TMI Blog1990 (11) TMI 415X X X X Extracts X X X X X X X X Extracts X X X X ..... poration') and the Amritsar Gas Service, respondent No. 1, as distributor of the Corporation-for sale of the Corporation's Liquefied Petroleum Gas (LPG) known as 'Indane' in cylinders only for household consumers and commercial consumers in the area at Amritsar, specified in the Agreement. The terms and conditions of distributorship were specified in the Agreement. Clause 27 of the Agreement provided for termination of the Agreement by the Corporation forthwith on the happening of any of certain specified events. Clause 28 permitted either party 'without prejudice to the foregoing provision or anything to the contrary' contained in the Agreement to terminate the Agreement by thirty days' notice to the other party 'without assigning any reason for such termination.' Clause 37 provided for adjudication of any dispute or difference of any nature by arbitration. It appears that the appellant-Corporation received certain complaints about the working of the distributorship alleging unauthorised connections being given and tampering of the waiting list of customers by the distributor which were acts prejudicial to the interest, reputation and product ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istributor at Amritsar with immediate effect. You are hereby called upon to settle all your accounts with the Corporation and immediately handover, return and redeliver the entire stock of LPG filled, empty cylinders, equipments lying with you. You are hereby also advised to handover all the documents, stationery and other relevant papers of the said distributorship to the authorised representative of the Corporation who would be calling on you shortly. Yours faithfully, for and on behalf of Indian Oil Corporation Ltd. sd/- (S.K. BAKSHI) GENERAL MANAGER 3. Aggrieved by termination of the distributorship in this manner, respondent No. 1 filed a suit in the Court of Sub-Judge, 1st Class, Amritsar, on 23.9.1983, impleading as defendants the appellant-Corporation, some of its officers and some other persons to whom the distributorship for that area was to be given. The relief claimed in the suit in substance was for a declaration that termination of the distributorship of the plaintiff- respondent No. 1 was illegal and void; that the distributorship continued notwithstanding the said termination; and some other consequential reliefs. It may be mentioned that the suit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alidly effected by the defendant Corporation? ORD. (2) If issue No. 1 is decided against the defendant Corporation, to what relief is the plaintiff entitled? OPP. (3) Is the defendant entitled to make the counter-claim as stated in the written statement? If so, to what amount is the defendant entitled? OPD. The arbitrator then recorded his decision on the issues framed and granted the reliefs as under: I have very carefully considered the evidence, both oral and documentary, led in the case and the arguments addressed by the learned counsel for the parties. In the light of the facts and circumstances of the case and the law governing such cases, I record my decision on various issues framed in the case as under:- Issue No. 1. I hold that the termination of the plaintiff's distributorship was not validly effected by the defendant Corporation and thus decides this issue in favour of the plaintiff. Issue No. 2, As a consequence of my decision on Issue No. 1, the plaintiff is granted a declaration that the termination of its distributorship by the defendant Corporation by letter dated 11th March, 1983, was wrongful, invalid and not binding on the plaintiff. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the distributorship in the category of Unemployed Engineering Graduates to provide them with the means of livelihood as per the policy of the Government. They were appointed by letter dated December 1, 1971, in pursuance of which they made all arrangements by hiring office premises and godowns and fitting and furnishing them properly by investing a good deal of money to make this business the source of their livelihood. They had held this distributorship for 11 years before it was terminated. Those were the years which were vital for them to establish themselves in service or business and make a career thereof for earning livelihood during the rest of their lives. Those precious years have gone never to return. iv) The distributorship agreement was for an indefinite period, that is, till the time it was terminated in accordance with the terms contained therein. Since it has not been terminated in accordance with Clause 27 thereof, under which the termination was made, the plaintiff firm is entitled to the continuance of the distributorship in the special circumstances of this case. This award will, however, not fetter the right of the defendant Corporation to terminate th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to remedy the breach by restoration of the distributorship and pay compensation for the reasons given in the award. The counter-claim made by the appellant-Corporation in the written statement was not decided by the arbitrator on the ground that it did not come within the scope of the reference. Respondent No. 1 has filed an application (C.M.P. No. 3053 of 1987) to direct the arbitrator to file the award and then to make the award a rule of the Court and to pass a decree in terms thereof. The appellant-Corporation has, however, filed objections dated 31.8.1987 under Section 30 of the Arbitration Act. It is this C.M.P. and the objections therein which are to be decided by us. 8. The arguments advanced by Shri Harish Salve on behalf of the appellant-Corporation to the validity of the award are these. The first contention is that the validity of the award has to be tested on the principles of private law and the law of contracts and not on the touchstone of constitutional limitations to which the Indian Oil Corporation Ltd. as an instrumentality of the State may be subject since the suit was based on breach of contract alone and the arbitrator also proceeded only on that basis to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jurisdiction; and interest also must be awarded to the respondent. 10. We may at the outset mention that it is not necessary in the present case to go into the constitutional limitations of Article 14 of the Constitution to which the appellant-Corporation as an instrumentality of the State would be subject particularly in view of the recent decisions of this Court in M/s. Dwarkadas Marfatia and Sons v. Board of Trustees of the Port of Bombay [1989]2SCR751 , Mahabir Auto Stores and Ors. v. Indian Oil Corporation and Ors. MANU/SC/0191/1990 and Km. Shrilekha Vidyarthi etc. etc. v. State of UP, and Ors. AIR1991SC537 , This is on account of the fact that the suit was based only on breach of contract and remedies flowing therefrom and it is on this basis alone that the arbitrator has given his award. Shri Salve is, therefore, right in contending that the further questions of public law based on Article 14 of the Constitution do not arise for decision in the present case and the matter must be decided strictly in the realm of private law rights governed by the general law relating to contracts with reference to the provisions of the Specific Relief Act providing for non-enforceability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also may be attracted in the present case since Clause (c) clearly applies on the finding read with the reasons given in the award itself that the contract by its nature is determinable. This being so granting the relief of restoration of the distributorship even on the finding that the breach was committed by the appellant-Corporation is contrary to the mandate in Section 14(1) of the Specific Relief Act and there is an error of law apparent on the face of the award which is stated to be made according to 'the law governing such cases'. The grant of this relief in the award cannot, therefore, be sustained. 12. Another relief granted in the award is the price of 224 cylinders and 384 regulators taken away by the appellant-Corporation from the plaintiff-respondent No. 1. These articles did not belong to the plaintiff-respondent No. 1 and were the property of the appellant-Corporation and, therefore, the direction to pay its price to the plaintiff-respondent No. 1 also discloses an error of law apparent on the face of the award. The appellant-Corporation had also been directed in the award to return the amounts of two bank drafts of Rs.l5,580.83p. each dated 8.3.1983 and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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