Allahabad High Court
M/S Kamal Kant Automobiles And Another vs Hindustan Petroleum Corporation Ltd. ... on 18 February, 2019
Equivalent citations: AIR 2019 (NOC) 560 (ALL), AIRONLINE 2019 (NOC) 560 (ALL), 2019 (3) ALJ 115, 2019 (137) ALR SOC 73 (ALL), (2019) 3 ADJ 307 (ALL), (2019) 3 ALL WC 2105
Bench: Pradeep Kumar Singh Baghel, Pankaj Bhatia
HIGH COURT OF JUDICATURE AT ALLAHABAD AFR RESERVED Court No. - 21 Case :- WRIT - C No. - 25127 of 2018 Petitioner :- M/S Kamal Kant Automobiles And Another Respondent :- Hindustan Petroleum Corporation Ltd. And 2 Others Counsel for Petitioner :- Tarun Agrawal,Imran Syed,Sri Ravi Kant, (Senior Advocate), Counsel for Respondent :- C.S.C.,Vikas Budhwar Hon'ble Pradeep Kumar Singh Baghel,J.
Hon'ble Pankaj Bhatia,J.
(Delivered by Hon'ble Pankaj Bhatia,J.) Heard Sri Ravi Kant, Senior Advocate, assisted by Sri Imran Syed and Sri Tarun Agrawal, learned counsel for the petitioners and Sri Vikas Budhwar, learned counsel appearing on behalf of respondent nos. 1 & 2.
The petitioners have filed the present writ petition seeking the following reliefs:
(A) Issue a writ, order or direction in the nature of certiorari quashing the impugned order dated 24.7.2017 passed by respondent no. 2 (Annexure No. 7).
(B) Issue a writ, order or direction in the nature of mandamus commanding the respondent nos. 1 and 2, their agents to restore the dealership agreement dated 18.10.2016 and to forthwith restore the supply of the diesel and petrol to the petrol pump of the petitioner.
(C) Issue any suitable writ, order or direction in addition to and in supplement to refer to above, as this Hon'ble Court may deem fit and proper in the facts and circumstances of the case.
(D) Award the cost of the writ petition to the petitioner.
The facts in brief leading to the filing of the present writ petition are as follows:
The petitioners were appointed dealer in terms of an agreement dated 18.10.2016 executed in between the petitioners and the respondent no. 1 (Annexure-1 to the writ petition). The petitioners were also granted a licence for selling the petroleum products by District Supply Officer under the U.P. High Speed Diesel Oil and Light Diesel Oil (Maintenance of Supplies and Distribution) Order, 1981.
On 08.05.2017, a joint inspection was made out by team comprising of Additional District Magistrate, Hathras, District Supply Officer, Hathras, Inspector of Weight and Measures, Sales Officer of Indian Oil Corporation and Service Engineers of MIDCO and GILBARCO wherein the team found that the single nozzle machine dispensing diesel S.R. No. 13FH/104V appears to be tampered. Similarly, the double nozzle of diesel GILBARCO make S.R. No. 201502000728 also appeared to be tampered and similarly the petrol single nozzle make MIDCO S.R. No. OBFH0361 also appeared to be tampered.
An inspection report was prepared on the basis of inspection carried out and all the allegations were mentioned in the said inspection report on 8.5.2017 and the petitioners were served with a show cause notice by the respondent no. 3, District Supply Officer, Hathras calling upon the petitioners to explain the irregularities indicated by the inspection team in its report dated 08.05.2017, to which the petitioners filed this objection and submitted a reply on 08.07.2017, alongwith the objections filed by the petitioners, the petitioners also prayed that the pulsar card be sent for lab report to verify the correctness of the allegations levelled in the inspection report dated 08.05.2017. It has been further stated that an FIR was also filed on 10.7.2017 against petitioner no. 2, Ram Veer Singh (partner of the petitioner no. 1 firm) and its Manager Sri Vijendra Singh under section 3/7 E.C. Act read with Section 420 IPC. The said FIR was registered as Case Crime No. 343 of 2017, Police Station Sasni Kotwali, District Hathras. On the basis of the inspection and the FIR, the District Supply Officer passed an order dated 11.7.2017 suspending the licence of the petitioners.
