Indian Oil Corporation Ltd vs Tapas Kumar Das
2021 Latest Caselaw 454 Cal/2

                     IN THE HIGH COURT AT CALCUTTA
                      Ordinary Original Civil Jurisdiction
                               ORIGINAL SIDE


Present:
THE HON'BLE JUSTICE MOUSHUMI BHATTACHARYA


                            I.A No: G.A. 2 of 2021
                                      in
                             A.P. 827 of 2018

                         Indian Oil Corporation Ltd.
                                      Vs.
                              Tapas Kumar Das

For the Petitioner               :    Mr. Jishnu Saha, Sr. Adv.
                                      Mr. M.S. Yadav, Adv.


For the Respondent              :     Mr. Debajyoti Datta, Adv.
                                      Mr. Subhasish Bandopadhyay, Adv.


Last Heard on                   :     09.07.2021.



Delivered on                     :    12.07.2021.



MOUSHUMI BHATTACHARYA, J.

1. This is an application for amending the grounds of challenge in an

application under Section 34 of The Arbitration and Conciliation Act, 1996

(the Act). The impugned Award dated 30th July, 2018 was passed by a

learned Sole Arbitrator allowing some of the claims filed by the claimant

(respondent before this court) in relation to termination of a dealership

executed between the respondent herein and the petitioner Indian Oil

Corporation Limited.

2. According to the petitioner, the application for amendment should be

allowed since the proposed grounds contained in the Schedule to the

application, were urged by the petitioner before the Arbitrator.

3. Mr. Jishnu Saha, learned senior counsel appearing for the petitioner-

Indian Oil Corporation Limited, submits that the new grounds pertain to the

Marketing Discipline Guidelines for certain types of dealerships of Indian Oil

Corporation Limited, which provides for the remedies available to a dealer in

the event of termination of the dealership. Counsel submits that the

grounds pertaining to the Guidelines were missed out through inadvertence

in the application challenging the impugned Award. Counsel submits that

the issues framed by the Arbitrator in the impugned Award would show that

the petitioner had urged the new grounds in the arbitration proceedings.

Counsel relies on Fiza Developers & Inter-Trade Pvt. Ltd. vs AMCI (INDIA) Pvt.

Ltd. & Anr; (2009) 17 SCC 796 on the proposition that an award may be set

aside by a court on its own initiative if the subject-matter of the dispute is

not arbitrable or the Award is in conflict with the public policy of India.

Counsel relies on State of Maharashtra vs. Hindustan Construction Company

Limited; (2010) 4 SCC 518 on the point that court can grant leave to amend

an application under Section 34 if the circumstances of the case so warrant.

Venture Global Engineering vs Satyam Computer Services Limited and

Another; (2010) 8 SCC 660 has been shown to urge that facts disclosed after

passing of the Award may be brought on record as grounds if such facts

have a positive link with the facts constituting the Award. Emkay Global

Financial Services Limited vs Girdhar Sondhi ; (2018) 9 SCC 49 has been

relied upon on the point that if there are matters which are relevant for

determination of issues arising under Section 34 and which were not before

the Arbitrator, such matters can be brought to the notice of the court.

4. Mr. Debajyoti Datta, learned counsel appearing for the respondent

opposes the application for adding new grounds for setting aside the Award

primarily on the factual score. Counsel submits that in seeking to introduce

new grounds, namely on the lack of jurisdiction, the nature and character of

the setting aside application is being changed which is not permissible in

law. It is also submitted that the amendments are being carried out beyond

the period of 120 days within which an application has to be made for

setting aside an Award. Counsel submits that grounds which are sought to

be added now do not have a foundational basis in the original application.

Counsel submits that if Section 34 (2) (b) is read with the amended Section

34 (2A) of the Act, there will be no need to add the proposed grounds.

Counsel relies on Pushpa P. Mulchandani and others vs Admiral

Radhakrishin Tahilani (Retd.) and others; (2000) 4 Mh.L.J. 819 and Esteem

Mercantile Pvt. Ltd. vs M/s K.H. Parekh and another; (2002) 2 Mh.L.J. 216 in

support of the proposition that amendments cannot be allowed to be carried

out beyond the period specified in Section 34(3) of the Act.

