Himachal Pradesh HC Directs Mahindra To Restore DMS Access Of Ex- Authorised Service Centre Pending Arbitration

The Himachal Pradesh High Court has granted interim relief to Naveen Auto Store Sole Proprietary, a Mahindra-authorised service centre operator, and directed Mahindra & Mahindra Ltd. to restore the dealer management system (DMS) access of its workshop.

The Court held that the petitioner had made out a prima facie case for interim protection pending arbitration proceedings.

Justice Romesh Verma observed, “The petitioner has been able to demonstrate on record that huge investment including purchases of various tools, various investments, expenditure has been made in the service station at the askance of the respondents. The agreements, which were entered between the parties from time to time, are clear and specific, therefore, the petitioner has been able to make out a prima facie case for the grant interim relief in his favour."

The dispute arose out of a long-standing commercial relationship between Naveen Auto Store and Mahindra & Mahindra Ltd. The automobile company had issued advertisements in Punjab Kesari and Divya Himachal for opening authorised service stations in Himachal Pradesh.

Pursuant to an offer made by Naveen Auto Store on June 21, 1999 for opening a service station at Ghumarwin in Bilaspur district, Mahindra issued a letter of intent on August 1, 2000. The parties subsequently entered into agreements in 2002, 2006 and 2015. The last agreement was for the period from April 1, 2021 to March 31, 2024. It contained an arbitration clause.

According to the petition, Naveen Auto functioned as a non-exclusive Mahindra Authorised Service Centre. It claimed to have incurred expenditure on workshop expansion, land purchase, specialised tools, diagnostic systems, employee training and other infrastructure at the instance of the company.

The petitioner stated that after expiry of the last agreement on March 31, 2024, Mahindra blocked the DMS login used for servicing vehicles. It alleged that everything at the service station had come to a halt. It also claimed to have suffered financial losses amounting to ₹1.05 crore.

After invoking arbitration, Naveen Auto Store approached the High Court seeking restoration of the DMS access. It also sought permission to continue servicing Mahindra vehicles.

Mahindra opposed the petition. It argued that since the agreement had expired on March 31, 2024, no enforceable right survived in favour of the petitioner. It stated that the DMS code had accordingly been blocked.

Rejecting the objection, the High Court referred to Supreme Court decisions on the scope of interim protection pending arbitration proceedings.

The Court observed, “The hon'ble Supreme Court in its various decisions has come to the conclusion that Section 9 must be given liberal and purposive construction so that arbitration is not rendered bootless.”

The Court noted that the petitioner had already invoked arbitration. It also recorded that a petition seeking appointment of an arbitrator was pending before the High Court.

The Court further recorded that the petitioner had placed material on record showing expenditure incurred for establishment and expansion of the service station. This included about ₹64 lakh towards workshop expansion and another ₹9 lakh towards specialised tools.

Allowing the petition, the Court directed Mahindra & Mahindra Ltd. to restore the dealer management system access of the petitioner's workshop. The direction will continue till the appointment of the arbitrator and decision on any application filed under Section 17 of the Arbitration and Conciliation Act.

For Petitioner (M/s Naveen Auto Store Sole Proprietary): Senior Advocate Tara Singh Chauhan and Advocate Surya Chauhan.

For Respondents (Mahindra & Mahindra Ltd. & Ors.): Advocate Subhash Chander.