Telangana High Court
M/S Jaiswal Auto Gas vs M/S Shv Energy Pvt Ltd. on 15 July, 2022
Author: A. Abhishek Reddy
Bench: A. Abhishek Reddy
THE HON'BLE SRI JUSTICE A. ABHISHEK REDDY
ARBITRATION APPLICATION No.105 OF 2021
ORDER:
This application is filed under Section 11(5) & (6) read with Section 15(2) of the Arbitration and Conciliation Act, 1996 (for short 'the Act') read with para 3(1)(d) of the Scheme for Appointment of Arbitrator, 1996, seeking appointment of Arbitrator.
2. The case of the applicant, in brief, is that the respondent had entered a Franchise Agreement dated 18.04.2018 for a period of 10 years commencing from 18.04.2018 with the applicant for Auto LPG Dispensing Station. It is the case of the applicant that by way of agreement dated 20.08.2018, the respondent agreed to provide deficit revenue realization as per clause 1 and clause 2 of the agreement for paying cost overheads of Rs.5,25,000/- per quarter till August, 2019. Though the respondent has initially agreed to enter into agreement orally for a period of 10 years, however, on request of the respondent, the agreement dated 20.08.2018 was entered for a period of one year on the assurance of the respondent that the same would be continued from time to time. It the specific case of the applicant that by the end of term of agreement dated 20.08.2018, the applicant had contacted the respondent in the month of August, 2019, and requested for continuing the agreement 2 dated 20.08.2018, however, the respondent has chosen not to execute an extension agreement. That after several discussions and correspondence with the respondent, the applicant has sent a legal notice dated 29.01.2021 to the respondent for payment of Rs.1,17,95,000/- towards the loss sustained by the applicant for running the gas station and the amount of expenses for investing and erecting the gas station. That the respondent has submitted a reply notice dated 22.02.2021 stating that the revenue realization agreement dated 13.08.2018 was valid only for a period of one year and as the said period has expired the applicant is not entitled to any deficit realization amount. Hence, the applicant is constrained to file the present Arbitration Application.
3. A counter has been filed by the respondent mainly contending that the respondent never promised to extend the revenue realization agreement beyond the period of one year. In the counter it is further averred that the various heads raised in the legal notice, dated 18.03.2021 seeking to appoint an Arbitrator are not legally tenable and cannot be enforced under an Arbitration clause as most of the claims are time barred and some of the disputes cannot be gone into by the Arbitrator and prayed to dismiss the Arbitration Application. Even though, the respondent had made a counter 3 claim of Rs.3,88,63,275/- in his reply dated 22.02.2021, the same is not being pressed in this application..
4. Heard Sri B. Chandrasen Reddy, learned Senior Counsel, appearing for Smt. B. Namratha Reddy, learned counsel for the applicant, and Sri Ch.Pushyam Kiran, learned counsel for the respondent.
5. Learned counsel appearing on behalf of the applicant has stated that in furtherance of the Franchisee Agreement for Auto LPG Dispensing Station, dated 18.04.2018, the applicant has entered into a lease agreement, dated 16.05.2018, and due to Covid-19 pandemic situation, the parties have entered into another agreement, dated 20.08.2018. Learned counsel for the applicant has stated that in both the Franchisee Agreements and lease agreement, an arbitration clause is there and that the applicant has issued legal notice, dated 29.01.2021 raising a dispute to be resolved by the arbitrator, for which a reply was issued by the respondent on 22.02.2021 denying the same. Thereafter, the applicant issued another notice, dated 18.03.2021. Learned counsel for the applicant has stated the applicant has several disputes with regard to the above three agreements entered into by the parties and having regard to the arbitration clause in the said 4 agreements, this Court may be pleased to pass necessary orders appointing an arbitrator to settle those disputes.
6. Per contra, learned counsel appearing for the respondent has vehemently opposed the very maintainability of the present application. Learned counsel has stated that the Revenue Realization Agreement, dated 20.08.2018, is entered only for a period of one year i.e., from 20.08.2018 till August, 2019, and as per the said agreement, the respondent is not obligated to pay any amount to the applicant herein. That once the period fixed in the agreement with regard to the payment of the deficit revenue agreement is over and the amounts envisaged therein are paid, the question of raising the Arbitration dispute with regard to the same does not arise. Insofar as the other disputes are concerned, the arbitrator cannot go into all those other questions and prayed this Court to dismiss the present arbitration application.
7. A perusal of the agreements entered into by the parties, dated 18.04.2018, 16.05.2018 and 20.08.2018, shows that all the three agreements have an arbitration clause which reads as under:
"ARBITRATION:
Any dispute or differences arising between the parties under this Agreement shall be settled by mutual discussions. Should, however, there be no settlement, the dispute shall be referred to Arbitration, under the Arbitration & Conciliation Act, 1996 by a sole Arbitrator and the seat of Arbitration shall be Hyderabad city. Any dispute arising out 5 of this agreement shall be subject to the exclusive jurisdiction of the appropriate court situating within the city of Hyderabad."
8. Moreover, in the notice, dated 29.01.2021, the petitioner has raised not just only one dispute with regard to the Deficit Realization Agreement but has raised several other disputes with regard to other two agreements. Therefore, it cannot be said that the raising of the dispute is only with regard to the deficit revenue realization which is valid for a period of one year only. As seen from the legal notice, dated 18.03.2021, there are other disputes raised by the party/applicant. Admittedly, all the three agreements entered by the parties are part and parcel of a single deal and cannot be read in isolation and has to be read as a whole. The question as to whether the applicant is entitled to any of the said amounts or not cannot be gone into by this Court and can only be gone into by the arbitrator. Therefore, this Court is of the opinion that the present Arbitration Application to appoint an arbitrator is valid and justified. However, it is left open to the respondent to raise all the objections before the Arbitrator with regard to the entitlement of the applicant to any of the claims raised by the applicant herein.
9. In the result, the Arbitration Application is ordered appointing Smt.D.Sarala Kumari, retired District Judge, as the sole Arbitrator 6 to arbitrate on the disputes between the applicant and the respondent and the said arbitrator shall enter on reference and proceed with, as enjoined by the Act.
10. The learned Arbitrator shall fix her remuneration as per the statutory provisions. She shall also fix the costs and expenses of the secretarial assistance for the arbitration proceedings upon deliberation and consultation with the parties. All the costs and expenses of the arbitration proceedings shall be borne by both the parties in equal share. The learned Arbitrator is requested to complete arbitration proceedings, and pass an award at the earliest, preferably within six months from the date of commencement of the arbitral proceedings. It is made clear that this order does not preclude the respondent from raising any legally tenable objections as may be permissible under the law.
Miscellaneous Applications, if any, pending in the Arbitration Application shall stand closed.
_________________________ A. ABHISHEK REDDY, J Date: 15.07.2022 smr