The main legal point established in the judgment is that a dealership agreement is terminable, and the sole arbitrator does not have jurisdiction to restore such a contract, especially in the presence of irregularities in its operation.

JUDGMENT :

C.V. BHADANG, J.

1. The challenge in this appeal under section 37 of the Arbitration and Conciliation Act, 1996 (Act, for short) is to the judgment and order dated 7/5/2011 passed by the learned District Judge, South Goa, at Margao in Arbitration Application no.15/2019. By the impugned judgment, the learned District Judge, while dismissing the arbitration petition filed by the appellant has confirmed the award dated 9/7/2009 passed by the sole arbitrator.

2. The brief facts are that the aforesaid arbitration was initiated by the first respondent in which the appellant was the claimant no.1, while the second respondent was the claimant no.2. The first respondent had entered into a dealership agreement with Mr. Vishwamber K. Salkar (since deceased) who was appointed as retail outlet dealer from 1/12/1970 to 31/10/1986 to run a dealership in the name and style as M/s. Uma Service Centre, Vasco. Subsequently, the dealership was reconstituted by inducting the appellant as a minority partner holding 49% share and Vishwamber Salkar continued as a majority shareholder having a share holding of 51%. It appears that a dealership agreement was executed on 1/11/1987 between the parties. Mr. Vishwamber V. Salkar expired on 5/7/1997 and pending reconstitution of the dealership the supply to the retail outlet was continued purely on adhoc basis on the request of the appellant. According to the first respondent during the period of such ad hoc operation of the dealership there were several irregularities which were committed and on account of which there was no formal proposal for reconstitution submitted to the first respondent.

3. It appears that the first respondent issued a show cause notice to both the appellant and the second respondent on 5/4/2006 for breach of the various terms and conditions of the dealership agreement. After considering the reply, the first respondent terminated the dealership by letter dated 1/6/2006 which dispute was referred to the sole arbitrator. The appellant made a claim for restoration of the dealership and he being recognized as a sole proprietor/dealer of M/s. Uma Service Centre and for compensation etc.

4. The sole arbitrator placing reliance on the decision of the Supreme Court in the case of Indian Oil Corporation Ltd. Vs. Amritsar Gas Service and others,1991 SCC 533 and E. Venkatakrishna Vs. Indian Oil Corporation and anr., (2000) 7 SCC 764 found that the dealership agreement being a contract of commercial nature is terminable and it is not within the jurisdiction of the sole arbitrator to restore such dealership. The learned arbitrator after considering the reply as well as several inspection reports showing a number of irregularities in the operation of the dealership found that the termination of the dealership was legal and proper and rejected the claim for restoration which was unsuccessfully challenged by the appellant before the learned District Judge.

5. I have heard Shri De Sa, the learned counsel for the appellant, Shri Bhobe, the learned counsel for the first respondent and Shri Desai, the learned counsel for the second respondent. Perused record.

6. Shri De Sa, the learned counsel for the appellant has placed reliance on the decision of the Supreme Court in the case of Allied Motors Ltd. Vs. Bharat Petroleum Corporation Ltd., (2012) 2 SCC 1, in order to submit that in an appropriate case, the arbitrator can restore a dealership and the arbitrator was not justified in holding that he has no jurisdiction to restore the dealership. It is submitted that in any event there was also a claim for compensation which ought to have been considered by the learned arbitrator. It is submitted that the learned District Judge failed to exercise jurisdiction under section 34 of the Act in refusing to interfere with the award.

7. Shri Bhobe, the learned counsel for the first respondent as well as Shri Desai, the learned counsel for the second respondent have supported the impugned judgment. Shri Bhobe, th