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2014 DIGILAW 1040 (GAU)

Durga Filling Station v. Indian Oil Corporation

2014-12-04

HRISHIKESH ROY

body2014
JUDGMENT Hrishikesh Roy, J. 1. Heard Mr. G. Choudhury, learned counsel for the petitioner. The respondent M/s. Indian Oil Corporation Ltd. (hereinafter referred to as the 'the Oil Company') and their officials are represented by Mr. M.K. Choudhury, the learned senior counsel. This application is filed under Section 11(6) of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as the 'the Arbitration Act'), for appointment of an arbitrator in a dispute arising out of the HSD Pump Dealership Agreement dated 6.4.2006 (Annexure-1), whereby the petitioner is operating a HSD retail outlet at Tezpur. 2. On 25.2.2012, the Anti Adulteration Cell (AAC) of the Oil Company made a surprise inspection of the petitioner's outlet and detected that an unauthorized device/apparatus was fixed in the dispensing unit to ensure short delivery of diesel to the customers. The inspecting team then sealed the outlet for further verification. Thereafter a Specialized Investigating Team was constituted by the Oil Company who again visited the retail outlet on 15.3.2012. The manipulation of the dispensing unit was re-affirmed by the 2nd team and on this finding, the sale from the HSD outlet was suspended on 28.2.2012 (Annexure-3) and the dealer was asked to explain why the unauthorized apparatus was fitted for short delivery of lesser diesel. 3. Thereafter another show cause notice for termination of dealership was issued on 10.7.2012 (Annexure-7) but the dealer after securing various documents to give response, failed to furnish any reply. Moreover they were also absent from the scheduled personal hearing fixed on 8.8.2013 and consequently the dealership was terminated on 29.8.2013 by the Oil Company. 4. At the stage of the show case proceeding, the petitioner through their letter dated 8.4.2013 (Annexure-13) claimed that an arbitrable dispute has arisen and accordingly demanded that an arbitrator be appointed on the proceeding drawn up by the Oil Company against the dealer. But since the Oil Company failed to respond to the demand for appointment of arbitrator, the present application is filed under the Arbitration Act. 5. Mr. But since the Oil Company failed to respond to the demand for appointment of arbitrator, the present application is filed under the Arbitration Act. 5. Mr. G. Choudhury, the learned counsel for the petitioner refers to the dealership agreement dated 6.4.2006 (Annexure-1) and argues that in the event of any dispute arising out of this agreement, arbitration is envisaged under Clause 69 (page 22) of the said Agreement dated 6.4.2006 when Clause 69 is invoked, the Executive Director of the Oil Company or his nominee is to arbitrate the dispute but as the respondents failed to accede to the request made by the dealer on 8.4.2013 (Annexure-13), Mr. Choudhury argues that an independent arbitrator should be nominated by the Court. 6. However Mr. M.K. Choudhury, the learned senior counsel submits that since unauthorized device was detected in the dispensing unit in violation of Clause 6.1.5 of the Marketing Discipline Guidelines, 2005 (hereinafter referred to as 'the 2005 Guidelines'), the dealer if aggrieved by the termination order, should approach the Appellate Forum under the 2005 Guidelines and in this case arbitrator need not be appointed by the Court. The senior counsel further argues that since a foreign device was installed at the dispensing unit to ensure short delivery to the customers, the resultant issue should best be addressed by a technical person and since the Appellate Authority under the 2005 Guidelines is the General Manager of the Oil Company, he should be preferred as the adjudicating authority for the dispute where technical details of equipments will have to be considered. 7. In this case, the termination notice was served on the dealer on 29.8.2013 itself but on 30.8.2013, the dealer filed an application for interim protection under Section 9 of the Arbitration Act before the learned District Judge, Tinsukia. In the Misc. (Arbitration) Case No. 6/2013, the District Judge examined whether the retail outlet can be allowed to be operated as an interim measure, pending adjudication of the dealership termination dispute. After due consideration, the interim application was partially allowed by permitting the retail outlet to operate with the remaining dispensing units barring the one, where the illegal device was detected. 8. Aggrieved by the decision of the learned District Judge, given on 19.11.2013, the Oil Company has filed an Arbitration Appeal and the same is pending consideration of the Appellate Court. 9. 8. Aggrieved by the decision of the learned District Judge, given on 19.11.2013, the Oil Company has filed an Arbitration Appeal and the same is pending consideration of the Appellate Court. 9. A pending proceeding under Section 9 of the Arbitration Act is not an obstacle for appointment of arbitrator under Section 11 of the Arbitration Act but what is required to be considered is whether the aggrieved dealer should be relegated to the Appellate Authority under the 2005 Guidelines or whether an independent arbitrator should be appointed, under Clause 69 (page 22) of the Dealership Agreement dated 6.4.2006. 10. The primary objection of the Oil Company against appointment of arbitrator is on account of the technical details of the equipments which may have to be considered in the adjudicating process and therefore it is suggested by them that the General Manager under the 2005 Guidelines should be the best authority to address the dealership termination grievance. But while the General Manager or the Executive Director of the Oil Company can be expected to impartially decide the grievances of the dealer, it may be better if the adjudicatory authority is someone who is not connected either with the Oil Company or the dealer. Moreover if an experienced judge is nominated as the arbitrator, he shouldn't have any difficulty to appreciate the technical aspects of the illegal device fitted onto the dispensing unit. 11. Therefore since Clause 69 of the Dealership Agreement envisages resolution of dispute arising out of the agreement through arbitration and the Oil Company had failed to refer the dispute for arbitration of the Executive Director within 30 days of the notice, I feel that this Court should nominate an independent arbitrator for adjudicating the dealership termination dispute. 12. Following the above reasoning and considering the nature of the dispute, Hon'ble Mr. Justice H.N. Sarma, a former Judge of this Court is appointed as the arbitrator. The parties will appear before him on 9.1.2015 and the arbitrator will fix the terms of arbitration in presence of the parties. With this direction, the case is disposed of. The Registry will accordingly communicate this order to Hon'ble Mr. Justice H.N. Sarma immediately. Disposed off