Delhi District Court
M/S B. M. Carriers vs . Indian Oil Corporation Ltd. on 14 September, 2018
Digitally signed
by AJAY
AJAY GULATI
M/s B. M. Carriers vs. Indian Oil Corporation Ltd.
GULATI Date:
2018.09.14
16:01:18 +0530
IN THE COURT OF SH. AJAY GULATI, ADDL. DISTRICT
JUDGE02, SAKET COURTS, SOUTH DISTRICT, NEW DELHI
In the matter of
ARB No.88/2017
Filing No.364/2017
CNR No. DLST010009582017
M/s B M Carriers
R40, South Extension,
PartII
................Petitioner
Versus
Indian Oil Corporation Ltd.
NRO, Indian Oil Bhawan,
No.1, Sri Aurobindo Marg,
Yusuf Sarai, New Delhi
.............Respondent
Date of Institution : 06.09.2010
Date of reserving the judgment: 14.09.2018
Date of pronouncement : 14.09.2018
Decision : Dismissed
PETITION UNDER SECTION 34 OF THE ARBITRATION AND
CONCILIATION ACT, 1996 AGAINST THE AWARD DATED
31.03.2010 PASSED BY LEARNED SOLE ARBITRATOR MR.
GOPAL KRISHAN APPOINTED BY THE RESPONDENT IN THE
MATTER OF ARBITRATION BETWEEN M/S B M CARRIER AND
INDIAN OIL CORPORATION WHEREBY THE CLAIM OF THE
CLAIMANT WAS REJECTED WITHOUT CONSIDERING THE
RECORDS PLACED DURING THE PROCESS OF ARBITRATION
IN BIASED WAY
ARB No.88/2017 Page 1 of 20
M/s B. M. Carriers vs. Indian Oil Corporation Ltd.
JUDGMENT
1. Petitioner has impugned the Arbitral award on the ground that it violates the fundamental public policy of India, which is a listed ground under section 34 (2) (C) of the Arbitration and Conciliation Act 1996 for setting aside of the arbitral award. Petitioner was the claimant before the Arbitral tribunal (consisting of a sole arbitrator).
2. A brief factual recapitulation would be necessary before adverting to the merits of the objection raised by the petitioner.
3. Petitioner is a logistics company which was engaged by the respondent for bulk transportation of LPG. The LPG is transported in Tank Trucks (TT's). Respondent has a number of bottling plants situated in various parts of the country where the TT's of various logistics companies are requisitioned for filling of the tank's for further transportation. On 18.11.2005, at the LPG bottling plant of the respondent at Karnal (Haryana), during a routine schedule of filling of LPG in a TT owned by the petitioner (HR47/3798), driver of one such TT owned by the Petitioner allegedly drove away the TT from the fueling Bay without bothering to check whether the LPG filling hose had been detached or not from the valve of the tank truck. This resulted in the breakage of the valve of the tank truck ARB No.88/2017 Page 2 of 20 M/s B. M. Carriers vs. Indian Oil Corporation Ltd.
and resultantly, the entire quantity of LPG which was filled up in the TT leaked and was consequently wasted. As a result of the incident, the bottling plant had to be immediately shut and remained unoperational till the next day. As a result of the accident, respondent had to sustain considerable operational losses. An internal inquiry was conducted by the officials of the Respondent company which found the driver of the TT owned by the petitioner, guilty of breaching standard operating procedure (driving away the tank truck without waiting for the filling hose to be disconnected from the valve of the TT) and also found the petitioner guilty of using substandard material/equipment in the tank truck.
4. At this stage, it is important to highlight that the internal inquiry team returned a specific finding of fact that the driver of TT no. HR47/3798 had driven away the tank truck using a duplicate ignition key without waiting for disconnection of the LPG filling hose from the truck valve. As per the findings of the internal inquiry, after a tank truck is docked at the filling bay, it is ensured that the truck is completely stationary and its key is locked up to prevent any possibility of the truck being moved away without completion of the LPG filling procedure. However, during the course of inquiry, it was found that all the ARB No.88/2017 Page 3 of 20 M/s B. M. Carriers vs. Indian Oil Corporation Ltd.
original keys of all the tank trucks which were docked simultaneously along with TT No. HR HR47/3798 for filling up of LPG, were found kept locked in the box which conclusively proved that the driver of TT no. HR47/3798 drove away the truck by using a duplicate ignition key. Besides, a duplicate key was found in the cabin of the offending TT with which the truck had been switched on. In support of this finding, photographs showing that the keys of the Tank Trucks which had docked at the loading bay were lying locked, were also attached with the inquiry report.
