[Cites 6, Cited by 0]
Karnataka High Court
Indian Oil Corporation Ltd vs M/S Sri Shivakumara Enterprises on 25 February, 2026
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CMP No. 100002 of 2025
HC-KAR
IN THE HIGH COURT OF KARNATAKA, AT DHARWAD
DATED THIS THE 25TH DAY OF FEBRUARY, 2026
BEFORE
THE HON'BLE SMT. JUSTICE LALITHA KANNEGANTI
CIVIL MISC PETITION NO.100002 OF 2025
BETWEEN:
INDIAN OIL CORPORATION LTD.,
MARKETING DIVISION,
BELLARY DIVISIONAL OFFICE,
NO.6, 1ST FLOOR, INFANTRY ROAD,
CANTONMENT, BALLARI-583104,
REPRESENTED BY ITS
DIVISIONAL RETAIL SALES HEAD.
...PETITIONER
(BY SRI. C.V. ANGADI, ADVOCATE)
AND:
M/S. SRI. SHIVAKUMARA ENTERPRISES,
INDIAN OIL DEALER,
SY. NO.142/3B83C LNO.193,
ANAII-DAVANGERE ROAD,
DAVANGERE TALUK AND DISTRICT-577001,
REPRESENTED BY ITS PROPRIETOR
Digitally signed by
YASHAVANT SRI. NITESH S/O. GNANAMURTHY S.
NARAYANKAR ...RESPONDENT
Location: HIGH COURT
OF KARNATAKA (NOTICE TO RESPONDENT IS HELD SUFFICIENT (V/O/DATED
07.01.2026))
THIS CIVIL MISCELLANEOUS PETITION IS FILED UNDER
SECTION 11(6) OF THE ARBITRATION AND CONCILIATION ACT, 1996
PRAYING TO I) REFER THE DISPUTE, ARISEN BETWEEN THE
PETITIONER AND THE RESPONDENT TO THE ARBITRATOR WHO IS ON
PANEL, IN VIEW OF THE ARBITRATION CLAUSE CONTAINED AT
SL.NO.68 OF THE DEALERSHIP AGREEMENT DATED 12.12.2012
(ANNEXURE-A) IN THE INTEREST OF JUSTICE AND EQUITY. II) TO
GRANT SUCH OTHER AND FURTHER RELIEF AS THIS HON'BLE COURT
DEEMS FIT, UNDER THE CIRCUMSTANCES OF THE CASE, TO MEET THE
ENDS OF JUSTICE.
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CMP No. 100002 of 2025
HC-KAR
THIS CIVIL MISCELLANEOUS PETITION HAVING BEEN HEARD
AND RESERVED ON 07.01.2026, COMING ON FOR PRONOUNCEMENT
OF ORDER THIS DAY, THE COURT PRONOUNCED THE FOLLOWING:
CORAM: THE HON'BLE SMT. JUSTICE LALITHA KANNEGANTI
CAV ORDER
The present Civil Miscellaneous Petition is filed seeking to
refer the dispute arisen between the petitioner and the
respondent to the Arbitrator who is on panel in view of the
Arbitration clause contained at Sl.No.68 of the dealership
agreement dated 12.12.2012.
2. The petitioner before this Court is the Indian Oil
Corporation Ltd. It is the case of the petitioner that the petitioner
is a Public Sector Undertaking company registered under the
Indian Companies Act, 1913/1956 which is engaged in refining
crude oil and storing, distributing and selling of the petroleum
products and for this purpose require Tank Trucks for road
transportation of bulk petroleum products from their various
points storage to customers/other storage points. Pursuant to
the conclusion of the dealer selection of the respondent as Retail
Outlet Operator, the petitioner and respondent have entered into
an agreement of Retail Outlet Dealership Agreement.
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3. The petitioner and the respondent entered into
"Petrol/HSD Pump Dealer Agreement" on 12.12.2012. Pursuant
to the floating of the tender by the petitioner for availing services
of the Tank Trucks for transportation of Bulk Petroleum Products,
the respondent also participated. The respondent is a carrier and
was engaged in a business of operating of Tank Trucks. The
Tender proceedings culminated in entering into "Bulk Petroleum
Road Transport Agreement" on 29.07.2016. The respondent
placed an indent for supply for Motor Spirit to the petitioner to be
supplied to the retail outlet operated by the respondent in
pursuance of the dealership agreement. The total invoice amount
is Rs.19,70,126/-. In this regard, a Tax Invoice has been issued
by the petitioner dated 26.09.2021. The respondent was
required to pay the said amount immediately to the petitioner
but the respondent has not made any payment. The petitioner
has made many reminders and requests to the respondent to
make the payment. But there was no response from the
respondent.
4. It is stated that the Dealership Agreement provides for
referring the disputes, in respect of any right, liability act,
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omission on account of any of the parties hereto arising out of or
in relation to the Dealership Agreement. The petitioner placing
reliance on Clause No.68 of the Dealership Agreement has issued
a Legal Notice on 03.12.2024 invoking the Arbitration Clause for
recovery of the amount along with interest at the rate of 18%
per annum from the date of invoice till the date of repayment.
