Delhi High Court
Captain Guman Singh & Sons vs Indian Oil Corporation Ltd. on 15 February, 2016
Author: Manmohan Singh
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment pronounced on: 15th February, 2016
+ OMP No.478/2015 & I.A. No.19179/2015
CAPTAIN GUMAN SINGH & SONS ..... Petitioner
Through Mr.Kapil Joshi, Adv. with
Mr.Arun S.Bhati, Adv.
versus
INDIAN OIL CORPORATION LTD ..... Respondent
Through Mr.Divjyot Singh, Adv. with
Mr.Anand Sree, Adv.
CORAM:
HON'BLE MR.JUSTICE MANMOHAN SINGH
MANMOHAN SINGH, J.
1. The petitioner has filed the objections under Section 34 of the
Arbitration and Conciliation Act, 1996 (hereinafter referred to as the "Act")
for seeking setting aside of the impugned Arbitral Award dated 11 th March,
2015. Along with the objections, the petitioner also filed two applications;
one being I.A. No.19179/2015 under Section 151 CPC for stay and another
being I.A. No.19180/2015 under Section 151 CPC for condonation of delay
of 46 days in refiling the petition.
2. Both the parties have made their submissions on merit.
3. Brief facts of the case are that on 18th November, 1982 a dealership
agreement (hereinafter referred to as "Agreement") was executed between
late Sh. Guman Singh who was the original allottee and proprietor of M/s
Captain Guman Singh and Sons and the respondent, pursuant to which the
petitioner firm was appointed as the respondent's authorized dealer at Pali,
Rajasthan for the retail sales/supply of kerosene for domestic purposes and
light diesel oil.
4. In the year 2004, the proprietor of M/s Guman Singh and Sons,
Sh.Guman Singh expired. In January, 2012 while investigating, certain
alleged malpractices were found to be committed by the legal representatives
of Guman Singh, one of whom is the petitioner herein, with regard to illegal
sale of Blue Kerosene to Granite Industries in Jalore District, Rajasthan. As
per the case of the respondent, it was discovered that after the death of Sh.
Guman Singh, the dealership was operated benami without any prior
approval or notice of reconstitution being served on the respondent, which
was in gross violation of the terms of the Agreement.
5. Accordingly, a show-cause notice dated 10th January, 2012 was served
on the petitioner directing him to address the aforementioned violations of
the Agreement. The reply dated 13th February, 2012 of the petitioner was
found to be unsatisfactory and the dealership in the name of M/s Guman
Singh and Sons was terminated by letter dated 28th May, 2012.
6. Aggrieved by the said termination of the dealership, the petitioner
referred the dispute to arbitration through sole Arbitrator, Sh. Premananda
Jena (hereinafter referred to as "Tribunal"). Having heard both the parties,
the Tribunal by award dated 11th March, 2015 dismissed the claim filed by
the petitioner and upheld the termination of the Agreement.
7. The Tribunal observed that the dealership was managed by the legal
heirs of late Sh. Mr. Guman Singh without reconstituting the firm or/and
without receiving prior approval from the respondent. The respondent had
therefore rightfully terminated the Agreement as the said conduct was in
gross violation of Clauses 13 and 16 of the Agreement.
8. Aggrieved by the award of the Tribunal, the petitioner has approached
this Court under Section 34 of the Act for setting aside the award.
9. The contention of the petitioner is that the dealership be reinstated to
the petitioner which was rejected by the Arbitral Tribunal. After
termination, the petitioner is not getting the supply from the respondent.
10. The Tribunal had found that the Agreement is determinable in nature
in terms of Clause 21, which entitles either party to terminate the Agreement
by giving 30 days' notice in writing and without assigning any reason.
Additionally, the Tribunal had held the termination to be lawful in view of
the petitioner having contravened the terms of the Agreement.