5. I have heard learned counsel for the parties and seen the documents

relevant for deciding the question whether the petitioner should be allowed

to amend the arbitration petition by addition of the grounds set forth in the

Schedule to the present application.

6. The grounds contained in the Schedule relate to the Marketing

Discipline Guidelines for specific kinds of Dealership and that the contracts

entered into between the Public Sector Oil Marketing Companies and such

dealers are subject to the terms and conditions of the Marketing Discipline

Guidelines. The grounds relate to the agreement between the petitioner and

the respondent being subject to the terms and conditions contained in the

said Guidelines of 2005 which automatically became a part of the agreement

entered into between the parties. The Guidelines were framed by the

Ministry of Petroleum for the conduct of certain dealerships of public sector

Oil Marketing Companies. From the grounds, the grievance of the petitioner

appears to be that the Arbitrator ignored a fundamental term of the

agreement between the parties by holding that the Guidelines had

been governing the dispute between the parties. As stated above, the

petitioner's stand is that the Guidelines also provide the remedies which are

available to a dealer on the termination of the dealership.

7. The issue which falls for consideration is whether permitting the

petitioner to incorporate the additional grounds of challenge to the existing

Arbitration Petition would enlarge the scope of the arbitration petitions

beyond permissible limits or allow new grounds to be brought in for the first

time to the challenge to the Award. The test is whether the additional

grounds can be traced to the arbitration proceedings that is in pleading or

document which was before the Arbitrator. If the contents or point urged in

the additional grounds can be found in the contentions urged by the parties

before the Arbitrator, it cannot then be said that the additional grounds are

sought to be introduced by the petitioner for the first time in a Section 34

proceeding. The only point urged in the additional grounds is the relevance

of the Marketing Discipline Guidelines which form part of the agreement

between the parties and which the Arbitrator failed to give sufficient

importance to. On a perusal of the Award, it is found that the issues were

settled over the five and six sittings of Arbitration and Guidelines were

incorporated in issue no. 3 which is set out below :-

"3. Whether the Claimant is entitled to challenge the termination of his

dealership by the Respondent when the Claimant did not prefer any appeal

therefrom in accordance with the Marketing Discipline Guidelines?"

8. Issue No. 20 also mentions the Guidelines which appears as :-

"20. Whether the claimant not having challenged the termination order

in accordance with the Marketing Discipline Guidelines is entitled to challenge

the show cause notice?"

9. Besides the issues, the submission of Indian Oil Corporation Limited

(respondent before the Arbitrator) has also clearly been noted in the

impugned Award namely that the claimant, Tapas Kumar Das (respondent

before this Court) has not exhausted the remedy provided in the Marketing

Discipline Guidelines by preferring an appeal against the order of

suspension and termination. The Award proceeds to discuss the various

provisions of the Marketing Discipline Guidelines including the Chapters 5,

6 and Clause VI relating to irregularities for penal action and other actions

taken against a dealer. Clause IV provides that in the event of termination,

the dealer will have the right of appeal before the appropriate authority

empowered to decide the matter within 30 days of the termination order.

The claimant's contentions, recorded in the Award, also mentions the

Guidelines.

10. The letter of termination dated 15th January, 2013, which was a part

of records before the Arbitrator also mentions the Marketing Discipline

Guidelines - 2005. It is evident from the above that the Marketing Discipline

Guidelines was a crucial part of the proceedings before the Arbitrator and

including the issue of whether the arbitration proceedings were

maintainable at all or not. The present application does not call for a

decision on whether the Arbitrator's view on the Guidelines was correct or

not. The limited question is whether the petitioner should be prevented from

incorporating the Guidelines as part of its grounds for challenge to the

Award under Section 34 of the Act.

11. The ratio of the decisions shown by the parties can be summarized on

the premise that a new ground is generally not permitted to be introduced

by way of an amendment whereas a ground which has a foundational link to

the unamended ground would pass muster. The logic to the aforesaid rule

can be found in the limitation envisaged in Section 34(3) of the Act which

provides a specific time frame of three months from the date of receiving the

Award for making an application for setting aside the Award. An additional

period of 30 days has been given to a party for making such application

upon satisfaction of the Court that the applicant was prevented by sufficient

cause from making the application within the three months. Allowing an

applicant to introduce a new ground to an existing application under

Section 34 would defeat the statutory objective of 34(3) which permits an

aggrieved party to approach a court within the statutory time limit and not

beyond. A ground which does not have any link to an existing petition would

become a new ground and hence the subject matter of a separate Section 34

application.

