IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH FAO-CARB-34-2018 (O&M)

Date of decision: 19.05.2026 M/S GANESH RICE MILL ....Appellant Versus PUNJAB STATE GRAIN PROCUREMENT CORPORATION LTD AND ANR ...Respondents CORAM: HON'BLE MR. JUSTICE ASHWANI KUMAR MISHRA HON'BLE MR. JUSTICE ROHIT KAPOOR *****

Present: Mr. Baldev Raj Mahajan, Sr. Advocate with Ms. Prerna Malhotra, Advocate and Mr. Jaskirat Singh, Advocate for the appellant.

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ASHWANI KUMAR MISHRA, J. (Oral)

CM-91-FCARB-2018 Delay of 09 days in filing the appeal has been satisfactorily explained.

In that view of the matter, the application is allowed and accordingly, the delay of 09 days in filing the appeal is condoned.

CM-92-FCARB-2018 Delay of 23 days in refiling the appeal has been satisfactorily explained.

In that view of the matter, the application is allowed and accordingly, the delay of 23 days in refiling the appeal is condoned.

Main case

1. This appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (for short ‘1996 Act’) arises out of an order passed by the Additional District Judge, Commercial Court, Gurdaspur dated 24.08.2017, whereby the appellant’s objections to the arbitral award under section 34 of the 1996 Act have been rejected.

2. Undisputed facts of the case are that during the crop season 2011- 12, the respondent-Corporation supplied 86734.90 quintals of paddy contained in 2,47,814 bags of 35 kilograms each for custom milling. Out of it, the appellant-miller was required to deliver 58112.38 quintals of rice contained in bags of 50 kilograms each. The stipulated period for doing so was extended uptill 31.12.2012. The appellant-miller however delivered only 37679.80 quintals of rice to the FCI. For the shortfall in supply of rice, the respondent- department initiated recovery at the rate of Rs.1740/- per quintal (in A-class bags) and Rs.1681/- per quintal (in B-class bags) amounting to Rs.6,25,64,364/-. The claim was objected to by the appellant before the Arbitrator. The Arbitrator vide its reasoned award has allowed the claim and awarded a sum of Rs.5,29,28,576/-, against which objections filed under section 34 of the 1996 Act have been rejected.

3. Learned senior counsel for the appellant argues that the contract for custom milling was limited to 26330 quintals of paddy, and therefore, in the absence of any agreement, it was not open for the respondents to have stored larger paddy, nor was it open for the Arbitrator to have travelled beyond the terms of the contract so as to hold the appellant liable for return of the paddy which was not subjected to custom milling at the rate demanded by the respondents.

4. We have perused the award of the Arbitrator, as also the order passed by the Commercial Court rejecting the appellant’s objections. Though it is undisputed that the contract specified the quantity of paddy to be stored and then custom milled to be 26330 quintals, but it remains undisputed that in fact a much larger quantity of paddy was delivered to the appellant for custom milling. The Arbitrator has gone into this aspect of the matter and has found that the appellant had in fact issued receipts acknowledging specified quantity of paddy over and above the quantity specified in the contract for custom milling. Actual milling was also far in excess of the contracted quantity. It was in this context that the Arbitrator has found substance in the claim lodged by the respondents as per which the shortfall in supply of rice as against paddy had to be made good.

5. The issues for consideration have bee noticed by the Arbitrator in para 12. In para 13 and 14, the Arbitrator has held as under:-

“13. A perusal of the consolidated receipt, Ex. C7, of delivery of paddy in the rice mill of the respondent, from as many as 12 different commission agents and grain markets, shows that 89,365 quintals of paddy was stored in the mill of the respondent. This receipt, placed on record along with the affidavit of Joginder Singh, AW1, was neither challenged i