The Hindustan Petroleum Corporation Limited issued a show cause notice on 23.6.2017 calling upon the petitioners to show cause as to why action be not taken against the petitioners on the basis of discrepancies pointed out by the inspection team in its report which has tarnished the image of the corporation. The petitioners gave a reply to the said show cause notice on 8.7.2017 denying all the allegations made in the show cause notice and further requested the company to send the alleged dispensing equipment for laboratory testing to ascertain the authenticity. Thereafter Corporation passed an order dated 24.7.2017 terminating the agreement executed in between the petitioners and the respondent-corporation, the reasoning given in the said order was that on the basis of a report dated 08.5.2017 received by the Corporation several irregularities were pointed out and upon hearing the petitioners, the respondent-corporation was of the view that on the basis of the report dated 08.05.2017, it was clear that the petitioners have failed in performing the obligations expected from the petitioners under the agreement dated 18.10.2017 which has tarnished the image of Corporation and, thus, the Corporation was of the view that the agreement deserves to be terminated and was accordingly terminated with immediate effect. In sum and substance, the order dated 24.7.2017 was a mere repetition of the averments made in the show cause notice.
It has further been stated that after passing of the order dated 24.7.2017, the Investigating Officer of Case Crime No. 343 of 2017 requested the equipment manufacturing company to make available the lab reports with regard to the alleged tampering of the pulsar card and, in pursuance thereto, on 09.09.2017, the analysis reports were sent by GILBARCO and, on 08.1.2018, the lab test report of the other components alleged to be found tampered was sent by MIDCO. The said test reports clearly established that no physical damage was found on the said equipments. The said reports have also been filed alongwith present petition as Annexure-8 to the writ petition. The Investigating Officer finally submitted a report on 13.2.2018 stating therein that on the basis of the lab reports dated 09.09.2017 and 8.1.2018 no further investigation was required and no case was made out against the petitioners. The said final report was also accepted by Additional Chief Judicial Magistrate, Hathras vide his order dated 05.04.2018 (Annexure-10 to the writ petition). It has also been stated that on 19.2.2018 the respondent no. 3 revoked the suspension order dated 11.07.2017 (Annexure-6 to the writ petition) and was made subject to outcome of proceedings before learned Additional Chief Judicial Magistrate, Hathras, while revoking the suspension order the respondent no. 3 also extensively relied upon the investigation reports wherein nothing wrong was found with the equipment.
The petitioners state that after revoking of the suspension the opposite party no. 3 wrote a letter to the respondent-corporation to restore the agreement dated 18.10.2016 vide letter dated 22.02.2018.
On 11.4.2018, the respondent no. 3 passed an order for removing the seal which was put by the inspection team on the dispensing units and by a separate order dated 11.4.2018 (Annexure-13 to the writ petition) restored the licence of the petitioners. In the said order, a request was also made by the respondent no. 3 to the respondent no. 2 to start the supply of the petrol and diesel oil forthwith to the petitioners, however, the respondent no. 2 did not restore the agreement.
The petitioners also filed a civil suit being Civil Suit No. 77 of 2018 challenging the cancellation of the agreement on 24.7.2018 wherein the respondent-corporation appeared and filed an application under Order VII Rule 11 of Civil Procedure Code mainly on the ground that the suit was not maintainable within the territorial jurisdiction of Hathras and, secondly, there was an arbitration clause in the agreement and, thus, under Section 8 of the Arbitration and Conciliation Act, 1996 the matter could not be proceeded with and the plaint had to be rejected in exercise of powers under Order VII Rule 11 CPC. The said application of the respondent-corporation was allowed on 19.7.2018 and the plaint was rejected under Order VII Rule 11 CPC on the ground that there exists an arbitration clause. Thereafter the petitioner has filed the present petition on 24.7.2018 challenging the termination order dated 24.7.2017 and for restoration of dealership agreement dated 18.10.2016.
It has been argued that the agreement was subject to marketing guidelines known as the "Marketing Discipline Guidelines" which unequivocally provides in terms of Clause 5.1.4 regarding the manner of proceeding when tampering with dispensing units are discovered. Clause 5.1.4 is quoted as under:
"5.1.4 ADDITIONAL / UNQUTHORISED FITTINGS/ GEARS FOUND IN DISPENSING UNITS/ TAMPERING WITH DISPENSING UNIT Any mechanism/fittings/ gear found fitted in the dispensing unit which is likely to manipulate the deliver.