12. In Venture Global, the Supreme Court allowed facts to be brought in

on the basis that the said facts which were disclosed after passing of the

Award have a causative link with the facts inducing the Award. The

Supreme Court held that facts which would have a bearing on the

proceedings for setting aside and for determining whether the Award was

induced by fraud may be made part of the Section 34 proceedings. In Emkay

Global, the Supreme Court was of the view that an application for setting

aside an Arbitral Award will not ordinarily require anything beyond what

was before the Arbitrator. The Supreme Court in fact held in favour of

bringing matters to the notice of the Court by way of affidavits even where

they were not part of the records in the arbitration proceedings, but were

relevant for determination of the issues before the court. In Fiza Developers,

the Supreme Court was of the view that the scope of amendment in a

section 34 application is restricted to the question whether any ground

exists for setting aside of the Award and also held the necessity for framing

of issues where material facts are in dispute. The decisions sought to be

relied upon by learned counsel appearing for the respondent, who opposes

the application for amendment proceed on the basis that if the existing

petition does not contain the ground proposed to be added, the additional

grounds must be rejected since it would have a bearing on Section 34(3) of

the Act (Ref: Esteem Mercantile) and on the general proposition that

amendments beyond the prescribed period of limitation cannot be allowed

since that would amount to entertaining a fresh petition (Ref: Pushpa P.

Mulchandani). In Prakash Industries Ltd. vs Bengal Energy Ltd. and Another;

AIR 2020 Cal 279 the proposed amendments were disallowed on the ground

that the amendments were more than amplification of the existing grounds.

The facts in that case make it clear that the petitioner sought to bring in

grounds in relation to the Sale of Goods Act which did not have a foundation

in the Section 34 application which had already been filed. The application

of the petitioner was hence rejected on that basis. Ground No. XVII of the

existing grounds in the present case broadly covers the right of the

respondent (claimant in the arbitration) to make claims and in the reference

for an award. Although the Guidelines have specifically been referred to in

the existing grounds, there are other grounds which go to the root of the

Arbitrator's power to decide the disputes between the parties. Read with the

other pleadings which were before the Arbitrator and which expressly

mentions the Marketing Discipline Guidelines, it cannot be said that the

additional grounds are new grounds despite a pleading to such effect in

paragraph 6 of the instant application. The relevant test is whether the

petitioner would be constrained to file a new application under Section 34

for challenging the Award under the additional grounds. The petitioner

would pass the test since the Marketing Discipline Guidelines constitutes a

prominent and significant part of the records before the Arbitrator and

disallowing the petitioner from bringing the said Guidelines into the existing

application would deprive the petitioner from an important challenge to the

impugned Award. This would militate against the liberal stand taken by the

courts in respect of amendments where the objective is to primarily allow a

party to amend its pleading as may be necessary for the purpose of

determining the real questions in controversy between the parties. There is

no doubt that the Marketing Discipline Guidelines go to the very root of the

matter and are crucial for determining the challenge to the impugned

Award.

13. The admitted factual position is also that the existing Section 34 was

made within the 120 days statutory time limit, although the present

application for amendment has been filed after three years.

14. G.A No. 2 of 2021 is allowed by reason of the above discussion. The

petitioner is given leave to amend A.P. No. 827 of 2018 in the manner as

indicated in the Schedule annexed to the application. The petitioner is given

leave to re-verify the petition upon the same being amended within four

weeks from the date of this order. The Department is accordingly directed to

take requisite steps within the aforesaid time frame. A copy of the amended

and re-verified petition should be served on the respondent within a week

from the amendments being carried out. A.P No. 827 of 2018 shall be listed

upon mentioning. The petitioner will however be liable for payment of costs

assessed at Rs. 25,000/- to be paid to the State Legal Services Authority, for

the delay in filing the present application.

Urgent Photostat certified copy of this Judgment, if applied for, be

supplied to the parties upon compliance of all requisite formalities.

(Moushumi Bhattacharya, J)