Galaxy Auto Fuels and Shiju John v Indian Oil Corporation Limited and Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN FRIDAY, THE 25[TH] DAY OF FEBRUARY 2022 / 6TH PHALGUNA, 1943** **AR NO. 85 OF 2021** ## **PETITIONERS:** 1 M/s.GALAXY AUTO FUELS REPRESENTED BY ITS MANAGING PARTNER, SRI.SHIJU JOHN, S/O A.G.JOHN, M/s.GALAXY AUTO FUELS, NEAR S.B.COLLEGE, CHANGANACHERRY, PIN-686101. 2 SHIJU JOHN AGED 46 YEARS S/O A.G.JOHN, M/S GALAXY AUTO FUELS, NEAR S.B.COLLEGE, CHANGANACHERRY, PIN-686101. BY ADVS. P.B.KRISHNAN P.B.SUBRAMANYAN SABU GEORGE B.ANUSREE MANU VYASAN PETER ABRAHAM BABU KALLIVAYALIL ## **RESPONDENTS:** 1 INDIAN OIL CORPORATION LIMITED, HAVING ITS REGISTERED OFFICE AT INDIAN OIL BHAVAN, G-9, YAVAR JUNG MARG, BANDRA (EAT), MUMBAI-400051, REPRESENTED BY ITS CHAIRMAN. 2 THE DEPUTY GENERAL MANAGER (RETAIL SALES), INDIAN OIL CORPORATION LIMITED, THIRUVANANTHAPURAM DIVISIONAL OFFICE, INCHAKKAL BYPASS ROAD, VALLAKADAVU P.O, THIRUVANANTHAPURAM-695008. 3 DIVISIONAL RETAIL SALES MANAGER INDIAN OIL CORPORATION LIMITED, THIRUVANANTHAPURAM DIVISIONAL OFFICE, INCHAKKAL BYPASS ROAD, VALLAKADAVU P.O, THIRUVANANTHAPURAM-695008. 4 DIRECTOR (MARKETING) INDIAN OIL CORPORATION LIMITED, **AR NO. 85 OF 2021** **2** HAVING ITS REGISTERED OFFICE AT INDIAN OIL BHAVAN, G-9, YAVAR JUNG MARG, BANDRA (EAST), MUMBAI-400051. BY ADVS. M.GOPIKRISHNAN NAMBIAR K.JOHN MATHAI JOSON MANAVALAN KURYAN THOMAS PAULOSE C. ABRAHAM RAJA KANNAN POOJA MENON THIS ARBITRATION REQUEST HAVING COME UP FOR ADMISSION ON 25.02.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: **AR NO. 85 OF 2021** **3** ## **ORDER** The petitioners, who are stated to be a Partnership Firm and its Managing Partner respectively, have filed this Arbitration Request invoking the jurisdiction of this Court under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act' for short), on the singular assertion that they had entered into Annexure A1 Dealership Agreement with the respondents and that its term has now expired. 2. According to Sri.P.B.Krishnan, learned counsel for the petitioners, once the afore said Agreement expired, certain corollary disputes inevitably arose, particularly with respect to the “Machinery and Apparatus” relating to the “Petroleum outlet” which was supplied by the respondents and that same can be adjudicated and resolved only through the mechanism of Arbitration, on account of Clause 62 of the afore mentioned Agreement. The learned counsel submitted that, therefore, his clients addressed the **AR NO. 85 OF 2021** **4** respondents through Annexure A7 notice, seeking that the Machinery and Apparatus” installed by them pursuant to Annexure A1 Agreement be removed and to honour his clients' claim for demurrage and such other; or in the alternative that they agree to an Arbitration as per the afore mentioned clause in the Agreement. 3. Sri.P.B.Krishnan asserted that, in spite of Annexure A7 being accepted by the respondents, they have chosen not to respond to it or to accede to any of the requests therein, thus constraining his clients to approach this Court through this Arbitration Request. 4. The afore assertions and imputations made by the petitioners through their learned counsel Sri.P.B.Krishnan, were vehemently answered by Smt.Pooja Menon - learned counsel appearing on behalf of the Standing Counsel for the respondents, relying upon a Statement filed on behalf of her clients. She argued that Annexure A1 ## **AR NO. 85 OF 2021** ## **5** Agreement, though styled as a 'Dealership Agreement', creates certain rights over the land in question in favour of her clients and consequently that such issues cannot be subjected to an arbitration under the provisions of the “Act”. ## 5. Smt.Pooja Menon further predicated that questions relating to tenancy and rental arrears are inexorably involved in this case and consequently that petitioners must invoke their remedies before the competent Civil Court. She thus prayed that this Arbitration Request be dismissed. 6. The afore dialectical contentions of the parties being so recorded, I have examined Annexure A1 to verify whether the contentions of the respondents would hold water in law. 7. As rightly stated by Sri.P.B.Krishnan, learned counsel for the petitioners, Annexure A1 is not a tenancy agreement but a 'Retail Outlet ## **AR NO. 85 OF 2021** ## **6** Dealership Agreement'. As per its terms, the land is admittedly owned by the petitioners and the respondents have only installed _'the apparatus and equipment described in the second schedule'_ for the purpose of running an retail petroleum outlet. 