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 – 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. 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. [Para 37] [591-B-C]
1.5 The writ Court (Single Judge) was 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. [Para 38] [591-D]
1.6 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. This approach of the Division Bench was erroneous and is, therefore, legally unsustainable. The reasoning and conclusion arrived at by the Single Judge is just and proper, whereas the reasoning and conclusion arrived at by the Division Bench is not proper and is set aside. The order of the Single Judge (writ Court) is restored and, in consequence, the writ petition filed by the respondent is dismissed. [Paras 39, 40 and 42] [591-E-G; 592-A-B]
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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