FAO No.2575 of 2007 (O&M) -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH FAO No.2575 of 2007 (O&M) Date of Decision: 26.4.2010 Punjab State Civil Supplies Corporation Limited and another ..Appellants. Vs. M/s Sandhu Rice Mills and others ..Respondents. CORAM: HON'BLE MR.JUSTICE RAKESH KUMAR JAIN Present: Ms.Deepali Puri, Advocate for the appellants. Mr.S.K.Rishi, Advocate for the respondents. RAKESH KUMAR JAIN, J. This appeal is directed against the order dated 7.6.2006 passed by Additional District Judge, Chandigarh whereby Objections under Section 34 of the Arbitration and Conciliation Act, 1996 (for short `the Act') challenging the arbitral award dated 8.1.2004 has been dismissed. The only grievance raised by the counsel for the appellants is that the Arbitrator has committed an error of jurisdiction while observing that “I am also of the firm view that the disputes regarding economic cost and award of interest @ 21% as per agreement in respect of left over paddy and late delivery of rice are outside the purview of arbitrator. Decision thereon by the MD has been provided as final, as that the matter concerning recovery of economic cost and interest happened to be “excepted matters.” Therefore, these matters are out of the purview of Arbitration. But at the FAO No.2575 of 2007 (O&M) -2- same time, in my considered view, it does not mean that the claimant is not entitled for the recovery of the price of the left over paddy with reasonable interest rate and reasonable rate of interest for late delivery of resultant rice. Reasons are very few and simple.” It is submitted that if the Arbitrator had no jurisdiction to decide the matter even with regard to interest being excepted matters, he had no jurisdiction to observe that the claimant/PUNSUP is entitled to recover left over paddy with reasonable rate of interest. Learned counsel for the respondent could not support the order passed by the Arbitrator because apparently the order is without jurisdiction insofar as the observation with regard to charging of reasonable rate is concerned. It is submitted by counsel for the appellant that if the matter falls within the “excepted matters” then the entire discretion vests with the Managing Director, who would decide as to what would be the rate of interest to be charged from the respondent. In view of the above discussion, the appeal is hereby allowed and the impugned award of the arbitrator dated 8.1.2004 only to the extent where it is observed “But at the same time, in my considered view, it does not mean that the claimant is not entitled for the recovery of the price of the left over paddy with reasonable interest rate and reasonable rate of interest for late delivery of resultant price” is set aside. Rest of the award is maintained. (Rakesh Kumar Jain) 26.4.2010 Judge Meenu