Prince Roadlines vs Hindustan Petroleum Corporation ...
2018 Latest Caselaw 6749 Del

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*    IN THE HIGH COURT OF DELHI AT NEW DELHI

                                  Date of decision 14th November, 2018

+     O.M.P. (COMM) 476/2016
      PRINCE ROADLINES                                  ..... Petitioner
                   Through            Mr.Bhopal Singh, Adv.

                         versus

      HINDUSTAN PETROLEUM CORPORATION LTD.
                                              .... Respondent
                   Through  Mr.J.P. Sengh, Sr. Adv. with
                            Mr.Rikesh Singh, Ms.Mrigna
                            Shekhar, Mr. R.L.Sinha,
                            Mr.Shashi Pratap and Mr.Akash
                            Mishra, Advs.
      CORAM:
      HON'BLE MR. JUSTICE NAVIN CHAWLA
      NAVIN CHAWLA, J. (Oral)

1. This petition under Section 34 of the Arbitration and Conciliation Act, 1996 has been filed by the petitioner challenging the Arbitral Award dated 11.08.2015 passed by the Sole Arbitrator adjudicating the disputes that had arisen between the parties in relation to the Bulk Transport Agreement dated 01.06.2009 executed between the parties. In terms of the said Agreement the petitioner had deputed five Tank Trucks bearing Nos.DL 1 GB 5501, DL 1 GB 4988, DL 1 GB 6633, HR55 5126 and HR 55E 5767 with the respondent.

2. It is the case of the respondent that based on suspicion of existence of false chamber in 12 KL Tank Truck No DL 1GB 5501 the

OMP (COMM) 476/2016 Page 1 same was inspected by cutting open all the three chambers in presence of the proprietor of the petitioner on 17.11.2009 and a false chamber in compartment no.2 (middle compartment) on helper side was found. Similar inspection was done for the other remaining four trucks and following deficiencies were reported:

Sl. Tank Truck No. Observation of deviations. No.

       1.        DL1 GB 5501          Fresh painting marks, false
                                      chamber observed.
       2.        DL1 GB 4988          Epicoating inside the tank with
                                      fresh painting was observed.
                                      Painting marks observed, welding
                                      in the TT, variation with respect
                                      to approved explosive drawing.
       3.        DL1 GB 6633          Variation with respect to approved
                                      explosive drawing. Fresh paint in
                                      compartment
       4.        HR 55 5126           The size of the tank was found to
                                      be having variation with respect to
                                      the approved explosive drawing.
       5.        HR 55 E 5767         Variation with respect to approved
                                      explosive drawing

3. Based on the above findings, a Show Cause Notice dated 25.11.2009 with respect to the first truck and Show Cause Notice dated 15.12.2009 with respect to the remaining four trucks was issued by the respondent to the petitioner. However, Inspection Report was filed only for the first truck and not for the others.

4. Having considered the reply submitted by the petitioner, the respondent terminated the Agreement vide notice dated 24.02.2010 and

OMP (COMM) 476/2016 Page 2 blacklisted Tank Trucks of the petitioner. A FIR under Section 379/420 of Indian Penal Code, 1860 was also registered against the petitioner.

5. The petitioner invoked the Arbitration Agreement and filed its Statement of Claim seeking recovery of amounts deducted by the respondent as also the refund of security amount, bank guarantee and compensation.

6. During the pendency of the arbitral proceedings, by an order dated 27.09.2013 passed by the Metropolitan Magistrate, Dwarka Courts, Delhi, the proprietor of the petitioner was acquitted of the charges in FIR No.254/2009. The Metropolitan Magistrate, in her order made the following observation:

"8. In the present case, it is an admitted fact that the accused had undertaken to supply tankers to the complainant which could be used for transportation purposes by the complainant. Both PW2 Ashwani Gupta and PW3 Satish Kumar had admitted in their cross-examination that at the time of the agreement, no fault was found in the impugned tanker. Now, the basic premise on which the present case has been registered against the accused is the inspection report/panchnama dated 17.11.2009, which is Ex.PW3/B. I have perused the same. It has been recorded in the panchnama Ex.PW3/B that "based on suspicion of existence of false chamber in truck no .... , we cut/open all the three chambers and the existence of false chamber in compartment no.2 (middle compartment) on helper side was established." Then, it is mentioned as to who cut the compartment (PW1), the time taken and the size of the false compartment. Nothing except these facts has been mentioned in the panchnama Ex.PW3/B. The same is silent as to how the inspection was conducted or how the existence of the false compartment was established.

