- (1.) This is an application filed by the petitioner questioning a portion of the award passed by Sole Arbitrator Mr. P. Rajagopalan on 10th January, 2010. The fact remains that the petitioner was a LPG Distributor of the respondent "HINDUSTAN PETROLEUM CORPORATION LTD." having its office at P-4, Oil Installation Road, Paharpur, Kolkata-700 088, in the town of Burdwan in the state of West Bengal. Disputes and differences arose between the petitioner and the respondent by reason of termination of dealership affected by the respondent by its letter dated 15th January, 2009. Such disputes and differences were referred to arbitration in terms of arbitration clause in the dealership agreement dated 13th June, 2005. According to clause 38 of the dealership agreement any dispute or difference of any nature whatsoever or regarding any rights, liability, act, omission on account of any of the parties hereto arising out or in relation to the agreement shall be referred to the Sole Arbitrator of the Managing Director of the Corporation or of some officer of the Corporation who may be nominated by the Managing Director. It further provides from the said clause 38 that 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 i.e. dispute before him. The Arbitrator shall have all summary powers and may take such evidence oral and documentary as the Arbitrator in his absolute discretion thinks fit and shall be entitled to exercise all powers under the Indian Arbitration Act, 1940 including admission of any affidavit as evidence or the matter in difference i.e. dispute before him. The Arbitrator shall be at liberty to appoint, if necessary, any Accountant or Engineer or other technical person to assist him, and to act by the opinion so taken.
(2.) Pursuant to the said clause Arbitrator entered into the dispute and statement of claim filed by the petitioner before the Arbitrator. Reply to the statement of claim along with counter claim was also filed by the respondent. Learned Arbitrator after hearing learned Counsel of the respective parties and upon perusal of all the records, documents and written notes of submissions/arguments concluded to the effect that actions of the respondents are violative of principles of natural justice and even after imposition of penalty, which was paid by the petitioner, dealership of the petitioner was terminated which is double punishment. The punishment is contrary to the Market Discipline Guidelines and further petitioner is entitled to get restoration of dealership.
(3.) In clause 37 the learned Arbitrator recorded that in his opinion the arbitration proceedings is based on two parts. First part is legal aspects of the termination of the distributorship and second part is related to handling of distributorship in a casual and arbitrary manner by the controlling officer of the respondent corporation. He also recorded that the distributorship is guided by the Marketing Discipline Guidelines and so far the first offence is concerned penalty was imposed and so far the second offence is concerned after receipt of explanation from the petitioner penalty has been imposed and the penalty was paid by the claimant and therefore there is no cause of action on the side of the respondent who issued termination letter dated 15th January, 2009. It was also recorded by him that the distributorship was under suspension from January 8 and as such the distributor could not have indulged in any more irregularity, which calls for termination either as per Marketing Discipline Guidelines or as per relevant clauses in the dealership agreement. He has come to the conclusion that the suspension of the dealership should have been revoked after the penal action for second offence was taken vide letter dated 24th July, 2008 and there was no justification for the respondent to continue with the suspension beyond 24th July, 2008. It was also decided by the learned Arbitrator that the respondent should have acted upon the second offence either in invoking the provision of Marketing Discipline Guidelines or as per the relevant clause in dealership agreement. Awarding double punishment for the same offence can not be justified by any means, which is a clear violation of principle of natural justice. He further decided that the action of the respondent to continue with the suspension even after action has been taken for the second offence vide letter dated 24th July, 2008 is arbitrary in nature and also unjustifiable by all means. The Arbitrator also decided that after exercising the option available as per Marketing Discipline Guidelines to the respondent, to penalise the claimant for irregularities for second offence it was not a reasonable and justifiable action taken by the respondent in terminating the dealership and that also under Clause 28B which in fact imposed double punishment for same offence specially when for such violation penalty was imposed and such penalty was paid by the petitioner. Ultimately the learned Arbitrator rejected the claim of the petitioner for restoration of dealership and passed the following award: 55(a) With regards to the Claimant's claim to declare the purported termination effected by letter dated 15-1-09 is illegal and cancellation there of, I, as an arbitrator, is not vested with power under Arbitration and Conciliation Act, 1996 and clause 38 of the dealership Agreement vide which I was appointed to adjudicate the disputes & differences to cancel the letter of termination issued by the respondent vide letter dated 15.1.09, unmindful of the fact that in similar cases referred above the Hon'ble Supreme Court held the view that a commercial contract which is determinable, can not be restored by the Arbitrator once terminated. In my view the respondent has erred in terminating the distributorship under clause 28B, after a gap of 6 months after the Claimant has been penalizes for the same offence which I held is bad in law and also against Principle of Natural Justice. (b) & (c) View above the Respondent is not vested with power to do so. (d) The Claimant's prayer is not maintainable and hence rejected. However, since the termination of the distributorship under clause 28B is held by me as bad in law, in such a situation, under clause 29 of the Distributorship Agreement the Agreement is revocable by either party with out assigning any reason giving 30 days notice, the only relief could be granted to the Claimant is compensation for the notice, instead of restoration of the distributorship. The Claimant is entitled to compensation being the loss of earning for the notice period of 30 days. This view was held by Supreme Court in one of the cases similar in nature. (e) Both the parties to bear the expenses of the Arbitration equally and no order to cost.;