In the High Court of Judicature at Madras Dated:06.04.2010 Coram: The Honourable Mr.Justice R.SUBBIAH Writ Petition No.2567 of 2010 and M.P.Nos.1 to 4 of 2010 M/s.Sudha Moulee Indane Gas Service by its Proprietor M.Latchumanan Having Office at Sudha Theatre Complex T.V.Malai Road, Thirukkanur-605 501. ..Petitioner ..vs.. 1. The Executive Director Tamil Nadu State Office, Chennai Indian Oil Corporation Limited (Marketing Division), Indian Oil Bhavan 139, Nungambakkam High Road, Chennai-600 034. 2. The Assistant Manager LPG Sales Indian Oil Corporation Limited Office of Bottling Plant Othiyampet, Villianur Puducherry. ..Respondents Writ petition filed under Article 226 of the Constitution of India, for issuance of a Writ of Certiorari, calling for the records of the 1st respondent in their letter/order No.TRAO:SUDHAMOULEE:PONDY dated 29.01.2010 and to quash the decision dated 29.01.2010 taken thereon terminating the distributorship agreement dated 30.06.2000 for distributing LPG cylinders. For Petitioner : Mr.V.T.Gopalan, Senior Counsel for Mrs.Radha Gopalan For Respondents : Mr.R.Ravi https://hcservices.ecourts.gov.in/hcservices/ ORDER This writ petition is filed for the issuance of a writ of certiorari, to call for the letter of the 1st respondent dated 29.01.2010, in and by which, the distributorship agreement dated 30th June 2000 entered into between the petitioner and the respondents was terminated, and quash the same. 2. It is the case of the petitioner that the petitioner was granted an agency/distributorship for distribution of Liquified Petroleum Gas (LPG) by the respondent Corporation and an agreement was entered into between the petitioner and the respondents on 30.06.2000. Clause 37 of the said agreement provided for an appointment of an Arbitrator in case of disputes or differences that had arisen in relation to the agreement. While so, a show cause notice dated 23.06.2009 was issued to the petitioner calling upon his explanation within seven days as to why the distributorship should not be terminated in exercise of the rights conferred on the respondents under the said agreement. For which, the petitioner sent a reply denying the charges and also raising a dispute that when once the charges levelled against the petitioner had been totally denied by him, the matter has to be referred to an independent Arbitrator and not by the officers of the respondents company. Subsequently, the petitioner filed an application under section 9 of the Arbitration and Conciliation Act, 1996, in O.A.No.689 of 2009 before this Court seeking an order of injunction restraining the proceedings pursuant to the show cause notice issued by the respondents dated 23.06.2009, pending appointment of an arbitrator and the said application was allowed and the interim injunction was granted for a period of eight weeks with a direction to the petitioner to obtain necessary orders for appointment of arbitrator by such time, failing which, the order of interim injunction shall stand automatically vacated on the lapse of the period stipulated therein. Thereafter, the petitioner had suffered from a serious ailment and taken treatment from 10.10.2009 and he had been advised to take complete bed rest for some time with physiotherapy exercise every day. Therefore, he did not comply with the order of this Court within the stipulated time. But, the 1st respondent, by letter dated 29.01.2010, by exercising powers conferred on them under clause 27(n) of the agreement dated 30.06.2000, terminated the distributorship agreement with immediate effect and called upon the petitioner to settle his account with them at the earliest. Hence, the petitioner has come forward with the present writ petition, challenging the order dated 29.01.2010. 3. Per contra, it is the contention of the 1st respondent that the writ petition itself is not maintainable when the parties are governed by the arbitration agreement. That apart, in the order dated 28.08.2009 made in O.A.No.689 of 2009, this Court has specifically observed that the petitioner should take necessary steps for https://hcservices.ecourts.gov.in/hcservices/ appointment of an arbitrator within eight weeks and on failing to do so, the order of injunction shall stand automatically vacated. The eight weeks' period has come to an end on 23.10.2009. But the termination order was issued only on 29.01.2010 i.e.even after two months from the date of expiry of eight weeks' period mentioned in the order dated 28.08.2009 made in O.A.No.689 of 2009. Moreover, after termination, the Corporation entrusted the supply of LPG cylinders to another gas agency, namely, Indra Indane Service, on 02.02.2010 and the customers of the petitioner agency were also informed to contact M/s.Indra Indane Service for LPG refill supplies through advertisement in leading two dailies on 03.02.2010. The petitioner has filed the writ petition on 09.02.2010. Since there is an arbitration clause in the agreement, the petitioner is entitled to raise an arbitral dispute in the manner known to law and not by invoking jurisdiction of this Court. Therefore, the present writ petition is liable to be dismissed on the ground of maintainability. 