B JENARATHANAN BALAJI SERVICE STATION COIMBATORE Vs. SENIOR REGIONAL MANAGGER HINDUSTAN PETROLEUM CORPORATION COIMBATORE REGIONAL OFFICE COIMBATORE

JUDGEMENT

(1.) PETITIONER, who is the Managing partner of Balaji Service Station, who is appointed as retail outlet dealer by the respondent Corporation under the Dealership Agreement dated 29.12.1985. The dealership of the petitioner is admittedly governed by the provisions of the Motor Spirit and High Speed Diesel (Prevention of Malpractices in Supply and Distribution) Order, 1990, an order framed by the Central Government in exercise of the powers conferred by Sec. 3 of the Essential Commodities Act, 1955.

(2.) FOLLOWING clauses of the agreement dated 29.12.1985 are relevant to be mentioned. "24. The quantities of petroleum and other allied products stated to be delivered by the Corporation as measured by the Corporations measuring; devices or means shall be final and binding upon the parties hereto. The property in the product shall pass from the Corporation to the Dealer at the time of delivery of the product to the dealer of his representative and the Corporation not in any way be responsible for loss or shortage thereafter. A receipt signed by or on behalf of the dealer at the time of delivery of petroleum products by the Corporation will be conclusive evidence that the petroleum products mentioned therein where in fact delivered to the dealer, that such products were in accordance with the specifications there for mentioned hereunder and that the quantities of such products mentioned in the receipts are correct, and the dealer shall thereafter be precluded from making any claim against the Corporation for compensation or otherwise on the ground of short delivery or contamination of such products. 25. The dealer shall be responsible for all loss, contamination, damage or shortage of or to the products to the whether partial or entire, and no claim will be entertained by the Corporation therefore under any circumstances except in cases where the Corporation is satisfied that loss arose from leakage from underground tanks or pipes which the dealer could not reasonably have discovered and of which the dealer gave immediate notice in writing to the Corporation on discovery. The Corporation will consider compensation only from the date of receipt of notice till leakage is rectified. 26. All the products supplied by the Corporation to the dealer hereunder shall be in accordance with the specification laid down by the Corporation from time to time. The dealer shall take every possible the recaution against contamination of the Corporation's product by water, dirt or other things injurious to the quality and shall not in any way directly or indirectly alter the specifications of the said product as delivered. The Corporation shall have the right to exercise at its discretion at any time and from time to time quality control measures for products marketed by the Corporation and lying with the dealer the opinion of the Regional Manager for the time being at the Corporation Regional Office at Ernakulam as to whether any product of the Corporation has been contaminated shall be final and binding upon the dealer. In the event of the said Regional Managing Director finding that the contamination has been due to any act or default of the dealer or of its servants or agents, the Corporation shall have the right without being bound to do so, to remove the contaminated product and to destroy or otherwise deal with the same without making any payment therefore to the dealer and without prejudice to the Corporation right to terminate this agreement forthwith. 42. The dealer undertakes faithfully and promptly to carry out, observe and perform all directions or rules given or made from time to time by the Corporation for the proper carrying on of the dealership of the Corporation. The dealer shall scrupulously observe and comply with all laws, rules and regulations and requisitions of the all Central/State Governments and of all "all authorities" appointed by them or either of them including in particular the Chief Controller of explosives, Government of India an d/or any other municipal and/or any other local authority with regard to the storage and sale of such petroleum products. 55. Notwithstanding anything to the contrary herein contained, the Corporation shall be at liberty to terminate this agreement forthwith upon any time after the happening of any of the following namely: (I) If the dealer shall contaminate or tamper with the quality of any of the products supplied by the Corporation. The Corporation's right to terminate this agreement under the terms of this clause shall be without prejudice to any of its other rights and remedies against the dealer, in the event of the Corporation terminating this Agreement under the provisions of this clause, it shall be liable to pay for any loss of compensation in respect of such termination provided that the supply of any petroleum products by the Corporation to the dealer pending expiry of any notice, of termination or after any act contravention or omission by the dealer entitling the Corporation to terminate this agreement shall have become known to the Corporation, shall not in any way prejudice or affect the right of the Corporation to revoke and/or enforce the termination of this agreement and the licence granted hereunder. 66. Any dispute or difference of any nature whatsoever or regarding any right, liability, act, commission or account of any of the parties hereto arising out of or in relation to this Agreement shall be referred to the sole arbitration of the Managing Director of the Corporation or of some officer of the Corporation who may be nominated by the Managing Director. It is also a term of this contract that no person other than the Managing Director or a person nominated by such Managing Director of the Corporation as aforesaid shall act as Arbitrator hereunder. The award of the Arbitrator so appointed shall be final, conclusive and binding on all parties to the agreement, subject to the provisions of the Arbitration Act, 1940 or any statutory modification of/or re-enactment thereof and the rules made thereunder and for the time being in force shall apply to the Arbitration proceedings under this clause".

(3.) MR. T.R. Rajagopalan, learned senior counsel for the petitioner contends that there is no variation in the density of the sample and hence the finding of the respondent that the petitioner had adulterated the petroleum product entrusted to him. MR. T.R. Rajagopalan, learned senior counsel further contends that the petroleum product is contaminated merely on the basis of the final boiling point is erroneous and in any event, the unilateral finding of the respondent that the petroleum product had been adulterated and contaminated by the petitioner is not justified, and therefore, the order of suspension of the petitioner's dealership licence for a period of 45 days, by the impugned proceedings, is arbitrary and unreasonable and violative of Art. 14 of the Constitution of India.