5. As a consequence of the internal inquiry report which found the petitioner guilty of statutory/regulatory/procedural breaches, a sum of Rs.8,20,260/ was ordered to be deducted from the dues payable to the Petitioner, for the loss caused due to the leakage of LPG resulting from the accident. Further, TT no. HR47/3798 was blacklisted for a period of 6 months from transporting LPG. Both these penalties were imposed vide letter dt.18.09.2006.
6. Before the ld. Arbitrator, petitioner challenged the imposition of penalty on various grounds i.e. negligence was purely of the staff of the respondent company; they forced the truck driver to run away; no FIR was got ARB No.88/2017 Page 4 of 20 M/s B. M. Carriers vs. Indian Oil Corporation Ltd.
registered immediately so as to cover up the lapse on the part of the respondent staff; during the course of internal inquiry conducted by the respondent company, no statement of the staff member actually present at the time of the accident was recorded; and that despite having an insurance cover, the respondent company did not enforce insurance policy to cover the loss of LPG.
7. On the basis of claim and written response filed by both the parties, following issues were framed by the ld. Arbitrator;
1. Whether the deduction of Rs.7,79,165/ from the payable and due amount to be paid by the respondent to the claimant is justified or not? (OPC)
2. Whether the loss of LPG was caused by the negligence of the driver of the tanker No.HR 47/3798?(OPR)
3. Whether the loss of PG was caused by the negligence of the employees of the respondent company by violating the by laws of the respondent company?(OPC)
4. Whether the quantification of the loss of 18 MTs of LPG from the taker was correct or not?
8. Significant to highlight that the claimant failed to ARB No.88/2017 Page 5 of 20 M/s B. M. Carriers vs. Indian Oil Corporation Ltd.
cite the driver of the TT no.HR47/3798, Sh. Satyendra Yadav, as a claimant witness. However, claimant produced 2 witnesses to prove its case i.e. Puneet Batra and Ramesh Batra. Both these witnesses were working with the petitioner firm which is a family run enterprise. In the absence of any documentary or oral evidence on behalf of the claimant to prove that the loss of LPG was as a result of the negligence on the part of the staff of the Respondent company, and nonciting of the truck driver of TT no.HR 47/3798 as a claimant witness, there was little scope for the Claimantpetitioner to prove its claim i.e. proving its counter allegation that infact it was the staff of Respondent who were guilty of negligence which ultimately resulted in leakage of LPG from the TT. Though the respondent witnesses were exhaustively cross examined, in his concluding analysis, the ld. Arbitrator attributed the negligence to the claimantpetitioner's driver. Consequently, the penalty imposed was upheld by the ld. Arbitrator with a slight modification - the ld. Arbitrator held that as a usual practice adopted for filling up the LPG in tank trucks, LPG was not filled up to the tank's full capacity and consequently, held that instead of 18MT, 17.695 MT was the actual quantity of LPG lost due to leakage. This finding was returned on the basis of the ARB No.88/2017 Page 6 of 20 M/s B. M. Carriers vs. Indian Oil Corporation Ltd.
documents supplied by the claimant-petitioner since the respondent company failed to furnish documents which could prove that the tank truck was filled to its capacity of 18 MT. The respondent had assessed the loss on the basis of daily stock analysis which was not relied upon by the ld. Arbitrator. As a corollary, ld. Arbitrator directed refund of cost of 0.305 MT of Bulk LPG at the prevailing rate to the claimant. However, blacklisting of the TT involved in the accident for a period of 6 months was upheld.
9. As already observed at the outset, the arbitral award is sought to be set aside on the ground of it being in breach of fundamental public policy of India. Ld. Counsel for the Petitioner highlighted 2 aspects of the Award to substantiate the assertion - first, that though the accident took place on 18.11.2005, for upholding the penalty imposed on the petitioner, the Arbitrator relied on the terms of the contract dated 28.2.2006 which was entered into between the petitioner and the respondent for bulk transportation of LPG i.e. reliance was placed on a document which came into existence subsequent to the date of accident; and second, that the internal fact finding inquiry conducted by the respondent was in violation of rule 67 of The Static and Mobile Pressure Vessels (Unfired) Rules 1981 (hereinafter to be referred to as the Rules of ARB No.88/2017 Page 7 of 20 M/s B. M. Carriers vs. Indian Oil Corporation Ltd.
1981).
