Punjab Agro Industries Corporation Chandigarh v. M/S Singla Gram Udyog Samiti (registered) Bhawanigarh,District Sangrur

both arising out of the same award of the arbitrator and impugned order passed by learned District Judge, Sangrur dated 22.8.2006, whereby an objection filed under Section 34 of the Arbitration and Conciliation Act, 1996 (for short 'the Act') has been accepted and award of the arbitrator dated 1.12.2005 has been set aside. On 10.1.2001, an agreement was entered into between Punjab Agro Industries Corporation (for short, PAIC) and M/S.Singla Gram Udyog FAO No. 237 of 2007 (O&M) 2 Samiti (respondent No.1.) for milling of paddy as per clause 10 of the Punjab Rice Procurement (Levy) Order, 1983 for custom milling of the crop year 2000-2001. As per terms and condition of the agreement, respondent was to supply entire milled rice to the Food Corporation of India (for shot 'FCI') by 28.1.2001 which was subsequently extended up to

30.9.2001. A dispute arose between the parties which was referred to the arbitrator in terms of clause 21 of the agreement. The arbitrator vide his award dated 1.12.2005, observed as under:- “Resultantly, in view of the foregoing discussion, I hold that the claimants are entitled to recover the cost of 5741.88 quintals of short- delivered-rice @ Rs.1072.95 per qtl which comes to Rs.61,60,750/-, cost of 56029 retained gunny bags @ Rs.36.28 which comes to Rs.773878/- (Rs.741262+ Rs.32616 Sales Tax)TDS Rs.10439/- and quality cuts amounting to Rs.12870/- i.e. total Rs.6957937/- from the respondents. However, after adjusting the amount of Rs. 4,97,100/- payable to the miller on account of milling charges, the net recoverable amount from the miller comes to Rs.6460837/- as on 1.10.2002. It is also pertinent to mention here that the claimant has not produced any documentary evidence in order to prove its claim towards cost of crates, sheets and meshnets and as such the claim to this extent is declined. Consequently, I make an award to the effect that the claimants are entitled to recover a sum of Rs. 6460837/- as on 1.10.2002 with agreed interest @ 21% per annum till the date of award. Thereafter the total amount shall carry interest @ 18% from the date of the award till realisation. The cost of the arbitration proceedings are quantified at Rupees ten thousand only which shall be borne by the respondent”. FAO No. 237 of 2007 (O&M) 3 Feeling aggrieved, P.A.I.C. filed arbitration case No.3 of

03.2.2006 alleging that the arbitrator has failed to award interest as agreed, which was allowed to be awarded @ 21% for the first year and 30% for the subsequent year and sought modification of the award whereas the respondent filed arbitration case No.2. of 27.1.2006 alleging that the arbitrator acts as Legal Advisor and has been biased while passing the award. No evidence was produced by P.A.I.C in respect of receipt of paddy by the respondent and as such, it is not proved to have been delivered to the respondent. On the pleadings of the parties, in arbitration case No.2 dated

