2018 (7) TMI 1137 - SC - Indian Laws

Whether the Division Bench was right in setting aside the letter dated 13.03.2013 of IOC which terminated the respondent s dealership and was, therefore, justified in issuing a mandamus against the IOC to restore the dealership of the respondent herein and resume supply of fuel to his fuel station? - Held that - The Division Bench was not justified in doing so - reconsideration of the respondent s case as to whether his dealership should be restored or not was an independent cause of action between the parties and the same arose after the award was passed and upheld by the Single Judge. It has, therefore, nothing to do with the award and nor it could be linked with the arbitration proceedings. It was solely within the discretion of the IOC they being the principal to decide as to whether the respondent s dealership should be restored or not and, if so, on what grounds. The IOC considered the case of the respondent and after taking into account all the facts and circumstances appearing in the respondent s working, came to a conclusion that it was not possible for them to restore his dealership. It was accordingly informed to the respondent vide letter dated 13.03.2013 - the writ Court (Single Judge) was, therefore, justified in dismissing the respondent s writ petition and upholding the rejection on the ground that the High Court cannot interfere in the administrative decision of IOC and nor it can substitute its decision by acting as an Appellate Court over such decision in exercise of writ jurisdiction. It is more so when such decision is based on reasons involving no arbitrariness of any nature therein which may call for any interference by the High Court. The Division Bench committed an error in interpreting the award. The Division Bench proceeded on entirely wrong assumption that since the award was in respondent s favour, the IOC had to simply issue a consequential order in compliance thereof directing the IOC to revive the respondent s dealership and restore the supply of fuel to the respondent. Appeal allowed - the impugned order of the Division Bench set aside and the order of the Single Judge (writ Court) restored.

Summary

Issues Involved:
1. Termination of dealership agreement.
2. Arbitration award and its interpretation.
3. Rejection of representation by IOC.
4. Judicial review of administrative decisions.

Issue-wise Detailed Analysis:

1. Termination of Dealership Agreement:
The case involves the termination of the respondent's dealership agreement by Indian Oil Corporation Ltd. (IOC) on 11.03.2009 due to breaches found during inspections on 01.08.2008 and 02.08.2008. The inspections revealed that the "totalizer wires of L&T Line DU in petrol pump model serial No.1578 used at MS 2 pump was found cut" and "no totalizer seal" was in place. The respondent's dealership was terminated after a show cause notice and an unsatisfactory reply from the respondent.

2. Arbitration Award and its Interpretation:
The respondent invoked clause 69 of the dealership agreement, leading to arbitration. The Arbitrator’s award dated 14.10.2011 acknowledged the breaches but suggested a lenient view due to no variation in quality and quantity and the respondent’s substantial suffering. The High Court upheld the award, allowing the respondent to approach IOC for reconsideration of the dealership restoration. The Division Bench misinterpreted the award as setting aside the termination and mandating restoration of the dealership, which was not the case.

3. Rejection of Representation by IOC:
Following the High Court's order, the respondent filed a representation on 20.02.2013 for resumption of fuel supply, which IOC rejected on 13.03.2013. The Single Judge upheld IOC's decision, finding no merit in the respondent's writ petition challenging the rejection. The Division Bench, however, issued a mandamus to IOC to restore the dealership and resume fuel supply, which was later contested.

4. Judicial Review of Administrative Decisions:
The Supreme Court found that the Division Bench erred in its interpretation and overstepped its judicial review authority. It emphasized that the reconsideration of the respondent’s dealership was an independent cause of action and within IOC's discretion. The Single Judge correctly upheld IOC's administrative decision, which was based on valid reasons and free from arbitrariness. The Supreme Court restored the Single Judge's order, dismissing the respondent's writ petition.

Conclusion:
The Supreme Court allowed the appeal, set aside the Division Bench's order, and restored the Single Judge's decision, emphasizing the correct interpretation of the arbitration award and the limited scope of judicial review over administrative decisions.