The main legal point established in the judgment is that the termination of a dealership agreement can be upheld if the party has violated the terms and conditions of the agreement, and specific performance may not be granted if the contract provides for determination in case of breach.

By this petition filed under section 34 of the Arbitration and Conciliation Act, 1996 (for short ‘Arbitration Act, 1996’) the petitioner seeks to challenge the award dated 30th March, 2009 made by the learned arbitrator rejecting all the claims made by the petitioner.

2. In the year 1986, dealership was commissioned under physically handicapped category by the respondents in favour of one Mr. Dashrath Fajge as the sole proprietor. Subsequently Mr. Abdul Gani was inducted with the said Mr. Dashrath Fajge and fresh dealership agreement dated 20th April, 1992 was executed.

3. On 9th May, 2003, the District Administration/Police raided outlet premises of the petitioner and found that the tanker bearing No. MH26-7600 was uploading unidentified product into MS tank. The vehicle was seized by the police authorities. The retail outlet was sealed after taking samples. Under the provisions of Essential Commodities Act, case was filed against the petitioner. The sales and supplies to the retail outlet of the petitioner was suspended. The 1st respondent thereafter issued a notice dated 14th May, 2003 to the petitioner to show cause as to why action should not be taken against them. The petitioner vide their letter dated 26th May 2003 admitted that their manager Mr. Reddy had conspired with unauthorized persons and arranged to put solvent in the motor spirit. The 1st respondent was not satisfied with the reply tendered by the petitioner. By letter dated 7th June, 2003 the retail outlet of the petitioner was closed for a period of 30 days and penalty of Rs.20,000/- was imposed for such offence upon the petitioner. The petitioner paid the said penalty on 16th May, 2003. As the petitioner did not obtain any permission to resume the retail outlet from the Collector Nanded, the operation remained suspended till 7th September, 2003.

4. On 7th September, 2003, the sales at the outlet of the petitioner recommenced. Since the case under the Essential Commodities Act, against the petitioner was in progress, the District Authorities issued notice to respondents to close the retail outlet. The sales at the outlet of the petitioner therefore had to be suspended on 22nd November, 2003 where after the supplies to the retail outlet were never resumed admittedly.

5. The petitioner thereafter approached the State Government, Ministry of Food, Civil Supply and requested for resumption of supply to the retail outlet. The State Government passed an order dated 14th June, 2004 for resumption of supply.

6. On 23rd June, 2004, the respondent received a letter from one Mrs. Bharti Pawar and Mr. Sachin Pawar claiming that they were partners in the dealership with the petitioner and produced copy of the partnership deed alongwith the extract from the Registrar of Partnership Firm. It is the case of the respondent that the said partnership was without prior consent obtained by the petitioner from the respondent and such act was in breach of the dealership agreement. The respondents thereafter issued show cause notice on 1st July, 2004 to the petitioner as to why action should not be taken. The petitioner vide their reply dated 15th July, 2004 denied of having entered into partnership agreement with Mr. and Mrs. Pawar.

7. It came to the notice of the respondents that Mr. Dashrath Fajge, the original allottee of the petrol pump was in employment with Nanded Municipal Corporation with effect from 16th November 1998 which was also without consent of the respondents and amounted to violation of the terms and conditions of the dealership agreement. The respondents accordingly issued show cause notice on 14th January, 2005 as to why action including termination should not be taken against the petitioner. The respondents did not find reply dated 25th January, 2005 submitted by the petitioner as satisfactory and therefore by letter dated 24th February, 2005 terminated the dealership of the petitioner. The petitioner thereafter invoked arbitration clause. The learn