Viney Mittal, J. - (1.) This order shall dispose of three appeals being FAO Nos. 5420 to 5422 of 2005 as identical facts are involved in all the three appeals. All the three appeals have been filed by appellant-District Food and Supplies Controller, Moga, challenging identical orders dated June 1,2005 passed by the learned Additional District Judge, Moga. Vide the aforesaid order, the learned Additional District Judge has held that awards passed by the Arbitrator were illegal and has, consequently, allowed the petitions filed by the respondent-miller under section 34 of the Arbitration and Conciliation Act,1996. For the sake of convenience the facts are borrowed from A dispute had arisen between the District Food and Supplies Controller, Moga and the Miller M/s. Mangla Rice Mills, with regard to an agreement between the parties, for milling of paddy for the year 1994-95.
(2.) The claimant-District Food and Supplies Controller ( hereinafter referred to as the "Controller") claimed that the miller was to deliver the rice manufactured out of the paddy within the stipulated period but had failed to deliver the said rice and had also failed to comply with the terms and conditions of the agreement. The Arbitrator rendered his award dated January 7,2002 and the Miller was held responsible for shortage of stocks and ordered the recovery of the cost of paddy at the custom mill rate of rice prevailing at that time along with interest. The miller filed an application under section 34 of the Arbitration and Conciliation Act,1996( hereinafter referred to as the "Act") challenging the aforesaid awards. Various objections were raised with regard to jurisdiction/competence of the Arbitrator. It was also claimed that the reference of the dispute to the Arbitrator was barred by limitation.
(3.) The learned Additional District Judge examined the entire controversy between the parties. It was noticed that the dispute pertained to the year 1994-95. However, the reference was made in the year 2000. Relying upon section 43 of the Act read with Article 137 of the Limitation Act, it was held that reference of the dispute to the Arbitrator was beyond limitation and,therefore, it was held that the award of the Arbitrator was liable to be set aside on that ground alone. It was further held that clause 6(I) of the arbitration agreement contained a penal clause and as per the aforesaid clause the sole authority to decide the aforesaid penalty was the Director and,therefore the appointment of the Arbitrator to adjudicate the aforesaid controversy on that point, was wholly contrary to the arbitration agreement. Reliance in this regard was placed upon a judgment of this court in M/s.Shree Krishna Rice Mills V. Punjab State Cooperative Supply and Marketing Federation Limited 2003(2) Civil Courts Cases 167. On the basis of the aforesaid authority, it was held that when a specific remedy had been provided in the agreement between the parties, then the aforesaid controversy could not be referred to the Arbitrator. Consequently, the award dated January 7,2002 passed by the Arbitrator was set aside. The petition filed by the miller under section 34 of the Act was allowed.;