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2007 DIGILAW 242 (KAR)

UNITY SERVICE STATION v. INDIAN OIL CORPORATION LTD. , BANGALORE

2007-04-03

S.ABDUL NAZEER

body2007
( 1 ) THE petitioner has entered into petrol/hsd pump dealer agreement (for short 'agreement') with the 1st respondent corporation as per Annexure-A on 13-9-2004 for establishment of retail outlet for sale of motor Spirit/high Speed Diesel. It is the case of the respondent that the petitioner has committed certain irregularities while selling the ms/hsd in its outlet. A show-cause notice was issued to the petitioner as per Annexure-E dated 22-12-2005 calling upon him as to why the agreement should not be terminated. The petitioner has sent detailed reply on 22-12- 2005 as per Annexure-G. One more show- cause notice as per Annexure-J dated 7-4-2006 was issued to the petitioner and the petitioner has sent a reply as per Annexure-E. Considering the reply filed by the petitioner, respondent has passed an order as per Annexure-M dated 1-6-2006 terminating the agreement. The operative portion of the order is as under : "on careful analysis and detailed consideration of all the aspects of the matter, we find that the explanation submitted by you is not factually correct or convincing. The dealership firm M/s. Unity Service Station, No. 5, vatal Nagaraj Road (Rajajinagar Road), rajajinagar, Bangalore, is therefore found to have committed the offence of adulteration of petroleum product, viz. Motor Spirit, thereby violated the terms and conditions of the subject dealership Agreement. In the light of the serious major irregularities committed by you with scant regard and respect for the goodwill of the Corporation or the reputation of its products, it is considered that this is a fit and deserving case to terminate the Dealership. The Competent Authority of Indian Oil Corporation limited, has taken decision to terminate the agreement after perusal of all the papers placed before him and therefore, the corporation invoking clause 56 (i) and (k) of the above cited agreement dated 13-9-2004 hereby terminate the agreement forthwith and you cease to be out retail outlet dealer in respect of the Retail Outlet situated at No. 5. Vatal Nagaraj Road. New Railway Quarters, opp. Okalipuram, Rajajinagar, Bangalore- 560023. You are directed to settle the accounts with us immediately. " ( 2 ) LEARNED counsel for the petitioner would contend that petitioner has not indulged in any irregularities as alleged by the respondent and that the order impugned is illegal and unenforceable in law. Vatal Nagaraj Road. New Railway Quarters, opp. Okalipuram, Rajajinagar, Bangalore- 560023. You are directed to settle the accounts with us immediately. " ( 2 ) LEARNED counsel for the petitioner would contend that petitioner has not indulged in any irregularities as alleged by the respondent and that the order impugned is illegal and unenforceable in law. On the other hand, learned counsel for the respondent submits that agreement (Annexure-A) provides for referring the matter for arbitration. He further submits that the alternative remedy available to the petitioner is efficacious in nature. Therefore, he prays for dismissal of the writ petition. ( 3 ) I have carefully examined the arguments of the learned counsel made at the Bar and perused the materials placed on record. ( 4 ) AS noticed above, the petitioner has entered into dealership agreement. The said agreement contains various clauses. Clause 67 of the said agreement provides for referring. the matter for arbitration in case there is any dispute or difference of any nature with regard to right, liability etc. , on account of any of the parties to the agreement. The said clause is as under: "any disputes and/or difference of any nature whatsoever or regarding any right, liability, act, omission on 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 ). It is known to the parties to the agreement that the arbitrator so nominated is an employee of the Corporation and may be shareholder of the Corporation. 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 or officer of the Corporation 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 agreement that no person other than the Director (Marketing) or a person nominated by such Director (Marketing) of the Corporation aforesaid shall act as arbitrator hereunder. 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 agreement that no person other than the Director (Marketing) or a person nominated by such Director (Marketing) of the Corporation 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 and Conciliation Act, 1996 or any statutory modification of or re-encashment thereof and the rules made thereunder and for the time being in force shall apply to the arbitration proceeding under the clause". ( 5 ) IT is well settled that when an alternative and equally efficacious remedy is open to a litigant, he should be required to pursue that remedy and not to invoke the special jurisdiction of the High Court to issue a prerogative writ. The extraordinary jurisdiction of the Court is not a panacea for all the maladies which a litigant may suffer from. It is true that the existence of an alternative remedy does not affect the jurisdiction of the Court to issue a writ, but the existence of an adequate legal remedy is a thing to be taken into consideration in the matter of granting writ. Writ jurisdiction is not to facilitate avoidance of obligation voluntarily incurred. Article 226 of the Constitution of India is not meant to supplant the existing remedies at law but only to supplement them in certain well recognised situations. ( 6 ) IN State of U. P. v. Bridge and Roof company (India) Ltd. , (1996) 6 SCC 22 : ( AIR 1996 SC 3515 ), the Apex Court has