- (1.) This first appeal from order under Section 37 of the Arbitration and Conciliation Act, 1996 (herein after referred to as the Act 1996) has been filed by M/s Hindustan Petroleum Corporation Limited challenging the judgment and order dated 09.10.2015 passed by the District Judge, Agra allowing objection under Section 34 of the Act, 1996 filed by the respondent and setting aside the arbitral award. We have heard Sri Vikas Budhwar, learned counsel for the appellant and Sri Kartikey Saran appearing for the respondent. With the consent of learned counsel for the parties, this appeal is being finally heard and decided at this stage. Facts, giving rise to the dispute, are as under. M/S Hindustan Petroleum Corporation Ltd.-appellant is Government of India Enterprises and is engaged in refining, marketing and selling of petroleum products. Respondent was duly appointed as retail outlet dealer and dealership agreement was executed on 28.06.2002. An inspection of the retail outlet of respondent was conducted on 27.10.2006 wherein certain irregularities were detected. A notice dated 12.10.2007 was issued to the respondent referring to breach of clause 4 (a), 6(f), (h), (i), 3 (a), 3(i) and 31 (b) of the dealership agreement and clauses 6.1.3 (b) and 6.1.4 of the Marketing Guidelines, 2005. While the said proceedings were underway, another inspection of the retail outlet of the respondent was carried out on 08.10.2007. During the said inspection, sample of Motor Spirit and High Speed Diesel were drawn from the dispensing unit nozzles of retail outlet and marker test was undertaken. The sample of High Speed Diesel passed the marker test but sample of Motor spirit failed as pink colour did not appear in the same corroborating adulteration. Another sample of nozzle from the dispensing pump was taken. The samples collected were sent to Mathura installation for repeat marker test. A letter dated 11.10.2007 was written by the Chief Regional Manager, Mathura RO to the respondent requiring him to come to M/S Hindustan Petroleum Corporation Ltd. Mathura retail R. O. on 18.10.2007 at 10:30 AM to witness repeat marker test. On 18.10.2007 respondent came to Mathura Retail RO but marker test could not be conducted as she insisted that test be carried out only in the presence of the Chief Regional Manager. In accordance with her request, next date for marker test was fixed for 31.10.2007. On the said date, marker test was conducted in the presence of officials of the appellant corporation and the respondent. The sample failed the test indicating adulteration.
(2.) A notice dated 06.11.2007 was issued to the respondent to show cause within seven days as to why necessary action be not taken as per relevant clauses of the dealership agreement. The sales and supplies of respondent were suspended with effect from 08.10.2007. However, since she continued to operate the retail outlet and sold petroleum product, another show cause notice dated 20.04.2008 was issued. After considering the reply submitted by the respondent to show cause notice, appellant vide order dated 24.09.2008 terminated the dealership agreement. Respondent filed Civil Misc. Writ Petition no. 63144 of 2008 challenging the order dated 24.09.2008. During the course of hearing of the writ petition, it transpired that on the request made by dealer for appointment of an Arbitrator Sri N.K. Tankiwala was appointed as Arbitrator. The writ petition was dismissed leaving it open to the dealer to pursue the remedy before the Arbitrator. The sole arbitrator entered into reference and respondent submitted her claim. The appellant-corporation submitted reply to the statement of claim and also submitted their counter claim. Since Sri N. K. Tankiwala was superannuated on 31.01.2009 an order was passed by the Chairman & Managing Director of the appellant-corporation appointing Sri K. Murli, Director Refineries as the sole arbitrator. The sole arbitrator passed an award dated 25.11.2009 holding termination of the dealership agreement to be proper and valid and rejected the claim of respondent-dealer to set aside the order of termination dated 24.09.2008. The claim of the respondent-dealer for resumption of sales and supplies and damages were also rejected. In respect of counter claim of the appellant for a sum of Rs.5,56,680/- towards outstanding corpus fund, a sum of Rs.3,08,549/78 was found payable by respondent-dealer to the appellant-corporation within one month from the date of receipt of copy of the award. Similarly claim of the appellant-corporation for a sum of Rs.90,558/- on account of electricity was also allowed and respondent-dealer was directed to make payment of the said amount to the Corporation within one month from the date of receipt of award. Interest at the rate of 6% per annum was also allowed on the outstanding counter claim on delayed payment. Aggrieved by the award, respondent-dealer made an application under section 34 of the Act, 1996 which was registered as Misc. Arbitration Case no. 97 of 2010. District Judge vide impugned judgment and order dated 09.10.2015 allowed the application and set aside the award dated 25.11.2009 passed by sole arbitrator. A perusal of the impugned judgment goes to show that District Judge has set aside award on the sole ground that by virtue of notification issued by the Government of India, Ministry of Petroleum and Natural Gas dated 31.12.2008 under Section 3 of the Essential Commodities, 1995, the Central Government has made amendment in the Motor Spirit & High Speed Diesel (Regulation of Supply, Distribution and Prevention of Malpractices) Order 2005 amending the provisions of marker test as authenticity was found to be doubtful hence termination order dated 24.09.2008 was rendered illegal. District Judge while passing the impugned judgment has relied upon a judgment of learned single Judge in the case of Anil Service Station, Azamgarh and another Vs. Union of India and others, 2009 7 ADJ 347 .
(3.) Learned single Judge held that since marker test itself has been withdrawn by the Government of India, authenticity of such marker test was doubtful and it was not conclusive for coming to the conclusion that there has been adulteration in the petroleum product. Marker test was introduced by way of amendment in Control Order 2005 by adding definition of marker and amending definition of alteration. It may be relevant to quote paragraphs 2 (a), (f), (fi) and (t). "2(a) "adulteration" means presence of marker in motor spirit and high speed diesel and/or the introduction of any foreign substance into motor spirit or high speed diesel illegally or unauthorisedly with the result that the product does not conform to the requirements of the Bureau of Indian Standards Specification Numbers IS 2796 and IS 1460 for motor spirit and high speed diesel respectively or any other requirement notified by the Central Government from time to time;" "(f) "malpractices" shall include the following acts or omission and commission in respect of motor spirit and high speed diesel- (i) adulteration; (ii) pilferage; (iii) stock variation; (iv) unauthorised exchange; (v) unauthorised purchase; (vi) unauthorised sale; (vii) unauthorised possession (viii) overcharging; (ix) sale of oil-specification product; (x) short delivery; "(fi) "marker" means a chemical substance approved by the Central Government from time to time for blending in kerosene and other petroleum products with the objective of preventing their diversion or adulteration of motor spirit or high speed diesel". "(t) "sale of off-specification product" means sale of motor spirit or high speed diesel by dealer of "having traces of marker and/or" quality not conforming to Bureau of Indian Standards Specification Numbers IS 2796 and IS 1460 for motor spirit or high speed diesel respectively.";