Bhadrah Khatoon v. Bharat Petroleum Corp. Ltd.

ORDER

1. Heard Mr. Rahul Pant, learned senior counsel for the petitioner as also Mr. R. P. Sharma learned counsel appearing for the respondents.

2. The instant petition has been filed by the petitioner under Section 11(6) of Jammu and Kashmir Arbitration and Conciliation Act, 1997 (for short, the Act’) for appointment of an arbitrator, on the strength of averments made and grounds taken in the petition.

3. Facts, in brief, leading to the filing of the instant petition are that in the year 2018, the respondent No. 1 invited applications for setting up retail outlets at various locations both regular and rural, including at the location of 2 AP No.27 0f 2022 village Nagrota. The petitioner also applied for the said retail outlet at village Nagrota under the ST category and came to be selected on the basis of draw of lots. The letter of intent was accordingly, issued in favour of the petitioner by the respondent No. 1 and the petitioner was asked to fulfill all the terms and conditions as contained in the letter of intent so as to enable commissioning of the dealership within the stipulated time frame. The petitioner claims to have fulfilled all the terms and conditions. A formal dispensing pump and selling license agreement dated 31.07.2019 came to be executed between the petitioner and respondent No 1, whereby license was granted in favour of the petitioner for 15 (fifteen) years w.e.f. 31.07.2019 to 30.07.2034.

4. Learned counsel for the petitioner submits that petitioner has been running business by strictly adhering to the terms and conditions of the License Agreement. However, vide letter dated 18.06.2021 respondent No.2 issued a show cause notice to the petitioner alleging therein that the petitioner had made a false declaration by way of an affidavit to the effect that she had passed matriculation examination from J&K Board in the year 2001 as the matriculation certificate was fraudulently obtained by the petitioner and she, by the same affidavit had made a declaration that, if any, of the documents submitted in support of the application for awarding of the retail outlet dealer ship is found to be untrue, incorrect or false, the respondent-Corporation would be within its right to withdraw the letter of intent or terminate the dealership granted in favour of the petitioner. In the letter of intent dated 09.03.2019 issued by BPCL it was also mentioned that, if any declaration given by the petitioner in her application is found to be false, the respondent-Corporation would be within its right to withdraw the letter of intent. 3 AP No.27 0f 2022

5. Learned counsel for the petitioner submits that the allegation of the respondent-Corporation that the petitioner has fraudulently obtained the 10th class certificate from J&K Board and has misrepresented material facts based on the affidavit filed by the petitioner is not correct, as such, since a dispute has arisen between the petitioner and the respondent-Corporation, the petitioner invoked the arbitration clause as provided in para 19 of the Memorandum of Agreement dated

31.07.2019. The said arbitration clasue-19 reads as under:- “19. Any dispute or difference whatsoever arising out or in connection with this Agreement including any question regarding construction, interpretation application, meaning, scope, operation or effect of this contract or termination thereof shall be referred to and finally resolved through arbitration as per the procedure mentioned herein below:- existence, validity, (a) The dispute or difference shall, in any event, be referred only to a Sole Arbitrator (b) The appointment and arbitration proceedings shall be conducted in accordance with SCOPE forum of Arbitration Rules for the time being in force or as amended from time to time (c) The Seat of arbitration shall be at Jammu (d) The proceedings shall be conducted in English language (e) The cost of the proceedings shall be equally borne by the parries, unless otherwise directed by the Sole Arbitrator.”

6. Accordingly, the petitioner served a legal notice upon respondents on 20.04.2022 for referring the dispute to an arbitrator in terms of the aforesaid clause-19 of the agreement dated 31.07.2019. However, the respondent- Corporation has not responded to the said legal notice, compelling the petitioner to approach this Court seeking appointment of an independent arbitrator under Section 11(6) of the Act. 4 AP No.27 0f 2022

7. Learned counsel for the respondent-Corporation contesting this petition submits that the dispute is not arbitrable. It has been submitted that the 10th Class certificate submitted by the petitioner for obtaining dealership of Oil Company was found to be not genuine and the said fact was also certified by the J&K Board. It is also stated that the petitioner has suppressed the relevant material facts. Therefore, as per the letter of intent, her dealership is liable to be cancelled and, in this regard, the respondents have already issued show cause notice to the petitioner. The dispute, being based on a criminal fact of fraud practiced by the petitioner will be beyond the scope of arbitration. In support of his contention, learned counsel for the respondents has relied upon the judgments of the Hon’ble Supreme Court rendered in case titled M/S Emaar India Ltd vs. Tarun Aggarwal Projects LLP and Anr., 2022 SCCOnLine1328,and A V Papayya Sastry vs. Government of AP and others,(2007) 4 SCC 221.

8. On the other hand, Mr. Rahul Pant, learned senior counsel for the petitioner submits that mere allegation of misrepresentation/fraud would not be sufficient for cancelling the dealership of the petitioner and in case the matriculation certificate obtained by the petitioner from the J&K Board is not found to be genuine as alleged by the respondent-Corporation, the petitioner does not want to rely upon the same, as otherwise, the petitioner has equivalent qualification as she passed Adeeb examination from Jamia Urdu, Aligarh which is equivalent to matriculation certificate.

