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TMI Blog2003 (7) TMI 493X X X X Extracts X X X X X X X X Extracts X X X X ..... . - Heard learned counsel for the parties. 2. Leave granted. 3. This appeal is filed against the judgment of the High Court of Punjab Haryana at Chandigarh delivered in Civil Revision No. 1688 of 2002 on 1-7-2002 whereby the High Court dismissed the revision petition filed by the appellant herein against an order made by the Civil Judge (Senior Division), Rewari, Haryana, dated 19-2-2002, dismissing the application filed by the appellant herein under section 8 read with section 5 of the Arbitration and Conciliation Act, 1996 (for short the Act ) in a suit pending before it seeking reference of the suit pending before it to an arbitrator as contemplated under Clause 40 of the Dealership Agreement between the parties. 4. The facts necessary for disposal of this appeal, briefly stated are as follows: The appellant herein is a company carrying on the business of manufacture, sale and distribution of petroleum products which it does through dealers and distributors appointed by it. The re spondent herein is one of such dealers appointed by the appellant to sell its petroleum products through a retail outlet at Jais ingpur Khera, National Highway No. 8, District Rewari, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant states that on 29-11-2001 a show-cause notice was issued by the appellant to the respondent in regard to short-delivery and tampering, as stated above. 6. In response to the above show-cause notice of the appellant, it is stated that the respondent submitted its reply and on consideration of the same, the appellant not being satisfied, suspended the sales and supply of petroleum products to the respondent s retail outlet for a period of 30 days and also levied a penalty of Rs. 15,000 for the said irregularities com mitted by the respondent as per the appellant s letter dated 16-1-2002. 7. Being aggrieved by the said stoppage of supply of appellant s product, the respondent filed Civil Suit No. 18 of 2000 in the Court of the Civil Judge (Senior Division), Rewari, praying, inter alia, for a declaration that the order dated 16-1-2002 is illegal and arbitrary. The respondent along with the plaint in the said suit also filed an application under Order 39 Rules (1) and (2) of the CPC. Learned Civil Judge was pleased to stay the suspension of supplies by the appellant to the respondent while in regard to the penalty, no stay was granted. 8. In reply to the plaint file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er pro vided for under the Standards of Weights and Measures (Enforce ment) Act, 1985 (the 1985 Act), and such dispute cannot be gone into in arbitration proceedings, is wholly erroneous and cannot be sustained. With reference to the judgment of the High Court, the learned counsel also contended that the High Court has erred in coming to the conclusion that a revision petition under sec tion 115 of the CPC will not be available to the appellant on the facts and circumstances of this case. 11. Mr. Chetan Sharma, learned senior counsel appearing for the respondent, in reply, contended that the courts below have justly come to the conclusion that the arbitration clause found in the Dealership Agreement could not have contemplated an adjudication by an arbitrator in regard to a dispute arising between the par ties pertaining to short-delivery of the Motor Spirit and HSD or tampering with the seal because these are the disputes which have penal consequences, hence, could only be tried by a competent criminal court on being investigated by an authorised agency as provided in the 1985 Act. He also submitted that since the dis pute ex facie showed that the same cannot be adjudicated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ason, Chairman Managing Director is unable or unwilling or refuses or fails to act as an Arbitrator or nominate an Arbitrator then the matter shall be referred to the Director (Marketing) who shall appoint a Officer of the Corporation to act as an Arbitrator. It being fully understood and agreed by and between the parties hereto that the vacancy should not be supplied within the meaning of sub-section 1( b ) of section 8 of the Arbitration Act, 1940 (Act No. 10 of 1940). ( f ) The award of the Arbitrator so appointed shall be final conclusive and binding on all parties to the agreement subject to the provisions of the Arbitration Act, 1940. ( g ) The award shall be made in writing and published by the Arbitrator within 12 months after entering upon the reference or within such extended time not exceeding one further year as the parties shall agree in writing. The parties hereto shall be deemed to have irrevocably given their consent to the Arbitrator to make and publish the award within the period referred to hereinabove and shall not be entitled to raise any objection or protest thereto under any circumstances whatsoever. ( h ) It is hereby expressly agreed that the powers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in an agreement between the parties before the Civil Court, there is a clause for arbitration, it is manda tory for the Civil Court to refer the dispute to an arbitrator. In the instant case the existence of an arbitral clause in the agreement is accepted by both the parties as also by the courts below but the applicability thereof is disputed by the respondent and the said dispute is accepted by the courts below. Be that as it may, at the cost of repetition, we may again state that the existence of the arbitration clause is admitted. If that be so, in view of the mandatory language of section 8 of the Act, the courts below ought to have referred the dispute to arbitration. 