Delhi High Court
National Agricultural ... vs Rajasthan State Co-Operative ... on 17 March, 2017
THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 17.03.2017
+ FAO(OS) 79/2017
NATIONAL AGRICULTURAL CO-OPERATIVE
MARKETING FEDERATION OF INDIA LTD (NAFED)... Appellant
versus
RAJASTHAN STATE CO-OPERATIVE OILSEED GROWERS
FEDERATION OF INDIA LTD ... Respondent
Advocates who appeared in this case:-
For the Appellant : Mr Aaditya Vijay Kumar with Mr Ajay Arjun Sharma
For the Respondent : Ms Manju Bhagat with Mr Shreshth Nanda
CORAM:-
HON'BLE MR JUSTICE BADAR DURREZ AHMED
HON'BLE MR JUSTICE ASHUTOSH KUMAR
JUDGMENT
BADAR DURREZ AHMED, J (ORAL)
CM 10526/2017
Allowed subject to all just exceptions.
FAO(OS) 79/2017 & CM 10525/2017(stay)
1. This appeal is directed against the judgment and/or order dated
18.01.2017 delivered by a learned Single Judge of this Court in OMP
100/2010, which was a petition under Section 34 of the Arbitration and
Conciliation Act, 1996 (hereinafter referred to as „the said Act‟).
2. The said petition impugned the Award dated 18.11.2009 passed by a
sole Arbitrator. The Award was made in respect of disputes which had
arisen between the appellant and the respondent. The appellant is the
National Agricultural Cooperative Marketing Federation of India Limited
(NAFED) and the respondent is the Rajasthan State Cooperative Oilseed
Growers Federation of India Limited which is also known as „Tilam
Sangh‟.
3. The dispute pertained to the procurement of mustard seeds under the
Price Support Scheme (PSS) for the Rabi 2005 season. The procurement of
mustard seeds was to be made under an agreement entered into between
NAFED and Tilam Sangh. The said agreement stipulated two-tier system
of procurement, whereby Tilam Sangh (as also other State Cooperative
Federations) would procure mustard seeds as agents of NAFED from the
farmers, but through Primary Marketing Cooperative Societies. In other
words, there was a two-tier system contemplated for procurement of
mustard seeds. The first tier was the Primary Marketing Cooperative
Society and the second tier was the State Cooperative Federations which
were to function as agents of NAFED. Of course, the agreement made it
clear that the dealings between the State Cooperative Federations and the
Primary Marketing Cooperative Societies would be on principal to
principal basis without any involvement of NAFED.
4. For the services rendered by the State Cooperative Federations, they
were to be paid service charge of 2% which was to be shared with the
marketing societies on the value of naked seeds on satisfactory performance
of the work and after scrutiny of the bills.
5. The dispute here relates to this service charge of 2%. It so happened
that for the districts of Kota and Sri Ganganagar, the concerned State
Cooperative Federation (i.e. Tilam Sangh) set up its own centres for
procurement and, therefore, procured the mustard seeds without the
intervening marketing society.
6. According to NAFED, this was a violation of the agreement between
them as also the policy of procurement through a two-tier system under the
Price Support Scheme. On the other hand, Tilam Sangh contended that
there was no violation of the agreement inasmuch as the same had been
permitted and it was within the knowledge of NAFED that under
exceptional circumstances, which prevailed in Rajasthan and in particular
in Kota and Sri Ganganagar, Tilam Sangh was permitted to make
procurement not through the Primary Cooperative Marketing Societies but
directly, which it did.
7. The sole arbitrator, however, held in favour of NAFED by observing
as under:-
"11. On the perusal of available documents and material on
record, it has been observed that the claimant had made its claim
on the basis of actual procurement of mustard seed at Kota and
Sri Ganganagar centres set up by them in order to achieve the
procurement target as per the agreement. This act of the claimant
was not in line with paragraph 1 of the Agreement which clearly
stipulated that the supporters shall be required to purchase
mustard seed in various centres / mandis of the state identified
for the purpose, from the farmers, through the oil seeds growers
co-operative societies of the respective areas under PSS. Such
procurement by the claimant was in contravention to the
principles of cooperatives as well as the PSS which promotes the
Two Tier System in the rural areas. The act of the Claimant was
more in the nature of commercial business solely undertaken
with the motive Of profit earning, In the instant case, NAFED
made payment to Tilam Sangh as compensation being equivalent
to 1% commission for direct procurement and supervision
together done by them, Thus, the claim, for additional 1%
commission for supervision and administration did not appear to
be acceptable."
8. The learned Single Judge, however, set aside this finding of the
learned Arbitrator on the ground that the letter dated 18.02.2005, which had
been issued by the Government of Rajasthan to the Administrative Officer/
Manager, NAFED, clearly indicated that the procurement was permitted
through the centres set up by Tilam Sangh at, inter alia, district Kota and
district Sri Ganganagar. According to the learned Single Judge, the learned
Arbitrator had overlooked the letter dated 18.02.2005 from the State of
Rajasthan to the NAFED which was before the learned Arbitrator. It is in
this backdrop that the learned Single Judge concluded as under:-
"10. In light of the above letter, the main case of the
Respondent procurement at the two centres made by the
Petitioner was without prior permission of NAFED and contrary
to the agreement entered into between them should fail.
Consequently, this Court is satisfied that the impugned Award
is contrary to the fundamental policy in India inasmuch as it
overlooked the above vital piece of evidence that goes into the
root of the matter. The Award negativing the Petitioner's claim
for the balance 1% service charge is hereby set aside."
9. It is evident that the learned Single Judge has set aside this part of the
Award, while upholding the findings on the other aspects only on the
ground that a vital piece of evidence, which went to the root of the matter,
had been ignored/not taken into consideration by the learned Arbitrator.
This is certainly one of the grounds on which an Award or part of an Award
can be set aside. Consequently, we do not find any reason to interfere with
the decision of the learned Single Judge because it is absolutely clear that
the learned Arbitrator had not taken into account this vital piece of
evidence, namely, the letter dated 18.02.2005 referred to above. The said
letter clearly indicated that permission had been granted to Tilam Sangh to
make the procurement through its own centres. The letter was addressed to
NAFED and there is no denial of receipt of this letter. Therefore, clearly
the permission was granted with the knowledge of NAFED.
10. Consequently, the appeal is dismissed. There shall be no order as to
costs.
BADAR DURREZ AHMED, J
ASHUTOSH KUMAR, J
MARCH 17, 2017
SR
