Delhi District Court
M/S Mangalwar Filling Station vs Indian Oil Corporation Limited on 4 March, 2021
IN THE COURT OF SH GURVINDER PAL SINGH,
DISTRICT JUDGE (COMMERCIAL COURT)-02,
PATIALA HOUSE COURT, NEW DELHI
OMP (COMM.) No. 44/2018
M/s Mangalwar Filling Station
National Highway No. 76,
Udaipur Road, Chittorgarh,
Rajasthan ...Petitioner
vs
1. Indian Oil Corporation Limited
G-9, Aliyavarjung Marg,
Bandra (East), Mumbai-400051
2. Indian Oil Corporation Limited
Indian Oil Bhawan, Yusuf Sarai,
New Delhi.
3. Indian Oil Corporation Limited (Marketing Division)
Udaipur Division Office, through Senior Divisional,
Retail Sales Manager, Indian Oil Bhawan, Plot No. 1162-63,
Sector No. 11, Hiranmagri, Udaipur, District Udaipur (Raj.)
4. Indian Oil Corporation Limited
State Office Jaipur, through General Manager,
Ashok Chowk, Adarsh Nagar, Jaipur (Raj.)
5. Hon'ble Mr. Justice V.K Shali (Retd.)
Sole Arbitrator, New Delhi. ....Respondents
Date of Institution : 13/12/2018
Arguments concluded on : 02/02/2021
Decided on : 04/03/2021
Appearances : Sh. Rishabh Sancheti, Ld. Counsel for petitioner.
Ms. Mala Narayan, Ld. Counsel for respondent.
JUDGMENT
1. Petitioner has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (herein after referred as the Act), seeking setting aside of the arbitral award dated 21/07/2018 passed in OMP (COMM.) No. 44/2018 M/s Mangalwar Filling Station vs. Indian Oil Corporation Ltd. & Ors. Page 1 of 37 Arbitration case titled as M/s Mangalwar Filling Station vs Indian Oil Corporation Ltd. by Learned Sole Arbitrator Hon'ble Mr. Justice (Retired) V.K Shali. In terms of the impugned arbitral award, it was held by Learned Sole Arbitrator that the claim of claimant was false, frivolous and vexatious; besides that the show cause notice dated 06/02/2015 was issued validly to the claimant/petitioner for his having put the wires on the cover portion of the dispenser unit was not intimated to the respondent. Further, was held therein that the relief sought by the claimant/petitioner for de-sealing the unit and permitting to operate the pump was untenable in law and the three claims of petitioner/claimant were dismissed. Initially petition under Section 34 of the Act was filed before the District Judge, Chittorgarh, Rajasthan on 02/08/2018. It was returned on 29/11/2018 in terms of order dated 28/11/2018 of the District Judge, Chittorgarh, Rajasthan under Order VII Rules 11 and 10B CPC for presentation before competent Court at New Delhi.
2. Following are the three claims of petitioner, adjudicated by the Arbitral Tribunal:
CLAIM NO. 1:
Quash the Show Cause Notice dated 06/02/2015 issued by the respondent to the claimant, being illegal and arbitrary as it is beyond the scope of the Petrol/HSD Pump Dealer Agreement dated 01/02/1997 and Marketing Discipline Guidelines, 2012.
CLAIM NO. 2:
Direct the Respondent to remove the seal from the Dispensing Unit in question which has been put since 30/10/2014 and make the said Dispensing Unit operational as it is affecting the business and livelihood of the Claimant/petitioner.
CLAIM NO. 3:
Direct the Respondent to replace the Dispensing Unit in question OMP (COMM.) No. 44/2018 M/s Mangalwar Filling Station vs. Indian Oil Corporation Ltd. & Ors. Page 2 of 37 which is already old and was earlier installed at a different pump or station owned by the Respondent in Sirohi.
3. Adumbrated in brief, facts of the case are that claimant/petitioner is a proprietary concern of one Sh. Rajendra Kumar Patni doing business of running a petrol and diesel pump on the National Highway No. 76, Udaipur Road, Chittorgarh, Rajasthan, which was granted by the respondent. Respondent is Government of India Undertaking engaged in, inter alia, in pipeline transportation and marketing of petroleum products. Originally, the claimant/petitioner was the owner of a parcel of land on National Highway No. 76, Udaipur Road, Chittorgarh, Rajasthan. The respondent appointed the claimant/petitioner as a dealer for operating a petrol and diesel pump/station vide Letter of Appointment dated 04/01/1991. The respondent executed a Petrol/HSD Pump Dealer Agreement for Dealer Owned/Leased Sites dated 19/04/1991 in favour of the claimant/petitioner. The claimant/petitioner transferred his leasehold rights in the land owned by him, whereupon the petrol and diesel pump or station was being operated from vide order dated 19/07/1996 issued by the District Collector, Chittorgarh. The claimant/petitioner, thereafter sold the land in question to the respondent, for a total sale consideration of Rs. 13,50,000/-. The respondent executed a fresh Petrol/HSD Pump Dealer Agreement for Corporation Owned/Leased Sites dated 01/02/1997 in favour of the claimant/petitioner and the claimant/petitioner was once again appointed as a dealer of the respondent to operate the petrol and diesel pump on the National Highway No. 76, Udaipur Road, Chittorgarh, Rajasthan as a licensee of the respondent. The said Petrol/HSD Pump Dealer Agreement 01/02/1997 was initially for a period of five years and, thereafter it was to continue for a successive period of one year until determined by either party. The said Petrol/HSD Pump Dealer Agreement dated 01/02/1997 has not been allegedly determined by either party, post and after expiry of the initial first five years of the said Petrol/HSD Pump Dealer Agreement dated 01/02/1997. It is further averred that it has OMP (COMM.) No. 44/2018 M/s Mangalwar Filling Station vs. Indian Oil Corporation Ltd. & Ors. Page 3 of 37 been continuing since 1997 on the same terms and conditions. It is alleged that the respondent inspected the said petrol and diesel pump in the normal course of business in terms of the Petrol/HSD Pump Dealer Agreement dated 01/02/1997 from time to time as also for the purpose of maintenance. On 30/10/2014, the officials of the respondent visited the said petrol and diesel pump for a surprise inspection and a joint inspection and analysis report dated 31/10/2014 was also prepared. It is alleged that pursuant to the said inspection dated 30/10/2014 the respondent addressed a communication dated 11/11/2014 to the claimant/petitioner alleging that the wire connecting the Mechanical Totaliser to the CPU of the Dispensing Unit No. 55430 Model 3G3387P for dispensing of diesel, was found broken and tape had been put on it. It was further alleged that the Mechanical Totaliser was not working even on dispensation of the product from the subject nozzle and no complaint regarding non-functioning of the said Mechanical Totaliser had been made by the claimant/petitioner to the respondent. The respondent also sought an explanation from the claimant/petitioner in this regard. The claimant/petitioner addressed a communication dated 24/11/2014 to the respondent denying the allegations imposed upon the respondent and clarified that:
(a) The Dispensing Unit in question was installed at the premises two years back and has been completely operational and that its Mechanical Totaliser was also in order showing correct readings.
(b) In addition to the Mechanical Totaliser an Electronic Totaliser has also been installed on the said Dispensing Unit with which the disbursement of the diesel is correctly monitored.
(c) The opening and closing count of the Mechanical totalizer is also entered in the Daily Sale Register which is also being maintained by the claimant/petitioner and it revealed that the count of the Electronic Totaliser and the Mechanical Totaliser matched and the said fact itself indicated that the Mechanical Totaliser was functioning properly.OMP (COMM.) No. 44/2018 M/s Mangalwar Filling Station vs. Indian Oil Corporation Ltd. & Ors. Page 4 of 37
(d) The Dispensing Unit had been inspected on several prior occasions by the Officials of the respondent and a difference had never been found or observed in the gross sales of the product.
(e) As a matter of fact on 30/10/2014 before the officials of the respondent visited the petrol and diesel pump or station of the claimant/petitioner for surprise inspection of the reading of the Mechanical Totaliser had already been entered in the Daily Sales Register, which showed that the sale reading of the Mechanical Totaliser and Electronic Totaliser matched and the sales of the product also matched at the time of inspection.
(f) The said Dispensing Unit was old even when it was installed at the petrol and diesel pump or station of the claimant/petitioner two years back and was earlier installed at a different station owned by the respondent in Sirohi.
