The Punjab State Co-Operative Supply & Marketing Federation Limited, Chandigarh vs M/s Bhagwati Rice Mill Badhni Kalan, District Moga through its Partners and Ors.

Present appeal has been filed alongwith an application (CM-18-RFCOM-2018) for condonation of delay of 106 days in filing the same. The appeal itself has been preferred challenging the judgment and decree dated 12.05.2017 passed by the Additional District Judge, Moga dismissing the suit filed by the plaintiff-appellant herein for recovery of ₹1,62,36,348/-.

The brief facts relevant to the present lis are that The Punjab State Co-Operative Supply & Marketing Federation Limited (hereinafter referred to as the ‘plaintiff-appellant’) had filed a suit for recovery of ₹1,62,36,348/- with interest thereupon. It was averred in the plaint that the defendant-respondent No.1-firm was running a rice sheller. Defendant-respondent Nos.2 to 6 were partners of defendant-respondent No.1-firm. During the crop year 1994-95, the plaintiff-appellant had procured paddy at support price being one of the procurement agencies of the State of Punjab for custom milling of the paddy. The District Food & Supply Controller, Faridkot had allotted the defendant-respondent No.1-firm to the plaintiff-appellant for getting the custom milling of the paddy vide letter dated 29.09.1994. Agreement dated 28.09.1994 was executed between the plaintiff-appellant and defendant-respondent No.1-firm for milling the paddy for the year 1994-95. The plaintiff-appellant is stated to have supplied 2,880 bags containing 1,872 quintals of paddy of variety IR-8 and 1,59,329 bags containing 1,03,563.25 quintals of paddy of PR-106 superfine paddy. The defendant-respondent No.1-firm was to deliver 1,265.84 quintals of rice against the paddy of IR-8 and 67,999.62 quintals of rice against the superfine paddy upto 28.02.1995. The defendant-respondent No.1-firm was to maintain the delivery schedule of rice as mentioned in Clause VI of the agreement. It was further averred that defendant-respondent No.1-firm failed to adhere to the said schedule and did not supply any rice hence the defendant-respondents were liable to pay compensation as enumerated under the different clauses of the agreement. It was further averred that the plaintiff-appellant was entitled to recover the loss, damages and compensation due to non-delivery of rice and cost of the Bardana. The total amount recoverable from the defendant-respondents towards balance rice was stated to be ₹1,86,40,869/- and towards cost of Bardana ₹13,04,611/-. Hence, the defendant-respondents were liable to pay ₹2,08,41,431/- but they had deposited an amount of ₹46,05,083/-. After adjusting the said amount, they were liable to pay ₹1,62,36,348/-. It was further the case set up that Sh. A.S. Sekhon was appointed as Arbitrator vide order dated 22.11.1996 issued by the Managing Director of the plaintiff-appellant to adjudicate upon the dispute between the parties arising out of non-milling of the paddy pertaining to the crop year 1994-95. The Arbitrator passed award dated 14.12.2005 in favour of the plaintiff-appellant. However, the award was set aside by the Additional District Judge, Moga vide order dated 22.02.2007 on an application filed by the defendant-respondents under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the ‘Act of 1996’). The Court, holding the award to be illegal, gave liberty to the plaintiff-appellant to avail the remedy as available in law. It was further the case set up that the Managing Director of the plaintiff-appellant was competent to take a decision in the matter and therefore the Managing Director afforded numerous opportunities to the Millers to present their case before him, however, none appeared on behalf of the defendant-respondents and ex parte proceedings were conducted. The counter notices filed by the defendant-respondents on 16.11.2007, 15.02.2008, 10.05.2008, 16.12.2008 and 16.12.2010 were considered and filed being merit-less. In pursuance of the directions given by the Managing Director, the District Manager of the plaintiff-appellant presented a claim for recovery of ₹1,62,36,348/- in the form of affidavit. The Managing Director of the plaintiff-appellant allowed the said claim vide order dated 25.05.2011. Hence, the defendant-respondents are liable to pay the said amount.