Addition, Removal, replacement or manipulation of any part of the Dispensing Unit including any mechanism, gear, miscroprocessor chip/electronic parts/CEM software will be deemed as tampering of the dispensing unit.
In such cases, views and independent opinion of the original equipment manufacturer would be obtained and suitable decision taken.
In case of this irregularity, sales from the concerned dispensing unit to the suspended, DU sealed, Samples to be drawn of all the products and sent to lab for testing.
It is argued that while passing the impugned order dated 24.7.2017 the respondent-company did not obtain the opinion of the original equipment manufacturer before passing the said order and thus, the order dated 24.7.2017, was in violation of Clause 5.1.4 as the respondent-corporation did not even call for the test report. The petitioners further argued that Clause 8.5.6 provides that a show cause notice will be issued within 30 days from the date of the inspection indicating the irregularities and the said show cause notice should be accompanied by specific allegations of the irregularities and no such notice was issued within 30 days and the show cause notice dated 23.6.2017, being beyond 30 days, was illegal and all the proceedings in pursuance of the said show cause notice deserves to be set aside on that ground alone. The petitioners further argued that Clause 8.5.6 of the guidelines clearly provides that a personal hearing is to be given prior to passing the order, which the petitioners state were not given and, thus, the same is violative of the guidelines as well as against the principles of natural justice and thus liable to be set aside. It is further argued that Clause 8.5.8 of the guidelines require that on receipt of the reply to the show cause notice the charges levelled are required to be reviewed in view of the reply received and a speaking order is required to be passed giving the complete details of the irregularities committed, the reply of the dealer and the detailed reason as to why the replies and not acceptable to the person passing the order, the petitioners state that the reply was not considered and the same was discarded as immaterial and the order was passed without assigning any reasons.
At last, the petitioners argue that the entire foundation based upon which the order dated 24.7.2017 was passed, has vanished, and, thus, the petitioners are entitled to restoration of the agreement and the dispensing unit.
The petitioners have also placed reliance on two judgements of the Hon'ble Supreme Court in case of E. Venkatakrishna vs. Indian Oil Corporation and another, (2000) 7 SCC 764 and Harbanslal Sahnia and another vs. Indian Oil Corporation Ltd. and others, (2003) 2 SCC 107.
Learned counsel for the respondents, on the other hand, has argued that in view of the Arbitration Clause the writ petition deserves to be dismissed. It is further argued that the reports on which strong reliance has been placed by the petitioners, were given by the Equipment Manufacturer at the instance of one Ajay Kumar, Sub-Inspector on 02.09.2017. It is further stated that the said report is an ex-parte report as neither the petitioners nor the answering respondents were present when the said test was conducted and thus no reliance can be placed on the said report. It is further argued that the reports are only an opinion of the original equipment manufacturing which are not binding on the answering respondents as the answering respondents have to take decision independently according to its evaluation as per the Marketing Disciplinary Guidelines. It is further argued that the report dated 09.09.2017 was for the first time brought to the notice of the respondent-corporation alongwith the representation dated 11.4.2018. The respondents have further argued that the findings recorded by criminal courts are not binding on the Corporation and the Corporation is free to exercise its rights in terms of the dealership agreement dated 18.10.2018 and the Marketing Discipline Guidelines. The learned counsel for the respondents has relied upon the decision of the Hon'ble Supreme Court in the case of Hindustan Petroleum Corporation Ltd vs. Pinkcity Midway Petroleums, (2003) 6 SCC 503. No other point was argued.
It is relevant to mention that with regard to the allegations of not following the guidelines contained in the Marketing Discipline Guidelines, the petitioners have made a specific assertion in paragraph nos. 35 and 36 of the writ petition that the provisions of Clause 5.6.7 were not followed and the individual opinion of the equipment manufacturer ought to have been taken prior to passing the order, to this specific assertion, the respondents have not given any reply as to why the opinion of the equipment manufacturer was not taken by the respondent-corporation prior to passing of the impugned order.
