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SRI LALITHA DEVI GAS AGENCIES V/S . HINDUSTAN PETROLEUM CORPORATION LTD , decided on Monday, August 5, 2002.
[ In the High Court of Andhra Pradesh, W.A. 681 of 2002 . ] 05/08/2002
Judge(s) : CHIEF DR. AR. LAKSHMANAN & V. ESWARAIAH
Advocate(s) : P.V. SANJAY KUMAR, VEDULA VENKATARAMANA.
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  "2002 (5) ALD 389"  ==   " 2002 LAP 494 2002 (5) ALT 516"  







    Subject Index:CONSTITUTION OF INDIA Art.226     AR. LAKSHMANAN J.( 1 ) BY consent of both the parties the writ appeal and the writ petition filed by the appellant M/s. Sri Lalitha Devi Gas Services Ltd. represented by its proprietor Vasundara Devi are taken up for final hearing. ( 2 ) THE matter was heard by this Court on an earlier occasion and was adjourned with a direction to post the writ petition also along with the writ appeal for a combined hearing. The writ appeal is directed against the order dated 1-4-2002 passed by learned single Judge of this Court in WPMP No. 7113/2002 refusing to grant stay of the impugned demand raised by the respondent-Corporation. Now that the writ petition itself is posted along with this writ appeal there is no need to consider the claim made by the appellant in the writ appeal. The writ petition was filed by the petitioner for the following relief:? for the reasons mentioned in the accompanying affidavit the petitioner herein pray that this Honourable Court may be pleased to issue a writ of mandamus or any other appropriate writ and declare that the action of the 2nd respondent contained in impugned order in reference No. HP Gas/ Vep dated 3-2-2002 purporting to levy damages against the petitioner and threaten the petitioner with termination of dealership of non-payment of damages so levied is arbitrary without jurisdiction and illegal and direct the respondent to forbear from either recovery of the said amount or take steps for termination of the dealership of the petitioner pursuant to the order dated 3-2-2002 and further direct the respondents to release the supply of LGP Distributor gas cylinders/regulators to the petitioners without any reduction of the number of the cylinders/regulators as was supplied upto November 2001 and grant such other relief as it deems fit and proper in the circumstances of the case. ( 3 ) THE petitioner is a sole proprietor concern which was established in the year 1967 and is engaged in the trade of distribution of gas cylinders (LPG) to the consumers. The respondent-Corporation was incorporated some time in the year 1975. In fact the petitioner was a dealer of M/s. Parel Investment Trading Company Pvt. Ltd. (PITCL) Bombay. Thereupon the petitioner was enrolled as distributor of respondent-Corporation which is a Government of India enterprise in the year 1984 and the Gas connections of PITCL were transferred to the respondent-Corporation. While so a show-cause notice dated 9-10-2001 was issued to the petitioner calling for the explanation on the charge that the petitioner has released 3 693 unauthorized connections. The petitioner has submitted an explanation to the show-cause notice on 3-12-2001 stating that the facts and figures contained in the show-cause notice dated 9-10-2001 are not correct and the verification of the authorized connections has to be done with reference to the old records of PITCL Thereupon the 2nd respondent issued second show-cause notice dated 3-12-2001 alleging mat the petitioner has released unauthorized connections and called upon the petitioner to explain about the release of 2654 unauthorized connections. The explanation dated 12-12-2001 was submitted denying the allegations that the petitioner has issued unauthorized connections. It is submitted by the petitioner that calling upon the explanation over a matter relating to 1984 is not proper. However the 2nd respondent passed the impugned order dated 3-2-2002 recording a finding that the petitioner has released 2114 unauthorized connections and as per the Marketing Disciplinary Guidelines 2001 the respondent-Corporation has levied a penalty of Rs. 84 56 000. 00 towards unauthorized release of connections at Rs. 4000. 00 per connection. The second respondent has also levied a line of Rs. 35 000. 00 upon the alleged irregularities. Questioning the correctness of the order dated 3-2-2002 the present writ petition has been filed along with very many material papers. ( 4 ) A counter-affidavit was filed by the respondent questioning the maintainability of the writ petition. It is useful to reproduce relevant portion of paragraph 1 of the counter-affidavit which reads as follows:. . . . . AT the outset I am advised to submit that the above writ petition is not maintainable inasmuch as the petitioner being a dealer of the respondent-Corporation under a Dealership agreement cannot invoke the extraordinary jurisdiction of this Honble Court under Article 226 of the Constitution of India in a purely contractual matter. Further the Dealership Agreement itself provides for an efficacious remedy by way of arbitration in the event of any disputes arising between the parties regarding any rights liability act omission or account arising out of or in relation to the Dealership Agreement as per clause No. 38 of the Agreement. In view of the alternative and efficacious remedy available to the petitioner the present writ petition liable to be dismissed at the very threshold. ( 5 ) A reply affidavit along with Annexures I to IX was filed by the writ petitioner on 28-7-2002. The petitioner submitted that the case on hand is an imminently fit case where this Court should intervene under Article 226 of the Constitution of India and render justice. Even if the respondent-Corporation should shut their eyes inspite of the explanation the issue could be sorted out only in a civil Court after adjudicating on the facts evidence and materials placed by both the parties or by an impartial arbitrator. Only after appropriate and final adjudication on the controversy in question any further action can be ever thought of. ( 6 ) MR. Venkataramana the learned Counsel appearing for the writ petitioner has also further urged that the demand is highly unfair and unreasonable and that the respondent-Corporation shut their eyes to all the realities to make an arbitrary claim of Rs. 84 91 000. 