M/s. Sri.Graha Agenciesrep. By its PartnershipD.B.VaidyanathanHaving Office atNo.7 v. The Deputy General Manager Indian Oil Corporation Limited Regional Office

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED:06.12.2007CORAM:THE HON'BLE MR.JUSTICE P.JYOTHIMANIWRIT PETITION NO.35374 OF 2007and M.P.Nos.1 to 3 of 2007M/s. Sri.Graha Agenciesrep. By its PartnershipD.B.VaidyanathanHaving Office atNo.7, Smith ColonyGanapthypuramEast ThambaramChennai 600 059... Petitionervs.1.The Deputy General Manager Indian Oil Corporation Limited Regional Office, Nungampakkam Chennai 600 034.2.The Chief Area Manager Indian Oil Corporation Limited Marketing Division Indane Area Office 500 Anna Salai Teynampet, Chennai 600 018.3.The Area Manager Indian Oil Corporation Limited Chennai Area Office 500 Anna Salai Teynampet, Chennai 600 018... RespondentsWrit petition filed under Article 226 of the Constitution ofIndia praying for issuance of writ of certiorarified mandamus tocall for records relating to the order passed by the 1strespondent dated 16.11.2007 in TNL/S/385 and quash the same anddirect the respondents to continue the supply of LPG Cylinders andallow the petitioner agency to run the business smoothly .For petitioner :Mr.R.C.Paul KanagarajFor respondents:Mr.T.R.Rajagopalan,Sr.Counsel for M/s.Anand, Abdul and Vinoth Assts... https://hcservices.ecourts.gov.in/hcservices/ ORDERThe challenge in the writ petition is the order of the firstrespondent dated 16.11.2007 under which the first respondent hassuspended the distributorship given to the petitioner for the saleof the Indian Oil Corporation Liquified Petroleum Gas (LPG) knownas Indane in cylinders for house-hold customers. Admittedly, asper the agreement dated 07.02.2002 entered between the petitionerand the IOC, the respondent herein, the distributorship has beengiven to the petitioner. Clause 37 of the agreement contemplatesthe disputes to be referred to the Arbitrator. The said clausestates as follows:"37. Any dispute or difference of any nature whatsoeveror regarding any rights, liability, act, omission oraccount of any of the parties hereto arising out of orin relation to this agreement shall be referred to thesole arbitration of the Managing Director of theCorporation or of some Officer of the Corporation whomay be nominated by the Managing Director. TheDistributor will not be entitled to raise any objectionto any such arbitrator on the ground that thearbitrator is an officer of the Corporation or that hehas to deal with the matters to which the contractrelates or that in the course of his duties as anofficer of the Corporation he had expressed views onall or any other matters in dispute or difference. Inthe event of the arbitrator to whom the matter isoriginally referred being transferred or vacating hisoffice or being unable to act for any reasons, theManaging Director as aforesaid at the time of suchtransfer vacation of office or inability to act, shalldesignate another person to act as arbitrator inaccordance with the terms of the agreement. Suchpersons shall be entitled to proceed with the referencefrom the point at which it was left by his predecessor.It is also a term of his contract that no person otherthan the Managing Director or a persons nominated bysuch Managing Director of the Corporation as aforesaidshall act as arbitrator here under. The award of thearbitrator so appointed shall be final conclusive andbinding on all parties to the agreement, subject to theprovisions of the Arbitration Act, 1940 or anystatutory modification or re-enactment thereof and therules made thereunder for the time being in force shallapply to the arbitration proceedings under thisclause."2. The case of the petitioner is that on the basis of certaincomplaints a show-cause notice was issued to the petitioner by therespondent Corporation on 9.10.2007, directing the petitioner togive explanation for nearly 11 charges which are stated to bebreach of contract of terms of agreement and also the misconducton the part of the petitioner. The petitioner has given itsexplanation on 5.11.2007 and thereafter, the impugned order came https://hcservices.ecourts.gov.in/hcservices/ to be passed finding that all the charges levelled against thepetitioner as distributor have been proved. A reference to theimpugned order shows that the petitioner who was givendistributorship only in respect of house-hold customers has beendiverting the same for commercial purpose also and on inspection,it was found that by diversion of Indane Cylinders which are to besupplied for residential purpose to commercial purpose, therespondent Corporation has incurred a loss to the extent of 