Paragraph 35 & 36 of the writ petition and the reply of the respondent-corporation in para 89 & 90 of the counter affidavit are being quoted as under:
Paragraph 35 & 36 of the writ petition Para 89 & 90 of the counter affidavit
35. That it would be relevant to refer to clause 5.1.4 of the aforesaid Guidelines which deals with additional/unauthorised fitting/gears found in dispensing units/tampering with dispensing units. A perusal of the aforesaid clause would reveal that it provides that in case any sort of tampering/irregularity is found, the view and individual opinion of the equipment manufacturer would be obtained and suitable decision would be taken thereafter.
89. That the contents of paragraph no. 35 in so far as it relates to the clause 5.1.4 of the Marketing Disciplinary Guidelines being matter of record do not call for reply. However interpretation contrary to material on record is liable to be ignored. The reliance and the reference so placed by the petitioner upon the analysis report dated 09.09.2017 is concerned, the same is wholly misconceived as the said testing was done behind the back of the answering respondent as the answering respondent have no point of time informed about the date when the testing was done. Moreover the answering respondents put the very first time came to know about this when they received the copy of the analysis report along with the representation.
36. That admittedly, the impugned order has been passed without having waited for the lab test report which were sent to the respective manufacturing companies. Therefore, the impugned order having been passed in the teeth of clause 5.1.4 of the guidelines is out and out illegal and arbitrary and the same deserves to be set aside.
90. That the contents of paragraph no. 36 is misconceived incorrect denied. However, it is submitted that the order passed by the answering respondent is perfectly valid in accordance with law no fault whatsoever can be attributed in this regard.
It is further specifically stated in paragraph 37 of the writ petition that an opportunity of personal hearing is a must in terms of Clause 8.5.6 of the Guidelines which has not been provided. The respondent-corporation has not given any reply as to why the show cause notice was not served within 30 days of the inspection and, secondly, why an opportunity of hearing was not provided as argued by the petitioners. Paragraphs 37, 38, 39, 40, 41 and 42 of the writ petition and the reply of the respondent-corporation in para 92 of the counter affidavit are being quoted here-in-below:
Paragraphs 37, 38, 39, 40, 41 and 42 of the writ petition Paragraph 92 of the counter affidavit
37. That further clause 8.5.6 of the aforesaid Guidelines clearly provides that in respect of irregularities, a show cause notice will be issued to the dealer within 30 days from the date of inspection.
92. That the contents of paragraph nos. 38 to 47 are misconceived incorrect denied. In reply thereto it is submitted that order dated 24.7.2017 passed by the answering respondent-Corporation is perfectly valid in accordance with law no fault whatsoever can be attributed in this regard. The petitioner had committed irregularities and violated the provisions of the dealership agreement. The rights so sought to be exercised by the answering respondent corporation is a contractual right recognized by the Hon'ble Supreme Court in terms of the dealership agreement. Moreover merely because the final report has been accepted by the competent court of law will not be in any manner whatsoever bound the answering respondent corporation. So far as the analysis report dated 9.9.2017 is concerned, the same is of no help to the petitioner as the said test was done behind the back of the petitioner without any communication. The conduct of the petitioner dis-entitles him for any relief whatsoever the writ petition has no merits and liable to be dismissed.
38. That admittedly, the inspection was carried out on 08.05.2017, thus, it is absolutely clear that a show cause notice dated 23.6.2017 was issued beyond 30 days from the date of inspection. Thus, any proceeding taken further on the basis of a faulty and illegal show cause notice is arbitrary without application of mind and deserves to be set aside.
39. That clause 8.6 of the aforesaid Guidelines provides that an opportunity of personal hearing will be provided to the dealer or its nominee before recommending or approving the termination of the dealership.
40. That it is submitted that no opportunity of hearing was ever provided by the respondent no. 2 before passing the impugned order, therefore, the impugned order having been passed without providing any opportunity of personal hearing as mandated under clause 8.6 of the Guidelines is manifestly illegal and arbitrary and against the principles of natural justice and the same deserves to be set aside.
41. That, further, clause 8.5.8 of the aforesaid Guidelines provides that upon receipt of reply to the show cause notice, the charges levelled are required to be reviewed and then a speaking order is required to be passed indicating complete details of the irregularities and also mentioning reasons as to why the reply is either acceptable or not acceptable, therefore, the impugned order having been passed without adhering to clause 5.1.4, 8.5.6, 8.5.8 and 8.6 of the Marketing Discipline Guidelines is manifestly illegal arbitrary, unjust and deserves to be set aside.