10. In so far as the first ground is concerned, the contention of the petitioner is misplaced. A perusal of the letter dt. 01.02.2006 which was issued by the respondent company to the petitioner informing them about the commencement of the new contract, shows that the contract was to be effective from a back date i.e. 01.11.2005. This date is clearly prior to the date of accident (i.e. 18.11.2005) which puts to rest any doubt about the applicability of the contract dated 28.2.2006. Additionally, it needs to be highlighted that few terms of this Contract were highlighted by the Arbitrator only for the purpose of outlining the procedure involved in filling up the LPG in tank trucks and to further highlight the liability of the carriers in case of loss of LPG. The petitioner however, has put up a case that it was not liable at all for the loss caused since the negligence was attributed solely to the staff of the respondent, and not that the carrier could not have been liable at all for the loss of LPG. In any case, the contract dt. 28.2.2006 is applicable, as already observed. It is most apposite to highlight here that the penalty imposed on the petitioner by the respondent company was not on the basis of the contact dt. 28.2.2006. Infact, the letter dated 18.09.2006, vide which penalty was ARB No.88/2017 Page 8 of 20 M/s B. M. Carriers vs. Indian Oil Corporation Ltd.
imposed on the petitioner, does not even refer to any particular contract/ contract terms or a statutory provision. Further relevant to highlight that even before the ld. Arbitrator i.e. in its claim, the petitioner failed to challenge the imposition of the penalty on the ground of it being without any basis or having been imposed arbitrarily. The grounds for raising claim before the ld. Arbitrator related to the assertions on behalf of the petitioner that it was the respondent's staff which had acted negligently and thus caused the accident.
11. Regarding the internal fact finding inquiry having been conducted in violation of the statutory rules, it needs to be highlighted that Rule 67 of the Rules of 1981 comes into play only when the inquiry is conducted under section 9 (2) of the Indian Explosive Act. Sections 8 and 9 of the 'Act' are reproduced below -
"8. Notice of accident (1) Whenever there occurs in or about, or in connection with, any place in which an explosive is manufactured, possessed or used, or (any aircraft, carriage or vessel) either conveying an explosive or on or from which an explosive is being loaded or unloaded, any accident by explosion or by fire attended with loss of human life or serious injury ARB No.88/2017 Page 9 of 20 M/s B. M. Carriers vs. Indian Oil Corporation Ltd.
to person or property, or of a description usually attended with such loss or injury, the occupier of the place, or (the master of the aircraft or vessel) or the person incharge of the carriage, as the case may be, shall [within such time and in such manner as may be by rule prescribed give notice thereof and of the attendant loss of human life or personal injury, if any, to the (Chief Controller of Explosives) and] and to the officer in charge of the nearest police station.
9. Inquiry into accident (1) Where any accident such as is referred to in section 8 occurs in or about or in connection with (any place, aircraft, carriage or vessel) under the control of any of (Armed Forces of the Union), an inquiry into the causes of the accident shall be held by the naval, military, or air force authority concerned, and where any such accident occurs in any other circumstances, the District Magistrate shall, in cases attended by loss of human life, or may, in any other case, hold or direct a Magistrate subordinate to him to hold, such an inquiry. (2) Any person holding an inquiry under this section shall have all the powers of a Magistrate in ARB No.88/2017 Page 10 of 20 M/s B. M. Carriers vs. Indian Oil Corporation Ltd.
holding an inquiry into an offence under the [Code of Criminal Procedure 1973] and may exercise such of the powers conferred on any officer by rules under section 7 as he may think it necessary or expedient to exercise for the purposes of the inquiry. (3) The person holding an inquiry under this section shall make a report to the Central Government stating the causes of the accident and its circumstances.
(4) The Central Government may make rules
(a) to regulate the procedure at inquiries under this section;
(b) to enable the (Chief Controller of Explosives) to be present or represented at any such inquiry;
(c) to permit the Chief Inspector of Explosives in India or his representative to examine any witnesses at the inquiry;
(d) to provide that where the Chief Inspector of Explosives in India is not present or represented at any such inquiry, a report of the proceedings thereof shall be sent to him;
(e) to prescribe the manner in which and the time within which notices referred to in ARB No.88/2017 Page 11 of 20 M/s B. M. Carriers vs. Indian Oil Corporation Ltd.
section 8 shall be given."
12. Rule 67 of the Rules of 1981 is also reproduced below:
"67. Inquiry into accident. (1) Whenever a District Magistrate, a Commissioner of Police or a magistrate subordinate to a District Magistrate holds an inquiry under sub section (1) of Section 9 of the Act, he shall adjourn such an inquiry unless the Chief Controller or an officer nominated by him is present to watch the proceedings or the Magistrate has received written communication form the Chief Controller that he does not wish to send a representative. (2) The Magistrate shall, at least fourteen days before holding the adjourned inquiry, send to the Chief Controller notice in writing of the time and place of holding the adjourned inquiry. (3) Where an accident has been attended with loss of human life, the Magistrate, before the adjournment, may take evidence to identify any body and may order the internment thereof. (4) The Chief Controller or his representative shall be at liberty at any such inquiry to examine ARB No.88/2017 Page 12 of 20 M/s B. M. Carriers vs. Indian Oil Corporation Ltd.
any witness, subject to the order of the Magistrate, on points of law.
