{"id":97334,"date":"2009-09-03T00:00:00","date_gmt":"2009-09-02T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/ms-setia-rice-mills-vs-punjab-state-co-operative-supply-on-3-september-2009"},"modified":"2015-12-04T03:55:15","modified_gmt":"2015-12-03T22:25:15","slug":"ms-setia-rice-mills-vs-punjab-state-co-operative-supply-on-3-september-2009","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/ms-setia-rice-mills-vs-punjab-state-co-operative-supply-on-3-september-2009","title":{"rendered":"M\/S Setia Rice Mills vs Punjab State Co-Operative Supply … on 3 September, 2009"},"content":{"rendered":"
Punjab-Haryana High Court<\/div>\n
M\/S Setia Rice Mills vs Punjab State Co-Operative Supply … on 3 September, 2009<\/div>\n
F.A.O No.2954 of 2006                                               1\n\n\n            IN THE HIGH COURT OF PUNJAB AND HARYANA\n                       AT CHANDIGARH.\n\n                                          F.A.O No.2954 of 2006\n                                          Date of Decision: 03.09.2009\n\n\nM\/s Setia Rice Mills, Jalalabad Road, Muktsar\n\n                                                   ....Appellant\n\n            Versus\n\n\nPunjab State Co-operative Supply and Marketing Federation Limited\n(Markfed) and another\n\n                                                  ...Respondents\n\nCORAM : Hon'ble Ms. Justice Nirmaljit Kaur\n\nPresent:-   Mr. S.K. Singla, Advocate\n            for the appellant.\n\n            Ms. Deepali Puri, Advocate\n            for the respondents.\n\n                         *****\n\n          1. Whether Reporters of Local Newspapers may be\n             allowed to see the judgment ?\n          2. To be referred to the Reporters or not ?\n          3. Whether the judgment should be reported in the\n             Digest ?\n          **\nNIRMALJIT KAUR, J.\n<\/pre>\n
             This is an appeal against the order dated 15-12-2005 passed<\/p>\n
by District Judge, Faridkot, vide which, the objections of the appellant<\/p>\n
against the award dated 18-11-2004, were dismissed. The dispute, in this<\/p>\n
case, is with respect to the delivery of rice by the end of February, 1996.<\/p>\n
As per the claim, the appellant-miller failed to shell 3149 bags weighing<\/p>\n
2046.85 quintals of IR-8 and 41493 bags weighing 26970.45 quintals of<\/p>\n
paddy within the stipulated period. It was alleged that the appellant-miller<\/p>\n
violated the terms and conditions of the agreement and did not mill and<\/p>\n
supply the rice as per the contract.\n<\/p>\n
            The solitary argument raised by learned counsel for the
\n F.A.O No.2954 of 2006                                                     2<\/span><\/p>\n
appellant is that as per the terms of the agreement, the appellant-miller<\/p>\n
was to deliver the rice of the paddy supplied to it by the end of February,<\/p>\n
1996. It was agreed between the parties that in case of failure of the<\/p>\n
appellant-miller to supply the resultant rice within the fixed period of milling,<\/p>\n
he would be liable to pay an interest at the rate of 21% per annum on the<\/p>\n
basis of economic cost of left over quantity. The appellant-miller failed to<\/p>\n
deliver the rice within the stipulated period and as per the specifications.<\/p>\n
Therefore, he is liable to pay interest at the rate of 21% per annum as<\/p>\n
mentioned in the agreement. It was stated that the Managing Director of<\/p>\n
the Corporation appointed the Arbitrator to settle the disputes between the<\/p>\n
parties instead of deciding it himself in accordance with Clauses 6(iii), 7(iii)<\/p>\n
and 20 of the agreement.\n<\/p>\n
             For proper adjudication, it would be appropriate to reproduce<\/p>\n
Clause 6(iii) and Clause 7(iii), which read as follows :-<\/p>\n
              “Clause 6 :\n<\/p><\/blockquote>\n
               (i) and (ii) xxx     xxx\n<\/p><\/blockquote>\n
               (iii)   The Miller shall complete delivery of the rice
\n              within 10 days of issuance of paddy to him and rice due
\n              to the State Govt. on the total quantity of paddy issued
\n              to him or in joint custody released at regular interval
\n              shall be delivered not later than the 28th February,
\n              1995. The miller shall further ensure milling of Govt.
