Jharia Petrol Supply, Durgapur, Jharia, P.O. & P.S. Jharia, District Dhanbad v. Indian Oil Corporation Limited

Indian Oil Corporation Limited, through its D.G.M. (R.S.), having its office at Indian Oil Bhawan, Dhanbad, P.O. & P.S. Dhanbad, District Dhanbad.

Managing Director, Indian Oil Corporation Limited, having its office at Indian Oil Bhawan, Dhanbad, P.O. & P.S. Dhanbad, District Dhanbad. … … Respondents ------- CORAM:HON’BLE MR. JUSTICE SUJIT NARAYAN PRASAD ------- For the Petitioner For the Respondents :Mr. Vipul Poddar, Advocate :Mr. Rahul Lamba, Advocate Order No. 04/Dated 2nd March, 2022 ------ The matter has been taken up through video conferencing.

2. The instant application has been filed under Section 11(6)(C) of the Arbitration and Conciliation Act, 1996 for appointment of an independent Arbitrator and for reference of the dispute arising out of Clause 21 of the Agreement dated 29.09.1967 for Petrol HSD Dealer Agreement, between the parties for adjudication. [2]

The brief facts of the case which petitioner/applicant to approach this Court by filing the instant application, are that an agreement was entered in between the petitioner/applicant and respondents, to be known as Petrol HSD Dealer Agreement, for the purpose of sale and disposal of Petrol / High Speed Diesel Oil and certain other petroleum products. The aforesaid contract contains a provision as under Clause 21 for settlement of dispute through Arbitrator. The petitioner/applicant was carrying out the business in terms of the aforesaid contract. However, an explanation was sought for on 15.09.1999 asking to reply as to why the penal action should not be initiated in line with Clause 14 of the said dealership agreement in violation of the terms and conditions of the aforesaid dealership agreement. The petitioner/applicant replied. However, aforesaid reply was not found to be satisfactory and in consequence thereof, the dealership agreement was cancelled. The petitioner/applicant approached to this Court by filing writ petition being C.W.J.C. No.827 of 2000 (R). However, the aforesaid writ petition was dismissed against which intra-court appeal being L.P.A. No.696 of 2001 was [3] preferred but the same was also dismissed vide order dated

22.04.2002. The petitioner/applicant, thereafter, made a request for appointment of Arbitrator vide application dated

28.04.2018. According to the petitioner/applicant, when the Arbitrator, in terms of the contract, has not been appointed, the instant application under Section 11(6)(C) of the Arbitration and Conciliation Act, 1996 has been filed. The instant application was heard on 22.11.2021.

Mr. Rahul Lamba, learned counsel, after waiving notice on behalf of respondents, had sought for four weeks’ time to file counter affidavit. The matter was directed to be posted thereafter. The matter has been listed today for hearing of the matter. Mr. Lamba, learned counsel appearing for the respondents, has submitted that although no counter affidavit has been filed, but he is ready to argue the matter on merit. The matter has been heard on merit with the consent of the learned counsel for the parties.

Mr. Vipul Poddar, learned counsel appearing for the petitioner/applicant, has submitted that it is a fit case where the sole Arbitrator is required to be appointed for [4] adjudication of the claim in terms of Arbitration Agreement as contained under Clause 21. He further submits that the petitioner/applicant, in terms of the aforesaid condition stipulated in the contract, made request for appointment of Arbitrator vide application dated 28.04.2018 but the same was not responded. It is the laches on the part of the respondents in not appointing the Arbitrator, therefore, the instant application.

Per contra, Mr. Rahul Lamba, learned counsel appearing for the respondents, submits that the instant application is not maintainable on the ground of limitation. According to him, the instant application has been filed after inordinate delay of about 20 years from the date of passing of the order by the Hon’ble Division Bench of this Court in L.P.A. No. 696 of 2001 whereby liberty was granted to the petitioner/applicant to approach before the authority for appointment of Arbitrator. He further submits that the request for appointment of Arbitrator was also made after lapse of about 16 years from the date of order passed in L.P.A. No. 696 of 2001. He, in order to strengthen his argument, has relied upon the judgment rendered by Hon’ble Apex Court in Bharat Sanchar Nigam Limited and Another v. Nortel Networks India Private Limited [(2021) 5 SCC 738], wherein the issue of limitation was the sole criteria for [5] consideration and while delving upon the issue, the Hon’ble Apex Court has held that the provision of Article 137 of the First Schedule of the Limitation Act, 1963, will be applicable, thereby the proceeding for appointment of Arbitrator, if filed beyond the period of three years as provided under Article 137 of the Limitation Act, 1963, will be barred by limitation and in view of the matter, such application is fit to be dismissed at the threshold.

