FAO No.3718 of 2009 (O&M) -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH **** FAO No.3718 of 2009 (O&M) DATE OF DECISION: 04.08.2010 **** M/s Jai Durga Rice Mills, Sardulgarh, District Mansa . . . . Appellant VS. Punjab State Cooperative Supply & Marketing Federation Ltd. and another . . . . Respondents **** CORAM : HON’BLE MR.JUSTICE RAKESH KUMAR JAIN **** Present: - Mr.Naresh Jain, Advocate for the appellant. Mr.Ashwani Prashar, Advocate for the respondents. **** RAKESH KUMAR JAIN J. (ORAL) This appeal is directed against the award of the Arbitrator dated 26.6.2003 and the order passed by Additional District Judge, Mansa dated 23.10.2008 by which objection filed by the appellant under Section 34 of the Arbitration and Conciliation Act, 1996 (for short ‘the Act’) to set aside the arbitral award has been dismissed. At the very outset, learned counsel for the appellant has submitted that the Arbitrator has committed an error of law in the exercise of his jurisdiction as he has touched the issues which were not within his domain as those issues were of excepted matters and were to be decided by the Managing Director. It is submitted that the matters, which are termed as ‘excepted matters’ means such matters for which FAO No.3718 of 2009 (O&M) -2- decision could be taken by the authority under the agreement and are not required to be referred to the Arbitrator for the purpose of its adjudication. In this case, appellant has raised objection on excepted matter much less the jurisdiction of the Arbitrator, which is as under: - “JURISDICTION: The jurisdiction of this Tribunal has been objected to on the ground that the matter falls within the “excepted matter” because as per the clause 8, 9 and 22 of agreement, the decision of M.D. Markfed will be final in the matter of claiming economic cost and interest of unmilled paddy and as such neither the M.D. has authority to refer the dispute to the Tribunal nor the Tribunal has any jurisdiction to continue with the proceedings. The counsel for respondent has referred to various rulings on the issue. I have considered this objection. The present reference and claim petition has been made in terms of clause 22 of agreement dated 28.12.98 to the Arbitrator who is to conduct the proceedings as the nominee of MD Markfed. Moreover after having been apprised about the economic cost and provision of interest in the agreement, the MD decided to refer all the disputes to the Arbitrator as his nominee. Further, the respondent rice miller did not approach the MD for his decision in the matter and in the circumstances, the claimant had to refer the dispute to the Arbitrator after obtaining the orders of MD Markfed. FAO No.3718 of 2009 (O&M) -3- Apart from the above, in the present case the exception clause is not attracted because the respondent miller has delivered the entire rice/paid the price of unmilled paddy in terms of rice as claimed by him. Under these circumstances this objection of jurisdiction is rejected.” In reply, learned counsel for the respondents has submitted that it is only the way of writing by the Arbitrator that he is a nominee of the Managing Director but in fact he has decided the case independently. After hearing both the learned counsel for the parties, I am of the view that the decision on the jurisdiction of the Arbitrator is patently wrong. The sole Arbitrator could not be an agent or nominee of the Managing Director. He has to be an independent FORA for the purpose of deciding the dispute inter se the parties to the agreement. It is further held that an Arbitrator is an independent person, who is unbiased and impartial to decide a lis between the parties. Therefore, these observations, with regard to the jurisdiction that the Tribunal is a nominee of the MD leads only to the conclusion that he was not unbiased. In view thereof, the present appeal is allowed, arbitral award as well as impugned order is set aside. It is however, made clear that the matter can be referred again to the Arbitrator in accordance with law to decide the issues which do not come within the purview of excepted matters. (RAKESH KUMAR JAIN) 04.08.2010 JUDGE Vivek