Calcutta High Court (Appellete Side)
Sri Sajal Kumar Mandal vs The Indian Oil Corporation Limited & Ors on 16 April, 2019
Author: Ashis Kumar Chakraborty
Bench: Ashis Kumar Chakraborty
IN THE HIGH COURT AT CALCUTTA
(CONSTITUTION WRIT JURISDICTION)
APPELLATE SIDE
W.P. 22927 (W) OF 2018
Sri Sajal Kumar Mandal.
-VS-
The Indian Oil Corporation Limited & Ors.
BEFORE:
The Hon'ble JUSTICE ASHIS KUMAR CHAKRABORTY
For the petitioners : Mr. Ashok Banerjee, Sr. Advocate,
Mr. Sudipto Panda, Advocate,
Mr. Subrata Ghosh, Advocate,
For the respondent no.s 1 to 5 : Mr. M. S. Yadav, Advocate,
Heard on : 06.02.2019
Judgement on : 16.04.2019
Ashis Kumar Chakraborty, J.
The petitioner was appointed by the respondent no.1 oil company as the distributor of Liquid Petroleum Gas (in short, "LPG") at Panchmura, PS Taldangra, District Bankura in the State of West Bengal (hereinafter referred to as 'the said area'). In this writ petition the petitioner has challenged the notice dated November 14, 2018 issued by the Executive Director, WBSO of the respondent no.1 Oil Company terminating his distributorship of LPG.
The brief facts required to be considered for deciding this writ petition are that on or about November 27, 2010 the respondent no.1 issued a public notice inviting application for selection of the distributor of LPG, under Rajiv Gandhi Gramin Liquid Petroleum Gas Vitrak (RGGLV) for the said area. In response to the said advertisement, the petitioner filed an application for obtaining the distributorship of LPG for the said area and in a draw held on August 23, 2011 he was selected for the said distributorship. According to the petitioner, in the meantime, by a registered deed of purchase no.4561 of 2010 dated November 24, 2010 he purchased a plot of land measuring 14 decimals from Sri Bimal Chandra Nandi and on the said plot of land he intended to set up the godown and the showroom for said LPG distributorship. In the application submitted to the respondent no.1, the petitioner stated that he intends to set up the LPG godown and showroom. The petitioner further claims that in order to set up the godown to store the gas cylinders and to ensure smooth supply of gas cylinders, by virtue of a registered deed dated November 23, 2011 he also purchased another adjoining plot of land ad measuring an area of 4 decimals.
On February 27, 2012 an agreement was entered into between the petitioner and the respondent no.1, whereby the latter appointed the former as the distributor of LPG for the said area. The terms and conditions under which the respondent no.1 appointed the petitioner as the LPG distributor for the said area were recorded in the said agreement dated February 27, 2012. Clause 37 (a) of the said agreement dated February 27, 2012 contemplated that all disputes and differences arising under or in relation to the said agreement shall be referred to the sole arbitration of the Director (Marketing) of the respondent no.1 and if, the said Director is unable or unwilling to act of the sole arbitrator the matter shall be referred to the sole arbitration of some other officer of the respondent no.1, who is willing to act as such sole arbitrator.
