- (1.) The appellant submitted an application under Section 9 of Arbitration and Conciliation Act, 1996 (hereinafter called "the Act") alleging that the appellant is a partnership concern and a retail outlet dealership agreement was executed between it and the respondent no.1 on 08.04.2010 for a period of 15 years w.e.f. 29.03.2009. In consequence of the said agreement, the appellant started selling Motor Spirit (for short "MS") and High Speed Diesel (for short "HSD") and other petroleum products of HPCL as its dealer with honesty. There was no complaint against it. The respondent no.1 intimated the appellant vide letter dated 03.11.2010 that the sample of MS obtained from its retail outlet during inspection on 04.09.2010 was found adulterated after analysis. Simultaneously, the respondent no.1 suspended supply of MS, HSD and other petroleum products and asked the appellant to show cause why the dealership agreement may not be terminated. The appellant alleged that the samples of MS and HSD were obtained in complete disregard of the rules applicable for the purpose and, as such, the alleged report cannot be relied upon. Even according to show cause notice, out of the samples of MS and HSD being tested, the sample of HSD was found to be as per prescribed norms. It was further mentioned that there is provision for arbitration in the agreement and as such, the respondent no.1 cannot terminate the agreement and the matter is required to be adjudicated by the Arbitrator. Therefore, the appellant prayed that an interim order may be issued restraining the respondents from obstructing supply of MS, HSD and other petroleum products to the appellant's outlet. The application was contested by the respondents by submitting a reply. It was mentioned therein that on 04.09.2010 samples were obtained according to three tier sample procedure in the presence of the representative of the appellants, Shri Dinesh Kumbaj, who signed on all the relevant papers. An analysis of the samples was obtained and the sample of MS contained excess sulfur and was not in accordance with the prescribed standard. Hence, show cause notice dated 03.11.2010 was issued. The operation of retail outlet is subject to conditions contained in the agreement which are governed by Marketing Discipline Guidelines. As the sample was found adulterated, the sale was stopped to prevent supply of adulterated material to the general public. The appellant was indulging in illegal activities by selling adulterated material to the public and causing economic loss to the respondents. It was also submitted that condition no.66 of agreement contains provision for adjudication of disputes through arbitration, but the appellant has not taken any steps for invoking the same. It was also submitted that the agreement executed between the parties is determinable and as such, it cannot be specifically enforced under Section 14 of Specific Relief Act, 1963 (hereinafter called "Act 1963"). In view of provisions of Section 41(e) of Act, 1963, no injunction can be issued and the application is liable to be dismissed. After hearing the parties, the learned Court below rejected the application of the appellant by the impugned order which has been challenged by the appellant in this appeal filed under Section 37 of the Act.
(2.) I have heard the learned Senior Advocates for the parties at length.
(3.) It has been contended on behalf of the appellant that while drawing samples of MS and HSD, the provisions of The Motor Spirit and High Speed Diesel (Regulation of Supply, Distribution and Prevention of Malpractices), Order 2005 (hereinafter called "the Order") were violated inasmuch as no information was given to the appellant before conducting inspection and taking samples. Consequently, nobody on behalf of the appellant was present at that time. Two samples of MS were taken by emptying the containers in which samples of HSD were taken earlier. It is further contended that the information about the test report was communicated with undue delay and as such, the reports cannot be relied upon to prove that the appellant was selling adulterated MS. It is also contended that sale of HSD and MS is, respectively, 10000 and 1500 Ltrs daily at the appellant's outlet and if the appellant intended to earn money illegally, it would have resorted to adulteration in HSD and not in MS. It is further contended that there is an arbitration agreement between the parties and the respondent cannot terminate the agreement unless the disputes and differences between the parties are adjudicated by the Arbitral Tribunal. Much emphasis has been laid on the observations made by the learned Court below in its impugned order on Pages 8 and 9 that until and unless the matter is adjudicated by the arbitrator finally, the Corporation has no right to terminate the agreement dated 04.08.2010. In support of the aforesaid submissions, reliance has been placed on the cases of Harbanslal Sahnia and another Vs. Indian Oil Corporation Ltd. and others, 2003 2 SCC 107 and Hindustan Petroleum Corporation Ltd. and others Vs. Super Highway Services and another, 2010 3 SCC 321.;