POWERS OF ARBITRATOR in termination of petrol dealership = whether the relief of restoration of dealership can be granted by the Arbitrator and whether the writ is liable to be dismissed - giving liberty to the writ petitioner to raise the dispute as to restoration of dealership before the Arbitrator, particularly as the respondent-HPCL has already raised an arbitration dispute with regard to the penalty imposed on the writ petitioner. = the Arbitrator has no such power of restoring the dealership even if the order of termination is found to be bad. All that the arbitrator could do, if he found that the termination of the distributorship was unlawful, as to award damages, as any civil court would have done in a suit.Hence the writ petition is restored for hearing before single judge

PUBLISHED IN http://judis.nic.in/judis_andhra/filename=9734

HON'BLE THE ACTING CHIEF JUSTICE SRI N.V. RAMANA AND HON'BLE SRI JUSTICE VILAS V. AFZULPURKAR            

W.A.No.371 of 2013

28-03-2013

K. Harinath

Hindustan Petroleum Corporation Ltd. and another

Counsel for the Appellant: Sri P. Kamalakar

Counsel for Respondents: Sri B. Mayur Reddy

<Gist:

>Head Note:

?Cases referred:
1. (1999) 5 SCC 651
2. (1991) 1 SCC 533
3. (2000) 7 SCC 764

JUDGMENT: (Per Hon'ble Sri Justice Sri Vilas V. Afzulpurkar)

Heard Mr. E. Manohar, learned Senior counsel in support of the appeal and Mr. B.
Adinarayana Rao, learned Senior counsel appearing for the respondents.

2.      The appellant was the writ petitioner in W.P.No.26115 of 2012 which was
filed questioning the order of the Chief Regional Manager, Hindustan Petroleum
Corporation Limited (HPCL) dated 24-07-2012 whereunder the dealership agreement
between the petitioner and the respondents dated 03-07-2009 and distributorship
agreement also of even date was terminated forthwith.  When the said writ
petition was heard by the learned single Judge, learned counsel for the
respondents inter alia raised objection as to maintainability of the writ
petition in view of the alternative remedy of arbitration available to the writ
petitioner.  
The said issue was adjudicated by the learned single Judge by
accepting the contention of the learned counsel for the respondents that in case
the writ petitioner invokes the jurisdiction of Arbitrator, the learned
Arbitrator can grant all the reliefs including that of restoration of dealership
if the termination of dealership is found vitiated.
In support of the said
contention, learned counsel for the respondents also   placed reliance upon the
decision of the Supreme Court in
OLYMPUS SUPERSTRUCTURES PVT. LTD. v. MEENA            
VIJAY KHETAN 1.
Learned single Judge, therefore, dismissed the writ petition
holding inter alia that the relief of restoration of dealership also can be
granted by the Arbitrator and giving liberty to the writ petitioner to raise the
dispute as to restoration of dealership before the Arbitrator, particularly as
the respondent-HPCL has already raised an arbitration dispute with regard to the
penalty imposed on the writ petitioner.  
Aggrieved thereby, the present appeal is filed.

3.      Learned Senior counsel appearing for the appellant primarily contends that
the finding of the learned single Judge that the Arbitrator would have
jurisdiction to restore the dealership to the writ petitioner is opposed to at
least two decisions of the Supreme Court in INDIAN OIL COROPORATION LTD. v.    
AMRITSAR GAS SERVICE 2 and E. VENKATAKRISHNA v. INDIAN OIL CORPORATION 3.   He               
further contends that even if the petitioner is driven to remedy of arbitration,
the Arbitrator cannot grant the relief of restoration of dealership though the
petitioner is able to demonstrate that the order of termination is vitiated.
Learned Senior counsel would, therefore, submit that the impugned order of the
learned single Judge dismissing the writ petition solely on the said ground is
clearly unwarranted.
 He also submitted that even the decision in OLYMPUS 
SUPERSTRUCTURES's case (1 supra) relied upon by the learned single Judge also    
does not state the proposition that Arbitrator can restore the dealership on
being satisfied of illegality of termination.  
Learned Senior counsel would,
therefore, submit that since the basic premise of the impugned order is opposed
to the decisions of the Supreme Court cited above and as the learned single
Judge has not considered the writ petition on merits, the impugned order is
liable to be set aside and the petitioner is entitled to an opportunity of
hearing of the writ petition on merits.

4.      Learned Senior counsel appearing for the respondents-HPCL
fairly states
that so far as the legal position with regard to the powers of the Arbitrator
are concerned, as held by the decisions in AMRITSAR GAS SERVICES's case   (2 supra) and E. VENKATAKRISHNA's case (3 supra), 
the Arbitrator has no such  
power of restoring the dealership even if the order of termination is found to be bad.
Though the learned Senior counsel does not want to join the issue on
that aspect, he further submits that the invocation of jurisdiction of this
Court under Article 226 of the Constitution of India is even otherwise unsustainable as several disputed questions arise for consideration which would not be adjudicated by this Court.      
He points out that
  the order of
termination is based upon several acts and omissions of the writ
petitioner/dealer and all the said acts and omissions relate to compliances
which involve investigation of facts and while exercising the jurisdiction under
Article 226 of the Constitution of India, this Court would not embark upon
adjudication of disputed questions of facts.
He, therefore, submits that even otherwise also the writ petition filed by the
appellant is not sustainable and as rightly observed by the learned single
Judge,
appropriate remedy for the petitioner is to invoke the clause relating to
arbitration particularly as the arbitration dispute raised by the respondent- HPCL is already pending. 

