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2010 Supreme(Mad) 1538
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE R. SUBBIAH
Sudha Moulee Indane Gas Service by its Proprietor M. Latchumanan Thirukkanur
Versus
The Executive Director Tamil Nadu State Office, Chennai Indian Oil Corporation Limited & Another
Writ Petition No. 2567 of 2010 & M.P. Nos. 1 to 4 of 2010
Decided On : 06-04-2010
For the Petitioner:V.T. Gopalan, Senior Counsel for Radha Gopalan, Advocate.
For the Respondents:R. Ravi, Advocate.
The court emphasized the importance of the arbitration clause in the agreement and upheld the validity of the termination order.
Headnote:
certiorari - distributorship agreement - Arbitration and Conciliation Act, 1996, section 9 - Article 137 of the Limitation Act - section 21 of the Arbitration and Conciliation Act - (2007)5 SCC 28, (1987) 3 SCC 66, (2003)2 SCC 107, (1987) 2 SCC 160 - The court discussed the termination of distributorship agreement, the validity of the termination order, and the petitioner's right to invoke arbitration proceedings. The key legal provisions discussed were the Arbitration and Conciliation Act, 1996, the Limitation Act, and relevant case law. The court emphasized the importance of the arbitration clause in the agreement and upheld the validity of the termination order.
Fact of the Case:
The petitioner held a distributorship for LPG distribution, and the agreement with the respondents was terminated. The petitioner sought relief through a writ petition, arguing that the termination affected his livelihood and that the arbitration proceedings had already commenced.
Finding of the Court:
The court found that the termination was valid and that the petitioner's right to continue the distributorship after the stipulated time had expired was not absolute. The court upheld the validity of the termination order and dismissed the writ petition.
Issues: The issues included the validity of the termination, the petitioner's right to invoke arbitration proceedings, and the impact of the termination on the petitioner's livelihood.
Ratio Decidendi: The court held that the respondents had the right to terminate the distributorship after the expiry of the stipulated time, and the petitioner's argument based on the Limitation Act and the Arbitration and Conciliation Act was not accepted.
Final Decision: The writ petition was dismissed, and no costs were awarded to the petitioner. The connected M.Ps. were closed.
1. This writ petition is filed for the issuance of a writ of certiorari, to call for the letter of the 1st respondent dated 29.01.2010, in and by which, the distributorship agreement dated 30th June 2000 entered into between the petitioner and the respondents was terminated, and quash the same.
2. It is the case of the petitioner that the petitioner was granted an agency/distributorship for distribution of Liquified Petroleum Gas (LPG) by the respondent Corporation and an agreement was entered into between the petitioner and the respondents on 30.06.2000. Clause 37 of the said agreement provided for an appointment of an Arbitrator in case of disputes or differences that had arisen in relation to the agreement. While so, a show cause notice dated 23.06.2009 was issued to the petitioner calling upon his explanation within seven days as to why the distributorship should not be terminated in exercise of the rights conferred on the respondents under the said agreement. For which, the petitioner sent a reply denying the charges and also raising a dispute that when once the charges levelled against the petitioner had been totally denied by him, the matter has to be referred to an independent Arbitrator and not by the officers of the respondents company. Subsequently, the petitioner filed an application under section 9 of the Arbitration and Conciliation Act, 1996, in O.A.No.689 of 2009 before this Court seeking an order of injunction restraining the proceedings pursuant to the show cause notice issued by the respondents dated 23.06.2009, pending appointment of an arbitrator and the said application was allowed and the interim injunction was granted for a period of eight weeks with a direction to the petitioner to obtain necessary orders for appointment of arbitrator by such time, failing which, the order of interim injunction shall stand automatically vacated on the lapse of the period stipulated therein. Thereafter, the petitioner had suffered from a serious ailment and taken treatment from 10.10.2009 and he had been advised to take complete bed rest for some time with physiotherapy exercise every day. Therefore, he did not comply with the order of this Court within the stipulated time. But, the 1st respondent, by letter dated 29.01.2010, by exercising powers conferred on them under clause 27(n) of the agreement dated 30.06.2000, terminated the distributorship agreement with immediate effect and called upon the petitioner to settle his account with them at the earliest. Hence, the petitioner has come forward with the present writ petition, challenging the order dated 29.01.2010.
3. Per contra, it is the contention of the 1st respondent that the writ petition itself is not maintainable when the parties are governed by the arbitration agreement. That apart, in the order dated 28.08.2009 made in O.A.No.689 of 2009, this Court has specifically observed that the petitioner should take necessary steps for appointment of an arbitrator within eight weeks and on failing to do so, the order of injunction shall stand automatically vacated. The eight weeks period has come to an end on 23.10.2009. But the termination order was issued only on 29.01.2010 i.e.even after two months from the date of expiry of eight weeks period mentioned in the order dated 28.08.2009 made in O.A.No.689 of 2009. Moreover, after termination, the Corporation entrusted the supply of LPG cylinders to another gas agency, namely, Indra Indane Service, on 02.02.2010 and the customers of the petitioner agency were also informed to contact M/s.Indra Indane Service for LPG refill supplies through advertisement in leading two dailies on 03.02.2010. The petitioner has filed the writ petition on 09.02.2010. Since there is an arbitration clause in the agreement, the petitioner is entitled to raise an arbitral dispute in the manner known to law and not by invoking jurisdiction of this Court. Therefore, the present writ petition is liable to be dismissed on the ground of
