JUDGMENT
Prakash Krishna, J.
1. This appeal is under Section 37(1-a) of the Arbitration and Conciliation Act, 1996, hereinafter called the Act against the order dated 19th August, 2004, rejecting the application filed by the appellant for injunction under Section 9 of the Arbitration Act.
2. The facts of the case are as follows :
The appellants filed an application under Section 9 of the Act seeking permanent prohibitory injunction restraining the defendants from terminating the dealership of two petrol pumps in pursuance of the notice dated 21st December, 2002. The appellants are the licensees of the respondent to sell the petroleum products through retail outlets, one at Delhi Gate Agra and another at Keetham, Agra Mathura Road, Agra. There is no dispute between the parties that there is arbitration clause in between the parties vide para 22 (a) of the agreement dated 13th August, 1998 in between Bharat Petroleum Corporation Limited and the appellants. The Arbitration Clause in the said agreement provides that any dispute or difference of any nature whatsoever in claim, cross application, counter application or set of the Corporation against the distributor or regarding any right, liability at omission or on the account of any of the parties arising out of order in relation to the agreement shall be referred to the sole arbitration of the Director (Marketing) of the Corporation or his nominee. It appears that the Corporation terminated the dealership of the appellants in respect of petrol pumps at Hari Parvat, Agra and at Keetham, Agra. This order was challenged by means of Writ Petition No. 32568 of 2002 by the appellants in this Court. A Division Bench of this Court on 29th August, 2002 allowed the writ petition on the ground that no opportunity of hearing was given to the appellants (petitioners) before passing the impugned order. The Court was of the opinion that even if the appellants (petitioners) committed some irregularities they should be given show cause notice before termination of licence. After the order of this Court passed in the aforesaid writ petition a show cause notice was given to the appellants. A copy of the show cause notice is Annexure-4 to the affidavit filed along with the stay application. In the show cause notice it has been stated that in the inspection dated 5th July, 2002 at the retail outlet at Keetham a number of irregularities were noticed but the appellants neither during the inspection, nor subsequently the (licensee) has put forward any explanation. Another inspection was carried on 15th July, 2002 at retail outlet at Hari Parvat, Agra. In that inspection also a number of discrepancies were found which have been enumerated in paragraph 6.2 of the show cause notice. Yet other discrepancies found out in the inspection dated 18th July, 2002 are mentioned in paragraph 6.4 of the show cause notice. According to the respondent it was found in the said inspection dated 18th July, 2002, that the appellant is indulging in short delivery of 250 ml in every five litres’ delivery by making manipulation in the delivery machine. The allegation was that the appellants have interfered with the working parts of the pumps and with the equipments provided by the respondent company without previous written consent of the company, the appellants have thus committed breach of agreement entered into on 13.8.1998 various discrepancies and defaults were also pointed out by the respondent company In the show cause notice. It appears that thereafter the present appellants filed a Suit No. 457 of 2003 in the civil court and obtained an ex parte injunction order from the Court of Civil Judge (Junior Division), Agra. In the said suit the factum of arbitration agreement between the parties was concealed. Subsequently an application under Section 9 of the Act, giving rise to the present appeal seeking permanent prohibitory injunction restraining the defendants from terminating the dealership was filed. In the application it has been stated that the appellants have sent their reply to the show cause notice on 24th May, 2003, but the respondent company is adamant to terminate the dealership. A dispute having arisen as per the agreement dated 13th August, 1988 between the parties, the dispute regarding alleged termination notice is to be referred to the sole arbitration of the Director (Marketing) of the respondent company or its nominee.
3. The learned District Judge, Agra, by the impugned order dated 19th August, 2004, has rejected the stay application for interim relief. Challenging the order of the court below the present appeal has been filed.
