INDIAN OIL CORPORATION LTD. & ANR. versus T. NATARAJAN

Citation: [2018] 6 S.C.R. 582 · Decided: 17-07-2018 · Supreme Court of India · Bench: UDAY UMESH LALIT · Disposal: Appeal(s) allowed

Judgment (excerpt)

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SUPREME COURT REPORTS
[2018] 6 S.C.R.
INDIAN OIL CORPORATION LTD. & ANR.
v.
T. NATARAJAN
(Civil Appeal No. 6748 of 2018)
JULY 17, 2018
[ABHAY MANOHAR SAPRE AND
UDAY UMESH LALIT, JJ.]
Administrative Law : Administrative decisions by Government
Company – Interference by the High Court – Permissibility of – On
facts, dealership agreement wherein respondent selling petroleum
products of the appellant-Government Company – Termination of
the respondent’s dealership agreement for certain breaches –
Arbitral award that letter of termination of dealership calls for stern
action, however, since their outlet closed for 2 years, lenient view
may be taken – High Court upheld the award with liberty to the
respondent to approach appellant for continuation of dealership –
Pursuant thereto, respondent moving representation for resumption
of the supply of fuel to him, and the same was rejected – Thereafter,
writ petition by respondent – Single Judge upheld termination of
letter of dealership – However, the Division Bench set aside the
termination letter and issued a mandamus to appellant to restore
the dealership of the respondent and resume supply of fuel to his
fuel station – On appeal, held: 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
nothing to do with the award and nor it could be linked with the
arbitration proceedings – It was solely within the discretion of the
appellant to decide – Appellant came to a conclusion that it was not
possible for them to restore his dealership – Writ court justified in
upholding the rejection on the ground that the High Court cannot
interfere in the administrative decision of the appellant 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
[2018] 6 S.C.R. 582
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– Order passed by the Division Bench is set aside and that of the
Single Judge is restored – Arbitration and Conciliation Act, 1996.
Allowing the appeal, the Court
HELD: 1.1 The Division Bench was not justified in
reversing the decision of the Single Judge (writ court) by setting
aside the letter of IOC-government company which terminated
the respondent’s dealership and in issuing a mandamus against
the IOC to restore the dealership of the respondent and resume
supply of fuel to his fuel station. [Paras 32, 33] [590-B-C]
1.2 A plain reading of the award and order of the Single
Judge upholding the award indicates that the Arbitrator, in clear
terms, held against the respondent that he committed breaches
of the dealership agreement and as a result of this categorical
finding, the Arbitrator, in substance, upheld the letter of
termination of dealership calling for stern action against the
respondent. Indeed, once the breaches were held made out, the
only consequence that ensued from such finding was to uphold
the letter of termination of dealership agreement. Since arbitration
clause 69 (c) empowers the Arbitrator to pass any order in the
arbitration proceedings, the Arbitrator and so also the Single
Judge while upholding the award  considered it proper to grant
liberty to the respondent to file a representation to the IOC for
re-consideration of his case for restoration of his dealership. Such
liberty could never be construed to mean that the Arbitrator had
either set aside the letter of termination of the respondent’s
dealership or directed to restore the supply of fuel to the
respondent. [Para 34] [590-E-F]
1.3 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. [Para 36] [590-G-H; 591-A]
1.4 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.
INDIAN OIL CORPORATION LTD. & ANR. v. T. NATARAJAN
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SUPREME COURT REPORTS
[2018] 6 S.C.R.
The IOC considered the cas

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