5.      We have considered the submissions referred to above. The decision in
OLYMPUS SUPERSTRUCTURES's case        
(1 supra) was a case arising under Specific Relief Act and the question that
fell for consideration before the Hon'ble Supreme Court was with reference to
the power of the Arbitrator in such case to grant specific performance.  The
Supreme Court made a reference to the view of Punjab, Bombay and Calcutta High
Courts holding that the Arbitrator can grant specific performance of the
contract relating to immoveable property under an award and the said view was
accepted by the Supreme Court.  The said decision, therefore, is not directly
applicable to the facts and circumstances of the present case.  On the contrary
in the decision in AMRITSAR GAS SERVICES's case (2 supra), specific issue
relating to LPG dealership agreement arose in the context of the Arbitrator
restoring the dealership agreement and the Supreme Court held that:

"This finding read along with the reasons given in the award clearly accepts
that the distributorship could be terminated in accordance with the terms of the
agreement dated April 1, 1976, which contains the aforesaid clauses 27 and 28.
Having said so in the award itself, it is obvious that the arbitrator held the
distributorship to be revocable in accordance with clauses 27 and 28 of the
agreement.  It is in this sense that the award describes the Distributorship
Agreement as one for an indefinite period, that is, till terminated in
accordance with clauses 27 and 28.  The finding in the award being that the
Distributorship Agreement was revocable and the same being admittedly for
rendering personal service, the relevant provisions of the Specific Relief Act
were automatically attracted.  Sub-section (1) of Section 14 of the Specific
Relief Act specifies the contracts which cannot be specifically enforced, one of
which is 'a contract which is in its nature determinable'.  In the present case,
it is not necessary to refer to the other clauses of sub-section (1) of Section
14, which also may be attracted in the present case since clause (c) clearly
applies on the finding read with reasons given in the award itself that the
contract by its nature is determinable.  This being so granting the relief of
restoration of the distributorship even on the finding that the breach was
committed by the appellant-Corporation is contrary to the mandate in Section
14(1) of the Specific Relief Act and there is an error of law apparent on the
face of the award which is stated to be made according to 'the law governing
such cases'.  The grant of this relief in the award cannot, therefore, be
sustained."

6.      Similarly in the decision
in E. VENKATAKRISHNA's case (3 supra), it was 
held by the Supreme Court that:

"6.     In our view, the Division Bench was right.  All that the arbitrator could
do, if he found that the termination of the distributorship was unlawful, as to
award damages, as any civil court would have done in a suit.

7.      We find it difficult to accept the contention on behalf of the appellant
that what was referred to the arbitrator was the issue of restoration of
distributorship in the sense that the arbitrator could direct, upon holding that
the termination was unlawful, that the distributorship should be restored.  We
think that the reference itself contemplated consequential damages for wrongful
termination.  In any event and assuming that there is any error in so reading
the reference, it is difficult to hold that the arbitrator was thereby vested
with jurisdiction to award restoration.

8.      It was contended that the appellant had invoked the arbitration clause
only because of the order of the learned Single Judge of the Karnataka High
Court on the writ petition that he had filed and that that order contemplated
that the arbitrator, acting on the arbitration clause in the agreement, would
have the authority to award restoration.  In the first place, we do not find any
such observation in the judgment of the learned Single Judge.  In any even, such
observation, even if it were there, would not vest the arbitrator with a
jurisdiction that he did not otherwise possess in law."


7.      In view of the legal position referred to above, we find it difficult to
sustain the order of the learned single Judge dismissing the writ petition on
the ground that the petitioner can get the relief of restoration of dealership
before the Arbitrator as well.  In that view of the matter, the order impugned
is liable to be set aside.

8.      It is obvious that the writ petition has not been adjudicated on merits
and only in the context of alternative remedy it was dismissed. 
Though Mr. B.
Adinarayana Rao, learned Senior counsel, urged that several disputed questions
arise for consideration, which may not be gone into in writ petition, we are not
inclined to accept the said submission as it would amount to depriving the writ
petitioner of adjudication of his case on merits even before the learned single
Judge hears and decides the matter on merits.  
In other words, we feel that it
amounts to prejudging the merits of the writ petition in appeal in the absence
of any adjudication on merits by the learned single Judge.

9.      Therefore, the writ appeal is allowed.  The impugned order of the learned
single Judge is set aside.   The writ petition shall stand restored on the file
of this Court and shall be listed for hearing before the learned single Judge
having provision as per the Roster.
We request the learned single Judge to
hear and decide the writ petition on merits at his Lordship's earliest
convenience. As a sequel, W.A.M.P.No.913 of 2013 stands closed.   No order as to
costs.
_________________
N.V. RAMANA, ACJ  
________________________  
VILAS V. AFZULPURKAR, J  
Date: 28-03-2013

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