INDIAN OIL CORPORATION LIMITED v. PRAYAGRAJ FUEL POINT THROUGH ITS PROPRIETOR
2015-07-27
N.V.ANJARIA
body2015
DigiLaw.ai
ORDER : N.V. ANJARIA, J. This application is filed by the applicant- Indian Oil Corporation Limited-original respondent in the main Special Civil Application, praying to refer the dispute raised in the petition for arbitration in accordance with the clause in the dealership agreement executed between the applicant and the respondent original petitioner. It is further prayed to dismiss main Special Civil Application No. 12027 of 2014 upon reference to the arbitration. 2. In the Special Civil Application, the petitioner prayed for setting aside of order/letter dated 01st June, 2013 passed by respondent No.1 by which the dealership agreement of the petitioner came to be terminated and also order dated 07th June, 2014 passed by respondent No.2 confirming the termination of dealership. It is further prayed to declare that the possession of the retail outlet was illegally taken by the respondents. 3. The facts of the petition to the extent necessary for consideration of the present Civil Application may be stated. By virtue of agreement dated 24th April, 2006, the petitioner came to be granted dealership in the category of Scheduled Caste Woman. Thereupon the petitioner started operating retail outlet in the name and style of M/s. Prayagraj Fuel Point at Navi Morvad, National Highway No.8-A. It is the case of the petitioner that a notice came to be issued, wherein the petitioner was called upon to explain certain discrepancies noticed at the time of inspection of the fuel outlet. The reply of the petitioner did not convince the Corporation. The applicant-Corporation by orders dated 01st June, 2013 and 13th June, 2013 terminated the dealership of the petitioner. The petitioner therefore preferred appeal under Chapter VI of the Marketing Discipline Guidelines, 2005 before the Director (R & D), IOCL & Appellate Authority. The said appeal was dismissed on 07th June, 2014. The petitioner has challenged the order dated 01st June, 2013 cancelling termination and order dated 07th June, 2014 passed by the appellate authority as above. 3.1 By filing the present Civil Application, Indian Oil Corporation Limited-applicant contended that since an arbitration clause exists in the dealership agreement, the petitioner ought to have invoked the same and ought to be resorted to the said remedy. It is therefore prayed to dismiss the petition and refer the dispute to the Arbitrator. 4. Learned advocate Mr.
3.1 By filing the present Civil Application, Indian Oil Corporation Limited-applicant contended that since an arbitration clause exists in the dealership agreement, the petitioner ought to have invoked the same and ought to be resorted to the said remedy. It is therefore prayed to dismiss the petition and refer the dispute to the Arbitrator. 4. Learned advocate Mr. Akshay A. Vakil for the applicant-Corporation referred to clause No.61 with its sub-clauses (a) to (m) in the dealership agreement and submitted that in view of the said clauses governing the rights and obligations of the parties in respect of any dispute, this petition may not be entertained. Learned advocate for the applicants submitted that the petitioner is required to be relegated to the said remedy by referring the dispute to the Arbitrator under Section 8(i) of the Arbitration and Reconciliation Act, 1996. He submitted that the law is well settled that when the alternate remedy in form of arbitration is available, the court would not exercise writ jurisdiction under Article 226 of the Constitution. In support of his submissions, learned advocate for the applicant-Corporation relied on following decisions- (i) Smt.Rukmanibai Gupta Vs The Collector, Jabalpur and others [ AIR 1981 SC 479 ], (ii) Har Shankar and others Vs The Deputy Excise and Taxation Commissioner and others [ AIR 1975 SC 1121 ] and (iii) Hindustan Petroleum Corporation Limited Vs M/s.Pinkcity Midway Petroleums [ AIR 2003 SC 2881 ]. It was requested to allow the application and refer the dispute raised in the petition to the Arbitrator in accordance with arbitration clause as above. 4.1 Learned advocate for the opponent-original petitioner, on the other hand, submitted that clause 61 which is styled as arbitration clause does not provide for arbitration in its true sense. He submitted that the arbitrator would be authority of the Corporation and in appointment of arbitrator, other party has no say. It was submitted that such one-sided provision could not be said to be satisfying essentials for making it an arbitration clause. It was submitted that the prayer in the petition is accordingly made to set aside decision dated 07th June, 2014 passed by respondent No.2-the appellate authority. According to learned advocate for the respondent-original petitioner, the appellate authority is authority of the Corporation which has exercised appellate powers and after hearing both the sides, confirmed the order of termination of the dealership.
