VENUS AGENCIES REP BY ITS PARTNERS SMT S SAROJINI & S MUTHUKUMAR Vs. SENIOR REGIONAL MANAGER-RETAIL HINDUSTAN PETROLEUM CORPORATION LTD

JUDGEMENT

(1.) This Original Side Appeal is directed against the order and judgment rendered by the learned Single Judge dismissing O.P.No.606 of 2006 instituted by the appellant herein under section 34 (3) of the Arbitration and Conciliation Act, 1996, challenging the correctness of the Award rendered on 11th July 2005.

(2.) The facts lie in a very narrow compass. The appellant before us was granted the license to run a retail outlet to sell petrol, diesel and other petroleum products manufactured and supplied by Hindustan Petroleum Corporation Limited. It appears that the said licence/ dealership was renewed somewhere in the year 1985 for a period of fifteen years. Whileso, one of the partners, by name M.Sivalingam died on 22.5.2000, rendering the Partnership Firm as dissolved due to the death of one of the two partners of Firm. However, with a view to retrieve the monies due to the Firm from the market, permission was granted in a piecemeal fashion to the Firm to carry on with the vending operations of the products. It appears that on 31st January 2002, a surprise inspection took place and samples were drawn from the retail outlet and when the samples were tested in the laboratory, it failed with regard to one of the parameters where as against the minimum of 88 the product was found to have standard of 85. As a consequence of the sub-standard product, proceedings have been initiated and duly complying with the principles of natural justice by issuing show cause notice on 23 May 2002 and after considering the explanation offered in response thereof on 30th May 2002, final orders were passed on 5.6.2002, imposing a fine of Rs.20,000/- as well as stopping the supplies and sales for a period of 30 days. After the punishment period has elapsed, supplies have been restored from 8th July 2002. Again another set of samples were drawn on 27th August 2002 and this time also, the samples have failed with regard to the same parameter known as "RON" and this time around, the laboratory found the sample as so sub-standard that it has reflected the parameter value as 77 as against the minimum of 88. Hence, a show cause notice was issued on 23rd September 2002 proposing to cancel the dealership agreement. The appellant has submitted its reply to the said show cause notice on 7.10.2002. Finding the response to the show cause notice as not convincing, orders were passed on 22.11.2002, terminating the dealership agreement. It is only appropriate to notice that the following three reasons weighed with the competent authority for terminating the dealership agreement:

(3.) Since the dealership agreement has provided for referring the disputes between the parties for resolution through the mechanism of arbitration. The Deputy General Manager-Retail (Upgradation), South Zone, Chennai was appointed as Arbitrator. The claim and resistance by way of counter claims alongwith the reply and also a further rejoinder filed by the Company have all been considered. The learned Arbitrator, by his award dated 11th July 2005, dismissed the claim by upholding the termination of the dealership agreement dated 16th February 1987, effected on 22.11.2002 as valid and legal. The other claim made by the claimant for payment of damages towards loss of business has been rejected. It is this award, which came to be challenged by instituting O.P.No.606 of 2006 as noticed already . That O.P. was dismissed by the learned Single Judge of this court by judgment and order dated 27.2.2008 and hence this appeal.