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Madhya Pradesh High Court · body

2001 DIGILAW 136 (MP)

Agrawal Motors v. Union of India (UOI)

2001-02-12

DIPAK MISRA

body2001
Judgment ( 1. ) BY this writ petition preferred under Articles 226 and 227 of the Constitution of India the petitioner has prayed for calling for records from the custody of respondent Nos. 2 and 3 and upon perusal of the same to issue a writ of certiorari for quashment of the order contained in Annexure P. 8 and to grant such other relief as may be deemed fit and proper in the facts and circumstances of the case. ( 2. ) THE facts as have been unfolded are that the petitioner is a dealer of Hindustan Petroleum Corporation having its retail outlet for petrol and diesel at Baldeobagh, Jabalpur. The petrol pump has been in existence since 1957 and no complaint of any kind has ever been launched against it from its inception. It is set forth in the petition referred to as the Act) to provide in the interest of general public for control of production, supply and distribution of, and trade and commerce in certain commodities. Section 3 of the Act empowers Central Government to control production supply, distribution etc. of essential commodities by making orders in respect of the matters enumerated therein. The Central Government in exercise of the powers conferred on it by Section 3 of the Act has framed the Motor Spirit and High Speed Diesel (Regulation of Supply and Distribution and Prevention of Malpractices) Order, 1998 (hereinafter referred to as the 1998 order ). The said order defines "adulteration", "dealer", "high speed diesel", "malpractice", "motor spirit", "oil company", and "pilferage". The Clauses 4 and 5 of the 1998 Order deal with power of search and seizure and sampling of product. According to the petitioner Clause 3 of the 1998 order provides that the Food Inspector shall put the seal over the underground tank inlet after diesel/petrol is unloaded and the said seal can be broken by him alone at the time of unloading of the next tanker. It is set forth in the writ petition that on 17-10-2000 a team of eight persons arrived at the petitioners pump and obtained samples of diesel and petrol and at the same time carried out inspection. It is set forth in the writ petition that on 17-10-2000 a team of eight persons arrived at the petitioners pump and obtained samples of diesel and petrol and at the same time carried out inspection. During the inspection the team found that the density check of petrol and diesel was found well within the variance limits; the delivery measurement of the products from both the petrol and the diesel pumps was in order; the seals of the various State Government Departments, namely, Food and Civil Supply and the Weight and Measurement Department were found intact; and the pump as well as the tank was found sealed and the physical and book stocks the various registers were also found in order and within the variance limits. It is put forth that the density is the only test which is carried out at the time of unloading of the tanker in the presence of the dealer and the government officials and if the diesel and petrol are found deficient in any other manner, the dealer cannot be held responsible for the same. The Residual Octane Number (hereinafter referred to as the RON) test is carried out at the laboratory. It is pleaded that there is no provision for conducting such test at the time of unloading of the tanker at the dealers place or even at the Depot of the Corporation. According to the writ petitioner if petrol is found deficient in RON test the same could be due to various reasons for which the petitioner cannot be held responsible. It is alleged that in the instant case the sample bottles were neither dried nor cleaned as envisaged in the 1998 Order and no copy of panchnama was given to the petitioner even though asked for. It is urged that the composition of search party was not of the nature as specified in Clause 4 of the 1998 Order. There was no Gazetted Officer of the Central Government or State Government; no Police Officer not below the rank of Deputy Superintendent of Police duly authorised by general or special order by the Central or the State Government : no officer of the concerned Oil Company i. e. Hindustan Petroleum Corporation not below the rank of Sales Officer and, therefore, the search and seizure conducted by the search party is totally illegal. It is the further case of the petitioner that six samples of one litre each of the Motor Spirit (Petrol) were not taken but the six samples were taken in bottles which contain 750 ml. and such samples cannot form the basis of any validity test and no sanctity can be attached to such a test. It is put forth in the petition that in case of deficiency in the RON test the petitioner cannot be held liable. To continue the chronology of each to after the seizure was effected on 17-10-2000 the petitioner received a letter dated 9-11-2000, Annexure P. 6, from Chief Regional Manager Retail indicating that sample of ULP had failed in RON (Octane Rating) test by showing a result of 85 against the specification of 87. An explanation was called for from the petitioner in the said letter and in pursuance there of the petitioner filed his show cause on 13-11-2000. It is alleged in the writ petition that respondent No. 3 without considering the explanation of the petitioner in an arbitrary manner suspended the supply of all petroleum products for a period of 45 days effective from 15-12-2000. The said communication has been brought on record as Annexure P-8. On receipt of the same the petitioner submitted a representation on 16-12-2000 requesting the Corporation to get the samples re-tested and till such time to keep the order contained in Annexure P-8 in abeyance. It has been further set forth that there was abrupt