Allowed

M/S Padmashree Service Station v. Indian Oil Corporation Limited

Karnataka HC20 Nov 2023CMP/315/2021

Case brief

AI extract

What is this about?

Civil Misc. Petition for appointment of a sole arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996. The Court allowed the petition and appointed a former High Court Judge to adjudicate the dispute regarding the illegal termination of a dealership agreement.

What did the court decide?

Appointment of Hon'ble Mr. Justice A.N.Venugopala Gowda as Sole Arbitrator and directions to the Registry for communication of the order.

M/S Padmashree Service Station Vs Indian Oil Corporation Limited — Arbitration | Karnataka HC (2023)

¶1

¶2

NC: 2023:KHC:41562 CMP No. 315 of 2021

¶3

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

¶4

DATED THIS THE 20^TH DAY OF NOVEMBER, 2023

¶5

BEFORE

¶6

THE HON'BLE MR JUSTICE B M SHYAM PRASAD CIVIL MISC. PETITION NO. 315 OF 2021

¶7

BETWEEN:

¶8

M/S PADMASHREE SERVICE STATION A PROPRIETORSHIP CONCERN REPRESENTED BY ITS PROPRIETRIX SMT SMITHA ANIL KUMAR AGED ABOUT 38 YEARS, W/O LATE ANIL KUMAR NO.37, 4^TH CROSS SRIRAMPURAM, BENGALURU-560 021.

¶9

…PETITIONER

¶10

(BY SRI. ABHINAV A RAMANAND.,ADVOCATE)

¶11

AND:

¶12

Digitally signed by ANAND N Location: HIGH COURT OF KARNATAKA

¶13

INDIAN OIL CORPORATION LIMITED HAVING ITS HEAD OFFICE AT G-9 ALI YAVAR JUNA MARGA BANDRA (EAST), MUMBAI-400 051 REPRESENTED BY ITS MANAGING DIRECTOR ALSO AT INDIAN OIL CORPORATION LIMITED MARKETING DIVISION

¶14

¶15

NC: 2023:KHC:41562 CMP No. 315 of 2021

¶16

BENGALURU DIVISIONAL OFFICE INDIAN OIL BHAVAN NO.28 1^ST FLOOR ANJUMAN KAY ARR TOWER P KALINGA RAO ROAD (MISSION ROAD) BENGALURU -560 027 REPRESENTED BY ITS DEPUTY GENERAL MANAGER (RS) BENGALURU DO.

¶17

…RESPONDENT (BY SRI. SANTOSH S NAGARALE, ADVOCATE)

¶18

THIS CIVIL MISC. PETITION IS FILED UNDER SEC.11(6) OF THE ARBITRATION AND CONCILIATION ACT 1996, PRAYING TO APPOINT A SOLE ARBITRATOR BY INTERPRETING CLAUSE 61 IN THE AGREEMENT DATED 04/07/2011 AT ANNEXURE-A IN THE LIGHT OF THE AMENDED PROVISIONS OF THE ARBITRATION AND CONCILIATION ACT, 1996 AND IN TERMS OF SECTION 12(5) OF THE ARBITRATION AND CONCILIATION ACT, 1996.

¶19

THIS PETITION, COMING ON FOR ADMISSION, THIS DAY, THE COURT MADE THE FOLLOWING:

¶20

¶21

NC: 2023:KHC:41562 CMP No. 315 of 2021

¶22

ORDER

¶23

This petition is filed for appointment of the sole Arbitrator relying upon the Dealership Agreement dated 04.07.2011 [ Annexure-A ] and the agreement for arbitration as contained therein. This agreement for arbitration in its material part¹ reads as under:

¶24

(a) Any dispute or difference of any nature whatsoever, any claim, cross-claim. counterclaim or set-off or regarding any right, liability, act, omission or account of any of the parties hereto arising out of or in relation to this agreement shall be referred to the sole arbitration of the Director (Marketing) of the Corporation who may otherwise himself act as the Arbitrator or nominate some other officer of the Corporation to act as the Arbitrator. The Dealer will not be entitled to raise any objection to any such Arbitrator on the ground that the Arbitrator is an officer of the Corporation.

¶25

1 The other terms relate to the procedure that is to be followed if the Arbitrator is transferred or his unable to function and continuation of the arbitral proceedings.

¶26

¶27

NC: 2023:KHC:41562 CMP No. 315 of 2021

¶28

According to the petitioner, the present

¶29

dispute is because the Dealership Agreement dated 04.07.2011 is illegally terminated by the order dated 04.01.2018, and therefore, there must be a declaration to the effect with the reinstatement of the dealership and in the alternative, an adjudication on the damages that must be paid to the petitioner. The petitioner at the first instance has filed the writ petitions in W.P. Nos.13252-13253/2018 challenging the termination order dated 04.01.2018, and these writ petitions are disposed of on 23.08.2018 observing that the petitioner has alternative efficacious remedy under the Marketing Discipline Guidelines, 2013 [for short, ‘the Guidelines’ ] .