4. Learned Senior Counsel appearing for the petitioner contended that by taking advantage of the eight weeks' period mentioned in the order dated 28.08.2009 made in O.A.No.689 of 2009, the impugned order dated 29.01.2010 was issued by the 1st respondent Corporation cancelling the distributorship agreement, without issuing any notice. Under Article 137 of the Limitation Act, the period of limitation is three years to invoke the arbitration clause. Therefore, by fixing eight weeks' period, the right of the party to invoke the arbitration clause cannot be taken away. Moreover, under section 21 of the Arbitration and Conciliation Act, the arbitration proceedings in respect of a particular dispute commences on the date on which a request for that dispute to be referred to arbitration is received by the respondent. In the instant case, a request was already made by the petitioner for the appointment of an arbitrator. Therefore, it has to be construed that already the arbitration proceedings had been commenced. Under such circumstances, the termination of the distributorship agreement by order dated 29.01.2010 by misinterpreting the limitation period fixed by this Court in O.A.No.689 of 2009 is not correct. In support of the said contentions, the learned senior counsel has also relied upon the judgment reported in (2007)5 SCC 28 (PUNJAB STATE AND OTHERS ..vs.. DINA NATH), wherein it has been dealt with as to how the order of the Court has to be construed and interpreted. Learned senior counsel further relied on the decision reported in (1987) 3 SCC 66 (M/s.D.NAVINCHANDRA & CO., ..vs.. UNION OF INDIA), wherein it has been specifically stated that it is a presumption of law that the courts act lawfully and will not ask any authority to do anything which is illegal. When that being the law laid down by the Hon'ble Supreme Court, the respondents cannot give a different interpretation to the time specified in the order as against the period stipulated in the Limitation Act and terminate the agreement. Further, the learned senior counsel would contend that the petitioner had been carrying out the distribution of LPG cylinders for a long period and https://hcservices.ecourts.gov.in/hcservices/ it is the only source of his livelihood and in the said circumstances, the impugned order of termination is in violation of Article 21 of the Constitution of India. Therefore, it cannot be said that the writ petition is not maintainable as against the order of termination. In this regard, the learned senior counsel has also relied upon a judgment reported in (2003)2 SCC 107 (HARBANSLAL SAHNIA ..vs.. I.O.C.LTD.,), wherein it has been held that the High Court could exercise its writ jurisdiction in spite of availability of the alternative remedy when the petitioner's distributorship is their bread and butter. 5. That apart, the learned senior counsel for the petitioner has relied on the judgment reported in (1987) 2 SCC 160 (STATE OF KARNATAKA ..vs.. SHREE RAMESHWARA RICE MILLS) to substantiate his contention that the Government being a party to the contract, cannot decide the disputed questions of breach and damages. In the instant case, Clause 37 of the Agreement says that the Officers of the respondents Corporation shall act as an Arbitrator. Moreover, clause 37 of the agreement is unilateral in nature. Thus, the learned senior counsel would submit that though an interim order was granted by this Court as against the impugned order, the respondent has not given effect to the said interim order and till date, they did not supply the LPG cylinders and hence, they are liable to be punished under the Contempt of Courts Act. 6. Per contra, the learned counsel for the respondents would submit that clause 28 of the Agreement says that either of the parties shall be entitled to terminate the agreement by giving 30 days' notice. In the instant case, a show cause notice dated 23.06.2009 was issued to the petitioner. Therefore, it cannot be said that no notice was issued before the termination. The main charge levelled in the show cause notice is diversification of domestic cylinders to commercial purpose, which is a major irregularity and on earlier two occasions, the petitioner was warned for the same. In the order of interim injunction granted in O.A.689 of 2006, it has been specifically observed that if the petitioner does not get necessary orders for appointment of an arbitrator within the period of eight weeks, the interim injunction granted against the show cause notice will stand automatically vacated. Therefore, the interim order granted by this Court is a perennial relief and the petitioner cannot give a different interpretation after having failed to get appropriate relief based on the order dated 28.08.2009. Further, the learned counsel would contend that though eight weeks' period expired on 23.10.2009, the termination order was issued after two months from the date of expiry of the time, as stipulated in the interim order. Thereafter only, the petitioner has chosen to file the present writ petition. 7. Apart from that, the learned counsel for the respondents would submit that the relationship between the parties is contractual https://hcservices.ecourts.gov.in/hcservices/ in nature and hence, the writ petition is not maintainable. In this regard, he relied upon the judgment reported in 2009(8) SCC 520 (INDIAN OIL CORPORATION LTD., ..vs. RAJA TRANSPORT PRIVATE LTD.,) in support of his contention that there is nothing wrong in appointing the officer of the respondents as an arbitrator. Further the learned counsel would contend that pursuant to the termination order, the alternative arrangement was made by the respondents Corporation by entrusting the supply of LPG cylinders to the other gas agency, namely, Indra Indane Service on 02.02.2010 itself and this was informed to the customers through advertisements in two dailies. Thereafter, on 10.02.2010, the petitioner, by suppressing the said facts, has obtained the interim order. Now, since the transaction between the parties is contractual in nature, the petitioner has to work out his remedy by exercising the arbitration clause and hence, the writ petition has to be dismissed. 