J U D G M E N T

PANKAJ MITHAL, J.

1. Leave granted.

2. The challenge in this Civil Appeal is to the judgment and order dated 10.01.2017 passed by the High Court of Punjab & Haryana at Chandigarh in exercise of powers under Signature Not Verified Digitally signed by SNEHA DAS Date: 2024.09.27

17:09:36 IST Reason:

Section 37 of the Arbitration and Conciliation Act, 19961 setting aside the order dated 07.04.2015 passed under Section 34 of the Act and also the arbitral order dated

08.11.2012.

FACTS:

3. The appellant - Punjab State Civil Supplies Corporation Ltd.2 entered into an agreement dated 06.10.2008 with M/s Sanman Rice Mills3 whereunder the Corporation was to supply paddy to the Rice Mill for the purpose of milling that had to supply back the resultant rice to the Corporation.

4. A total of 2,02,850 bags of Grade ‘A’ variety of paddy weighing

70,997.50 quintals was supplied by the Corporation to the Rice Mill. However, after processing, the Rice Mill resupplied only a part of the same with a shortfall of 35110.39 quintals of rice. Thus, this shortage in quantity of rice equivalent to a total cost of Rs.7,16,15,716/- was recoverable from the Rice Mill. Against the aforesaid outstanding amount, the Rice Mill

1 hereinafter referred to as ‘the Act’

2 hereinafter referred to as ‘the Corporation’

3 hereinafter referred to as ‘the Rice Mill’

paid ten cheques of Rs.50 lakh each amounting to Rs.5 crore to the Corporation leaving a balance of Rs.2,16,15,716/-. Thus, there arose a dispute between the parties with regard to the recovery of the balance amount. The dispute was referred to the Arbitrator.

5. The Arbitrator passed an award on 08.11.2012 and awarded a sum of Rs.2,67,66,804/- in favour of the Corporation as against the Rice Mill. The amount awarded was to be paid with interest @ 12 per cent per annum. The said award was objected to by the Rice Mill by filing a petition under Section 34 of the Act before the Additional District Judge. It was dismissed on 07.04.2015 with the finding that there is no illegality in the award within the scope of interference permissible under Section 34 of the Act. Not satisfied by the aforesaid order, the Rice Mill filed an appeal under Section 37 of the Act before the High Court. The appeal has been allowed by the impugned judgment and order 10.01.2017 and not only the judgment and order passed by the Additional District Judge under Section 34 of the Act has been set aside but also the Arbitral order dated 08.11.2012.

6. It is in the above factual scenario that the Corporation has preferred the present appeal for setting aside the impugned judgment and order dated 10.01.2017 passed by the High Court in an appeal under Section 37 of the Act.

7. Learned counsel for the parties were heard at length.

POINT OF DETERMINATION:

8. The short question on the submission of the parties, which arises for our consideration is about the scope of powers of the Appellate Court under Section 37 of the Act and whether the Appellate Court was justified in setting aside the award dated 08.11.2012 which had already been confirmed under Section 34 of the Act.

LEGAL POSITION:

9. The object of the Act is to provide for a speedy and inexpensive alternative mode of settlement of dispute with the minimum of intervention of the courts. Section 5 of the Act is implicit in this regard and prohibits interference by the judicial authority with the arbitration proceedings except where so provided in Part-I of the Act. The judicial interference, if any, is provided inter-alia only by means of Sections 34 and 37 of the Act respectively.

10. Section 34 of the Act provides for getting an arbitral award set aside by moving an application in accordance with sub- Section (2) and sub-Section (3) of Section 34 of the Act which inter-alia provide for the grounds on which an arbitral award is liable to be set aside. One of the main grounds for interference or setting aside an award is where the arbitral award is in conflict with the public policy of India i.e