stoppage of supply of all petroleum products w. e. f. 17-1-2001 and the petitioner was informed that the same was done due failure report obtained after the second sample was tested in which the Octane Rating has been certified to be 86. Questioning the validity of stoppage of supply of petroleum products it is contended in the petition that the petitioner cannot be held responsible for any deficiency in RON test when the Corporation itself cannot establish as to what was the quality of the petrol at the time of delivery through tanker. It is also put forth that all other tests statutorily required having been found correct, it excludes the possibility of pilferage or adulteration and hence the petitioner could not have been held liable. It is also put forth that all other tests statutorily required having been found correct, it excludes the possibility of pilferage or adulteration and hence the petitioner could not have been held liable. It is averred that as composition of search party was not in accordance with the requirement as contemplated in Clause 4 of the 1998 Order and the sample was not taken in accordance with the mandate of Clause 5 of such order the whole action of the respondents is vitiated and therefore, the order contained in Annexure P-8 deserves to be quashed. ( 3. ) A preliminary objection has been filed by the answering respondents contending that the disputes which are raised by the petitioner are covered by the arbitration clause and, therefore, are not be adjudicated in the present writ petition. ( 4. ) A reply has been filed to the preliminary objection contending, inter alia, that the petitioner does not remember to have signed any agreement containing any arbitration clause and even assuming such an arbitration clause exists the dispute of the present nature is not covered by the said clause. It is futher stated in the said reply that the Motor Spirit and High Speed diesel (Regulation of Supply and Distribution and Prevention of Malpractices) Order, 1998 came into existence in the year 1998 and under Clause 2 of the said Order, Schedule-I has been provided wherein Octane Test requirement has been prescribed. It is put forth that when the Order and Schedule were thus not in existence when the alleged agreement is said to have entered into, the controversy of present nature is not covered by the agreement and thereby not referable to arbitration. ( 5. ) A rejoinder affidavit has also been filed by the petitioner reiterating that the nature of dispute is not covered by the alleged agreement and there is no question of referring the matter to an arbitrator. It has also been put forth in the said affidavit that the petitioner can only be expected to sell petrol of that density and in that quantity which were delivered to him. It has been highlighted that no RON test in carried out in presence of the petitioner at the time of delivery of petrol and that being the position the petitioner cannot be expected to sell petrol having the ingredients apart from that found at the time of density check. It has been highlighted that no RON test in carried out in presence of the petitioner at the time of delivery of petrol and that being the position the petitioner cannot be expected to sell petrol having the ingredients apart from that found at the time of density check. In essence, justifications have been given by the petitioner claiming interference by this Court in exercise of extraordinary jurisdiction. ( 6. ) I have heard Mr. R. P. Agarwal learned Senior counsel alongwith Mr. Sanjay Agarwal for the petitioner and Mr. PS. Nair, learned senior counsel alongwith, Mr. R. Menon for the respondents. ( 7. ) IT is submitted by Mr. Agarwal that whole action of the respondents is unwarranted in asmuchas no responsibility can be fixed on the petitioner as he has nothing to do with the RON Test. It is vehemently urged by the learned senior counsel that the search party which obtained the samples of diesel and petrol and carried out inspection has no jurisdiction to do so in view of the fact that its composition was not in accordance with the requirement of Clause 4 of the 1998 Order. It is also urged by him that twice the tests were carried out and there were difference in the two reports and, therefore, benefit should have been given to the petitioner. It is proponed by him that abrupt stoppage of supply of petroleum products is unsustainable in law as the petitioner has become a victim of a test in respect of which he has no control. Mr. Agarwal, has canvassed that a controversy of this nature is not arbitrable by any stretch of imagination and hence, the alternative remedy, if any, cannot be taken recourse to. ( 8. ) MR. Nair, learned senior counsel appearing for the respondents, in his turn, submitted that the issues which have been raised by the petitioner are essentially questions of fact and extremely technical in nature and cannot be gone into in a writ petition. ( 8. ) MR. Nair, learned senior counsel appearing for the respondents, in his turn, submitted that the issues which have been raised by the petitioner are essentially questions of fact and extremely technical in nature and cannot be gone into in a writ petition. It is his further submission that the plea with regard to violation of Clause 4 of the 1998 Order in regard to search and seizure does not have much substance in asmuchas, as admitted by the petitioner, the senior Sales Officer of Bharat Petroleum Corporation Limited, Jabalpur was present and the insistence on the presence of a Sales Officer of Hindustan Petroleum Corporation does not render any assistance to the petitioner and in any view of the matter it is an irregularity which does not vitiate the search and seizure. The learned counsel has further submitted that the arbitration clause covers such a dispute and the petitioner can advance his stand and