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2010 Supreme(Cal) 338
IN THE HIGH COURT AT CALCUTTA
Ashoke Kumar Dasadhikari, J,
KUNDAN SINGH
Versus
HINDUSTAN PETROLEUM CORPORATION LTD.
AP No. 161 of 2010
Decided On : March 31, 2010
Advocate Appeared:
Sabyasachi Chowdhury, Neelesh Chowdhury for the petitioner;
Debajyoti Datta, Rakhshanda Quamal for the respondent.
The court has the power to modify an arbitral award under Section 34(4) of the Arbitration and Conciliation Act, 1996, if the award is illegal, arbitrary, and not at all sustainable in law and opposed to public policy.
Headnote:
ARBITRATION - TERMINATION OF DEALERSHIP - VIOLATION OF PRINCIPLES OF NATURAL JUSTICE - DOUBLE PUNISHMENT - RESTORATION OF DEALERSHIP - AWARD - MODIFICATION - PUBLIC LAW FIELD.
Fact of the Case:
The petitioner, a former LPG distributor of the respondent, challenged a portion of an arbitral award that awarded compensation instead of restoring the dealership, despite finding that the termination of the dealership was illegal, arbitrary, and violative of the principles of natural justice.
Finding of the Court:
The court held that the findings of the arbitrator were not covered under contractual matters or private law field but were covered by the principles under public law field. The court found that the judgments relied upon by the arbitrator to deny the petitioner's claim for restoration of dealership were not applicable in the facts and circumstances of the case.
Issues: 1. Whether the termination of dealership was illegal, arbitrary, and violative of the principles of natural justice? 2. Whether the arbitrator erred in not restoring the dealership but awarding compensation instead? 3. Whether the court has the power to modify the award under Section 34(4) of the Arbitration and Conciliation Act, 1996?
Ratio Decidendi: 1. The court held that the termination of dealership was illegal, arbitrary, and violative of the principles of natural justice, as found by the arbitrator. 2. The court held that the arbitrator erred in not restoring the dealership but awarding compensation instead, as the findings of the arbitrator were not covered under contractual matters or private law field but were covered by the principles under public law field. 3. The court held that it has the power to modify the award under Section 34(4) of the Arbitration and Conciliation Act, 1996, as the award was illegal, arbitrary, and not at all sustainable in law and opposed to public policy.
Final Decision: The court directed the respondent to restore the dealership within three weeks from the date of service of the order and to cancel the suspension order passed by the respondent.
1. This is an application filed by the petitioner questioning a portion the award passed by Sole Arbitrator Mr. P.Rajagopalan on lath January 2010.
2. The fact remains that the petitioner was a LPG Distributor of the respondent "HINDUSTAN PETROLEUM CORPORATION LTD." having it office at P-4, Oil Installation Road, Paharpur, Kolkata-700 088, in the tow of Burdwan in the state of West Bengal. Disputes and differences aros between the petitioner and the respondent by reason of termination of dealership affected by the respondent by its letter dated 15th January, 2009 Such disputes and differences were referred to arbitration in terms of arbitration clause in the dealership agreement dated 13th June, 2005. According to clause 38 of the dealership agreement any dispute or difference of any nature whatsoever or regarding any rights, liability, act, omission on account of any of the parties hereto arising out or in relation to the agreement shall be referred to the Sole Arbitrator of the Managing Director of the Corporation or of some officer of the Corporation who may be nominated h the Managing Director. It further provides from the said clause 38 that the Arbitrator shall have power to order and direct either of the parties to abide by, observe and perform all such directions as the Arbitrator may think fit having regard to the matter in difference i.e. dispute before him. The Arbitrator shall have all summary powers and may take such evidence oral and documentary as the Arbitrator in his absolute discretion thinks fit and shall be entitled to exercise all powers under the Indian Arbitration Act, 1940 including admission of any affidavit as evidence or the matter in difference i.e. dispute before him. The Arbitrator shall be at liberty to appoint, if necessary, any Accountant or Engineer or other technical person to assist him, and to act by the opinion so taken.
3. Pursuant to the said clause Arbitrator entered into the dispute and statement of claim filed by the petitioner before the Arbitrator. Reply to the statement of claim along with counter claim was also filed by the respondent Learned Arbitrator after hearing learned Counsel of the respective parties and upon perusal of all the records, documents and written notes of submissions/arguments concluded to the effect that actions of the respondents are violative of principles of natural justice and even after imposition penalty, which was paid by the petitioner, dealership of the petitioner wm terminated which is double punishment. The punishment is contrary to the Market Discipline Guidelines and further petitioner is entitled to get restoration of dealership.
4. In clause 37 the learned Arbitrator recorded that in his opinion the arbitration proceedings is based on two parts. First part is legal aspects of the termination of the distributorship and second part is related to handling of distributorship in a casual and arbitrary manner by the controlling officer of the respondent corporation. He also recorded that the distributorship is guided by the Marketing Discipline Guidelines and so far the first offence is concerned penalty was imposed and so far the second offence is concerned after receipt of explanation from the petitioner penalty has been imposed and the penalty was paid by the claimant and therefore there is no cause of action on the side of the respondent who issued termination letter dated 15th January, 2009. It was also recorded by him that the distributorship was under suspension from January 8 and as such the distributor could not have indulged in any more irregularity, which calls for termination either as per Marketing Discipline Guidelines or as per relevant clauses in the dealership agreement. He has come to the conclusion that the suspension of the dealership should have been revoked after the penal action for second offence was taken vide letter dated 24th July, 2008 and there was no justification for the respondent to continue with the suspension b