Under the Legal Notice dated 03.12.2024, the petitioner has
nominated Hon'ble Justice Gururajan (Retd. Judge), High Court
of Karnataka, Bangalore to be the Sole Arbitrator, subject to the
provision of the Arbitration and Conciliation Act, 1996. The said
notice is returned with unserved cover with the postal shara
"Addressee left without information hence RTS (Return to
Sender)". The petitioner apprehends that the respondent might
have deliberately avoided the service of notice. The petitioner
having no other equally efficacious remedy has preferred this
petition by invoking Sections 8 and 11 of the Arbitration and
Conciliation Act, 1996, for appointment of the Arbitrator.
5. Learned counsel appearing for the petitioner submits
that in the light of clause No.68 of the Dealership Agreement
dated 12.12.2012, the petitioner is invoking the Arbitration
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Clause and under the Legal Notice dated 03.12.2024, the
petitioner has nominated Hon'ble Justice Gururajan (Retd.
Judge), High Court of Karnataka, Bangalore to be the Sole
Arbitrator, subject to the provisions of the Arbitration and
Conciliation, 1996. Hence, the petition may be allowed by
appointing an Arbitrator to adjudicate the disputes between the
parties.
6. On 07.01.2026, this Court had passed an order that as
per the postal shara, notice issued to the respondent is returned
as 'refused' which amounts to deemed service of notice.
7. Having heard the learned counsel for the petitioner,
perused the material on record. The clause No.68 of the
Dealership Agreement dated 12.12.2012 reads as follows:
"68. This Agreement has been made in triplicate and all
payments thereunder shall be due and made in
Mangalore unless otherwise directed by the Corporation.
The courts in the city of Ballary alone shall have
jurisdiction to entertain any suit, application or other
proceeding in respect of any claim or dispute arising
under this Agreement.
Any disputes and or/difference of any nature
whatsoever or regarding any right, liability act,
omission on account of any of the parties here to arising
out of or in relation to this garment shall be referred to
the sole arbitration of the director (Marketing) of the
Corporation, or of some officers of the corporation who
may be nominated by the Director (Marketing). It is
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known to the parties to the Agreement that the
arbitrator so nominated is an employee of the
Corporation and may be a share holder of the
Corporation. In the event of the arbitrator to whom the
matter is originally referred being transferred or
vacating his office or being unable to act for any reason,
the Director (Market-ing) as aforesaid at the time of
such transfer or vacation of office or inability to act,
may designate another officer of the corporation to act
as arbitrator in accordance with the terms of the
Agreement.
Such person shall be entitled to proceed with the
reference from the point at which it was left by his
predecessor, It is also a term of this agreement that no
person other than the Director (Marketing) or a person
nominated by such Director (Marketing) of the
Corporation as aforesaid shall act as arbitrator
hereunder. The award of the arbitrator so appointed
shall be final, conclusive and binding on all parties to
the Agreement, subject to the provisions of the
Arbitration and conciliation Act, 1996 or any statutory
modification of or reenactment thereof and the rules
made thereunder and for the time being in force shall
apply to the arbitration proceeding under this clause."
8. It is also stated that the Dealership Agreement clause
entered into in the year 2012 i.e., prior to coming into force the
amending Act 3 of 2016 to the Arbitration and Conciliation Act,
1996. As per the Clause No.68 relating to the appointment of the
Arbitrator, it is envisaged that the dispute shall be referred to
Sole Arbitrator if the Director (Marketing) of the Corporation or
of some officers of the Corporation who may be nominated by
the Director (Marketing). Post Amendment to Section 12(5)
inserted by the "Arbitration and Conciliation (Amdt.) Act, 2015 (3
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of 2016), dated 31.12.2015 with effect from 23.10.2015, which
requires to be read along with Seventh Schedule, the Director
(Marketing) as provided under Clause No.68 becomes ineligible.
The Seventh Schedule at SL.No.12 reads as under:
"12. The arbitrator is a manager, director or part of the
management, or has a similar controlling influence in
one of the parties."
9. It is stated that the Director (Marketing) of the
Corporation is disqualified. As such, the petitioner has
approached this Court.
10. This Court has perused clause No.68. It is the case of
the petitioner that the respondent is required to pay sum of
Rs.19,70,126/- as per the invoice dated 26.09.2021. The
arbitration clause discloses that any disputes and or/difference of
any nature whatsoever or regarding any right, liability act,
omission on account of any of the parties here to arising out of
or in relation to this garment shall be referred to the sole
arbitrator. In view of the existence of the arbitration clause, this
Court having thoroughly examined the annexure annexed to this
civil miscellaneous petition, is of the view that the petitioner has
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fulfilled the mandate provided under Section 11(4) of the Act.
Hence, this Court is passing the following order:
ORDER
i. The Civil Miscellaneous Petition is allowed appointing Ms. Justice J.M.Khazi, Former Judge, High Court of Karnataka as the sole Arbitrator to enter reference of the disputes between the petitioner and the respondent.
ii. All contentions inter se parties are left open for adjudication in the arbitration proceedings;
iii. Office is directed to communicate this order to Ms. Justice J.M.Khazi, Former Judge, High Court of Karnataka.
iv. All I.As. in this Civil Miscellaneous Petition shall stand closed.
Sd/-
JUSTICE LALITHA KANNEGANTI MEG CT: UMD List No.: 1 Sl No.: 3