IMPORTANT POINT
When the arbitral award categorically found that there was breach of conditions of dealership logical consequence would be termination of dealership. Giving liberty to represent for reconsideration does not mean that the Arbitrator had either set aside termination or directed to restore the supply of fuel to the respondent.

Headnote:(a) Administration of justice – Cause of action – Dealership terminated due to breach of condition thereof – Arbitrator upholding termination – Giving liberty to respondent for a representation before appellant for reconsideration of restoration of dealership which was rejected giving reasons – High Court while quashing rejection also quashing termination restoring dealership of respondent – Not proper – Question of reconsideration arising after award was passed and upheld by Writ Court – Reconsideration issue, held, a new cause of action – Nothing to do with award – Could not be linked with arbitral proceedings. (Para 36, 37)
       (b) Administration of justice – Judicial review – Appellant rejecting respondent’s representation for reconsideration giving reasons – Writ Court rightly declining to interfere in administrative decision of appellant – Writ Court rightly holding that it cannot substitute its decision by acting as an Appellate Court in Writ jurisdiction – Division Bench misinterpreting arbitral award – Decision unsustainable. (Para 38, 39)
       Facts of the case:
       The IOC appointed respondent as its retail dealer for sale of petroleum products.
       On 01.08.2008, Deputy Inspector of Labour (Weights & Measures) carried out an inspection of the respondent's petrol pump. It was followed by another inspection carried out by the Sales Officer of the IOC on 02.08.2008. In these inspections, "no totalizer seal" was found in place.
       After issuing show cause notice to the respondent on 27.08.2008 the IOC terminated the respondent's dealership agreement.
       The matter was referred to the sole Arbitrator.
       The IOC questioned its legality of the award whereas the respondent filed an interim application No.447/2012 seeking resumption of supply of fuel to him before the High Court.
       The High Court dismissed the application and upheld the award.
       The respondent then on 20.02.2013 filed a representation to the appellant (IOC) requesting them for resumption of the supply of fuel to him pursuant to the directions of the award. By letter dated 13.03.2013, the IOC rejected the representation assigning the reasons for rejection of the respondent's representation.
       The Single Judge (writ Court) dismissed the writ petition finding no merit to the challenge made to the rejection of the respondent's representation and upheld the same as being just and proper calling no interference.
       The Division Bench allowed the respondent’s appeal and while setting aside the order of the Single Judge issued a mandamus to the IOC to restore the respondent's dealership and resume the supply of fuel to his fuel station.
       Finding of the Court:
       The reasoning and conclusion arrived at by the Single Judge is just and proper, whereas the reasoning and conclusion arrived at by the Division Bench is not proper.
       Result: Appeal allowed.

JUDGMENT :

Abhay Manohar Sapre, J.

1. Leave granted.

2. This appeal is filed against the final judgment and order dated 08.10.2015 passed by the High Court of Judicature at Madras in W.A. No.589 of 2015 whereby the Division Bench of the High Court allowed the writ appeal filed by the respondent herein and set aside the order dated 17.04.2014 passed by the Single Judge of the High Court in Writ Petition No. 10026 of 2013 by which the writ petition filed by the respondent herein was dismissed.

3. In order to appreciate the issues involved in the appeal, it is necessary to set out the facts in detail. The facts are taken from the SLP paper book.

4. The appellants herein were respondent Nos.1 and 2 and the sole respondent herein was the writ petitioner in the writ petition before the High Court out of which this appeal arises.

5. Appellant No.1 is the Government Company called Indian Oil Corporation Ltd. (hereinafter referred to as "the IOC"). The IOC is engaged in the business of manufacturing and sale of several petroleum products such as petrol, High Speed Diesel (HSD), lubricants etc. The IOC has set up several retail outlets all over the country for sale of their products through their retail dealers.

6. On 31.08.1989, the IOC appointed respondent as its retail dealer for sale of petroleum products. A dealership agreement (Annexure P12) was accordingly executed between the IOC and the respondent in this regard.

7. The respondent had to carry on the business as per the terms and conditions of the dealership agreement. The respondent accordingly set up his petrol pump in the name and style of M/s Lakshmi Service Station at GST Road, Kooteripattu Town (Tamil Nadu) and started selling petroleum products of IOC.

8. On 01.08.2008, Deputy Inspector of Labour (Weights & Measures) carried out an inspection of the respondent's petrol pump. It was followed by another inspection carried out by the Sales Officer of the IOC on 02.08.2008. In these two inspections, it was noticed that “totalizer wires of L&T Line DU in petrol pump model serial No.1578 used at MS 2 pump was found cut”. In other words, in these inspections, "no totalizer seal" was found in place.

9. It is these inspections, which gave rise to issuance of show cause notice by the IOC to the respondent on 27.08.2008. The show cause notice, after setting out the details of the inspections, proceeded that why the dealership agreement of the respondent dated 31.08.1989 be not terminated for the alleged breaches noticed in the inspections. The respondent was called upon to file his reply. The respondent filed his reply.

10. Not satisfied with the reply filed by the respondent, the IOC, vide letter dated 11.03.2009 terminated the respondent's dealership agreement.

11. The respondent felt aggrieved by the termination of his dealership agreement and invoked clause 69 of the dealership agreement which provided for resolution of disputes by the Arbitrator arising in relation to the dealership agreement and he requested the IOC to refer the matter to the Arbitrator for his decision. The IOC acceded to the respondent’s request and accordingly referred the matter relating to termination of his dealership to the sole Arbitrator.

12. The Arbitrator then embarked upon the reference and passed his reasoned award dated 14.10.2011. The operative part of the award reads as under:-

“The act of continuing the sales even after the breakage of Totalizer Seal committed by the claimant, in question, calls for stern action. However, it is noted that there was no variation in the quality and quantity. Again, the petitioner has already suffered substantially for more than two (2) years for the closed status of the retail outlets. Therefore, a lenient view may be considered by the respondent, bearing in mind the element of benefit of doubt.”

13. The IOC, felt aggrieved by the award of the Arbitrator, questioned its legality by filing an application (OP No.358 of 2012) under Section 34 of the Arbitration and Conciliation

Click Here to Read the rest of this document

SUPREME COURT OF INDIAABHAY MANOHAR SAPRE, UDAY UMESH LALIT, JJ.Indian Oil Corporation Ltd. & Anr. – AppellantsVersusT. Natarajan – RespondentCivil Appeal No. 6748 of 2018 [Arising out of SLP (C) No. 33100 of 2015]Decided On : 17-07-2018

SUPREME COURT OF INDIA
ABHAY MANOHAR SAPRE, UDAY UMESH LALIT, JJ.
Indian Oil Corporation Ltd. & Anr. – Appellants
Versus
T. Natarajan – Respondent
Civil Appeal No. 6748 of 2018 [Arising out of SLP (C) No. 33100 of 2015]
Decided On : 17-07-2018