Supreme Court - Daily Orders
M/S. Kisan Rice Trading Company Thr. Its ... vs Punjab State Civil Supplies ... on 7 September, 2015
Bench: A.K. Sikri, Rohinton Fali Nariman
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IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 6887/2015
(Arising out of Special Leave Petition(C) No(s). 16463/2015)
M/S. KISAN RICE TRADING COMPANY
THR. ITS PARTNER PARMOD GUPTA APPELLANT(S)
VERSUS
PUNJAB STATE CIVIL SUPPLIES
CORPORATION LTD. AND ANR. RESPONDENT(S)
O R D E R
Leave granted We have heard learned counsel for the parties at length. An agreement for milling of paddy into rice was entered between the appellant and the respondent on 23.09.1994. Some disputes arose and respondent filed the claim petition before the Arbitrator. Though initially the claims filed were to the tune of Rs.55 lacs approximately, thereafter the claims were revised and reduced to mere Rs.3,41,627/-, the details of these claims are as under:
“Revised claim covered by Arbitration Agreement 1½ times the cost of balance rice at FCI (Clause 13) rate as on 30.6.1995 Signature Not Verified Rs. 67,119/-Digitally signed by
Cost of bags lying with the miller as ASHWANI KUMAR Date: 2015.09.12 (Clause 12) approved by Food & Supplies Department for Rs. 2,08,593 10:48:32 IST Reason:
15,555 bags @ Rs. 13.41 Sales tax @4% on bags lying with the miller Rs. 919/- Income tax 2 Rs.4126 Transportation charges incurred on shifting (Clause 11(vii) of paddy to other mills for milling Rs. 25,366 Revised claims covered by Excepted matter Quality cuts (Clause 6(1) Rs. 25,366/-” The appellant herein contested the aforesaid claims and also filed its counter claims. The appellant claimed that the respondent had in fact recovered an excess amount of Rs. 1,00,122.75 from the appellant. The learned Arbitrator considered the claim as well as counter claims of both the parties except one claim of the respondent which pertains to quality cuts which was in the sum of Rs. 25,366/- treating the same to be the excepted matter. The Arbitrator found that before the claims were raised the parties had settled the accounts and no dues statement was signed and on this basis claims as well as counter claims of both the parties were rejected.
The objections to the Award were filed which were rejected by the District Judge. Against the order of the District Judge, an appeal was filed before the High Court. Plea, taken by the respondent was that the claims made by the respondent which were the subject matter of the arbitration were excepted matters and could not have been gone into by the Arbitrator. It was submitted that going by the nature of these claims, as per the agreement, it is the Managing Director of the Punjab State Civil Supplies Corporation Ltd. (hereinafter referred to as ‘PUNSUP’) who will look into these claims. The High Court accepted the aforesaid plea of the respondent vide its order dated 23.04.2015 and on this basis 3 Award is set aside and the Managing Director of PUNSUP is directed to decide the claims of the respondent. Challenging that order of the High Court present appeal is preferred.
We have already mentioned the nature of the claims which were raised by the respondent. The agreement between the parties contains arbitration clause and the operative portion thereof reads as under:
“ARBITATION: All the dispute and difference arising out of or in the manner touching or concerning this agreement whatsoever (except at any matter the decision of which is expressly provided in the contract) shall be referred to the sole arbitration of the Managing Director or any person appointed by him in this behalf. It will be no objection to any such appointment that the person appointed was an employee of PUNSUP or that he had to deal with the millers in which the contract relates and that in the course of his deal as such an employee of the PUNSUP he had expressed views on all or any of the matters in disputes or difference. The award of such arbitration shall be final and binding on the parties to the contract. It is a terms of this contract that in the event of the arbitration being transferred or vacating his office dying of being unable to act for any reason the Managing Director at the time of such transfer, vacation of rice, death or inability shall against another person to act as arbitrator. Such a person shall be entitled to proceed with reference from the stage where it was left by his predecessor. Provided further that any demand for arbitrator in respect of any claim(s) of the miller, under the contract shall be in writing and made within one year of the date of completion or expiry of the period of contract. If the demand is not made within the period, the claim(s) of the miller shall be deemed to have been waived off and absolutely barred and the Managing Director shall be discharged and released of all liability under the contract in respect of these claims.
The cost or an in connection with arbitration shall be in the discretion of the arbitrator who may make suitable provisions for the same in his award.
Subject as aforesaid the Arbitration Act, 1940 shall apply to the Arbitration providing under this 4 clause. In witness thereof. The parties here to have signed this agreement on the day and year first above written.” The reading of the aforesaid clause would demonstrate that all the disputes and differences arising out of or in the manner touching or concerning this agreement, they are to be referred to the sole arbitration of the Managing Director or any person appointed by him in this behalf except those matters the decision of which is specifically provided in the contract. In the agreement certain matters are mentioned where the decision is to be taken by the Managing Director. We are concerned with following clauses:
“5(iii) In case there is shortfall in the recovery of rice provided in sub-clause(i) above the miller shall pay to the PUNSUP the cost of paddy equivalent to the short fall at the rate of 1½ times the economic cost of paddy.