\n              paddy and delivery of rice in the following manner :-\n<\/p><\/blockquote>\n
                       October\/November          :     20%\n                       December                  :     26%\n                       January                   :     26%\n                       February                  :     28%\n<\/pre>\n
                       In the event of his failure to supply rice within the
\n              stipulated period he shall be liable for an interest @
\n              21% on the basis of economic cost of left over
\n              quality\/stocks of paddy\/rice. The decision of Director in
\n              this behalf shall be final.”\n<\/p><\/blockquote>\n
             Clause 7(iii)
\n F.A.O No.2954 of 2006                                                        3<\/span><\/p>\n
                      Clause 7(iii) of the agreement reveals that in the
\n              event of failure of the miller to supply the rice within the
\n              stipulated period, he shall be liable for an interest at the rate
\n              of 21% per annum on the basis of economic cost of left
\n              over stock\/quantity of paddy\/rice and the decision of the MD
\n              in that behalf shall be final. The clauses of the agreement
\n              also show that the shortage on the part of the miller would
\n              be recovered at 1.5 time the economic cost of equivalent
\n              paddy according to the variety involved. No doubt, as per
\n              the aforesaid clauses of the agreement, the `excepted
\n              matters’ were to be determined by the Managing Director
\n              himself and were not to be referred for arbitration, but the
\n              Managing Director of the Corporation had no judicial power
\n              under the agreement. If the miller fails to supply the rice as
\n              per the clauses of the agreement, then who is to decide
\n              those matters regarding the payment of the price of left over
\n              stock and interest for late delivery. In that situation, only the
\n              Arbitrator, who will be either the Managing Director himself
\n              or any other person appointed by him in that behalf, will
\n              decide the said matters. No doubt, the `excepted matters’
\n              cannot be referred to arbitration as per the clauses of the
\n              agreement, but that does not mean that the MARKFED
\n              cannot recover the price of the left over stock\/shortage and
\n              the interest for late delivery, as provided in the agreement.
\n              Even otherwise, there is no other remedy available to the
\n              Corporation to recover the amount of the alleged `excepted
\n              matters’ except by including the same in its claim submitted
\n              before the Arbitral Tribunal.”\n<\/p><\/blockquote>\n
             The relevant part of Clause 20 of the agreement reads thus :\n<\/p><\/blockquote>\n
                     ” Arbitration : All the disputes and difference arising
\n              out of the or in any manner touching or concerning this
\n              agreement whatsoever extend except as to any matter the
\n              decision of which is expressly provided for in the contract
\n              shall be referred to the sole arbitration of the M.D. PSWC
\n              or any person appointed by him in this behalf.”<\/p><\/blockquote>\n
             Thus, the aforesaid dispute or claim for the delayed supply and<\/p>\n
shortage was covered under the Agreement between the parties and there was<\/p>\n
no need to refer the Arbitrator for adjudication. This being the only dispute, a<\/p>\n
combined reading of Clauses 6(iii), 7(iii) and Clause 20, clearly shows that the
\n F.A.O No.2954 of 2006                                                        4<\/span><\/p>\n
remedy of the dispute is made available in the agreement itself. The decision<\/p>\n
given by the Managing Director would be final. The Managing Director was the<\/p>\n
only competent authority under the agreement to decide the dispute. The<\/p>\n
reference to the Arbitrator was illegal.\n<\/p>\n
              In a case Shree Krishna Rice Mills v. The Punjab State Co-op<\/p>\n
Supply and Marketing Federation Ltd., The Punjab Law Reporter-Vol CXXXV<\/a><\/p>\n
(2003-3) 341, this Court, on a similar proposition of law, has observed in para 12<\/p>\n
of the said judgment that :-\n<\/p>\n
                        “12.    Therefore, the combined reading of Clauses
