Allahabad High Court
M/S Chainu, Indane Gas Service And ... vs Executive Director, Upso-1 Indian Oil ... on 21 March, 2025
Author: Mahesh Chandra Tripathi
Bench: Mahesh Chandra Tripathi
HIGH COURT OF JUDICATURE AT ALLAHABAD
?Neutral Citation No. - 2025:AHC:42239
Court No. - 42
Case :- ARBITRATION AND CONCILI. APPL.U/S11(4) No. - 206 of 2023
Applicant :- M/S Chainu, Indane Gas Service And Another
Opposite Party :- Executive Director, Upso-1 Indian Oil Bhavan And 4 Others
Counsel for Applicant :- Arun Kumar Tiwari
Counsel for Opposite Party :- Rituraj Singh
Hon'ble Mahesh Chandra Tripathi,J.
1. Heard Mr. Arun Kumar Tiwari, learned counsel for the applicant and Mr. Rituraj Singh, learned counsel for the opposite party.
2. The instant arbitration application has been filed by the applicants praying for appointment of sole arbitrator under Clause 37 of the distributorship agreement dated 14.03.2019 and further to decide the dispute arising out of order 08.08.2022, passed by Executive Director, U.P. State Office-1, Indian Oil Corporation Limited by which the distributorship agreement dated 14.03.2019, executed between I.O.C.L. and the applicants' dealership, was terminated.
3. At the very outset, Sri Rituraj Singh, learned counsel for the opposite party-Corporation raised an objection qua maintainability of the instant application on the premise that against the termination order dated 08.08.2022, the applicant approached this Court by filing Writ-C No. 27057 of 2022 which was dismissed by Division Bench of this Court vide order dated 12.01.2023. Against the same, special leave petition, i.e., S.L.P. (Civil Diary) No. 14541 of 2023 preferred before the Hon'ble Apex Court has also been dismissed by the Apex Court vide its order dated 04.07.2023.
4. Learned counsel for the opposite party states that as the termination order has already been approved and special leave petition filed against the same has already been rejected, the petitioner has no right to re-agitate the issue in the guise of arbitration clause of the agreement.
5. The said argument is objected by learned counsel for the applicant and he submits that even though while dismissing the special leave petition, the Apex Court has indicated that dismissal of special leave petition would not come in the way of the petitioner seeking recourse in accordance with law. He states and placed reliance upon Claus-37 of agreement dated 14.03.2019 wherein it has been provided that for redressal of a dispute, the forum available is of an arbitrator.
6. Considering the factual situation as well as the relevant case law holding the field, I am of the opinion that objection so raised by the Corporation can very well be examined by the sole Arbitrator as once the leave is accorded by the Apex Court and no other efficacious remedy is available to the petitioner, in terms of agreement, the instant application can be moved. It is open to the opposite party to raise the objection before the Arbitrator.
7. The applicant has preferred the instant application for appointment of an arbitrator to settle the dispute between the parties as per the provisions of the Arbitration and Conciliation Act, 1996.
8. At present, upon perusal of the record- mainly, the copy of the agreement, statutory notice and its reply, it is clear that there exists an arbitration clause between the parties with respect to the disputes arising in the matter. Despite issuance of statutory notice, the parties have neither been able to appoint an arbitrator nor have they been able to constitute an Arbitral Tribunal.
9. The provisions of Section 11(6) of the Act, 1996 prior to its amendment was as follows:-
11. Appointment of Arbitrators.-.........
(6) Where, under an appointment procedure agreed upon by the parties,-
(a) a party fails to act as required under that procedure; or(b) the parties, or the two appointed arbitrators, fail to reach an agreement expected of them under that procedure; or(c) a person, including an institution, fails to perform any function entrusted to him or it under that procedure, a party may request the Chief Justice or any person or institution designated by him to take the necessary measure, unless the agreement on the appoint procedure provides other means for securing the appointment.
10. The scope of the power under Section 11(6) of the Act, 1996 was considerably wide in view of the decisions in SBP and Co. v. Patel Engg. Ltd. and National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd. This position continued till the amendment brought about in 2015.
11. However, this section was amended and Section 11(6-A) added by the 2015 Amendment, is as follows:
"11. (6-A) The Supreme Court or, as the case may be, the High Court, while considering any application under sub-section (4) or sub-section (5) or sub-section (6), shall, notwithstanding any judgment, decree or order of any court, confine to the examination of the existence of an arbitration agreement."
12. From a reading of the amended Section 11(6-A), the intention of the legislature is crystal clear i.e. the court should only look into one aspect, that is the existence of an agreement and the agreement contains a clause which provides for arbitration pertaining to the disputes which have arisen between the parties to the agreement.
13. Supreme Court in the case of Duro Felguera, S.A. Vs. Gangavaram Port Ltd. has held that :
"After the amendment, all that the courts need to see is whether an arbitration agreement exists-nothing more, nothing less. The legislative policy and purpose is essentially to minimise the Court's intervention at the stage of appointing the arbitrator and this intention as incorporated in Section
11(6-A) ought to be respected."
14. Having heard learned counsel for the applicant, the scope of the present proceedings under Section 11 of the Act does not require any elaboration in view of that position in law having been clarified by a recent three judge decision of the Supreme Court in the case of M/S Mayavati Trading Pvt. Ltd. Vs. Pradyuat Deb Burman.
15. Hon'ble Supreme Court in the matter of Uttarakhand Purv Sainik Kalyan Nigam Ltd. v. Northern Coal Field Ltd. held that "In view of the legislative mandate contained in Section 11(6-A), the Court is now required only to examine the existence of the arbitration agreement. All other preliminary or threshold issues are left to be decided by the arbitrator under Section 16, which enshrines the kompetenz-kompetenz principle". This has been further reiterated by the Hon'ble Supreme Court in its later judgments which are as under :-
(i) SBI General Insurance Company Ltd. vs. Krish Spinning
(ii) Vidya Drolia & others vs. Durga Trading Corporation
(iii) DLF Home Developers Ltd. vs. Rajapura Homes (P) Ltd.
(iii) Indian Oil Corporation Limited v. NCC Limited
16. After going through the record the Court is, prima facie, satisfied that there exists dispute between the parties and further there exists an arbitration clause, between the parties. Also, it is clear that the parties have not been able to appoint a consented arbitrator and therefore, the appointing authority has to be assumed by this Court upon the present application being brought before this Court.
17. At the same time, no final conclusion is being drawn on any of the objections that may be raised by the opposite party, in view of the law noted above, it is open for the parties to raise all the issues before the Arbitrator as permissible under the law and further it would remain open to the opposite party to raise objections as to the competence of the arbitral tribunal and all other pleas as the Act permits.
18. Leaving all such course completely open to the respective parties, at present, only a forum is being provided for a claim to be raised and resisted in accordance with law.
19. Accordingly, Mr. Justice Sunil Ambwani (Retd. Chief Justice), residing at C-33, FF, Nizamuddin East, New Delhi-110013, (Mobile No.9415238954), be appointed the sole arbitrator for resolution of the disputes between the parties. Subject to his consent under Section 11(8) of the Act, the parties agree to request the learned arbitrator to conduct the proceedings at New Delhi.
20. The Registry is directed to obtain consent of the proposed learned arbitrator, in terms of Section 11(8) of the Act.
Order Date :- 21.3.2025
Shiraz
