Karni Filling Station through its Proprietor Kishan Singh Ujjawal v. Indian Oil Corporation
2012-02-23
MOHAMMAD RAFIQ
body2012
DigiLaw.ai
Hon'ble RAFIQ, J.—This writ petition has been filed by petitioner M/s. Shri Karni Filling Station aggrieved by notice dated 9.12.2011 (Annexure 12) by which petitioner was called upon to show cause as to why the dealership agreement dated 4.8.1983 and its RO dealership should not be terminated. In that notice, however, it was also directed that sales and supplies of the retail out are suspended with immediate effect. 2. Petitioner originally filed a civil suit with various prayers including the prayer for injunction against stoppage of supply in which an objection was raised by the respondent IOC that it has the remedy of raising arbitration dispute. Whereupon, the civil suit was dismissed with liberty to the petitioner to avail that remedy. Petitioner served a notice upon the respondents for appointment of arbitrator. Respondents have accordingly appointed Shri Sanjoy Bhattacharya, Senior Manager, Engineering, IOC, Rajasthan State Office, as arbitrator as per clause 69 of the Agreement. The petitioner has approached this Court challenging the show cause notice dated 9.12.2011 but in the course of argument, learned counsel for the petitioner has argued that since the arbitration proceedings may take time, supply of oil through other dispensing units, which were found to be in perfect condition, may be ordered to be restored. 3. Shri K.K. Shah, learned counsel for petitioner has argued that it is only that particular dispensing unit in which according to the allegation of the respondent an additional chip was found, the supply could be discontinued and not of the entire retail outlet. Even that could not be done by respondents because they have failed to establish any tempering of the dispensing unit by the petitioner. Learned counsel invited attention of the court towards, manual, which he has downloaded from Internet, Part No. WF whereof mentions the product description as PTFE Tube having UL/CUL as E 203950 at page 22, which according to the counsel is the tube and not chip. It is not shown as a chip even in the report of inspection carried out by the Anti Adulteration Team of the IOC, which is responsible for maintenance and upkeep of the dispensing units. Reference is made to the Inspection Report of Dispensing Unit dated 8.11.2011 (Annexure 10). 4.
It is not shown as a chip even in the report of inspection carried out by the Anti Adulteration Team of the IOC, which is responsible for maintenance and upkeep of the dispensing units. Reference is made to the Inspection Report of Dispensing Unit dated 8.11.2011 (Annexure 10). 4. Shri K.K. Shah, learned counsel for the petitioner has also cited judgment of the Division Bench of the Andhra Pradesh High Court dated 21th July, 2011, in Writ Appeal No. 318 of 2011 - The Union of India and Others vs. M/s. P. Laxmikanth Rao and Sons, whereby the Division Bench dismissed the writ appeal filed against the order dated 14.3.2011 of the Single Bench in Writ Petition No. 20302 of 2010 - M/s. P. Laxmikanth Rao and Sons vs. The Union of India and Others. In fact, petitioner therein was a dealer in products of the Hindustan Petroleum Corporation Limited and a show cause notice was issued alleging that the HSD dispensing unit was delivering 140 ml. Liter short, for every five liters and that the lever of the metering unit was found to have been tampered, by replacing a gear with 39 teeth, in the place of the one with 38 teeth. Not satisfied with the explanation of the petitioner therein, the Corporation terminated the dealership. The Single Bench observed that the equipment for measuring and supply of petroleum products is chosen and fitted by the respondents themselves. A dealer has absolutely no say in the matter. Further, the terms of agreement prohibit a dealer from meddling in any manner, with the dispensing unit. If any defect is noticed, the only step which the dealer is required to take is that he should report it to the company. The court further observed that the petitioner made an elaborate reference to the previous inspections, the condition of seals etc. In the impugned order, it was stated that a duplicate gear was implanted by the petitioner. Not a word was said about the seal being in tact. It was further observed that the opinion tendered by the manufacturer of the unit i.e. Larson and Tubro, was not made available to the petitioner. The court held that it is a case of non-application of mind.
Not a word was said about the seal being in tact. It was further observed that the opinion tendered by the manufacturer of the unit i.e. Larson and Tubro, was not made available to the petitioner. The court held that it is a case of non-application of mind. Things would have been different had the respondent said that the petitioner, or for that matter any individual, can have access to the gear even while the seal was intact. Failure to supply the same, resulted in violation of principles of natural justice. The petitioner cannot be expected to answer certain issues regarding which he has no information. The Single Bench set aside the impugned order. In appeal, the Division Bench of the AP High Court maintained the view taken by the Single Bench and dismissed the appeal. 5. On the contrary, Shri O.P. Mehta, learned counsel for the respondents argued that an absolutely indigenous mechanism was devised by the petitioner in dispensing lesser quantity of the high speed diesel, which could not be noticed by a person of ordinary prudence. It is only when the anti adulteration team of the respondent Corporation inspected the site of the petitioner that it came to light. During the inspection of L&T DU Sr. No. MQ 12418 Model No. G.T. 22416 CHEB at retail outlet of the petitioner, conducted by Shri Adarsh Kumar Sharma and Shri Chandra Kant Choudhary in presence of other persons, the team found one additional electronic fitting bearing Serial No. H (Q 15) E 203950 connecting between pulser cable and control card, which was when `switched on' giving 90 ml short supply in every 5 liters. The electronic chip was connected to printer switch and there was short delivery of 90 ml per 5 liters was found from this DU in "ON" position of printer switch. Delivery from this DU is found correct in "OFF" position of the printer switch. 6.
