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IN THE HIGH COURT OF ALLAHABAD
M. WAHAJUDDIN
INDIAN OIL CORPN.LTD. - Appellant
Versus
SANJAI - Respondents
CIV. REVN. 663 Of 1984
Decided On : 05/22/1985
ARBITRATION ACT - SECTION 20 - JURISDICTION - INJUNCTION - NATURAL JUSTICE - CONTRACTUAL RIGHTS - REVISION - SCOPE OF INTERFERENCE - JURISDICTIONAL ERROR - MATERIAL IRREGULARITY - BALANCE OF CONVENIENCE - IRREPARABLE LOSS - ARBITRATION CLAUSE - INTERPRETATION - STAY ORDER - DIRECTIONS TO TRIAL COURT - SPEEDY DISPOSAL - APPEAL - REVISION.
Fact of the Case:
The Indian Oil Corporation Limited (IOCL) created an agency for the supply and distribution of gas in favor of Sanjai Agarwal, running M/s. Allied Gas Service, Jaunpur. IOCL later canceled the agency on the ground that it was obtained by practicing fraud and misrepresentation upon IOCL regarding Agarwal's eligibility for the agency. Agarwal filed a suit under Section 20 of the Arbitration Act, seeking an injunction to restrain IOCL from terminating the agency. The trial court granted the injunction, holding that Agarwal had made out a prima facie case and that the balance of convenience and irreparable loss favored him. IOCL filed a revision petition, challenging the trial court's jurisdiction to entertain the suit and the grant of the injunction.
Finding of the Court:
The court held that the trial court had jurisdiction to entertain the suit under Section 20 of the Arbitration Act and that the grant of the injunction was not illegal or irregular. The court found that the agreement between IOCL and Agarwal contained an arbitration clause, but that the trial court had not adjudicated the issue of jurisdiction and had simply deferred the matter. The court also held that the trial court had considered the relevant factors in granting the injunction, including the prima facie case, balance of convenience, and irreparable loss. The court further directed the trial court to dispose of the case, including the issue of jurisdiction, within three months.
Issues: 1. Whether the trial court had jurisdiction to entertain the suit under Section 20 of the Arbitration Act? 2. Whether the grant of the injunction was illegal or irregular? 3. Whether the trial court had considered the relevant factors in granting the injunction?
Ratio Decidendi: 1. The court held that the trial court had jurisdiction to entertain the suit under Section 20 of the Arbitration Act because the agreement between IOCL and Agarwal contained an arbitration clause, which attracted the Arbitration Act. 2. The court held that the grant of the injunction was not illegal or irregular because the trial court had considered the relevant factors, including the prima facie case, balance of convenience, and irreparable loss. 3. The court held that the trial court had considered the relevant factors in granting the injunction, including the prima facie case, balance of convenience, and irreparable loss.
Final Decision: The court dismissed the revision petition and upheld the trial court's order granting the injunction. The court also directed the trial court to dispose of the case, including the issue of jurisdiction, within three months.
( 1 ) AN application under S. 20 of the Arbitration Act having been moved by the opposite party Sanjai Agarwal and another before IV Additional District Judge, Jaunpur, was registered as Suit No. 32 of 1984. It would appear that the Indian Oil Corporation Limited created an agency for supply and distribution of gas in favour of Sanjai Agarwal running M/s. Allied Gas Service, Jaunpur. It later cancelled such agency on the ground that the agency was obtained by practising fraud and misrepresentation upon the Indian Oil Corporation Limited regarding eligibility of the applicant for such agency. The two specific allegations in that case are that Sanjai Agarwal concealed that he is self employed, being partner in firm, and that he also made wrong representation that he is not paying income-tax. The case of the revisionist is that but for the misrepresentation, fraud and material suppression the opposite party would not be eligible for the agency, as such agencies are meant for certain categories of persons in which the opposite party is not covered. The revisionist, therefore, cancelled the agency of the applicant and stopped gas supply. The opposite party was called upon to deliver complete charge with empty cylinders and filled cylinders etc. Another person was granted gas agency, so that the consumers may not suffer.
( 2 ) IT is not in dispute before this Court that the revisionist can create a number of agencies and distributors for supply of gas cylinders in any district and there is no restriction to that. It would appear that opposite party wrote back that Sanjai Agarwal is ill, staying elsewhere and the charge will be given if someone is deputed on a future date. In the meanwhile Sanjai Agarwal and his Allied Gas Service filed the aforesaid suit. A prayer for injunction was also made. Injunction was granted allowing opposite partys application 5-C and rejecting the objection 28-C and the application 24-C of the present revisionist. The revision No. 663 of 1984 is directed against the same.
( 3 ) IT would further appear that a plea was also raised that it is the Delhi Court which had jurisdiction to entertain the application under S. 20 of the Arbitration Act and the revisionist prayed that the application under S. 20 of the Arbitration Act should not be entertained at Jaunpur and the Jaunpur Court had no jurisdiction. In this connection the revisionist relied upon Cl. 26 of agreement, in which it was provided that the Delhi Court alone shall have the jurisdiction to entertain any suit, application etc. in respect of the dispute arising under the agreement. It was urged before the Court below that consequently the Court below at Jaunpur had no jurisdiction to entertain the suit and it could not pass any injunction order in the case. It is noteworthy that Cl. 37 of the agreement enterted into between the parties stipulates that any dispute or difference of any nature arising between the parties out of or in relation to this agreement be referred to sole arbitration of the Director of Marketing or the person nominated by such Director of Marketing or the defendants.
( 4 ) THE defendants i. e. present revisionists stand before the said Court was that Cl. 27 (b) of the agreement was attracted empowering it to terminate the distributorship. The plaintiffs i. e. present opposite partys stand was that the termination order was illegal and void and also violated the principles of natural justice. It was also maintained by the plaintiff-opposite party that he signed blank forms of the agreement and the fillings where ever they have been made were made subsequently. The Court below observed that prima facie the contention of the plaintiff-opposite party cannot be wholly baseless, when it is found that some of the blank spaces in the agreement, which should necessarily be filled remained blank. The Court below further observed that the question requires evidence to be recorded before the rival contentions of the partie
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