27.1.2006, vide order dated 23.3.2006, following issues were framed :-

1. Whether the award dated 1.12.2005 is liable to he set aside, as alleged ? OPA Relief:

2. In arbitration case No.3 of 03.2.2006, following issues were framed :-

1. Whether award dated 1.12.2005 is liable to be modified, as alleged ? OPA Relief:

2. Both the arbitration case Nos. 2 and 3 aforesaid were consolidated vide order dated 19.5.2006, but evidence was recorded in arbitration case No.2 of 27. 1.2006. After taking the evidence, the learned Court decided arbitration case No.2. of 27.1.2006 in favour of the respondents and arbitration case No.3 dated 03.2.2006 was dismissed. As a net result, award of the arbitrator dated 1.12.2005 was set aside. In the present appeals, learned counsel appearing on behalf of FAO No. 237 of 2007 (O&M) 4 the appellants has vehemently argued that stock of paddy was supplied to the respondent as it was mentioned in the agreement itself and, therefore, no separate receipt was required to be issued. It is submitted that the learned Court below has committed grave error while allowing arbitration case of the respondent and dismissing the arbitration case of the appellant. I have heard learned counsel for the parties and have perused the record with their assistance. Learned Court below while dealing with the aforesaid arguments raised before this court has given the following findings:- “As per clause 2 of the agreement reproduced above, 5320 Mts of paddy was agreed to be sold to the miller. It was for the Corporation to prove this fact by leading evidence. The Corporation did not lead any evidence whatsoever before the Arbitrator except examining Rattan Mittal, a Senior District Manager of the Corporation at Sangrur. He has simply proved the statement of account Annexure C-3 which is at page 28 of the arbitration file and his statement do not prove that the entire quantity of paddy as mentioned in the statement of account was actually supplied to the miller. He has admitted during cross-examination that no separate receipt regarding the taking of delivery of paddy from the miller was obtained. He has deposed in his affidavit that the miller acknowledged the receipt of paddy in the agreement itself. As stated above, in the agreement only the quantity of the paddy which was agreed to be supplied is mentioned and it is nowhere mentioned that the miller actually received the quantity mentioned therein. FAO No. 237 of 2007 (O&M) 5 In the absence of any such receipt regarding the delivery of paddy to the miller or any other evidence establishing that the entire paddy was actually delivered to the miller, it cannot be said that the entire paddy as mentioned in the statement of claim Annexure C-3 was supplied to the miller. As per clause 5 and 6 of the agreement reproduced earlier, paddy was to remain in the joint custody of the Corporation and the miller till the milling is completed and the delivery of paddy to the miller was deemed to be completed when the stocks were weighed at the scale point. Clause 15 (iii) of the agreement further provides that the miller shall not mill paddy without issuance of proper release orders. No receipts of the scale point or the release orders were produced before the Arbitrator to prove that the entire paddy was actually issued to the miller. As much as no receipt regarding delivery of paddy was obtained from the miller. The District Manager, Sangrur had written a letter dated

28.6.2002 which is at page 94 of the arbitration file mentioning therein that 18705 bags of paddy is due towards the miller who had refused to issue receipt and Inspector Harbans Singh has not obtained the same and that recovery of Rs.59,38,900/- be made from Harbans Singh. Thus, it is the case of corporation itself that its employee Harbans Singh was responsible for the loss of 18705 bags of paddy valued at Rs.59,38,900/-. It may be added that the corporation claim rice at the rate of 64% of the paddy supplied. The rice of 18705 bags of paddy, each weighing 50 Kg. comes to around 5985 qtls. As per averments of the corporation, the miller failed to supply 5741.88 qtls of rice. A case bearing FIR No.116 FAO No. 237 of 2007 (O&M) 6 dated 17.6.2003 under Section 406 IPC was registered at P.S. Bhawanigarh but the same was filed as 'untraced' as per letter No.275515A dated

17.6.2003 of SHO, P.S. Bhawanigarh addressed to the District Manager of the Corporation which is at page 90 of the arbitration file. It is mentioned in the said letter that the said paddy i.e. 18705 bags was stored in the space of M/s Singla Gram Udyog under the supervision of Inspector Harbans Singh, some of the paddy was shifted to outside shellers and some was milled by local shellers. During the investigation, it was found that the stored paddy was not in possession of Pawan Kumar (Miller) and no receipt was obtained from him. Harbans Singh died on 16.11.2001 and it was not clear whether he transferred 18705 bags of paddy or he himself embezzled it. Thus, the police during investigation found that 18705 bags of paddy, each weighing 50 Kg were not supplied to the miller. Besides this, it was found that the Senior Superintendent of Police, Sangrur also informed the District Manager of the PAIC vide his letter dated 13.2.2002 that no case is made out against the respondent for misappropriation of paddy and asked the department to fix the responsibility of its official. It has also been observed that at one point of time, vide letter dated 28.6.2002, PAIC asked to recover the price of said bags of paddy amounting to Rs. 59,38,900,/- from Harbans Singh, an employee of the PAIC.” In view of the categoric finding recorded by the learned Court below on the basis of evidence available on file, an irresistible conclusion which could be drawn is that paddy was not supplied to the respondents. No other argument has been raised by the learned counsel for the appellant. FAO No. 237 of 2007 (O&M) 7 In view of the above, I do not find any illegality in the order of the Court below. Hence, both the appeals are hereby dismissed, though without any order as to costs. February 05,2010 RR (Rakesh Kumar Jain) Judge