Jain Automobiles H. P. C. Dealer Through Its Dealer And Proprietor D. C. Jain vs Hindustan Petroleum Corporation Limited

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2020 Supreme(All) 1385

IN THE HIGH COURT OF JUDICATURE AT ALLAHABAD
Rohit Ranjan Agarwal, J.
Jain Automobiles H.P.C. Dealer Through Its Dealer And Proprietor D.C. Jain - Appellant
Vs.
Hindustan Petroleum Corporation Limited - Respondent
Appeal U/S 37 of Arbitration & Conciliation Act, 1996 No. -23 of 2020
Decided On : 16-12-2020

Advocates:
Advocate Appeared:
For the Appellant : Manu Khare
For the Respondent: Vikas Budhwar

Headnote:
Arbitration & Conciliation Act, 1996 - Section 4, 9 (2), 11 (6), 12 (5), 37, 43 (1) - Respondent contended that provisions of Section 4 of Act of 1996 are not applicable as same are applicable only in respect to arbitration proceedings before Arbitrator and not referable to filing of any application before Court for appointment of Arbitrator - Whether Court at Kanpur as well as this Court has jurisdiction to try and deal with present case - In view of Section 4 of Act of 1996 whether by not raising question of jurisdiction, right of Corporation stood waived and can be questioned in proceedings under Section 16 – Held, Section 42 provides for jurisdiction of a Court where any application is made with respect to an arbitration agreement, and that Court alone shall have jurisdiction over arbitral proceedings and all applications arising out of that agreement, arbitral proceedings shall be made in that Court and not in any other Court - Once agreement provided for exclusive jurisdiction clause whether any objection is raised or not will not confer any jurisdiction upon Court trying same which is barred by agreement clause and Courts mentioned in agreement clause shall only have jurisdiction to try case - Exclusive jurisdiction Clause 65 of agreement provided for dispute to be redressed before Courts at Lucknow, thus filing of application under Section 9 as well as 11 before Courts at Kanpur and this Court was not maintainable at behest of appellant-applicant - No benefit of Section 4 could be extended as arbitral proceedings had not commenced - Application dismissed.

JUDGMENT :

Rohit Ranjan Agarwal, J.

1. Heard Sri Manu Khare, learned counsel for the appellant-applicant and Sri Vikas Budhwar, learned counsel for the respondents.

2. These two connected matters were heard together and are being decided by a common order.

3. Arbitration Appeal No. 23 of 2020 filed under Section 37 of the Arbitration & Conciliation Act, 1996 (for short ‘Act of 1996’) arises out of judgment and order dated 06.12.2019 passed in Arbitration Case No. 31/70/2019 (Jain Automobiles Vs. Hindustan Petroleum Corporation Ltd.) by Presiding Officer, Commercial Court, Kanpur Nagar. While Arbitration & Conciliation Application No. 45 of 2020 has been filed under Section 11 (6) of the Act of 1996 for appointment of independent Arbitrator in terms of provisions of Clause 66 of agreement dated 29.01.2013.

4. Facts of the case in nutshell are, that appellant-applicant M/s. Jain Automobiles is the sole proprietorship firm dealing in the business of petroleum products. It has a retail outlet with MS site located at Cantonment, M.G. Road, Kanpur Nagar, and HSD site located at village Bidhuna, NH-34, Kanpur Nagar. A dealership agreement was executed between the appellant-applicant and respondent Hindustan Petroleum Corporation Ltd. (hereinafter referred as the ‘Corporation’) on 29.01.2013 which provides in Clause 65 and 66 for referring the matter to arbitration in case of dispute between the parties. Further the Courts in city of Lucknow shall have the jurisdiction to entertain any suit, application or other proceedings in respect of any claim or dispute arisen under the said agreement.

5. It appears that the Corporation carried out its inspection on 03.07.2018 at HSD site, wherein certain irregularities were found. A show cause notice was issued on 20.08.2018, but no reply was submitted, as such, the respondent Corporation passed an order imposing monetary penalty of Rs. 25,000/-on 17.04.2019. While on 20.08.2018 another inspection was conducted, this time on the MS site of the appellant-applicant, wherein certain discrepancies were found. Show cause notice was issued on 15.02.2019, which was replied by the appellant-applicant on 27.02.2019. Fate of this notice culminated on 02.06.2020 when the respondent Corporation proceeded to pass an order imposing monetary penalty of Rs. 25,000/-and suspending the sales and supply for a period of fifteen days from 05.06.2020.

6. 3rd inspection was conducted on 04.09.2018 at HSD site of the appellant-applicant and a show cause notice was issued on 25.03.2019 which was replied on 07.04.2019. The respondent Corporation on 04.06.2019 passed an order for imposition of monetary penalty of Rs. 45,000/-. 4th inspection was conducted on 17.11.2018 on the retail outlet of the appellant-applicant at the HSD site, a show cause notice was issued on 30.08.2019 which was replied on 12.09.2019. 5th inspection was made on 03.04.2019 during which minor irregularities such as toilet facilities were found not clean and one power nozzle was delivering product short by 20 ML, accordingly, a show cause notice was again issued on 09.05.2019 which was replied by the appellant-applicant on 17.05.2019, whereon the respondent Corporation on 03.06.2020 proceeded to issue warning-cum-guidance letter with regard to the irregularities so mentioned. On 13.01.2020 again an inspection was conducted at HSD site of the appellant-applicant for the sixth time and pursuant thereto a show cause notice was issued on 05.02.2020, a reply to which was submitted on 17.02.2020 but till date no decision has been taken.

7. As the appellant-applicant came to know that the respondent Corporation was going to stop the sales and supply at Mall Road and Bidhuna petrol pump, a notice dated 18.03.2019 was given invoking the arbitration clause as per agreement dated 29.01.2013. The appellant-applicant on 19.03.2019 filed a petition under Section 9 of the Act of 1996 for restraining the respondent and its officer from abruptly stopping the sales and supply