The main legal point established in the judgment is that the termination of the Dealership Agreement must be in accordance with the relevant clause of the agreement, and the award for loss of profit and damages must be supported by sufficient evidence.

JUDGMENT

(Prayer: Arbitration Original Petition filed under Section 34(2)(b)(ii) and 34(2A) of the Arbitration and Conciliation Act, 1996 to set aside the Arbitral amended award dated 08.12.2021 passed by the Hon’ble Tribunal.)

This Arbitration Original Petition is filed under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter called as “the Act”) to set aside the Arbitral award dated 08.12.2021.

2. The Arbitral Tribunal had passed the said award directing the respondents to pay to the claimant a sum of Rs.1,15,40,000/- with interest at the rate of 9% from the date of commencement of the arbitration i.e., 23.01.2019 till the date of the award within 3 months from the date of award, failing which the same shall be paid along with an interest at the rate of 18% per annum till the date of payment and also directing the respondents to pay to the claimant a sum of Rs.23,38,514/- with interest at the rate of 18 % per annum from the date of demand till the date of payment.

3. Mr.Murari, learned Senior counsel appearing on behalf of the petitioner would submit that the petitioner-company was incorporated under the provisions of the Companies Act, 1956 and engaged in the business of manufacturing, selling and service of auto mobile vehicles under the well known brand name “Hyundai” from the year 1997. The respondent is a dealer of the petitioner-company and was initially appointed vide Dealership Agreement dated 20.05.1999 on a non- exclusive basis for the sale and the service of the petitioner-s products in the territory of Trivandrum and Kollam in Kerala. The respondent function as a dealer of the petitioner-company on a principal-to-principal basis as per the terms of the agreement from the aforementioned date of appointment for a period of 3 years.

4. On 30.11.2011, a fresh Dealership Agreement was entered into between the petitioner and the respondent for the purpose of sales and services on a non-exclusive basis for the territory of Trivandrum only. The term of the new Dealership Agreement was 3 years. It is an admitted fact that the new Dealership Agreement was not renewed after its expiry by lapse of time on 24.11.2014.

5. Under these circumstances, the petitioner sent the warning notices on 03.06.2013 and 11.07.2013 and also sent a Show Cause Notice dated 16.08.2013 due to the poor performance of the respondent. On 26.08.2013, the respondent sent a reply to the Show Cause Notice wherein it has admitted its poor performance, deficiency of funds and existence of an unauthorised sale and further requested the petitioner to not to withdraw the dealership.

6. The learned Senior counsel would further submit that the petitioner had once again issued the letters dated 19.11.2014 and 15.12.2014 due to the continued non-performance of the respondent and subsequently a meeting for revival was also held on 23.12.2014. In spite of the above non performance letter and the revival meeting, the non-performance of the respondent was continued in the year 2015 and hence, a warning letter dated 05.03.2015 and a non-performance letter 07.05.2015 were issued to the respondent. Thereafter, on 14.07.2015, a Show Cause Notice was issued to the respondent for its poor sales performance, lack of inventory funding, sales complaint, shortfall in manpower and calling upon the respondent to show cause as to why the new Dealership Agreement dated 30.11.2011 should not be terminated. On 20.07.2015, the respondent sent a reply admitting the poor performance, lack of inventory funding and customer complaints. However, the respondent continued to reflect the poor performance. Therefore, the petitioner was constrained to terminate the new Dealership Agreement dated 30.11.2011 by issuing a termination letter dated 17.08.2015 by stating that the agreement stands terminated without cost on the expiry of 30 days from the receipt of the termination letter by referring Clause 13.1 of the standard provisions of new Dealership Agreement which entitled both t