After entering into the said agreement dated February 27,2012 the petitioner started to run his LPG distributorship in the said area in the District of Bankura. According to the petitioner, in the month of March, 2012 he was informed of certain defects in the title of the 14 decimals of land which he had purchased from Shri Bimal Chandra Nandi for setting up the godown of LPG. Thereafter, when the petitioner went to the office of respondent no.1 he was advised to approach the other co-owner of the said plot of land ad measuring 14 decimals. As such, the petitioner caused the other co-owner of the said plot of land, namely Smt. Taralika Shit to transfer her 50% share in the said land, that is, 7 decimals in favour of the petitioner. On September 26, 2016 the petitioner entered into an addendum agreement with the respondent no.1 modifying the said agreement dated February 27, 2012 to the effect that henceforth the said distributorship of the petitioner of LPG shall be treated and known as 'Gramin Vitrak' instead of 'Rajiv Gandhi Gramin LPG Vitrak'. On November 16, 2016 the Senior Area Manager of the respondent no.1, issued a show cause notice to the petitioner alleging that for considering his application by the respondent no.1 for appointment of distributor of the LPG for the said area, the petitioner had relied upon the deed to prove his title in respect of 14 decimals of land upon which he had constructed the godown, but after execution of the said agreement dated February 27, 2012 the petitioner submitted the said deed executed by Taralika Shit dated March 13, 2012, that is, on a date after his selection as RGGLV distributor for 7 decimals of the same plot of land. Accordingly, by the said show cause dated November 16, 2016 the Senior Area Manager of the respondent no.1 advised the petitioner to submit his explanation for the said discrepancies. By his letter dated December 5, 2016 addressed to the Senior Area Manager of the respondent no.1, the petitioner replied to the said show cause dated November 16, 2016. Thereafter, on February 27, 2017 the petitioner and the respondent no.1 entered into a memorandum of agreement, thereby renewing the said distributorship of the petitioner for a further period of five years. Clause 37 (a) and (b) of the said agreement dated February 27, 2017 contains the identical arbitration clause provided in the said agreement dated February 27, 2017. On April 24, 2018 the respondent no.3, the General Manager (LPG) of the respondent no.1 issued a further show cause notice to the petitioner stating that he had utilized for construction of godown (as per approved explosive plan) which exceeded the dimensions of land offered in his application dated November 26, 2010 and it was found after being selected as the distributor the petitioner purchased additional plot of land by virtue of the registered title deed dated September 26, 2011, without prior knowledge or approval of the respondent no.1. In the said show cause notice it was asserted that as per clause 20 of the Manual for Selection of RGGLV (2009), if any information furnished by the applicant is found to be false at any point of time before or after appointment as a distributor, the allotment shall be cancelled forthwith and the distributorship shall be terminated. The respondent no.3 further referred to Clause 27 (1) of the distributorship agreement providing that if any information given by the distributor in his application for appointment is found to be untrue or incorrect in any material particular, the respondent no.1 shall have the entire discretion to terminate the agreement forthwith. The petitioner was directed to submit his reply within 15 days from the date of receipt of the same. The petitioner challenged the said show cause notice dated April 24, 2018 by filing a writ petition, WP 22927(W) of 2018 (Sri Sajal Mandal - vs- the Indian Oil Corporation Ltd. and Ors.) before this High Court. By an order dated May 16, 2018 a learned single Judge of this Court disposed of the said writ petition by permitting the petitioner to file a detailed reply to the said show cause notice dated April 24, 2018.
On May 25, 2018 the petitioner filed his reply to the said show cause notice dated April 24, 2018 to the respondent no.3. After considering the said reply dated May 25, 2018 the respondent no.2 issued the notice dated November 14, 2018 to the petitioner terminating his distributorship under the name and style of Panchmura Indane Gramin Vitrak. As mentioned earlier, it is the said notice dated November 14, 2018 issued by the respondent no.2 terminating the distributorship of the petitioner which has been challenged in this writ petition.