According to learned advocate for the respondent-original petitioner, the appellate authority is authority of the Corporation which has exercised appellate powers and after hearing both the sides, confirmed the order of termination of the dealership. He submitted that in the circumstances, requiring petitioner to avail the remedy under clause 61 would be improper and misdirected. He submitted that once a co-ordinate authority of the Corporation has decided the appeal against the termination dealership agreement, it would create a piquant situation where another authority of the same status of the Corporation would act as an arbitrator. 5. Before proceeding further clause No.61 may be looked at, reproduced hereunder, 1“(a) Any dispute or difference of any nature whatsoever, any claim, cross-claim, counter-claim or set-off 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 who may either himself act as the Arbitrator or nominate some other officer of the Corporation to act as the Arbitrator. 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. (b) In the event of the Arbitrator to whom the matter is originally referred being transferred, he shall be entitled to continue the arbitration proceedings notwithstanding his transfer unless the Director (Marketing) at the time of such transfer or at any time thereafter, designates another person to act as Arbitrator in his place in accordance with the terms of this agreement. (c) In the event of the arbitrator, to whom the matter is originally referred vacating his office or being unable or refusing to act for any reason, the Director (Marketing) at the time of vacation of office or inability or refusal to act, shall designate another person to act as Arbitrator in accordance with the terms of this agreement. (d) The Arbitrator newly nominated by the Director (Marketing) under clause (b) or under clause (c) above, shall be entitled to proceed with the reference from the point at which it was left by his predecessor. (e) It is an express term of this contract that no person other than the Director (Marketing) or a person nominated by such Director (Marketing) of the Corporation as aforesaid shall act as Arbitrator hereunder.
(e) It is an express term of this contract that no person other than the Director (Marketing) or a person nominated by such Director (Marketing) of the Corporation as aforesaid shall act as Arbitrator hereunder. If for any reason, Director (Marketing) is unable or unwilling or refuse or fails to act as Arbitrator or nominate an Arbitrator then he shall not be referred to arbitration at all. (f) 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 or re-enactment thereof and the rules made thereunder for the time being in force shall apply to the arbitration proceedings under this clause. (g) The award shall be made in writing and published by the Arbitrator within two years after entering upon the reference or within such extended time not exceeding one further year as the parties shall by writing agree. The parties hereto shall be deemed to have irrevocably given their consent to the Arbitrator to make and publish the award within the period referred to hereinabove and shall not be entitled to raise any objection or protest thereto under any circumstances whatsoever. (h) The Arbitrator shall have power to order and direct either of the parties to abide by, observe and perform all such directions as the arbitrator may think fit having regard to the matter in difference i.e. dispute before him. The arbitrator shall have all summary powers and may take such evidence oral and/or documentary as the arbitrator in his absolute discretion thinks fit, and shall be entitled to exercise all powers under the Indian Arbitration Act, 1940, including admission of any affidavit as evidence concerning the matter in difference i.e. dispute before him.
The arbitrator shall have all summary powers and may take such evidence oral and/or documentary as the arbitrator in his absolute discretion thinks fit, and shall be entitled to exercise all powers under the Indian Arbitration Act, 1940, including admission of any affidavit as evidence concerning the matter in difference i.e. dispute before him. (i) It is hereby expressly agree that the powers of the Arbitrator nominated in the matter hereinbefore mentioned shall include the power to make interim order/orders, as the circumstances of the case may justify, to appoint a receiver, commissioner or custodian by whatever name called to take possession of the property in dispute during the pendency of the proceedings and subject to such final order as may be passed by the Arbitrator and shall also have the power to issue such further orders from time to time as he may deem fit, on an application being made to him by any of the parties to the dispute where it is apprehended that the property to which it relates is in danger of being wasted, damaged, deteriorated or parted with or rights of other third parties are likely to be created thereon. (j) The parties against whom the arbitration proceedings have been initiated, that is to say, the Respondents in the proceedings shall be entitled to prefer a cross-claim, counter-claim, or set off before the Arbitrator in respect of any matter in issue arising out of or in relation to the agreement without seeking a formal reference of arbitration to the Director (Marketing) for such counter-claim, cross-claim or set off and the arbitrator shall be entitled to consider and deal with the same as if the matters arising therefrom have been referred to him originally and deemed to form part of the reference made by the Director (Marketing). (k) The Arbitrator shall be at liberty to appoint, if necessary, any Accountant or Engineer or other technical person to assist him and to act on the opinion taken from such person. (l) The Arbitrator shall have power to make one or more award/s whether interim or otherwise in respect of the dispute and difference and in particular, will be entitled to make separate awards in respect of claims or cross-claims of the parties.
