Karnataka High Court
M/S G P V Enterprises vs Indian Oil Corporation Limited on 16 February, 2018
Author: Vineet Kothari
Bench: Vineet Kothari
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IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 16th DAY OF FEBRUARY 2018
BEFORE
THE HON'BLE Dr.JUSTICE VINEET KOTHARI
C.M.P. No.181/2015
BETWEEN:
M/S G.P.V. ENTERPRISES
IOC (S.K.) DEALER, MANDYA
OFFICE AT: KARASWADI ROAD
MANDYA TOWN , MANDYA-571401
REPRESENTED BY ITS PARTNER
SRI. G. VENKATESH.
... PETITIONER
(By Mr. N. SHIVA KUMAR, ADV.,)
AND:
1. INDIAN OIL CORPORATION LIMITED
MYSURU DIVISIONAL OFFICE
NO.118, BEHIND FCL GODOWN
METAGALLI, MYSURU 570016.
2. INDIAN OIL CORPORATION LIMITED
NO.29, P KALINGA RAO ROAD
BANGALORE 560027
REPRESENTED BY ITS
DEPUTY GENERAL MANAGER (RETAIL SALES).
3. INDIAN OIL CORPORATION LIMITED
A COMPANY REGISTERED UNDER
INDIAN COMPANIES ACT, 1956
HAVING ITS REGISTERED OFFICE
AT G-9, ALL YAVAR JUNG MARG
BANDRA (EAST), MUMBAI 400 051
REPRESENTED BY ITS MANAGING DIRECTOR.
... RESPONDENTS
Date of Order 16-02-2018 C.M.P.No.181/2015
M/s. G.P.V. Enterprises IOC (S.K.) Dealer
Vs. Indian Oil Corporation Limited & Ors.
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(By Mr. A.K. LAKSHMANAN, ADV., FOR R1 TO R3)
THIS C.M.P. IS FILED UNDER SECTION 11(6) OF THE
ARBITRATION AND CONCILIATION ACT 1996, PRAYING TO
APPOINT AN INDEPENDENT, COMPETENT AND IMPARTIAL
PERSON HAVING KNOWLEDGE IN THE MATTERS OF
CONTRACT, PARTNERSHIP DEEDS TO ACT AS SOLE
ARBITRATOR TO ADJUDICATE THE DISPUTE BETWEEN THE
PARTIES TO THE DEALERSHIP AGREEMENT
DATED:22/09/1987 IN THE INTEREST OF JUSTICE AND
EQUITY.
THIS C.M.P. COMING ON FOR HEARING THIS DAY, THE
COURT MADE THE FOLLOWING:-
ORDER
Mr. N. Shivakumar, Adv. for Petitioner Mr. A.K. Lakshmanan, Adv. for R1 to R3
1. The controversy involved in the present case is squarely covered by the decision of the Hon'ble Supreme Court in the case of Aravali Power Company Pvt. Ltd., vs. M/s.Era Infra Engineering Ltd., (2017 SCC Online 1072), vide paras 16 and 19 of the said judgment which are quoted below on the question as to whether the Respondent-Indian Oil Corporation Ltd., as per the Arbitration Agreement between the parties could appoint an in-house employee as an Arbitrator or not.
Date of Order 16-02-2018 C.M.P.No.181/2015 M/s. G.P.V. Enterprises IOC (S.K.) Dealer Vs. Indian Oil Corporation Limited & Ors. 3/6
2. It is therefore no longer res integra and the amendment effected by Act No.3 of 2016 with effect from 23.10.2015 amending Section 12 of the Act cannot be applied with further retrospectivity, in terms of the aforesaid Supreme Court decision.
3. Since in the present case, an in-house Arbitrator was appointed on 24.06.2015 appointing Mr.K.L.Murthy, Executive Director (Lubes), vide Annexure-R2 dated 24.06.2015, the present Civil Misc. Petition under Section 11 of the Act, seeking appointment of another Arbitrator is not maintainable.
4. Paras 16 and 19 of the aforesaid decision of the Hon'ble Supreme Court relying upon another case involving Indian Oil Corporation itself, are quoted below for ready reference:-
"16. At the outset, it must be stated that the invocation of arbitration in the present case was on 29.07.2015, the Arbitrator was appointed on 19.08.2015 and the parties appeared before the Arbitrator on 07.10.2015, Date of Order 16-02-2018 C.M.P.No.181/2015 M/s. G.P.V. Enterprises IOC (S.K.) Dealer Vs. Indian Oil Corporation Limited & Ors.4/6
well before 23.10.2015 i.e. the date on which the Amendment Act was deemed to have come into force. The statutory provisions that would therefore govern the present controversy are those that were in force before the Amendment Act came into effect. We must mention here that both the parties have addressed their submissions on this premise.
19. The fact that the named arbitrator happens to be an employee of one of the parties to the Arbitration Agreement has not by itself, before the Amendment Act came into force, rendered such appointment invalid and unenforceable. The observations of this Court in Indian Oil Corporation Ltd. v. Raja Transport Private Ltd., (2009) 8 SCC 520, in paragraphs 28, 30, 31 and 32 are quite clear. Said paragraphs were as under:
"28. It is contended by the respondent that in view of the emphasis on the independence and impartiality of an arbitrator in the new Act and having regard to the basic principle of natural justice that no man should be judge in his own cause, any arbitration agreement to the extent it nominates an officer of one of the parties as Date of Order 16-02-2018 C.M.P.No.181/2015 M/s. G.P.V. Enterprises IOC (S.K.) Dealer Vs. Indian Oil Corporation Limited & Ors.5/6
the arbitrator, would be invalid and unenforceable.
30. We find no bar under the new Act, for an arbitration agreement providing for an employee of a Government/statutory corporation/public sector undertaking (which is a party to the contract), acting as an arbitrator. Section 11(8) of the Act requires the Chief Justice or his designate, in appointing an arbitrator, to have due regard to:
"11. (8)(a) any qualifications required of the arbitrator by the agreement of the parties; and
(b) other considerations as are likely to secure the appointment of an independent and impartial arbitrator."
31. Section 12(1) requires an arbitrator, when approached in connection with his possible appointment, to disclose in writing any circumstances likely to give rise to justifiable doubts as to his independence or impartiality. Section 12(3) enables the arbitrator being challenged if Date of Order 16-02-2018 C.M.P.No.181/2015 M/s. G.P.V. Enterprises IOC (S.K.) Dealer Vs. Indian Oil Corporation Limited & Ors. 6/6
(i) the circumstances give rise to justifiable doubts as to his independence or impartiality, or
(ii) he does not possess the qualificsations agreed to by the parties.
32. Section 18 requires the arbitrator to treat the parties with equality (that is to say without bias) and give each party full opportunity to present his case. Nothing in Sections 11, 12, 18 or other provisions of the Act suggests that any provision in an arbitration agreement, naming the arbitrator will be invalid if such named arbitrator is an employee of one of the parties to the arbitration agreement."
2. Therefore, the present C.M.P. filed by the petitioner under Section 11 of the Act seeking an appointment of an Arbitrator in the matter is liable to be dismissed and accordingly, the same is dismissed.
No costs.
Sd/-
JUDGE Srl.