Punjab State Electricity Board vs Deekay Mechanical Works and Another

Mohinder Pal, J.—This is a dispute regarding interest on delayed payment between the Appellant-Board and the Respondent.

As per facts of this case M/s Deekay Mechanical Works, Sangrur (Respondent herein) filed a suit for declaration against Punjab State Electricity Board (Appellant herein) in the Court of learned Additional Civil Judge (Senior Division), Patiala claiming compound interest as capital with monthly rests @ 5% above the floor rate for comparable lending as per Section 6 of the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 (hereinafter referred to as `the Act'').

During the pendency of the proceedings, the Appellants filed an application u/s 8 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as `the Arbitration Act'') and the learned Additional Civil Judge (Senior Division), Patiala vide order dated 8.4.2002 referred the matter to an Arbitrator to be appointed by the Appellant-Board in accordance with the terms and conditions of the purchase order and agreement executed between the parties. In pursuance to the purchase order dated 8.4.2002 the Appellant-Board appointed Engineer N.K. Arora, General Manager, GGSSTP, PSEB, Ropar as the sole Arbitrator which passed an award dated 1.10.2006 in favour of the Appellant-Board. The Respondent herein moved an application u/s 34 of the Arbitration Act in the Court of learned District Judge, Patiala against the award passed by the sole Arbitrator. The learned District Judge, Patiala accepted the said application and set aside the award passed by the Arbitrator vide order dated 24.7.2008. The Appellant-Board preferred the present appeal against the order passed by the learned District Judge, Patiala which is now under challenge before me.

I have heard Mr. Sarjit Singh, Senior Advocate assisted by Ms. Shikha Sharma, Advocate appearing for the Appellant and Mr. Kanwalvir Singh Kang, Advocate appearing for Respondent No. 1.

While disposing of this matter, learned District Judge directed the parties to approach for remedy before the Micro Small Enterprises Facilitation Council etc. at Chandigarh (hereinafter referred to as `Facilitation Council''). The relevant part of the order is reproduced as under:

Therefore, from the above I find that the arbitrator by ignoring the statutory provisions of the Small Scale and Ancillary Industrial Undertakings Act has misconducted himself as the award is against the public policy. The learned Counsel for the objector has stated that now the law has been amended and there is no need to remand the case back to the arbitrator and as per amended law, they will approach for the remedy before the Industrial Facilitation Council etc.

While arguing before me, learned senior counsel for the Appellant-Board has contended with vehemence that the Respondent was not entitled to move an application before the Facilitation Council once the matter has been ceased of by the Arbitrator appointed by the Board. It is further submitted that even the order passed by the learned District Judge requires to be set aside in view of the fact that he has failed to remand the case back to the sole Arbitrator appointed by the Appellant-Board for looking into the matter afresh. It has been submitted that the learned District Judge has exceeded his jurisdiction by directing the Respondents to approach new Arbitrator in the form of Facilitation Council etc. Accordingly, it has been prayed that the order passed by the learned District Judge deserves to be set aside.

On the other hand, while arguing on behalf of the Respondent, it has been submitted that after the passing of the impugned order by the District Judge, this matter went to Facilitation Council Chandigarh which has decided the same vide award dated 14.6.2010 passed by Shri S.S. Bains, IAS, Chairman-cum-Presiding Arbitrator, MSME Facilitation Council, Chandigarh. Against this award, the Appellant-Board has preferred an appeal u/s 34 of the Arbitration Act. Learned Counsel for the Respondent has also produced copy of the award passed by the Chairman-cum-Presiding Arbitrator, MSME Facilitation Council and certified copy of the order dated 28.2.2011 passed by learned Additional District Judge, Patiala. While entertaining petition u/s 34 of the Arbitration Act, the Court of learned Additional District Judge, Patiala has passed the following order:

I have considered the rival contentions of both the learned Counsel and have also gone through the provisions of the Act. A perusal of the record depicts that 75% of the award amount is already deposited in the court. Under the provisions of Section 19 of the Act the court is empowered to release a part of the said amount to the claimant subject to reasonable conditions. In these circumstances the application is disposed off with the direction to release 50% of the amount deposited in the court in favour of the applicant, on furnishing unconditional bank guarantee of the equivalent amount. In the larger interest of justice, Nazir of this Court is also directed to deposit the remaining amount in some FDR for a period of one year, to be renewed subsequently till the disposal of the case. The balance amount along with interest shall be subject to the final disposal of the main case.

Now record of arbitrator be summoned for 17.3.2011.

I have given my thoughtful consideration to the submissions of both the counsel on this point. In my considered view, once the matter has been set to rest by passing a detailed award by the Chairman-cum-Presiding Arbitrator, Facilitation Council, Chandigarh, an appeal against the said award u/s 34 of the Arbitration Act is pending before the learned Additional District Judge, Patiala, and the Appellant-Board has deposited 75% of the award amount in favour of the Respondent, there is no reason to re-open the matter afresh which has been set to rest by the impugned order. Even otherwise, after amendment only the Industrial Facilitation Council was the proper forum to decide the matter.

For the aforesaid reasons, this appeal is dismissed.