(g) Admittedly, while the officials of the respondent were handling the said Dispensing Unit for inspection, the panel of the said Dispensing Unit fell as the bolts and hinges of the cover of the panel were broken owing to it being an old Dispensing Unit and the officials of the respondent did not hold the cover of the panel from falling, due to which the wires connecting the CPU got snapped and as a result of which the said Mechanical Totaliser stopped working.
(h) At the time of inspection when oil was being dispensed, although the Mechanical Totaliser was not working due to snapped wires, the Electronic Totaliser was still working properly.
(i) The claimant/petitioner relies more on the Electronic Totaliser because it gives a more accurate reading to the smallest decimal and the Mechanical Totaliser readings and Electronic OMP (COMM.) No. 44/2018 M/s Mangalwar Filling Station vs. Indian Oil Corporation Ltd. & Ors. Page 5 of 37 Totaliser readings are tallied on opening and closing of sale.
(j) The claimant/petitioner had no knowledge of the wire being taped before the inspection.
(k) Since the claimant/petitioner was not aware of the taped wire and the Mechanical Totaliser was working properly the claimant/petitioner had no reason to make a complaint with the respondent for non-functioning of the said Mechanical Totaliser.
(l) No tampering has been done by claimant/petitioner and that the claimant/petitioner works in a very organized manner and with honesty and the respondent is aware about this as the officials of the respondent have inspected the said Dispensing Unit eleven times prior in time and neither deficiency nor manipulation has ever been observed or reported. The claimant/petitioner craves leave to refer to and rely upon true copies of the inspection reports if necessary or when produced.
4. Despite the communication dated 24/11/2014 addressed by the claimant/petitioner to the respondent, a Show Cause Notice dated 06/02/2015, inter alia, calling upon the claimant/petitioner to explain why the dealership of the claimant/petitioner be not cancelled was issued by the respondent to the claimant/petitioner. The claimant/petitioner addressed a communication dated 14/03/2015 to the respondent denying the allegations imposed by the respondent in the said Show Cause Notice dated 06/02/2015 and in view of the clarification and explanation furnished by the claimant/petitioner in the present communication the respondent was informed that no investigation or inquiry is necessary against the claimant/petitioner. The claimant/petitioner challenged the Show Cause Notice dated 06/02/2015 by instituting a Civil Suit being No. 07/2015, inter alia, seeking a decree of Permanent Injunction against the respondent OMP (COMM.) No. 44/2018 M/s Mangalwar Filling Station vs. Indian Oil Corporation Ltd. & Ors. Page 6 of 37 alongwith an application under Order XXXIX Rules 1 and 2 of the CPC, 1908 seeking an interim injunction against the respondent before the Court of the Ld. Additional District Judge, Nimbaheda, Chittorgarh, Rajasthan. The respondent filed its written statement to the said suit filed by the claimant/petitioner. The respondent also filed an application under Order VII Rule 11 of the CPC, 1908 seeking rejection of the plaint filed by the claimant/petitioner. The said application under Order VII Rule 11 of the CPC, 1908 as filed by the respondent was dismissed by the Learned Additional District Judge, Nimbaheda, Chittorgarh, Rajasthan vide order dated 06/04/2015. Learned Additional District Judge, Nimbaheda, Chittorgarh, Rajasthan, vide its order dated 18/04/2015 allowed the application of the claimant/petitioner under Order XXXIX Rules 1 and 2 of the CPC, 1908, inter alia, directing the respondent not to stop the supplies of the petrol and diesel pump or station of the claimant/petitioner during the pendency of the said Civil Suit No. 17 of 2015. Aggrieved by the orders dated 06/04/2015 and 18/04/2015 passed by the Learned Additional District Judge, Nimbaheda, Chittorgarh, Rajasthan, the respondent filed two Petitions being Civil Revision Petition No. 134 of 2015 and Civil Miscellaneous Appeal No. 1482 of 2015 respectively against the said orders dated 06/04/2015 and 18/04/2015 before Hon'ble High Court of Rajasthan at Jodhpur. Vide common order dated 08/10/2015, Hon'ble High Court of Rajasthan at Jodhpur was pleased to dismiss the Civil Revision Petition No. 134 of 2015 and Civil Miscellaneous Appeal No. 1482 of 2015 filed by the respondent. Aggrieved by the order dated 08/10/2015 passed by the Hon'ble High Court of Rajasthan at Jodhpur, the respondent filed a Special Leave Petition (Civil) No. 43590-4591 of 2016 before Hon'ble Supreme Court of India impugning the said order dated 08/10/2015. The respondent addressed a communication dated 20/12/2015 to the Assistant Controller (Weights and Measures) District Industry Centre Department, to inspect the said Dispensing Unit in question. Pursuant thereto an inspection was carried out on 21/12/2015 and an Office Report dated 21/12/2015 as also an Inspection Report dated 22/12/2015 was prepared in OMP (COMM.) No. 44/2018 M/s Mangalwar Filling Station vs. Indian Oil Corporation Ltd. & Ors. Page 7 of 37 that behalf. Vide order dated 31/03/2017, Hon'ble Supreme Court of India, inter alia, referred the parties to arbitration before and under the aegis of the Delhi International Arbitration Centre.
5. The arbitral proceedings culminated into the impugned award. The petitioner has impugned the arbitral award on the following grounds:-
1) The impugned award passed by Ld. Sole Arbitrator/non applicant no. 5 is not as per the law and justice.
2) Ld. Sole Arbitrator/non applicant no. 5 has not even understood the case, nor has perused the documentary evidence carefully filed on record, nor has perused the oral evidence carefully, nor have the produced oral and documentary evidences been made basis of the award, nor has the speaking award been passed, from which the award passed by Ld. Sole Arbitrator/non applicant no. 5 being against the public policy is liable to be rejected.
3) The award was reserved after hearing submissions from both the sides in this case by Ld. Sole Arbitrator/non applicant no.
5, from which according to the public policy of India, the award was to be passed in short time within one month but the award has been passed after around six months without giving opportunity of rehearing by Ld. Sole Arbitrator/non applicant no. 5, which is clearly against the public policy of India.
4) The reliefs on Claim No. 1, Claim No. 2 and Claim No. 3 were sought before Ld. Sole Arbitrator/non applicant no. 5 on behalf of the applicant.
5) The main arguments of non applicant nos. 1 to 4 regarding Claim No. 1 is that the wire of mechanical totalizer which is connected to C.P.U. of the alleged dispensing unit installed on the petrol pump of the applicant, that wire being broken was OMP (COMM.) No. 44/2018 M/s Mangalwar Filling Station vs. Indian Oil Corporation Ltd. & Ors. Page 8 of 37 having tape on it. With regard to this, applicant was given letter regarding information of the said facts by the non applicant no. 3. The reply to which was given to the non applicant no. 3 by the applicant. The applicant in the said reply showed mentioning everything clearly that the pump was being operated honestly and neither the wire of the alleged dispensing unit was broken by him, nor was tape put on the broken wire by the applicant or its employees. While it is the reality that the alleged dispensing unit was earlier installed in Sirohi and was old. The same was installed on the applicant's pump, but the said alleged dispensing unit was calculating diesel distribution properly, due to which the applicant never got a chance to see the said machine, nor did he see opening it from inside. Therefore, the applicant could never learn about the wire being broken and the tape put on that and therefore, the applicant could not inform the non applicant nos. 1 to 4 with regard to this. The day meaning on 30/10/2014 when inspection was made, the wire got separated on getting the panel broken on the same day and tape was found put on, the applicant came to learn on the very first day. All clarifications was made by the applicant for this, from which the non applicant nos. 1 to 4 became satisifed, if the non applicant nos. 1 to 4 were not satisfied from the said reply of the applicant then according to Clause 8.5.6 of The Marketing Discipline Guidelines, the applicant could be issued show cause noticew within a period of 30 days by the non applicant, which was not done. Instead with 3 months 7 days delay illegal notice was given on 06/02/2015 with ill intention by non-appicant no. 3, which is against public policy of India as every rule of MDG Guidlines 2012 is mandatory and not directory.
OMP (COMM.) No. 44/2018 M/s Mangalwar Filling Station vs. Indian Oil Corporation Ltd. & Ors. Page 9 of 376) It has been presumed in the detailed award passed by Ld. Sole Arbitrator/non applicant no. 5 that the seal of alleged dispensing unit was tampered by the applicant side which falling in the definition of critical irregularlity, the dealership of the applicant can be cancelled. Such kind of presumption is against the evidence and facts produced on record.