4. Heard learned counsel for the parties and perused the record.
5. There is no dispute between the parties that there is an arbitration agreement in existence and the dispute is covered by the arbitration clause. However, the learned counsel for the respondent supported the order of the court below and submitted that before grant of any interim injunction the Court has to satisfy itself about three ingredients namely prima facie case, balance of convenience and irreparable loss. On the other hand, the learned counsel for the appellant submitted that the dispute having arisen between the parties, the matter should be referred to the arbitration till then temporary injunction should be granted.
6. Section 9 of the Act provides that a party may, before or during the arbitral proceedings or at any time after making arbitral award but before it is enforced in accordance with Section 36, apply to a Court for grant of interim injunction or appointment of a receiver. There is no dispute that under Section 9 of the Act a Court possesses a power to grant interim relief by way of injunction even before the reference of the dispute to the Arbitrator. The Supreme Court in Sundaram Finance Ltd. v. NEPC India Ltd., (1999) 2 SCC 479, has clarified that it is not necessary that the arbitral proceedings must be pending or at least a notice invoking arbitration clause must have been issued before an application under Section 9 is filed. This judgment of the Supreme Court has been explained subsequently in the case of Firm Ashok Traders and Anr. v. Gurmukh Dass Saluza and Ors., (2004) 3 SCC 155. It has been held that when an application under Section 9 is filed before commencement of the arbitral proceedings, there has to be “manifest intention” on the part of the applicant to take recourse to the arbitral proceedings. The word “before” means, inter alia, ahead of, in presence or sight of, under the consideration, or cognizance of. The filing of the application for interim relief under Section 9 must have the proximity of relationship by reference to the arbitration. The party invoking Section 9 may not have actually commenced the arbitral proceedings, but must be able to satisfy the Court that the arbitral proceedings are actually contemplated or manifestly intended and are positively going to commence within a reasonable time. In the present case there is no material on record to show that the appellants have applied for appointment of an Arbitrator in pursuance of the arbitration clause and has made no efforts of making reference to an Arbitral Tribunal. During the course of arguments it was submitted by Shri Ranjeet Saxena, learned counsel for the appellant that an application for appointment of an Arbitrator has been filed under the Act before Hon’ble the Chief Justice, which is pending. In the same breath it was submitted that a letter has been given by the appellants to the respondent company for appointment of the Arbitrator. In para 4 of the second supplementary affidavit of Shri Jagbindar Singh filed on behalf of the respondent Corporation it has been stated that the appellant never insisted upon the Corporation to appoint an Arbitrator. It has been stated that it is for the appellants to put proof before the District Judge or before this Court, nothing has been brought on record by the appellant. During course of the arguments, the learned counsel for the appellant could not establish except making an oral submission that the appellants have filed application for the appointment of an Arbitrator before the Hon’ble Chief Justice of this Court. In the arbitration clause there is named Arbitrator. In the face of name of the Arbitrator it is difficult to understand why an application for appointment of an Arbitrator has been filed before the Hon’ble Chief Justice. It is not necessary for me to dilate on this point any further, as the record does not show that the arbitration proceedings are actually contemplated or manifestly intended and are positively going to commence within a reasonable time and as such the rejection of application by the court below is perfectly justified.
7. Dr. R.G. Padia, learned senior counsel for the respondent company rightly pointed out that the application purported to be an application under Section 9 of the Act was not an application for grant of temporary injunction. He invited my attention towards the prayer as contained in the said application. The relevant portion of the prayer of the application under Section 9 of the Act reads as follows :
“The applicant prays as under :
(A) By a decree of permanent prohibitory injunction, the opposite party, its officials and agents be restrained from terminating the applicant’s dealership under the garb of notice dated 21.12.2002 and causing interference in applicant’s running and operating of their retail outlet…..
8. The appellants have claimed a decree of permanent prohibitory injunction in the application under Section 9 of the Act, which is not the scope of Section 9 of the Act.