42. That, moreover, even the reply submitted by the petitioner was not at all considered and same was discarded as immaterial, without assigning any reason for having reached to such a conclusion, the impugned order is manifestly illegal, arbitrary and deserves to be set aside.
Based upon the pleadings and the arguments of the petitioners and the respondent-corporation, the following points arise for determination:
(1) Whether the order dated 24.7.2017 passed by the Corporation terminating the agreement is perverse and based on no material and contrary to the Marketing Discipline Guidelines?
(2) Whether this Court should exercise its power under Article 226 of the Constitution of India in view of Arbitration Clause in the agreement?
and;
(3) Whether the petitioner is entitled to restitution of the dealership?
Point No. 1It is well settled that even in contractual matters the corporations which are limb of the State are bound to act fairly, reasonably, and, in accordance with law, based on the principles of fairness and good governance and any decision, which is perverse or against the legal requirements, is bound to be held as perverse & arbitrary and, thus, in violation of Article 14 of the Constitution of India. The Hon'ble Supreme Court in the Case of Food Corporation of India Vs. Kamdhenu Cattle Feed Industries Ltd. 1993(1) SCC 71 in Paragraph No. 7 has held as under :-
"7. In contractual sphere as in all other State actions, the State and all its instrumentalities have to conform to Article 14 of the Constitution of which non-arbitrariness is a significant facet. There is no unfettered discretion in public law: A public authority possesses powers only to use them for public good. This impose the duty to act fairly and to adopt a procedure which is `fairplay in action'. Due observance of this obligation as a part of good administration raises a reasonable or legitimate expectation in every citizen to be treated fairly in his interaction with the State and its instrumentalities, with this element forming a necessary component of the decision making process in all State actions. To satisfy this requirement of non- arbitrariness in a State action, it is, therefore, necessary to consider and give due weight to the reasonable or legitimate expectations of the persons likely lo be affected by the decision or else that unfairness in the exercise of the power may amount to an abuse or excess of power apart from affecting the bona fides of the decision in a given case. The decision so made would be exposed to challenge on the ground of arbitrariness. Rule of law does not completely eliminate discretion in the exercise of power, as it is unrealistic, but providers for control of its exercise by judicial review."
Supremacy of Rule of Law is the foundation for any civil society and any action, which is not supported by the Rule of Law applicable, is bound to be abhorred by the courts and is bound to fail while judging the same from the lenses of arbitrariness and thus it can be safely held to be a violation of Article 14 of the Constitution of India.
In the present case, the sole reasoning given while passing the impugned order, is the inspection report dated 8.5.2017, which was carried out at the dispensing unit of the petitioners whereas the respondent-corporation was bound to follow the procedure in Manufacturing Discipline Guidelines which was not followed at all. The said inspection report itself was disapproved and not accepted in the inspection/lab test reports carried out by the original equipment manufacturer GILBARCO and MIDCO and there being no material on record prior to the passing of the order dated 24.7.2017, it is held that the order dated 24.7.2017 was perverse and without any specific material on record leading to the order being passed on 24.7.2017. The order dated 24.7.2017 further suffers from the vice not following the procedure as laid down in Clause 5.1.4, 8.5.6, 8.3.8 and 8.6 of the Marketing Discipline Guidelines as none of the said specific guidelines was followed by the respondent- corporation prior to the passing of the order dated 24.7.2017. It clearly establishes that the order dated 24.7.2017 was without following the guidelines, which provides for the manner of passing an order, no reasoning whatsoever has been given by the Corporation in its counter affidavit to justify as to why the said Guidelines were not followed prior to the passing of the impugned order. Thus, the respondent-corporation has partially accepted that the Guidelines were not followed prior to the passing of the impugned order.
The argument of the respondent-corporation that the report of the original equipment manufacturer is not binding on them as the same was ex parte and was done at the behest of the Inspecting Officer, who was investigating the criminal offence and thus the same cannot be held to be binding on the respondent-corporation, testing this argument, the Court is of the view that it was incumbent upon respondent-corporation to have sent the sealed equipments for lab test by the original equipment manufacturer and they having failed to do so cannot take a stand not to rely on the said report, even if the said argument for the sake of argument is accepted.