(l) The Arbitrator shall have power to make one or more award/s whether interim or otherwise in respect of the dispute and difference and in particular, will be entitled to make separate awards in respect of claims or cross-claims of the parties. (m) The Arbitrator shall be entitled to direct anyone of such parties to pay the costs of the other party in such manner and to such extent as the Arbitrator may in his discretion determine and shall also be entitled to require one or both the parties to deposit funds in such proportion to meet the Arbitrator's fees and expenses as and when called upon to do so.” 5.1 The above clause stands in the agreement between the parties named as arbitration clause. The Supreme Court in K.K. Modi Vs K.N. Modi [ (1998) 3 SCC 573 ] held that certain basic attributes must be present for an agreement to be considered as arbitration agreement. Firstly, the arbitration agreement must contemplate that decision of the arbitral tribunal must be binding to the parties. Secondly, the jurisdiction of the Arbitrator to decide the rights of the parties must be derived either from the consent of the parties or from an order of the Court or from a statute in that regard. In the third place, the agreement must contemplate that substantive rights of the parties would be determined by the tribunal agreed upon. The agreement between the parties to refer their disputes for a decision of the tribunal must be with an intent to enforce the same in law, is the core attribute. In the fifth place, the arbitral tribunal would determine the rights of the parties in an impartial and judicial manner owing equal obligation of fairness towards both the sides. In the last, the agreement must contemplate that the tribunal would make a decision upon a dispute which is already formulated at the time when the Reference is made. 5.2 In other words, the agreement to become an arbitration agreement or arbitration clause, has to ensure that the formation, selection or appointment of arbitral tribunal is such which has equal obligation towards both the sides and must be one would extend equal fairness to both the sides. The parties must have a freedom to chose and select a person to act as an arbitral tribunal.
The parties must have a freedom to chose and select a person to act as an arbitral tribunal. The arbitration tribunal is not one which is thrust upon either side at the instance of other side. An agreement or clause providing for an appointment of arbitrator who because of his position stands supervised, controlled or governed by one of the parties to the agreement, may lack an essential attribute to become an arbitrator and such clause may not be capable of termed as an arbitration clause. In the present case, paragraph 61 of the agreement between the parties, being treated as arbitration clause inter alia provide for appointment of Director (Marketing) of the Corporation to be the Sole Arbitrator or he may nominate some other officer of the Corporation as an Arbitrator. The other side, namely the dealer, is not entitled to raise any objection to any such Arbitrator on the ground that he is an officer of the Corporation. Even such officer is transferred, he would continue as Arbitrator or designate another person. Paragraph 61 is divided into various sub-clauses (a) to (m), of which sub-clause (f) says that the award shall be final and conclusive and mentions the award to be subject to Arbitration Act, 1940, which is a statute already replaced. Clause (g) provides for irrevocable consent to the award which may be made and published within the stipulated period. 5.3 On the aforesaid criteria, prima-facie, the language of paragraph 61(a) to 61(m) in the agreement styled as arbitration clause by the Corporation, may not satisfy the tests. It may be possible to view clause 61(a) to 61(m) in the agreement between the applicant-Corporation and the original petitioner, to be not entirely satisfying the requirements to become an arbitration clause with necessary intake of the essential attributes for an arbitration clause or arbitration agreement. The effect of the clauses would be needed to be examined in detail so as to ascertain whether they make an ideal arbitration clause in eye of law. No final opinion is expressed. But then, there is another facet of the issue. 6. A weightier reason exists for not treating the above clause to be a bar to entertain the writ petition and to exercise discretion in favour of the petitioner by not treating it as an alternative remedy and to relegate the petitioner to such remedy.
No final opinion is expressed. But then, there is another facet of the issue. 6. A weightier reason exists for not treating the above clause to be a bar to entertain the writ petition and to exercise discretion in favour of the petitioner by not treating it as an alternative remedy and to relegate the petitioner to such remedy. 6.1 As noted above, under the arbitration clause, the Director (Marketing) of the Corporation or his nominee officer is provided to function as Sole Arbitrator. In the present case, the dispute between the parties is in respect of termination of the dealership agreement. The termination of dealership was pursuant to order dated 01st June, 2013 passed by the Corporation. The petitioner thereupon preferred appeal against the said order under clause IV of the Notes under Chapter VI of Marketing Discipline Guidelines 2005. The petitioner was informed about right to appeal in the said letter/order dated 01st June, 2013 itself stating that the petitioner may prefer an appeal before the Director (R&D) of the Corporation within 30 days by sending the appeal at the address of the said authority which was mentioned. 6.2 In accordance with the said provision, the petitioner preferred appeal before the Director (R&D) of applicant-Indian Oil Corporation. A copy of memorandum of appeal preferred before the said appellate authority raising various grounds of challenge to the dealership termination order is on record. It could be seen therefrom that the Director (R&D) of the Corporation-the appellate authority considered the appeal after hearing both the sides. The said appellate authority while deciding the appeal, dealt with the grounds of challenge to the dealership termination order on its merits. The hearing of appeal culminated into order dated 07th June, 2014, which is the impugned order in the writ petition. 6.3 As the order dated 07th June, 2014 itself mentions, upon receipt of appeal a personal hearing was held on 10th September, 2013 which was postpone and was held again. Prior to the hearing, the parties were given opportunity to file documents in support of their respective contentions. Personal hearing was also afforded to both the sides and they were permitted to present their oral submissions. The Corporation had filed a written response to the appeal. Both the sides filed documents. It is by this process that the appellate authority reached to his conclusion to pass order dated 07th June, 2014.
