Punjab-Haryana High Court
Punjab Sate Civil Supplies Corp Ltd vs Aman Rice Mill & Anr on 10 January, 2024
Author: Suvir Sehgal
Bench: Suvir Sehgal
Neutral Citation No:=2024:PHHC:006038
2024:PHHC:006038
FAO-1776-2013 (O&M) -1-
IN THE HIGH COURT OF PUNJAB & HARYANA AT
CHANDIGARH
(210)
FAO-1776-2013
Date of decision:- 10.01.2024
Punjab State Civil Supplies Corporation Limited ... Appellant
Versus
Aman Rice Mill and another ... Respondents
CORAM: HON'BLE MR. JUSTICE SUVIR SEHGAL
Present:- Ms. Deepali Puri, Advocate
for the appellant.
None for the respondents.
****
SUVIR SEHGAL, J. (ORAL)
1. By way of present appeal filed under Section 37 of the
Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the
Act"), Punjab State Civil Supplies Corporation Limited (for short "the
PUNSUP") has assailed order dated 11.01.2013 passed by Additional
District Judge, Chandigarh, whereby Objection Petition under Section 34 of
the Act filed by the respondents, has been accepted.
2. Facts, in brief, are that an agreement dated 03.11.2001, Annexure
P-1, was entered into between the appellant and the respondents for custom
milling of rice for the year 2000-01. Under the agreement, the respondents
were to be supplied 5159.54 Metrics MTs of paddy for shelling, which was
to be completed by the respondents by 30.04.2001 and the resultant rice, as
per specification, was to be supplied to the Food Corporation of India (FCI)
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in PUNSUP account. Clause 8 (iii) of the agreement, Annexure P-1,
provided that in case of shortfall in the recovery of rice, the miller is
responsible to pay the price of rice at custom mill rates plus interest @
21% from the date it became due. Clause 9 provided that in case of rice
does not confirm to the specification laid down in the agreement, it shall be
liable to be rejected and the miller shall be liable to pay PUNSUP for short
delivery of rice as penalty at the custom mill rate fixed by the Government
of India, besides interest @21%. It was further provided that the decision of
the Managing Director in this regard would be final. In Clause 9 (ii), the
time period for the delivery of the shell rice was specified and it was
clarified that on the failure to deliver the rice within the time frame, interest
@21% for the first year of default and @30% for the subsequent period on
the economic cost fixed by the Government, would be payable by the miller
and the decision of the Managing Director- PUNSUP in this connection
shall be final.
3. A dispute arose between the parties and in terms of Clause 22 of
the agreement, Annexure P-1, it was referred to an Arbitrator for decision.
Both the parties raised claim and counter claim. An award dated 28.10.2005
was passed by the Arbitrator for Rs.18,59,930.74/- in favour of PUNSUP
with interest @ 9% per annum on the awarded amount, besides costs.
Litigation cost would also awarded in its favour. Respondents filed
objections before the learned Additional District Judge against the award.
Interpreting Clause 9 (ii) of the agreement, Annexure P-1, the learned
Additional District Judge came to the conclusion that the controversy fell
within the excepted clause and was to be decided by the Managing
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Director. Accordingly, the award was set aside and the matter was sent to
M.D., PUNSUP for decision in accordance with law. Aggrieved against the
order of the learned Additional District Judge, PUNSUP has approached
this Court by way of present appeal.
4. By referring to the counterclaim raised before the Arbitrator,
counsel for the appellant has urged that PUNSUP had claimed sales tax,
income tax, quality, cut and cost of bags, besides cost for short delivery of
rice, which did not fall within the purview of the Clause 9 (ii) of the
agreement, Annexure P-1. She contends that the Court has misread the
Clause and has erred in referring the matter for adjudication to the M.D.,
PUNSUP. She has placed reliance upon the judgments of this Court
reported in FAO-1186-2010 titled as "Adarsh Rice Mills Versus Punjab
State Civil Supplies Corporation and another", decided on 17.07.2012;
FAO-396-2010 titled as "Punjab State Civil Supplies Corporation Ltd.
and another Versus M/s Shiv Shankar Rice Mills and another", decided
on 18.07.2012; FAO-3778-2004 titled as "M/s Shiv Shankar Rice Mills
Versus PUNSUP and others", decided on 01.02.2011; FAO-2462-2005
titled as "Punjab State Civil Supplies Corporation Limited and others
Versus Sham Rice Mills", decided on 25.09.2010; FAO-5268-2013 titled
as "Punjab State Civil Supplies Corporation Limited and another Versus
M/s Muktisar Rice Mills and others", decided on 18.04.2023 and FAO-
5510-2013 titled as "Punjab State Civil Supplies Corporation Limited
Versus Mittal Rice Mills and others", decided on 18.04.2023.
5. I have heard counsel for the appellant and perused the record with
her able assistance.
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6. Although, respondents have been served, but there is no
appearance on their behalf. Identically worded clauses in the agreement
came up for consideration before a Co-ordinate Bench of this Court in
Muktisar Rice Mill's case (supra) and this Court held as under:-
"14. In the present case, the issue involved is as to
whether failure to shell paddy and to supply rice is covered
under Clause 9 of the agreement or not?
15. The contention of learned counsel for the miller
that non-supply of rice shall fall within Clause 9 lacks merit.
Clause 8 (iii) deals with the case where there is shortfall for
recovery of rice. On the other hand Clause 9(i) deals with the
case where the rice is not supplied as per the specifications
laid down. Under Clause 9(iii), the miller is liable to pay
interest to PUNSUP for failing to supply rice within the
stipulated period.
16. There is another aspect to be considered. In case
the contention of learned counsel for the miller is accepted,
Clause 8(iii) is rendered redundant as it covers cases where
price of rice is to be recovered on account of short supply of
rice.
17. Reliance of learned counsel for the miller in the
cases of M/s Aggarwal Rice Mills and M/s Dashmesh Rice
Mills and others (supra) is of no avail. In M/s Aggarwal
Rice Mills' case (supra), the appeal was decided on the basis
of the admission of counsel for the State that on the issue of
recovery of 1.5 times of economic costs of shortage of paddy
and charging of interest for non-supplying the rice within the
stipulated time, the decision of the Director, DFSC shall be
final. The case of M/s Dashmesh Rice Mills and others
(supra) was decided by relying upon the decision of M/s
Aggarwal Rice Mills' case (supra).
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18. It would be apposite to mention that Claims No. 15
and 16 relating to the interest on the amount recoverable and
for late delivery of rice was rejected by the arbitrator. The
District Judge erred in concluding that failure of the miller to
supply rice is covered under Clause 9 and while arriving at
this conclusion Clause 8 (iii) was not considered.
19. In view of the above, the appeal is accepted. The
impugned order is set aside."
7. This Court is of the view that the present matter is squarely
covered with the observations of the Co-ordinate Bench of this Court
reproduced above. Resultantly, instant appeal is allowed and the impugned
order is set aside.
8. Matter is remitted to the District Judge, Chandigarh for re-
consideration and fresh decision.
9. Parties are directed to appear before the District Judge,
Chandigarh on 15.02.2024, who may decide the matter himself or assign it
to any Court of competent jurisdiction.
(SUVIR SEHGAL)
JUDGE
10.01.2024
Kamal
Whether Speaking/Reasoned Yes/No
Whether Reportable Yes/No
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