00 on a wrong and highly illegal basis. Such a claim now belatedly made without any basis or material is nothing hut an arbitrary action intended to only terminate the distributorship on illegal and irrational basis. We ore unable to countenance this submission in particular. ( 7 ) OUR attention was drawn to the agreement that has been entered into between the parties. Clause 38 of the said agreement filed along with the reply reads thus:? any dispute or difference of any nature whatsoever or regarding any rights 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 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 arbitrator on the ground that the arbitrator is an officer of the Corporation or that he has to deal with the matter to which the contract relates or that in the course of his duties as an officer of the Corporation he had expressed viewed on all or any other matters in dispute or difference. In the event of the arbitrator to whom the matter is originally referred being transferred or vacating his office or being unable to act for any reasons the Managing Director as aforesaid at the time of such transfer vacation of office or inability to act shall designate another person to act as arbitrator in accordance with the terms of the agreement. Such persons 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 Managing Director or a person nominated by such Managing Director of the Corporation as aforesaid shall act as arbitrator hereunder. The award of the arbitrator so appointed shall be final conclusive and binding on all parties to the agreement subject to the provision of the Arbitration Act 1940 or any statutory modification of re-enactment thereof and the rules made thereunder for the time being in force shall apply to the arbitration proceedings under this clause. The award shall be made in writing and published by the arbitrator within six months after entering upon the reference or within such extended time not exceeding further four months as the sole arbitrator shall by a writing under his own hands appoint 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 matter in difference. 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 thinks fit and shall be entitled to exercise all power under the Indian Arbitration Act 1940 including admission of any affidavit as evidence or the matter in difference. e. dispute before him. The arbitrator shall be at liberty to appoint if necessary any Accountant or engineering or other technical person to assist him and to act by the opinion so taken. The arbitrator shall have power to make one or more awards whether interim or otherwise in respect of the dispute and difference and in particular will be entitled to make separate awards in respect of claims or cross claims of the parties. The parties hereby agree that the Courts in the city of Secunderabad alone shall have jurisdiction to entertain any application or other proceedings in respect of anything arising under this agreement and any award or awards made by the sole arbitrator hereunder shall be filed in the concerned Courts in the city of Secunderabad only. a close scrutiny of the above clause would clearly reveal that any dispute or difference of any nature whatsoever regarding any rights liability act omission or account arising out of or in relation to this agreement shall be referred to the sole arbitration of the Man-aging Director of the Corporation or some officer of the Corporation who may be nominated by the Managing Director. It is further stated in the said clause that 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 or that he has to deal with the matter 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 view of the above specific clause it is not now open to the petitioner herein to ask for an independent arbitrator. Both the petitioner and respondent-Corporation are parties to the agreement and therefore are bound by the terms of the contract. The arbitrator is given wide power and jurisdiction to deal with any dispute or difference of any nature arising out of the contract in question. The arbitrator shall also have the 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 matter in difference namely the dispute before him. He shall have the powers to lake such evidence oral or documentary as the arbitrator in his discretion thinks fit and shall be entitled to exercise all powers under the Indian Arbitration Act. He shall have power to make one or more awards whether interim or otherwise in respect of the dispute and the difference and in particular the will be entitled to make separate awards in respect of claims or cross claims of the parties. The parties to this agreement have agreed that the Courts in the city of Secunderabad alone shall have jurisdiction to entertain any application or other proceedings in respect of anything arising under this agreement and any award or awards made by the sole arbitrator shall be filed in the concerned Courts in the city of Secunderabad only.( 8 ) NOW that a specific clause has been included in the agreement that has been entered into between the parties in our opinion; the entire matter has to be referred to the sole arbitrator of the Managing Director of the Corporation or some officer of the Corporation who may be nominated by him. The petitioner is at liberty to raise all the contentions which have already been raised in this writ petition and also in the writ appeal and file any other additional document if the petitioner so chooses. Likewise the respondent-Corporation is also at liberty to raise their claim if any before the arbitrator. Now that both the parties have agreed to refer the dispute for arbitration we need not once again direct the petitioner to invoke Clause 38 and correspond with the respondent which in our opinion is wholly unnecessary. The arbitrator shall immediately after entering upon the appearance may issue notice to both parties and then proceed further to consider all the claims made by the petitioner and the respondent-Corporation. The Managing Director who is nominated as arbitrator shall conduct and complete arbitration proceedings within two months. ( 9 ) THE arbitration proceedings shall commence within one month from the date of the receipt of our order. Till the arbitration proceedings are completed the status quo obtaining as on today shall be maintained between the parties. There will be stay of collection of the impugned demand till the arbitrator completes the arbitration proceedings. ( 10 ) BOTH the writ appeal and writ petition are disposed of accordingly. No costs.