The respondent-corporations have also failed to justify the order dated 24.7.2017 as there was no material before the respondent-corporation leading to passing of the order dated 24.7.2017 except the inspection report dated 08.05.2017, thus even if the argument of the Corporation is accepted it can be safely stated that the order dated 24.7.2017 is based upon no material at all.
The argument of the respondents that the findings of the criminal court are not binding on the respondent-corporation are well taken and there cannot be any quarrel with regard to the said argument, however, the respondent-corporation cannot take contradictory stand stating that the Corporation is not bound by the findings recorded by the criminal court and on the other hand, proceed to defend by the order which is based upon no material except the inspection report dated 08.5.2017.
The averments regarding not giving an opportunity of personal hearing, not giving a show cause notice within 30 days, not passing a speaking order, have not even been defended by the Corporation before this Court.
Thus, the Court is of the view that the order dated 24.7.2017 suffers from the vice of arbitrariness having been passed incomplete disregard to the procedure laid down in the Marketing Discipline Guidelines in complete disregards to principles of natural justice and is also perverse being based upon non-existent material. The Hon'ble Supreme Court in the case of Hindustan Petroleum Corporation Limited and others vs. Super Highway Services and another, (2010) 3 SCC 321 while dealing with the Marketing Discipline Guidelines has held as under:
"31.The cancellation of dealership agreement of a party is a serious business and cannot be taken lightly. In order to justify the action taken to terminate such an agreement, the concerned authority has to act fairly and in complete adherence to the rules/guidelines framed for the said purpose. The non-service of notice to the aggrieved person before termination of his dealership agreement also offends the well-established principle that no person should be condemned unheard. It was the duty of the petitioner to ensure that Respondent 1 was given a hearing or at least serious attempts were made to serve him with notice of the proceedings before terminating his agreement.
32. In the instant case, we are inclined to agree with Mr. Bhatt's submissions that the High Court did not commit any error in allowing the writ petition filed by Respondent 1 herein, upon holding that notice of the Laboratory Test to be conducted at the Barauni Terminal had not been served upon the Respondent 1, which has caused severe prejudice to the said respondent since its dealership agreement was terminated on the basis of the findings of such Test. Admittedly the dealership agreement was terminated on the ground that the product supplied by the petitioner Corporation was contaminated by the respondent. Such contamination was sought to be proved by testing the T.T. retention sample in the laboratory at Barauni Terminal.
33. The Guidelines being followed by the Corporation require that the dealer should be given prior notice regarding the test so that he or his representative also can be present when the test is conducted. The said requirement is in accordance with the principles of natural justice and the need for fairness in the matter of terminating the dealership agreement and it cannot be made an empty formality. Notice should be served on the dealer sufficiently early so as to give him adequate time and opportunity to arrange for his presence during the test and there should be admissible evidence for such service of notice on the dealer. Strict adherence to the above requirement is essential, in view of the possibility of manipulation in the conduct of the test, if it is conducted behind the back of the dealer.
34. In the present case, there is no admissible evidence to prove service of notice on the respondent or refusal of notice by the respondent. Further, the notice dated 28-5-2008 which was allegedly refused by respondent, did not give him adequate time to arrange for the presence of himself or his representative during the test to be conducted at 3.00 PM on 29.05.2008. It is also to be noted that the endorsement regarding the alleged refusal is dated 29.05.2008 itself. Thus, the termination of the dealership agreement of the respondent was arbitrary, illegal and in violation of the principles of natural justice."
The said judgment was followed by the Hon'ble Supreme Court in the case of Bharat Petroleum Corporation Limited vs. Jagannath and Company and others, (2013) 12 SCC 278. Thus, Point no. 1 is decided by holding that the order dated 24.7.2018 is wholly arbitrary, perverse and illegal.
Point No. 2.
