FCI, BHATINDA Vs. MALWA RICE MILLS AND ORS

JUDGEMENT

(1.) The Food Corporation of India (hereinafter 'FCI') has filed the present petition challenging the award dated 14th December, 2011 whereby all the claims of FCI had been rejected.

(2.) The chronology of facts and events are that an agreement was entered into on 17th October, 1994 between FCI and M/s. Malwa Rice Mills, Bhatinda - Respondent (hereinafter, 'Respondent'). As per the said agreement, the Respondent was to store paddy in its mill, and mill the same. After undertaking the process of milling, the resultant rice was to be supplied to FCI. The terms and conditions as contained in the contract are as under: -

(3.) It is the admitted position that a total 19755 quintals in 30390 bags of paddy was stored in the Respondent's mill for the purposes of milling. The total paddy milled was to the tune of 849121 quintals in 13333 bags. The remaining paddy continued to be stored in the Respondent's premises. It was neither milled nor returned to FCI. The contract was for a period of around 4 months i.e., from 17th October, 1994 to 28th February, 1995. The contract was to be completed by 28th February, 1995 which was extended till 31st May, 1995. However, since the Respondent did not complete the milling, the left over paddy was considered to be sold and a sum of Rs. 4,10,748/- was adjusted from the said sale. A huge loss was caused to the FCI because of which FCI invoked the arbitration clause in the agreement which is as under: