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2006 DIGILAW 1304 (PNJ)

District Food And Supplies Controller, Moga v. Mangla Rice Mills

2006-03-27

VINEY MITTAL

body2006
Judgment Viney Mittal, J. 1. This order shall dispose of three appeals being FAO Nos.5420 to 5422 of 2005 as identical facts are involved in all the three appeals. All the three appeals have been filed by appellant-District Food and supplies controller, Moga, challenging identical orders dated June 1,2005 passed by the learned Additional District Judge, Moga. Vide the aforesaid order, the learned Additional District Judge has held that awards passed by the arbitrator were illegal and has, consequently, allowed the petitions filed by the respondent-miller under section 34 of the Arbitration and conciliation Act,1996. For the sake of convenience the facts are borrowed from a dispute had arisen between the District Food and Supplies controller, Moga and the Miller M/s. Mangla Rice Mills, with regard to an agreement between the parties, for milling of paddy for the year 1994-95. 2. The claimant-District Food and Supplies Controller ( hereinafter referred to as the "controller") claimed that the miller was to deliver the rice manufactured out of the paddy within the stipulated period but had failed to deliver the said rice and had also failed to comply with the terms and conditions of the agreement. The Arbitrator rendered his award dated january 7,2002 and the Miller was held responsible for shortage of stocks and ordered the recovery of the cost of paddy at the custom mill rate of rice prevailing at that time along with interest. The miller filed an application under section 34 of the Arbitration and Conciliation Act,1996 (hereinafter referred to as the "act") challenging the aforesaid awards. Various objections were raised with regard to jurisdiction/competence of the arbitrator. It was also claimed that the reference of the dispute to the arbitrator was barred by limitation. 3. The learned Additional District Judge examined the entire controversy between the parties. It was noticed that the dispute pertained to the year 1994-95. However, the reference was made in the year 2000. Relying upon section 43 of the Act read with Article 137 of the limitation act, it was held that reference of the dispute to the Arbitrator was beyond limitation and,therefore, it was held that the award of the Arbitrator was liable to be set aside on that ground alone. However, the reference was made in the year 2000. Relying upon section 43 of the Act read with Article 137 of the limitation act, it was held that reference of the dispute to the Arbitrator was beyond limitation and,therefore, it was held that the award of the Arbitrator was liable to be set aside on that ground alone. It was further held that clause 6 (I) of the arbitration agreement contained a penal clause and as per the aforesaid clause the sole authority to decide the aforesaid penalty was the director and,therefore the appointment of the Arbitrator to adjudicate the aforesaid controversy on that point, was wholly contrary to the arbitration agreement. Reliance in this regard was placed upon a judgment of this court in M/s. Shree Krishna Rice Mills V. Punjab State Cooperative Supply and marketing Federation Limited 2003 (2) Civil Courts Cases 167. On the basis of the aforesaid authority, it was held that when a specific remedy had been provided in the agreement between the parties, then the aforesaid controversy could not be referred to the Arbitrator. Consequently, the award dated January 7,2002 passed by the Arbitrator was set aside. The petition filed by the miller under section 34 of the Act was allowed. 4. I have heard Shri Sushant Maini, Deputy Advocate general,punjab appearing for the appellant and with his assistance have also gone through the record of the case. From the perusal of the order passed by the learned Additional district Judge, I find that the reference of the dispute to the Arbitrator had been found to be barred by limitation, under section 43 of the Act read with article 137 of the Limitation Act. Nothing has been shown that the aforesaid finding recorded by the learned Additional District Judge suffers from any infirmity. 5. It is also clear from the perusal of the clause 17 of the arbitration agreement ( reproduced in the grounds of appeal) that " all the disputes and differences arising out of or in any manner touching or concerning this agreement whatsoever ( except as to any matter the decision of which expressly provided in the contract ) shall be referred to the sole arbitration of the Director or any person appointed by him in this behalf". Thus, the matters which could be referred to for adjudication to the arbitrator were only such disputes for settlement of which no provision had been made in the agreement itself. However, clause 6 (1) of the agreement specifically provides for imposition of penalty by the director and it has been provided therein that the decision of the Director in that behalf would be final. Thus, when clause 6 (1) of the agreement specially dealt with the penalty clause, then the aforesaid dispute with regard to imposition of penalty could not have been referred for adjudication to the arbitrator, since it was one of the exceptions provided in the arbitration clause itself. In this view of the matter, the reference of the aforesaid dispute to the Arbitrator was wholly beyond the terms of the arbitration agreement and,therefore the award rendered by the Arbitrator with regard to the aforesaid controversy could not be sustained and has rightly been set aside. 6. No other point has been urged. As a result of the aforesaid discussion, I do not find any merit in the present appeals. The same are consequently dismissed.