\n                18, 5 and 6 of the aforesaid agreement, clearly show that
\n                all disputes between the Markfed and the Miller were liable
\n                to be referred to the arbitration concerning the agreement
\n                except disputes regarding the matters, the decision of
\n                which is expressly provided for in the contract. Under
\n                Clauses 5 and 6 of the aforesaid agreement, the decision
\n                with regard to 1.5 times economic costs and interest at the
\n                rate of 21% is clearly provided in the agreement, itself and
\n                as such, the aforesaid matters were not liable to be referred
\n                to the Arbitrator and reference in this regard was beyond
\n                the scope of arbitration clauses and the proceedings before
\n                the Arbitrator were clearly liable to be terminated on the
\n                short ground alone. In such circumstances, neither the
\n                Managing Director had any authority to refer aforesaid
\n                dispute to the Arbitrator, nor the Arbitrator had any
\n                jurisdiction to continue with the proceedings under any
\n                circumstances. The observation of the learned Additional
\n                District Judge at page 13 of the judgment that the claim with
\n                regard to the economic cost and interest was liable to be
\n                decided by the Arbitrator and the dispute is not frivolous, is
\n                not based on the appreciation of Clause 18 read with
\n                Clauses     5   and   6    of   the   agreement   but   he   has
\n                misinterpreted these clauses and had failed to appreciate
\n                the same properly and as such, has misdirected himself.
\n                Consequently, the findings of the Additional District Judge
\n                on this score cannot be sustained.”\n<\/p><\/blockquote>\n
The Special Leave Petition filed against the aforesaid judgment was dismissed.<\/p>\n
              This Court, vide order dated 28-07-2009, while deciding FAO No.
\n F.A.O No.2954 of 2006                                                  5<\/span><\/p>\n
3521 of 2007 titled as District Food and Supplies, Controller, Moga vs. M\/s<\/p>\n
Aggarwal Rice Mlls, Baghapurana, Distt. Moga, disposed of a bunch of similar<\/p>\n
appeals, by relying on the judgments of Hon’ble the Apex Court, rendered in the<\/p>\n
case of `Food Corporation of India v. Surendra, Devendra and Mahendra<\/p>\n
Transport Co.’<\/a> , The Punjab Law Reporter Vol. CXXXIII (2003-1) 843 and<\/p>\n
`Shree Krishna Rice Mills v. The Punjab State Co-op Supply and Marketing<\/p>\n
Federation Ltd.’,<\/a> (supra).\n<\/p>\n
              Learned counsel for the respondents, however, does not dispute<\/p>\n
that the same is also covered by the above judgments.\n<\/p>\n
              Accordingly, the appeal is allowed and the order dated<\/p>\n
15-12-2005 passed by District Judge, Faridkot, vide which, the objections<\/p>\n
of the appellant against the award dated 18-11-2004, were dismissed, is<\/p>\n
set aside. The Managing Director is at liberty to recall the record of the<\/p>\n
arbitration proceedings and proceed with the matter, in accordance with<\/p>\n
law.<\/p>\n
\n\n\n\n                                                     (NIRMALJIT KAUR)\n03.09.2009                                                JUDGE\ngurpreet\n <\/pre>\n","protected":false},"excerpt":{"rendered":"
Punjab-Haryana High Court M\/S Setia Rice Mills vs Punjab State Co-Operative Supply … on 3 September, 2009 F.A.O No.2954 of 2006 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. F.A.O No.2954 of 2006 Date of Decision: 03.09.2009 M\/s Setia Rice Mills, Jalalabad Road, Muktsar ….Appellant Versus Punjab State Co-operative Supply and Marketing […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[8,28],"tags":[],"class_list":["post-97334","post","type-post","status-publish","format-standard","hentry","category-high-court","category-punjab-haryana-high-court"],"yoast_head":"\nM\/S Setia Rice Mills vs Punjab State Co-Operative Supply ... on 3 September, 2009 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/ms-setia-rice-mills-vs-punjab-state-co-operative-supply-on-3-september-2009\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"M\/S Setia Rice Mills vs Punjab State Co-Operative Supply ... on 3 September, 2009 - 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