Delhi High Court Sukhbir Singh vs M/S Hindustan Petroleum Corporation ... on 16 January, 2020 $~ * Reserved on: 18th October, 2019 Pronounced on: 16th January, 2020 + O.M.P. 1118/2014 SUKHBIR SINGH ..... Petitioner Through: Mr. Sanat Kumar, Senior Advocate with Mr.Vinayak Batta, Advocates. versus M/S HINDUSTAN PETROLEUM CORPORATION LTD ..... Respondent Through: Mr.Anupam Srivastava & Ms.Divya Joshi, Advocates. % HON'BLE MR. JUSTICE PRATEEK JALAN JUDGMENT 1. By the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 [hereinafter referred to as "the Act"], the petitioner seeks setting aside of an award dated 09.09.2014, rendered by a sole arbitrator [hereinafter referred to as "the award"]. FACTS 2. The petitioner and the respondent were parties to a dealership agreement dated 27.06.1994 under which the petitioner was running a retail outlet for petrol, diesel, motor oils, greases, and other such products. The term of the agreement was fifteen years. O.M.P. 1118 of 2014 Page 1 of 34 3. The controversy between the parties, which gave rise to arbitration proceedings, concerns a sample of motor spirit ["MS"] taken from the petitioner‟s retail outlet on 22.01.2009. The inspection of MS at the retail outlet of the petitioner is stated to have failed in the mobile lab test report, although the sample of High Speed Diesel ["HSD"] was found to meet with specifications. Depot samples ["supply location sample"], alongwith a Tank Truck Retention Sample ["TT Sample"] and Retail Outlet Sample ["RO Sample"] were sent by the respondent to its laboratory, and received on 24.01.2009. The laboratory report dated 25.02.2009, in respect of the MS depot sample received, reveals that the samples taken from the supply location and the tank truck were not tested, as they were reported to be "leaky". However, it was reported that the sample taken from the retail outlet failed to meet specifications. The respondent thereafter appears to have submitted another depot sample of MS to its laboratory on 30.01.2009. According to the petitioner, this was done unilaterally by the respondent without any information or notice to the petitioner. The report dated 28.04.2009, in respect of the MS sample received on 31.01.2009, found the sample to meet specifications. 4. The respondent issued a show cause notice dated 12.05.2009, calling upon the petitioner to show cause as to why its dealership should not be terminated. The petitioner claims that it is at this stage that the test reports came to its knowledge. 5. The petitioner replied to the show cause notice on 20.05.2009, raising various disputes regarding the validity of the procedure O.M.P. 1118 of 2014 Page 2 of 34 adopted by the respondent, and relying upon the provisions of the respondent‟s Marketing Discipline Guidelines ("MDG") in this regard. 6. The petitioner challenged the show cause notice by way of a writ petition [WP(C) 13930/2009] before this Court. The writ petition was disposed of by an order dated 29.07.2010, permitting the petitioner to file a further reply to the show cause notice, and directing the respondent to pass a reasoned order. Pursuant to the liberty granted, the petitioner filed a detailed reply on 06.08.2010. By a reasoned order dated 05.10.2010, the respondent found the petitioner‟s reply unsatisfactory, and decided to proceed further in the matter. The dealership was then terminated on 22.12.2010. This was challenged in WP(C) 8175/2010, which was withdrawn on 23.08.2012 with liberty to pursue arbitration proceedings. 7. The petitioner invoked the arbitration clause contained in the dealership agreement, and Mr. Arun Garg, an officer of the respondent, was appointed as the sole arbitrator in accordance with the arbitration clause. Before the arbitrator, the petitioner filed a statement of claim seeking restoration of the dealership agreement and cancellation of the termination letter, as well as damages. 8. The respondent, in its reply to the petitioner‟s statement of claim, relied inter alia upon the laboratory test results mentioned above. The respondent contended that the test results demonstrated adulteration and tampering with the quality of the product by the petitioner. The petitioner filed an affidavit in evidence dated 09.09.2013, reiterating its contentions regarding noncompliance with provisions of the MDG, and drawing out various discrepancies in the