Gango Gas Agency vs Indian Oil Company
2002 Latest Caselaw 1430 Del

JUDGMENT

S. Mukerjee, J.

1. This petition under Section 9 of the Arbitration & Conciliation Act, 1996 has been filed in respect of the following prayers:

(i) to pass appropriate orders as interim measure for protection of the applicants rights and the liabilities of the Respondents by way of issuing interim injunction commanding the Respondents, not to enforce their letter dated 12.10.2001 and 24.10.2001 whereby the Respondents have inter alia required the Petitioner/applicant to issue transfer vouchers for all the customers of Nakur in favor of BPCL Distributor and also for closure of the extension counter at Nakur.

(ii) to grant ex parte ad-interim orders as per prayer (i) herein above and confirm the same after notice to the Respondents.

(iii) to pass any other or further orders/reliefs which this Hon'ble Court may deem fit and proper in favor of the Petitioner/applicant.

2. The case of the petitioner briefly is that vide letter dated 9.2.1988, the applicant/Petitioner was appointed as distributor at Gangoh in district Saharanpur of the State of U.P.

3. It is further contended by the petitioner that thereafter an agreement dated 20.1.1992 was duly executed between the parties wherein the terms and conditions governing the arrangement/agreement between the parties were recorded. A perusal thereof according to petitioner would reveal that all disputes and differences of any nature whatsoever or as regards any right, liability, act, omission of any of the parties to the agreement would become subject matter of the arbitration, in accordance with Clause 37 of the said Agreement.

4. It was also agreed that the courts in Delhi alone will have jurisdiction to entertain proceedings in respect of any claim or dispute arising under the Agreement.

5. The petitioner contends that initially the distribution area of the Petitioner/applicant, was defined to be the Municipal limits of Gangoh town only, but later on the said area stood extended as per the revised rules governing the operating area of all the distributors up to 30 Kms radius of the town limit.

6. The petitioners submits that on the above basis, be developed the customer base and also requested the Respondents to sanction Extension Counter at town Nakur and Nanauta, which were respectively at a distance of 14/15 Kms from Gangoh.

7. After duly considering the petitioner's request, the respondents vide their letter dated 4.1.2001 granted approval for opening of the new extension counter at Nakur and Nanauta. It was specifically stated that for Nakur as and when any IOC distributorship comes up, the applicant/Petitioner, will transfer all the customers of Nakur to the new IOC distributor.

8. It is stated that on account of the tremendous labour and hard work put in by the Petitioner/applicant in developing the customer base, the Respondents were pleased to grant approval for opening up a new extension counter at Nakur and Nanauta, even though for Nakur area M/s BPCL had already issued letter of intent and also that advertisement had been issued by the Respondents for distributorship in the area under Marketing Plan 1996-97 under open category.

9. Accordingly to the petitioner, he invested huge funds to the extent of more than Rs. 2,00,000/- for opening the office/show-room at each respective place, furnishing the same and commissioning the extension counters.

10. Further the case of the petitioner to his rude shock, all of a sudden after working of the extension counters for about 10 months, the Respondent directed the petitioner, vide respondent's communication dated 12.10.2001, to issue transfer vouchers for all its customers in favor of BPCL distributor.

11. Although the above communication was received only on 17.10.2001, yet the petitioner/applicant was asked to "make compliance immediately and report by 15.10.2001".

12. In the same very communication of respondent it was stated that after 15th October 2001, LPG supplies should not be sent by the Petitioner/applicant to the extended area.

13. The petitioner claims that the thereupon on 21st October 2001, represented to the Respondents, calling upon them to withdraw their order dated 12.10.2001, he citing various reasons such as follows:

(i) Because the Petitioner/applicant was bound to transfer the customers only to any IOC distributorship which may come up at Nakur, and not to any other oil company's distributor.

(ii) Because the distributorship of BPCL at Nakur had already been allotted prior to the issue of the issue of the approval letter dated 4.1.2001 as regards to the new extension counters.

(iii) Because on the assurance of the Respondents, necessary establishment at Nakur had been made after spending huge amounts at show room, office, network, stationary and employment etc.

14. The respondents, it is stated, did not take heed of the representation of the petitioner and instead issued communication dated 24.10.2001 which was delivered in the office of the petitioner only in the evening of 25.10.2001.