11. Learned counsel for the respondent submits that under the dealership
agreement it was the option of the respondent to authorize the petitioner,
now coming through legal representatives of the deceased proprietor
Sh.Guman Singh in the year 2004, to continue with the dealership. It is also
stated that on investigation certain malpractices were found which are
mentioned in the award of the Arbitral Tribunal. He submits that even
otherwise, in view of the option, which lies with the respondent, the contract
was validly terminated by it on 28th May, 2012. The petitioner is not
enjoying any facility after the said date in terms of the dealership agreement
dated 18th November, 1982. The said agreement now cannot be enforced
under the law in order to restore the dealership as sought by the petitioner.
Even if the termination of the agreement was found to be unlawful, the only
relief which could have been granted in view of the issues raised by the
petitioner is damages/compensation for the period of notice as per the
contract.
12. In Manohar Lal (D) by LRs. v. Ugrasen (D) by LRs. and Ors. (2010)
11 SCC 557, the Supreme Court held that the "Court cannot grant a relief
which has not been specifically prayed by the parties". In Bharat Amratlal
Kothari v. Dosukhan Samadkhan Sindhi and Ors. AIR 2010 SC 475, the
Supreme Court held that, "Though the Court has very wide discretion in
granting relief, the court, however, cannot, ignoring and keeping aside the
norms and principles governing grant of relief, grant a relief not even prayed
for by the petitioner".
13. I have considered the entire gamut of the matter and heard the learned
counsel for the parties as well as gone through the award passed in the
matter. The Tribunal has already referred various judgments in the said
Award. The same are read as under:
i. In the decision of the Supreme Court of India in IOC v.
Amritsar Gas Service, (1991) 1 SCC 533, wherein it has been
held that a dealership agreement containing a clause entitling
either party to terminate the agreement with thirty (30) days'
notice was determinable in nature, and therefore, in terms of
Section 14(1) of the Specific Relief Act, 1963 (hereinafter
referred to as "Specific Relief Act") a relief of restoration of
dealership cannot be sustained. Section 14(1) (c) of the
Specific Relief Act states that a contract which is in its
nature determinable cannot be specifically enforced. It
was further held that even if the termination of the agreement
was illegal, the only relief which could be granted was the
award of compensation for the period of notice.
ii. A similar view was espoused by the Supreme Court in E.
Venkatakrishna v. Indian Oil Corporation and Ors., (2000) 7
SCC 764 wherein it was held that "all the arbitrator could do,
if he found the termination of the distributorship to be
unlawful was to award damages, as any civil court would
have done in a suit". The Appellant therein was appointed as
a dealer of the first respondent to distribute liquefied
petroleum gas and the dealership agreement therein contained
a termination clause that the distributorship could be
terminated if the dealer did any act which was prejudicial to
the interests of the Respondent.
iii. Further, even the relief of injunction sought by the Petitioner
could not be granted as per the provisions of Section 14(1)(c)
read with Section 41 (e) of the Specific Relief Act. The
Division Bench of this Court in Rajasthan Breweries Ltd v.
The Stroh Brewery Company AIR 2000 Delhi 450, held that"
if it is found that a contract by its very nature is determinable,
the same not only cannot be enforced but in respect of such a
contract no injunction could also be granted and that is
mandate of law". The aforementioned decision was followed
by this Court in the later decisions of Mittal Services v.
Escotel Mobile Communications Ltd AIR 2003 Delhi 410
and Indian Railways Catering and Tourism and Corp. Ltd v.
Cox and Kings India Ltd & Anr. 2012 (1) ARBLR184
(Delhi)"
14. Under these circumstances, the relief of restoration of the dealership
cannot be granted as it is rightly observed in the Award. As far as
claiming of damages and compensation as provided in the contract is
concerned, the petitioner has not pleaded or proved the same before the
Arbitral Tribunal. Therefore, the said relief as pressed by the learned
counsel for the petitioner cannot be allowed in view of the decisions of the
Supreme Court in Manohar Lal (supra) and Bharat Amrat Lal Kothari
(supra).
15. The objections filed by the petitioner are not sustainable on merit.
The petition is accordingly dismissed.
16. Pending applications stands disposed of.
(MANMOHAN SINGH)
JUDGE
FEBRUARY 15, 2016