¶30

The petitioner has thereafter filed appeal before the Executive Director [ the appellate authority as mentioned in the termination letter and as contemplated under Regulation 8.8 of the Guidelines ], and the respondent has issued notice of hearing by

¶31

¶32

NC: 2023:KHC:41562 CMP No. 315 of 2021

¶33

the Dispute Resolution Panel [ DRP ] informing the petitioner that the hearing is convened at New Delhi and written submissions may be filed with the concerned authority. The petitioner has responded contending that its appeal must be considered by the Executive Director and not by the DRP with the petitioner ultimately causing legal notice dated 16.04.2021 asserting different grounds in support of the application and nominating a former Judge of this Court as a sole Arbitrator.

¶34

Sri Abhinav A Ramanand, the learned counsel for the petitioner, submits that the Guidelines as of the date of the termination order dated 04.01.2018 contemplated appeal to the appellate authority who would have been the respondents’ Executive Director but the Guidelines have been amended from 03.08.2018 stipulating that the appellate authority will be DRP comprising of different Members as mentioned therein, and

¶35

¶36

NC: 2023:KHC:41562 CMP No. 315 of 2021

¶37

therefore, the petitioner’s appeal could only have been examined by the Executive Director and not by DRP as contemplated under the amended Guidelines. Sri Abhinav A Ramanand also submits that the petitioner’s appeal before the Executive Director is disposed of on 27.09.2021, and as such, the petitioner has no other recourse but to pursue the proceedings for appointment of the Arbitral Tribunal.

¶38

Sri Santosh S Nagarale, the learned counsel for the respondent, is unable to controvert that the Executive Director has disposed of the petitioner’s appeal by the Order dated 27.09.2021. This Court is of the considered view that if the respondent could insist that the petitioner’s appeal must be dealt by the DRP in terms of the amended Guidelines, the respondent should have placed the appeal before the DRP rather than allowing it to be disposed by the Executive Director. However, the Executive Director has disposed of the appeal on the

¶39

¶40

NC: 2023:KHC:41562 CMP No. 315 of 2021

¶41

ground that the appellant wished to redress the dispute through arbitration. It cannot even be asserted that the petitioner has not prosecuted the appeal.

¶42

In the circumstances, where the Executive Director has closed the appeal with recourse as aforesaid, this Court is of the considered opinion that, without entering into a debate on whether the amended Guidelines must be made applicable to the petitioner, the arbitral Tribunal must be constituted for adjudication of the petitioner’s claims as against illegal termination. At this stage, the learned counsel for the respondent submits that the petitioner’s nominee could be appointed as the sole Arbitrator leaving open all questions except insofar as the existence of the agreement and the arbitrability of the dispute to be decided in the arbitral proceedings. Hence the following:

¶43

¶44

NC: 2023:KHC:41562 CMP No. 315 of 2021

¶45

ORDER

¶46

a) The petition is allowed.

¶47

b) Hon’ble Mr. Justice A.N.Venugopala Gowda, Former Judge of High Court of Karnataka, is appointed as the sole arbitrator to enter reference of the dispute between the petitioner and the respondent and conduct the proceeding at the Arbitration and Conciliation Centre (Domestic and International), Bengaluru according to the Rules governing the Arbitration and Conciliation Centre (Domestic and International), Bengaluru.

¶48

c) The Registry is directed to

¶49

communicate this order [even by E- mail] to the Arbitration and Conciliation Centre (Domestic and

¶50

¶51

NC: 2023:KHC:41562 CMP No. 315 of 2021

¶52

International), Bengaluru, and Hon’ble Mr. Justice A.N.Venugopala Gowda, Former Judge of High Court of Karnataka, Address: # 426/27-1, Opp. BES College Ladies Hostel, 33^rd Cross,18^th Main, 4^th ‘T’ Block, Jayanagar, Bengaluru 560 041 [Email: [email protected]] as required under the Appointment of Arbitrators by the Chief Justice of Karnataka High Court Scheme, 1996.

¶53

d) The Registry is directed to return the original documents after retaining the photocopy of the same.

¶54

Sd/JUDGE

¶55

AN/-

M/S Padmashree Service Station v. Indian Oil Corporation Limited

Case brief

What is this about?

What did the court decide?

M/S Padmashree Service Station v. Indian Oil Corporation Limited

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Caterpillar Financial Services India Private Limited Vs Harmeet Singh

Mahaveer P Vs Mr G Suraj Kumar @ G Suraj

Sri P Pichanna Vs M/S Cateleya Projects

M/S Prabuddha Fuel Junction Vs Indian Oil Corporation Limited

T K Sudhindra Vs the State of Karnataka

Sri Annapooraneshwari Hydraulics Vs the Superintendent of Central Tax