The electronic chip was connected to printer switch and there was short delivery of 90 ml per 5 liters was found from this DU in "ON" position of printer switch. Delivery from this DU is found correct in "OFF" position of the printer switch. 6. Shri O.P. Mehta, learned counsel for the Respondents, invited attention of the Court towards the Marketing Discipline Guidelines of the OIC and argued that if any additional mechanism/fittings/gear found fitted in the dispensing unit with the intention of manipulating the delivery and thereby dispensing the lesser quantity of oil, then as per the clause 6.1.5 of the Marketing Discipline Guidelines effective from 1st August, 2005 (hereinafter shall be referred to as `the MDG, 2005'), the sales and supplies have to be suspended from the dispensing units, if the short delivery of products, the sales and supplies should be suspended from the dispensing unit till re-calibration is carried out by W&M Department in the presence of an officer of the oil company. It is contended that in clause 4 of the Appendix-I appended to the MDG, 2005 it is provided that where irregularity of additional/ unauthorized fittings/gears found in the dispensing unit, the penal action provided is of termination and therefore for a conduct like this the supply was rightly discontinued. 7. It is argued that in view of such conduct of the petitioner, the respondent Corporation had left with no option except to disconnect the supply. 8. Learned counsel for the respondents argued that Clause 69 of the Agreement between the parties provides for the remedy of reference to arbitrator if and when any dispute arises between the parties. Already the dispute has been referred to the Arbitrator and therefore this Court ought not to entertain this writ petition. It is also argued that the arbitrator so appointed has even got the power to pass interim order if necessity so arises. The petitioner should be relegated to the remedy of arbitration particularly when on the petitioner's own application, the respondents have appointed the Arbitrator. 9. Learned counsel, in support of his arguments, relied on the judgments of the Supreme Court in Bharat Sewa Sansthan vs. U.P. Electronic Corporation Limited- 2007 AIR SCW 5399; Chacko and Another vs. Mahadevan - 2007 AIR SCW 5408; Empire Jute Co. Ltd. & Others vs. Jute Corporation of India Limited and Another- 2007 AIR SCW 6930; Mrs.
9. Learned counsel, in support of his arguments, relied on the judgments of the Supreme Court in Bharat Sewa Sansthan vs. U.P. Electronic Corporation Limited- 2007 AIR SCW 5399; Chacko and Another vs. Mahadevan - 2007 AIR SCW 5408; Empire Jute Co. Ltd. & Others vs. Jute Corporation of India Limited and Another- 2007 AIR SCW 6930; Mrs. Sanjana M. Wig vs. Hindustan Petro Corporation Limited- 2005 AIR SCW 4535; Hindustan Petroleum Corporation Limited vs. M/s. Pinkcity Midway Petroleums - 2003 AIR SCW 3558; The Branch Manager, M/s. Magma Leasing & Finance Limited and Another vs. Potluri Madhavilata and Another- 2009 (2) WLC (SC) Civil 660 and Smt. Kalpana Kothari vs. Smt. Sudha Yadav and Others- 2002 WLC (SC) Civil 85. 10. Learned counsel for the petitioner rejoined and submitted that the arbitrator may take a longer time to decide the dispute and the petitioner will have to suffer for this entire duration awaiting the out come of the result of arbitration proceedings. 11. I have given my anxious consideration to the rival submissions of learned counsel for both the parties. 12. In Bharat Sewa Sansthan, supra, the Supreme Court held that the main objectives of the Arbitration Act is to make provision for an arbitral procedure which is fair, efficient and capable of meeting the needs of the specific arbitration and to minimize the supervisory role of Courts in the arbitral process and to permit an arbitral Tribunal to use mediation, conciliation or other procedures during the arbitral proceedings in settlement of disputes etc. Supreme Court ordinarily will not be obliged to bypass the provisions of the Arbitration and Conciliation Act, 1996 in exercise of its power and jurisdiction under Article 142 of the Constitution of India. 13. In Empire Jute Co. Ltd., supra, the Supreme Court held that power of judicial review is not to be exercised when there exist arbitration clause. There was a contract containing widely worded arbitration clause for compulsory purchase of raw jute from Jute Corporation. Dispute was about liability of Jute Mill to pay carrying costs for taking late delivery. The order of High Court deciding payability of charges leaving amount to be decided by arbitrator, was held to be improper and entire dispute was directed to be resolved through arbitration. 14. In Mrs.
