Delhi High Court
Food Corporation Of India vs M/S. Deep Rice Mills on 19 October, 2011
Author: Pradeep Nandrajog
$~21
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Decision: 19th October, 2011
+ FAO(OS) 489/2011
FOOD CORPORATION OF INDIA ..... Appellant
Through: Mr.Sukumar Pattjoshi, Advocate and
Mr.S.K.Dubey, Advocate.
versus
M/S. DEEP RICE MILLS ..... Respondent
Through: Nemo.
CORAM:
HON'BLE MR. JUSTICE PRADEEP NANDRAJOG
HON'BLE MR. JUSTICE S.P. GARG
1. Whether the Reporters of local papers may be allowed
to see the judgment?
2. To be referred to Reporter or not?
3. Whether the judgment should be reported in the Digest?
PRADEEP NANDRAJOG, J. (Oral)
1. Award dated 24.3.2011 published by the Sole
Arbitrator, Sh.S.Gopal in Arbitration Case No.736 'FCI vs.
M/s.Deep Rice Mills', has been unsuccessfully challenged by the
appellant before the learned Single Judge who has dismissed in
limine OMP No.596/2011, finding no merit to even issue a notice.
2. The learned Single Judge has noted that various
similar petitions filed, being OMP No.567/2011, OMP
No.570/2011 and OMP No.597/2011 raising same issue had been
dismissed in limine and that awards in said matters were by
different arbitrators but on similar reasoning.
3. The award in question has recognized the validity of
a deed of settlement signed on 12.7.2006 between the General
Manager, Food Corporation of India (FCI), Punjab region (acting
through Area Manager) and M/s.Deep Rice Mills. Other awards
pertained to similar agreements signed between Rice Mill
owners and FCI.
4. In the award it has been noted; a fact not in dispute,
that FCI had entered into an agreement on 17.10.1994 with
M/s.Deep Rice Mills for storing-cum-milling paddy. As per FCI, in
breach of the agreement, it had not received the stipulated
quantity of rice against the paddy stored with M/s.Deep Rice
Mills. As per Food Corporation of India 12,151 quintal of paddy
was left un-milled as of 26.5.1995. Cost worked out was
`54,82,296.30 i.e. the sum claimed by FCI.
5. M/s.Deep Rice Mills was contesting the claim.
6. Similar disputes were pending between FCI and other
Rice Mills. The number of Rice Mills being large, a policy
decision was taken to try and effect a negotiated settlement and
indeed, the Regional Managers of FCI, Zonal Manager of FCI as
also the Area Managers of FCI started negotiating.
7. Pertaining to the dispute between FCI and M/s.Deep
Rice Mills, Area Manager of FCI started negotiating on behalf of
the General Manager of FCI.
8. A settlement was arrived at which was reduced in
writing vide deed of settlement dated 15.7.2006.
9. As noted herein above, the award recognizes the said
deed of settlement.
10. It is not in dispute that the deed of settlement dated
15.7.2006 has been signed by the Area Manager FCI and
M/s.Deep Rice Mills.
11. FCI challenges the award alleging that the settlement
was not approved by the Chairman-cum-Managing Director FCI.
12. The learned Arbitrator has posed the following
questions to FCI:-
(a) Whether the parties were informed that the
settlement was subject to the approval of the
Chairman-cum-Managing Director?
(b) Whether M/s.Deep Rice Mills were ever informed that
the Area Manager did not have the authority to enter
into the settlement?
(c) Whether any disciplinary action was taken against
the Area Manager for signing the deed of settlement?
13. FCI gave no answer. It just said that the Area
Manager, FCI did not have the authority to enter into the
settlement.
14. Now, we find it surprising that if the Area Manager
had no authority to sign the deed of settlement, why no
disciplinary action has been taken against him till date. We
highlight that learned counsel for the appellant concedes that no
disciplinary action has been initiated or is intended to be
initiated against the Area Manager, FCI.
15. FCI is a statutory corporation. It is not the
Government of India. Thus, concept of Business Allocation Rules
would not be applicable to FCI. It relates to the indoor
management of FCI as to who has the authority to act on behalf
of FCI it was for FCI to have led evidence before the learned
Arbitrator to show that the Area Manager was not authorized to
enter into any such agreement and attempt made before us to
rely upon some office orders is of no use. We highlight that
before the learned Arbitrator the only stand taken was that the
agreement in question did not have the approval of the
Chairman-cum-Managing Director of FCI.
16. It was never told to M/s.Deep Rice Mills that the Area
Manager has no authority to execute any deed of settlement.
Learned counsel for the appellant has no answer to the
question: If the Area Manager had no authority to enter into any
settlement why was he put in the forefront to negotiate. To the
preceding sentence, we need to add that learned counsel for FCI
admits that a policy decision was taken to negotiate with the
rice millers and try and resolve the dispute across the table.
Learned counsel further concedes that it was pursuant to the
said policy decision that the Area Manager, FCI commenced the
negotiations with M/s.Deep Rice Mills. Counsel concedes that
there is no material with FCI to show that the brief entrusted to
the Area Manager, FCI was to do preliminary ground-work i.e. if
a settlement was possible, to outline the contours thereof and
before finalizing the settlement to take the approval from the
senior officers.
17. Be that as it may, we are concerned with the validity
of an award and the view taken based upon the evidence. The
issue adjudicated by the Arbitrator is: Whether the settlement in
question binds FCI. Within the contours of Section 34 of the
Arbitration & Conciliation Act 1996, we see no scope to set aside
the award and therefore we concur with the view taken by the
learned Single Judge that the award cannot be set aside.
18. The appeal is dismissed in limine.
19. No costs.
PRADEEP NANDRAJOG, J.
S.P. GARG, J.
OCTOBER 19, 2011
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