8. Heard the learned counsel appearing for all the parties. 9. The submission made by the learned senior counsel for the petitioner is on the following lines; (i) The writ petition is maintainable since there is a violation of Article 21 of the Constitution of India because the termination order affects the livelihood of the petitioner; and (ii) since eight weeks' period has been stipulated in the order of interim injunction dated 28.08.2009 passed by this Court in O.A.No.689 of 2009, the right of the party cannot be taken away when Article 137 of the Limitation Act provides three years' time and also in view of Section 21 of the Arbitration and Conciliation Act, it has to be construed that the arbitration proceedings had already commenced. In support of the above contentions, the learned senior counsel appearing for the petitioner has relied upon a catena of judgments, as stated supra. But, I am of the view that all these submissions could be appreciated if there is a duty cast upon the respondents to appoint an independent arbitrator. But, the agreement provides for appointing the Director (Marketing) or some other officer of the Corporation by such Director (Marketing) in his place, to act as an arbitrator. The petitioner has signed the said agreement without raising any objection. Now, it is the petitioner, who has initiated the legal proceedings before this Court to appoint an independent arbitrator. Therefore, the question that has to be seen, in view of the submissions made by the parties is, whether the order of termination is illegal ? or whether the petitioner could be allowed to continue as the distributor till the completion of the arbitration proceedings initiated ? https://hcservices.ecourts.gov.in/hcservices/ 10. So far as the submission made by the learned senior counsel for the petitioner, by relying upon Article 137 of the Limitation Act that there is a limitation of three years for appointment of arbitrator and by fixing stipulated time, his right cannot be taken away, is concerned, I am not inclined to accept this argument for the reason that the respondents Corporation cannot compel that till the completion of the arbitration proceedings, the petitioner agency should not be terminated. Under such circumstances, eight weeks' time given by this Court by the order dated 28.08.2009 has to be construed only to allow the petitioner to continue his agency after the period of eight weeks' time and hence, the respondents have every right to decide whether to terminate the dealership or not after the expiry of eight weeks' time. So far as the appointment of the arbitrator is concerned, as contended by the learned senior counsel for the petitioner, Article 137 of the Limitation Act provides three years period, but it does not mean that after the expiry of eight weeks' time, their dealership cannot be terminated. As contended by the learned counsel for the respondents, in the order of injunction granted by this Court in O.A.No.689 of 2009, which is perennial in nature, it has been clearly observed that on expiry of eight weeks' period, the interim injunction shall automatically stand cancelled. Hence, no fault could be found in the action taken by the respondents. Moreover, in the instant case, the main charge levelled against the petitioner in the show cause notice is diversification of domestic cylinders to commercial purpose. It is the contention of the respondents that already, on previous occasions, the petitioner was warned for the same irregularity. Under such circumstances, the respondents Corporation have every right to take decision with regard to termination. In the said situation, the petitioner cannot take a defence that the termination order affects his livelihood when the nature of charges levelled against the petitioner shows that the conduct of the petitioner would affect the interest of the larger customers. Therefore, I am not inclined to accept the submission made by the learned senior counsel for the petitioner by relying upon a catena of judgments in support of his contentions. Under such circumstances, I am of the view that the petitioner has every right to agitate his case before the Arbitrator and at the same time, I do not find any illegality in the order of termination issued by the respondents, that too after issuing the valid show cause notice to the petitioner. If at all the petitioner has not taken sufficient steps for appointment of an Arbitrator within the time stipulated by this Court, he should have approached this Court for extension of time and not by way of invoking the writ jurisdiction as if it is an appropriate forum. Under such circumstances, I am of the view that the petitioner is not entitled to get the relief sought for in this petition. https://hcservices.ecourts.gov.in/hcservices/ For the reasons stated above, the writ petition fails and accordingly it is dismissed. No costs. Consequently, connected M.Ps.are closed. Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar To 1. The Executive Director Tamil Nadu State Office, Chennai Indian Oil Corporation Limited (Marketing Division), Indian Oil Bhavan 139, Nungambakkam High Road, Chennai-600 034. 2. The Assistant Manager LPG Sales Indian Oil Corporation Limited Office of Bottling Plant Othiyampet, Villianur Puducherry. 1 cc To Mrs.Radha Gopalan, Advocate, SR.22939 1 cc To Mr.R.Ravi, Advocate, SR.22461 W.P.No.2567 of 2010 ARCO(CO) PMK.8.4.2010. https://hcservices.ecourts.gov.in/hcservices/