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IN THE HIGH COURT OF CALCUTTA
I.P. Mukerji, J.
M/s. Hazra Filling Station - Petitioner
Versus
Indian Oil Corporation Limited and anr. - Respondents
W.P. No. 1618 (W) of 2012
Decided On : 17-08-2015
For the Petitioners:Kishore Dutta, Sr. Advocate, Jayanta Das and Soumitra Ghosh, Advocates
For the Respondents:Soumendra Nath Mukherjee, Sr. Advocate, Manawendra Nath Yadav and Saswati Chatterjee, Advocates
A dealer under a dealership agreement with an oil corporation who fails to safeguard the premises and equipment, and whose actions raise a strong suspicion of foul play, cannot challenge the termination of the dealership agreement on the ground that the arbitration clause in the agreement bars the exercise of writ jurisdiction.
Headnote:
DEALERSHIP TERMINATION - INDIAN OIL CORPORATION - DEALERSHIP AGREEMENT - TAMPERING WITH EQUIPMENT - ARBITRATION CLAUSE - WRIT JURISDICTION - IRREGULARITIES IN SAFEGUARDING PREMISES - NO RELIEF IN WRIT PETITION. The writ petition filed by the dealer, Sutanu Hazra, challenging the termination of his dealership agreement with Indian Oil Corporation (IOC) for alleged tampering with equipment and failure to safeguard the premises is dismissed. The court holds that the termination was lawful and that the dealer has not discharged the onus of proving that he was not guilty of the alleged misconduct. The court also finds that the arbitration clause in the dealership agreement does not bar the exercise of writ jurisdiction in this case, as the dispute involves questions of law and the dealer has not been denied natural justice or due process.
Fact of the Case:
Sutanu Hazra, the proprietor of Hazra Filling Station, filed a writ petition challenging the termination of his dealership agreement with Indian Oil Corporation (IOC) for alleged tampering with equipment and failure to safeguard the premises. The writ petitioner and the Corporation had a special legal relationship, with the Corporation being the lessee of the land where the filling station was situated. The dealership agreement contained an arbitration clause providing for the resolution of disputes by the Director (Marketing) of the Corporation or a nominated officer. On 24th September 2010, the anti-adulteration cell of the Corporation inspected the premises and found discrepancies in the dispensing units. The Corporation issued a show cause notice to the dealer, who responded by denying the allegations and claiming that the incident was an accident. The Corporation, however, terminated the dealership agreement on 16th December 2011, citing the dealer's failure to take adequate safeguards to protect the installation.
Finding of the Court:
The court found that the dealer had not discharged the onus of proving that he was not guilty of the alleged misconduct. The court also found that the termination was lawful and that the dealer had not been denied natural justice or due process. The court further held that the arbitration clause in the dealership agreement did not bar the exercise of writ jurisdiction in this case, as the dispute involved questions of law.
Issues: 1. Whether the termination of the dealership agreement was lawful. 2. Whether the dealer had discharged the onus of proving that he was not guilty of the alleged misconduct. 3. Whether the arbitration clause in the dealership agreement barred the exercise of writ jurisdiction.
Ratio Decidendi: 1. The court held that the termination of the dealership agreement was lawful as the dealer had not discharged the onus of proving that he was not guilty of the alleged misconduct. 2. The court found that the acts of breach of contract by the dealer were written in bold on the face of the records and that there was no need to refer the parties to arbitration. 3. The court held that the arbitration clause in the dealership agreement did not bar the exercise of writ jurisdiction in this case, as the dispute involved questions of law and the dealer had not been denied natural justice or due process.
Final Decision: The writ petition filed by the dealer is dismissed.
I.P. Mukerji, J.
Sutanu Hazra is the proprietor of Hazra Filling Station. It operates from a place at Amta Road, Baltikuri (Kalitala), Dasnagar, Howrah in West Bengal. This filling station used to deal in the products of Indian Oil Corporation (hereinafter referred to as "the Corporation").
2. The writ petitioner and the Corporation had a special legal relationship. The land where the filling station is situated is owned by the writ petitioner. The Corporation was the lessee. On 27th December, 2005 the parties entered into a dealership agreement where under the writ petitioner was appointed as a dealer for the retail sale of the products of the Corporation.
3. In this writ the writ petitioner challenges the termination of this dealership made by the Corporation by its letter dated 16th December, 2011.
4. Now, I will describe the facts in some detail.
5. Certain clauses in the dealership agreement are in my opinion very important. First of all, the recital clause, as was the agreement, was in standard form. It stipulated that the Corporation would have some interest in the land and in the "super structure thereon" as described in the first schedule. Now, this first schedule denoted the entire land of 8 cottahs 15 chittaks and 22 sq.ft. owned by the petitioner in the aforesaid place together with "all the buildings, structure other movable and immovable property assets thereon". The recital affirmed that the Corporation would install in the property "apparatus and equipments mentioned in schedule II of the agreement." Now the items mentioned in schedule II of the agreement were the usual items that were to be found in a filling station. Apart from the usual things like dispensing pumps, air compressors, car wash equipments, belts, handles, keys, meters, lubricant machines, the premises had a 20/15 KL tank.
6. Clause 15 gave power to the Corporation to stop or suspend supplies to the dealer. This power was to be exercised by the General Manager of the Corporation at Kolkata.
7. Clause 45 stipulated that it had the power to terminate the agreement on the happening of the events mentioned therein. Sub-clause (k) provided that such right would be exercised if the dealer "tampered with the quality of the products."
8. Under clause 42 the dealer was to adhere to all laws and regulations and the directions of the officers of the Corporation.
9. The agreement also contains an arbitration clause, which is clause 61. It is inserted hereunder.
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61(a) Any dispute or difference of any nature whatsoever, any claim, cross-claim, counterclaim or set-off or regarding any right, liability, act, omission or account of any of the parties hereto arising out of or in relation to this agreement shall be referred to the sole arbitration of the Director (Marketing) of the Corporation who may either himself act as the Arbitrator or nominate some other officer of the Corporation to act as the Arbitrator, the Dealer will not be entitled to raise any objection to any such Arbitrator on the ground that the Arbitrator is an officer of the Corporation.
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(f) The award of the Arbitrator so appointed shall be final conclusive and binding on all parties to the agreement subject to the provisions of the Arbitration Act, 1940 or any statutory modification or reenactment thereof and the rules made thereunder for the time being in force shall apply to the arbitration proceedings under this clause.
(g) The award shall be made in writing and published by the Arbitrator within two years after entering upon the reference or within such extended time not exceeding one further year as the parties shall by writing agree. The parties hereto shall be deemed to have irrevocably given their consent to the Arbitrator to make and publish the award within the period referred to herein above and shall not be entitled to raise any objection protect thereto under any circumstances whatsoever."
10. The facts are like this.
11. On 24th September, 2010 t