7) As far as this presumption has been passed in its award by Ld. Sole Arbitrator/non applicant no. 5 that the applicant has come taking two stands. On one hand, he is telling that when the inspection was conducted then the wire got broken on falling down of the panel gate and the mechanical totalizer got disconnect from C.P.U. If such was that then where the black tape came from on that. With regard to this, a clarification was made on behalf of the applicant on record which is this that when the alleged dispensing unit was opened then the wire inside being repaired inside, black tape was already found on it which during the inspection the wire got disconnected on the wire getting stretched on the panel falling down and the calculation got stopped immediately after disconnecting with the mechanical totalizer, otherwise earlier since the alleged dispensing unit was installed on the applicant's petrol pump and the inspection was conducted on 30/10/2014 then the mechanical totalizer was working properly. Therefore, the applicant came to learn about the fact of the broken wire and the black tape put on that for the first time on 30/10/2014. As soon as the inspection was started and diesel was taken out from the alleged dispensing unit then the mechanical totalizer was calculating before the inspection officers also, the reading mentioned in the report regarding calculation time of the inspection, is clear from the perusal of that. The reading of diesel dispensing OMP (COMM.) No. 44/2018 M/s Mangalwar Filling Station vs. Indian Oil Corporation Ltd. & Ors. Page 10 of 37 mentioned in the daily stock register, the reading of mechanical totalizer and electronical totalizer have been mentioned and there was match in the calculation of reading of mechanical totalizer and electronic totalizer till before the inspection meaning thereby is equal then how this statement of non applicant nos. 1 to 4 is reliable that the applicant can distribute from the alleged dispensing unit getting diesel from any other State on cheaper rates. There is no difference in the stock on the applicant's pump at the time of inspection then passing this presumption that the applicant can distribute any other fuel from the alleged dispensing unit, is surprising. It is clear from the perusal of the statement of Sh. M.E. Zuberi, Officer of non applicant no. 1 before Ld. Sole Arbitrator/non applicant no. 5 that they have neither knowledge of complete facts nor have they perused the record available in the non-applicant no. 1 because when he was asked this question in the cross examination as non applicant no. 1 that the alleged dispensing unit was installed to the applicant's pump bringing from any other retail outlet means other pump then he stated being unware in his reply. While according to the reord, the reply to this question could be either in yes or in no. Thus, when it was asked clearly in question no. 2 that the alleged dispensing unit was installed on the applicant's pump bringing from Sirohi then he replied that he does not know about it. Therefore, this answer shows that the non-applicant side does not have knowledge of the actual facts. This witness has answered in affirmative to the question no. 4 which was regarding the daily stock register maintained at the applicant, from which it is clear that calculation of diesel distribution from the mechanical totalizer and the electronic totalizer of the alleged dispensing unit is OMP (COMM.) No. 44/2018 M/s Mangalwar Filling Station vs. Indian Oil Corporation Ltd. & Ors. Page 11 of 37 going properly and when the calculation and the stock till beginning of the inspection are proper then how allegation of critical irregularity according to Clause 8.2 of The Marketing Discipline Guildelines 2012 against the applicant could be made.
8) The reply dated 24/11/2014 given to the non-applicant no. 3 by the applicant, the courage of making true statement in the end of that made by the applicant, taking wrong meaning of that the applicant has been punished by the non- applicant no. 5.
9) The inspection was got made again by the Assistant Controller (Weight and Measures) District Industry Centre Department regarding the alleged dispensing unit, on which inspecting the same on 21/12/2015 the report of which was filed on 22/12/2015 by the said department in which all seals were found clear and proper. While according to the law immediately after the show cause notice the alleged dispensing unit was supposed to be inspected by the Weight and Measures Department by the officials of the non-applicant company, which was not got done deliberately that clearly shows ill intention of the non-applicant no. 3.
10) The "show cause notice" dated 06/02/2015 given to the applicant by the non-applicant no. 4, proper and satisfied reply of that was filed to the non-applicant no. 3 by the applicant, on the basis of which the applicant's claim was supposed to be accepted by the non-applicant no. 5, but inspite of all the facts and evidences being in favour of the applicant, on the basis of wrong and forged basis, the applicant's claim was rejected by the non-applicant no. 5 from which the award is liable to be rejected.
11) A video clip has been filed on behalf of non-applicant nos. 1 OMP (COMM.) No. 44/2018 M/s Mangalwar Filling Station vs. Indian Oil Corporation Ltd. & Ors. Page 12 of 37 to 4 before non-applicant no. 5, which was seen by non-
applicant no. 5 during the arguments. It appears from perusal of this that the wire which is connected from C.P.U. in the alleged dispensing unit, black tape has been put on that. Such type of video clip was misunderstood by non-applicant no. 3. As has been requested above that the alleged dispensing unit was established on the applicant's pump from Sirohi petrol pump which was in working condition and both the mechanical and the electrical totalizer of the said unit being in working condition were calculating properly. Therefore, there was no context of seeing the C.P.U. opening it up by the applicant, but wrong meaning of this video clip was understood by non applicant no. 5, while reality was that when the alleged dispensing unit was establised on the applicant's petrol pump from Sirohi, even before that the tape was put on connecting the wire in the said unit but this fact was neither conveyed to the applicant nor could the applicant know, because both the mechanical and the electrical totalizer of the said unit were calculating properly.
12) The automation system on the applicant's petrol/diesel pump was installed by the non-applicant only in which gross calculation is done. Therefore, the sale was happening always from the alleged dispensing unit, that was continuously getting matched from the mechanical and the electronic totalizer. Therefore, the witness of the non-applicant nos. 1 to 4 were to say that saying this is all juggling of methods or numerical manipulation on which it is not safe to rely on such kind calculation being surprising is imaginary statement. Because this automation system is being installed by the non- applicant no. 1 itself, on which its seal is made.
13) The award has been passed by the non-applicant no. 5 OMP (COMM.) No. 44/2018 M/s Mangalwar Filling Station vs. Indian Oil Corporation Ltd. & Ors. Page 13 of 37 ignoring the record and the law for rejecting the applicant's claim inspite of all the record and facts in favour of the applicant, being against the law and against the public policy of India, is liable to be set aside.
14) According to sub-clause (5) of Section 34 of the Act, the non-
applicant nos. 1,2,3 and 4 have been informed through registered notice before filing of this application. It was prayed for setting aside of the arbitral award dated 21/07/2018.
