FAO No. 4034 of 2007 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH -- Date of decision: September 25th, 2009 1. FAO No. 4034 of 2007 M/S G M Rice Mills and others ........ Appellants Versus Punjab State Civil Supplies Corporation Ltd. (PUNSUP) and another .......Respondents 2. FAO No. 1653 of 2007 M/S Ashoka Industries Jalalabad ........ Appellant Versus Punjab State Civil Supplies Corporation Ltd. (PUNSUP) and another .......Respondents 3. FAO No. 1654 of 2007 M/S Dashmesh Rice Mills, Jalalabad ........ Appellant Versus Punjab State Civil Supplies Corporation Ltd. (PUNSUP) and another .......Respondents 4. FAO No. 4801 of 2007 M/S Jagtar Singh Prabh Dyal ........ Appellant Versus Punjab State Civil Supplies Corporation Ltd. (PUNSUP) and another .......Respondents 5. FAO No. 1408 of 2008 M/S Durga Industry and others ........ Appellants Versus FAO No. 4034 of 2007 2 Punjab State Civil Supplies Corporation Ltd. (PUNSUP) and another .......Respondents Coram: Hon'ble Ms Justice Nirmaljit Kaur -.- Present: Mr. Puneet Jindal, Advocate for the appellant-Miller Mr. G S Sandhawalia, Advocate for the respondent-PUNSUP Mr. C S Bakshi, Advocate for respondent No. 2 -.- 1. Whether Reporters of local papers may be allowed to see the judgment? 2. To be referred to the Reporter or not? 3. Whether the judgment should be reported in the Digest? Nirmaljit Kaur, J. This order shall disposed of all the aforementioned five connected appeals as common question of law and fact is involved in all these appeals. However, for facility of reference, the facts are being taken from FAO No. 4034 of 2007. The only dispute raised in this case is that the appellant miller was entitled to 2% dryage on the book weight of paddy received by the Miller, but the Arbitrator has wrongly disallowed the same. It was further submitted that in case 2% dryage is allowed to the Miller, then nothing is recoverable from the appellant miller. While stating that the appellant miller was entitled to 2% dryage on the book weight of paddy, learned counsel for the appellant submitted that the impugned award passed by the Arbitrator is against the terms and FAO No. 4034 of 2007 3 conditions of the agreement and law. In order to show that 2% dryage on the book weight of paddy was duly provided for, Clause 4 of the agreement was referred to, which is reproduced below:- “ Clause 4 The miller shall be responsible for the safe custody of paddy so lifted till the delivery of rice, as per agreed recovery of paddy out turn ratio. Mill shall also make good the losses that may be incurred in paddy and rice during transit/storage at 1½ time the economic cost of the converted variety of paddy and or rice towards the short fall.” The said dispute relates to the crop year 1994-95. The agreement is dated 08.11.1994. It was stated that the concept of allowing 2% dryage was for the reasons that there is a natural phenomenon with paddy to lose its weight with the passage of time automatically. According to the appellant, the PUNSUP arbitrarily and illegally raised this dispute after the sale of the entire unmilled paddy with almost all the millers with respect to the crop for the year 1994-1995 alleging shortage of paddy and then raising a claim at the rate of 21% of the economic price and rice. It was on account of this fact that the Government of Punjab framed a policy dated 06.06.2000. In the aforesaid policy, for the first time, the Government laid down in Clause (a) and (c) as under:- a) Case in which the millers had sold paddy as per instructions and no rice/paddy is due from them, the arbitration proceedings may be dropped. c) In case where driage has caused shortage, the same should be recovered from the custom millers at the custom milled rice rates along with interest at bank rate.” FAO No. 4034 of 2007 4 Learned counsel for the appellant further argued that since, the entire unmilled paddy was sold through open sale policy and there was no shortage, therefore, the case of the appellant was to fall under clause (a) mentioned above. According to the appellant, their case fell under Clause (a), whereas, the Arbitrator wrongly treated this case under Clause (c) and disallowed 2% dryage with regard to the unmilled paddy, which was sold through open sale policy. It is also submitted that some other Arbitrators on the same issue had allowed the benefit of dryage and stated that once, the same was allowed, it cannot be withdrawn. Reliance has also been placed on a judgment rendered by Hon’ble