[Cites 8, Cited by 0]
Calcutta High Court
Tapas Kumar Das vs Indian Oil Corporation Limited on 1 April, 2026
Author: Debangsu Basak
Bench: Debangsu Basak
2026:CHC-OS:112-DB
OCD-3
IN THE HIGH COURT AT CALCUTTA
CIVIL APPELLATE JURISDICTION
COMMERCIAL DIVISION
APOT/32/2026
IA No. GA-COM/1/2026
TAPAS KUMAR DAS
-Vs-
INDIAN OIL CORPORATION LIMITED
BEFORE:
The Hon'ble JUSTICE DEBANGSU BASAK
-AND-
The Hon'ble JUSTICE MD. SHABBAR RASHIDI
For the Appellant : Mr. Samit Talukdar, Sr. Adv.
Mr. Debajyoti Datta, Adv.
Mr. Subhasis Bandopadhyay, Adv.
For the Respondent : Mr. Jishnu Saha, Sr. Adv.
Mr. Manwendra Singh Yadav, Adv.
Ms. Saswati Chatterjee, Adv.
HEARD ON : 01.04.2026
DELIVERED ON : 01.04.2026
DEBANGSU BASAK, J.:-
1. Appeal under Section 37 of the Arbitration and Conciliation Act,
1996 is directed against the judgment and order dated December
23, 2025 passed in AP-COM/160/2024.
2. By the impugned judgment and order, learned Single Judge
allowed the application under Section 34 of the Act of 1996 filed by
the respondent challenging an award dated July 30, 2018.
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3. Learned senior advocate appearing for the appellant submits that,
learned Single Judge erred in setting aside the award and allowing
the application under Section 34 of the Act of 1996. He submits
that, the award did not suffer from any illegality nor did it violate
any fundamental policy of India. It was within the jurisdiction of
the learned arbitrator to err in fact and in law. The award cannot
be classified as non-speaking or perverse. Learned Arbitrator
evaluated the evidence placed and passed an award providing
reasons for the findings returned.
4. Learned Senior Advocate appearing for the appellant submits that,
the appellant was engaged as a dealer by the respondent. The
dealership agreement was terminated on the allegation of the
appellant allegedly indulging in adulteration. He submits that, two
tests were done of one sample taken. Sample taken was in
violation of the law applicable. In any event, the test was done in
absence of the appellant. He refers to the finding of the learned
Arbitrator in this regard. He submits that, in so far as the first
test is concerned, the same was done in breach of the principles of
natural justice. The report of the second test was not adverse to
the respondent. Secondly, he submits that, the arbitral tribunal
was right in holding that the termination of the contract was bad.
5. Learned Senior Advocate appearing for the appellant submits that,
once the arbitral tribunal returned a finding that the termination
was bad, then, the contract revives. In addition thereto, the
Arbitrator was entitled to award compensation for the damages
suffered by reason of the wrongful termination of the contract. He
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contends that, the learned Arbitrator, therefore, proceeded to
assess the damages and rightly awarded the same.
6. Learned Senior Advocate appearing for the respondent submits
that, the sampling was done in accordance with law. The arbitral
Tribunal proceeded on the basis of the breach of constitutional
provisions while the arbitral Tribunal was adjudicating between
the two parties purely on the basis of a commercial contract. He
submits that, the impugned award suffers from patent illegality
and tantamount to re-writing the contract. He submits that, the
contract between the parties did not permit reinstatement of the
dealership agreement which, according to him, was validly
terminated. Therefore, he submits that, no interference is called
for in the present appeal.
7. Parties entered into a dealership agreement dated March 8, 2004.
By such agreement the appellant was appointed as the distributor
to run a retail outlet at village-Kanchanpur, Jalpai, NH-41 in the
district of Purba Medinipur for operating a petrol pump under the
name and style of M/s. Mahisadal Filling Station.
8. The outlet of the appellant was inspected by a Joint Industry Team
on February 9, 2011. Samples of the products sold at the outlet of
the appellant were taken. On test, conducted thereon, such
samples did not meet the prescribed specification. Finding of such
inspection was recorded in the inspection report dated February 9,
2011.
9. By a writing dated February 24, 2011, the appellant was called
upon to show cause as to why action should not be taken against
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him in terms of the Marketing Discipline Guidelines, 2005. It is
admitted at the Bar that Marketing Discipline Guidelines, 2005
applies to the contract between the parties.
10. A further show cause notice was issued to the appellant on July
18, 2011 calling upon the appellant to show cause as to why the
dealership agreement should not be terminated for violation of the
essential terms and conditions, malpractice and criminal acts
including tampering of seals of the sample containers.
11. Appellant invoked the arbitration clause in the contract at this
stage. A first round of arbitration took place. Arbitrator in the
first round passed an award dated August 30, 2012 which was set
aside. Thereafter, on an application under Section 11 of the Act of
1996, the Arbitrator which passed the award dated July 30, 2018
was appointed.
12. By the award dated July 30, 2018, learned Arbitrator held the
termination to be bad in law, directed restoration of the dealership,
and, awarded damages.
13. On the score of restoration of dealership, learned Trial Judge
found that, the learned Arbitrator disregarded the terms of the
dealership agreement and the established law on the subject.
Learned Single Judge held that, the learned Arbitrator acted
contrary to clause (3) of the dealership agreement which permits
the agreement to be terminated at the option of the parties even
without any event of default occurring. Learned Single Judge
referred to Sections 14 and 16 of the Specific Relief Act, 1963 in
this regard.
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14. Learned Single Judge also noted that, learned Arbitrator
embarked upon a discussion as to the applicability of
Constitutional provisions as, the respondent is an authority within
the meaning of Article 12 of the Constitution of India. Learned
Single Judge held that the contract between the parties was
voluntarily undertaken and that there was no scope to enter into
the arena of infringement of constitutional right as done by the
learned Arbitrator.
15. So far as the claim on account of damages is concerned, learned
Single Judge held that, the damages was awarded without any
evidence in support of the proof thereof. Learned Single Judge
held that, claim on account of damages cannot be awarded without
any proof of the same.
16. Our scope of enquiry under Section 37 of the Act of 1996 is
circumscribed by the parameters under Section 34 thereof. We are
to evaluate whether or not learned Single Judge applied the
parameters enshrined under Section 34 of the Act of 1996 in
assessing the award impugned before it. In the facts and
circumstances of the present case, leaned Single Judge correctly
found that, the learned Arbitrator was guilty of re-writing the
contract between the parties arriving at a decision which can be
termed to be patent illegality and contrary to the established
principles of law. These parameters are well established principles
for setting aside an award under Section 34 of the Act of 1996 if
the award falls foul of the same.
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17. In view of the discussion above, we do not find any ground to
interfere with the impugned judgment and order.
18. Accordingly, APOT/32/2026 along with the connected
applications are dismissed without any order as to costs.
(DEBANGSU BASAK, J.)
19. I agree
(MD. SHABBAR RASHIDI, J.)
Sp3/As.
