay in court, arguing that the violation of the time limit rendered the notice legally unsustainable. The court concurred, observing that the authorities had failed to provide any justification for the delay and that the guideline’s language made the 30-day timeline compulsory.

“The samples were taken during the inspection, and the show cause notice was issued more than two months after receiving the test results, in clear violation of the mandatory guidelines,” the Bench noted.

Accordingly, the Court quashed the notice on grounds of inordinate delay. However, it granted the authorities the liberty to conduct a fresh inspection, draw samples, and proceed in accordance with the law. "...the present show cause notice cannot be sustained on the ground that the same has been issued with an inordinate delay. Accordingly, the show cause notice is quashed and set aside and the respondent authorities are granted liberty to carry out fresh inspection and draw samples and act in accordance with law. With the above direction, the writ petition is disposed of," the Court ordered.

Cause Title: Gyanendra Kumar vs. Union Of India And 7 Others [Neutral Citation No. 2025:AHC:18882-DB]

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