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2016 Supreme(Del) 1774
IN THE HIGH COURT OF DELHI AT NEW DELHI
V.KAMESWAR RAO, J.
SHIVAN AUTO CENTER - Petitioner
Versus
INDIA OIL CORPORATION LTD. & ANR. - Respondents
O.M.P. (COMM) 99/2016
Decided on : 25-04-2016
For the Appellant : Mr. Sudhir Nandrajog, Sr. Adv. with Mr. Sanjay Bansal, Adv.
For the Respondent: Ms. Mala Narayan, Adv.
The main legal point established is that breaching dealership agreements and executing a General Power of Attorney in favor of a third party can lead to termination of the dealership, and technical grounds for challenging show cause notices may not be sustainable.
Headnote:
Breach of Dealership Agreement - Indian Oil Corporation - LOI dated 4.6.1991, Agreement dated 19.01.1995, Agreement dated 22.4.2013 - The court discussed the breach of dealership agreements, the validity of show cause notice and termination, and the legal implications of the General Power of Attorney executed in favor of a third party.
Fact of the Case:
The petitioner challenged the award dismissing their claim in response to a termination letter from Indian Oil Corporation. The petitioner had entered into dealership agreements and a partnership for running a petrol pump, but the respondents alleged breach of contract due to the petitioner's actions.
Finding of the Court:
The court found that the petitioner had breached the dealership agreements and the Letter of Intent by executing a General Power of Attorney in favor of a third party, leading to the termination of the dealership.
Issues: The issues included breach of dealership agreements, validity of show cause notice and termination, and entitlement to the reliefs claimed by the petitioner.
Ratio Decidendi: The court held that the petitioner's actions constituted a breach of the dealership agreements and LOI, and the show cause notice and termination were legally valid. The court also emphasized the wide powers granted in the General Power of Attorney and the irreversibility of the breach.
Final Decision: The court dismissed the petition, finding no merit in the petitioner's claims.
V.KAMESWAR RAO, J.
IA No. 4976/2016
Exemption allowed subject to all just exceptions.
Application stands disposed of.
O.M.P. (COMM) 99/2016
1. The challenge in this petition is to the award dated 29th March, 2016 passed by Mr. B.C. Joshi, learned Arbitrator whereby the learned Arbitrator has dismissed the claim of the claimants.
2. Some of the facts of the present petition are that on 4th June, 1991, Mr. Sanjay Kumar Singh was issued a letter of intent (LOI) by the respondents Indian Oil Corporation of setting up a petrol pump / retail outlet for selling petroleum products supplied by the respondents. On 15th April, 1994, a General Power of Attorney was executed by Mr. Sanjay Kumar Singh in favour of one Mr. Praveen Singh.
3. It is the case of the petitioner that Mr. Praveen Singh was working as a Manager in the petrol pump for the purposes of dealing with various Government authorities for construction of showroom and for promotion of business on behalf of Mr. Sanjay Kumar Singh.
4. On 19th January, 1995, a dealership agreement was executed between Mr. Sanjay Kumar Singh as the proprietor of the petitioner and the respondents. It is the case of the petitioner that Mr. Sanjay Kumar Singh had cancelled the General Power of Attorney dated 15th April, 1994 executed in favour Praveen Singh on 1st November, 2011 and was running the dealership without violating any of the conditions of the dealership agreement dated 19th January, 1995. The revocation was duly communicated to the Sub-Registrar-II, Asaf Ali Road, New Delhi on 5th November, 2011.
5. On 27th March, 2012, after written and expressed approval of the respondents, Mr. Sanjay Kumar Singh entered into a partnership agreement with Mr. Satish Singh for running the business of sale of MS, HSD Lubes, Greases etc. supplied to the firm, under license, from Indian Oil Corp. As per the constitution of the partnership deed dated 27th March, 2012, Mr. Sanjay Kumar Singh holds 51% share and the second partner Mr. Satish Singh holds 49% share.
6. On 22nd April, 2013, petitioner and the respondents executed a new dealership agreement which resulted in cancellation of the earlier agreement dated 19th January, 1995 executed between Mr. Sanjay Kumar Singh and the respondents. The partnership firm carry on the business under the name and style of 'Shivan Auto Center' and both the partners personally managing and running the business in absolute conformity with the provisions of the aforesaid dealership agreement.
7. On 4th September, 2014, the petitioner firm received an impugned show cause notice dated 4th September, 2014 from the respondents under clause 35, 46(i) and (iii) of the dealership agreement dated 19th January, 1995 and clause 28 (a) & 35 of the dealership agreement dated 22nd April, 2013 asking him to explain the execution of the alleged General Power of Attorney dated 15th April, 1994 by Mr. Sanjay Kumar Singh in favour of Mr. Praveen Singh causing breach of the agreement. A reply dated 15th October, 2014 to the said show cause notice was given by the petitioner having denied all the allegations made in the notice and emphasising the fact that the show cause notice was vague, based on the wrong facts, assumptions and presumptions and liable to be withdrawn.
8. On 19th December, 2014, petitioner filed an OMP No. 1627/2014 under Section 9 of the Arbitration and Conciliation Act, 1996 before this Court for interim protection and the court passed the order dated 19th December, 2014 directing the respondents that in the event of the respondents deciding to take extreme step to terminate the dealership, the respondents will give effect thereto after one week from the date of the order. It was further clarified that in the event the order of cancellation is issued during the ensuing court holidays, the same be not given effect for 3 days after the re-opening of the court.
9. On 14th January, 2015, respondents issued termination letter which was to become effective from 21st January, 2015.
