Food Corporation Of India, Moga vs M/S Dashmesh Rice & Genl Mills & ...
2014 Latest Caselaw 436 Del

*     IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                     Order decided on: January 23, 2014

+                        O.M.P. No.826/2011

      FOOD CORPORATION OF INDIA, MOGA          ..... Petitioner
                  Through   Mr.Mohan Lal Sharma, Adv.

                         versus

      M/S DASHMESH RICE & GENL MILLS & ORS ..... Respondents
                   Through  Mr.Arijeet Singh, Adv. with
                            Ms.Deepali Dwivedi & Mr.Siddharth
                            Dutta, Advs.

      CORAM:
      HON'BLE MR. JUSTICE MANMOHAN SINGH

MANMOHAN SINGH, J. (ORAL)

1. The Food Corporation of India, petitioner herein, has filed the objections, inter-alia, under Section 34 of the Arbitration and Conciliation Act, 1996 (in short, called the "Act") against the award dated 30th June, 2011 passed by the learned sole Arbitrator, Hon'ble Mr. Justice (Retd.) R.L.Gupta.

2. During the pendency of the arbitration proceedings, the respondents filed objections under Section 16 of the Act in view of the order passed by the Supreme Court of India dated 17th July, 2003 for rejection of the reference. In para 5 of the said petition, the following statement was made:-

"5. That the alleged agreement is not legal and valid as required under the provisions of Indian Partnership Act. In this case the alleged agreement is not signed by any of the partner. This means that there is no valid and legal agreement as required under section 7 of the Arbitration

& Conciliation Act, so no reference can be made. The corporation is stopped with its own act and conduct on the ground that they have already settled the milling bill and issued the necessary 'No Due Certificate'. In the year 2006, the settlement was effected by the FCI through its District Manager and as per the settlement, the FCI agreed to withdraw the arbitration. As per the settlement, 374 paddy shelling cases are pending with ICA, New Delhi for the crop year of 1994-95 and out of that the FCI decided the withdraw 334 cases where the 'No Due Certificate' was issued and where the stock is nil, only 40 cases remained pending where there was misappropriation and criminal cases lodged against the millers. This fact is confirmed as per the letter written by Zonal Office of FCI to the Senior Regional Manager, FCI Chandigarh on 13.7.2005 which has been approved by Senior Officials of the FCI and the deed of settlement has been executed by District Manager who is competent and authorize to execute the document on behalf of the corporation. So in these circumstances, the present reference and proceedings become infructuous and are liable to be rejected. Moreover, the present reference reopening the said matter is not legal; rather it is abuse of process of law. So the appointment of the arbitral tribunal for the enforcement of the penal clauses of the alleged agreement is against the law and this reference is liable to be rejected at this preliminary stage to save the time, energy and costs of the proceedings."

3. While rendering the award, the learned sole Arbitrator has accepted the statement made by the respondents in the petition and has come to the following conclusion:-

"I am, therefore, of the considered view that the deed of settlement between the FCI and the respondent does not suffer from any infirmity. Even if the FCI is not in favour of this deed of settlement, it has to take proper legal steps for setting it aside. In this respect, it was laid down in the case of NATHANI STEELS LTD. VS.

ASSOCIATED CONSTRUCTIONS, 1995 Supp (3) Supreme Court Cases 324 as follows:-

"Once there is a full and final settlement in respect of any particular dispute or difference in relation to a matter covered under the arbitration clause in the contract and that dispute or difference is finally settled by and between the parties, such a dispute or difference does not remain to be an arbitral dispute and the arbitration clause cannot be invoked even though for certain other matters, the contract may be in subsistence. Once the parties have arrived at a settlement in respect of any dispute or difference arising under a contract and that dispute or the difference is amicably settled by way of a final settlement by and between the parties, unless that settlement is set aside in proper proceedings, it cannot lie in the mouth of one of the parties to the settlement to spurn it on the ground that it was a mistake and proceed to invoke the Arbitration clause. If this is permitted the sanctity of contract, the settlement also being a contract, would be wholly lost and it would be open to one party to take the benefit under the settlement and then to question the same on the ground of mistake without having the settlement set aside. In the circumstances, in the instant case since the dispute or difference was finally settled and payments were made as per the settlement, it was not open to the respondent unilaterally to treat the settlement as non est and proceed to invoke the Arbitration clause."

Till date, there is nothing on record to show if the FCI ever indicated its desire to the respondent that it did not honour the settlement. Therefore, if at all the FCI wants to wriggle out of this settlement, it has to select an appropriate legal remedy for this purpose.

Since the disputes between the parties were settled by means of deed of settlement dated 9th March, 2006, the matter does not remain arbitral."

4. When the matter is taken up today, the learned counsel for the respondents has taken the same ground by stating that the objections are not tenable in view of the findings arrived by the learned sole Arbitrator. He has also provided the list of other matters which have been disposed of under the similar circumstances. He further states that the said deed of settlement is legal and valid and the same cannot be challenged by the petitioner again and again before this Court. Learned counsel has also referred one of the orders dated 17th September, 2012 passed in SLP(C) C.C. No.5424/2012 whereby the petitions filed by the petitioner were dismissed and the contention of the petitioner was rejected.

5. In view of the above said facts and circumstances of the case, there is no merit in the present petition. The same is accordingly dismissed.

(MANMOHAN SINGH) JUDGE JANUARY 23, 2014