67lakhs. It is the case of the respondents as seen in the counteraffidavit, that the petitioner got distributorship as aproprietary concern and whereas on enquiry it came to light thatthe petitioner in fact has entered a partnership with his brotherand the partnership deed was registered as early as 1988 and thepetitioner has suppressed the material fact and obtained thedistributorship in his name as if he is the sole proprietor. Itis the further case of the respondent that the distributorship hasbeen transferred to one Pattammal Agencies as an interim measure,after cancelling the petitioner's distributorship.3. Mr.R.C.Paul Kanagaraj, learned counsel appearing for thepetitioner would submit that to the show-cause notice issued bythe respondent Corporation, the petitioner has given a detailedexplanation. However, while passing the impugned order, theexplanation has not been taken into consideration, and on theother hand, it is due to the personal vendetta of the thirdrespondent, the impugned order has been passed suspending thedistributorship of the petitioner. 4. Per contra, Mr.T.R.Rajagopalan,learned senior counsel forthe respondent Corporation who has taken me to the contents of thecounter affidavit to show as to how the cylinders meant for house-hold have been used for commercial purpose resulting in huge lossto the Corporation. According to him, the price of a cylindermeant for house-hold is Rs.288/-, whereas the price of a cylindersupplied for commercial purpose is Rs.1160/- and therefore, by theconduct of the petitioner, he has not only earned huge benefitillegally, but also caused loss to the Corporation. In respect ofthe arbitration Clause, the learned senior counsel would submitthat when the contract provides a clause for arbitration, the writpetition is not maintainable. To substantiate his contention, hereferred to the order of the Division Bench of this Court in thecase of M/s.Kasturi Agencies rep. By its Manager vs. Indian OilCorporation, Chennai Divisional Office rep. By its DivisionalManager in W.A.No.3812 of 2004 dated 19.4.2007, wherein theDivision Bench has held that the writ petition is not maintainablewhen the agreement provides for arbitration in case of disputes.Therefore, the learned counsel submits that the writ petitionitself is not maintainable.5. This Court by order dated 20.11.2007, while orderingnotice of motion, has granted interim stay for a period of twoweeks. It is stated that a contempt application has been filed onthe basis that the respondent Corporation has violated the stayorder and the same is pending. In the contempt application, onthe basis of the submission made by the learned counsel for the https://hcservices.ecourts.gov.in/hcservices/ petitioner that the public are suffering a lot in the sense thatthey are approaching the petitioner every day for supply of gas,there appears to be a direction given permitting the petitioner toissue necessary slip to such customers making them to approach thethird respondent in which event, the third respondent will seethat the supply to the public is effected without any disturbance.6. Considering the submissions made by the learned counselfor both sides and also taking into consideration of the presenceof arbitration clause in the agreement dated 7.2.2002, the writpetition is not maintainable and it is liable to be dismissed. Itis open to the petitioner to invoke the arbitration clause as perthe agreement stated above. In the event of arbitration clausebeing invoked by the petitioner, the arbitration proceedings shallbe completed expeditiously. In the meantime, till the arbitratoris appointed and a decision is arrived at, the arrangement asstated above, viz., that as and when the public approach thepetitioner, the petitioner shall issue slip and ask them toapproach the third respondent and in such event, the thirdrespondent will see that the supply to the customers for domesticpurpose is made without interruption. The writ petition is dismissed with the above direction. Nocosts. Consequently, connected miscellaneous petitions areclosed.Sd/-Asst. Registrar./true copy/Sub Asst. Registrar.khTo1.The Deputy General Manager Indian Oil Corporation Limited Regional Office, Nungampakkam Chennai 600 034.2.The Chief Area Manager Indian Oil Corporation Limited Marketing Division Indane Area Office 500 Anna Salai Teynampet, Chennai 600 018. https://hcservices.ecourts.gov.in/hcservices/

3.The Area Manager Indian Oil Corporation Limited Chennai Area Office 500 Anna Salai Teynampet, Chennai 600 018.1 cc to Mr.R.C. Paul Kanagaraj, Sr. 727241 cc to M/s. Anand Abdul Vinodh Associates, Sr. 72285 W.P.No.35374 of 2007SA (CO)kk 19/12