Punjab-Haryana High Court
M/S Joy H.P. Centre vs Hindustan Petroleum Corporation Ltd. ... on 4 November, 2014
Author: K.Kannan
Bench: K.Kannan
CWP No.19886 of 2012 (O&M) 1
IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
CWP No.19886 of 2012 (O&M)
Reserved on: 29.10.2014
Date of Decision: 04.11.2014.
M/s Joy H.P. Centre ......Petitioner
Versus
HPCL and others .....Respondents
CORAM: HON'BLE MR. JUSTICE K.KANNAN
1. Whether Reporters of local papers may be allowed to see the
judgment ?
2. To be referred to the Reporters or not ?
3. Whether the judgment should be reported in the Digest?
Present: Mr.H.S. Hooda, Senior Advocate with
Mr. J.S. Dhaliwal, Advocate
for the petitioner.
Mr. Anil Malhotra, Advocate
for respondents No.1 & 2.
Mr. Aman Arora, Advocate
for respondent No.3.
****
K.KANNAN, J. (ORAL)
The petitioner is the dealer in petroleum products manufactured and distributed by the 1st respondent. The dealership has been terminated on 21.09.2012 after a show cause notice having been issued on 04.04.2012 and after consideration of the reply sent by the petitioner on 09.04.2012. The imputation made against the petitioner was that the petitioner was guilty of adulteration of the petroleum products stored at the outlet.
The petitioner challenges the order of termination as contrary to the procedure established by law and on inadequate consideration of facts MOHMED ATIK 2014.11.05 11:21 I attest to the accuracy and authenticity of this document CWP No.19886 of 2012 (O&M) 2 brought by the petitioner. There is preliminary objection taken by the respondent that the dealership agreement contains an arbitration clause and the petitioner cannot have an intervention through a writ petition without resort to such an arbitral process. There is a CM No.16238 of 2012 filed under Section 5 and 8 of the Arbitration and Conciliation Act, 1996 with the prayer for reference of the case to Arbitration. The application and petition have been heard together.
There is no dispute about the fact that dealership agreement specifically contains in Clause 66 that any dispute or difference of any nature whatsoever 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 Corporation or by some officer of the Corporation who may be named by the Director.
There cannot be doubt that termination of a contract is indeed a dispute which is arbitrable. However, the learned Senior counsel for the petitioner would urge in support for the maintainability of the writ petition, the decision of the Hon'ble Supreme Court in Harbanslal Sahnia and another vs. Indian Oil Corporation Limited and others (2003) 2 SCC page 107 that an alternative remedy to a writ petition or a rule of exclusion of writ jurisdiction is a matter of discretion and not one of compulsion. When the dealership which is bread and butter comes to be terminated for an irrelevant and non-existent cause, the case should have been decided by the High Court itself instead of driving the parties to initiate action for arbitration. This according to learned Senior counsel for the petitioner provided a ground for continuation of the proceedings before this Court and secure a final adjudication. Learned Senior counsel for the petitioner would MOHMED ATIK 2014.11.05 11:21 I attest to the accuracy and authenticity of this document CWP No.19886 of 2012 (O&M) 3 argue that the grounds of termination of the agreement was founded an imputation that on a surprise inspection done on 16.11.2011 when samples had been taken there was an attempt to create a panic by causing fire to distract the attention of the personnel of the Corporation present there. The learned Senior counsel would also argue that their own reports were never consistent and the boiling points of the samples taken on various dates and in the various tests showed gross dissimilarity, they were supposed to be 290oC on 16.11.2011, 245oC on 25.11.2011 and 220oC on 27.03.2012. Learned Senior counsel would state that if there had been case of adulteration, results ought to have been same on various dates and the gross variations were proof of manipulation by the Corporation. The further argument is that on three dates the samples which were required to be taken were not properly drawn and were against the guidelines, consequently the appropriate relief would be possible only through a writ petition for the violation of guidelines cannot be a matter which can be brought before the Arbitrator.
The issue of whether manipulations had taken place and the samples drawn at various places from different sources attached to the petrol outlet would not be considered without going into the factual issue of whether the lab tests were correct or whether the values recorded have been manipulated or not. The integrity of the samples drawn from the various sources is also a crucial issue and it is essential to examine whether the samples drawn were indeed the subject on which the tests were conducted.
The Hon'ble Supreme Court that found that a writ remedy will not be lost when the termination was on irrelevant and non-existent cause is not the subject here. There is no denying the fact that adulteration of the MOHMED ATIK 2014.11.05 11:21 I attest to the accuracy and authenticity of this document CWP No.19886 of 2012 (O&M) 4 petroleum product is surely a ground which can result in termination of the contract. The Supreme Court was considering a situation of a sample test which was carried out in violation of the instructions contained in Government orders. The case was with reference to a sample taken from the outlet which did not specify the standard specifications. In that case there were specific Government instructions about the manner of taking samples and carrying out tests. It was emphasized that the testing should be done for quality and intensity at the retail outlet itself in the presence of dealer with necessary equipments but in that case the sample was taken on 11.02.2000 and the lab test had been carried out about a month later which was capable of causing variations in values. The Supreme Court was dealing, therefore, with a situation where the scope for strength/frictions of petrol getting adulterated by the length of time taken made meaningless the reference to the results in the tests to be used for termination of contract. In this case where no infirmity brought before the Court. If there is an undisputed fact regarding what was the product seized and the product which was subject to test or any action of the respondent which prima facie excited the suspicion to give any credibility to the report, I could have no difficulty in taking a decision before the Court itself.
In this case there are serious factual matters that would require consideration of whether the samples were taken from the three sources as set down in the guidelines and whether the tests were carried out to the knowledge and in the presence of the petitioner or whether the petitioner had not been joined in the test. It cannot be said that the termination has been affected on any irrelevant or non-existent cause. The correctness of the reports could be vouched in an appropriate inquiry which shall be not MOHMED ATIK 2014.11.05 11:21 I attest to the accuracy and authenticity of this document CWP No.19886 of 2012 (O&M) 5 available in a writ jurisdiction. It will be not be exigent in law for disposal of the case on mere allegations and counter-allegations brought through pleadings. The case would require a full-fledged adjudication and, therefore, it is directed that the respondent shall consign the dispute raised before this Court by the petitioner as requiring an adjudication and nominate the Arbitrator as contained in Clause 66 within a period of two weeks through the Officer who is competent to nominate such a person. Needless to say that the petitioner would be served with notice by Authorities and the adjudication will proceed in accordance with law.
The application filed under Section 5 and 8 of the Arbitration and Conciliation Act 1996, is allowed and the writ petition to quash the termination of the order is dismissed to await the adjudication by the Arbitrator.
04.11.2014 (K.KANNAN)
Atik JUDGE
MOHMED ATIK
2014.11.05 11:21
I attest to the accuracy and
authenticity of this document