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Judgment
Sangeet Lodha, J.—By way of this writ petition, the petitioner is seeking directions to the respondents to recommence the Dealership Agreement for distribution of LPG entered into with the petitioner. It is further prayed that the respondents be directed to pay compensation to the tune of Rs. 10 lacs to the petitioner for not starting sale and supply of LPG to the petitioner in terms of agreement dated 25.9.10 and the award dated 17.4.13 passed by the Arbitrator.
The relevant facts are that the petitioner was awarded LPG Distributorship at Banswara and accordingly, a Dealership Agreement dated 23.9.85 was entered into between the parties for a period of ten years, which was renewed from time to time, vide Dealership Agreement dated 23.9.95, 26.11.05 and 25.9.10. The petitioner was served with show cause notice dated 23.6.11 issued by the second respondent pointing out various irregularities and malpractices alleged to have been committed by the petitioner during the period 2008 to 2011. The show cause notice was responded to by the petitioner by filing reply thereto. According to the petitioner, the respondents without giving an opportunity of hearing to the petitioner and taking into consideration its reply/explanation, terminated the Dealership Agreement vide order dated 20.3.12.
Aggrieved thereby, the petitioner preferred a writ petition being No. 2670/12-M/s. Kharadi Gas Services v. HPCL and Ors., before this court. The respondent-HPCL raised a preliminary objection questioning the maintainability of the writ petition in view of availability of remedy by way of arbitration under clause 39 of the Dealership Agreement dated 25.9.10.
The writ petition was disposed of by this court vide order dated 23.7.12 with the directions to the respondent-HPCL to appoint Arbitrator for adjudication of the dispute raised by the petitioner within a period of one month from the date of receipt of certified copy of the order. The Arbitrator to be appointed by the respondent-HPCL was directed to adjudicate the dispute and pass award within a period of four months thereafter.
The petitioner submitted his claim before the Arbitrator and the respondent-HPCL filed a counter thereto. The Arbitrator framed various issues on the basis of the pleadings and after due consideration of the rival submissions, passed the award dated 17.4.13, holding that the termination of the Dealership Agreement by the respondent-HPCL vide letter dated 20.3.12, is not proper and valid due to procedural lapses, on account of not issuing show cause notice in accordance with the approval taken from approving authority and accordingly, treated the same as violation of principle of natural justice on the part of the respondent-HPCL. However, the respondent-HPCL was given liberty to take appropriate action after complying with the principles of natural justice and in accordance with policy and procedures of the respondent-HPCL. The claim of the petitioner for restoration of the Dealership Agreement was rejected. The financial claim of the petitioner for loss of business, compensation/damages was also rejected.
After passing of the award as aforesaid, the petitioner requested the respondent-HPCL to restore the Dealership Agreement and permit it to carry on business, but to no avail. Hence, this petition.
Learned counsel for the petitioner contended that the act of the respondents in not restoring the Dealership Agreement of the petitioner despite termination thereof being held illegal by the Arbitrator, is ex facie capricious. Learned counsel submitted that after passing of the award, the respondents have neither restored the dealership of the petitioner nor any action is taken against the petitioner after following the principle of natural justice and acting in accordance with the policy and procedures of the respondent-HPCL as observed by the Arbitrator. Learned counsel submitted that the Arbitrator has declined to restore the dealership relying upon the decision of the Hon''ble Supreme Court in the matter of E. Venkatakrishna Vs. Indian Oil Corporation and Another, , wherein the court held that the Arbitrator cannot direct restoration of the dealership under the arbitration clause and can only award damages as any civil court could have done in a suit. Learned counsel submitted that acting fairly, the respondents were required to restore the Dealership Agreement entered into with the petitioner forthwith.
