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2010 Supreme(P&H) 2748
PUNJAB & HARYANA HIGH COURT
Surya Kant, J.
M/s.Deep Agro Exports
Versus
Union Of India
C.W.P. No. 6556 of 2010,
Decided On : SEPTEMBER 27, 2010
Disputes arising from contractual obligations should be settled through the ordinary process of law of contract or through the agreed mechanism between the parties.
Headnote:
Rice Millers - Dispute over milling of PAU-201 variety of paddy - Punjab Rice Procurement [Levy] Order, 1983, Prevention of Food Adulteration Act, 1954 - The court discussed the contractual obligations, arbitration clause, and the quality specifications for rice, emphasizing that the dispute should be settled through the ordinary process of law of contract or through the agreed mechanism between the parties.
Fact of the Case:
The petitioners, Rice Millers, sought to quash notices requiring them to mill the PAU-201 variety of paddy, claiming it was substandard. The respondents argued that the dispute should be settled through the ordinary principles of the Law of Contract.
Finding of the Court:
The court found that the dispute between the parties should be settled through the arbitration clause in the agreement, and the breach of the agreed terms and conditions of the contract should be resolved through the ordinary process of law of contract.
Issues: Dispute over milling of PAU-201 variety of paddy, contractual obligations, and invocation of writ jurisdiction under Article 226 of the Constitution.
Ratio Decidendi: The court held that the dispute should be settled through the arbitration clause in the agreement and that the breach of the agreed terms and conditions of the contract should be resolved through the ordinary process of law of contract.
Final Decision: The writ petitions were dismissed, and the petitioners were relegated to the alternative remedy of arbitration as per the agreement.
Surya Kant, J.
1. This order shall dispose of CWP Nos. 6556, 8796, 8832, 8836, 8883, 8902, 8918, 9261, 10599,13031, 14252, 15213 and 16753 of 2010 as the questions of law and facts involved in these cases are quite common. For the sake of brevity, the facts are being extracted from CWP No. 6556 of 2010.
2. The petitioners are running their respective Rice Mills at different places near Bhucho Mandi, District Bathinda. They seek a writ of certiorari for quashing of the impugned notices dated 25.02.2010 [Annexures P-11 and P-12] which are said to be contrary to the decision taken in the meeting held on 22.10.2009 by the District Administration, Bhatinda. A writ of Mandamus is also sought directing respondents No. 3 to 8 to adhere to and implement the decision dated 22.10.2009 wherein it is said to have been amicably resolved that the Rice Millers like the petitioners are not bound to mill the PAU-201 variety of paddy. The petitioners also seek a consequential direction to absolve them from any liability as a result of non-milling of the PAU-201 variety of paddy, the extracted rice whereof is stated to be below the prescribed specifications and substandard/ unfit for human consumption.
3. The petitioner - Rice Millers have been allotted paddy for custom milling by the Procuring Agencies, namely, respondents No. 5 to 8 for the Crop Year 2009-10 and a formal agreement to this effect has been executed between the parties, a copy whereof has also been placed on record [Annexure P-1]. The petitioners have averred that as soon as they initiated the process of storing the paddy - PAU-201 variety - it was found to be excessively damaged of discolour percentage in rice and therefore, they refused to store the said variety of paddy. Since the farmers had allegedly created law and order problem due to non-lifting of their PAU-201 variety of paddy, an urgent meeting was conveyed by the Deputy Commissioner, Bhatinda on 22.10.2009 which was duly attended by the representatives of the petitioners as well as the District Managers of the Procuring Agencies, namely, respondents No. 5 to 8. It was resolved in the said meeting that the Rice Millers will cooperate in checking the quality and quantity of the paddy at the time of unloading and get the PAU-201 variety of paddy stored separately and that they may endorse on the receipt that they are not bound to mill this variety as per the given specifications of the Government of India or till the Government takes a decision with regard to the rice extracted from this variety of paddy. It was also decided that the Millers shall not create any hindrance in the working or shifting of the paddy by the agencies out of the District or storing it with the willing millers within the District. A joint report [Annexure P-3] was also prepared by the District Managers of the Procuring Agencies in which they acknowledged that during the trial milling, 7% to 10% damaged rice was produced from the PAU-201 variety of paddy which was much higher than the norms specified by the FCI and that the damaged contents of the rice extracted from the afore-stated variety of paddy were around 7% to 8%. The petitioners further case is that since the specification relaxed by the Government of India at the relevant time was up to 3% in respect of the damaged/slightly damaged grains, which was further increased to 4% vide FCI Memo dated 15.10.2009 [Annexure P-6], followed by further increase to 4.75% was still below the 7% to 8% damaged contents of the PAU- 201 variety of paddy, the petitioners were left with no choice but to refuse to mill the PAU-201 variety of paddy. However, instead of honouring the settlement dated 22.10.2009, the respondents have started issuing the impugned show-cause notices to the petitioners calling upon them to deliver the milled rice and/or compensate the financial loss caused to the State Government/Agencies.
4. The 5th respondent - PUNGRAIN has filed a comprehensive reply/affidavit, inter-alia,
