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"6. [...] In construing the expression "arising out of" in the context of an arbitration clause contained in an agreement, the Supreme Court in the case of Union of India v. Salween Timber Construction(India) &Ors., 1969 (2) SCR 224 laid down the following test: "In our opinion the claim made by the respondent firm was a claim arising out of the contract. The test for determining the question is whether recourse to the contract by which both the parties are bound is necessary for the purpose of determining whether the claim of the respondent firm is justified or otherwise. If it is necessary to take recourse to the terms of the contract for the purpose of deciding the matter in dispute it must be held that the matter is within the scope of the arbitration clause and the arbitrators have jurisdiction to decide the case." Does the issue raised in the present petition fall within the expression "claim or dispute arising under this agreement" appearing in Clause 68 of the said agreement? The test for determining the question is whether recourse to the said agreement is necessary for the purpose of deterring these issues? Recourse to the agreement is not necessary for considering the incident of the inspection. Recourse to the agreement is not necessary while taking up the issue of drawing of samples and the correct procedure therefor. Recourse to the agreement is also not necessary for deciding the question as to whether the show cause notice dated 16.8.2003 is valid and legal. Clause 68 of the said agreement is not at all attracted."

14. While arguing that the present dispute does not arise under the dealership agreement, IOCL relied on Phool Service Station v. Indian Oil Corporation Ltd. [2003 (71) DRJ], where the petitioner‟s outlet was located in the State of Uttar Pradesh and the dispute pertained to the sampling procedure adopted by the respondents. The Court therein held that the dispute did not arise „under the agreement‟ and hence the jurisdiction clause of the agreement would not be applicable. The decisions of Hilal Filling Station(supra) and Phool Service Station(supra) have been considered by this Court in Jai Ganesh Petroleum (supra), which was also relied upon by the respondent. There, the Court examined the facts of each case and held that the existence of a clause conferring jurisdiction of the courts at Delhi was not sufficient to entitle the petitioners in those cases to approach this Court under Article 226 of the Constitution of India. In Jai Ganesh Petroleum (supra), the action had arisen due to an inspection carried out at the retail outlet which was located in U.P., the samples drawn therefrom had been tested and had failed, it was thus held that the cause of action arose in U.P. and the dispute had not arisen under the dealership agreement. Similarly, in Khuttar Filling Station (supra), the dealership agreement was entered in Delhi for setting up a petrol pump in Uttar Pradesh. The dispute once again related to the method of taking samples from the petrol pump of the petitioner, the Court held therein, that the dispute did not arise under the dealership agreement and that no part of the cause of action arose in Delhi. The facts of Annapurna Filling Station (supra) were similar in nature, therein it was held, "51. I have noticed the authoritative judicial pronouncements afore stated to the effect that the dispute relating to violation of Marketing Discipline Guidelines, short supplies etc. do not arise under the agreement and as such a party could not place reliance on Clause 68 of the agreement in support of the submission that the courts in the city of Delhi alone could have jurisdiction to entertain any suit, application or other proceedings in respect of such claim. Furthermore, the retail outlet of the petitioner is located on Mainpuri in the city of Uttar Pradesh which is beyond the territorial jurisdiction of this court. The show cause notice has been issued from Uttar Pradesh and the reply was sent by the petitioner to Uttar Pradesh. The order was passed after consideration thereof at Uttar Pradesh. Such order has been impugned in the present writ petition. I find, therefore that no material fact having a nexus with the lis has arisen within the territorial jurisdiction of this court."