J. Mohandas v. Indian Oil Corporation

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE C.K.ABDUL REHIM** ## **&** **THE HONOURABLE MRS. JUSTICE SHIRCY V.** **TUESDAY, THE 27TH DAY OF MARCH 2018 / 6TH CHAITHRA, 1940** **Arb.A.No.85 of 2017** **IN OPARB 196/2013 of II ADDITIONAL DISTRICT COURT,TRIVANDRUM** ## **APPELLANT/PETITIONER/CLAIMANT:** ## **J. MOHANDAS** **AGED 54, S/O D.JOSEPH, PROPRIETOR M/S HAPPY FUELS,INDIAN OIL DEALER, AYANIMOODU PO, N H ROAD, PALLICHAL,THIRUVANANTHAPURAM695501.(PREVIOUSLY RESIDING AT AJEE MANDIRAM, VAVODE, VAZHICHAL PO,NEYATTINKARA, THIRUVANANTHAPURAM, PIN- 695129 AND HAVINGPRESENT RESIDENCE ADDRESS AT AMAL BHAVAN, PUTHUVAKKAL, KATTAKADA PO, KATTAKADA (VIA), THIRUVANANTHAPURAM- 695572** **BY ADVS. SRI.E.M.MURUGAN SRI.P.R.PRATEESH** ## **RESPONDENT/RESPONDENT/RESPONDENT:** **INDIAN OIL CORPORATION REPRESENTED BY DIVISIONAL RETAIL SALES MANAGER,II FLOOR, CO BANK TOWERS, VILAS BHAVAN, PALAYAM,THIRUVANANTHAPURAM- 695033HAVING REGISTERED OFFICE AT INDIAN OIL BHAVAN, G-9, ALI YAVAR JUNG MARG, BANDRA (EAST), MUMBAI,PIN- 400051, ERNAKULAM- 682036.** **BY ADVS. SRI.C.S.DIAS SMT.MARIA ELIZABETH WILSON SMT.P.K.DHANYA SRI.N.K.SUBRAMANIAN SRI.A.K.SUKUMARAN-SR.GP** **THIS ARBITRATION APPEALS HAVING BEEN FINALLY HEARD ON 27.03.2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **Arb.A.No.85 of 2017** **2** ## **C.K.ABDUL REHIM, J. & SHIRCY.V, J.** ======================== **Arb.Appeal.No. 85 of 2017** ======================== **Dated this the 27[th] day of March 2018** ## **J U D G M E N T** ## **C.K.Abdul Rehim, J.** The petitioner in O.P.(Arbitration)No. 196 of 2013 on the files of the Additional District Court-II, Thiruvananthapuram is the appellant herein, challenging dismissal of the Original Petition. The appellant who was the claimant in Arbitration Proceedings before the Sole Arbitrator had challenged the Award dated 05.03.2013, in a petition filed under Section 34 of the Arbitration and Conciliation Act 1996 (hereinafter referred to as the 'Act' for short) before the District Court. The District Court dismissed the Original Petition on finding that the appellant had not succeeded in proving that the impugned Award is one opposed to public policy of India, so as to bring it within the purview of ground enumerated under Section 34(2) (b)(ii) of the Act. It is aggrieved by the said order of the District Court, the above appeal is filed. 2. A brief narration about the dispute involved will be essential. The appellant was appointed as a dealer of petroleum products in a retail outlet owned by the respondent corporation, **Arb.A.No.85 of 2017** **3** located at Pallichal, Thiruvananthapuram, based on the dealership agreement executed on 15.01.2004 between the parties. The dealership was terminated by the respondent corporation through letter issued on 21.08.2008, on the ground that the claimant had violated Clause No.9(b) and 10 of the agreement. The appellant had failed to achieve the sales target fixed and the sales in the outlet had gone far less than the minimum agreed volume set out in the agreement etc. It was also alleged that the appellant had parted with the management of the retail outlet to others by executing an agreement on 18.10.2006, in violation of the terms of the dealership agreement and that the retail outlet are run by those persons, since October, 2006. The dealership was terminated by invoking various clauses contained in the agreement. The arbitration proceedings was commenced at the instance of the appellant by invoking Clause 61 of the Dealership Agreement. The respondent appointed the Sole Arbitrator, in terms of the arbitration clause contained in the agreement and the dispute was adjudicated by the Arbitrator. In the Award, which was impugned before the District Court, the Sole Arbitrator found that, the action of the respondent in terminating the dealership of the appellant was valid and sustainable. It was further found **Arb.A.No.85 of 2017** **4** that the appellant will be entitled for an amount of Rs. 2,38,675.70/- (Rupees Two Lakh Thirty Eight Thousand Six Hundred and Seventy Five and Seventy Paise only) which remains due for payment from the respondent, subsequent to the termination. The respondent was directed to pay the amount within a period of thirty days from date of the Award, along