Indian Oil Corporation Limited vs M/S Shree Laxmi Domestic Gas Suppliers … on 14 July, 2025

Calcutta High Court

Indian Oil Corporation Limited vs M/S Shree Laxmi Domestic Gas Suppliers … on 14 July, 2025

Author: Shampa Sarkar

Bench: Shampa Sarkar

OCD 3
                              ORDER SHEET
                            AP-COM/358/2025
                     IN THE HIGH COURT AT CALCUTTA
                          COMMERCIAL DIVISION
                              ORIGINAL SIDE


                 INDIAN OIL CORPORATION LIMITED
                               VS
         M/S SHREE LAXMI DOMESTIC GAS SUPPLIERS AND ANR


 BEFORE:
 The Hon'ble JUSTICE SHAMPA SARKAR
 Date: 14th July, 2025.

                                                                        Appearance:
                                                        Mr. Amit Kumar Nag, Adv.
                                                         Mr. Partha Banerjee, Adv.
                                                  Mr. Yubaraj Bhattacharyya, Adv.
                                                              . . .for the petitioner.

                                                         Mr. Anubhab Sinha, Adv.
                                                       Mr. Debdut Mukherjee, Adv.
                                                              Mr. Gaurav Das, Adv.
                                                            . . .for the respondents.

The Court:

1. The petitioner prays for appointment of an Arbitrator for adjudication of

disputes and differences arising out of the operation of an LPG

distributorship at Jharsuguda. The distributorship agreement was

executed between the parties on January 7, 1992 in the erstwhile

corporate office of the petitioner situated at 1, Shakespeare Sarani,

Calcutta 700071. The distributorship is governed by the terms and

conditions of the agreement. Allegedly, disputes cropped up on and from
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2015, when the performance of the respondents was not up to the

mark.

2. The petitioner claims to have identified shortage in the number of

cylinders at stock. Upon inspection and detection of irregularities, a

penalty was imposed. The area officer prepared an inspection report

detailing the irregularities. Consequently, an order was passed

suspending the distributorship of the respondents for three months.

The respondents did not pay the penalty nor did the respondents hand

over the inventory. The suspension was extended from time to time.

Alternative arrangements were made by the petitioner to safeguard the

interest of the customers.

3. A writ petition was filed by the respondents before the Hon’ble High

Court at Orissa. The petitioner was directed to readjudicate the entire

issue. Upon hearing the respondents, a penalty was imposed to the

tune of Rs.69,76,024.84. The order was challenged by the respondents

before the Appellate Authority. The Appellate Authority dismissed the

appeal. The respondents failed and neglected to pay the outstanding

amount.

4. With this background, it is contended by the petitioner that the dispute

continued. An application under Section 9 of the Arbitration and

Conciliation Act, 1996 was filed and necessary order was passed. The

petitioner invoked arbitration by a notice dated February 19, 2025. The

respondents did not reply to the said notice.

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5. Under such circumstances, this application has been filed before this

Court. According to the petitioner, the value of the dispute is more than

Rs. 98 lakhs at present.

6. Mr. Sinha, learned advocate for the respondents, submits that the

allegations made against the respondents at the time of suspension of

the distributorship and imposition of penalty are baseless and not

substantiated by proper evidence. It is further submitted that the

dispute was once decided by the High Court at Orissa when the

petitioner was directed to readjudicate the matter. The petitioner

mechanically passed an order, in the same lines as the order which was

set aside by the Orissa High Court. The claim of the penalty imposed is

time barred.

7. The background as narrated hereinabove clearly indicates that there is

a dispute between the parties. The arbitration agreement is under

Clause 37(a) of the distributorship agreement dated January 7, 1992.

The objections raised by Mr. Sinha with regard to arbitrability,

admissibility, limitation etc are to be decided by the learned Arbitrator

at the appropriate stages of the proceeding.

8. The application is thus allowed, keeping all points open. The exclusive

jurisdiction is vested with the Courts of Calcutta. Part cause of action

arose within the jurisdiction of this Court, as the agreement was

admittedly executed in the erstwhile office of the petitioner, which was

situated in Shakespeare Sarani.

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9. Accordingly, this Court appoints Mr. Suddhaswatta Banerjee, learned

Advocate Bar Library Club (Mob :- 9874669520) as the arbitrator, to

arbitrate upon the disputes between the parties. This appointment is

subject to compliance of Section 12 of the Arbitration and Conciliation

Act, 1996.

10. The learned arbitrator shall fix his/her own remuneration as per

the Schedule of the Act.

11. The application is, accordingly, disposed of.

(SHAMPA SARKAR, J.)

SP/