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2023 Supreme(P&H) 2688
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
AVNEESH JHINGAN, J.
M/s. Sant Sunder Dass Rice and General Mill – Appellant
Versus
Punjab State Civil Supplies Corp. Ltd. (Punsup) & Ors. – Respondents
FAO NO. 3868 of 2015 (O&M)
Decided On : 02-05-2023
Mr. R. S. Rangpuri, Advocate; For the Appellant
Mr. Deepak Sabherwal, Advocate for Respondents No. 1 & 2.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 37 - Appeal against dismissal of objections to arbitration award - Claim for price of un-milled paddy and failure to supply rice governed by agreement clauses clarifying roles and penalties. (Paras 1, 8, 14, 15, 18)
(B) Contractual Interpretation - Obligations under contract regarding supply and quality of goods - Clauses must be read together to ascertain the applicable provisions for recovery of price or penalties. (Paras 10, 16)
Facts of the case:
The appellant, a rice miller, failed to supply the agreed quantity of milled rice, leading to arbitration where a claim of Rs 64,56,837/- was awarded to the respondent, PUNSUP, which was not disputed in context of the agreement's specifications.
Findings of Court:
The miller's argument that the penalty for short supply was covered under a specific clause was found to lack merit, as the situation did not pertain to return of non-conforming rice but rather price recovery for unsupplied rice.
Issues: Whether the claim for recovery of price for failure to shell paddy falls under the terms specified in the agreement, specifically regarding clauses on supply and penalties.
Ratio Decidendi: The court held that the conflicting clauses of the agreement must be interpreted together, reaffirming that Clause 8 governs price recovery while Clause 9 pertains to rejection of rice based on quality specifications.
Result: Appeal dismissed.
| Table of Content |
|---|
| 1. miller failed to shell paddy. (Para 2 , 3) |
| 2. arguments regarding agreement clauses. (Para 4 , 5) |
| 3. interpretation of agreement clauses. (Para 8 , 9 , 10 , 11 , 12 , 13) |
| 4. analysis of clauses 8 and 9. (Para 14 , 15 , 16 , 17) |
| 5. conclusion: appeal dismissed. (Para 18 , 19) |
JUDGMENT
Avneesh Jhingan, J. (Oral)
M/s Sant Sunder Dass Rice and General Mill (hereinafter referred to as 'the miller') is in appeal under section 37 of the Arbitration and Conciliation Act, 1996 (for short, 'the Act').
2. The relevant facts are that Punjab State Civil Supplies Corporation Ltd. (hereinafter referred to as 'PUNSUP') on 30.11.2000 entered into an agreement with the miller for shelling of paddy for the crop year 2000-01. Paddy in 41663 bags weighing 20831.50 quintals was issued and the miller failed to shell the entire paddy. The arbitration proceedings initiated at the instance of PUNSUP culminated in award dated 18.5.2005. PUNSUP was held entitled to recover Rs 64,56,837/- along with interest at the agreed rate of 21% w.e.f. 1.8.2012 till the date of award and further interest @ 18% on the total amount from the date of award till realization.
3. The objections filed by miller under Section 34 of the Act were dismissed on 20.12.2014.
4. Learned counsel for the miller argues that the claim of PUNSUP was covered under Clause 9 of the agreement and the matter was to be decided by the Managing Director. The contention is that clause 9 (i) deals with 'quantity of rice short supplied'. He further argues that as the interest was awarded to claimant, the matter shall fall under clause 9 (i) of the agreement.
5. Learned counsel for PUNSUP defends the impugned order and contends that the claim was under clause 8 of the agreement.
6. Statement of claim is reproduced below:
| Amount recoverable of rice 6064.50 qtls. Remained with miller @ 994.91 per qtl. |
| Rs.60,33,632.00 |
| Cost of 18660 katta @ 23.36 per bag | : | Rs.4,35,898.00 |
| & cost of 16605 katta @ 11.49 per bag | : | Rs.1,90,791.00 |
| Sales Tax + surcharge on bardana | : | Rs.27,574.00 |
| TDS | : | Rs.4,850.00 |
| Total | : | Rs.66,92,745.00 |
Amount payable to miller
| Milling Charges | : | Rs.1,54,757.00 Rs.65,714.00 |
| Stitching Charges | : | Rs.15,437.00 |
| Total | : | Rs.2,35,908.00 |
| Net recoverable | : | Rs.64,56,837.00 |
| Interest on late delivery of rice | : | Rs.13,55,935.00 |
| Total amount recoverable | : | Rs.78,12,772.00 |
7. Heard learned counsel for the parties and perused the record produced by them.
8. Before proceeding further, it would be appropriate to reproduce Clauses 8, 9 and 22 of the agreement:
"8. The miller shall ensure that:-
(i) The resultant rice after milling of paddy is aerated for 72 hours before bagging.
(ii) The degree of polish given to rice shall be 5%.
(iii) In case there is a shortfall in the recovery of rice provided in sub clause (i) above the miller shall pay to the PUNSUP the price of rice at custom milled rice rates plus interest @ 21% from the date it becomes payable till the date of actual realization equivalent to the shortfall.
(iv) The by-products viz. Broken rice, rice, kani Phuk (rice husk) and rice bran etc. obtained during manufacturing of rice shall be the property of the miller and the PUNSUP shall have no right or responsibility in regard to these.
(v) The miller will be paid milling and other admissible charges at the convenience of the PUNSUP after the milling operations are completed and the entire rice is delivered to Central Pool.
9. The entire quantity of rice of all varieties delivered by the miller to the PUNSUP shall conform to the specifications laid down in the Punjab Rice Procurement (Levy) Order 1983, as amended from time to time or in any other orders or notifications issued by the State Government from time to time. The stocks of rice not conforming to the specifications so laid down, shall be liable to be rejected in respect of such quantity of rice which is not found to be within the spe
