Hindustan Petroleum Corporation Ltd. v. Taj Petroleum, Dealer of H. P. C. L. , through its Proprietor Shafiq Majid Sheikh
2017-11-08
P.N.DESHMUKH
body2017
DigiLaw.ai
JUDGMENT : 1. This appeal is filed under Section 37(1)(c) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'Act of 1996') against the impugned judgment dated 19th June, 2017 passed by the Principal District Judge, Nagpur in Civil M.A.No.1111 of 2016 vide which appeal preferred by appellant herein under Section 34 of the Act of 1996 challenging award passed by the Arbitrator came to be dismissed. 2. Learned counsel for the appellant has submitted that during pendency of proceedings before the learned Arbitrator, by order dated 27th January, 2016 passed on Exh.10, appellant is permitted to run petrol pump/retail outlet which was run by respondent and during pendency of Miscellaneous Application before the learned District Judge, appellant had filed application under Section 9 of the Act of 1996, praying for continuation of interim order dated 27th January, 2016 and pending said application it was agreed between the parties that respondent would not press for execution of award passed by the Arbitrator, if matter is decided finally, accordingly as on today appellant is running the petrol pump. 3. Facts which are necessary to understand the controversy involved in appeal can be stated briefly as under :- For the sake of convenience appellant is referred as Company and respondent as Dealer. The Dealer had filed claim against Company before the Arbitrator, seeking declaration that order dated 21st December, 2012 issued by Company is illegal, void and be quashed and set aside, contending that Dealer was appointed by the Company as per agreement dated 5th April, 2006 and in pursuance to it, was running retail outlet situated at Bhandara, Khat Road, Distt. Bhandara (M.S.). Officials of the Company on 13th December, 2012 and 14th December, 2012 visited outlet and drew samples of M.S. (Motor Spirit) and HSD (High Speed Diesel) and on testing the same since found that the samples had failed. Company therefore issued show cause notice to Dealer on 19th February, 2012. Said notice was replied on 6th May, 2013. It is the specific case of Dealer that as per Marketing Discipline Guidelines of the Company general procedure for inspection of retail outlet is required to be followed by the Company and its Officers for drawing samples. However, in the case in appeal, no such guidelines were followed as samples of petroleum products were collected in contravention to it.
It is the specific case of Dealer that as per Marketing Discipline Guidelines of the Company general procedure for inspection of retail outlet is required to be followed by the Company and its Officers for drawing samples. However, in the case in appeal, no such guidelines were followed as samples of petroleum products were collected in contravention to it. Thereafter, the Dealer was running the outlet peacefully till 9th May, 2013 and after lapse of four months his dealership was suspended without any intimation. It is further case of Dealer that on 23rd August, 2013 another show cause notice was issued by the Company alleging certain violations which was replied on 23rd September, 2013 and 15th October, 2013, however, without considering the same his Dealership came to be illegally terminated with effect from 21st December, 2013, even without referring the dispute to Arbitration and thus, it is the case of Dealer that the action on the part of the Company in terminating dealership agreement dated 5th April, 2006 is liable to be quashed. 4. Company has filed written statement and has resisted the claim of Dealer submitting that the samples which were drawn at the Dealer's outlet on 14th December, 2012, on testing in the Laboratory, were reported to be not to the standard vide Lab report dated 19th January, 2013 and therefore, show cause notice was issued to Dealer on 19th February, 2013 which was replied by him on 6th May, 2013. Another show cause notice was issued on 23rd August, 2013 which was replied on 23rd September, 2013 and 15th October, 2013, however, neither of the replies is found to be satisfactory and therefore, Company has finally terminated dealership on 21st December, 2013. 5. During the Arbitration proceedings Dealer led oral and documentary evidence while Company did not examine any witness which enquiry ended by passing Award dated 30th September, 2016 thereby quashing order dated 21st December, 2013 terminating the dealership and restoring the permit vide agreement dated 5th April, 2006. The company was even directed to supply petroleum products. 6. In view of the facts as aforesaid, point which required for consideration is whether, communication dated 21st December, 2013 issued by Company to Dealer terminating his Dealership licence dated 5th April, 2006 is legal and proper and decision taken is after giving reasonable opportunity to dealer to put up his case. 7.
6. In view of the facts as aforesaid, point which required for consideration is whether, communication dated 21st December, 2013 issued by Company to Dealer terminating his Dealership licence dated 5th April, 2006 is legal and proper and decision taken is after giving reasonable opportunity to dealer to put up his case. 7. Learned Counsel for the Company so far as on the issue of grant of reasonable opportunity to dealer to put up his case is concerned, has referred to the Dealership agreement dated 5th April, 2006 and has submitted that said document does not specify any such term for giving an opportunity of hearing to Dealer before Dealership is terminated, however, has fairly stated that no hearing was given to Dealer before impugned order came to be passed. 8. Learned counsel appearing for the Dealer on this count has relied upon various authorities to demonstrate that giving an opportunity of hearing before termination of Dealership is in compliance with principle of natural justice and in absence of any such hearing if the Dealership is terminated, the act would amount to illegality. To substantiate submissions as aforesaid, learned counsel appearing for Dealer has relied upon the case of Allied Motors Ltd. ..vs.. Bharat Petroleum Corporation Ltd. reported in (2012)2 SCC 1 . In this case, facts were similar as samples were drawn from the petrol pump without following procedure as prescribed in Motor Spirit and High Speed Diesel (Regulation of Supply and Distribution and Prevention of Malpractices) Order, 1998 as well as Marketing Discipline Guidelines and in such circumstances, the dealership was terminated without offering opportunity to Dealer which was held bad in law and hence order of termination of Petrol Pump was set aside and possession and dealership of Petrol Pump was directed to be restored. 9. In view of above stated law, on perusal of record it appears to be the specific case of Dealer wherein he had requested to offer personal hearing to him before any decision was taken, however, he was not offered any such opportunity for the reasons best known to Company which action on the part of Company is apparent in violation of principles of natural justice and is not therefore at all sustainable.
Even otherwise, test report dated 19th January, 2013 and of retention sample dated 8th June, 2013 were of material variance because in the test dated 19th January, 2013 MS nozzle samples drawn from retain outlet did not meet the specification and in that view of the matter also it was necessary for Company to give an opportunity of personal hearing to Dealer. The Dealer in fact vide his communication dated 2nd December, 2013 had requested Company to give an opportunity of hearing on the date which could be suitable for them, however, hearing is not given before action of termination of Dealership is taken. It is, therefore, apparent that principles of natural justice are violated in the appeal in hand. In view of facts discussed as aforesaid and the settled law thus, the order passed by Company terminating dealership is found to be illegal and therefore liable to be set aside. Resultantly, I reply point, which arose for determination in negative. As a consequence of above, no illegality or perversity could be noted, which prompts interference in the appellate jurisdiction. The appeal as such fails and stands dismissed. Appellant/Company is directed to resume supply of petroleum products for its sale to respondent/Dealer by following usual procedure and shall allow respondent to occupy the retail outlet which is put into occupation of Company by virtue of interim measure, forthwith.