At the very outset of the hearing of the writ petition, a strong objection was raised by Mr. M. S. Yadav, learned counsel appearing for the respondent nos.1, 2 and 3 with regard to the maintainability of the writ petition. It was contended that the disputes with regard to termination of the petitioner's distributorship of LPG arise out of the distributorship agreement between the parties and in view of such disputes being covered by the arbitration agreements contained the said agreements dated February 27,2012 and February 27, 2017 the instant writ petition is not maintainable. In support of such contention, learned counsel appearing for the respondent nos. 1, 2 and 3 relied on the decisions of the Supreme Court in the cases of Empire Jute Company Ltd. and Ors. -vs- Jute Corporation of India Ltd. and Anr. reported in (2007) 14 SCC 680 and Joshi Technologies International INC (supra) -vs- Union of India & Ors. reported in (2015) 7 SCC
728. On the other hand, Mr. Ashok Banerjee, learned senior counsel appearing for the writ petition submitted that there is no merit in the contention of the respondent Oil Company to the maintainability of the writ petition. Mr. Banerjee, however, did not dispute the existence of the arbitration agreement between the petitioner and the respondent no.1 contained in both the said agreements dated February 27, 2012 and February 27, 2017. He first cited the decision of the Supreme Court in the case of Whirlpool Corporation - vs- Registrar of Trade Marks, Mumbai and Anr., reported in (1998) 8 SCC 1 and submitted that it is well- settled law that the alternative remedy does not operate as a bar to the High Court in entertaining a writ petition at least in four contingencies:- (i) where the writ petition has been filed for enforcement of any fundamental rights, or (ii) where there has been a violation of the principle of natural justice, or (iii) where the order or proceedings are wholly without jurisdiction and the vires of the act of challenge. It was further submitted that it is well settled law that the cancellation of the distributorship agreement of a party of a serious matter and cannot be taken lightly. When there is no service of prior notice to the aggrieved person before the termination of a distributorship agreement, the same results in violation of the well-settled principle of natural justice that no person should be condemned unheard. Mr. Banerjee further relied on the decisions of the Supreme Court in the case of Hindustan Petroleum Corporation Limited and Ors. -vs- Super Highway Services and Anr. reported in (2010) 3 SCC 321 and in the case of Union of India and Ors. -vs- Tantia Construction Pvt. Ltd. reported in (2011) 5 SCC 697. It was argued that as per the advice of the respondent no.1 the petitioner purchased 50% share of the said Taralika Shit of the said plot of land ad measuring 14 decimals. It was argued for the petitioner that when the respondent no.1 required him to pay for the same plot of land twice, the action of the respondent no.1 oil company to terminate the distributorship agreement of the petitioner is vitiated by arbitrary exercise of power. Therefore, according to the petitioner, the alternative remedy under the arbitration agreement contained either in the said agreements dated February 27, 2012 or the agreement dated February 27, 2017 is no bar against the petitioner or invoking the writ jurisdiction of this Court to challenge the wrongful termination of his distributorship agreement by the respondent no.1 oil company.
In view of objection raised by the respondent no.1 with regard to the jurisdiction of this Court to entertain this writ petition I find it appropriate to decide such issue first. As mentioned above, the objection raised by the respondent no.1 oil company with regard to the maintainability of this writ petition is based on the arbitration agreement contained in Clause 37 of both the said agreements dated Febaryary 27, 2012 and February 27, 2017. The existence of the arbitration agreement(s) between the parties for the decision of any dispute arising out of the relating to the said agreements is not in dispute. It cannot be and it is not the case of the writ petitioner that the distributorship agreement dated February 27, 2012 or the renewal agreement dated Februyary 27, 2017 is a statutory contract. It is settled law that a contract would not become statutory simply because it is for construction/setting up of a public utility and it has been awarded by a statutory or public body carrying on any business involving public utility services. The fact that one of the parties to the agreement is a statutory or public body will not by itself affect the settled principle that disputes about the meaning of covenant in a contract or its enforcibility have to be determined according to the law of the contract and merely because a contract is entered into in exercise of an enabling power conferred by a statute that by itself cannot render the contract a statutory contract. It is only when a contract is entered into by a statutory or public body containing the prescribed terms and conditions which are statutory, then the said contract to that extent is statutory. In this regard, reference may profitably be made to the decision of the Supreme Court in the case of India Thermal Power Ltd. v. State of M.P. reported in (2000) 3 SCC 379. In the case of State of U.P. v. Bridge & Roof Co. (India) Ltd. reported in (1996) 6 SCC 22 the Supreme Court held the contract between the