Judgment : 1. The Petitioner, Original Respondent has challenged the Award dated 19th May, 2009 passed by the Sole Arbitrator. 2. The basic events are that the Petitioner is the Indian Oil Corporation Ltd., (called the IOC) who owns and operates 10 of India's 19 refineries with a combined refining capacity of 60.2 million Metric Tones per annum. The Respondent is a fleet owner and a transport contractor who gives on hire tankers for transportation of various petroleum products. On 22.08.2002, a Bulk POL Road Transport Contract Agreement was entered into between the Petitioner and the Respondent. By this agreement the Petitioner gave contract to Respondent to transport Lube Oil Products to different dispatch points of the Petitioner. Petitioner relies on Clauses 21 & 27 besides other terms and conditions contained in the agreement. On 01.09.2004, the agreement i.e. Bulk POL Road Transport Contract Agreement was extended for a period of one year i.e. upto 31.08.2005. On 03.09.2004, a tanker bearing T.T/No. MH04-AL-7885 of the Respondent Company reported 18 KL of Neutral 150” Base Oil vide Challan No. 90303673 for unloading at Taloja Plant. Sample product was sent to lab for testing through driver of the T/C the same day. Lab report showed traces of moisture in the sample sent, but the same was not recorded on challan by the Officer and the receipt copy of challan kept at plant does not show presence of any free water. On 04.09.2004 and 06.090.2004, TT/No. MH-04-AL-7885 was unloaded in storage Tank 362. On 07.09.2004, while blending a batch of “Servo Torque 10” at Taloja Lube Plant, Neutral150 Base Oil was taken from storage Tank No. 362. On 09.09.2004, presence of free water was detected in Base Oil Neutral 150 drawn from storage Tank No. 362 and consequently approx. 10,000 litres of water was drained from Tank No.362. Storage Tank Nos. 363A and 363B storing Neutral 500 and approx. 700 litres of water was drained from these two tanks which was also delivered by the Respondent Company's truck on 21.08.2004 at Taloja Plant. 3. As the above offence was a very serious matter, vigilance inquiry was directed for determining the culprits behind the said malpractice committed at Taloja Plant. On 27.12.2004 and 31.012.2004, the Respondent company admitted their wrong doing by these two letters and assured that such malpractices will not happened in future. 3. As the above offence was a very serious matter, vigilance inquiry was directed for determining the culprits behind the said malpractice committed at Taloja Plant. On 27.12.2004 and 31.012.2004, the Respondent company admitted their wrong doing by these two letters and assured that such malpractices will not happened in future. On 10.01.2005, 24.03.2005, 11.04.2005 and 21.04.2005 letters from Respondent to Petitioners requesting to start loading the transport trucks. In the month of January, 2006, the Vigilance Department after investigating the alleged malpractices submitted their report. The vigilance report recorded in its findings that officers at Taloja Plant allowed power operation practices in the Plant which made Plant Operations susceptible to situations where Base Oil was pilfered from the Plant and equal amount of water was unloaded in Base Oil Storage tank during August to September, 2004, causing a direct loss amounting to Rs. 3,97,867/- to the corporation. Vigilance report clearly brought out the malpractices carried out by the persons in charge of Truck No. MH-04-AL-7885 of the Respondent Company. 4. On 10.03.2006, the Petitioner issued show cause notice to the Respondent Corporation. On 23.03.2006, the Respondent Corporation replied to the show cause notice. On 28.07.2006, the Petitioner informed the Respondent vide letter about “Holiday Listing” of the Respondent, whereby the Respondent would be debarred from entering into any contracts with Indian Oil Corporation for a period of two years. As per the Agreement, the Petitioner then adjusted the Security Deposit of Rs. 2,50,000/-towards the loss of product and further informed the Respondent Company to pay the balance amount of Rs.1,47,987/- towards the balance dues along with 12% interest vide letter dated 12.07.2006. 5. In the month of November, 2007, the Respondent then filed a claim before the Sole Arbitrator Shri Y. V. Ramanrao for refund of Security Deposit. On 23.04.2008, the Petitioner filed its Counter Claim. On 19.05.2009, the Arbitrator framed four issues and passed the Award on the issues framed, whereby it is held that the Petitioner is not entitled to withhold and adjust the Security Depos8it and Bank Guarantee of the Respondent and also for damages from the Respondent, amounting to Rs. 1,47,987/-after adjusting the Security Deposit. 6. Being aggrieved by the Arbitral Award, the Petitioners are filing the present Petition to challenge the aforesaid Award passed by the learned Arbitrator. 7. 1,47,987/-after adjusting the Security Deposit. 6. Being aggrieved by the Arbitral Award, the Petitioners are filing the present Petition to challenge the aforesaid Award passed by the learned Arbitrator. 7. The learned Arbitrator after taking into account the statement of claim, written statement, counter claim, pleadings, affidavits, documents, oral and written arguments, awarded the claim of the Claimant/Respondent. 8. The learned Arbitrator was right in holding that a show cause notice dated 10th March, 2006 issued by the Petitioner is invalid and improper, as admittedly the alleged malpractice, even if any, for the period from 04.09.2004 to 06.09.2004 were not informed after expiry of the contract period through show cause notice dated 10th March, 2006. This was admittedly after 18 months from the date of the alleged incident. The learned Arbitrator has also observed as under: “That product is unloaded under strict supervision of Respondents Officers only after carrying out various checks and after satisfactory meeting of norms specified by Respondent. The subject truck MH-04-AL-7885 was unloaded on 04.09.2004 and 06.09.2004 and a copy of challan duly acknowledged handed over to Claimant. The copy of challan does not bear any malpractice, as alleged by Respondent. No recovery made towards alleged malpractice by Claimant from Claimants transportation payments.” 9. Therefore, taking over all view of the matter, the reasons so given cannot be faulted with at the instance of the Petitioner who failed to take action at an appropriate time and in fact their officers failed to raise any objection at the relevant time. It appears that there was no endorsement of any malpractices made by the concerned officers at the relevant time. The alleged collusion and or enquiry against those officers at later stage in any way cannot be the reason to accept the case of the Petitioner that show cause notice so issued was valid and proper. Such show cause notice itself is nothing but merely a formality. The Respondent could not have been in a position to prove negative in view of the clear endorsement and/or no objection of any kind from the officers at the relevant time. 10. The learned Arbitrator is right in holding that the alleged adulteration and malpractice by the Respondent was also not proved. There is clear statement on record that the Respondent was not informed about investigation of the alleged malpractice. 10. The learned Arbitrator is right in holding that the alleged adulteration and malpractice by the Respondent was also not proved. There is clear statement on record that the Respondent was not informed about investigation of the alleged malpractice. No opportunity of whatsoever was given to the Respondent/Claimant at the relevant time to put their case. The show cause notice as recorded was given after 18 months. It nowhere mentioned about the investigation. It was concluded prior to issue show cause notice. The claimants got the knowledge about the investigation only after receipt of the Petitioner's letter dated 12th July, 2006. 11. In view of the above back ground, the learned Arbitrator was right in holding that the Respondent/Claimant is entitled for refund of security deposit and original bank guarantee by the Respondents. In view of the above finding, withholding of original bank guarantee and security deposit was illegal and impermissible. The malpractice as alleged is not proved and therefore, there is no reason to deny the monetary entitlement, refund of security deposit and the original bank guarantee. Therefore, taking over all view of the matter, I am inclined to observe that the Award is well within the framework of law and the record. 12. In the result, the Arbitration Petition is dismissed. There shall be no order as to costs.