Research › Search › Judgment

Madhya Pradesh High Court · body

2004 DIGILAW 531 (MP)

MAHILA BAHU UDDESHIYA SAHAKARI SAMITI MARYADIT v. STATE OF M. P.

2004-07-09

A.K.MISHRA

body2004
ORDER Arun Mishra, J. In these six writ petitions common question arises for consideration; petitioners are claiming payment of wheat which has been supplied to MP. State Civil Supplies Corporation Ltd. (hereinafter referred to as "Corporation"). - The facts are being noted from W.P. No. 28355/2003, Mahila Baku Uddeshiya Sahakari Samiti Maryadit and another vs. State of M. P. and ors. Petitioner No. 1 is a registered society under M.P. Swayata Sahakarita Adhiniyam, 1999. Petitioner No. 2 is Manager of the society. Petitioners are working as sub-agents of Corporation for the purpose of procurement of foodgrains from cultivators at the minimum support price conforming to "Fair Average Quality" (for short hereinafter referred to as "FAQ"). Minimum support price for procurement of wheat was also fixed. The Corporation has been established by the State Government. Petitioners procured the wheat as per the scheme. Petitioners claim that they have procured and supplied good quality of wheat to the Corporation. Respondent 2 or 3, namely, Corporation or its District Manager did not raise any query about the quality of the wheat procured, at no stage they were required to show cause, agreement (P/2) dated 15-2-2003 is silent as to what kind of quality of wheat has to be procured, there was no guidelines issued in this regard. Petitioners claim that wheat procured by them was FAQ. Without opportunity of hearing, huge amount has been withheld by the respondents, they have submitted representation. Petitioners have invested an amount of about Rs. 3 1/2 crores and they have also made huge investment for purchase of new gunny bags. Corporation has already lifted the entire quantity of stored wheat from the stores and utilized, thus, Corporation cannot withheld the payment of the amount which is otherwise to go to farmers/cultivators. Petitioners' self-interest is restricted only to 2% commission. Payment of 7,751.87 quintals has been withheld. Action of the respondents is unfair arbitrary and mala fide. Petitioners are likely to suffer irreparable injury in case amount is not paid. A return has been filed by respondents 2 and 3. Petitioners' self-interest is restricted only to 2% commission. Payment of 7,751.87 quintals has been withheld. Action of the respondents is unfair arbitrary and mala fide. Petitioners are likely to suffer irreparable injury in case amount is not paid. A return has been filed by respondents 2 and 3. It is contended in the return that wheat supplied was of non-FAQ quality, there is an arbitration agreement between the -petitioners' society and Corporation in which it has been clearly stipulated that in case of any dispute arising out of this agreement, same shall be referred to sole arbitration of Managing Director, M.P. State Civil Supplies Corporation Ltd. Therefore, petitioner should have exhausted the remedy of "arbitration" which has been agreed to between the parties. It is also contended that petitioners have the remedy under M.P. Co-operative Societies Act of filing a dispute u/s 64 of M.P. Co-operative Societies Act. It is purely a civil dispute and petitioner can file civil suit. It is further contended in the return by respondents 2 and 3 that there are several disputed Pacts which cannot be proved on the basis of affidavit, it is purely a contractual matter, hence, writ petition is not the appropriate remedy. It was clearly provided in the agreement that only FAQ wheat shall be procured, condition has not been fulfilled, enquiry is being made by the District Collector. Classification of FAQ standard is part of the agreement (R/2). Matter relates to procurement of wheat for Year 2003-2004, the procurement period is from April to June. The last five years wheat procurement in Satna district clearly show that the maximum procurement in Satna district has never gone beyond 8000 MT. This year the procurement reached 24000 MT, everyone was alarmed. Samples of the wheat were tested by technical person from headoffice in order to determine its quality, it should match with the FAQ standard. Samples failed and it was found that some amount of wheat procured was of inferior quality. This is contrary to the agreement. Report (R/4) of technical person of Corporation has been placed on record. It is to be decided whether procurement is genuine, in case societies are found to be wrong they are to be black listed. The respondents have already suspended 10 employees who were prima facie found delinquents as a result of preliminary enquiry in accordance with the service rules. Report (R/4) of technical person of Corporation has been placed on record. It is to be decided whether procurement is genuine, in case societies are found to be wrong they are to be black listed. The respondents have already