the Supreme Court in the case of 'Oil and Natural Gas Corporation Ltd. v. SAW Pipes Limited', AIR 2003 Supreme Court 2629, to contend that the award contrary to the provisions of substantive law or Act or terms of contract, can be set aside. Learned counsel for the respondent-Punsup, on the other hand, submitted that the objections filed by the appellant miller have been dismissed by holding that not only Clause (a), but also Clause (c) of the policy was applicable to the appellant miller. It was submitted that no doubt, according to the agreement dated 08.11.1994, the Punsup/claimant supplied 32086 bags weighing 20855-90-000 quintals of IR 8 paddy and 155 bags weighing 100- 75-000 quintals of PR 106 paddy, however, after allowing the benefit of dryage, the appellant miller was to supply rice at the rate of 67% against this paddy to FCI in the account of the PUNSUP/claimant. Ultimately, the miller did not deliver the rice against the paddy to the extent of 9845-62-000 quintals of PR 106 and also did not deliver any rice against the quantity of IR 8 paddy. This had to be sold to the miller under the sale policy. The appellant miller FAO No. 4034 of 2007 5 did not come forward to settle the amount and pay the same to the respondent- Punsup in spite of notice. As such, the matter was referred to the Arbitrator and a claim of net recoverably amount Rs.38,79,984.00 (as on 30.06.1995) was sent and after adding interest from 01.07.1995 to 28.02.1998 at the rate of 21% per annum i.e. Rs.21,72,791.00, a total recoverable amount as on 01.03.1998 was claimed to the tune of Rs.60,52,775.00. Meanwhile, the Government had framed a policy dated 6.06.2000, referred to above, which the appellant miller also relied upon. It was clearly mentioned in the aforesaid policy that where ever there was shortage of paddy on account of dryage, the same shall be recovered from the custom millers at the custom milled rate of rice rates, along with interest at the bank rate. After hearing the learned counsel for the parties, I do not find any merit in the arguments raised by the learned counsel for the appellant miller. It is evident from the facts narrated that before framing of the policy dated 06.06.2000, a claim of Rs.38,79,984.00 (as on 30.06.1995) was submitted as per the terms and conditions of the agreement. After circulation of the policy dated 06.06.2000, a revised statement of accounts was submitted. As per the revised statement of accounts, the original claim of Rs.38,79,984.00 as on 01.07.1995 was reduced to Rs.1,68,035.00. The original claim stood reduced to Rs.1,68,035.00 on account the same being revised as per the policy dated 06.06.2000. Thus, the policy has to be adopted and accepted by the millers as a whole and not as a part. The entire policy had to be read together. The appellant miller has accepted the policy for the purpose of levying of interest at the bank rate, but does not wish to accept the same qua the recovery of the shortage caused due to the dryage. As per the policy, dryage of 2% is not FAO No. 4034 of 2007 6 permissible on the sold paddy. It was on the basis of the calculation, as per the new policy, the net recoverable amount stood heavily reduced from Rs.38,79,984.00 to Rs.1,68,035.00. Even as per Clause (a), the same is applicable only if the rice/paddy is not due and there is no shortage. The case of the appellant does not fall under Clause (a) of the policy, inasmuch as, the shortage of paddy was found at the side of the miller after the sale of the balance paddy. Once, the shortage was admitted on account of dryage and rice/paddy is due, the appellant cannot escape from the applicability of Clause (c) of the policy. Admittedly, both the appellant-miller and the respondent-Punsup heavily relied on the policy dated 06.06.2000. Thus, it cannot be said that the impugned award is against the agreement dated 08.11.1994, which has now to be read along with the policy dated 06.06.2000. As such, the judgment relied upon by the learned counsel for the appellant miller in the case of 'Oil and Natural Gas Corporation' (supra) is not applicable in the facts and circumstances of the present case. In view of the foregoing discussion, there is no ground to interfere with the impugned judgment passed by the District Judge, Ferozepur, dismissing the objections of the appellant miller filed under Section 34 of the 1996 Act and all the appeals are accordingly dismissed being devoid of merits. (Nirmaljit Kaur) Judge September 25, 2009 mohan