M/s Garg Gas Service, Kasauli and Ghanshyam Garg vs Hindustan Petroleum Corporation Ltd.

Kuldip Singh, Judge

This petition has been filed u/s 11(6) of Arbitration and Conciliation Act 1996 (for short, the Act) for appointment of Arbitrator to adjudicate the dispute between the parties. It has been stated that petitioner is the sole proprietor of M/s Garg Gas Service Kasauli and is a dealer of Hindustan Petroleum Corporation Limited for the supply of domestic and commercial LPG for the last 25 years. An application dated 17.12.2011 for appointment of Arbitrator under clause 39 of the agreement was moved to the Managing Director of Hindustan Petroleum Corporation Limited. The respondent No. 1 issued notice dated 21.12.2011 and suspended the supplies to the petitioner in terms of clause 29A of Dealership agreement dated 2.6.2011. The petitioner was directed to immediately handover the possession to respondent No. 1 of equipments and records. The respondent No. 1 took over physical possession by breaking open the locks of the office of the petitioner and took over the entire record.

The petitioner had been running the dealership to the satisfaction of all concern for over 25 years until Sunil Malik, Chief Regional Manager of the company was transferred to Delhi. After the transfer of Sunil Malik, M.K. Sharma, Chief Manager Vigilance and Abhinav Sethi Sales Officer started raising illegal demands to which petitioner did not agree and they conspired to harass the petitioner. M.K. Sharma carried out inspection on 10.3.2007 pointing out some irregularities. The Chief Regional Manager issued notice dated 25.3.2009 to the petitioner, which was replied on 5.4.2009. The explanation of the petitioner was examined by respondent No. 1 and thereafter communication dated 1.5.2009 was sent to the petitioner in which explanation of the petitioner qua four out of five irregularities was accepted. The fifth irregularity on the basis of explanation was not pursued, except a penalty of Rs. 20,038/- was imposed on the petitioner.

M.K. Sharma and Abhinav Sethi carried out another inspection on 24.12.2009, the petitioner made complaint to Chief Regional Manager on 12.2.2010. The respondent No. 1 accepted the explanation of petitioner qua 16 points out of 20 points through communication dated 9.6.2010, but a penalty of Rs. 1,80,600/- was levied on the petitioner.

The petitioner thereafter received two notices. A reply was given on 28.10.2010. However, another inspection of the premises of the petitioner was carried out on 8.2.2011 and ten objections were raised without any basis. The petitioner represented against those objections.

In the meantime, the agreement came to an end and parties renewed agreement on 2.6.2011. The respondent No. 1 on 9.12.2011, imposed penalty of Rs. 17,67,185/- . The petitioner was asked to deposit the same within seven days. The petitioner on 13.12.2011 replied the notice. It has been alleged that petitioner is being harassed because the petitioner did not succumb to the illegal demands of respondents No. 2 and 3. The penalties imposed from time to time on the petitioner are wrong and illegal. The respondent No. 1 has issued order dated 21.12.2011 stopping the supplies and in a highhanded manner the possession had been taken by respondent No. 1 of the premises after breaking open the locks. The petitioner moved an application, under clause 39 of the agreement to the Managing Director for appointment of an Arbitrator for resolving the dispute, but no arbitrator has been appointed. The petitioner has thus filed the petition for appointment of an Arbitrator. The petitioner in para-7 of the petition has highlighted his alleged claims.

The petition has been contested by filing reply. It has been stated that petition is not maintainable, the arbitration clause-39 of the agreement has not been denied. The petitioner had already applied for appointment of an Arbitrator under clause 39 on 17.12.2011. The petitioner has filed the petition, u/s 11 of the Act before the expiry of 30 days and therefore, the petition is not maintainable. The respondent No. 1 has otherwise appointed Arun Garg as sole arbitrator as per clause 39 of the agreement. The court has no jurisdiction. On merits, the stand taken by the petitioner has been denied.

Heard and perused the record. It has been stated by the leaned counsel for the petitioner that in Arbitration Case No. 94 of 2011 on 2.1.2012 High Court by way of an interim order had stayed the order dated 21.12.2011 and the parties were directed to maintain status quo as it existed before 21.12.2011. It has been stated by the learned counsel for respondent No. 1 that in the Arbitration Appeal 1 of 2012 on 9.1.2012, the order dated 21.12.2011 stood recalled. The respondent No. 1 shall issue notice and after affording an opportunity of hearing, pass an appropriate order. The learned counsel for the petitioner has submitted that respondent No. 1 has no doubt appointed Arun Garg as an Arbitrator, but he is working under M.K. Sharma, who is now working as Chief Manager (Operation) and, therefore, possibility cannot be ruled out that Arun Garg will act under the directions of M.K. Sharma and petitioner will not get justice from Arun Garg.

The letter dated 23.1.2012 appointing Arun Garg as an Arbitrator has been issued by Chairman and Managing Director and is addressed to Ghanshyam Garg, M/s Garg Gas Service, Kasauli. The learned counsel for the petitioner has stated that till now the petitioner has not in writing informed the Chairman and Managing Director declining to accept Arun Garg as an Arbitrator for adjudicating the dispute for any reason. The malafides have not been alleged against the Chairman and Managing Director as well as against Arun Garg. M.K. Sharma and Abhinav Sethi were impleaded as respondents No. 2 and 3 in the petition, as some malafides were alleged against them in the petition. However, on 2.1.2012, the petitioners did not press the petition against respondents No. 2 and 3 and prayed deletion of their names and their prayer was allowed.

The clause 39 of the agreement is of arbitration, which provides that dispute shall be referred to the sole arbitrator of Managing Director of the corporation or of some officer of the corporation, who may be nominated by the Managing Director. The dealer will not be entitled to raise any objection to any such arbitration on the ground that the arbitrator is an officer of the corporation or he has to deal with the matter to which the contract relates. The petitioner on 17.12.2011 requested the Managing Director of the corporation for appointment of an arbitrator under clause 39 of the agreement. The section 11 of the Act provides that if a party fails to agree on the arbitrator within thirty days from the receipt of a request by one party from the other party to agree, the appointment shall be made upon a request of the party by the Chief Justice.

The present petition was filed on 29.12.2011 before the expiry of 30 days notice provided in section 11. Arun Garg has been appointed Arbitrator by Chairman and Managing Director on 23.1.2012. There are no malafides against the Chairman and Managing Director or Arun Garg. The petitioner is bound by clause 39 of the agreement. Simply Arun Garg is an officer at certain level in the corporation is no ground to petitioner to question his appointment as an arbitrator. The petitioner on 2.1.2012 did not press the petition against respondents No. 2 and 3 M.K. Sharma and Abhinav Sethi and prayed deletion of their names. The petitioner in these circumstances cannot be heard to raise grievance of malafides against M.K. Sharma and Abhinav Sethi. The arbitrator has already been appointed by Chairman and Managing Director under clause 39 of the agreement to adjudicate the dispute between the parties. In fact, the petition filed is pre-mature, inasmuch, the petition has been filed before the expiry of thirty days of notice u/s 11 of the Act. In any event, no case has been made out by petitioner against the appointment of Arun Garg as an Arbitrator to adjudicate the dispute between the parties. Thus seen from any angle, there is no merit in the petition. In view of above discussion, the petition fails and is accordingly dismissed.