The court held that where there is an arbitration clause in a contract, the Writ Court will not readily interfere in the realm of a contract, and the remedy lies in arbitration.

Subrata Talukdar, J.

1. In this writ petition the writ petitioner no.1, who operates a petroleum retail outlet under the respondents-Indian Oil Corporation Limited (for short IOCL) is represented by its Directors being the writ petitioner nos. 2, 3 and 4 who challenge the order of termination of the retail outlet (for short RO) dated 20th September, 2012 in turn upheld by the Appellate Authority (for short AA) of the IOCL vide order dated 5th of June, 2013.

2. At the heart of the dispute is the failure on the part of the RO to emerge successful in the sample testing of extra premium (XP) petrol drawn from the RO by the Field Officer of IOCL during an inspection on 30th November, 2011.

3. At the inspection on 30th November, 2011 both High Speed Diesel (for short HSD) and XP were drawn. While the HSD sample conformed to the normative specification, in respect of the XP sample which was tested, the original failed to meet the specification of Full Boiling Point (for short FBP) as well as the level of existing gum. Accordingly, supplies of all products to the RO were suspended vide communication dated 15th December, 2011.

4. The suspension of supplies was followed by a show cause notice on the 22nd of December, 2011 and, by reply dated 23rd December, 2011 the petitioners requested for testing of the sample retained by the RO. The RO sample retained with the dealer and the Field Officer were again tested on 10th February, 2012 and, both the retention samples failed to meet the specified norm.

5. A notice of termination was thereafter issued to the RO vide letter of IOCL dated 4th of April, 2012, in which the specific allegation was made against the RO that failure to meet the specification of the samples means adulteration of the product.

6. By reply to the show cause dated 4th of April, 2012, the RO by letter dated 18th April, 2012 purported to admit the fact that at the time the product were unloaded from the tanker on 26th November, 2011 of 4 kilolitres (kls) XP + 8 kls HSD, none of the three Directors of the RO were present at the site. Thus, the product was unloaded by the Duty Manager in presence of the driver of the tanker and helper.

7. The reply of the RO further points to the fact that at the time of unloading the tanker on 26th November, 2011 by mistake the disposal pipe of HSD was introduced in the underground tank of XP for some time. Such mistaken insertion of the HSD disposal pipe resulted in the failure of the XP to meet the sample testing norms.

8. Being dis-satisfied with the reply of the RO, IOCL terminated the dealership vide its letter dated 20th September, 2012. The RO preferred an appeal on 19th October, 2012 to which personal hearing as well as opportunity to file written submissions was granted to the RO on 24th of April, 2013.

9. In the appeal the additional point was taken on behalf of the RO that the testing of the XP samples was done on several parameters. It is transparent that there is no difference in respect of the other parameters while, in respect of the FBP alone there was a striking difference. Therefore, in the appeal the RO pressed for testing by an independent laboratory.

10. The AA took cognizance of the fact that in the reply to the show cause the RO had taken the point of mistaken decantation of HSD into the XP tank. The AA also noticed the defence taken by the RO at the show cause stage that the point regarding mistaken decantation was purportedly taken at the behest of the Field Officer of IOCL.

11. The AA further took notice of the fact that not only the FBP and the existing gum content of the XP had failed in the sample test, it is also on record that the density of the RO sample was found to be at variance. Therefore, the combined effect of FBP, existing gum content and density variation pointed towards adulteration of the product.

12. The AA also noticed that the samples drawn from the RO were tested at the Gauripur Regional Laboratory of IOCL at Kolkata and, the IOCL had extended suff