The central legal point established is that the arbitrator's jurisdiction is limited to awarding damages for wrongful termination, and not restoration of distributorship.

( 1 ) THE appellant was appointed a dealer of the first respondent to distribute liquified petroleum gas. The contract in this behalf contained a Clause by reason of which the distributorship could be terminated if the dealer did anything which was prejudicial to the interests of good name of the principal of its products. It was the case of the respondent that the appellant had stored spurious gas cylinders; therefore, the dealership of the appellant was terminated under the terms of the said Clause.

( 2 ) THE appellant filed a writ petition in the High Court of Karnataka seeking restoration of the distributorship. The writ petition was dismissed because the learned Single Judge found that there was an arbitration Clause in the contract between the parties. He said: "in this behalf, all that is necessary to observe is that it is open for the petitioner to raise these points in the dispute and plead before the Arbitrator that the termination of distributorship agreement was arbitrary and that the material on the basis of which the opinion was formed did not exist or did not justify the formation of such an opinion, If such a plea is raised, the Arbitrator is duty bound to consider as to whether the opinion formed was based on sufficient material and if not to give appropriate relief to the petitioner. " No appeal against the order of dismissal was filed.

( 3 ) THE appellant wrote to the Director (Marketing) of the respondent invoking the arbitration Clause. The Director (Marketing) was called upon to act as an Arbitrator or to appoint a sole Arbitrator to determine the following issues: " (i) Issue of Termination of distributorship of Habbal, Yalahanka and adjacent areas of Bangalore City. (ii) Issue of Restoration of the distributorship, and (iii) Consequential damages and pendentalite interest. " On 10th December, 1987 the Director (Marketing) declined to act as Arbitrator, but he appointed an Arbitrator "to adjudicate upon the disputes and differences arising between you and the Corporation and to give his Award/s thereon. " The appellant filed a Statement of Claim before the Arbitrator so appointed and prayed for setting aside the termination, for damages, for a direction to the respondent "to restore distributorship to the claimant" and for incidental reliefs. The Arbitrator raised issues, thus: " (1) Whether the claimant or his servants or agents committed/suffered to be committed the act mentioned in the termination letter dated 11/8/87 issued by the respondent and whether or not the termination of the Indane distributorship of the claimant by the respondent is justified. (2) Whether the order of termination dt. 11/8/87 of the distributorship of the claimant valid or liable to be set aside. (3) Whether the claimant is entitled to the various monetary claims made in the statement of claim dt. 28/1/1988. If so, to what extent? (4) Whether the respondent is entitled to the monetary claim made in its written statement dt. 28/3/88. If so, to what extent? (5) Whether the respondent is entitled to any interest as claimed in its written statement dt. 28/3/88 If so, to what extent? (6) To what reliefs are the parties entitled?" The Arbitrator made an award thus: "i award and hold that with a view to meet the ends of justice the claimant, Shri E. Venkatakrishna, doing business under the name and style of M/s Poornashree Gas shall be restored with the Indane distributorship at Habbal, Bangalore forthwith each of the parties in entitled to the monetary benefits as awarded above. In the circumstances of the case, I award and hold that the parties shall bear their respective costs. "

( 4 ) THE award was challenged by the respondent in proceedings under Section 30 of the Arbitration Act taken before a learned Single Judge of the Madras High Court. The learned Single Judge rejected the challenge. The respondent preferred an appeal and the Division Bench, in the judgment and order that is impugned before us, upheld the challenge. It said