AI Structured Summary
Not yet generated for this judgment
Judgment
The present petition has been filed under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter ‘A&C Act’), seeking appointment of a Sole Arbitrator to adjudicate the disputes between the parties.
The disputes emanate from a Motor Spirit and High Speed Diesel Retail Outlet Dealership (‘B’ Site) Agreement dated 03.06.2014 (hereinafter “Dealership Agreement”), executed between the parties, in respect of the retail outlet situated at Khasra No. 17/72/2, Main Khewra Road, Bahalgarh, District Sonipat, Haryana.
The disputes are stated to have originated on account of suspension of sale and supply of petroleum products from the retail outlet by the respondent vide communications dated 14.09.2020 and 15.09.2020, despite a clean inspection report dated 12.09.2020 furnished by the Petroleum and Explosives Safety Organisation (PESO).
It is submitted that a Show Cause Notice (SCN), proposing termination of the Dealership Agreement was thereafter issued by the respondent on 17.12.2021, after a lapse of over 400 days.
It is further submitted that the parties attempted to settle the disputes amicably through a consensual framework recorded in the Minutes of Meeting dated 26.03.2022 (Annexed as Document –8 to the present petition), which was reinforced by a consent order dated 07.12.2022 passed by this Court in W.P.(C) No. 16762/2022 titled “Ehsaas Filling Station v. IOCL”. The respondent, however, failed to honour the said arrangement.
Subsequently, a fresh SCN dated 05.01.2026 was issued to the petitioners.
It is submitted that another set of disputes, also arose in context of the CNG facility installed at the aforesaid retail outlet. The cumulative effect of the aforesaid conduct of the respondent has resulted prolonged closure of the retail outlet for approximately 33 months (14.09.2020 to 12.07.2023), causing substantial financial loss, reputational damage to the petitioners.
The Arbitration Clause contained in the Dealership Agreement dated 03.06.2014 is as under:
(c)In the event of the arbitrator, to whom the matter is originally referred vacating his office or being unable or refusing to act for any reason, the Director (Marketing) at the time of vacation of office or inability or refusal to act, shall designate another person to act as Arbitrator in accordance with the terms of this agreement.
(d)The Arbitrator newly nominated by the Director (Marketing) under clause (b) or under clause (c) above, shall be entitled to proceed with the reference from the point at which it was left by his predecessor.
(e)It is an express term of this contract that no person other than the Director (Marketing) or a person nominated by such Director (Marketing) or a person nominated by such director (Marketing) or a person nominated by such director (Marketing) of the Corporation as aforesaid shall act as Arbitrator hereunder. If for any reason, Director (Marketing) is unable or unwilling or refuses or fails to act as Arbitrator or nominate an Arbitrator then the matter shall not be referred to arbitration at all.
(f)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 Act, 1940 or any statutory modification or re-enactment thereof and the rules made thereunder for the time being in force shall apply to the arbitration proceedings under this clause.
(g)The award shall be made in writing and published by the Arbitrator within two years after entering upon the reference or within such extended time not exceeding one further year as the parties shall be writing agree. The parties hereto shall be deemed to have irrevocably given their consent to the Arbitrator to make and publish the award within the period referred to hereinabove and shall not be entitled to raise any objection or protest thereto under any circumstances whatsoever.
(h)The Arbitrator shall have power to order and direct either of the parties to abide by, observe and perform all such directions as the arbitrator may think fit having regard to the matters in difference i.e. dispute before him. The arbitrator shall have all summary powers and may take such evidence oral and/or documentary as the arbitrator in his absolute discretion think fit, and shall be entitled to exercise all powers under the Indian Arbitration Act, 1940 including admission of any affidavit as evidence concerning the matter in difference i.e. dispute before him.
(i)It is hereby expressly that the powers of the Arbitrator nominated in the matter hereinbefore mentioned shall include the power to make interim order/orders, as the circumstances of the case may justify, to appoint a receiver, commissioner or custodian by whatever name called to take possession of the property in dispute during the pendency of the proceedings and subject to such final order as may be passed by the Arbitrator and shall also have the power to issue such further orders from time to time as he may deem fit, on an application being made to him by any of the parties to the dispute where it is apprehended that the property to which it is apprehended that the property to which it relates is in danger of being wasted, damaged, deteriorated or parted with or rights of other third parties are likely to be created thereon.
A notice invoking arbitration was issued by the petitioners on 20.04.2026, which, however, did not elicit any response.
In the above circumstances, the petitioners have approached this Court by way of the present petition, seeking appointment of a sole arbitrator to adjudicate the disputes between the parties.
Learned counsel for the petitioners, has highlighted the following extracts of the Termination Order dated 30.06.2026, appended as Document 1 to the respondent’s reply dated 18.09.2026, which has been handed over during the course of proceedings, wherein, the respondent has acknowledged the existence of the arbitration agreement between the parties. The relevant extracts of the said Termination Order are as under:
“Accordingly, the dealership agreement dated 03.06.2014, executed between you and the Corporation, is hereby terminated with immediate effect and you cease to be the dealer of the Corporation henceforth. You are hereby advised to hand over the equipment belonging to the Corporation to the authorized official of the Corporation and settle your accounts within 10 days of the date of this letter. You are also advised to act upon as per clause 59-63 of the Dealership Agreement, which is applicable despite the termination of the agreement. You may please contact our Divisional Office for any assistance if required.”
The above makes it evident that the existence of arbitration agreement is not in dispute.
In the circumstances, since the existence of the arbitration clause is admitted, in light of the judgment rendered by the Supreme Court in Perkins Eastman Architects DPC v. HSCC (India) Ltd, (2020) 20 SCC 760, TRF Limited v. Energo Engineering Projects Ltd, (2017) 8 SCC 377, Bharat Broadband Network Limited v. United Telecoms Limited., 2019 SCC OnLine SC 547, SBI General Insurance Co. Ltd. v. Krish Spinning, 2024 INSC 532, and Interplay between Arbitration Agreements under the Arbitration & Conciliation Act, 1996 & the Indian Stamp Act, 1899, In re, 2023 SCC OnLine SC 1666, there is no impediment in constituting an arbitral tribunal to adjudicate the disputes between the parties.
Accordingly, Ms. Parul Tuli, Advocate (Mob. No. +91 9810162324) is appointed as the Sole Arbitrator to adjudicate the disputes between the parties.
The respondents shall be at liberty to raise preliminary objections as regards arbitrability/jurisdiction, if any, which shall be decided by the arbitrator, in accordance with law.
The learned Sole Arbitrator may proceed with the arbitration proceedings subject to furnishing to the parties the requisite disclosure as required under Section 12 of the A&C Act.
Let the arbitration take place under the aegis of and asper the rules of the Delhi International Arbitration Centre (DIAC).
All rights and contentions of the parties in relation to the claims/counter claims are left open, to be decided by the learned Sole Arbitrator on merits, in accordance with law.
Needless to say, nothing in this order shall be construed as an expression of opinion of this Court on the merits of the case.
The present petition, along with the pending applications, stands disposed of in the above terms.