with the simple interest calculated at the rate of 18% per annum from 21.08.2008 onwards. It is made clear that, on failure to make payment of the said amount within the time stipulated, the same shall be paid with a penal interest @ 20% per month for each month of delay or part thereof, till realization. The claimant was given liberty to approach the respondent corporation for release of the DD charges, for the whole amount deposited through DDs for the period after February 2008. The respondent was directed to release the amount payable on that count after verification of such request, irrespective of the delay in submission of such claim. It was made clear that if such claim for the period after February 2008 was already submitted, the respondent corporation shall release the amounts due as the DD charges, within thirty days from date of the Award. On failure, it was made clear that the same shall be paid with penal interest at 20% per month. All other **Arb.A.No.85 of 2017** **5** issues based on the claim statement submitted by the appellant was declined, which includes the claim for reimbursement of product loss as well as the claim for damages alleged to have sustained based on the termination of the dealership. 3. In the Original Petition before the District Court, it was found that the appellant was not successful in establishing any grounds for interference with the Award, as provided under Section 34(2)(a). With respect to the grounds enumerated under Section 34(2)(b). contention of the appellant was that the Award was patently illegal and so it has to be set aside on the ground that it is in conflict with public policy of India. It was also contended that the Award suffers from material irregularity to the extent of non-appreciation of the evidence adduced by the appellant in a proper manner. But the District Court after referring to explanation I of Section 34(2)(b)(ii) observed that, the Award can be termed as one in conflict with the public policy of India only if it is contrary to justice and morality or if it is patently illegal or if it is unfair and unreasonable that it may shock the conscious of the Court. Referring to the decision of the Hon'ble Supreme Court in **Associate Builders v. Delhi Developmental Authority [(2015) 3 SSC 49],** the court below observed that, a decision which is perverse or irrational **Arb.A.No.85 of 2017** **6** is the one which no reasonable person would have arrived, can be interfered under Section 34. It was found that the absence of judicial approach, violation of principles of natural justice, perverse and irrational decisions etc. were also brought under the head of fundamental policy of India. It was also held that a finding passed on no evidence or a finding based on irrelevant aspects which was arrived on ignorance of vital evidence can necessarily be termed as a perverse decision. But, it was observed by the learned District Judge that the appellant had failed to show that the Arbitral Award is perverse or that there was no judicial approach by the Arbitrator. Nor it was proved that there occurred any violation of natural justice in conducting the Arbitration proceedings. The learned District judge found that the Award in question was passed after considering all the evidence adduced by the parties. It was noticed that the Arbitrator had arrived at the findings based on the evidence adduced, which includes Exts.C1 to C17 documents produced by the appellant. It was held that the appellant had not succeeded in pointing out any defect in the decision making process of the Arbitrator. Therefore, it was found that no illegality can be attributed with respect to the impugned Award. Holding that the Arbitrator had arrived at the **Arb.A.No.85 of 2017** **7** conclusion by applying his mind to the contentions of the parties and the materials available on record, it was found that the challenge against the Award as one opposed to public policy of India, cannot be accepted. Therefore, the original petition was dismissed. 