State Government and a Construction Company (the Central Government Undertaking) it is not a statutory in the realm of private law. Such contract is governed by the provision of the Contract Act or, may be, also by certain provisions of the Sales of Goods Act. Any dispute relating to interpretation of the terms and conditions of such contract cannot be agitated in a writ petition. If the contract between the parties contains in arbitratioin agreement, any dispute relating to interpretation of the terms and conditions of such contract between the parties even when one of the parties is a public or statutory body, has to be decided in arbitration. The same view was reiterated by the Supreme Court in the case of Pimpri Chinchwad Municipal Corporation & Ors. -vs- Gayatri Construction Company & Anr. reported in (2008) 8 SCC 172. In the case of ABL Internation Ltd. & Anr. -vs- Export Credit Guarantee Corporation of India Ltd. & Ors. reported in (2004) 3 SCC 553 the Supreme Court held that in an appropriate case, a writ petition as against the State or an instrumentality of a State arising out of a contractual obligation is maintainable and mere existence of certain disputed question of fact cannot be a ground to refuse to entertain a writ petition in all caces as a matter of rule. Nevertheless, in Paragraph 14 of the said decision, the Supreme Court reiterated the well-settled priciple of law that if the parties to the dispute have agreed to settle their disputes through arbitration and there is an agreement in that regard, the Court will not permit recourse to any other remedy without invoking the remedy by way of arbitration unless, of course both the parties to dispute agree to another mode of dispute resolution. In the case of Empire Jute Company Ltd. (supra) cited by the respondent Oil Company, the appellant before the Supreme Court, was the owner of a jute mill. In exercise of power conferred upon it under Section 3 of the Essential Commodities Act the Government of India made an order in the year, 2000 known as "Jute and Jute Textile Control Order, 2000". By the said order, powers were conferred on the Jute Commissioner to regulate stock of raw jute, fix price and controll the production thereof. In exercise of power confered under the said Control Order, the Jute Commissioner issued production control orders to various jute mill owners. The Jute Commisser sent the price of the said production control order to the Jute Corporation of India Ltd, the respondent in the said special leave petition for the purpose of issuing necessary sale contract in order to enable the jute manufacturers to take deliver of the requisite quantities of raw jute specified in the production control order. In term of the said Control Order the Jute Corporation of India also entered into sale contract with the petitioner in the special leave petition who did not purchase raw jute from the respondent Jute Corporation of India issued for the period of October, 2003 to April, 2004, but they claimed to have fulfilled their undertakings under the production control orders by procuring raw jute from the upon market. Apprehending the no further raw material would be allotted to them and or punitive actions will be taken against them, the petitioner before the Suprime Court filed a writ petition, before this High Court, against the Jute Corporation of India, claiming, inter alia, a declaration that the respondent no.2 in the writ petition does not have any power, competence and/or authority to direct and/or order them to compulsorily purchase raw jute from Jute Corporation of India for effecting supply under the supply orders. A learned single Judge of this Court passed an interim order in the said writ petition which was carried an appeal by Jute Corporation of India. However, in view of the existence of the arbitration agreement between the parties contained in the sale contract, the Division Bench held that the writ petition was not maintainable and set aside the interm order passed by the learned single Judge. The writ petitioner jute company challenged the said decision of the Division Bench of this Court before the Supreme Court. While upholding the decision of the Division Bench of this Court, the Supreme Court held that the power of judicial review vested in the superior courts undoubtedly have wide amplitude but the same should not be exercise when there exists an arbitration clause. Similar view has been expressed by the Supreme Court in the case of Sanjana M. Wig v. Hindustan Petroleum Corporation Ltd. (2005) 8 SCC 242. In paragraph 12 of the said decision the Supreme Court held once dispute between the parties requires adjudication of disputed question of facts wherefor the parties are required to read evidence both oral and documentary the same can be determined by a domestic forum chosen by the parties and the Court may not entertain a writ application. Much water has since flown under the bridge, but there has been no corrosive effect on these decision, though old, continue to hold the field. In the case of Joshi Technologies International INC (supra) cited by the respondent oil company the Supreme Court held that normally whenever a particular mode of settlement of dispute is provided in the contract, the High Court would refuse to exercise its discretion under Article 226 of the Constitution of India and relegate the party to the said mode of settlement, particularly, when settlement of dispute is to be resorted to through the means of arbitration.
