F.A.O.No. 1916 of 2009 (O&M) 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. F.A.O.No. 1916 of 2009 (O&M). DECIDED ON : 12.01.2010. The Punjab State Co-operative Supply & Marketing Federation Ltd and another. Appellants. VERSUS M/S. Krishna Trading Company and another. Respondents CORAM : HON'BLE Mr. JUSTCE RAKESH KUMAR JAIN. Present:- Ms. Deepali Puri, Advocate, for the appellants. Mr. Rajesh Kumar Girdhar, Advocate, for respondent No.1. RAKESH KUMAR JAIN,J. This appeal is directed against the order dated 31.10.2008 passed by learned District Judge, Faridkot, whereby objection filed under Section 34 of the F.A.O.No. 1916 of 2009 (O&M) 2 Arbitration and Conciliation Act, 1996 ( for short “ the Act”) for setting aside the Award dated 4.1.2006, has been accepted. Brief facts of the case are that during the Crop year 1994-95, The Punjab State Co-operative Supply & Marketing Federation Ltd. (for short “the Markfed) procured paddy for its shelling. On 27.9.1994, an agreement was executed between the Miller M/S. Krishna Trading Company, Kotkapura and the Markfed which was signed by Vinod Kumar, Special Attorney of Vijay Kumar, proprietor of the Miller Krishna Trading Company. In pursuance of the agreement, the Markfed supplied 49682 bags weighing 32293.30 quintals of paddy to the Miller for shelling. As per clause 6(iii) of the agreement, the Miller was to complete the delivery of rice within 10 days of the issuance of the paddy to him and rice due to the Markfed, on the total quantity of paddy issued to him or in the joint custody released at regular interval, was to be delivered not later than 28.2.1995. The Miller was to make the delivery of the rice to the Markfed in the following manner:- October/November, 1994 20% December, 1994 26% F.A.O.No. 1916 of 2009 (O&M) 3 January, 1995 26% February, 1995 28% The respondent delivered only 11384.50 quintals of rice to the FCI in the account of the Markfed and failed to shell the remaining paddy within the stipulated period and even thereafter, the Miller purchased 23007 bags weighing 14501.01 quintals of paddy and thus, there was a shortage of 453.54 quintals of paddy at the time of sale i.e. 299.9 quintals on account of driage. Thus, there was failure on the part of the Miller to deliver the rice within the stipulated period and as such he was liable to pay interest at the rate of 21% per annum on the basis of economic cost of the left over quantity of paddy/rice. In terms of the Arbitration Clause 18 of agreement, Arbitrator was appointed to whom dispute was referred in which the claim amount was revised/reduced to Rs.5,14,738/- including interest at the bank rate from 1.11.1995 to 31.3.2002 along with future interest. The learned Arbitrator observed in his Award dated 4.1.2006:- “ The respondents have not denied the fact that out of the above paddy, they had shelled only F.A.O.No. 1916 of 2009 (O&M) 4 26675 bags/17338.75 qtls paddy and delivered rice 11384.50 qtls, which will leave balance un- milled paddy of 23007 bags weighing 14954.55 qtls with the respondent miller.” However, the learned Arbitrator awarded net amount recoverable from respondent to the tune of Rs.2,19,375/- with interest at bank rate prevailing from time to time from 1.11.1995 to the date of award as per banking practice with interest at the rate of 18% from the date of award till the date of actual payment/recovery as per Section 31 (7b) of the Act and the arbitration fee share recoverable from respondent to the tune of Rs.4125/-. Aggrieved by the award, respondents had filed the objection petition and appellants filed their reply contending that the objections are time barred and are beyond the scope of Section 34 of the Act. The respondents had challenged the award on the ground that the agreement dated 27.9.1994 was signed on behalf of the Miller by Vinod Kumar, Special Attorney of Vijay Kumar, Proprietor of the Miller firm who was not authorized to do so. The agreement between the parties was executed on 27.9.1994, whereas the special power F.A.O.No. 1916 of 2009 (O&M) 5 of attorney was executed by Vijay Kumar in favour of Vinod Kumar on 29.9.1994 and was attested by the Notary Public, Faridkot on 6.10.1994. The learned District Judge, Faridkot allowed the petition under Section 34 of the Act on the aforesaid ground that the agreement was not signed by duly authorized person as the agreement was executed on 27.9.1994 i.e. before the execution of the Special Power of Attorney and, accordingly, set aside the award of the Arbitrator. Markfed has come up in appeal. Notice of motion was