IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH Civil Revision No.3637 of 2005 (O&M) Date of Decision : 12.10.2009 M/s Jain Rice Mills, Ahmedgarh .....Petitioner versus Punjab State Civil Supplies Corpn. Ltd. and others ....Respondents CORAM : HON'BLE MR.JUSTICE SURYA KANT. Present : Mr.H.S.Saggu, Advocate, for the petitioner, Ms.Deepali Puri, Advocate, for respondent Nos.1 & 2. -.- 1. Whether Reporters of Local papers may be allowed to see the judgment? 2. To be referred to the Reporters or not? 3. Whether the judgment should be reported in the Digest? --- ORDER Surya Kant, J. (Oral) This revision petition is directed against the order dated 18.5.2005 passed by the learned District Judge, Sangrur, dismissing the petitioner's objections against execution of the Award dated 16.12.1997 passed by the Arbitrator. [2] The facts may be noticed briefly. [3] The petitioner is a rice-mill who entered into an agreement with the respondent-Corporation on 16.10.1992 regarding lifting and C.R. No.3637 of 2005 (O&M) 2 shelling of rice out of the paddy. Besides other things, Clause 20 of the agreement provided as follows:- “20. ARBITRATION: All the disputes and differences arising out of in any manner touching or concerning this agreements whatsoever (except as to any matter the decision of which is expressly provided for in the contract) shall be referred to the sole arbitrator of the sfs or any person appointed by him in this behalf. It will be no objection to any such appointment that the person appointed is or was an employee of the Food Supplies Deptt., Punjab or that he had to deal with the matters in which the contract releast and that in the course of his duties as such an employee of the Punjab State Civil Supplies Corporation Limited. He had expressed views on all or any of the matters in dispute or difference. The award of such arbitration shall be final and binding on the parties to this contract. It is a term of this contract that in the event of the arbitration being transferred or vacating his office, dying or being unable to act for any reason the Director at the time of such transfer, vacation of office, death or inability shall appoint another person to act as arbitrator, such a person shall be entitled to proceed with the reference from the stage where it was left by his predecessor. Provided further that the demand for arbitration in respect of any claim(s) of the Millers, under the contract, shall be in writing and made within one year of the date of completion or expiry of the period of contract. If the demand is not made within that period, the claim (s) of the Millers shall be deemed to have been viewed off and absolutely barrel and the Director shall be discharged and C.R. No.3637 of 2005 (O&M) 3 released of all liabilities under the contract in respect of these claim. The cost or an in connection with arbitration shall be in the discretion of the arbitrator who may take suitable provisions for the same in his award.” [4] A dispute having arisen between the parties, the respondent- Corporation appointed an Arbitrator on 11.4.2006 to resolve the same. The petitioner-mill appeared before the Arbitrator and contested the claim of the respondent. The Arbitrator passed an award dated 16.12.1997 whereby the respondent's claim for recovery of Rs.3,85,092/- from the petitioner Mill was accepted. [5] The respondent-Corporation applied for execution of the award and on receipt of the notice, the petitioner-mill filed its objections, inter-alia, contending that the award has been passed by following the Arbitration and Conciliation Act, 1996 (hereafter referred to as the 1996 Act), whereas the arbitral proceedings had commenced under the Arbitration Act, 1940 (in short the 1940 At) and as such the award in question is illegal and cannot be executed. The objections have been dismissed by the learned District Judge, Sangrur, vide the impugned order, giving rise to this revision petition. [6] The solitary question that arises for consideration is as to whether the arbitral proceedings in the present case commenced under the 1940 Act or under 1996 Act? [7] Section 21 of the 1996 Act provides that “unless otherwise C.R. No.3637 of 2005 (O&M) 4 agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent”. [8] While the petitioner's case is that the respondent-Corporation first time sent a registered notice dated 11.1.1996 for initiation of arbitral proceedings and thus, the arbitration proceedings are deemed to have commenced from the date of issue of that notice, i.e., 11.1.1996, before the 1996 Act came into force w.e.f. 25.1.1996, it is urged on behalf of the respondent-Corporation that the notice dated 11.1.1996, relied upon by the petitioner contained no request for appointment of an Arbitrator nor such a request was required to be made in view of the expressed consent for appointment of an Arbitrator given by the petitioner vide Clause 20 of the agreement dated 16.10.1992. [9] In order to resolve the controversy, it would be apposite to reproduce the notice dated 11.1.1996 in extenso and