6(i) The entire quantity of rice of all varieties delivered by the miller to the PUNSUP shall conform to the specifications laid down in the Punjab rice procurement (LEVY) Order, 1983, as amended from time to time and in shy other or Notifications issued by the State Government from time to time. The stocks of rice no conforming to the specifications so laid down, shall be liable to rejected to the respect of such quantity of rice which is not found to be liable to offer fresh stocks of rice conforming to the specifications to the PUNSUP in the event of his failure to supply rice within the prescribed specifications, shall be liable to pay to the PUNSUP for the quantity of rice short supplied at the penal rate of one and half times the economic cost the converted variety of paddy equivalent to the shortages. The decision of the Managing Director, PUNSUP (hereinafter referred to as the Managing Director) in this behalf shall be final.
6(iii) The Miller shall complete delivery of rice within 10 days of issuance of paddy to him and rice and rice due to the PUNSUP on the total quantity of paddy issued to him or in joint custody released at 5 regular interval shall be delivered not later than the 28th February, 1995. The Miller shall further ensure milling of PUNSUP paddy and delivery of rice in the following manner:-
October/November: 20% December 26% January 26% February 28%.
In the event of his failure to supply rice within the stipulated period he shall liable to for an interest @21% on the basis of economic cost of left cover quantity/stocks of paddy/rice. The decision of Managing Director in this behalf shall be final.
12.PACKING: Rice shall be packed in the gunny bags in which paddy is supplied by the Miller. In case the PUNSUP choose to supply other gunny bags for the purpose, the Miller shall pack the rice in such gunny bags so supplied and return the PUNSUP they gunny bags originally supplied. The rice Mills will give proper account of all gunny bags. Double line machine stitching is made compulsory to all the Mills/dealers irrespective of rice milling capacity. The bags found surplus after the filing of rice shall be retained by the millers had cost therefore shall be paid by the millers to the PUNSUP at the rate to be fixed by the State Government from time to time.
13(ii) The Miller shall be responsible to make good all shortages/in paddy, rice and gunny bags that might occur while in his custody till the entire stocks are returned. These shortages can do till the entire stock are returned with the specification and variety of paddy, rice and gunny bags involved. In case the miller fails to do so, recovery would be made from him for shortages of paddy and rice at 1½ times the economic cost of equivalent paddy according to the variety involved.
14.VOLUME OF WORK: The PUNSUP do not guarantee any definite volume of work relating to shelling of paddy at any time or through out the period of contract.
The more mention of any item of work in this contract shall not by itself confer a right on the miller to demand that the work relating to shelling of paddy at a particulars/Centre/Mandi should necessarily or exclusively be entrusted to him. The government shall have the exclusive right to support one or more millers for any particulars 6 centre/mandi and to divide the work between the millers in any manner that the Govt. may decide and no claim shall be against the PUNSUP for such withdrawal/distribution to work.“ Insofar as the claim No.1 of the respondent is concerned, it pertains to 1½ times cost of balance rice at FCI rate as on 30.6.1995. It is clear therefrom that the respondent wanted the cost of balance rice at higher rates. In order to show that it is the Managing Director who had to decide this claim, reference is made to clause 6(i) which is reproduced as above. On reading of the said clause, we do not find that the contention of the respondent is correct. This clause pertains to the quality of stocks which which were to be supplied and in that respect the decision of the Managing Director was final. On the other hand, the claim of the respondent is directly covered by Clause 13(ii). Likewise, claim no. 2 relates to the cost of bags lying with the miller as approved by the Food & Supplies Department. The endeavour of the respondent to cover the same under clause 12 is not justified inasmuch as clause 12 deals with packing and not cost of bags. Insofar as, claim of sales tax and transportation charges are concerned, we do not find any provisions wherein such claims are to be entertained by the Managing Director. We are, thus, of the opinion that all these claims were arbitrable and were not covered by any excepted clauses. The High Court, therefore, committed error in holding that the Managing Director had to take his decision on these claims. 7 The appeal is allowed and the order of the High Court is set aside.
......................J. [A.K. SIKRI] ......................J. [ROHINTON FALI NARIMAN] NEW DELHI;
SEPTEMBER 07, 2015
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ITEM NO.202 COURT NO.14 SECTION IVB
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
Petition(s) for Special Leave to Appeal (C) No(s). 16463/2015
(Arising out of impugned final judgment and order dated 23/04/2015 in FAO No. 3486/2013 passed by the High Court Of Punjab & Haryana At Chandigarh) M/S. KISAN RICE TRADING COMPANY THR. ITS PARTNER PARMOD GUPTA Petitioner(s) VERSUS PUNJAB STATE CIVIL SUPPLIES CORPORATION LTD. AND ANR. Respondent(s) (with interim relief and office report)(FOR FINAL DISPOSAL) Date : 07/09/2015 This petition was called on for hearing today. CORAM : HON'BLE MR. JUSTICE A.K. SIKRI HON'BLE MR. JUSTICE ROHINTON FALI NARIMAN For Petitioner(s) Mr. R. Anand Padmanabhan, Adv.
Mr. Anand Sharma, Adv.
Mr. Shashi Bhushan Kumar,Adv.
For Respondent(s) Mr. Rabin Majumdar, Adv.
Mr. Nitin Kaushal, Adv.
Mr. Anjan Sinha, Adv.
UPON hearing the counsel the Court made the following O R D E R Leave granted.
The appeal is is allowed in terms of the signed order. Pending Interlocutory Application, if any, is, accordingly, disposed of.
(Ashwani Thakur) (Renu Diwan)
COURT MASTER COURT MASTER
(Signed order is placed on the file)