1 WP 6564/10 abs IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 6564 OF 2010 Om Sri Premji Fuel Centre .. Petitioner V/s Union of India & Anr. .. Respondents Mr. A.A. Kumbhakoni, Senior Advocate i/b Mr. Udit Law for the petitioner. Mr. D.A. Dube for respondent no.1. Mr. Minoo Siodia i/b Rustomji & Liniwala & Co. for respondent no.2. CORAM : B.H. MARLAPALLE & N.D. DESHPANDE JJ. DATE : 17TH SEPTEMBER 2010 P.C. : 1. We have heard Mr. Kumbhakoni, the learned counsel for the petitioner, who was initially aggrieved by the show cause notices dated 1st July 2010 and 22nd July 2010 as well as the subsequent order dated 12th August 2010 thereby terminating the dealership agreement. 2. The petitioner, i.e. Smt. Suman Singh, came to be allotted a retail outlet dealership by respondent no.2 oil company. A 2 WP 6564/10 Memorandum of Agreement was signed between the petitioner and the respondent no.2 – oil company on 1st July 2007 and accordingly in the name and style of Om Sri Premji Fuel Centre at Village Lahe in District Thane on Mumbai-Nasik Highway (NH-3) became operational on 28th July 2007. On 29th June 2010, the officers of respondent no.2 – oil company visited the agency and measured the stocks. They found that the stocks were beyond the permissible limits in the storage tanks and, therefore, first show cause notice was issued on 1st July 2010 which was replied by the petitioner on 6th July 2010. The second show cause notice was issued on 22nd July 2010 invoking the powers under clauses 28 and 42 of the dealership agreement. It appears that the petitioner approached this Court on 13th August 2010 and, in the meanwhile, she had submitted her reply to the second show cause notice on 3rd August 2010. Before the petition was filed, the termination order dated 12th August 2010 was issued and consequently the petition came to be amended. 3. As per the petitioner, the impugned actions by the officers of respondent no.2 are arbitrary and in breach of the principles of natural justice. It is further contended that despite the reply submitted to the notices, the impugned termination order came to be issued and without application of mind to the reply so 3 WP 6564/10 submitted and the facts. The petitioner, therefore, prays for setting aside the termination order dated 12th August 2010 and for restoration of the dealership. 4. On behalf of respondent no.2, Mr. Sandeep Maheshwari, Senior Regional Manager, Vashi Retail Region, has filed affidavit in reply and invited our attention to clause 66 of the dealership agreement. The said clause reads as under: “66. ANY DISPUTE OR DIFFERENCE OF ANY NATURE WHATSOEVER OR REGARDING ANY RIGHT, LIABILITY, ACT OMISSION OR ACCOUNT OF ANY OF THE PARTIES HERETO ARISING OUT OF OR IN RELATION TO THIS AGREEMENT (OTHER THAN THOSE IN RESPECT OF WHICH THE DECISION OF ANY PERSON, IS BY THE AGREEMENT EXPRESSED TO BE FINAL AND BINDING) SHALL BE REFERRED TO THE SOLE ARBITRATION OF THE CHAIRMAN AND MANAGING DIRECTOR OF THE CORPORATION OR OF SOME OFFICER/RETIRED OFFICER OF THE CORPORATION OR RETIRED OFFICER OF OTHER OIL PSUS OR RETIRED SENIOR CENTRAL GOVT. OFFICER WHO MAY BE NOMINATED BY THE CHAIRMAN AND MANAGING DIRECTOR. THE DEALER WILL NOT BE ENTITLED TO RAISE ANY OBJECTION TO 4 WP 6564/10 ANY SUCH ARBITRATOR ON THE GROUND THAT THE ARBITRATOR IS OR WAS AN OFFICER AND/OR SHARE HOLDER OF THE CORPORATION OR THAT HE HAS TO DEAL WITH OR DEALT WITH THE MATTERS TO WHICH THE CONTRACT RELATES OR THAT IN THE COURSE OF HIS DUTIES AS AN OFFICER OF THE CORPORATION HE HAD EXPRESSED VIEWS ON ALL OR ANY OF THE MATTERS IN DISPUTE OR DIFFERENCE IN THE EVENT OF THE ARBITRATOR TO WHOM THE MATTER IS ORIGINALLY REFERRED VACATING HIS OFFICE OR BEING UNABLE TO ACT FOR ANY REASON THE CHAIRMAN AND MANAGING DIRECTOR AS AFORESAID AT THE TIME OF SUCH VACATION OF OFFICE OR INABILITY TO ACT, SHALL DESIGNATE ANOTHER PERSON TO ACT AS ARBITRATOR, IN ACCORDANCE WITH THE TERMS OF THE AGREEMENT SUCH PERSONAL SHALL BE ENTITLED TO PROCEED WITH THE REFERENCE FROM THE POINT AT WHICH IT WAS LEFT BY HIS PREDECESSOR. IT IS ALSO A TERM OF THIS CONTRACT THAT NO PERSON OTHER THAN THE CHAIRMAN AND MANAGING DIRECTOR OR A PERSON NOMINATED BY SUCH CHAIRMAN AND MANAGING DIRECTOR OF THE CORPORATION AS AFORESAID SHALL ACT AS ARBITRATOR HEREUNDER. THE COST OF ARBITRATION SHALL BE SHARED EQUALLY BY THE 5 WP 6564/10 PARTIES. THE AWARD OF THE ARBITRATOR SO APPOINTED SHALL BE FINAL, CONCLUSIVE AND BINDING ON ALL PARTIES TO THE AGREEMENT SUBJECT TO THE PROVISIONS OF THE ARBITRATION AND CONCLIATION ACT, 1996 OR ANY STATUTORY MODIFICATION OF OR RE-ENACTMENT THEREOF AND THE RULES MADE THEREUNDER AND FOR THE TIME BEING IN FORCE SHALL APPLY TO THE ARBITRATING PROCEEDINGS UNDER THIS CLAUSE.” By relying upon this arbitration clause, it has been submitted by respondent no.2 that the petition cannot be entertained and the petitioner will have to be left to the remedy of arbitration. 5. It was further submitted by Mr. Kumbhakoni, the learned counsel for the petitioner, that the testing samples placed on record and not disputed by both the parties do not indicate anything adverse against the petitioner and it was specifically submitted that all the sample have passed the test. The learned counsel further submitted that so far as the variations in the stocks beyond the permissible limit are concerned, the petitioner had specifically submitted in reply to the show cause notices that the storage tanks had slightly pilfered and, 6 WP 6564/10 therefore, they indicated higher levels. Mr. Kumbhakoni, therefore, relied upon a decision of the Supreme Court in the case of Harbanslal Sahnia v. Indian Oil Corporation Limited, (2003) 2 SCC 107, and submitted that there was no justification in directing the petitioner to go in for an arbitration and the petition deserves to be allowed by setting aside the termination order so as to restore the dealership in favour of the petitioner. 6. Mr. Siodia, the learned counsel for the respondent – oil company, on the other hand, referred to the reply submitted by the petitioner to the show cause notices whereby there is an admission of excess stocks beyond permissible limits and by referring to the decision of the Supreme Court in the case of Hindustan Petroleum Corporation Limited v. M/s Pinkcity Midway Petroleum, AIR 2003 SC 2881, he submitted that this petition cannot be entertained and the only remedy available to the petitioner is to go in for arbitration under clause 66 of the dealership agreement. He has also invited our attention to an order passed by a Division Bench of this Court on 26th June 2003 in Writ Petition No.515 of 2003 and in similar set of circumstances. 7. Having regard to the show cause notices, it is clear that 7 WP 6564/10 the termination of the agreement in the instant case is not founded on the failure of the petitioner’s samples and the termination is solely based on the excess stocks beyond permissible limits which were noticed during the inspection on 28th June 2010. The reply submitted to the first show cause notice on 6th July 2010 admits variations in stocks to certain levels. We have perused clauses 28 and 42 of the dealership agreement and by reading of these two clauses it is clear that they do empower the oil company to terminate the agreement on the grounds mentioned in the show cause notice and if the action of termination is pursuant to the contractual terms between the parties, the arbitration clause, i.e. clause 66 of the said agreement, shall operate. The Supreme Court in the case of Harbanslal Sahnia (supra) stated that the rule of exclusion of writ jurisdiction by availability of alternative remedy is a rule of discretion and not one of compulsion. In an appropriate case, in spite of availability of alternative remedy, the High Court may still exercise its writ jurisdiction in at least three contingencies, viz. (i) where the writ petition seeks enforcement of any of the fundamental rights, (ii) where there is a failure of principles of natural justice, or (iii) where the orders or proceedings are wholly without jurisdiction or the vires of an Act is challenged. In our opinion, none of these three contingencies are attracted 8 WP 6564/10 in the instant case and the petitioner was issued with the show cause notices, replies were submitted and were taken into consideration while issuing the impugned order of termination of the agreement. Between the petitioner and respondent no.2, there is a contractual relationship and the petitioner is a licensee or agency of respondent no.2. Therefore, the submissions made by Mr. Kumbhakoni to entertain the petition and set aside the order of termination so as to restore the dealership agreement cannot be accepted. The parties are bound by the terms of the agreement and, as noted earlier, the termination is by invoking the agreement clauses, i.e. clauses 28 and 42, which read as under: “28. THE DEALER SHALL NOT PURCHASE FROM ANY PERSON, FIRM OR COMPANY OTHER THAN THE CORPORATION ANY PETROLEUM OR ALLIED PRODUCTS USED STOCKED OR SOLD AT THE SAID PREMISES WITHOUT THE PREVIOUS CONSENT IN WRITING OF THE CORPORATION. 42. THE DEALER UNDERTAKES FAITHFULLY AND PROMPTLY TO CARRY OUT, OBSERVE AND PERFORM ALL DIRECTIONS OR RULES GIVEN OR MADE FROM TIME TO TIME BY THE CORPORATION FOR THE 9 WP 6564/10 PROPER CARRYING ON OF THE DEALERSHIP OF THE CORPORTION. THE DEALER SHALL SCRUPULOUSLY OBSERVE AND COMPLY WITH ALL LAWS, RULES, REGULATIONS AND REQUISITIONS OF THE CENTRAL/ STATE GOVERNMENT AND OF ALL AUTHORITIES APPOINTED BY THEM OR EITHER OF THEM INCLUDING IN PARTICULAR THE CHIEF CONTROLLER OF EXPLOSIVES, GOVERNMENT OF INDIA AND/OR MUNICIPAL AND/OR ANY OTHER LOCAL AUTHORITY WITH REGARD TO THE STORAGE AND SALE OF SUCH PETROLEUM PRODUCTS.” 8. Hence, we are satisfied that the only remedy available to the petitioner is to invoke the arbitration clause, i.e. clause 66 of the dealership agreement, and seek appropriate relief. In our considered opinion, the petition will have to be dismissed and the petitioner is required to be relegated to the remedy of arbitration. Hence, the petition is rejected summarily by relegating the petitioner to the remedy of arbitration under clause 66 of the dealership agreement signed between the parties. (N.D. DESHPANDE, J.) (B.H. MARLAPALLE, J.)