6. Respondent through Counsel filed reply controverting and not admitting the averments of the petition. It is averred that the petition preferred by the petitioner deserves to be set aside as it is not founded on law and has no basis of facts and the entire petition of the petitioner is based on misrepresented, self serving and concocted facts and also on misconstruction of law, therefore, merits dismissal in limine. It is further averred that the petition is not maintainable as the impugned award has been passed after careful consideration of the terms of the Dealership Agreement executed between the parties as also the Marketing Discipline Guideline, 2012 (in short MDG) issued by Oil Marketing Companies which have the approval of the Government of India through the Ministry of Petroleum and Natural Gas. The said guidelines have been formulated to ensure the uniform proper functioning of all retail outlets/petrol pumps all over India, so that quality and quantity of products dispensed from the said Retail Outlets are ensured in the interest of the common public. The said Guidelines also provide various categories of irregularities which may be detected at the said Retail Outlets and prescribes uniform punishments for the said irregularities detected in order to avoid any arbitrary decisions. The impugned award has been passed after considering the terms and conditions of the Dealership Agreement, provisions of the MDG as well as other documents submitted to the Tribunal including a video and photographs taken at the time of inspection showing OMP (COMM.) No. 44/2018 M/s Mangalwar Filling Station vs. Indian Oil Corporation Ltd. & Ors. Page 14 of 37 clearly the irregularities committed by the petitioner to cheat the general public, which irregularities were extremely grave in nature and can be seen by naked eye. It is further averred that the said award, being a well reasoned award, does not call for any interference by this Court. It is further averred that a conjunctive reading of Section 34 and Section 5 of the Act makes it clear that an Arbitration Award which is governed by Part I of the said Act can be set aside only on grounds mentioned in Section 34(2) and (3) of the Act and not otherwise. As such, the present petition being devoid of the grounds provided under Section 34 of the Act deserves dismissal with costs at the very threshold. It is further averred that the Arbitral Tribunal had disallowed the petitioner's claims after fully considering and interpreting the terms of the Dealership Agreement, Marketing Discipline Guidelines, 2012 as also the other documents, video and photographs clearly showing the irregularities committed by the petitioner at the said Retail Outlet by which he was cheating the public. As such, the award cannot by any stretch of imagination, be said to be unreasonable or perverse. As per well settled law, it is not for this Court to interfere with such interpretation in exercise of its powers under Section 34 of the Act. It is further averred that since the petitioner has challenged the impugned award on the grounds which pertain to pure findings of facts by the Learned Sole Arbitrator in utter disregard of the settled proposition of law that the Arbitrator is the sole Judge of the quantity and quality of evidence before him and since, as per settled law, no Court has any business to enter into pure questions of facts to set aside the award, the instant peition deserves to be dismissed outrightly. It is further averred that petitioner had not stated the correct and complete facts in their petition and had obtained an ex parte stay on the basis of incomplete and misstated facts. It is further averred that petitioner had neither raised any objections pertaining to the recording of irregularities in the Inspection Report and/or its capturing in a video recording as well as photographs nor lodged any protest and/or stated something at least about the wire being broken by the officials of respondent corporation, while they were capturing the said broken wire in the video recording and/or OMP (COMM.) No. 44/2018 M/s Mangalwar Filling Station vs. Indian Oil Corporation Ltd. & Ors. Page 15 of 37 the photographs being taken by them. Petitioner had failed to explain as to how the black coloured tape came to have been rolled on to the said same wire which was allegedly broken by the officials of respondent at the time of inspection. It is averred that the Industry's SOP at that time mandatorily provided for the Inspecting Authorities to take into consideration, only the readings which were reflected by the Mechanical Totaliser as the automation system at that time were full of glitches. The automation system installed at the petitioner's RO admittedly had glitches as it was automated in the Phase I Category while at present Category VI is going on, which is much more advanced. As such, the petitioner ought not to be allowed to contend that if the Mechanical Totaliser was not functional then readings could have been verified from the readings recorded by the Electronic Totaliser. It is further averred that the reading of the Mechanical Totaliser i.e., 2833318, as had been mentioned in the Inspection Report, is the one which was found to have been reflected by the Mechanical Totaliser as its last reading. It is further averred that to find out actual position of stocks through the Mechanical Totaliser, the Inspection Officers of the respondent require a Mechanical Totaliser, which is in a working condition, however, since the Mechanical Totaliser of the said DU was found to be non-functional during the inspection, it was not possible for the officials of respondent to verify the recordings made in the DSR and/or to find out the true picture of the actual stocks, the necessary corollary of which is that no credence can be given to the recordings made and/or alleged to have been made by the petitioner in the DSR. It is further averred that the Show Cause Notice dated 06/02/2015 has been issued by the respondent corporation strictly in terms of the MDG read with terms of the Dealership Agreement and therefore, no malafide ought to be imputed on the respondent corporation. It is further averred that the tampering of totaliser was done to match the readings of the Electronic Totaliser with the readings of the Mechanical Totaliser at the end of the day or at the beginning of the day. As such, matching of the readings taken from the Electronic Totaliser with that of the Mechanical Totaliser can have no bearing OMP (COMM.) No. 44/2018 M/s Mangalwar Filling Station vs. Indian Oil Corporation Ltd. & Ors. Page 16 of 37 with the tampering of the said DU as well as its totaliser and the consequences ensuing because of it. It is further averred that since it is the petitioner, who recorded the readings of the Mechanical Totaliser in the DSR and as the officials of the respondent, in the absence of a functional Mechanical Totaliser, are left with no means to verify the said recordings, the DSR and its contents cannot be given any credence. It is further averred that as regards the readings which had allegedly been taken from the Electronic Totaliser by the petitioner, no credence can be given to them as the industry's SOP at the relevant time mandated to take into consideration only the readings as were reflected by the Mechanical Totaliser and there was no material/evidence at all produced, from which it could be verified as to what were the actual readings of the Electronic Totaliser in the past. It is further averred that when the panel of the said DU had never fallen down at the time of inspection on 30/10/2014, the question of snapping of wires connecting the CPU could never arise. It is further averred that in cases where the inspection report is prepared by the officials of the respondent as per the Standard SL-5 format, then there is no such requirement that the officials of respondent are supposed to enter the time of starting and closing of inspection. It is further averred that Inspection Report has also been prepared as per the Standard SL-5 format. It was prayed for dismissal of the petition.
7. In filed rejoinder, petitioner had denied every assertion and objection made by the respondent in the reply to the present petition under Section 34 of the Act. It is submitted that the purpose of the MDG is that the quantity of the fuel sold on the petrol pumps could be calculated so that no dealer could be able to sell the duplicate products in unauthorized manner, however, there is an automation system already installed on the petitioner's petrol pump by the respondent no. 1 to 4, which has checks and balance system and the same has been working properly since the time it has been installed. The said automation system is also responsible for sending the data to the respondent corporation's server on daily basis.
OMP (COMM.) No. 44/2018 M/s Mangalwar Filling Station vs. Indian Oil Corporation Ltd. & Ors. Page 17 of 37Additionally, the joint inspection report does not provide any allegation of short selling of fuel. It is further averred that as per the terms of MDG, 2012 the respondent corporation was required to inform the Inspector of Weight and Measures Department immediately for a joint inspection, which is necessary to maintain transparency in a system, however, in the present case the respondent was at a sheer failure wherein it informed the Weight and Measures Department after lapse of more than one year. Further, the ill intention of the respondent can also be assessed from the fact that the respondent tried to show a joint inspection on 20/12/2015, almost after a year, by producing a joint report mentioning the name of the Inspector Mr. Bhikharam from the Measurement Department, Sales Officer Retail Sales, Chittorgarh Sales Area, representative of the DU pump etc. but the inspector of the Measurement Department and Manager (Engineering) of Udaipur ground officer refused to signed on the said joint report knowing the fact that a false case was to be prepared against the petitioner. Moreover, the show cause notice, which must be sent within a prescribed time limit of 30 days., the same was sent by the respondent after a period of three months violating MDG 2012. It is submitted that any dealership agreement cancelled by the respondent cannot be effected on the basis of dealership agreement itself, rather the MDG Guidelines have to be followed while taking recourse to such action. In the present case, the respondent terminated such agreement without taking into consideration of the MDG Guidelines. It is submitted that the Arbitral Tribunal has not even understood the case of the petitioner nor has perused the documentary evidence and made this the basis of the impugned award. It is submitted that examination of all the necessary parties was held during the course of arbitration proceedings wherein the officers of the respondent nos. 1 to 4 have conceded to some of the facts as stated by the petitioner i.e., the DSR was maintained till 30/10/2014, there was no irregularity in the said DU before 30/11/2014 etc. It is submitted that Learned Sole Arbitrator failed to appreciate that at the time of inspection of measurement, the respondent has explicitly mentioned the fact that the seal OMP (COMM.) No. 44/2018 M/s Mangalwar Filling Station vs. Indian Oil Corporation Ltd. & Ors. Page 18 of 37 of the totalizer was not tempered. It is submitted that so far as the cheating is concerned, it was neither the case of the respondent that the cheating had taken place nor it was established that there has been fraud and cheating with the general public, rather, the petitioner had always been successful in proving with the help of figures that the reading of the daily stock register, mechanical totalizer and electronic totalizer used to match from one another. It is submitted that the inspection report dated 30/10/2014 on record confirmed that the totalizer seal of the alleged dispensing unit has been completely proper and samples collected by the respondent nos. 1 to 4 were found to be correct in the test. It is further submitted that when the delivery of the nozzle, as can be seen from the records of the register, was conducted twice at 10:47 am and 10:50 am, the mechanical totalizer was in working order and the said reading of 2833318 has been mentioned in the inspection report. Thereafter, the respondent asked the petitioner to open and check the seal of Weights and Measures Department upon the Mechanical Totalizer and when the said panel was opened by the sales man, due to the broken gate joints the wire got stretched, resulting in shutting down of mechanical totaliser and the said fact can also be substantiated from the video prepared by the respondent wherein the sales man is handling the panel. Thereafter, the respondent prepared a video showing 27.810 litres diesel coming out of the nozzle whilst the mechanical totalizer is not working. It is further submitted that the mechanical totalizer stopped working during the course of inspection, but the electronic totalizer was still under function showing the reading 2153007.200. It is submitted that before termination of contract of dealership, the alleged irregularities must be established with the corroborated evidences, merely on assumptions that tempering was found in the delivery unit of the dealer's equipment, the petitioner shall not be visited with severe consequence of termination of dealership and that too when the OEM does not corroborated the version of the respondent. However, the judgments cited by the respondent are self contradictory in itself in as much as Learned Sole Arbitrator has committed the jurisdictional error by dealing OMP (COMM.) No. 44/2018 M/s Mangalwar Filling Station vs. Indian Oil Corporation Ltd. & Ors. Page 19 of 37 several other things, which are not required/under challenge. It is further submitted that the alleged Dispensing Unit (in short DU) has been established around two years ago on the pump of the petitioner and has been working completely fine. It is also noteworthy to mention here that its mechanical totalizer counts completely working well. Further, the same DU has an electronic totalizer in addition to the mechanical totalizer, from which diesel distribution is properly counted. The said counting of mechanical totalizer is mentioned in the Daily Sale Register (in short DSR) on the beginning and ending of the day and the same DU has been inspected many a time before but no difference came in the total sale. Further, it was the necessary duty of the inspection team that they would mention time of starting and ending the inspection in their report but the time of starting and ending the inspection was deliberately not mentioned in the report. It can be said that at the beginning of the inspection the mechanical totalizer was working which is mentioned in the delivery report. It is submitted that the petitioner never took this plea that since the DU was quite old that is why it was not working properly. It is submitted that the prayer made in the main petition under Section 34 of the Act is maintainable and hence, the same be allowed.