15. The petitioners case is that the mala fide intentions and ulterior object of the respondent, is clear from the fact that by the time the communication dated 24.10.2001 was actually delivered in the evening of 25.10.2001, it was humanly impossible to prepare the list of customers and hand over the BPCL Distributor by 26.10.2001 morning which was otherwise also a holiday.

16. The petitioner claims that the subject matter of the dispute is governed by the arbitration clause and that petitioner will suffer irreparable lose, hardship and injury in case the petitioner is not protected by way of interim injunction.

17. Reply was filed by the IOC Ltd. claiming that the petitioner has not come to this Hon'ble Court with claim hands, and rather has suppressed the material facts. The petitioner was only appointed distributor for the sale of "Indane" gas within the Municipal Limits of "Gangoh Town" as has been specifically agreed in writing between the petitioner and the respondent company in an agreement dated 20.6.2002.

18. Moreover it is stated that the respondent corporation is also entitled, at its sole discretion, to reduce, restrict, modify or alter the area of distributorship territory and the decision of the respondent Corporation shall be final and binding.

19. According to IOC Ltd. only extension counter was sanctioned for supplying refills to the customers of Nakur and Nanauta, which was transferable as soon as new Distributor was appointed.

20. The governing guidelines, it is pointed out, stipulate that extension counters will be allowed to be operated only where there is no regular LPG Distributor, and that where such extension counters are working, the customers shall immediately be transferred, as per the policy, to the new distributorship getting commissioned.

21. Circular dated 8.8.2001, 17.9.2001 and 16.10.2001 have been attached as Annexure B, C and D.

22. It is further stated that the new Distributor was appointed not by IOC Ltd., but by BPCL who is a member of the oil marketing companies under the common Ministry and that upon the appointment of the said Distributor, the customers were to be catered by that Distributor.

23. Without going into the details of the of the matter on the merits, since quite obviously the filing of the petition under Section 9 of the Act itself pre-supposes that the petitioner already has or intends to raise the dispute on the above grievances, same should not be prejudiced or be adversely affected by any observation on the merits thereof.

24. However even leaving aside the merits of the matter regarding the validity of the communications issued by the IOC Ltd. requiring the petitioner to make over the extension counter at Nakur and Nanauta to the newly appointed Distributor, it is obvious that no irreparable harm or hardship can be caused to the petitioner even assuming the averments to stand established.

25. At best, the petitioner can have a claim for damages which will be adjudicated in arbitration proceedings and the pecuniary compensation will be adequate compensation for the alleged grievance of the petitioner.

26. The balance of convenience would also lie in favor of the work of LPG supply to the customers, being carried out by the newly appointed Distributor instead of the extension counter going on side by side with that of the newly appointed Distributor in the same very area of Nakur and Nanauta.

27. The total number of cylinder refills which will be supplied at Nakur and Nanauta by the new Distributor, will stand duly recorded in the records which would be maintained. The remuneration or income earned by any Distributor from any particular refill is also bound to be known or determinable. In either case the balance of convenience requires that the newly appointed Distributor should function and the lists that the list of consumers relating to the extension counters at Nakur and Nanauta, should provided by the petitioner.

28. On the prima facie aspect also I find that this is not a fit case for issuance of interim orders under Section 9 of the Arbitration and Conciliation Act, 1996. The Respondents are relying upon a policy. They have also cited a number of court orders relating to extension counters, passed by the Hon'ble Punjab & Haryana High Court which do indicate that the actions of the respondents in those cases have been upheld by the courts. Moreover in the very nature of extension counters, and except for certain compelling circumstances which would have to be established only by arbitration proceedings, and would be compensated by damages if an when established, ordinarily on the prima facie view of the matter, such counters can continue only till the appointment of a newly commissioned LPG Distributorship, and not for all time or for such period as it to the satisfaction of the party who had availed the benefit of extension counters.

29. In view of the above, the petition under section 9 of the Arbitration & Conciliation Act, 1996 is liable to be dismissed.

30. It is made clear that the views expressed above are only for the purpose of disposal of the present suit and will not have any bearing in any other proceeding including arbitration proceedings between the parties.

31. Petition is accordingly disposed of. No order as to costs.