Dispute was about liability of Jute Mill to pay carrying costs for taking late delivery. The order of High Court deciding payability of charges leaving amount to be decided by arbitrator, was held to be improper and entire dispute was directed to be resolved through arbitration. 14. In Mrs. Sanjana M. Wig, supra, wherein question was regarding scope of judicial review vis-a-vis alternative remedy, whether refusal to exercise discretionary jurisdiction solely on ground of existence of alternative efficacious remedy, is permissible. The court held that if a serious disputed question of fact is involved arising out of contract qua contract, ordinarily a writ petition would not be entertained. Writ petition filed against termination of petrol pump dealership agreement was dismissed on the ground of availability of alternative remedy considering supervening circumstances viz. appellant committed a default in payment of dues towards supplies made and having regard to fact that dealership agreement has come to an end. The Supreme Court held that refusal to entertain a writ petition on ground of existence of an alternative remedy should not be interfered with. 15. In Hindustan Petroleum Corporation Limited, supra, the Supreme Court held that the language of Section 8 of the Arbitration and Conciliation Act is peremptory in nature. Therefore, in cases where there is an arbitration clause in the agreement, it is obligatory for the Court to refer the parties to arbitration in terms of their arbitration agreement and nothing remains to be decided in the original action after such an application is made except to refer the dispute to an arbitrator. Therefore, it is clear that if, as contended by a party in an agreement between the parties before the Civil Court, there is a clause for arbitration, it is mandatory for the Civil Court to refer the dispute to an arbitrator. 16. In the Branch Manager, M/s. Magma Leasing & Finance Limited & Another, supra, the Supreme Court held that an analysis of Section 8 is in the form of legislative command to the court and once the prerequisite conditions as afore-stated are satisfied, the court must refer the parties to arbitration. As a matter of fact, on fulfillment of conditions of Section 8, no option is left to the court and the court has to refer the parties to arbitration. 17.
As a matter of fact, on fulfillment of conditions of Section 8, no option is left to the court and the court has to refer the parties to arbitration. 17. In Smt. Kalpana Kothari, supra, the Supreme Court held that as long as the arbitration clause exists, having recourse to civil court for adjudication of dispute envisaged to be resolved through arbitral process or getting any other of the nature from civil court for appointment of receiver or prohibitory order without evincing any intention to have recourse to arbitration in terms of the agreement, may not arise. 18. It may at this stage be pertinent to mention that the dispute in the case before the Andhra Pradesh High Court was examined in a different context. In that case, the facts may be somewhat similar but yet there is distinction between nature of the allegations that are made in the present case and therein. Here what is alleged is that an electronic mechanism was devised by the petitioner by putting an additional electronic chip connecting the same between pulsar cable and control card of HSD L &T Sprint Dual DU Sr. No. MQ L&T 12418. That electronic chip was connected to printer switch. Short delivery of 90 ml. Per 5 ltr.was found from this DU in "ON" position of printer switch and full delivery from this DU is found in "OFF" position of this printer switch. This is indeed highly disputed question of fact and not a matter to be enquired into by this court. Whether or not, it was a chip or PTFE Tube, as shown in the manual of WOER Company, is a matter to be examined by the Arbitrator where the arbitrator being an expert himself, take his own view or may be guided by an expert person. The petitioner can also request for appropriate interim order for restoration of supply, if not through the disputed DU but through other DUS, before the arbitrator. 19. It is not that this Court does not have the power to entertain the dispute and decide the same but a choice has to be made between when the wide power available to this court ought to be exercised and when a refrain ought to be exercised.
19. It is not that this Court does not have the power to entertain the dispute and decide the same but a choice has to be made between when the wide power available to this court ought to be exercised and when a refrain ought to be exercised. In view of peculiarity attached to the issues involved in this matter where expert opinion based on evidence adduced by the parties may be required to analyze the disputes, this court would rather consider it more appropriate to restrain rather than invoking its original extraordinary writ jurisdiction, in the light of the settled proposition of law enunciated by the Supreme Court in number of judgments referred to supra. In those judgments, the Supreme Court decided that as a result of the disputed question of fact is involved arising out of the contract qua contract, ordinarily writ petition would not be entertained especially in judgment of the Supreme Court in Mrs. Sanjana M. Wig, supra, which also was a case of termination of a petrol pump dealership agreement in which the High Court dismissed the writ petition on the ground of availability of alternative remedy. In other cited judgments and number of subsequent judgments also, similar view has been expressed by the Supreme Court. 20. Considering, however, the apprehension of the petitioner that final award may be unduly delayed, it is directed that if the petitioner is able to file his claim and adduce his evidence within a period of one month from the date of receipt of copy of this order, as has been given out by the learned counsel for the petitioner, the process of adducing evidence by the respondents shall be completed within one month thereafter and final award shall be passed within one month next thereafter. Entire arbitral proceedings shall thus be concluded by the Arbitrator within three months from that date. This would however not preclude the Arbitrator to decide the application filed by the petitioner for appropriate interim relief earlier, as referred to above, with regard to restoration of supply from other DUS. 21. Writ petition stands disposed of with the above observations.