Himachal Pradesh High Court Refuses Interim Protection Against HPCL's Termination Of Transport Contract

The Himachal Pradesh High Court has recently refused to grant interim protection to Shree Shyam Roadlines against Hindustan Petroleum Corporation Limited's (HPCL) termination of its petroleum transportation contract.

It held that a terminated, determinable contract cannot be revived through proceedings under Section 9 of the Arbitration and Conciliation Act, 1996, and that the aggrieved party's remedy lies in seeking damages or compensation in other proceedings.

“After the termination of the contract, the remedy of damages or compensation is available to the present appellant in some other proceedings and a terminated agreement cannot be revived or restored in proceedings under Section 9 of the Arbitration and Conciliation Act,” Justice Romesh Verma observed.

The dispute arose from a March 26, 2025 agreement under which Shree Shyam Roadlines was to transport bulk petroleum products by road from Nalagarh until December 31, 2029.

The agreement required the transporter to maintain compliant tank trucks and reserved HPCL's right to terminate the contract.

A complaint received on April 14, 2025 prompted HPCL to investigate whether the trucks met the tender requirements.

In a show-cause notice dated July 8, 2025, HPCL alleged that three trucks lacked bottom-loading equipment before the November 8, 2024 bid deadline, despite fabrication certificates dated November 5 and 6, 2024.

The relevant fittings, it said, were supplied only in December 2024.

HPCL issued a second show-cause notice on October 24, 2025, after a report received on October 13 declared a truck's lock tampered with. Shree Shyam Roadlines replied to both notices.

On March 5, 2026, HPCL terminated the contract, blacklisted the entire fleet for two years with effect from July 8, 2025, and ordered forfeiture of the ₹8 lakh security deposit.

Shree Shyam Roadlines sought interim protection before the District Judge, Solan, under Section 9 on March 18, 2026.

The application was dismissed on June 6, 2026, prompting an appeal under Section 37(1)(b). The High Court had to decide whether interim relief could effectively restore the terminated contract.

The transporter argued that HPCL's termination order lacked reasons and violated procedural fairness because the company had not supplied relevant records sought by it.

It maintained that the trucks were ready before the bid deadline and denied any breach warranting termination.

HPCL defended the District Judge's decision, contending that Section 9 could not revive an already terminated contract and that the transporter's remedy lay elsewhere.

The High Court found that the agreement was determinable and that granting the relief sought would effectively compel its restoration through a mandatory injunction.

It also rejected the procedural fairness challenge, noting that HPCL had issued show-cause notices, sought replies and afforded an opportunity of hearing before terminating the contract.

On the alleged irregularities, the Court found that HPCL had established a prima facie case of serious malpractices.

Stressing the safety risks associated with petroleum transportation, it observed that “the safety of said goods is of prime importance and no leniency can be shown to the defaulting party.”

Finding no illegality or perversity in the District Judge's decision, the Court dismissed the appeal and pending applications, while recognising that Shree Shyam Roadlines could seek damages or compensation in other proceedings.

For Petitioner (Shree Shyam Roadlines): Advocates Kshitij Sharma (Senior Advocate), Priya Sharma, Shobhit Sharma.

For Respondent (Hindustan Petroleum Corporation Ltd. & another): Advocate Nitin Thakur.