Kumar Service Station vs Hindustan Petroleum Corporation Ltd.

Shiv Narayan Dhingra, J.—By this application u/s 9 of the Arbitration & Conciliation Act, 1996, the petitioner has prayed that the Court should stay the operation of termination letter dated 1.8.2003 in respect of retail outlet at Vinay Marg, Chankaya Puri, New Delhi.

Brief facts relevant for the purpose of deciding this petition are that the petitioner was running an HPCL retail outlet (Petrol Pump) of the respondent at Vinay Marg. The dealership of the petitioner for sale of the petroleum products was terminated vide letter dated 1.8.2003 under the terms and conditions of the dealership agreement. In the termination letter, it is specifically stated that the petitioner was given a show-cause notice dated 12.6.2003 before termination of dealership agreement and the petitioner was heard in person. The petitioner had also given a representation to Chief Regional Manager-Delhi Retail Region and after considering his representation and giving him personal hearing, the reasons disclosed by the petitioner for failure to perform its obligation under the agreement were not found plausible and the dealership was terminated. In the termination letter, it was provided that in case the petitioner raises a dispute or difference, in relation to this dealership agreement, he was free to invoke clause 66 of Dealership Agreement and seek adjudication through arbitration process. The petitioner did not invoke the arbitration process and first filed a writ petition before this Court challenging the validity of termination letter. This writ petition was dismissed by the Court on 26.2.2009 and thereafter the petitioner filed the present application u/s 9 of the Arbitration & Conciliation Act.

It is undisputed that till filing of this petition the petitioner had not invoked the arbitration clause. It is apparent that the petitioner was not interested in invoking arbitration clause for adjudication of Arbitration Clause but was only interested in obtaining interim injunctions by filing one or the other petition. He first enjoyed interim injunction during the pendency of writ petition and then obtained an ex parte interim injunction from this Court. In view of not invoking the arbitration clause soon after 1.8.2003, this petition is liable to be dismissed on this sole ground.

However, even otherwise, the petition is not maintainable. The dealership agreement relied upon by the petitioner specifically provides that the petitioner was only a licensee, being granted license to enter in the premises and use the premises and outfit for storing, selling and handling the products purchased from the respondent corporation. Clause 3 of the dealership agreement provided that the dealership could be determined by either party by giving 03 months'' notice in writing to the other party of its intention to terminate the agreement and upon the expiration on such notice, the agreement/license would stand cancelled and revoked. Thus, the dealership could be terminated by respondent giving three months'' notice. In view of the long correspondence which ensued between petitioner and the respondent before termination and show cause notice and in view of judgment of Supreme Court in Indian Oil Corporation Ltd. Vs. Amritsar Gas Service and Others, , I consider that this petition is not maintainable.

In Indian Oil Corporation Ltd. (supra), the Supreme Court observed that the contractual relationship between the State instrumentality and the private individual must be decided strictly in the realm of private law and the rights are governed by the general rule relating to contracts with reference to the provisions of the Specific Relief Act providing for non enforceability of certain types of contracts. In Indian Oil Case (supra), the learned Arbitrator had given an award granting relief of restoration of the distributorship on the basis of finding that breach of contract was committed by the Corporation. The Supreme Court observed that such an award cannot be passed in view of Section 14(1)(c) of Specific Relief Act. Section 14(1)(c) prohibits granting relief of restoration of distributorship on the basis that a breach was committed by the Appellate Corporation. In such a situation where the agreement was revocable in accordance with terms of the contract, the only relief which could be granted by the Arbitrator was award of compensation for the period of notice, as provided in the agreement.

I find that the petition is without merits and is liable to be dismissed and is hereby dismissed.