9. The application under Section 9 of the Act discloses a sorry state of affairs. There is no whisper in the application that the appellants are ready and willing to refer the dispute for arbitration and having invoked the arbitration clause or intend to invoke it for redressal of their grievance. In the said application it has been stated that earlier their dealership was terminated by the notice dated 2nd August, 2002 and the said order has been set aside in the Writ Petition No. 32568 of 2002 by the order dated 29th August, 2002. Now the company has served a notice dated 10.5.2003 on the identical allegations which were contained earlier and there is apprehension that they will again terminate their dealership. By this application an attempt was made by the appellants to create an impression on the trial court that once the termination of dealership having been set aside, the respondent Corporation wants to terminate the dealership again on the same allegations. This is obviously incorrect. The High Court set aside the earlier termination order simply on the ground that no notice before the termination was given to the appellants. The High Court while allowing the writ petition specifically mentioned in the said judgment that it is open to the respondents to pass a fresh order after giving show cause notice and opportunity of hearing to the petitioners. To put it differently, the High Court did not adjudicate upon the merits of the allegations leveled by the Corporation against the present appellants. It has not recorded any finding that on basis of the inspection relied on by the officials of the respondent company it cannot be said that the appellants are not involved in the under measurement of the petroleum products and there is no irregularity in the measurement of the petroleum products and their sale. Thus, the appellants who are seeking discretionary relief of temporary injunction order have not come to the Court with clean hands.
10. Learned counsel for the respondent submitted that the company possessed the power to terminate the agreement on the happenings of the events enumerated in Clause 13 of the agreement. Reliance was placed on Clauses I and VIII of Clause 13 (A) of the agreement. It provides that if the licensee for any reason other than due to company’s default failed to maintain supply to the public through the said facility for any period exceeding 24 hours, the company can terminate the agreement. Clause VIII of 13(A) of the agreement gives power to terminate the licence if the licensee commits any act which is prejudicial to the interest or the good name of the company or its products. The allegation made in the show cause notice that by tampering the measurement machine, the appellants were delivering 250 ml. short in every 5 litres delivery, that no product was found in Tank No. 2 on inspection dated 5.7.2002, are of serious nature, and in such circumstances the power to terminate the licence as conferred under the agreement was exercised by the Corporation. It was submitted in such circumstances that an injunction compelling a party to a contract to perform his part should not be granted when the agreement is terminable, otherwise It would amount to specific performance of a contract which by its nature is terminable.There is sufficient force in the said argument of the learned counsel for the respondent. Reliance has been placed upon a judgment of Supreme Court in the case of Hindustan Petroleum Corporation Limited v. Pink City Midway Petroleum, 2003 (3) SCCD 1047 : AIR 2003 SC 2881. It is not necessary for this Court to examine the matter in detail as only a limited point to grant or not to grant interim relief is involved in the present appeal. The only argument which could be put forward by the learned counsel for the appellant was that the action of the Corporation is mala fide. The appellants have lodged the first information report against certain officials of the respondent Corporation and they have obtained the stay order staying their arrest, therefore, the officials of the Corporation are after the appellants and they have an evil eye over the land of the two petrol pumps. Be that as it may, the court below has not committed any illegality in refusing to grant interim injunction in the facts and circumstances of the present case.
11. One of the factors which have been taken into account by the court below is that the appellant have filed Suit No. 457 of 2003 and obtained injunction order and, thereafter got hearing of the injunction application adjourned from time to time. It was brought to my notice that now the appellants have withdrawn that suit by the order dated 2nd September, 2004. The filing of the suit and obtaining of the injunction order and non-disclosure of the arbitration clause clearly reflects against the conduct of the appellants. The appellants possibly can not plead that they had no knowledge of the arbitration clause. One of the defences taken by the Corporation in the Writ Petition No. 32568 of 2002, was that the petitioners (who are appellants here) has an alternative remedy by way of arbitration, as noticed by the High Court in its judgment, delivered in the writ petition.
12. In the result, I find no merit in the appeal. The appeal is dismissed with costs.