8. Therefore, _prima facie,_ this Court is unable to find that the issue relating to tenancy or rental arrangement would stand in the way of the disputes between the parties being adjudicated and resolved through Arbitration; and presumably being aware of the mind of this Court as afore, Smt.Pooja Menon requested that such issues be also left open to the learned Arbitrator to decide under the “ _kompetenz-kompetenz_ ” principles residing in Section 16 of the “Act”. 9. Before I tread forward, I must certainly verify whether Annexure A1 Agreement contains an Arbitration Clause as claimed by the petitioners, which would bind the parties to the process of Arbitration for resolution of their disputes. ## **7** Again, as rightly stated by Sri.P.B.Krishnan, Clause 62 thereof provides that _“any dispute or difference of any nature whatsoever, any claim, cross-claim, counter-claim or set-off or regarding_ _any right, liability, act, omission or account of any of the parties arising out of or in relation to the Agreement shall be referred to the sole Arbitration of the Director (Marketing) of the 1[st]_ _respondent – Indian Oil Corporation”._ 10. It is thus indubitable that parties are bound themselves to Arbitration and that the only remaining question is whether such processes will have to be conducted by the Director (Marketing) of the 1[st] respondent. Though there is no contest that such a course is not possible on account of the judgment of the Hon'ble Supreme Court in ## _**Perkins Eastman Architects DPC v. HSCC (India)Ltd.**_ _**[AIR 2020 SC 59],**_ followed by this Court in _**Tulsi**_ ## _**Developers India Pvt. Ltd. v. Dr.Appu Benny Thomas**_ _**[2021(5) KLT 339],**_ it is necessary for me to record that law is now well settled that no party ## **AR NO. 85 OF 2021** ## **8** to the Agreement can either arbitrate or appoint an Arbitrator. 11. Luculently, therefore, this Court will have to disregard that part of Clause 62 of Annexure A1 Agreement, while affirming the request for reference of the disputes to arbitration, as made by the petitioners. In the afore circumstances, I order this Arbitration Request in the following manner:- (a) I nominate Sri.S.Jagadees, Thoppil House, A.C.George Lane, Unichira, Thrikkakkara P.O., Ernakulam, PIN-682021, as the sole Arbitrator, to adjudicate and resolve the disputes and differences between the parties to this case arising from Annexure A1 agreement. (b) The Registry is directed to communicate a copy of this order to the learned Arbitrator within a period of two weeks from today and to obtain a Statement of Disclosure from him under Section 11(8) read with Section 12(1) of the **AR NO. 85 OF 2021** **9** Arbitration and Conciliation Act, 1996. (c) Once the Disclosure Statement is obtained from the learned Arbitrator, the Registry shall release the certified copy of this order, with a copy of the said statement appended to it, retaining the original of the same on the files of this case. - (d) The fees of the Arbitrator shall be governed by the Fourth Schedule of the Arbitration and Conciliation Act, 1996. - (e) The parties to this case are _ad idem_ that they will share the arbitration costs and fees equally and it is so recorded. - (f) In order to enable the Arbitrator to commence the proceedings without delay, I direct the parties to mark appearance before him at 11.00 a.m. on 28.03.2022. It is needless to say that since this Court has not entered into the merits of any of the **10** contentions or the rival contentions of the parties, it will be open to them to raise any plea before the learned Arbitrator, including on his competence, which shall then be considered in terms of law appositely. **Sd/-** **DEVAN RAMACHANDRAN JUDGE** **MC/25.2** **AR NO. 85 OF 2021** **11** ## **APPENDIX OF AR 85/2021** PETITIONER ANNEXURES Annexure A1 DATED 16.04.2004 TRUE COPY OF THE DEALERSHIP AGREEMENT. Annexure A2 DATED 03.02.2021 TRUE COPY OF THE NOTICE SENT BY THE PETITIONER NO.2. Annexure A3 DATED 04.03.2021 TRUE COPY OF THE LETTER SENT BY THE PETITIONER NO.2 Annexure A4 DATED 23.03.2021 TRUE COPY OF THE REPLY LETTER SENT BY RESPONDENT NO.2. Annexure A5 DATED 03.06.2021 TRUE COPY OF THE LETTER SENT BY PETITIONER NO.2. Annexure A6 DATED 16.07.2021 TRUE COPY OF THE LETTER SENT BY PETITIONER NO.2. Annexure A7 DATED 31.08.2021 TRUE COPY OF THE LEGAL NOTICE ISSUED TO THE RESPONDENTS.