issued pursuant to which respondent No.1 has put in appearance. I have heard learned counsel for the parties and have perused the record very carefully and thoroughly. Learned counsel for the appellant has vehemently argued that agreement dated 27.9.1994 was signed by Vinod Kumar, who was special attorney of Vijay Kumar, proprietor of the Miller firm in whose favour special power of attorney was also executed on 29.9.1994 and it was attested by the Notary Public, Faridkot on 6.10.1994, meaning thereby action of Vijay Kumar was ratified by Vinod Kumar. It is also F.A.O.No. 1916 of 2009 (O&M) 6 submitted that respondent again had taken a plea before the Arbitrator that there was no agreement between the parties but due to its act and conduct it admitted before the Arbitrator that in fact in terms of the agreement, the respondent had shelled only 26675 bags/17338.75 qtls of paddy and delivered rice upto 11384.50 qtls which will leave balance un-milled paddy of 23007 bags weighing 14954.55 qtls with the respondent Miller meaning thereby that the agreement was duly accepted by the respondent. The agreement on the basis of which the paddy was accepted and milled partially which also led to shortage of paddy had been duly acted upon by the miller. The aforesaid plea has been ignored by the learned District Judge, while accepting the objection petition under Section 34 of the Act. Learned counsel for the appellant has also submitted that in view of Clause 6 of the Agreement dated 27.9.1994, the Arbitrator has no jurisdiction to decide the question involved as it reads as under:- “ 6(i) The entire quantity of rice of all varieties delivered by the Miller to the Markfed shall conform to the specifications laid down in the Punjab Rice Procurement (Levy) Order 1983, F.A.O.No. 1916 of 2009 (O&M) 7 as amended from time to time or in any other orders or notifications issued by the State Government from time to time. The stocks of rice not conforming to the specifications so laid down, shall be liable to be rejected in respect of such quantity of rice, which is not found to be within the specifications and the Miller shall be liable to deliver fresh stocks of rice conforming to the specifications to the Government. In the event of failure to supply rice within the prescribed specifications, the Miller shall be liable to pay the Markfed for the quantity of rice short supplied at the penal rate of one and half times the economic cost of the converted variety of paddy equivalent to the shortages. The decision of the Managing Director, Markfed, Chandigarh in this behalf shall be final.” As against this, learned counsel for the respondents has only high-lighted the finding of the learned District Judge, but he candidly accepted that the paddy was milled by the respondents and delivery could not be completed which led to shortage. Further he F.A.O.No. 1916 of 2009 (O&M) 8 submits that in any case, the Arbitrator had no jurisdiction because the dispute falls in the excepted matter as in the event of shortfall of rice, only penal rate is to be levied as per clause 6 of the Agreement and the same is to be decided by the Managing Director whose decision shall be final in this regard. He relies upon the decision by this Court in M/S. Shree Krishna Rice Mills Vs. The Punjab State Co-operative Supply and Marketing Federation Ltd, 2003 (2), Civil Court Cases, 167 (P&H) After hearing the learned counsel for the parties, I am of the view that this appeal deserves to be allowed. Since there is a dispute between the parties of ratification of the agreement which is proved on record by the act and conduct of the respondents. Therefore, the respondents cannot blow hot and cold by saying that the agreement was not signed by the authorized person and on the other hand, milled the supplied paddy. The law does not allow the party to approbate and re-probate in the same breath. But, since it is an excepted matter, therefore, the arbitrator had no jurisdiction to decide the matter in view of clause 6 of the agreement as the same falls within the purview of the Managing Director. F.A.O.No. 1916 of 2009 (O&M) 9 Thus, the award of the Arbitrator and the impugned order of the Learned District Judge are set aside. The appellants are at liberty to proceed against the respondents in view of the decision rendered by this Court in M/S. Shree Krishna Rice Mills’s case (supra) by making appropriate application to the Managing Director of the Corporation. With these observations, the present appeal is disposed of. 12.01.2010. (RAKESH KUMAR JAIN) Anoop JUDGE