8. I have heard Sh. Rishabh Sancheti, Ld. Counsel for petitioner; Ms. Mala Narayan, Ld. Counsel for respondent. and perused the relied upon precedents and records of the case as well as filed arbitral proceedings record and given my thoughtful consideration to the rival contentions put forth.
9. Ld. Counsel for petitioner argued in terms of the grounds of the petition. It was also argued that the award falls within the ambit of the grounds for consideration of the Court, as per Section 34 of the Act. It was further argued that where there is an error apparent on the face of record or Learned Sole Arbitrator has not followed the statutory legal position, then Court would be justified in interfering with the award published by the Learned Sole Arbitrator. It was further argued that the award passed by Learned Sole Arbitrator falls OMP (COMM.) No. 44/2018 M/s Mangalwar Filling Station vs. Indian Oil Corporation Ltd. & Ors. Page 20 of 37 within the scope of review under Section 34 of the Act as the same has error apparent on the fact of the award. The award suffers with patent illegality that ought to be corrected by this Court. It was further argued that Learned Sole Arbitrator failed to conform with the statutory guidelines applicable upon the contract between the petitioner and the respondent. A material disregard of the guidelines that binds and runs the contract of the parties, is an error apparent and the same shall be adjudicated upon by the Courts under Section 34 of the Act by setting aside such erroneous award passed by Learned Sole Arbitrator. It was further argued that the absence of conformity of the arbitral award with the MDG,2012 and the provisions of the same is an error apparent on the fact of the record for the adjudication of the matter under Section 34 of the Act. An arbitral award which is, on the face of it, patently in violation of the statutory provisions cannot be said to be in public interest. It was further argued that Learned Sole Arbitrator has failed to adhere to guideline/clause 8.5.2 regarding the sufficiency of proof in order to terminate the dealership of the petitioner and guideline 8.5.6 regarding the mandatory limitation/time period for issuance of show cause notice to the dealer for termination of dealership. It was further argued that the Show Cause Notice dated 06/02/2015 was barred by limitation, as per the guideline 8.5.6 of MDG, 2012 but Learned Sole Arbitrator erred in noting that the limitation period as per the MDG is directory and not mandatory. It was further argued that there was an error apparent on the fact of the record in the arbitral proceedings leading to the award. It was further argued that statutory provisions have been disregarded in reaching the conclusion of the award and the same is not in public interest.
10. Ld. Counsel for petitioner relied upon the following precedents:
1. Oil and Natural Gas Corporation Ltd. vs Saw Pipes Ltd., (2003) 5 SCC 705;
2. Hindustan Petroleum Corporation Ltd. & Ors. vs Super Highway Services & Anr., (2010) 3 SCC 321;
3. Allied Motors Limited vs Bharat Petroleum Corporation Limited, (2012) 2 SCC 1;OMP (COMM.) No. 44/2018 M/s Mangalwar Filling Station vs. Indian Oil Corporation Ltd. & Ors. Page 21 of 37
4. Associate Builders vs Delhi Development Authority, (2015) 3 SCC 49;
5. Indian Oil Corporation Ltd. & Ors. vs M/s R.M Service Centre & Anr., Civil Appeal No. 8257 of 2019 decided by Supreme Court on 07/11/2019;
6. Patel Engineering Ltd. vs North Eastern Electric Power Corporation Ltd., MANU/SC/0447/2020;
7. South East Asia Marine Engineering and Constructions Ltd. vs Oil India Limited, MANU/SC/0441/2020;
8. Anil Service Station vs Union of India, MANU/UP/2458/2009;
9. Natvarlal & Sons Through Partner vs Bharat Petroleum Corporation Ltd. through Managing Director, (2011) SCC Online Guj. 1906 (Gujarat High Court);
10. Paras Service Station vs Bharat Petroleum Corporation Ltd.,MANU/GJ/0846/2014;
11. Ranjith Filling Station, and another vs The Indian Oil Corporation Limited, 2013 SCC Online AP 351;
12. Ramniklal Keshavalal Lathiwala vs The General Manager, Bharat Petroleum Corporation Ltd. & Ors., W.P. (Civil) No. 6094 of 2014, decided by Bombay High Court on 04/07/2019;
13. M/s R.M. Service Centre vs Union of India & Ors., W.P. (C) No. 2824 of 2014, decided by Gauhati High Court on 13/10/2015;
14. M/s Bhatia Service Station vs Indian Oil Corporation Ltd., (2015) SCC Online Del. 11403 (Delhi High Court);
15. Bharat Petroleum Corporation Limited & Anr. vs M/s Pal Filling Station & Ors., (2015) SCC Online P&H 7906;
16. M/s Chaudhary Filling Point, Kazipur through its Proprietor & Anr. vs State of U.P. Through Principal Secretary Food & Civil Supplies & Ors, Misc. Bench No. 27043 of 2018 decided by Allahabad High Court on 30/01/2019 and
17. All India Petroleum Dealers Association (Regd.) & Anr. Vs Union of India Through its Secretary & Ors, W.P. (C) No. 10334/2017 & CM No. 27853/2018 (Delhi High Court).
