Punjab State Civil Supplies Corporation Ltd v. M/S.Sidana Industries & Anr.

CORAM: HON'BLE MR.JUSTICE RAKESH KUMAR JAIN Present: Mr.C.S.Bakshi,Advocate, for the appellant Rakesh Kumar Jain, J: (Oral) This appeal is directed against the order passed by learned Addl.District Judge,Chandigarh, whereby the objections filed by the appellant have been dismissed vide order dated 12.5.2008. Briefly stated, the Punjab State Civil Supplies Corporation Ltd (for short, PUNSUP) invited tenders on 24.9.1999 and offered to dispose off the stock of commercial wheat of the crop pertaining to the year 1997-98 lying at various open plinths in the State of Punjab. Respondent No.1. made an offer to purchase the said wheat lying at Fazilka centre of Sandhu open plinths at the rate of Rs.655.99 paise per quintal. PUNSUP accepted the offer vide letter dated 27.9.1999 for 3488 metric tonnes of wheat. Respondent No.1.deposited earnest money of Rs.18,00,000/- and paid another sum of Rs. 79,57,158.70 paise being cost of 12130 quintals of FAO No. 200 of 2009 (O&M) 2 wheat. As a matter of fact, a sum of Rs.1,20,841.30 paise was paid in excess to the PUNSUP, wheat was lifted by respondent No.1 in terms of the release order for 12130 quintals issued by PUNSUP, which was found to be of inferior quality as the wheat was meant for human consumption. In nutshell, respondent No.1. sold the lifted wheat at a loss and ultimately, matter was referred to the Arbitrator, who vide his award dated 14.2.2003 observed thus:- “In view of my findings above, it is established that the wheat agreed to be sold on “ as is where is basis' was not issueable wheat. As per the norms of the FCI, the issueable stock means fit for human consumption with PFA standards and thereafter the claimant rightly rejected the uplifted wheat for which the contract came to an end. After that the respondent corporation did not have any authority to forfeit the security as has been done vide order dated 12.7.2000 Ex.R-12. The claimant is therefore entitled to the refund of remaining amount of security of Rs.11.45 lacs deposited by him at the time of entering into the contract with the respondent corporation. Since the money has been retained illegally, the claimant is entitled to recover interest @ 18% per annum on the said amount with effect from 12.7.2000 to the date of actual payment. The claimant is also entitled to recover the outstanding amount of Rs. 10,831.00 as detailed in para No.9 above along with interest @ 18% per annum from the due date till its payment. As no evidence has been led by the claimant in respect of the remaining claims so the same are hereby rejected. The award is therefore, accordingly, made in favour of the claimant to the extent as mentioned above and against the respondent corporation. However, keeping in view the facts and circumstances of the FAO No. 200 of 2009 (O&M) 3 case, the parties are left to bear their own costs”. The PUNSUP filed objections under Section 34 of the Arbitration and Conciliation Act, 1996 (for short, 'the Act'), for setting aside the award dated 14.2.2003. The said objections were dismissed by the learned Addl.District Judge, Chandigarh observing thus:- The findings of the arbitrator are thus seem to be justified because had there been any fault on the part of the respondent, the petitioner Corporation would have invoked the risk and cost clause as per clause 9 of the terms and conditions and the remaining wheat would have been sold at the risk and cost of the respondent. On the other hand, it is further clear that when petitioner-Corporation invited the fresh tenders for the sale of un- lifted wheat, it was clearly mentioned that it will be the duty of the tenderer to bring the wheat within the PFA norms. This fact further shows that sub- standard of quality has been admitted by the petitioner Corporation while inviting tenders for the second time for disposal of wheat in question. On the contrary, it comes out that as per clause 12 of the terms and conditions, when a complaint was lodged by the respondent about the quality of the stock, the joint sampling was done but no report of the samples were sent to the respondent or any decision was taken, despite the fact that it was agreed between the parties that the sample taken jointly will be tested by the petitioner-Corporation and a decision will be taken by M.D. However, in this case there is nothing on the record to show that any such decision was taken and this fact alone shows that learned arbitrator rightly held that the wheat was found to be unfit for human consumption and thus, was not commercial wheat and the respondent was within its right to reject it and the petitioner was having no authority to forfeit the security. FAO No. 200 of 2009 (O&M) 4 Needless to say, it is undisputed case of the petitioner Corporation that price of the quantity of the wheat lifted by the respondent was duly paid and rather there was some excess payment and there was a credit balance of Rs.11.45 lacs with the petitioner Corporation, which was ordered to be refunded by the arbitrator, along with an excess amount of Rs.10831/-. If it is so, there is no illegality, whatsoever, in the impugned award and there is no ground as per the provisions of Section 34(2), to set it aside. Still aggrieved, the appellant/petitioner has come up in this appeal before this Court in which the only argument raised by learned counsel for the appellant is that there was no condition in the agreement executed between the parties that respondent No.1. could reject the wheat as it was sold “as is where is basis” . I have heard the learned counsel for the appellant and have perused the record. It has come in evidence that it was the duty of the tenderer to bring the wheat within the parameter of Prevention of Food Adulteration norms , but the wheat meant for human consumption was of sub standard quality as has been admitted by the PUNSUP while inviting tenders for the second time. Moreover, despite joint sample no report of the samples were sent to respondent No.1,though it was mutually agreed that the joint sample shall be tested by the PUNSUP and a decision shall be taken by its Managing Director. There is nothing on record to indicate the decision having been taken by the Managing Director of the PUNSUP in this regard, Therefore, it has been held by the Court below that the wheat was unfit for human consumption and was not commercial wheat. Hence, respondent FAO No. 200 of 2009 (O&M) 5 No.1 had right to reject the same. No other point has been raised before me by the learned counsel for the appellant. In view of the above, I do not find any illegality in the impugned order and the same is hereby dismissed though without any order as to costs. January 07,2010 RR (Rakesh Kumar Jain) Judge