Learned counsel for the respondents has very strongly urged that in view of the Arbitration Clause contained in the agreement the writ petition is liable to be dismissed whereas the counsel of the petitioners has stressed that availability of alternative remedy is a rule of discretion and not compulsion and the Court will not shirk from exercising the powers under Article 226 of the Constitution of India for setting aside the order, which is perverse and arbitrary and also violating the principles of natural justice. The Hon'ble Supreme Court while considering the maintainability of a writ petition in view of the availability of alternative remedy, relying upon the cherished judgement rendered in the case of Whirlpool Corporation vs. Registrar of Trade Marks, Mumbai & others, 1998 (8) SCC 11 has reiterated the same principle in its judgement rendered in the case of Harbanslal Sahnia (supra). Para 7 of the said judgement is quoted as under:
"So far as the view taken by the High Court that the remedy by way of recourse to arbitration clause was available to the appellants and therefore the writ petition filed by the appellants was liable to be dismissed, suffice it to observe that the rule of exclusion of writ jurisdiction by availability of an alternative remedy is a rule of discretion and not one of compulsion. In an appropriate case in spite of availability of the alternative remedy, the High Court may still exercise its writ jurisdiction in at least three contingencies: (i) where the writ petition seeks enforcement of any of the Fundamental Rights; (ii) where there is failure of principles of natural justice or, (iii) where the orders or proceedings are wholly without jurisdiction or the vires of an Act and is challenged [See Whirlpool Corporation v. Registrar of Trade Marks, Mumbai and Ors., (1998) 8 SCC 11. The present case attracts applicability of first two contingencies. Moreover, as noted, the petitioners' dealership, which is their bread and butter came to be terminated for an irrelevant and non-existent cause. In such circumstances, we feel that the appellants should have been allowed relief by the High Court itself instead of driving them to the need of initiating arbitration proceedings."
The petitioners have also relied upon the judgement of the Hon'ble Supreme Court in the case of E. Venkatakrishna (supra) wherein the Supreme Court has held that the only remedy available to the petitioners by invoking the Arbitration Clause would lead to a finding by the Arbitrator holding the termination as unlawful and for awarding the damages and the arbitrator did not have any jurisdiction for restoration of the fair price shop and thus the arbitration clause would not give any efficacious remedy to the petitioners for the reliefs sought. Reliance is placed upon paragraph 5 and 7 of the said judgement which is as under:
"The award was challenged by the respondent in proceedings under Section 30 of the Arbitration Act taken before a learned Single Judge of the Madras High Court. The learned Single Judge rejected the challenge. The respondent preferred an appeal and the Division Bench, in the judgment and order that is impugned be fore us, upheld the challenge. It said:
"There is considerable force in the contention of the appellant that what is arbitrable under Clause 37 is only the dispute or difference in relation to the agreement. The question of restoration of distributorship would not arise under the agreement. Therefore, we have no hesitation in holding that the Arbitrator was in error and in fact had no jurisdiction to direct restoration of distributorship to the 1st respondent."
In our view, the Division Bench was right. All that the Arbitrator could do, if he found that the termination of the distributorship was unlawful, was to award damages, as any civil court would have done in a suit.
We find it difficult to accept the contention on behalf of the appellant that what was referred to the Arbitrator was the issue of restoration of distributorship in the sense that the Arbitrator could direct, upon holding that the termination was unlawful, that the distributorship should be restored. We think that the reference itself contemplated consequential damages for wrongful termination. In any event and assuming that there is any error in so reading the reference, it is difficult to hold that the Arbitrator was thereby vested with jurisdiction to award restoration."
The Hon'ble Supreme Court in the case of Union of India and others vs. Tantia Construction Private Limited, (2011) 5 SCC 697 while dealing with the alternative remedy of arbitration has held as under:
"Apart from the above, even on the question of maintainability of the writ petition on account of the arbitration clause included in the agreement between the parties, it is now well established that an alternative remedy is not an absolute bar to the invocation of the writ jurisdiction of the High Court or the Supreme Court and that without exhausting such alternative remedy, a writ petition would not be maintainable. The various decisions cited by Mr. Chakraborty would clearly indicate that the constitutional powers vested in the High Court or the Supreme Court cannot be fettered by any alternative remedy available to the authorities. Injustice, whenever and wherever it takes place, has to be struck down as an anathema to the rule of law and the provisions of the Constitution.
We endorse the view of the High Court that notwithstanding the provisions relating to the arbitration clause contained in the agreement, the High Court was fully within its competence to entertain and dispose of the writ petition filed on behalf of the respondent company. We, therefore, see no reason to interfere with the views expressed by the High Court on the maintainability of the writ petition and also on its merits."