11. Ld. Counsel for respondent argued that on 30/10/2014 in a surprise joint inspection by a team of officers of it at the retail outlet operated by petitioner, the Mechanical Totaliser of one DU was found to be non functional. Even though product was being dispensed from the nozzle of said DU, the readings in the totaliser remained static/stationary at 2833318. The inspecting officers got the panel of DU opened and found the electrical wire going from CPU to totaliser broken with a black tape put on it to join the two broken ends of the wire and said officers took photographs of the same and captured the same in a video recording clearly showing the reading of totaliser to be static even OMP (COMM.) No. 44/2018 M/s Mangalwar Filling Station vs. Indian Oil Corporation Ltd. & Ors. Page 22 of 37 though product was being dispensed through the nozzle and the broken wire. It was further argued that thereafter the said irregularities were recorded in the said Inspection Report dated 30/10/2014 and the said report was prepared in the presence of the petitioner and the same was also signed by petitioner without raising any objections either pertaining to the recording of irregularities in the said Report and /or to the photographs taken and the video recording made during the inspection. In terms of Clause 8.2 (iii) of the Marketing Discipline Guidelines (in short MDG), 2012, sale of HSD from the said particular nozzle of the said DU was suspended and samples drawn for testing, the report of which was received on 05/11/2014. It was further argued that as per Clause 16 of the Dealership Agreement, the dealer shall not interfere with or attempt to adjust the outfit or any part thereof and shall ensure that the outfit is in proper working order and delivering full and proper measure at all times. The dealer was not to operate the outfit while it was out of order. As per Clause 13 'Outfit' comprised of equipment, tanks, dispensing units, etc. installed at the petrol pump by the respondent as detailed in Second Schedule of the agreement. Clause 23 of agreement provides that the dealer shall not add to or alter the outfit and that if dealer commits a breach of the afore mentioned obligation, the respondent herein would have a right to terminate the said agreement. It was further argued that Clause 56 of the Agreement grants liberty to respondent to forthwith terminate the agreement, upon the happening of any of the events detailed therein including
(a) if the dealer commits a breach of any covenant of the agreement; (h) if the dealer does not adhere to the instructions issued by the Corporation in connection with safe practices to be followed at the Retail Outlets (in short RO); and (k) if the dealer commits or suffers to be committed any act which is prejudicial to the interest or good name of the Corporation. It was further argued that on 08/01/2013 MDG were framed to ensure proper functioning and safe practices to be practiced at RO as also to ensure dispensation of proper quantity and quality of products at the ROs throughout India, for which respondent relied upon Clauses 4.2, 5.1.3, 5.1.4, 8.2(iii) and 8.5.6 of MDG. It OMP (COMM.) No. 44/2018 M/s Mangalwar Filling Station vs. Indian Oil Corporation Ltd. & Ors. Page 23 of 37 was further argued that on 11/11/2014 respondent issued a notice to the petitioner and petitioner sent his reply upon the same on 24/11/2014 concocting a false story that the cover and hinges of the panel were broken ever since installation of DU and upon opening of the lock without holding the panel, the panel fell upon the wire and breaking the wire, which made the mechanical totaliser non functional. No explanation was given about the black tape joining the two broken ends of wire. However, it is clear from the photographs and the video that no such incident had happened and that the panel never fell. It was further argued that after considering all the evidences another show cause notice dated 06/02/2015 was issued stating, inter alia, that the petitioner had failed to inform respondent about the breakdown of the mechanical totaliser in terms of Clause 4.2(a) of MDG, failed to explain how the black coloured tape came to be rolled onto the said wire if it was broken during inspection and that matching of stocks had no bearing on tampering/manipulation of the totaliser. It was further argued that present petition being devoid of the ground provided under Section 34 of the Act deserves to be dismissed. It was further argued that the findings of Learned Sole Arbitrator in the award are not at all unreasonable or perverse and as such this Court ought not interfere with the award as Learned Sole Arbitrator had disallowed the petitioner's claims after fully considering and interpreting the terms of the Dealership Agreement, MDG as also the other documents including a video and photographs taken at the time of inspection showing clearly the irregularities committed by the petitioner to cheat the general public, which irregularities were extremely grave in nature. As such, the award cannot, by any stretch of imagination, be said to be unreasonable or perverse. It was further argued that the findings of the Learned Sole Arbitrator in the award are not at all unreasonable or perverse as the award is a well reasoned award based on evidence including a video and photographs taken at the time of inspection showing clearly the irregularities committed by the petitioner. It was prayed to dismiss the petition.
OMP (COMM.) No. 44/2018 M/s Mangalwar Filling Station vs. Indian Oil Corporation Ltd. & Ors. Page 24 of 3712. Ld. Counsel for respondent relied upon the following precedents:
1. Rashtriya Ispat Nigam Ltd. vs Dewan Chand Ram Saran, MANU/SC/0327/2012;
2. Associate Builders vs Delhi Development Authority, (2015) 3 SCC 49;
3. McDermott International Inc. vs Burn Standard Co. Ltd. & Ors, MANU/SC/8177/2006;
4. MSK Projects India (JV) Limited vs State of Rajasthan & Anr., (2011) 10 SCC 573 and
5. National Highways Authority of India vs ITD. Cementation India Limited, MANU/SC/0490/2015.
13. Normally, the general principles are that Arbitrator is a Judge of the choice of the parties and his decision, unless there is an error apparent on the face of the award which makes it unsustainable, is not to be set aside even by the Court as a Court of law could come to a different conclusion on the same facts. The Court cannot reappraise the evidence and it is not open to the Court to sit in appeal over the conclusion of the Arbitrator. It is not open to the Court to set aside a finding of fact arrived at by the Arbitrator and only grounds on which the award can be set aside are those mentioned in the Arbitration Act. Where the Arbitrator assigns cogent grounds and sufficient reasons and no error of law or misconduct is cited, the award will not call for interference by the Court in exercise of the power vested in it. Where the Arbitrator is a qualified technical person and expert, who is competent to make assessment by taking into consideration the technical aspects of the matter, the Court would generally not interfere with the award passed by the Arbitrator.
14. An Arbitral Award can be set aside on the grounds set out in Sections 34(2)(a), (b) and (2A) of the Act in view of Section 5 of the Act.
15. Section 34 (1), (2) and (2A) of The Arbitration and Conciliation Act, 1996 read as under:
"34. Application for setting aside arbitral award- (1) Recourse to a court against an arbitral award may be OMP (COMM.) No. 44/2018 M/s Mangalwar Filling Station vs. Indian Oil Corporation Ltd. & Ors. Page 25 of 37 made only by an application for setting aside such award in accordance with sub-section (2) and sub- section (3).
(2) An arbitral award may be set aside by the court only if-
(a) the party making the application furnishes proof that-
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration;
Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or
(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or
(b) the court finds that-
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or
(ii) the arbitral award is in conflict with the public policy of India.
Explanation 1 - For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only OMP (COMM.) No. 44/2018 M/s Mangalwar Filling Station vs. Indian Oil Corporation Ltd. & Ors. Page 26 of 37 if,-- (i) the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81; or (ii) it is in contravention with the fundamental policy of Indian law; or (iii) it is in conflict with the most basic notions of morality or justice.
Explanation 2.-- For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.
(2A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award:
Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by reappreciation of evidence.
16. Supreme Court in case of Associate Builders vs. Delhi Development Authority, (2015) 3 SCC 49 has held that the interference with an arbitral award is permissible only when the findings of the arbitrator are arbitrary, capricious or perverse or when conscience of the Court is shocked or when illegality is not trivial but goes to the root of the matter. It is held that once it is found that the arbitrator's approach is neither arbitrary nor capricious, no interference is called for on facts. The arbitrator is ultimately a master of the quantity and quality of evidence while drawing the arbitral award. Patent illegality must go to the root of the matter and cannot be of trivial nature.
Also was held therein that:
"33. "...when a court is applying the 'public policy' test to an arbitration award, it does not act as a court of appeal and consequently errors of fact cannot be corrected. A possible view by the arbitrator on facts has necessarily to pass muster as the arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon when he delivers his arbitral award.... Once it is found that the arbitrators approach is not arbitrary or capricious, then he is the last word on facts.."OMP (COMM.) No. 44/2018 M/s Mangalwar Filling Station vs. Indian Oil Corporation Ltd. & Ors. Page 27 of 37
17. Supreme Court in case of Ssangyong Engineering & Construction Co. Ltd. vs. National Highways Authority of India, 2019 SCC OnLine SC 677 has held that under Section 34 (2A) of the Act, a decision which is perverse while no longer being a ground for challenge under "public policy of India", would certainly amount to a patent illegality appearing on the face of the award. A finding based on the documents taken behind the back of the parties by the arbitrator would also qualify as a decision based on no evidence inasmuch as such decision is not based on evidence led by the parties and therefore would also have to be characterized as perverse. It is held that a finding based on no evidence at all or an award which ignores vital evidence in arriving at its decision would be perverse and liable to be set aside on the ground of patent illegality.
18. In the case of M/s Arosan Enterprises vs Union of India & Anr., MANU/SC/0595/1999, it was inter alia held that reappraisal of evidence by the Court is not permissible in the proceeding under the Arbitration Act. In the event of there being no reason in the award, question of interference of the court would not arise at all. In the event, however there are reasons, the interference would still be not available within the jurisdiction of the Court unless of course, there exist a total perversity in the award or the judgment is based on wrong proposition of law. In the event, however, two views are possible on a question of law as well, the Court would not be justified in interfering with the award. Also was held that the Court as matter of fact , cannot substitute its evaluation and come to the conclusion that the arbitrator had acted contrary to the bargain between the parties. If the view of arbitrator is a possible view the award or the reasoning contained therein cannot be examined. The decisions in the cases of State of Rajasthan vs Puri Construction Co. Ltd, MANU/SC/0865/1994 and Sudersan Trading Company vs Government of Kerala & Anr., MANU/SC/0361/1989 were relied. Also was held therein that where an Aribitrator makes a mistake either in law or in fact in OMP (COMM.) No. 44/2018 M/s Mangalwar Filling Station vs. Indian Oil Corporation Ltd. & Ors. Page 28 of 37 determining the matters referred, but such mistake does not appear on the face of the award, the award is good notwithstanding the mistake, and will not be remitted or set aside.
