Kumar Service Station vs Hindustan Petroleum Corporation ...
2009 Latest Caselaw 2177 Del

           * IN THE HIGH COURT OF DELHI AT NEW DELHI

                                                       Date of Reserve: 18.4.2009
                                                     Date of Order: 20th May, 2009

OMP No. 112/2009
%                                                                    20.5.2009

      Kumar Service Station                       ... Petitioner
                     Through: Mr. A.Maitri, Advocate and
                     Ms. Radhika Chandrashekar, Advocate

             Versus


      Hindustan Petroleum Corporation Ltd.        ... Respondent
                     Through: Mr. Rajiv Kapur, Advocate


JUSTICE SHIV NARAYAN DHINGRA

1. Whether reporters of local papers may be allowed to see the
judgment?

2. To be referred to the reporter or not?

3. Whether judgment should be reported in Digest?

JUDGMENT

By this application under Section 9 of the Arbitration & Conciliation

Act, 1996, the petitioner has prayed that the Court should stay the operation of

termination letter dated 1.8.2003 in respect of retail outlet at Vinay Marg,

Chankaya Puri, New Delhi.

2. Brief facts relevant for the purpose of deciding this petition are that

the petitioner was running an HPCL retail outlet (Petrol Pump) of the respondent

at Vinay Marg. The dealership of the petitioner for sale of the petroleum products

was terminated vide letter dated 1.8.2003 under the terms and conditions of the

dealership agreement. In the termination letter, it is specifically stated that the

petitioner was given a show-cause notice dated 12.6.2003 before termination of

dealership agreement and the petitioner was heard in person. The petitioner had

also given a representation to Chief Regional Manager - Delhi Retail Region and

after considering his representation and giving him personal hearing, the reasons

disclosed by the petitioner for failure to perform its obligation under the

agreement were not found plausible and the dealership was terminated. In the

termination letter, it was provided that in case the petitioner raises a dispute or

difference, in relation to this dealership agreement, he was free to invoke clause

66 of Dealership Agreement and seek adjudication through arbitration process.

The petitioner did not invoke the arbitration process and first filed a writ petition

before this Court challenging the validity of termination letter. This writ petition

was dismissed by the Court on 26.2.2009 and thereafter the petitioner filed the

present application under Section 9 of the Arbitration & Conciliation Act.

3. It is undisputed that till filing of this petition the petitioner had not

invoked the arbitration clause. It is apparent that the petitioner was not

interested in invoking arbitration clause for adjudication of Arbitration Clause but

was only interested in obtaining interim injunctions by filing one or the other

petition. He first enjoyed interim injunction during the pendency of writ petition

and then obtained an ex parte interim injunction from this Court. In view of not

invoking the arbitration clause soon after 1.8.2003, this petition is liable to be

dismissed on this sole ground.

4. However, even otherwise, the petition is not maintainable. The

dealership agreement relied upon by the petitioner specifically provides that the

petitioner was only a licensee, being granted license to enter in the premises and

use the premises and outfit for storing, selling and handling the products

purchased from the respondent corporation. Clause 3 of the dealership

agreement provided that the dealership could be determined by either party by

giving 03 months' notice in writing to the other party of its intention to terminate

the agreement and upon the expiration on such notice, the agreement/license

would stand cancelled and revoked. Thus, the dealership could be terminated by

respondent giving three months' notice. In view of the long correspondence

which ensued between petitioner and the respondent before termination and

show cause notice and in view of judgment of Supreme Court in Indian Oil

Corporation Ltd. v. Amritsar Gas Service and ors. (1991) 1 SCC 533, I consider

that this petition is not maintainable.

5. In Indian Oil Corporation Ltd. (supra), the Supreme Court observed

that the contractual relationship between the State instrumentality and the private

individual must be decided strictly in the realm of private law and the rights are

governed by the general rule relating to contracts with reference to the provisions

of the Specific Relief Act providing for non enforceability of certain types of

contracts. In Indian Oil Case (supra), the learned Arbitrator had given an award

granting relief of restoration of the distributorship on the basis of finding that

breach of contract was committed by the Corporation. The Supreme Court

observed that such an award cannot be passed in view of Section 14(1)(c) of

Specific Relief Act. Section 14(1)(c) prohibits granting relief of restoration of

distributorship on the basis that a breach was committed by the Appellate

Corporation. In such a situation where the agreement was revocable in

accordance with terms of the contract, the only relief which could be granted by

the Arbitrator was award of compensation for the period of notice, as provided in

the agreement.

6. I find that the petition is without merits and is liable to be dismissed

and is hereby dismissed.

May 20, 2009                               SHIV NARAYAN DHINGRA, J.
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