Quick Summary: The High Court of Madras overturned a decision to end a petrol station's dealership, pointing out mistakes in the arbitration process. The case involved Bharat Petroleum and Sree Ramajeyam Service Station in Chennai.
On December 8, 2025, Justice N. Anand Venkatesh of the High Court of Madras gave a judgment about a disagreement between Bharat Petroleum Corporation Ltd and Sree Ramajeyam Service Station. The case was about a dealership termination order issued on November 27, 2020.
Bharat Petroleum, based in Chennai, had a long-standing dealership agreement with Sree Ramajeyam Service Station for over sixty years. On September 4, 2020, samples from the petrol station were tested and found to not meet certain standards, leading to claims of fuel tampering.
"The report, dated 19.09.2020, stated that the retail outlet sample did not conform to IS2796:2017 Specification for Motor Gasoline BS VI."
After a series of legal actions, including temporary court orders, the dealership was ended. However, Sree Ramajeyam argued against this through arbitration, claiming the termination was illegal and against basic fairness principles.
Justice Venkatesh found that the Arbitrator made mistakes in understanding technical specifications and legal standards. The court noted that the Arbitrator wrongly used an outdated standard and misunderstood the evidence about fuel tampering.
"The finding rendered by Sole Arbitrator certainly suffers from patent illegality."
The court pointed out several mistakes by the Arbitrator, including using the wrong standards and not providing enough reasoning for the termination's alleged bad intent.
"The Sole Arbitrator has applied an irrelevant BIS Standard and has relied upon a judgement which does not apply to the facts of the present case."
The High Court canceled the arbitration decision, ordering Sree Ramajeyam to pay Rs. 1.5 lakh to Bharat Petroleum. This decision highlights the importance of following the correct legal and technical standards in arbitration.
This case shows the need for correct use of standards and careful examination of evidence in legal disputes, especially in technical fields like fuel distribution.