19. Supreme Court in the case of Rashtriya Ispat Nigam Ltd. (supra) inter alia held that the Court while considering challenge to arbitral award does not sit in appeal over the findings and decision of the arbitrator, whereas the arbitrator is legitimately entitled to take the view which he holds to be the correct one after considering the material before him and after interpreting the provisions of the agreement. If he does so, the decision of the arbitrator has to be accepted as final and binding.
Also was held that if the view taken by the arbitrator was clearly a possible if not a plausible one, the Court cannot substitute its view in place of the interpretation accepted by the arbitrator.
20. Supreme Court in the case of McDermott International Inc. (supra), inter alia held that:
"72. It is trite that the terms of the contract can be express or implied. The conduct of the parties would also be a relevant factor in the matter of construction of a contract. The construction of the contract agreement is within the jurisdiction of the arbitrators having regard to the wide nature, scope and ambit of the arbitration agreement and they cannot, be said to have misdirected themselves in passing the award by taking into consideration the conduct of the parties. It is also trite that correspondences exchanged by the parties are required to be taken into consideration for the purpose of construction of a contract. Interpretation of a contract is a matter for the arbitrator to determine, even if it gives rise to determination of a question of law. [See Pure Helium India (P) Ltd. v. Oil & Natural Gas Commission, MANU/SC/0803/2003: AIR 2003 SC 4519 and D.D. Sharma v. Union of India. MANU/SC/0419/2004: (2004) 5 SCC 325]. Once, thus, it is held that the arbitrator had the jurisdiction, no further question shall be raised and the court will not exercise its jurisdiction unless it is found that there exists any bar on the face of the award."
21. Supreme Court in the case of MSK Projects India (JV) Limited (supra) inter alia held that:
OMP (COMM.) No. 44/2018 M/s Mangalwar Filling Station vs. Indian Oil Corporation Ltd. & Ors. Page 29 of 37"17. If the arbitrator commits an error in the construction of the contract, that is an error within his jurisdiction. But if he wanders outside the contract and deals with matters not allotted to him, he commits a jurisdictional error. Extrinsic evidence is admissible in such cases because the dispute is not something which arises under or in relation to the contract or dependent on the construction of the contract or to be determined within the award. The ambiguity of the award can, in such cases, be resolved by admitting extrinsic evidence. The rationale of this rule is that the nature of the dispute is something which has to be determined outside and independent of what appears in the award. Such a jurisdictional error needs to be proved by evidence extrinsic to the award. (See Gobardhan Das v. Lachhmi Ram, AIR 1954 SC 689; Thawardas Pherumal v. Union Of India, AIR 1955 SC 468, Union of India v. Kishorilal Gupta & Bros., AIR 1959 SC 1362, Alopi Parshad & Sons Ltd. v. Union of India, AIR 1960 SC 588, Jivarajbhai Ujamshi Sheth v. Chintamanrao Balaji, AIR 1965 SC 214 and Renusagar Power Co. Ltd. v. General Electric Co., (1984) 4 SCC 679: AIR 1985 SC 1156)".
22. Supreme Court in the case of National High Ways Authority of India (supra) inter alia held that "20. It is thus well settled that construction of the terms of a contract is primarily for an arbitrator to decide. He is entitled to take the view which he holds to be the correct one after considering the material before him and after interpreting the provisions of the contract. The court while considering challenge to an arbitral award does not sit in appeal over the findings and decisions unless the arbitrator construes the contract in such a way that no fair-minded or reasonable person could do."
23. Supreme Court in the case of G. Ramchandra Reddy v. Union of India, (2009) 6 SCC 414, asserted that Courts should not normally interfere with the award of an Arbitrator, unless there was a gross error apparent on the face of the record.
24. Supreme Court in the case of Dyna Technologies Pvt Ltd vs Crompton Greaves Limited, MANU/SC/1765/2019 inter alia held that the requirements of reasoned order were that to be proper, intelligible and adequate. In the absence of reasoning, when there is complete perversity in the reasoning then only it can be challenged under the provisions of Section 34 of the Act.
OMP (COMM.) No. 44/2018 M/s Mangalwar Filling Station vs. Indian Oil Corporation Ltd. & Ors. Page 30 of 3725. Supreme Court in the case of South East Asia Marine Engineering and Constructions Ltd. (supra) inter alia relied upon the law laid in the case of Dyna Technologies Pvt. Ltd. (supra) and held that we need to be cognizant of the fact of the arbitral awards should not be interfered with in a casual and cavalier manner, unless the Court comes to a conclusion that the perversity of the award goes to the root of the matter without there being a possibility of alternative interpretation which may sustain the arbitral award. Also was held therein that it was a settled law that where two views are possible, the Court cannot interfere in the plausible view taken by the arbitrator supported by reasoning. The pronouncement in the case of Dyna Technologies Pvt. Ltd. (supra) were again adverted wherein it was held that the Courts need to be cautious and should defer to the view taken by the Arbitral Tribunal even if the reasoning provided in the award is implied unless such award portrays perversity unpardonable under Section 34 of the Act.
26. Supreme Court in the case of Patel Engineering Ltd. (supra) inter alia held that wherein the finding of Ld. Arbitrator are arrived at by taking into account irrelevant facts and by ignoring the vital clauses, the same suffer from the vice of irrationality and perversity and that the award will be liable to be set aside when while interpreting the terms of the contract, no reasonable person could have arrived at a different conclusion other than that the awards passed by the arbitrator suffer from the vice of irrationality and perversity.
27. In the impugned arbitral award, Learned Sole Arbitrator referred to the following text of the visit report of the General Energy Management Systems Pvt. Ltd. dated 21/12/2015:
"OBSERVATION The observations noted down by our visiting CSE Mr. Dasharath over machine no.55430, MAKE-DRESSER WAYNE, presently out of CAMC, are as follows:
-While viewing the upper Electronic Section of machine it has been observed that one (black colour cable) out of 2 cables connecting Electro-mechanical Totalizer with CPU is broken & both the split ends had been joined with the usage of black colour tape.OMP (COMM.) No. 44/2018 M/s Mangalwar Filling Station vs. Indian Oil Corporation Ltd. & Ors. Page 31 of 37
-In case when the cable connecting Electro-mechanical Totalizer with CPU gets disconnected the Fuel Supply through Nozzle is not held but the Electro-mechanical Totalizer stops functioning whereas the Electronic Totalizer remain functioning."
28. The aforesaid observation was given in the aforesaid report consequent to the visit at the site in the presence of representative of present petitioner as well.
29. Learned Sole Arbitrator had appreciated also that the allegation against the claimant petitioner was only with regard to tampering of the wires connecting the dispensing unit with the CPU of the mechanical totalizer and this fact was admitted by the claimant/petitioner in its reply dated 24/11/2014 and even if it was denied by him later on still the onus was essentially on claimant/petitioner to explain as to how the wires came to be wrapped by black tape, which he was failed to do miserably.
30. Learned Sole Arbitrator opined that the time factor of 30 days for issuance of show cause notice was only directory in nature and not mandatory; because if it is to be held to be mandatory, it is fought with very serious consequences and in a given case with connivance of the unscrupulous employees of the Oil Companies, a dealer can avoid the termination or cancellation despite being guilty of critical irregularity. So Learned Sole Arbitrator did not accept the contention of Ld. Counsel for claimant/petitioner that the non issuance of the show cause notice dated 06/02/2015 within 30 days was fatal to the case of the respondent.