4. Heard; counsel appearing on either side. Learned counsel for the appellant contended that, with respect to the amount of 13 lakhs claimed from the respondent as the amount deposited by the appellant for supply of products, before the termination of the dealership, the findings of the Arbitrator cannot be sustained. It is pointed out that the Arbitrator had reduced various amounts which the respondent had allegedly cleared payment to the Electricity Board and to the ESI Corporation etc. as not amounts which are liable to be paid by the appellant. It is contended that those are the liabilities which the respondent ought to have incurred and therefore the deductions made are not tenable. 5. On a perusal of the impugned Award, it is evident that the Arbitrator had gone through the materials on record and arrived at a finding that the amounts paid by the Corporation to the Electricity Board and the ESI corporation are the liabilities of the appellant, which can be given set of against **Arb.A.No.85 of 2017** **8** the amount deposited by the appellant before the respondent Corporation. We do not think that the conclusion arrived by the Arbitrator in this regard is in any manner perverse which can be categorized as one shocking the conscious of the court. It remains well settled that the courts exercising power under Section 34 is not entitled to substitute its conclusion for the conclusions arrived by the Arbitrator, if such conclusions are possible or plausible based on the evidence available on record. The court is not expected to go deep into a re-appreciation of the evidence on record in order to arrive at any conclusion as to whether the Award is opposed to public policy or to the fundamental law of the country. 6. It is contended on behalf of the appellant that the denial of the claim to the extend of 22,29,370/- (Twenty Two Lakh Twenty Nine Thousand Three Hundred and Seventy only) towards reimbursement to the product loss of the MS Extra premium and Auto Gas, is totally illegal and unsustainable. It is contended that the conclusions in this regard arrived by the Arbitrator is perverse and opposed to fundamental law of the country. It is also contended that the Arbitrator had failed to consider that the respondent Corporation was paying such amounts to other dealers as a matter of custom and convention. **Arb.A.No.85 of 2017** **9** Therefore it is contended that denial of the claim in this respect was totally illegal and is liable to be interfered. On evaluation of the impugned Award it is evident that the Arbitrator had denied the claim in this count by referring to the specific clause contained in the dealership agreement, which clearly fetch liability on the appellant with respect to loss, contamination, damage or shortage of any of the products supplied or delivered by the Corporation. Therefore we did not find merit in the contentions in this regard. 7. As already observed, the court exercising powers under Section 34 is not expected to have done a reappraisal of the evidence on record. On a perusal of the Award in the case at hand, we are convinced that the Arbitrator had applied his mind to each of the issues involved. He had given his own reasonings in arriving at the conclusions, on such issues, based on the evidence available on record, both oral and documentary. Therefore, we are inclined to concur with the findings of the District Court that there exists no perversity or manifest injustice in the decision of the Arbitrator. It has to be held that the conclusions arrived by him are possible ones. The appellant could not succeed in establishing that the Award is patently illegal or against fundamental policy of India. None of the **Arb.A.No.85 of 2017** **10** conclusions cannot be termed as arrived on 'no evidence principle'. Therefore we find no reasons to interfere with the order passed by the District Judge in exercise of the appellate powers vested under Section 37 of the Act. 8. In the result, the above appeal fails and the same is hereby dismissed. It is brought to the notice of this court by the learned counsel for the appellant that the amounts due under the impugned Award has not yet been paid by the respondent Corporation. Per contra, learned counsel appearing for the respondent submitted that the amounts due were already sent to the appellant through Demand Draft, which the appellant had refused acceptance. However, in view of the dismissal of the appeal the respondent shall make the payments due under the Award, without any further delay. ## Sd/- ## **C.K.ABDUL REHIM JUDGE** Sd/- ## **SHIRCY.V.** **JUDGE** rp