PW2 Ashwani Gupta stated in his cross examination

OMP (COMM) 476/2016 Page 3 that the capacity of the tanker was tested by filling water in it, while PW3 Satish Kumar denied doing so. He stated in his cross examination that quantity was checked by theoretical measurements. This is a major contradiction between the testimonies of both the PWs. This was the most essential fact in the present case as unless it is established that there was an extra compartment in the tanker, the case of the prosecution shall fail. At the cost of repetition, the only witnesses to the inspection viz. PW2 Ashwani Gupta and PW3 Satish Kumar have deposed in contradiction to each other regards the manner of inspection. This creates a doubt over the fact of inspection itself. Also, no photographs of the inspection were taken by the complainant, while the photographs of the severed compartment were taken later on.

9. Secondly, as pointed out by the Ld. Counsel for the accused, both PW2 Ashwani Gupta and PW3 Satish Kumar admitted in their cross examination that there was no such record against the accused that he had taken excess supply from the depot and had supplied in short. Hence, there is no occasion where the complainant had been induced to deliver extra quantity to the accused (The other alternatives of make, alter or destroy do not apply to the facts of the present case). As this has not been proved that there was actual delivery of the property to the accused, the offence under Section 420, IPC is not made out. Hence, considering all the facts and circumstances, the accused is acquitted. The bail bonds already furnished by the accused are accepted further for the purposes of Section 437 A, CrPC. The same shall remain in force for a period of six months."

7. The Arbitrator in passing the Impugned Award has held as under:

"In light of above I am of the considered opinion that there is no merit to the claim and allegation of malafide

OMP (COMM) 476/2016 Page 4 or ulterior motive leveled against Respondent. However, In case of all IT's Inspection report as well as the findings of the officials of the respondent does not clearly establish any excess supply taken by the claimants, this has also been upheld by the decision of the Metropolitan Magistrate, Dwarka Delhi. Therefore, there is no justification for any recovery -towards excess supply from the claimants. Recoveries made must be refunded.

Para 8 of the decision of the Metropolitan Magistrate, Dwarka Delhi stated that there was no evidence with regard to false compartment as well as excess supply, this is decision and finding of the court which has reached finality has to be respected.

I am of the opinion that findings of the Sr. Installation Manager and officers of the respondent corporation with regard to other unauthorized physical changes, variation with ·approved explosive drawings have not been dealt by the court cannot be disregarded only on the basis of denial by the claimants. These findings attract provisions of the transport discipline guidelines which as per the transport agreement the claimant is bound to follow. The findings constitute malpractice under these guidelines and therefore I am of the opinion that looking to the totality of the facts respondents have been justified in the blacklisting the Tank Trucks of claimant and terminating the Agreement in terms of POL Transport Discipline Guideline and Industry Transport Guidelines."

8. A reading of the above findings of the Arbitrator would show that the same are contradictory in nature. On one hand, the Arbitrator has held that the respondent had not clearly established any excess supply taken by the petitioner and therefore, there was no justification for any recovery made from the petitioner towards excess supply and also held

OMP (COMM) 476/2016 Page 5 that the decision of the Metropolitan Magistrate that there was no evidence with regard to false compartment has to be respected, at the same time, based on the unproved report has held that the "other unauthorized physical changes, variation with approved explosive drawings have not been dealt with by the Court and cannot be disregarded", and that the respondent has been able to justify the order of blacklisting passed against the petitioner.

9. As noted above, the Inspection Report with respect to the Tank Truck bearing no.DL 1GB 5501 was only with respect to the false chamber in the second compartment. Once the same was held to be unproved, there was no evidence against the petitioner as far as this Tank Truck was concerned. Admittedly, the Inspection Report with respect to the other four trucks was not filed before the Arbitrator and therefore, the findings of the Inspection Report in respect of these trucks had remained unproved. As far as the report against the Tank Truck no.DL 1GB 5501, the Metropolitan Magistrate found that inspection alleged in this report had not been proved by the respondent. Before the Arbitrator no evidence was led by the respondent to prove this report.

10. Learned senior counsel appearing for the respondent submits that the above said Inspection Report was signed by the proprietor of the petitioner and therefore, stood proved. He submits that the petitioner never denied the signature on the said Inspection Report. On the other hand, counsel for the petitioner draws my attention to the reply given by the petitioner to the Show Cause Notice as also to the affidavit by way of evidence filed before the Arbitrator clearly contending that the

OMP (COMM) 476/2016 Page 6 petitioner was made to sign on certain papers as a condition for release of the trucks. This was a matter to be considered by the Arbitrator. A reading of the Award would show that the Arbitrator has not considered this issue at all. The Arbitrator, as noted above, in fact, has given contradictory findings with respect to the said report.

11. In view of the above, the Impugned Award, except in so far as it directs refund of the recoveries made by the respondent to the petitioner, cannot be sustained and is set aside, leaving it open to the parties to pursue their remedies in accordance with the law. There shall be no order as to cost.

12. The finding of the Arbitrator on issue of recoveries is being upheld as there is no challenge made to the same by the respondent.

                                                   NAVIN CHAWLA, J
NOVEMBER 14, 2018/Arya




OMP (COMM) 476/2016                                            Page 7