31. Learned Sole Arbitrator also appreciated the fact that it was not in dispute that the dispensing unit was second hand whereas it was the case of claimant/petitioner that the dispensing unit being second hand, therefore, he was not aware as to how the tape came to be wrapped on the wires meaning thereby that it was already in existence. Learned Sole Arbitrator also considered the fact that the dispensing unit was installed at the work place, OMP (COMM.) No. 44/2018 M/s Mangalwar Filling Station vs. Indian Oil Corporation Ltd. & Ors. Page 32 of 37 which was under the control and supervision of the petitioner/claimant and thus the onus was on the petitioner/claimant to explain as to how the tapes came to be applied to the wires connecting the dispensing unit with the CPU of the mechanical totalizer, which the petitioner/claimant failed to do miserably. Learned Sole Arbitrator also appreciated the facts that the petitioner/claimant changed his stand more than once making his conduct suspect, which had impelled Arbitral Tribunal to draw an adverse inference against him. Following was the part of the text of reply filed by claimant/petitioner to the notice dated 11/11/2014:
"7. It is true that the cable is broken and the tape is put on it and the pump has been installed at my place. So prime facie I am, guilty. However, I assure you no tampering has ever been done by me or by my staff at any point of time. Had it been done there would have been difference in the sale. My fault is this much that I never inspected the panel by opening it out and since the sale was matching always, my attention could not be drawn to any type of irregularity. Due to this mistake I am feeling very ashamed. Due to this I have good reputation in the company and I now believe that my reputation has been considerably damaged. I can understand this. I am feeling very hurt due to this immoral act and I do not have words to explain this.
8. This human error has been committed due to my negligence and I did not check the panel by opening it and did not inform the company in time. I am guilty of the same. I am requesting you with folded hands that I may be pardoned, and the above allegation will be cancelled and permission is granted for starting the sale with that pump on my petrol pump.
Yours faithfully, Sd/-
(illegible) Proprietor."
32. Learned Sole Arbitrator also appreciated some of important guidelines with which the claimant/petitioner was bound, which are as follows:
"1.4.2 QUANTITY
a) The dealer shall check on daily basis the Weights and Measures Department seal in the Metering Unit/Totaliser of the dispensing units for correctness and also that Weights & Measures certification for the unit is valid. In case W&M/totalizer seals are found tampered, sales through the concerned dispensing unit should be suspended forthwith and matter reported immediately to oil company. Sales to remain suspended till the seals are replaced."OMP (COMM.) No. 44/2018 M/s Mangalwar Filling Station vs. Indian Oil Corporation Ltd. & Ors. Page 33 of 37
"Clause 4.2(a): Equipments belonging to the Oil Company:
While the Oil company shall arrange to attend breakdown maintenance of the Dispensing Pumps and other equipments belonging to the Oil Company, it shall be the responsibility of the dealer to ensure that these equipments are handled in proper manner and day to day upkeep are carried out in accordance with the maintenance manual/instructions. N case of any break down, the same shall promptly be informed by the dealer to the oil company."
"Clause 5.1.3: Totalizer seals found tampered with:
Totaliser seals will also be construed as tampered if it allows manipulation of totalizer reading; deliberately making the totalizer non-functional or not reporting to the OMC, if totalizer is not working. In case of this irregularity sales from the concerned dispensing unit to be suspended and DU sealed. Samples to be drawn of all the products and send to lab for testing."
"CHAPTER 8
8. action to be taken by OMC under the Marketing Discipline Guidelines 8.1 ....
8.2 Critical Irregularities: The following irregularities are classified as critical irregularities:
Clause 8.2: Critical irregularities:
i. .....
ii. .....
iii. Totalizer seal of dispensing unit tampered or deliberately making the totalizer non functional or not reporting to the company if totalizer is not working. (5.1.3 read with 5.1.2) iv. .....
v. .....
vi. .....
vii.
Action: Termination at the FIRST instance will be imposed for the above irregularities."
"Clause 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 340 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.
8.5.7 The dealer would have a period of 15 days to reply from the date of receipt of show cause notice.
8.5.8 Upon receipt of the reply to the show cause notice, the authorized officer of the OMC will review the charges levelled and OMP (COMM.) No. 44/2018 M/s Mangalwar Filling Station vs. Indian Oil Corporation Ltd. & Ors. Page 34 of 37 the reply received and pass a speaking order preferably within a period of 45 days from the receipt of the reply. The speaking order shall indicate complete details of the irregularities committed, the reply of the dealer and detailed reasons as to why the reply is acceptable/not acceptable to the official.
8.6 In case of Critical irregularities leading to termination, the Head of the State office/Regional office/Zonal office of the concerned OMC or their Nominee before recommending/approving the termination of dealership will provide a personal hearing to the signatories to the dealership or their nominee(s). However if signatories to the dealership or their nominee (s) fail to attend the hearing on an appointed date, one more chance will be given and after that the case may be processed ex party based on available facts."
33. Learned Sole Arbitrator after appreciation of the oral and documentary evidences before him and after giving all opportunities to the parties to lead evidence, after appreciation of aforesaid guidelines came to the opinion that the claimant/petitioner was strictly supposed to adhere to these critical guidelines, any deviation from the same including tampering of any dispenser unit would be termed as critical irregularity which may result in cancellation of the dealership agreement.
34. Infact the first claim of the claimant/petitioner with respect to the quashing of show cause notice dated 06/02/2015 issued by the respondent to the claimant/petitioner has been declined by Learned Sole Arbitrator with the observation that said said show cause notice was issued validly to the claimant/petitioner for his having put the black tape on the snapped wires connecting dispenser unit in question to CPU of the mechanical totalizer, which facts were not intimated to the respondent. The show cause notice had been issued by the respondent to the present petitioner and it was for the petitioner/claimant to put forth appropriate reply within 15 days as per MDG 8.5.7 afore elicited with evidences containing all contentions of facts and law to the authority issuing the said show cause notice who would have after adhering to the principle of audi alteram partem and as per MDG 8.5.8 and 8.6 afore elicited had to proceed further. It had been the petitioner/claimant OMP (COMM.) No. 44/2018 M/s Mangalwar Filling Station vs. Indian Oil Corporation Ltd. & Ors. Page 35 of 37 who preempted and proceeded with the litigation, elicited herein above despite there being in existence an arbitration clause in the agreement inter se petitioner and respondent.
35. The precedents relied upon by Ld. Counsel for petitioner, elicited herein above, embody facts and circumstances entirely different and distinguishable to the facts and circumstances of the case in hand and are in no way of any help to the petitioner for getting the impugned award set aside. Moreover, majority of the relied upon precedents by Ld. Counsel for petitioner are in the filed Writ Petitions and not on Petitions under Section 34 of the Act nor on Appeals under Section 37 of the Act on dismissal of petitions under Section 34 of the Act. As elicited here in above the parameters for adjudication of a petition under Section 34 of the Act or an Appeal under Section 37 of the Act are not akin to parameters for adjudication of a Writ Petition.
36. The impugned award was passed by former Learned and Hon'ble Judge, High Court of Delhi as Sole Arbitrator whereas the findings were given, based on appreciation of facts, evidences and law after giving all reasonable opportunities to the parties to lead their evidence. Not only the reasonings of Learned Sole Arbitrator are logical but all the material and evidences were taken note of by the Learned Sole Arbitrator. The Court cannot substitute own evaluation of conclusion of law or fact to come to the conclusion other than that of the Learned Sole Arbitrator, as per the law laid in the precedents, elicited herein above. Cogent grounds, sufficient reasons have been assigned by the Learned Sole Arbitrator in reaching the just conclusion and no error of law or misconduct is apparent on the face of the record. This Court cannot re- appraise the evidence and it is not open to this Court to sit in the appeal over the conclusion/findings of facts arrived at by Learned Sole Arbitrator. The impugned award does not suffer from vice of irrationality and perversity. No error is apparent in respect of the impugned award. I do not find any contradiction in the observations and findings given by Learned Sole OMP (COMM.) No. 44/2018 M/s Mangalwar Filling Station vs. Indian Oil Corporation Ltd. & Ors. Page 36 of 37 Arbitrator. The award is not against any public policy nor against the terms of contract of the parties. No ground for interference is made out. None of the grounds raised by the petitioner attract Section 34 of the Act.
37. For the foregoing reasons, the petition is hereby dismissed.
38. The parties are left to bear their own costs.
39. File be consigned to record room.
ANNOUNCED IN (GURVINDER PAL SINGH)
OPEN COURT District Judge (Commercial Court)-02
on 04th March, 2021. Patiala House Court, New Delhi.
(Deepika) OMP (COMM.) No. 44/2018 M/s Mangalwar Filling Station vs. Indian Oil Corporation Ltd. & Ors. Page 37 of 37