14. The question then would arise what would be the role of the Civil Court when an argument is raised that such an arbitration clause does not apply to the facts of the case in hand? Learned counsel for the appellant contends that it is a matter which should be raised before the arbitrator who is competent to adju dicate upon the same and the Civil Court should not embark upon an inquiry in regard to the applicability of the arbitration clause to the facts of the case. While learned counsel appearing for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the facts of the case in hand but ought to have left that issue to be determined by the Arbitral Tribunal as contem plated in Clause 40 of the Dealership Agreement and as required under sections 8 and 16 of the Act. 15. In the normal circumstances, the above finding of ours should have sufficed to dispose of this appeal before us. But in view of the categoric findings given by the two courts below in regard to the non-applicability of Clause 40 of the Dealership Agreement to the facts of the case, and also in view of the arguments ad dressed before us, we are constrained to examine the correctness the findings of the two courts below to avoid multiplicity of proceedings. 16. It was argued before the courts below as also before us that the mis-conduct, if any, pertaining to short-supply of petroleum products or tampering with the seals would be a criminal offence under the 1985 Act. Therefore, the investigation into such con duct of the dealer can only be conducted by such officers and in a manner so specified in the said Act, and it is not open to the appellant to arrogate to itself such statutory power of search and seizure by relying on some contractual terms in the D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts at the said premises and the dealer shall faithfully observe and perform all the terms and conditions of such licence(s). ( f ) The dealer shall obtain any or every licence(s) necessary for the storage/sale of petroleum and other products at the said premises required under any Central/State Government or local enactment for the time being in force and shall faithfully ob serve and perform all the terms and conditions for such licence(s) and shall promptly renew the same from time to time. ( g ) The dealer shall be solely responsible for any breach or contravention by them, their servants or agents of any laws, rules, regulations or bye-laws passed or made by the Central and/or State Government and/or Municipal local and/or other Authorities as may be applicable from time to time to the busi ness including without prejudice to the generality of the forego ing. The concerned Authorities respectively appointed under the Petroleum Act, Payment of Wages Act, Shops Establishment Act, Factories Act and the Workmen s Compensation Act or any statutory modifications or re-enactments of the said statutes or rules and the Corporation shall not be responsible in any manner for any li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prejudice to any other right or remedy available to the Corporation under this Agreement. The dealer shall not be entitled to claim any compen sation or damage from the Corporation on account of any such stoppage and/or suspension of supply." A perusal of this Clause shows that if the dealer commits a default in complying with the obligations enumerated in Clause 20 of the Agreement, the appellant is entitled to stop or suspend supply of its petroleum products to such a dealer without preju dice to other remedies available under the Agreement. This right of the appellant to take action against an erring dealer under the terms of the Agreement is de hors the proceedings that may be available to be initiated against an erring dealer under the provisions of various other enactments referred to in Clause 20 of the said Agreement including under the provisions of the 1985 Act. This right of the Corporation to suspend the supply of petroleum products to an erring dealer is a right exercised under the terms of the contract and is independent of the statutory provisions of the various Acts enumerated in Clause 20 of the Agreement. The courts below, in our opinion, have committed an err ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f justice or cause an irrepara ble injury to a party against whom the said order is made. In support of this finding, the High Court has relied upon certain judgments of this Court. Having perused the said judgments, we are of the opinion that the findings given in those judgments do not apply to the facts of this case at all. We have come to the conclusion that the Civil Court had no jurisdiction to entertain a suit after an application under section 8 of the Act is made for arbitration. Therefore, we are of the opinion that the trial court failed to exercise its jurisdiction vested in it under section 115 of the CPC when it rejected the application of the appellant filed under sections 8 and 5 of the Act. In such situa tion, refusal to refer the dispute to arbitration would amount to failure of justice as also causing irreparable injury to the appellant. For the said reason, we are of the opinion that the High Court has erred in coming to the conclusion that the appel lant was not entitled to the relief under section 115 CPC. 21. For the reasons stated above, this appeal succeeds and the impugned orders of the courts below are set aside. The applica tion filed by the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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