Claims arising under arbitration agreements must adhere to stipulated limitation periods, and prior satisfaction accepted by a creditor bars reopening such claims.

JUDGMENT :

Lapita Banerji, J.

CM-14344-CII-2019

This is an application for condonation of delay of 28 days in filing the appeal.

Perused the grounds in the application.

Such grounds are found to be sufficient.

The application is allowed and delay of 28 days in filing the appeal is condoned.

MAIN CASE

Under challenge in the present appeal is the arbitration award dated September 12, 2016 and the judgment dated December 15, 2018 passed by the Additional District Judge, Panchkula, in an application under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the 1996 Act').

2. The appellant-claimant instituted the arbitration proceedings due to the failure on the part of the respondents-miller to supply the requisite quantity of Custom Milled Rice (CMR) for the crop year 2008-09. An agreement was entered into between the parties on October 03, 2008 for milling the paddy as per the terms and conditions stipulated in the agreement.

3. Pursuant to the milling agreement, the Corporation handed over 30104.05 quintals of paddy to the respondents-miller for milling. The respondents were required to deliver 20169.71 quintals of CMR. However, the respondents delivered only 15113.65 quintals and failed to deliver balance amount of 5056.06 quintals of CMR. The appellant raised a claim of Rs. 1,42,62,673/- against the respondents-miller. The respondents-miller paid a sum of Rs. 95,50,122/-. Thereafter, a sum of Rs. 47,12,551/- on account of principal amount remained due and payable by the respondents-miller to the appellant-Corporation. The appellant-Corporation claimed interest at the rate of 12.25% per annum on the principal sum. The total claim filed before the learned Arbitration was to the tune of Rs. 81,29,706/-. The respondents-miller had issued three cheques on April 07, 2010, April 14, 2010 and April 21, 2010 for satisfying their debt. However, all the three said cheques had bounced and criminal proceedings under Section 138 of the Negotiable Instruments Act, 1881 were initiated by the appellant.

4. During the pendency of the arbitration proceedings, it was submitted by the respondents-miller that the said proceedings were barred by the laws of limitation. Under the milling agreement, any claim arising out of a dispute relating to the agreement, had to be raised within one year from the date of accrual of the cause of action.

5. In the present case, the deficiency related to the 2008-09 crop year and the arbitration proceedings were admittedly instituted approximately after six years in 2015. The respondents-miller stance before the arbitral Tribunal was that the appellant-Corporation had received a sum of Rs. 29 lacs in full and final settlement of their dues with regard to the deficiency in supplying of CMR for the crop year 2008-09.

6. The satisfaction of the appellant-Corporation was recorded by the Judicial Magistrate, First Class, Kurukshetra vide an order dated December 18, 2014 in criminal complaint No. 288 of 2014 which was initially instituted on June 04, 2010 and later re-numbered in 2014.

7. The learned Arbitrator came to the finding that since the respondents-miller had paid Rs. 29 lacs during the pendency of the criminal proceedings in full and final satisfaction of the appellant, no further claim could be raised against the respondents-miller for the same default. He referred to the order dated December 18, 2014 passed by the criminal Court and recorded the observations passed by the learned Judicial Magistrate. The observations of the Judicial Magistrate regarding the complainant-appellant failing to prove that a sum of Rs. 77,85,387/- for which the criminal case was filed, was due and payable by the respondent/accused was taken in consideration