In view of the above priciple of law laid down by the Supreme Court in the aforementioned decisions, I find sifficient force in the contention raised by the respondent no.1 Oil Company with regard to the maintainability of the present writ petition in view of the arbitration agreement contained in distributorship agreement dated February 27, 2012 and the renewal agreement it is the Distributorship agreement dated February 27, 2017, renewing the original agreement dated February 27, 2012, which is presently in force. In the present case, the existence of the arbitration agreement between the parties as well as the fact that the dispute relating to the termination of the distributorship agreement of the petitioner respondent no.1 being coverred by the arbitratiohn agreement are not in dispute. The petitioner's challenge to the termination of the distributorship agreement by the respondenet no.1 is bounded on the ground that he was required by the officers of the respondent no.1 to purchase the 50 % of the said plot of land of 14 decimals from Smt. Taralika Shit involves adjudication of disputed question of fact to be tried on evidence. The validity of the termination of the distributorship agreement of the petitioner by the respondent no. 1 oil company also involves the interpretation of Clauses 27 (1) of the Distributorship Agreement. Even if be held for the sake of argument that in view of incorporation of sub-Section (5) of Section 12 of the Arbitration and Conciliation Act, 1996 neither the Director (Marketting) of the respondent no.1 oil company himself cannot act as the arbitrator nor he can he nominate any one else as the arbitrator, the remedy of the petitioner lies in filing an appropriate application under sub-section (6) of Section 11 of the said Act before this Hon'ble Court for appointment of an arbitrator. It may be noted that the decision of the Supreme Court in the case of Whirlpool Corporation (supra) cited by the petitioner did not deal with the point of maintainability of a writ petition on the grand of existence of an arbitration agreement between the parties. In the said case, the Supreme Court was dealt with the point whether petitioner could maintain a writ petition to challenge an order passed by a quasi judicial authority in spite of their being an alternative remedy of preferring an appeal from the said order.
So far as the decision of the Supreme Court in the Case of Hindustan Petroleum Corporation Ltd. and Ors. -vs- Super Highway Services and Anr. (supra) cited by the petitioner as recorded in the Paragraph 35 of the said decision, in the said case the Hindustan Petroleum Corporation, the respondent in the writ petition did not raise the point of maintainability of the writ petition filed by the petitioner on the ground of the alternative remedy available under the arbitration agreeement in the distributorship agreement before the High Court. It was for the first time, in the special leave petition filed before the Supreme Court, Hindustan Petroleum Corporation raised the objection to the maintainability of the writ petition on the ground of the arbitration agreement. Thus, the Supreme Court did not entertain the objection raised by the Hindustan Petroleum Corporation with regard to the maintainability of the writ petition on the ground the existence of the arbitration agreement between the parties raised for the first time in the special leave petition. In the present case, when the respondent no.1 oil company has raised preliminary objection of the maintainability of the writ petition at the threshold, the said decision of the Supreme court in the case of Super Highway Services & Anr. (supra) has no application in this case. The next decision cited by the petitioner in the case of Tantia Construction Pvt. Ltd. (supra) cited by the petitioner the notice of the Supreme Court was not drawn to the earlier decisions of the Court in the cases of India Thermal Power Ltd. (supra), Bridge & Roof Co. (India) Ltd., Pimpri Chinchwad Municipal Corporation & Ors. (supra) and ABL Internation Ltd. & Anr.(supra). Thus, I find it difficult to rely on the said decision of the Supreme Court in the case of Super Highway Services & Anr. (supra).
For all the foregoing reasons, in view of the existence of the arbitration agreement contained in the distributorship agreement dated February 27, 2017, this court is unable to entertain this writ petition. Accordingly, the Writ Petitioner, W.P. 22927 (W) of 2018 stands rejected. and the same stand rejected. The party shall, however, be entitled to take recourse to the arbitration agreement.
There will, however, be no order as to costs.
Urgent certified copies of this judgement, if applied for, be made available to the parties subject to compliance with requisite formalities.
(Ashis Kumar Chakraborty, J.)