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2009 DIGILAW 705 (HP)

Palam Gas Service v. Union Of India

2009-08-07

DEEPAK GUPTA, V.K.AHUJA

body2009
JUDGMENT : Deepak Gupta, J. By means of this order we are disposing of the present application filed by respondent No.2 under Section 8 of the Arbitration and Conciliation Act, 1996. 2. Briefly stated the facts of the case are that the writ petitioner was awarded LPA distributorship in Palampur in the year 1986 by the respondent Indian Oil Corporation (IOC). The area of operation of the petitioner was extended in the year 1987. According to the petitioner contrary to the policy of the IOC a number of gas agencies have been permitted to be opened within a radius of 15 kms. The petitioner's grievance is that in the month of January, 2009 he came to know that the IOC has issued a letter of intent in favour of respondent No.3, H.P. State Civil Supplies Corporation for opening a retail LPA outlet at village Ghughar which is at a distance of only 2 kms. from the gas agency of the petitioner. The petitioner alleges that the opening of this gas agency is against the policy of the Government and would make his gas agency totally unviable and uneconomical. The respondents have contested the allegation of the petitioner. The IOC has also filed an application under Section 8 of the Arbitration and Conciliation Act, 1996 for referring the dispute to the Arbitration in terms of Clause 37-A of the Agreement. We may make it clear that our observations are not being made on the merits of the case but solely to decide this application. 3. This application has been contested by the petitioner and it is urged that in the present writ petition certain reliefs have been claimed which are beyond the jurisdiction of the Arbitrator and therefore the application should be rejected. 3. This application has been contested by the petitioner and it is urged that in the present writ petition certain reliefs have been claimed which are beyond the jurisdiction of the Arbitrator and therefore the application should be rejected. To understand the rival contentions of the parties it would be pertinent to refer to the relevant portion of Clause 37-A of the Agreement which reads as follows: "37.(a) Any dispute or difference of any nature whatsoever, any claim, cross-claim, counter-claim or set off of the Corporation against the Distributor 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 Arbitrator of the Director (Marketing) of the Corporation or of some Officer of the Corporation who may be nominated by the Director (Marketing)" Rest of the Clause deals with the persons to be appointed, manner of appointment, manner of making the award etc. with which we have no concern. A bare perusal of this Clause shows that any dispute or difference arising out of the agreement or relating to the agreement has to be referred to the sole arbitration of the Director (Marketing) of the IOC or some other Officer nominated by the Director (Marketing). 4. Sh. K.D. Sood, learned counsel for the applicant contends that the Clause is very widely worded and will cover the disputes raised in the present petition also. Sh.Dadwal appearing for the writ petitioner non-applicant contends that such relief cannot be given by the Arbitrator and so the dispute cannot be referred to arbitration. 5. The reliefs claimed in the writ petition reads as follows: "A) A writ in the nature of Certiorari, to quash the LOI No.SAO/146/Ghuggar dated 12.01.2009 annexed as Annexure P-7 by declaring it illegal, unconstitutional and void. B) That the respondent may kindly be restrained from opening up & starting any work in this regard at village Ghughar, which is within the radius of 2 kms from the distributorship of the petitioner with the further direction to them not to harass the petitioner for raising an objection to such an illegal action of the respondents. B) That the respondent may kindly be restrained from opening up & starting any work in this regard at village Ghughar, which is within the radius of 2 kms from the distributorship of the petitioner with the further direction to them not to harass the petitioner for raising an objection to such an illegal action of the respondents. C) That the respondents may also be directed to produce the entire record pertaining to the allotment of LPG distributorship to the respondent No.3, including the record that why & how the discretion/concession has been given to the respondent No.3 Corporation in an illegal & arbitrary manner in spite of a well settled judgment in this field by the Hon'ble Apex Court while setting aside the allotment of petrol pumps made to the various allottees by the then Petroleum Minister against the norms by exercising the discretion in their favour." It may be true that in the writ petition the main ground of attack is that the opening up of a new LPG distributorship at Ghuggar would be in violation of the norms and policy guidelines of the IOC which are mandatory in nature. In that sense the dispute may be covered by the Arbitration clause. However, petitioner has prayed that the letter of intent dated 12.1.2009 be quashed and the respondents be restrained from opening up or starting work at village Ghuggar for starting the petrol pump. These reliefs cannot be granted by the Arbitrator. The Arbitrator has no jurisdiction qua respondent No.3. The Arbitrator can decide the matter in favour of the petitioner. In case he decides the matter in favour of the petitioner can the respondent No.3 be bound by such an award. The only answer is that he cannot be bound by such an award since he is not a party to the arbitration proceedings. 6. The Arbitrator has no jurisdiction to entertain the petition in respect of the first two reliefs claimed. In Sandeep Kumar and others v. Master Ritesh and others, (2006) 13 SCC 567, the apex Court held as follows: "8. It may be true that the appellant-plain tiffs had been representing a group, but admittedly all the parties to the suit were not parties to the arbitration agreement. If some of the defendants were not parties to the arbitration agreement, the question of invoking the arbitration clause as against those defendants would not arise. It may be true that the appellant-plain tiffs had been representing a group, but admittedly all the parties to the suit were not parties to the arbitration agreement. If some of the defendants were not parties to the arbitration agreement, the question of invoking the arbitration clause as against those defendants would not arise. As noticed hereinbefore, in the earlier round of litigation, the appellants categorically stated that the suit would be confined only as against those who were not parties to the arbitration agreement." 7. Similar view has been taken in Atul Singh and others v. Sunil Kumar Singh and others, (2008) 2 SCC 602 , wherein the Apex Court held as follows: "15. Therefore, for application of Section 8, it is absolutely essential that there should be an arbitration agreement between the parties. 16. It is an admitted fact that neither Shri Rajendra Prasad Singh nor the plaintiffs are parties to the partnership deed dated 17.2.1992. There is no document as defined in Section 7 of 1996 Act which may contain the signature of either Shri Rajendra Prasad Singh or the plaintiffs. Similarly, there is no document as contemplated by clauses (b) or (c) of Sub-section (4) of Section 7 of 1996 Act from which it may be spelled out that either Rajendra Prasad Singh or the plaintiffs were parties to clause relating to arbitration contained in the partnership deed dated 17.2.1992. It is also an admitted fact that Shri Rajendra Prasad Singh was alive when the said partnership deed dated 17.2.1992 was executed. Therefore, on the face of it Section 8 of 1996 Act would not apply to any dispute concerning the said partnership deed dated 17.2.1992 and the matter cannot be referred to arbitration." 8. In the present case, respondent No.3 is not a party to the Arbitration Agreement. The Arbitrator has no jurisdiction to pass any order against respondent No.3. The main relief claimed is that the letter of intent issued in favour of respondent No.3 be set-aside. Therefore, in our considered view this matter cannot be referred to arbitration and the dispute has to be decided in the writ proceedings itself. The application is accordingly dismissed. CWP No.555 of 2009: 9. The writ petition is admitted. 10. Be listed before the learned Single Judge for hearing. Liberty reserved to the parties to apply for early hearing.