On notice, the defendant-respondents put in appearance and filed their written statement contesting the suit. It was pleaded that no paddy was supplied to the defendant-respondent No.1-firm by the plaintiff-appellant and infact the paddy was stored at the Mill premises of the defendant-respondents due to shortage of space with the Government. However, the defendant-respondents could not even touch a single bag of the paddy without release order. As per policy as well as terms of the agreement, the defendant-respondents were first to deliver in advance wagons of rice and thereafter equivalent paddy was to be released by the official of the plaintiff-appellant. Since the paddy was never released to the defendant-respondent No.1-firm, therefore, there was no question of delivery of rice. It was further the pleaded case of the defendant-respondents that the paddy stored at their premises was sold by the Government as per policy of the Central Government. The award passed by the Arbitrator was admitted by the defendant-respondents however it was stated that the same was set aside by the Court. It was further the stand taken that the Managing Director of the plaintiff-appellant had no authority to pass any order and the order passed by the Managing Director was illegal and without jurisdiction. Replication was filed.

On the basis of pleadings of the parties the following issues were framed :

Whether the plaintiffs are entitled to decree for recovery of ₹1,62,36,348/- on the basis of order dated 25.05.2011 passed by the Managing Director, Markfed ? OPP

Whether suit is barred by limitation ? OPD

Whether suit is not maintainable ? OPD

Whether plaintiff is estopped by his act and conduct from filing the suit ? OPD

Whether suit has been filed through a duly authorized person ? OPP

Whether the suit is properly valued for the purchase of court fee and jurisdiction ? OPP

Relief.

Vide the impugned judgment and decree dated 12.05.2017 the suit of the plaintiff-appellant was dismissed. Hence, the present appeal.

Learned counsel for the plaintiff-appellant has contended that while setting aside the award passed by the Arbitrator, the Court vide order dated 12.02.2007 granted liberty to the plaintiff-appellant to avail its remedies as available under the law. Accordingly, the Managing Director of the plaintiff-appellant had passed the order dated 25.05.2011 allowing the claim of the plaintiff-appellant.

Per contra learned counsel for the defendant-respondents has contended that the Arbitrator passed an award in favour of the plaintiff-appellant on 14.12.2005 which was set aside by the Court of Additional District Judge, Moga vide order dated 22.02.2007. The Managing Director passed an illegal order dated 25.05.2011 allowing the claim and consequently the present suit for recovery was filed.

We have heard learned counsel for the parties.

In the present case, while setting aside the arbitral award, the Court had granted the plaintiff-appellant liberty to avail its remedies as available in law. The award was set aside vide order dated 22.02.2007. Thereafter, on 25.05.2011 the Managing Director passed an ex parte order allowing the claim of the plaintiff-appellant holding the defendant-respondents liable to pay an amount of ₹1,62,36,348/-. Learned counsel for the plaintiff-appellant is not in a position to deny the fact that the order setting aside the arbitral award dated 22.02.2007 was never challenged by the plaintiff-appellant herein. Learned counsel for the plaintiff-appellant has not been able to explain how the Managing Director assumed jurisdiction in the matter when the Additional District Judge, Moga while setting aside the arbitral award dated 22.02.2007 had granted liberty to the plaintiff-appellant to avail its remedies as available in law. There is no provision of law which has been shown to us vide which the Managing Director could have assumed the power or jurisdiction to pass such an order. In the absence of any jurisdiction with the Managing Director of the plaintiff-appellant, there is no basis for allowing the claim for recovery of the amount as claimed by the plaintiff-appellant. Even otherwise, there is no explanation for the delay of 106 days in filing the present appeal.

In view of the above, present appeal is dismissed on merits as well as on the ground of delay in filing the present appeal. Pending applications, if any, also stand disposed off.