On the other hand, learned counsel appearing for the respondent submitted that the petitioner has already filed an application before the court of competent jurisdiction for execution of the award and therefore, the writ petition preferred is not maintainable. Learned counsel submitted that the claim of the petitioner for restoration of the dealership having been specifically rejected by the Arbitrator, the question of restoration of the Dealership Agreement does not arise. Learned counsel submitted that pursuant to the award passed by the Arbitrator as aforesaid, the petitioner has already been served with the show cause notice dated 23.10.14 and it is always open for it to file the reply thereto and avail the opportunity of hearing. It is submitted that if the petitioner cooperates, the respondents are ready to conclude the proceedings initiated vide show cause notice dated 23.10.14 expeditiously.
I have considered the rival submissions and perused the material on record.
Indisputably, the writ petition earlier preferred by the petitioner, questioning the legality of termination of Dealership Agreement, was disposed of by this Court vide order dated 23.7.12, with the direction to the HPCL to appoint Arbitrator for adjudication of the dispute raised by the petitioner. It is not in dispute that the petitioner submitted its claim before the Arbitrator questioning the penal action of termination of dealership and also claimed restoration of the dealership and compensation/damages for loss of business and on the basis of pleadings of the parties, the Arbitrator framed the issues inter alia regarding the petitioner''s entitlement for restoration of Dealership Agreement.
A perusal of the award reveals that while deciding the issue regarding malpractices/irregularities committed by the petitioner, the Arbitrator arrived at the finding that since the proprietor of the petitioner-concern has admitted the factum of his staff committing irregularities during his illness, he is liable and responsible for the wrong done by his staff under the terms and conditions of the Dealership Agreement. The Arbitrator opined that irregularities have been committed by the petitioner in operating the LPG Dealership business and the said irregularities were treated as violation of terms and conditions of the Dealership Agreement. However, on account of procedural lapse in not issuing the show cause notice in accordance with the approval taken from the approving authority, the action taken was found to be not proper and valid. However, it is a common ground between the parties that while holding the action taken as improper and invalid on account of procedural lapses, the respondent-HPCL has been extended liberty to take appropriate action after complying with the principles of natural justice and in accordance with the policy and procedures of the respondent-HPCL. Further, the claim of the petitioner for restoration of Dealership Agreement and financial claim for loss of business, compensation/damages stands rejected by the Arbitrator specifically.
It is well settled that all claims which are subject matter of reference to arbitration merge in the award which is pronounced in the proceedings before the Arbitrator and after an award has been pronounced, the rights and liabilities of the parties in respect of the said claims can be determined only on the basis of said award. After an award is passed, no fresh action can be started on the original claim, which has been subject matter of the reference. Suffice it to say that the dispute having been adjudicated by the Arbitrator by passing the award unless and until it is challenged upon the available grounds in an appropriate proceedings, is conclusive on the merit of the controversy. In this view of the matter, at this stage, during pendency of the proceedings before the competent authority of the respondent-HPCL, pursuant to the award passed by the Arbitrator, the question of restoration of Dealership Agreement, which is not operative for last more than three years, does not arise.
But then, the Arbitrator having found the termination of the Dealership Agreement to be not proper on account of procedural lapses on the part of the respondent and having given the liberty to take appropriate action after complying with the principles of natural justice, the respondents are under an obligation to conclude the proceedings after complying with the principles of natural justice in accordance with law.
Admittedly, the respondents have already initiated the proceedings pursuant to the award passed by the Arbitrator as aforesaid by issuing show cause notice dated 29.10.14 and thus, it is open for the petitioner to file reply to the notice and avail the opportunity of hearing. The respondents are expected to conclude the proceedings expeditiously.
In view of the discussion above, the prayer made by the petitioner seeking directions to respondents for recommencement of the Dealership Agreement during the pendency of the penal proceedings and payment of compensation for loss of business, is rejected. However, the respondents are directed to conclude the proceedings initiated by issuing show cause notice expeditiously in any case, within a period of three months from the date of receipt of certified copy of the order. Needless to say that the petitioner shall be given fair opportunity to defend the allegations levelled against it and the respondents shall dispose of the proceedings in accordance with law, by passing a speaking order. The petitioner, if aggrieved by the decision to be taken by the respondent-HPCL in the proceedings initiated as aforesaid, shall be at liberty to avail the appropriate remedy available under the law.
The petition stands disposed of accordingly. No order as to costs.