claim damages and compensation before the arbitrator. ( 9. ) TO appreciate the rival submissions raised at the Bar it is imperative to deal with the preliminary objection as it goes to the very root of the matter. As per Annexure R-1 Clause 68 contains the arbitration clause which reads as under: "68. Any dispute or difference of any nature whatsoever or regarding any right, liability, act, omission or account of any of the parties hereto arising out of or in relation to this Agreement shall be referred to the sole arbitration of the Managing Director of the Corporation, or of some officer of the Corporation who may be nominated by the Managing Director. The Dealer will not be entitled to raise any objection to any such arbitrator on the ground that the arbitrator is an officer of the Corporation or that he has to deal with the matter to which the contract relates or that in the course of his duties as an officer of the Corporation he had expressed views on all or any of the matters in dispute or difference. In the event of the arbitrator to whom the matter is originally referred being transferred or vacating his office or being unable to act for any reason the Managing Director as aforesaid at the time of such transfer, vacation of office or inability to act, shall designate another person to act as arbitrator in accordance with the terms of the Agreement, such person shall be entitled to proceed with the reference from the point at which it was left by his predecessor. It is also a term of this contract that no person other than the Managing Director or a person nominated by such Managing Director of the Corporation as aforesaid shall act as arbitrator hereunder. The award of the arbitrator so appointed shall be final, conclusive and binding on all parties to the Agreement, subject to the provision of the Arbitration Act, 1940, or any statutory modification or re-enactment thereof and the Rules made thereunder and for the time being in force shall apply to the arbitration proceeding under this Clause. The award shall be made in writing within six months after entering upon the reference or within such extended time not exceeding further four months as the sole Arbitrator shall by a writing under his own hands appoint. " ( 10. ) ON a proper scrutiny of the aforesaid arbitration clause it perceptible that a dispute of the present nature is covered within the ambit and sweep of the clause as the dispute has arisen because of abrupt non-supply of petroleum products to the petitioner. Suspension of supply is equivalent to temporary abeyance of the agreement. Infact, it is to be construed as a breach of agreement as the same relates to the terms and conditions of the agreement. There remains no scintilla of doubt that the controversy in question would be covered by the arbitration clause. Quite apart from the above this is not a case where pure questions of law arise so as to release the petitioner from availing the remedy provided under the agreement. At this juncture I may profitably refer to a decision rendered in the case of E. Venkatakrishna v. Indian Oil Corporation and Anr. Quite apart from the above this is not a case where pure questions of law arise so as to release the petitioner from availing the remedy provided under the agreement. At this juncture I may profitably refer to a decision rendered in the case of E. Venkatakrishna v. Indian Oil Corporation and Anr. , (2000) 7 SCC 764 wherein a three judge Bench of the Apex Court while dealing with the powers of the arbitrator in case of termination of distributorship of a dealer of liquefied petroleum gas ruled as under: "in our view, the Division Bench was right. All that the arbitrator could do, if he found that the termination of the distributorship, was unlawful, was to award damages, as any Civil Court would have done in a suit. We find it difficult to accept the contention on behalf of the appellant that what was referred to the Arbitrator was the issue of restoration of distributorship in the sense that the arbitrator could direct, upon holding that the termination was unlawful, that the distributorship should be restored. We think that the reference itself contemplated consequential damages for wrongful termination. In any event and assuming that there is any error in so reading the reference, it is difficult to hold that the arbitrator was thereby vested with jurisdiction to award restoration. " ( 11. ) I have referred to the aforesaid decision to indicate that the petitioner is aggrieved by the action of the Corporation whereby there has been non-supply of all petroleum products. As has been indicated above suspension of such supply amounts to keeping in abeyance the agreement in question. Mr. Nair, learned counsel for the respondents has fairly stated that such a dispute is arbitrable as the same would come within the ambit and sweep of the agreement. That being so if the matter is referred to arbitrator it will be within the domain of the arbitrator to arrive at a conclusion whether the non-supply of petroleum products to the petitioner was un-lawful and in that event may award damages as may be commensurate to the loss sustained by the petitioner. ( 12. That being so if the matter is referred to arbitrator it will be within the domain of the arbitrator to arrive at a conclusion whether the non-supply of petroleum products to the petitioner was un-lawful and in that event may award damages as may be commensurate to the loss sustained by the petitioner. ( 12. ) IN view of the aforesaid premises, I am of the considered view that the reliefs sought for by the petitioner are not allowable in exercise of extra ordinary jurisdiction of this Court and he has to resort to the remedy as provided for in the arbitration agreement. ( 13. ) THE writ petition is accordingly disposed of. However, there shall be no order as to costs.