(5) Where evidence is given at an inquiry at which the Chief Controller or an officer nominated by him is not present, of any neglect as having caused or contributed to the explosion or accident or of any defect in or about or in connection with any installation or any vehicle appearing to the Magistrate or Jury to require a remedy, the Magistrate shall send to the Chief Controller notice in writing of the neglect or defect."
13. A bare perusal of the section 8 and 9 of the Explosives Act 1884 demonstrates that an inquiry under 8 and 9 of the said Act will be conducted only in case of an accident which entails loss of human life or personal injury. In the accident which occurred at the Karnal premises of the respondent on 18.112005, there was no loss of human life or even injury to any person. Infact, there was no loss of property also except for the loss of LPG which leaked from the TT of the petitioner and in addition, operational losses suffered by the respondent on account of shutting down of the entire LPG plant after the accident occurred. Consequently, Rule 67 of the Rules of 1981 has no ARB No.88/2017 Page 13 of 20 M/s B. M. Carriers vs. Indian Oil Corporation Ltd.
applicability to the facts of the present case.
14. At this stage, it is important to highlight a few additional but relevant facts. The internal inquiry conducted by the respondent was a closed inquiry. No official/ AR of the petitioner firm was summoned to give his version of the accident. No written explanation was sought from the petitioner firm. The inquiry team inspected the accident site and prepared a fact finding report on the basis of questioning from the staff of the respondent. The most significant finding of this report was regarding the fact that key of the TT involved in the accident was found locked in a box along with the keys of 7 other TT's who had docked at the LPG filling bays on the day of accident and recovery of a duplicate key from the driving cabin of the TT. This finding formed the basis for the inquiry team to conclude that the TT had been moved away from the Bay by its driver (driver of the petitioner) by using a duplicate key. The inquiry team also concluded that the tank truck could have been driven away by using a key of another tank truck but of the same model.
15. As already observed above, a perusal of the cross examination of the Respondent witnesses also reveals that the internal inquiry conducted by the respondent company was a closed inquiry. No notice was issued to the ARB No.88/2017 Page 14 of 20 M/s B. M. Carriers vs. Indian Oil Corporation Ltd.
petitioner/claimant for joining the proceedings and to get its version recorded. It is also not in dispute that police authorities were informed after a delay of 3 days i.e. on 21.11.2005 with the FIR eventually being registered on 26.11.2005. Besides, no information was submitted to the Joint Controller of Explosives (JCOE) for which an explanation was sought by the Controller. Further, in the cross examination of RW2, the witness failed to answer a relevant question (Question No.11) with regard to allegation of use of a duplicate key by the driver of the TT. As already observed, in the internal inquiry report, there is a specific factual finding that the offending TT was driven away by the driver by using a duplicate key. The photographs of the keys of the tank trucks lying locked in a box near the loading bays forms the fundamental basis for the finding in the internal inquiry report that the TT was driven away with a duplicate key i.e. since the main key was lying locked in the box. The witness however failed to point out any basis for submitting that the key encircled key on the photograph Ex. RW2/1 was actually the original key of the offending TT.
16. A perusal of the 'Award' reveals that the Arbitrator relied primarily on the internal inquiry report to uphold the imposition of penalty on the petitioner/claimant. Even ARB No.88/2017 Page 15 of 20 M/s B. M. Carriers vs. Indian Oil Corporation Ltd.
though the internal inquiry was admittedly a closed inquiry with no opportunity of hearing having been given to the petitioner/claimant, there is an equally glaring aspect of the evidence led on behalf of the petitioner/claimant which cannot be ignored and which has already been highlighted at the outset. The petitioner did not examine the driver of the offending TT. The only person who could have effectively countered the findings of the inquiry report was the driver of the offending TT. The witnesses who actually did appear on behalf of the petitioner/claimant had no personal knowledge of the accident. Except for alleging (which allegations have been repeated before this Court in the form of oral arguments/submissions) that the entire blame for the accident must lie on the respondent since the accident occurred in their facility and due to the fault of the staff of the respondent, no concrete evidence was put forth before the Ld. Arbitrator to prove this assertion. Infact, even in regard to documentary evidence, the petitioner/claimant relied on a set of Rules which prescribe the procedure for filling up of bulk LPG. These Rules were relied upon to assert and contend that the entire responsibility for the accident is of the respondent's staff since they did not follow the prescribed procedure. However, the petitioner/claimant conveniently forgot that ARB No.88/2017 Page 16 of 20 M/s B. M. Carriers vs. Indian Oil Corporation Ltd.
