IN THE HIGH COURT OF ALLAHABAD
JASPREET SINGH, J.
M/S Adarsh Gas Service Basti and Anr., Throu Its Proprietor - Appellant
Versus
M/S Bharat Petroleum Corporation Ltd. and Ors. - Respondents
First Appeal No. 50 of 2013 Along with First Appeal No. 51 of 2013
Decided On : 21-09-2021
Arbitration Clause - Distributorship Agreement - Arbitration and Conciliation Act, 1996 - Section 34, Section 9 - [Arbitration Clause] - [Distributorship Agreement] - [Section 34, Section 9]
Fact of the Case:
The appellant, a distributor of the respondent-corporation, invoked the arbitration clause after disputes arose. The sole arbitrator rejected the appellant's claim and allowed the respondent's counter claim. The appellant filed petitions under Section 34 and Section 9 of the Arbitration and Conciliation Act, 1996, which were dismissed by the District Judge, Lucknow. The appellant appealed these decisions.
Finding of the Court:
The Court found that the distributorship agreement was terminable and had expired by efflux of time. The appellant's intention to permanently close the distributorship, conveyed through SMS and a formal letter, was accepted by the respondent-corporation. The Court held that the resignation/termination was irrevocable and that the appellant's attempt to enforce the agreement was not tenable. The Court also dismissed the appellant's application under Order 41 Rule 27 C.P.C. to bring on record the Marketing Discipline Guidelines. The Court concluded that there was no error apparent in the decisions of the Arbitrator and the District Judge, and therefore dismissed both appeals.
Issues: The issues involved the interpretation of the distributorship agreement, the distinction between resignation and termination, and the applicability of the Marketing Discipline Guidelines. The Court also considered the scope of Section 34 and Section 37 of the Arbitration and Conciliation Act, 1996.
Ratio Decidendi: The distributorship agreement was terminable and had expired by efflux of time. The appellant's intention to permanently close the distributorship, conveyed through SMS and a formal letter, was accepted by the respondent-corporation and was irrevocable. The attempt to enforce the agreement was not tenable. The Court also dismissed the appellant's application to bring on record the Marketing Discipline Guidelines. The Court found no error in the decisions of the Arbitrator and the District Judge.
Final Decision: Both appeals were dismissed.
JUDGMENT :
1. The two instant appeals have been filed against the common judgment & order dated 01.01.2013 passed by the District Judge, Lucknow in Regular Suit No.81 of 2012 and 82 of 2012 which was contested between the same parties.
2. The appellant herein was the distributor of the respondent-corporation. The said Distributorship Agreement was entered between the parties on 11.01.1983 containing an arbitration clause. Certain disputes had occurred between the parties and consequently the appellant invoked the arbitration clause.
3. The claim of the appellant before the sole Arbitrator was rejected and the counter claim of the respondent-corporation was allowed. Being aggrieved against the aforesaid award dated 08.02.2012, the appellant preferred a petition under Section 34 of the Arbitration and Conciliation Act, 1996 before the District Judge, Lucknow which was registered as R.S. No. 82 of 2012. The appellants also moved a petition under Section 9 of the Arbitration and Conciliation Act, 1996 registered as Regular Suit No. 81 of 2012. Thus both petitions under Section 34 of the Arbitration and Conciliation Act, 1996 being Case No. 82 of 2012 and petition under Section 97 of the Arbitration and Conciliation Act, 1996 being No. 81 of 2012 respectively were decided by a common judgment dated 01.01.2013 and both the petitions were dismissed.
4. The appellant being aggrieved have preferred First Appeal No. 51 of 2013 under Section 37 of the Arbitration and Conciliation Act, 1996 challenging the order dated 01.01.2013 passed in Regular Suit No. 82 of 2012 whereby the objections under Section 34 of the Arbitration and Conciliation Act, 1996 were dismissed and First Appeal No. 50 of 2013 has been preferred against the order dated 01.01.2013 in Regular Suit No. 82 of 2012 whereby the application under Section 9 of the Arbitration and Conciliation Act, 1996 was dismissed.
5. It is in this view of the matter as both the appeals involve similar question in between the same parties arising out of a common judgment dated 01.01.2013, hence, have been heard together and are being decided by this common judgment.
6. In order to put the controversy in a perspective, brief facts giving rise to the above appeals are being noticed hereinafter:-
7. The respondent Corporation i.e. Bharat Petroleum Corporation Limited (hereinafter referred to as “BPCL/Corporation”) appointed the appellant as its distributor under the Scheduled Caste Category for distribution of Liquid Petroleum Gas (hereinafter referred to as “LPG”) by means of Distributorship Agreement dated 11.01.1983.
8. The said agreement was initially for a period of 10 years which was renewed every five years at the discretion of the BPCL. The record reveals that right from inception of the distributorship in the year 1983, the appellant has been operating the same, however, some time in the month of January, 2008, certain disputes occurred.
9. The genesis of the dispute was that the Corporation attached 19008 consumers of another Gas Agency with the Gas Agency of the appellant. The appellant was equipped to handle only 16500 consumers of its own, Since, there were certain complaints against a different Gas Agency whose 19008 consumers were also attached with the Gas Agency of the appellant, this put a lot of constraint on the appellant in operating its Gas Agency with efficiency.
10. Since the appellant was experiencing difficulties in managing the large number of consumers attached with the agency of the appellant, hence, it decided to forgo its distributorship and it wrote a letter dated 12.01.2009 expressing its intention to close the distributorship. Certain correspondence was exchanged between the appellant and the respondent-corporation and thereafter respondent-corporation conveyed its approval of closure of the distributorship of the appellant w.e.f. 11.02.2009. However, the appellant on 09.02.2009 made a request to the respondent informing the Corporation that the appellant was revoking it
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The distributorship agreement was terminable and had expired by efflux of time. The appellant's attempt to enforce the agreement was not tenable. The Court found no error in the decisions of the Arbi....
The main legal point established in the judgment is that the existence of an arbitration clause in a contractual agreement provides the parties with the remedy of invoking the arbitration clause for ....
The court established that termination of a distributorship must adhere to due process and contractual obligations, emphasizing the need for prior consent in partnership arrangements.
Absence of specific clause authorising and enabling either party to terminate the agreement in the event of happening of the events specified therein, from the very nature of agreement, which is priv....
The court emphasized that termination of business agreements requires adherence to principles of natural justice, including the right to a personal hearing, and that mere allegations without substant....
Natural justice principles mandate that parties should be afforded opportunity to explain before termination; disputes under contracts with arbitration clauses should not be resolved in writ petition....
A contract that is inherently terminable does not prevent the enforcement of specific performance claims if the termination is contested as being unjust or improper.
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