Supreme Court ruling: distributorship termination invalid, compensation granted. Refund upheld, property restoration rejected. Appellant's counter-claim acknowledged.

The Supreme Court found the termination of the distributorship invalid and granted compensation for a thirty-day notice period instead of restoration of the distributorship. The Court upheld the refund of draft amounts but rejected the restoration of property belonging to the appellant. The Court acknowledged the appellant's counter-claim but did not examine it further as it was not pursued by the appellant's counsel. The appellant was directed to bear the costs of arbitration and the appeal.

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Issues Involved:
1. Validity of the termination of the distributorship.
2. Reliefs to which the plaintiff is entitled if the termination is invalid.
3. Entitlement of the defendant to make a counter-claim.

Summary:

Issue 1: Validity of the Termination of the Distributorship
The Supreme Court examined whether the termination of the plaintiff's distributorship by the Indian Oil Corporation Ltd. (the appellant) was validly effected. The arbitrator found that the termination was not validly made under Clause 27 of the Distributorship Agreement. The appellant had terminated the distributorship citing unauthorized connections and tampering with the waiting list, which were deemed prejudicial to the Corporation's interests. However, the arbitrator concluded that the termination was wrongful and invalid.

Issue 2: Reliefs to the Plaintiff
Upon finding the termination invalid, the arbitrator granted several reliefs to the plaintiff:
- Declaration of Wrongful Termination: The termination of the distributorship was declared wrongful and invalid.
- Restoration of Distributorship: The arbitrator directed the restoration of the distributorship, considering it an exceptional case due to the nature of the distributorship and the livelihood of the partners.
- Compensation: The plaintiff was entitled to compensation for the commission that would have been earned from the date of wrongful termination until the distributorship was restored.
- Return of Property: The arbitrator ordered the return of 224 filled cylinders, 384 regulators, and other articles taken by the appellant.
- Refund of Draft Amounts: The appellant was directed to return the amounts of two drafts of Rs. 15,580.83 each, as no supplies were made against these drafts.

Issue 3: Counter-Claim by the Defendant
The arbitrator did not decide on the counter-claim made by the appellant, stating that it did not fall within the scope of the reference made by the Supreme Court. The counter-claim was not present at the time of the reference order dated April 9, 1986.

Supreme Court's Decision:
- Restoration of Distributorship: The Supreme Court held that granting the relief of restoration of the distributorship was contrary to law, as the contract was determinable in nature and could not be specifically enforced u/s 14(1) of the Specific Relief Act.
- Compensation: The Court modified the award, granting compensation for the notice period of thirty days instead of restoration of the distributorship. The compensation was to be calculated based on the earnings during that period.
- Return of Property: The direction to pay the price of 224 cylinders and 384 regulators was found erroneous, as these were the property of the appellant. However, the direction to refund the amounts of the two drafts was upheld.
- Counter-Claim: The Court acknowledged the merit in the appellant's grievance regarding the non-consideration of the counter-claim but did not examine it further as it was not pressed by the appellant's counsel.

Final Order:
The award was modified to grant compensation for the thirty-day notice period and refund of the draft amounts, but not the restoration of the distributorship. Costs of arbitration and the appeal were to be borne by the appellant.

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