9. Mr. Rahul Pant, learned senior counsel for the petitioner has relied upon a judgment of the Hon’ble Supreme Court rendered in case A. Ayyasamy vs. A. Paramasivam and others, AIR 2016 SC 4675 in which it has been laid down that the allegations of fraud should be such that not only these allegations are serious and that in normal course these may constitute criminal offence, but these 5 AP No.27 0f 2022 are also complex in nature and the decision on these issues demand extensive evidence for which civil court would appear to be more appropriate forum than the Arbitral Tribunal.

10. It has been submitted that the present case is not such a case. It has been also submitted that it is not that the petitioner had deliberately or intentionally relied upon the 10th class certificate issued by the J&K Board and by ignoring the said certificate, the respondent-corporation can still rely upon the certificate obtained by the petitioner from Jamia Urdu, Aligarh which is a substitute for the matriculation certificate from the J&K Board.

11. Heard the learned counsel for the parties and perused the materials on record.

12. In this regard, we may refer to the decision of the Hon’ble Supreme Court in Booz Allen and Hamilton Inc. vs. SBI Home Finance Ltd,(2011) 5 SCC 532, wherein it has been held that adjudication of certain categories of proceedings has been reserved by the legislature exclusively for public fora as a matter of public policy, and certain other categories of cases, though not exclusively reserved for adjudication by the courts and tribunals may, by necessary implication stand excluded from the purview of private fora. In the said case, the Hon’ble Supreme Court set down certain examples of non-arbitrable disputes as under:- (i) (ii) (iii) (iv) (v) (vi) to divorce, disputes relating to rights and liabilities which give rise to or arise out of criminal offences; judicial matrimonial disputes relating separation, restitution of conjugal rights, child custody; guardianship matters; insolvency and winding up matters; testamentary matters (grant of probate, letters of administration and succession certificate); and eviction or tenancy matters governed by special statutes where the tenant enjoys statutory protection against 6 AP No.27 0f 2022 eviction and only the specified courts are conferred jurisdiction to grant eviction or decide the disputes.

12. In the present case, though there can be no doubt, as also contended by the respondents that there is an element of fraud, if the certificate issued by the J&K Board is taken into consideration. However, it is also noted that the genuineness of which has not also been insisted upon by the petitioner. In that view of the matter, the genuineness or otherwise of the same will not be required to be examined by the adjudicating forum. In other words, the adjudicating forum would not be required to examine as to whether the 10th class certificate issued by the J&K Board is genuine or not, inasmuch as, the petitioner has not insisted upon the genuineness of the said certificate. Consequently, the only issue to be decided by the adjudicating forum would be as to what would be the effect of the said certificate issued by the J&K Board for the grant of dealership and also what would be its effect on the proposed action of the respondent-Corporation for the termination of said dealership.

13. Since the petitioner has submitted that she is otherwise eligible as has qualified the Adeeb examination from Jamia Urdu Aligarh which is equivalent to matriculation certificate and she has contended that she did not submit the 10th class certificate issued by the J&K Board knowingly and that she claims that she was not having the knowledge that the said certificate was not genuine, these are issues which can be examined by adjudicating forum, and thus, can also done by the arbitral tribunal.

14. In view of the aforesaid facts and circumstances of the case, this Court is of the opinion that though there may be an element of fraud as alleged by the respondents, but since the issue as to whether the certificate which was issued by the J&K Board was fraudulently obtained would not be required to be examined as the petitioner herself is not insisting upon the genuineness of the 7 AP No.27 0f 2022 said certificate, the bar on examining by an arbitral tribunal on issues involving criminal offences may not come into play.

15. Under these circumstances, the adjudicating authority will be required to examine as to the effect of submission by the petitioner of 10th class certificate issued by the J&K Board on the grant of dealership to the petitioner by the respondent-Corporation, in the light of the claim of the petitioner that she is otherwise, eligible for grant of dealership on the strength of Adeeb certificate.

16. In view of the aforesaid discussion, this Court is satisfied that petitioner has been able to make out a case for appointment of an arbitrator in terms of clause 19 of the agreement executed between the parties.

17. Accordingly, I appoint, Shri D. K. Kapoor, retired District and Sessions Judge as the sole arbitrator, who shall proceed in the matter in accordance with the provisions of the Act, after affording an opportunity of hearing to both the parties, who are at liberty to raise all preliminary objections before the Arbitrator. The Arbitrator shall, thereafter, after hearing the parties, make an award within the time provided in the Act itself after charging the prescribed fee along with incidental expenses to be shared by the parties.

18. Registry to inform the above named arbitrator about his appointment as an arbitrator in this matter.

19. Arbitration Petition stands allowed. CHIEF JUSTICE (N. KOTISWAR SINGH) Jammu 09.10.2023 BIR