Shri Balaji (Ksk) Through Its ... vs Indian Oil Corporation Limited
2022 Latest Caselaw 6427 Raj/2

       HIGH COURT OF JUDICATURE FOR RAJASTHAN
                   BENCH AT JAIPUR

              S.B. Arbitration Application No. 1/2022

Shri Balaji (KSK) Through Its Proprietor - Banwari Lal Sharma,
Address- Village-Jilly, Tehsil-Sujangarh, District - Churu (Raj.)
                                                                  ----Applicant
                                   Versus
Indian Oil Corporation Limited, Through Its Dy. General Manager
(Retail Sales) Jaipur Regional Office, 1 st Floor, LIC Investment
Building, Phase-II, Near Ambedkar Circle, Bhawani Singh Road,
Jaipur (Raj.) - 302005
                                                                ----Respondent

For Applicant(s)         :     Mr. Anuroop Singhi with
                               Mr. Aditya Vijay and
                               Mr. Bhaskar Agarwal
For Respondent(s)        :     Mr. Sandeep Pathak with
                               Ms. Vartika Mehra



          HON'BLE MR. JUSTICE PANKAJ BHANDARI

                                    Order

RESERVED ON                            ::                        22/09/2022
PRONOUNCED ON                          ::                        29/09/2022

1. The applicant has filed this Arbitration Application under

Section 11(5) read with Section 11(6) of the Arbitration and

Conciliation Act, 1996 seeking appointment of a Sole Arbitrator for

resolution of the disputes and differences between the parties.

2. It is contended in the Arbitration Application that a retail

outlet was allotted to the applicant by the respondent and an

agreement was executed between the parties on 03.05.2017. The

respondent conducted an inspection of the retail outlet on

03.03.2020 and on the basis of the inspection conducted, issued a

fact finding letter on 06.06.2022 to the applicant, inter-alia stating

therein that the applicant has violated the Marketing and

(2 of 5) [ARBAP-1/2022]

Discipline Guidelines, 2012 (hereinafter referred to as "the MDG

Guidelines") and asked the applicant to explain the reasons for

irregularities and the action taken to rectify the same. The

applicant was also asked to submit the explanation. A reply to the

said notice was given on 23.06.2020. Thereafter, the respondent

issued a letter on 28.09.2020 as a show cause notice whereby the

explanation submitted by the applicant was rejected.

3. The non-applicant/respondent vide order dated 22.12.2020

terminated the retail outlet of the applicant. The applicant

thereafter assailed the said order dated 22.12.2020 by filing writ

petition before the High Court being S.B. Civil Writ Petition

No.1622/2021. The applicant thereafter served a notice dated

06.10.2021 seeking appointment of an Arbitrator. The respondent

has failed to take any step, therefore, the present Arbitration

Application has been filed.

4. It is contended by counsel for the applicant that there is an

Arbitration Clause in the Agreement i.e. Clause 62. The applicant

had given a notice seeking appointment of an Arbitrator vide letter

dated 06.10.2021. Counsel for the applicant has placed reliance

on Sanjiv Prakash Versus Seema Kukreja & Ors.: (2021) 9 SCC

732. Counsel for the applicant has also placed reliance on

Management Committee of Montfort Senior Secondary School

Versus Vijay Kumar & Ors.: (2005) 7 SCC 472.

5. Learned counsel for the respondent has vehemently opposed

the Arbitration Application. It is contended that the MDG

Guidelines are in operation and as per the said MDG Guidelines,

the decision of termination of a retail outlet provides for filing of

an appeal before the Designated Authority. It is also contended

that appeals in case of termination arising out of invocation of the

(3 of 5) [ARBAP-1/2022]

MDG Guidelines, the Appellate Authority will be a Dispute

Resolution Panel (DRP) nominated by the Oil Marketing Company

and would comprise of (i) a Retired Judge of the High Court, (ii) a

Retired Government Servant, who held post not below the rank of

Joint Secretary in Government of India or equivalent rank and (iii)

a Retired Official of PSU Oil Marketing Companies, who held the

post not below the rank of Director. It is also provided that the

Retired Judge of the High Court in the Committee will be the

Chairperson. It is also contended that the proper remedy available

to the applicant was to file an appeal before the Dispute

Resolution Panel, but instead the applicant has approached this

Court. It is also contended that the applicant has filed a writ

petition challenging the order of termination and the applicant

cannot be permitted to take recourse to different remedies. It is

further contended that the dispute is not arbitrable and as there

was manipulation in the MDG Guidelines. Learned counsel has

placed reliance on Indian Oil Corporation Ltd. Versus All India

Petroleum Dealers Association: 2022 SCC OnLine Del 77 and

M/s. Neel Gas Agency Jabalpur Versus Indian Oil Corporation Ltd.,

Jabalpur: W.P. No.17554/2017 decided by the Madhya Pradesh

High Court on 23.08.2018.

6. I have considered the contentions and have carefully perused

the record.

7. It is pertinent to note that in the MDG Guidelines, it is

specifically provided that in case of termination arising out of

invocation of the MDG Guidelines, the dealer will have the right to

file appeal within a period of 30 days from the date of receipt of

the order, before the Appellate Authority. Thus, the MDG

Guidelines provides remedy to the applicant in relation to the

(4 of 5) [ARBAP-1/2022]

termination order passed by the respondent. It is evident that

during surprise inspection conducted at the retail outlet of the

applicant, critical irregularities were discovered. In the

communication that ensured between the parties, it was

specifically informed to the applicant that there was negative stock

variation of 976 liters in MS whereas permissible limit was 409

liters in MS and also a negative stock variation of 1342 liters in

HSD whereas permissible limit was 314 liters. Further, it was

found that the additional unauthorized fittings were installed on

the dispensing unit by which delivery variation can be done.

Unauthorized fittings were on account of the retail outlet and the

applicant being the owner was responsible for the same.

8. Since, the respondent has terminated the retail outlet after

assigning reasons thereof and the applicant has already

approached the High Court by filing a writ petition aggrieved by

the termination order of the retail outlet, further taking note of the

fact that the MDG Guidelines provide for filing of an appeal and

the same is to be filed before a Dispute Resolution Panel, which

consists of a Retired Judge of the High Court, a Retired

Government Servant and a Retired Official of the PSU. Thus, the

said dispute cannot be said to be arbitrable, as the proper

recourse available to the applicant with regard to the termination

of his retail outlet is under the MDG Guidelines. The relief claimed

for in the present Arbitration Application seeking appointment of

an Arbitrator is also pertaining to the termination of the retail

outlet for which the applicant has already availed the remedy of

filing a writ petition before this Court and alternative remedy of

filing an appeal under the MDG Guidelines is available to him.

(5 of 5) [ARBAP-1/2022]

9. The judgment cited by the counsel for the applicant,

Management Committee of Montfort Senior Secondary School

Versus Vijay Kumar & Ors. (supra) and wherein it has been held

that the applicant is the dominus litis cannot be applied to the

facts of the present case because the applicant has already availed

the remedy of filing a writ petition and an alternative remedy of

filing of an appeal is also provided for under the MDG Guidelines.

Thus, I am not inclined to entertain the Arbitration Application and

the same is accordingly dismissed.

(PANKAJ BHANDARI),J

SUNIL SOLANKI /PS

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