held that in cases of disputes relating to terms of private contract, proper course would be to refer the matter for arbitration or institution of civil suit and not a writ petition. It is held as under :- "21. There is yet another substantial reason for not entertaining the writ petition. The contract in question contains a clause providing inter alia for settlement of disputes by reference to arbitration (Clause 67 of the Contract ). The Arbitrators can decide both questions of fact as well as question of law. It is held as under :- "21. There is yet another substantial reason for not entertaining the writ petition. The contract in question contains a clause providing inter alia for settlement of disputes by reference to arbitration (Clause 67 of the Contract ). The Arbitrators can decide both questions of fact as well as question of law. When the contract itself provides for a mode of settlement of disputes arising from the contract, there is no reason why the parties should not follow and adopt that remedy and invoke the extraordinary jurisdiction of the High court under Article 226. The existence of an effective alternative remedy in this case, provided in the contract itself-is a good ground for the Court to decline to exercise its extraordinary jurisdiction under Article 226. The said article was not meant to supplant the existing remedies at law but only to supplement them in certain well-recognised situations" ( 7 ) AGAIN in ABL Internationals Ltd, v. Export credit Guarantees Corporation of India ltd. , (2004) 3 SCC 553 at paragraph 14, it has been held as under: "we have specifically inquired from the parties to the present appeal before us and has have been told that there is no such arbitration clause in the contract in question. It is well known that if the parties to a dispute had agreed to settle their dispute by arbitration, and if there is an agreement in that regard, the courts will not permit recourse to any other remedy without invoking the remedy by way of arbitration unless of course both the parties to the dispute agree an another mode of dispute resolution. " ( 8 ) I have gone through the different clauses of agreement and other materials placed on record. I am of the view that the contract between the parties is in the realm of private law. Any dispute relating to interpretation of the terms and conditions of such a contract cannot be agitated in a writ petition. This is a case where factual adjudication is necessary. If the parties have agreed to settle their dispute by arbitration and if there is an agreement in that regard, the Court will not permit recourse to any other remedy without invoking the remedy by way of arbitration. This is a case where factual adjudication is necessary. If the parties have agreed to settle their dispute by arbitration and if there is an agreement in that regard, the Court will not permit recourse to any other remedy without invoking the remedy by way of arbitration. ( 9 ) LEARNED counsel for the petitioner has relied on the decision of the Apex Court in mahabir Auto Stores v.. O. C. ( AIR 1990 SC 1031 ) and Harbanslal Sahnia v.. O. C. , ( AIR 2003 SC 2120 ) to contend that a writ petition under Article 226 of the Constitution is maintainable. In Mahabir's case (supra) the Apex court was considering a case of a firm which was carrying on business of sale and distribution of lubricants for 18 years and abrupt stoppage of supply of lubricants by the. O. C. without a notice of intimation to the firm. It has been held that whenever an instrumentality of a State enters the contractual field, it should be governed by the incidence of contract. The Court has directed the. O. C. that its case be put to the appellant's and the. O. C. was directed to consider the matter. In the present case, the respondents had issued show cause notice and the petitioner has filed its reply and thereafter impugned order was passed. Therefore, Mahabir's case (supra) is not applicable to the facts of this case. In harbanslal's case (supra), the Apex Court was considering a case between the appellants therein and the. O. C. The Court held that in appropriate cases, in spite of availability of an alternative remedy, the High Court may still exercise its writ jurisdiction in at least three contingencies: (i) Where the writ petition seeks enforcement of any of the fundamental rights (ii) Where there is failure of principles of natural justice; (iii) Where the orders or proceedings are wholly without jurisdiction or the virus of the act is challenged. In this case, cancellation of dealership was not on the aforesaid grounds. The said decision is also not applicable to the facts of this case. ( 10 ) THE petitioner has also filed two applications. e. , LA. 1/2007 for amendment of writ petition and. A. 11/2007 to restrain the respondents from allotting the dealership in question to 3rd parties. In. The said decision is also not applicable to the facts of this case. ( 10 ) THE petitioner has also filed two applications. e. , LA. 1/2007 for amendment of writ petition and. A. 11/2007 to restrain the respondents from allotting the dealership in question to 3rd parties. In. A. I/2007, petitioner contends that in a similarly situated case, the dealer therein was exonerated from similar charges. This is again a disputed question of fact. The petitioner has to agitate the matter before the appropriate forum. In so far as. A. II/2007 is concerned, since I am not inclined to entertain this writ petition, question of granting an interim order does not arise. ( 11 ) IN the result, writ petition fails and it is accordingly dismissed. However, liberty is reserved to the petitioner to avail alternative remedy available in law. All contentions are kept open. No costs. Petition dismissed.