Personal hearing was also afforded to both the sides and they were permitted to present their oral submissions. The Corporation had filed a written response to the appeal. Both the sides filed documents. It is by this process that the appellate authority reached to his conclusion to pass order dated 07th June, 2014. It considered rival contentions and submissions and dealt with the merits of order of termination of dealership agreement, ultimately dismissing the appeal holding that the action of termination of dealership agreement dated 24th April, 2006 by the applicant-Corporation was proper. 6.4 From the above, it is manifest that the said appellate authority is a quasi-judicial forum and functioned as such while deciding the appeal. The appeal before it was a quasi-judicial proceedings in which rights of both the sides were addressed, dealt with and decided. The decision making process in the appeal involved affording opportunity of hearing to the parties, observance of natural justice and it further involved a duty to decide judicially by application of mind. The Director (R&D) of the Corporation functioning as an appellate tribunal, had therefore all the trappings of quasi-judicial forum. 6.5 In Management Committee of Montfort Senior Secondary School Vs Vijay Kumar and others [ (2005) 7 SCC 472 ] considered the question as to when a tribunal can be said to be acting judicially or exercising judicial power. Quoting an English decision in R. Vs London County Council [(1931) 2 KB 215], the Supreme Court underlined the dictum that a forum or tribunal need not be a court, yet it may exercise judicial power. The court quoted from London County’s decision that “it is not necessary that it should be a court in the sense in which this Court is a court; it is enough if it is exercising, after hearing evidence, judicial functions in the sense that it has to decide on evidence between a proposal and an opposition and it is not necessary to be strictly a court.”. Referring to another English decision in Regina John M’Evoy Vs Dublin Corporation [(1878) 2 LR Ir 371] which observed that the term judicial does not necessarily mean acts of a judge or legal tribunal sitting for the determination of matters of law.
Referring to another English decision in Regina John M’Evoy Vs Dublin Corporation [(1878) 2 LR Ir 371] which observed that the term judicial does not necessarily mean acts of a judge or legal tribunal sitting for the determination of matters of law. It stated that a judicial act is an act done by a competent authority, upon consideration of facts and circumstances and imposing liability or affecting the rights of others. 6.6 The words ‘judicial’ or ‘quasi-judicial’ or ‘judicial power’ are not the connotations referable to a court only. A forum or authority may not be a court stricto sensu, yet where such authority or forum determine rights of person of property between the parties who are adversaries in terms of their rights and in relation to the specific controversy between them, and the authority is vested in some officer, person or tribunal to hear and determine on such rival rights, and the said authority or forum decides thereon after hearing case of both the sides, by taking evidence and upon weighing the merits of the contestants, such forum or authority would be a quasi-judicial or judicial forum. 6.7 Measured by the above principles and yardstick, the Director (R&D), IOCL and appellate authority acted and functioned as quasi-judicial authority in deciding the appeal of the petitioner-dealer against the order of termination of dealership agreement. The Arbitrator contemplated under clause 61(a) to (m) is Director (Marketing), Indian Oil Corporation. It is an authority of coordinate level in the Corporation. Even if the Director (R&D) and Director (Marketing) are not to be treated at par, they are the authorities of the Corporation. It would be incongruous if after decision by Director (R&D) in appeal, who acted as a quasi-judicial forum of appeal, the petitioner is driven to invoke the arbitration process where the Arbitrator is going to be the coequal authority. 6.8 Once the Director (R&D)-the appellate authority functioned as quasi-judicial tribunal and rendered its decision against the termination of dealership agreement in appeal by undergoing the process of determining the rights of the parties on the issue, asking the petitioner to invoke the clause for appointment of arbitration in respect of the very issue of termination of dealership agreement and relegating him to the process of arbitration does not stand to reason of law. It would be an incompatible situation. 7.
It would be an incompatible situation. 7. For the foregoing discussion, prayer in this Civil Application could not be granted. The Civil Application is dismissed.