Mr. Vipula Poddar, learned counsel appearing for the petitioner, in response to such submission, has submitted that the contention which has been raised by the learned counsel for the respondents to the effect that on the ground of expiry of the period of three years from date of occurrence of cause of action, the instant application is fit to be dismissed, is not worth to be considered in view of the judgment rendered by Hon’ble Apex Court in Uttarakhand Purv Sainik Kalyan Nigam Limited v. Northern Coal Field Limited [(2020) 2 SCC 455] and Zostel Hospitality Private Limited through its authorized representative v. Oravel Stays Private Limited through its Director and Others [(2021) 9 SCC 765].

We have heard the learned counsel for the parties and perused the documents available on record.

The undisputed fact in this case is that the petitioner/applicant had entered into a dealership [6] agreement on 29.09.1967 for the purpose of sale and disposal of Petrol / High Speed Diesel Oil and certain other petroleum products. The aforesaid agreement contains a clause of resolution of dispute as under Clause 21 thereof. The petitioner/applicant, while carrying out its business, on the ground of commission of certain irregularities, an explanation was sought for vide notice dated 15.09.1999 as to why the penal action be not taken. The aforesaid notice was replied by the petitioner/applicant denying the allegation of commission of alleged irregularities. The aforesaid reply was not found satisfactory and consequence thereof, the agreement was terminated vide order of termination dated 12.03.2001. The petitioner/applicant, being aggrieved with the aforesaid action of the respondents, preferred a writ petition being C.W.J.C. No.827 of 2000(R) but was dismissed on the ground of availability of alternative remedy. The petitioner/applicant then preferred intra-court appeal being L.P.A. No. 696 of 2001 which was also dismissed vide order dated 22.04.2002 on the ground of availability of alternative remedy of arbitration clause in the agreement. The petitioner/applicant has not acted immediately after passing of the order by the Hon’ble Division Bench of [7] this Court in L.P.A. No. 696 of 2001, rather, the petitioner/applicant made request vide letter dated

28.04.2018 for appointment of Arbitrator, as would appear from Annexure-5 to the paper book. The grievance of the petitioner/applicant that even though request for appointment of Arbitrator was made vide request letter dated 28.04.2018 but no response thereof was received, therefore, the instant application under Section 11(6)(C) of the Act, 1996 has been filed. Learned counsel respondents raised objection about non-maintainability of instant application on the ground of filing of this application after inordinate delay. He, in support of his argument has relied upon the judgment rendered by Hon’ble Apex Court in Bharat Sanchar Nigam Limited and Another (Supra). While on the other hand, learned counsel appearing for the petitioner/applicant has relied upon the judgment rendered by Hon’ble Apex Court in Uttarakhand Purv Sainik Kalyan Nigam Limited (Supra) and Zostel Hospitality Private Limited (Supra).

This Court, having appreciated the argument advanced on behalf of learned counsel for the parties, is required to answer the issue about the maintainability of the instant application on the ground of applicability of the provision of Article 137 of the Limitation Act, 1963. [8] This Court, before answering the aforesaid issue, is also required to consider as to whether the provision of Article 137 of the Limitation Act, 1963 will be held applicable in a petition filed under Section 11(6)(C) of the Arbitration and Conciliation Act, 1996. This Court, to answer the issue of applicability of the provision of Article 137 of the Limitation Act, 1963, has gone across the judgment rendered by Hon’ble Apex Court in Bharat Sanchar Nigam Limited and Another (Supra), wherein the provision of Article 137 of the Limitation Act, 1963 has been held applicable in a proceeding while considering the application filed under Section 11(6)(C) of the Act, 1996, as would appear from paragraph Nos. 45.1, 50, 51 and 53.1 thereof, which reads hereunder as:-