the said issue is a disputed fact which could have been proved or disproved only by leading cogent evidence. The Respondent discharged its onus by relying on the inquiry report but the petitioner /claimant did not lead any evidence to rebut it which could have been done in the best manner by bringing in the driver of the offending TT as a witness. Apart from this, the petitioner also made no effort to produce any driver of the other tank trucks which were docked at the loading bays at the time of the accident
17. As already noted above, during the course of final submissions before this Court, one of the main arguments raised is that the Arbitrator relied on a wrong contract (contract of 28.2.2006) to uphold the imposition of penalty on the petitioner/claimant. This submission has already been dealt with above in detail.
18. The second major argument raised has also been dealt with above i.e. with regard to 'internal inquiry' not having been conducted by the Respondent as required under rule 67 of the 1981 Rules.
19. This leads us to the question whether an 'Award' passed after reliance being placed by the Arbitrator on a closed inquiry report and ignoring omissions in the inquiry report i.e. the inquiry report being a closed inquiry, no basis to link the encircled key in photograph Ex.RW2/1 ARB No.88/2017 Page 17 of 20 M/s B. M. Carriers vs. Indian Oil Corporation Ltd.
(colly.) with the offending truck, and delay in registration of the FIR, can be characterized as being in breach of fundamental public policy of India?
20. As already observed above, failure of the petitioner/claimant to produce the most material witness - driver of the TT, left the Arbitrator with no choice but to rely on the inquiry conducted by the respondent. Petitioner/claimant's plea that the entire fault was on the part of the staff of the respondent and infact, they were the ones who told the driver to move the TT, could not be substantiated by the evidence led by the claimant petitioner. The claimantpetitioner also could not substantiate its allegation against the respondent company that they forced the driver of the offending tank truck to run away for the premises. Infact, perusal of letter dated 29.11.2005 which was written by the petitioner to the respondent, reveals that petitioner admitted the fault of its driver as a cause of the accident although it also sought to put blame on the staff of the Respondent officials. Though the Arbitrator could have returned a finding in favour of the petitioner/claimant highlighting the omissions/discrepancies which have been highlighted in the preceding paras by this Court, the ld. Arbitrator in his wisdom chose to place greater reliance on the inquiry ARB No.88/2017 Page 18 of 20 M/s B. M. Carriers vs. Indian Oil Corporation Ltd.
report of the Respondent.
21. The arbitral award cannot be set aside on the ground that the Arbitrator gave greater weightage to a particular evidence while ignoring the probative value of another evidence. Such an argument can appropriately be raised before an appellate court. However, while hearing objections under section 34 of the Act, this Court does not sit over the arbitrator's decision as a court of appeal and thus cannot reappreciate evidence and reach a different conclusion. It would have been a different situation if the evidence had been led by the petitioner by summoning the driver of the offending TT or any other independent witness, and still the Arbitrator would have relied on the inquiry report alone. Such a situation might have been a ground to submit that no authority exercising quasijudicial powers could be permitted to rely on a document (inquiry report) which violated rules of natural justice while ignoring other evidence. However, in the present matter, ld. Arbitrator had nothing else to rely on except the evidence in the form of inquiry report. In so far as the infirmities in the respondent's case are concerned, at the cost of repetition, it has to be again observed that this Court cannot comment on the manner in which the evidence was appreciated by the ld. Arbitrator nor can this ARB No.88/2017 Page 19 of 20 M/s B. M. Carriers vs. Indian Oil Corporation Ltd.
Court substitute its own decision for the one arrived at by the ld. Arbitrator. In support of this conclusion, reliance is placed on the following judgments:
1. National Highways Authority of India vs. Oriental Structural Engineers Ltd. Gammon India Ltd (JV); 2013 (4) Arb. LR 98(Delhi); and
2. Goel Construction Co. vs. UOI of India;
205)2013) DLT 516.
22. As a corollary of the above discussion, the objections filed against the arbitral Award dt.31.03.2010 are held to be without merit and hence, dismissed.
23. Copy of the order along with arbitral record be sent back to the Arbitral Tribunal. Thereafter, file be consigned to the record room after necessary compliance.
ANNOUNCED IN THE OPEN (AJAY GULATI)
CORT ON 14.09.2018 ADDL. DISTRICT JUDGE02
SOUTH, SAKET COURTS,
NEW DELHI
ARB No.88/2017 Page 20 of 20