Food Corporation of India v. M/S Dashmesh Rice & Genl Mills & Ors

1. The Food Corporation of India, petitioner herein, has filed the objections, inter-alia, under Section 34 of the Arbitration and Conciliation Act, 1996 (in short, called the “Act”) against the award dated 30th June, 2011 passed by the learned sole Arbitrator, Hon’ble Mr. Justice (Retd.) R.L.Gupta.

2. During the pendency of the arbitration proceedings, the respondents filed objections under Section 16 of the Act in view of the order passed by the Supreme Court of India dated 17th July, 2003 for rejection of the reference. In para 5 of the said petition, the following statement was made:-

3. While rendering the award, the learned sole Arbitrator has accepted the statement made by the respondents in the petition and has come to the following conclusion:- “I am, therefore, of the considered view that the deed of settlement between the FCI and the respondent does not suffer from any infirmity. Even if the FCI is not in favour of this deed of settlement, it has to take proper legal steps for setting it aside. In this respect, it was laid down in the case of NATHANI STEELS LTD. VS.

ASSOCIATED CONSTRUCTIONS, 1995 Supp (3) Supreme Court Cases 324 as follows:- “Once there is a full and final settlement in respect of any particular dispute or difference in relation to a matter covered under the arbitration clause in the contract and that dispute or difference is finally settled by and between the parties, such a dispute or difference does not remain to be an arbitral dispute and the arbitration clause cannot be invoked even though for certain other matters, the contract may be in subsistence. Once the parties have arrived at a settlement in respect of any dispute or difference arising under a contract and that dispute or the difference is amicably settled by way of a final settlement by and between the parties, unless that settlement is set aside in proper proceedings, it cannot lie in the mouth of one of the parties to the settlement to spurn it on the ground that it was a mistake and proceed to invoke the Arbitration clause. If this is permitted the sanctity of contract, the settlement also being a contract, would be wholly lost and it would be open to one party to take the benefit under the settlement and then to question the same on the ground of mistake without having the settlement set aside. In the circumstances, in the instant case since the dispute or difference was finally settled and payments were made as per the settlement, it was not open to the respondent unilaterally to treat the settlement as non est and proceed to invoke the Arbitration clause.” Till date, there is nothing on record to show if the FCI ever indicated its desire to the respondent that it did not honour the settlement. Therefore, if at all the FCI wants to wriggle out of this settlement, it has to select an appropriate legal remedy for this purpose. Since the disputes between the parties were settled by means of deed of settlement dated 9th March, 2006, the matter does not remain arbitral.”

4. When the matter is taken up today, the learned counsel for the respondents has taken the same ground by stating that the objections are not tenable in view of the findings arrived by the learned sole Arbitrator. He has also provided the list of other matters which have been disposed of under the similar circumstances. He further states that the said deed of settlement is legal and valid and the same cannot be challenged by the petitioner again and again before this Court. Learned counsel has also referred one of the orders dated 17th September, 2012 passed in SLP(C) C.C. No.5424/2012 whereby the petitions filed by the petitioner were dismissed and the contention of the petitioner was rejected.

5. In view of the above said facts and circumstances of the case, there is no merit in the present petition. The same is accordingly dismissed.

JUDGE JANUARY 23, 2014