Supreme Court Restores Arbitral Award in Punjab State Civil Supplies vs. Sanman Rice Mills Case image for SC Judgment dated 27-09-2024 in the case of Punjab State Civil Supplies Co vs M/s Sanman Rice Mills & Ors.
| |

Supreme Court Restores Arbitral Award in Punjab State Civil Supplies vs. Sanman Rice Mills Case

Updated on

The case of Punjab State Civil Supplies Corporation Ltd. vs. M/s Sanman Rice Mills & Ors. is a significant Supreme Court judgment concerning the enforcement of arbitral awards under the Arbitration and Conciliation Act, 1996. The Supreme Court overturned the Punjab & Haryana High Court’s ruling, restoring the arbitral award dated November 8, 2012, in favor of Punjab State Civil Supplies Corporation (PUNSUP).

Background of the Case

The dispute arose from an agreement between PUNSUP and M/s Sanman Rice Mills, under which PUNSUP supplied paddy to the mill for processing. The rice mill was obligated to return the processed rice to PUNSUP. However, there was a significant shortfall in the rice returned.

  • October 6, 2008: PUNSUP entered into an agreement with Sanman Rice Mills for rice milling.
  • 2009-2010: A total of 2,02,850 bags of Grade ‘A’ paddy, weighing 70,997.50 quintals, was supplied.
  • 2011: Sanman Rice Mills returned only a partial quantity, leaving a shortfall of 35,110.39 quintals of rice.
  • 2012: PUNSUP demanded Rs. 7,16,15,716/- for the shortfall. The rice mill issued 10 post-dated cheques of Rs. 50 lakh each, totaling Rs. 5 crore, leaving a balance of Rs. 2,16,15,716/-.
  • November 8, 2012: The dispute was referred to arbitration, and the arbitrator awarded Rs. 2,67,66,804/- to PUNSUP, with interest at 12% per annum.
  • April 7, 2015: The Additional District Judge upheld the award under Section 34 of the Arbitration Act.
  • January 10, 2017: The Punjab & Haryana High Court, in an appeal under Section 37, set aside the award.
  • September 27, 2024: The Supreme Court reversed the High Court’s ruling, reinstating the arbitral award.

Legal Arguments

Arguments by the Appellant (PUNSUP)

  • The High Court exceeded its jurisdiction under Section 37 by re-examining the merits of the arbitral award.
  • The award was based on substantial evidence, including contractual obligations and financial records.
  • The arbitrator’s decision was well-reasoned and in accordance with the contract and legal principles.
  • The High Court’s ruling undermined the finality of arbitration, which is against the principles of the Arbitration and Conciliation Act, 1996.

Arguments by the Respondents (Sanman Rice Mills)

  • The award contained errors in fact and law, and the arbitrator had exceeded his jurisdiction.
  • The calculation of the shortfall was incorrect, and there was no independent verification of the rice supplied.
  • The arbitration proceedings were conducted unfairly, denying the respondents an opportunity to present their case.
  • The High Court correctly re-evaluated the matter and found flaws in the arbitrator’s reasoning.

Supreme Court’s Observations

1. Limited Scope of Judicial Intervention in Arbitration

The Court emphasized that judicial intervention in arbitration is limited to the grounds mentioned in Section 34 of the Arbitration Act.

“The object of the Act is to provide for a speedy and inexpensive alternative mode of settlement of dispute with minimum court intervention.”

2. High Court’s Overreach Under Section 37

The Court held that the High Court had overstepped its jurisdiction by reassessing the evidence and findings of the arbitrator.

“The appellate power under Section 37 is not akin to ordinary appellate jurisdiction. The High Court could not reappraise the evidence or take a different view merely because it found it preferable.”

3. Enforcement of Arbitral Awards

The Court reaffirmed the principle that an arbitral award must be respected unless it is in conflict with public policy or suffers from fundamental legal errors.

“Unless an award is contrary to substantive law, fundamental public policy, or violates principles of natural justice, it must be upheld.”

Final Verdict

The Supreme Court issued the following directives:

  • The High Court’s order dated January 10, 2017, was set aside.
  • The arbitral award dated November 8, 2012, was restored.
  • The respondents (Sanman Rice Mills) were directed to pay Rs. 2,67,66,804/- with 12% interest.
  • PUNSUP was granted liberty to initiate execution proceedings.

This ruling reinforces the principle that arbitration awards should be respected and judicial interference should be minimal, ensuring efficiency and finality in dispute resolution.


Petitioner Name: Punjab State Civil Supplies Corporation Ltd..
Respondent Name: M/s Sanman Rice Mills & Ors..
Judgment By: Justice Pamidighantam Sri Narasimha, Justice Pankaj Mithal.
Place Of Incident: Punjab.
Judgment Date: 27-09-2024.

Don’t miss out on the full details! Download the complete judgment in PDF format below and gain valuable insights instantly!

Download Judgment: punjab-state-civil-s-vs-ms-sanman-rice-mill-supreme-court-of-india-judgment-dated-27-09-2024.pdf

Directly Download Judgment: Directly download this Judgment

See all petitions in Arbitration Awards
See all petitions in Commercial Arbitration
See all petitions in Enforcement of Awards
See all petitions in Judgment by P.S. Narasimha
See all petitions in Judgment by Pankaj Mithal
See all petitions in allowed
See all petitions in Remanded
See all petitions in supreme court of India judgments September 2024
See all petitions in 2024 judgments

See all posts in Arbitration and Alternate Dispute Resolution Category
See all allowed petitions in Arbitration and Alternate Dispute Resolution Category
See all Dismissed petitions in Arbitration and Alternate Dispute Resolution Category
See all partially allowed petitions in Arbitration and Alternate Dispute Resolution Category

Similar Posts