On the other hand, the judgement in case of Hindustan Petroleum Corporation Ltd vs. Pinkcity Midway Petroleums, (2003) 6 SCC 503 relied upon by the counsel for the respondents arose from the facts wherein the Court was considering the scope of the jurisdiction of civil court in view of section 8 of the Arbitration and Conciliation Act. The said judgement arose from the action to the challenge of suspension of supplies by a petroleum company in view of pendency of the statutory authorities exercising their powers under the Essential Commodities Act. The Hon'ble Supreme Court was of the view that the two powers of suspension and the exercise of statutory power under the Essential Commodities Act can co-exist and further it was held that the jurisdiction of the Civil Court is specifically barred under Section 8 of the Arbitration and Conciliation Act. The judgement rendered in the said case has to be viewed in view of specific bar of jurisdiction under section 9 of the CPC wherein the settled position is that the suit would be barred under Section 9, in the event of there being an arbitration agreement which is further fortified by the specific provisions contained in Section 8 of the Arbitration and Conciliation Act. In the present case, the petition has been filed invoking the jurisdiction of this Court under Article 226 of the Constitution of India and thus the restriction as contained in section 9 of the CPC as well as section 8 of the Arbitration and Conciliation Act are not applicable while exercising the extraordinary powers under Article 226 of the Constitution of India. The only limitation being that the Court will be hesitant in invoking the extraordinary powers except on the exceptions as laid down in the case of Whirlpool Corporation (supra).
In fact for the prayer of restoration of dealership, the only remedy available to the petitioners is by means of a writ petition as neither a civil suit is maintainable nor is this remedy available before an arbitrator appointed in terms of the arbitration clause contained in the agreement.
Thus, this Court is of the view that the writ petition is maintainable and the arbitration clause does not provide for an effective and efficacious remedy to the petitioners for the relief sought in the petition particularly relating to restoration of dealership.
Point No. 3.
After holding that the order dated 24.7.2018 is bad in law and liable to be quashed, the question arises as to whether the petitioner is entitled to restoration of dealership. There being no violation of any clause of agreement, no proceedings having culminated in accordance with law and after being exonerated of all the allegations levelled against the petitioner only natural outcome has to be restoration of all benefits which the petitioner was deprived of unauthorisedly.
The Hon'ble Supreme Court in case of Allied Motors Limited vs. Bharat Petroleum Corporation Limited, (2012) 2 SCC 1 while dealing with a similar matter wherein the Marketing Discipline Guidelines were not followed and termination was held to be illegal, held as under:
"In the instant case, samples were taken on 15-5-2000. On the very next day i.e. on 16-5-2000, without even giving a show-cause notice and/or giving an opportunity of hearing, the respondent-Corporation terminated the dealership of the appellant. The appellant had been operating the petrol pump for the respondent for the last 30 years and was given 10 awards declaring its dealership as the best petrol pump in the entire State of NCT of Delhi. During this period, on a number of occasions, samples were tested by the respondent and were found to be as per specifications.
In the instant case, the haste in which 30 years old dealership was terminated even without giving show-cause notice and/or giving an opportunity of hearing clearly indicates that the entire exercise was carried out by the respondent Corporation non-existent, irrelevant and on extraneous considerations. There has been a total violation of the provisions of law and the principles of natural justice. Samples were collected in complete violation of the procedural laws and in non-adherence of the guidelines of the respondent Corporation.
On consideration of the totality of the facts and circumstances of this case, it becomes imperative in the interest of justice to quash and set aside the termination order of the dealership. We, accordingly, quash the same. Consequently, we direct the respondent-Corporation to handover the possession of the petrol pump and restore the dealership of petrol pump to the appellant within three months from the date of this judgment.
The appeal is consequently allowed with costs which is quantified at Rs.1,00,000/- (Rupees one Lakh only) to be paid by the respondent-Corporation to the appellant within four weeks from today."
In view of the findings above, this Court is of the view that the order dated 24.7.2017 terminating the dealership of the petitioners, is liable to be set aside and a mandamus is issued to the respondents to forthwith restore the agreement dated 18.10.2016 and to restore the supply within two months from today.
The writ petition is allowed in terms of the said order dictated above.
No order as to costs.
Order Date :- 18.2.2019 Puspendra