the same reads as follows:- “You were informed through this office letter No.4562, dated 27.6.1994 and regd. Notice No.6760 dated 30.6.1995 that the amount which was outstanding in the ledger account of PUNSUP after settlement of the bill for the paddy milling during the year 1992-93, be deposited upto 15.7.1995. But you have not deposited the due amount which shows that you are not interested in depositing this amount. Before the case is sent for recovery due amount against you for arbitration, you are again asked through this registered notice to deposit the due amount within 15 days of the issue of this notice so as C.R. No.3637 of 2005 (O&M) 5 to avoid the legal proceedings against you. The recoverable amount from you is as follows:- 1. Original amount after : Rs.1,10,152.00 settlement of bill. 2. Interest to be recovered : Rs. 83,710.00 on the value of rice delivered after 28.2.93 according to agreement. Total:Rs.1,93,862.00 Plus interest on this amount @ 21% till deposit of amount.” [10] It be seen from the contents of the aforesaid notice that no request for appointment of an Arbitrator finds mention therein. It merely demanded the due payments from the petitioner before the case was sent for recovery of the due amount .......... for arbitration” (emphasis applied). In other words, the registered notice only contained a threat that in case the petitioner fails to deposit the due amount within 15 days, the respondent- Corporation could initiate the arbitral proceedings. The step, if any, to initiate the arbitral proceedings by the respondent-Corporation, was to be taken after expiry of 15 days period from the date the said notice was received by the petitioner-mill. Before expiry of the 15 days period, concededly the 1996 Act came into force. [11] That apart, the petitioner expressly agreed to clause 20 of the agreement dated 16.10.1992, in terms whereof the respondent-Corporation was at liberty to appoint an Arbitrator in the event of any dispute and no objection by the petitioner-mill against such appointment could be C.R. No.3637 of 2005 (O&M) 6 entertained. It necessarily means that the respondent-corporation needed no prior consent of the petitioner for appointment of an Arbitrator. Since a dispute had arisen, the respondent-Corporation was entitled to invoke clause 20 of the Agreement and appoint an Arbitrator. The existence of a dispute between the parties was acknowledged by the Corporation on 11.4.1996 only, when it eventually appointed the Arbitrator. That exercise was also undertaken after the new Act had come into force. [12] There is petitioner's own admission also that the the arbitral proceedings were to be initiated under the 1996 Act only. The petitioner moved an application before the Civil Judge (Senior Division), Sangrur under Section 34 of the 1996 Act, to set-aside the award in dispute dated 16.12.1997. That application was dismissed by the Civil Judge (Senior Division), Sangrur vide its order dated 27.8.2008 being not maintainable. Against that order, the petitioner-mill went in appeal before the learned District Judge, Sangrur, who vide his order dated 10.6.2009 has held as follows: “17. I have considered the submissions and find that the arbitral proceedings had not commenced before the coming into force of Act of 1996 because no notice was ever served by either of the parties prior to 25.1.1996 for the appointment of an Arbitrator for referring the differences for arbitration. The proceedings can be said to have commenced only when the Arbitrator was appointed by the Secretary to Government of Punjab, C.R. No.3637 of 2005 (O&M) 7 Department of Food and Supplies vide order dated 11.4.1996 having appointed Shri P.R.Aggarwal, IAS (Retd), as the Arbitrator in terms of clause 20 of the agreement dated 16.10.1992. It is specifically provided under Section 21 of the Act of 1996 that unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent. No such request was made by either of the parties and, therefore, the proceedings in respect of the dispute can be said to have commenced on the appointment of the Arbitrator vide order dated 11.4.1996.” (emphasis applied) [14] It, thus, stands conclusively established that the arbitral proceedings in the case in hand actually commenced after coming into force the 1996 Act and have been rightly adjudicated by the Arbitrator as per the procedure laid down under the 1996 Act. [15] Otherwise also, learned counsel for the petitioner, despite repeated queries, could not point out any prejudice caused to the petitioner on account of the fact that the arbitral proceedings have been concluded under the 1996 Act instead of following the procedure contemplated under the 1940 repealed Act. C.R. No.3637 of 2005 (O&M) 8 [16] For the reasons aforestated, I do not find any merit in this revision petition which is accordingly dismissed. [17] However, the observations made herein-above shall have no bearing on the objections, on merits, raised by the petitioner and the same shall be decided in accordance with law. 12-10-2009 (SURYA KANT) Mohinder JUDGE