suspended 10 employees who were prima facie found delinquents as a result of preliminary enquiry in accordance with the service rules. There is breach of agreement which was committed, petitioners are not entitled for cost of transportation charges, commission and other cost for the gunny bags. Enquiry is being held and petitioners will be paid according to their entitlement under the agreement. Out of the total purchase in Satna district, 26, 800 quintals was found to be sub-standard wheat. In order to improve its quality additional cost was incurred by the Corporation out of which 13000 quintals has been upgraded and utilized and balance of 13,800 quintals has not improved so far, the technical officer and others will examine this quantity and find out whether it can be improved or not. Otherwise this quantity will remain unused in the godown. Only about 18% cost has been withheld and 82% amount of cost has been paid. Police had also asked for certain information as per letter (R/8). Departmental enquiry is also pending into the illegal procurement, hence, no interference is called for in this writ petition. A rejoinder has been filed by the petitioners. It is submitted in the rejoinder that under the supervision of the respondents petitioners have carried out the work of procurement of the wheat. Sole condition for making payment to petitioners was acceptance letter (P/l) issued in favour of the society by the Corporation. It is binding. Respondents cannot wriggle out of the same. Entire quantity which was lifted has been used as such respondents are liable to make the payment with interest as claimed in the petition. There is no sample of procured wheat collected by petitioners available with Corporation. Thus, FAQ of procured wheat cannot be ascertained. Once the wheat has been accepted, respondents are bound to make the payment, arbitration clause does not come in the way as the action is arbitrary, unjust and illegal. There is no sample of procured wheat collected by petitioners available with Corporation. Thus, FAQ of procured wheat cannot be ascertained. Once the wheat has been accepted, respondents are bound to make the payment, arbitration clause does not come in the way as the action is arbitrary, unjust and illegal. Additional return has also been filed by respondents 2 and 3 contending that petitioners may file the claim before the Arbitration Tribunal and on time bound basis the matter will be decided after adjustment of the loss having suffered by the Corporation on account of fall in FAQ. A return has also been filed by respondents I and 4. They have contended that the petitioners have not sought any relief against them. They have been impleaded formally. Sample of the wheat was found to be inferior in quality, there is an arbitration agreement, dispute can be settled by an Arbitrator, hence, petition deserves to be dismissed. Facts in other connected writ petitions are more or less similar to this petition except the difference that in W.P. No. 410/04, W.P. No. 411/04 and W.P. No. 412/04 "arbitration proceedings" are going on is not in dispute. Shri Prashant Singh, learned counsel appearing for petitioners has submitted that respondents/corporation is bound by the acknowledgment (P/l) in which there is an admission of having made inspection and about wheat being FAQ. He has further heavily relied upon (P/9) filed by petitioners with rejoinder in which it has been mentioned that sample is presently not available in district office. He has further submitted that as the wheat has been utilized, respondents are bound to make the payment. He has further submitted that Arbitration by Managing Director cannot be said to be an efficacious remedy as such this Court should interfere and direct payment to be made in these writ petitions. Shri K. S. Wadhwa and Shri Manish Tripathi, learned counsels appearing on behalf of Corporation have submitted that wheat supplied was non-FAQ, there is a report of expert which has been obtained with respect to quality of the wheat supplied by the petitioners. Thus, the report is binding and petitioners cannot claim the full amount. Shri K. S. Wadhwa and Shri Manish Tripathi, learned counsels appearing on behalf of Corporation have submitted that wheat supplied was non-FAQ, there is a report of expert which has been obtained with respect to quality of the wheat supplied by the petitioners. Thus, the report is binding and petitioners cannot claim the full amount. They have further submitted that considering the fact that act of levy of huge quantity of wheat has been done as compared to the last year figure, average levy in district Satna was 8000 MT whereas procurement has reached upto 24000 MT which was an alarming fact, departmental enquiry is being held against several responsible persons, they have been charge sheeted. The disputed questions of fact are involved which cannot be determined in a writ petition as to Fair Average Quality of wheat receipt (P/l) cannot be said to be conclusive and binding as the enquiry is pending against the persons responsible for issuing it, there is an efficacious remedy of arbitration, it is purely a matter of contract, thus, interference cannot be made in a writ petition. Parties are bound by the agreement to have the dispute settled by the named arbitrator, thus, no interference is called for, writ petition may be dismissed. Shri Ashok Agarwal, GA appearing on behalf of the State has supported the submissions raised by learned counsels appearing on behalf of Corporation and has submitted that arbitration clause could be invoked and disputed facts cannot be resolved in this writ petition. Matter being purely contractual, writ petition is not the appropriate remedy. It is not in dispute that in three writ petitions W.P. No. 410/04, W.P. No. 411/04 and W.P. No. 412/04 arbitration proceedings are going on and arbitrator is in seisin of the matter. It is also not in dispute that there is a provision of arbitration. Similar agreement exist in all the writ petitions. In my opinion, there is a serious dispute with respect to quality of the wheat procured; whether it was FAQ or not. There is a report obtained by the Corporation of expert with respect to poor quality of wheat, this Court cannot give a finding on the disputed question of fact whether report is to be relied upon or not and also the fact from which of the petitioner FAQ wheat was procured. There is a report obtained by the Corporation of expert with respect to poor quality of wheat, this Court cannot give a finding on the disputed question of fact whether report is to be relied upon or not and also the fact from which of the petitioner FAQ wheat was procured. P/l may have the evidenciary value but the correctness of it has been seriously disputed by learned counsels appearing on behalf of Corporation on the basis of expert report and there is a categorical stand taken by the Corporation that non-FAQ wheat was procured that too in huge quantity, it was four times as compared to previous year procurement which shows that entire transaction undertaken this year is suspicious, quality could not be improved even after efforts were made, thus, there is a serious dispute as to the quality of the wheat, FAQ wheat was required to be purchased as per the procurement policy. In view of the arbitration clause in the agreement which covers the kind of dispute which has been raised in these petitions, in my opinion, appropriate remedy is before the Arbitrator. Such disputed questions of fact cannot be decided in the writ petition and the evidentiary value of the documents cannot be gone into particularly when facts have been seriously disputed. In three of the writ petitions No. 410/04, 411/04 and 412/04, arbitration proceedings are going on, that remedy other three petitioners have. In W.P. No. 28355/03, 28356/03 and 25857/03, another bench of this Court has passed an interlocutory order directing certain payment to be made. I am not disturbing the interlocutory order as this Court has safeguarded the interest of respondents/corporation while passing the interlocutory order, there is a condition of making refund and petitioners were required to furnish an undertaking within 15 days of making refund in case the same is necessitated and on that condition 90% of the payment was required to be released. Corporation was allowed to adjust the.sum already paid, the order was subject to further orders which may be passed in this petition. Corporation was allowed to adjust the.sum already paid, the order was subject to further orders which may be passed in this petition. As the cheques have been issued pursuant to the interim order, I am not disturbing the interlocutory order, however, the same shall be subject to the final decision which is to be rendered by the Arbitrator, in case refund is ordered undertaking furnished by the petitioners shall hold good and in case amount is required to be refunded, they have to refund the amount. I find no ground to make an interference in these writ petitions. Petitioners, if so advised, may prefer the dispute before the Arbitrator. Shri Prashant Singh, learned counsel appearing for petitioners has prayed that on dispute being preferred, Arbitrator may be directed to decide the dispute at an early date, to which Shri K. S. Wadhwa, Shri Mukesh Agarwal and Shri Manish Tripathi, learned counsels appearing for respondents have no objection. In case Arbitrator is approached within fifteen days by the remaining three petitioners of writ petition No. 28355/03, 28356/03 and 28357/03, Arbitrator to decide the matter as far as possible within four months after duly proceeding in the matter in accordance with law. The other three arbitrations which are pending be also decided within the same period. Writ petitions are disposed of with the above directions. Parties to bear their own costs as incurred of these petitions. C.C. as per rules.