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2001 DIGILAW 82 (UTT)

Harbans Lal Sahni v. Indian Oil Corporation Ltd.

2001-05-26

M.C.JAIN, P.C.VERMA

body2001
JUDGMENT M.C.Jain, J The petitioners are partners of M/s New Janata Weigh Bridge and Filling Station, Lalkuwan and were granted dealership of petroleum /H.S.D. by the respondent no.1. They are aggrieved by the order dated order dated OG-09-2000 (Annexure 12 to the writ petition) passed by the respondent no.1 terminating their dealership and have prayed for the quashing of the same. 2. The Sub-Divisional Magistrate Haldwani, District Supply Officer and other staff allegedly inspected the retail outlet of the petitioner on 11-02-2000. Truck Lorry no. USZ 9506 carrying SKO for TKD Almora was found unloading the said SKO in the underground diesel tank installed at the retail outlet of the petitioners. The officers drew the sample of diesel from the retail outlet tank of the petitioners and the same, on testing, was found to be adulterated as per lab report. A show cause notice dated 22-03-2000 (Annexure 4 to the writ petition) was issued to the petitioners to which they sent reply dated 01-04-2000 (Annexure 8 to the writ petition) denying the unloading of SKO from truck no. USZ 9506 into their underground tank. As regards the taking of the sample,they contended that the same had not been properly sealed. It was also contended by them that the test report had not been made available to them. According to them, there was no adulteration. They obtained test report from the office of District Magistrate, Nainital on 20-04-2000 and applied to the concerned authorities for retesting and re- sampling as provided u/s 20 of the Petroleum Act, but their prayer was rejected without any justification. The licensing authority cancelled their license, inter alia, on the charge of adulteration which was stayed by the Commissioner in appeal by order dated 31-08-2000. The appeal is said to be still pending. However, the respondent no.1 passed the impugned order dated 06-09-2000 terminating the dealership of the petitioners without any reason of justification. In short, the impugned termination order is said to have been passed arbitrarily, malafide and in violation of the principles of natural justice. It is also assailed to be in contravention of the Marketing Discipline Guidelines (MDG),1998. 3. Counter and rejoinder affidavits have been exchanged between the parties. 4. In short, the impugned termination order is said to have been passed arbitrarily, malafide and in violation of the principles of natural justice. It is also assailed to be in contravention of the Marketing Discipline Guidelines (MDG),1998. 3. Counter and rejoinder affidavits have been exchanged between the parties. 4. The contesting respondents 1 to 3 (referred to as 'Corporation' hereinafter) have supported the impugned order terminating the dealership of the petitioners and have raised a preliminary objection regarding the maintainability of the writ petition on the ground that the Corporation and petitioners had entered into agreement of dealership and the terms and conditions of the agreement were reduced in writing by way of written contract dated 31-03-1994 (Annexure 1 to Supplementary Counter Affidavit). The agreement contains a clause for resolving the disputes through arbitration. The said clause reads as under: 69. "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 Director Marketing of the Corporation or of some officer of the Corporation who may be nominated by the Director Marketing. 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 he has to deal with the matters to which the contract related or that in the course of his duties as an officer of the Corporation he had expressed views on all or any 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 Director Marketing 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 reference from the point at which it was left by his predecessor. It is also a term of his contract that no person other than the Director Marketing or a person nominated by such Marketing Director Marketing of the Corporation as aforesaid shall act as arbitrator hereunder. Such person shall be entitled to proceed with reference from the point at which it was left by his predecessor. It is also a term of his contract that no person other than the Director Marketing or a person nominated by such Marketing Director Marketing 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 provisions of the Arbitration Act,1940, or any statutory modification of 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." 5. In view of the arbitration clause reproduced above, the Corporation contends that the petitioners can only avail of the remedy of the settlement of the dispute raised by them through arbitration and the extra ordinary writ jurisdiction of the High Court can not be invoked to avoid contractual obligation voluntarily undertaken by them providing remedy of redressal of dispute through arbitration. 6. We have heard learned counsel for the parties at length and have given our thoughtful consideration to the matter. 7. Relying upon the case of Shyam Gas Company Vs. State of U.P. and others -A.I.R. 1991 Alld. 129, the learned counsel for the petitioners has argued that the arbitration clause would not survive after termination of the contract. Moreover, the action of the Corporation in terminating their dealership being arbitrary and malafide, there is every justification for invoking the writ jurisdiction of the High Court. It may be pointed out that the apex Court has laid down in the case of Rukmani Bai Gupta Vs. Collector (1984) 4 S.C.C. 556 that the Arbitration Act itself is a self contained and exhaustive code. Where the contract provides for resolution of dispute through arbitration, the writ jurisdiction under Article 226 of the Constitution can not be invoked as the same is not intended to facilitate the avoidance of obligation voluntarily undertaken. It follows from another decision of Hon'ble Supreme Court in the case of National Thermal Power Corporation Vs. Singer Company, A.I.R. 1993 S.C. ,998 that even in case of repudiation of the contract, arbitration clause survives. It follows from another decision of Hon'ble Supreme Court in the case of National Thermal Power Corporation Vs. Singer Company, A.I.R. 1993 S.C. ,998 that even in case of repudiation of the contract, arbitration clause survives. Their Lordships have ruled that the arbitration agreement contained in the arbitration clause of a contract is often referred to as a collateral or anciliary contract in relation to the main contract of which it forms a part in the sense that it survives to determine the claim of the parties and mode of settlement of their dispute even after the breach or repudiation of the main contract. The repudiation or breach of the main contract may not put an end to the arbitration clause, which may still survive for measuring the claims arising out of the breach and for determining the mode of their settlement. It is a procedural machinery which is activated when the disputes arise between the parties regarding their rights and liabilities. 8. In the present case, the question whether the dealership of the petitioner could be terminated by the Corporation for the acts or omissions of the former is a dispute squarely covered by arbitration clause 69 of the agreement entered into between the parties. It goes without saying that in writ jurisdiction, this court does not ordinarily enter into factual controversy. In the case at hand, factual controversy is indeed there as to whether the Tank Lorry no. USZ 9506 was actually unloading its contents in the underground diesel tank of the petitioners on 11-02-2000 wherefrom sample had been taken which was found to be adulterated, not meeting the requisite specifications. Shyam Gas Company's case relied upon by the learned counsel for the petitioners can not come to their rescue as the facts of that case were altogether on a different footing. In that case, the petitioners had challenged one clause no. 28 of the agreement to be void being against the public policy and it was held that where a party challenges the validity of any part of the contract, then the authority created under the said agreement would not be competent to adjudicate the same. Moreover, in that case the writ had been admitted and the matter was pending for the last four years. Moreover, in that case the writ had been admitted and the matter was pending for the last four years. Under these circumstances, it was observed that it would not be right and proper for the Court to decline to exercise discretion under Article 226 of the Constitution and to send the petitioners back to the arbitrator. To cap it all, as observed earlier, the disputed questions of facts are agitated in the present writ petition. 9. In view of the above discussion, we are of the view that the petitioners may invoke arbitration clause contained in the agreement to agitate their grievance. With this observation, the writ petition is dismissed. 10. There would be no order as to costs.