2009(3) ALL MR 532
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
SWATANTER KUMAR, J.
Ashoka Buildcon Pvt. Ltd.Vs.Maharashtra State Road Development Corporation & Anr.
Arbitration Petition No.24 of 2007
26th March, 2009
Petitioner Counsel: Mr. R. S. APTE,Mr. A. A. GARGE
Respondent Counsel: Ms. SOWMYA SRIKRISHNA,Mr. ADITYA MEHTA,M/s. Amarchand Mangaldas & S. A. Shroff & Co.
(A) Arbitration and Conciliation Act (1996) S.11 - Appointment of Arbitrator by Court - No claim certificate submitted as Respondent declined to release payment without the same - Retracted immediately - Certificate contained a provision that debarred applicant from taking legal remedy - Amounts to undue influence, pressure or duress - Applicant entitled to appointment of Arbitrator. 2008 ALL SCR 2533, 2007 Arb. W.L.J. 11 (SC), 2004(1) R.A.J. 232 (SC), 2008 Arb. W.L.J. 341 (AP) - Followed. 1995 Supp (3) SCC 324 - Dist. (Paras 6 to 14)
(B) Arbitration and Conciliation Act (1996) S.11 - Contract Act (1872), S.64 - Some payment to contractor made on issuance of No Claim Certificate - Contractor seeking reference of dispute for balance dues to Arbitrator - Application to Court for appointment - Contention that amount received should be deposited in Court - Opposed on ground that work done was far more than payment received - Held, submissions cannot be considered in Application u/s.11. (Paras 15, 16)
Cases Cited:
National Insurance Co. Ltd. Vs. M/s. Boghara Polyfab Pvt. Ltd., 2008 ALL SCR 2533 : 2008(4) R.A.J. 557 (SC) [Para 9,10]
M/s. Ambica Construction Vs. Union of India, 2007 Arb. W.L.J. 11 (SC) [Para 9,12]
Chairman & M.D., N.T.P.C. Ltd. Vs. Reshmi Constructions, Builders & Contractors, 2004(1) R.A.J. 232 (SC) [Para 9,12]
G. Venkata Reddy & Co., Engineers & Contractors Vs. Vice Chairman & Managing Director, A.P. Mineral Development Corporation Ltd. (APMDC Ltd.), 2008 Arb. W.L.J. 341 (AP) [Para 9]
Nathani Steels Ltd. Vs. Associated Constructions, 1995 Supp (3) SCC 324 [Para 14]
JUDGMENT
JUDGMENT:- In this Application under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the Act"), the Applicant prays for a direction for appointment of an Arbitrator in terms of Section 11 of the Act to resolve the dispute that had arisen between the parties. The Applicant was appointed as Nominated Sub-contractor as a result of the agreement between Respondent Nos.1 and 2 and was awarded the construction of Road Over Bridge at Daund, Nepty and Dehere and Murtizapur. The Applicant completed this construction work and submitted certain claims before Respondent No. 2 for sanction and also requested Respondent No.1 to form a Committee to review the said claims. When the bills were pending clearance, which according to the Applicant were of a huge amount, Respondent No.1 issued a letter dated 8th February, 2002 calling upon the Applicant to waive its right of arbitration and give an undertaking that the decision of the Committee would be binding on the Applicant. The Applicant by its letter dated 9th March 2002, addressed to the Minister of PWD, informed that it had no intention to request for arbitration if its disputes were amicably settled by the Committee. In case if the decision of the Committee was not acceptable to either of the party it should be left open for the parties to invoke Arbitration clause of the Agreement. Respondent No.2 vide its letter dated 24th March, 2003 then informed the Applicant that it proposed to make payment of Rs.199.04 lacs against the Applicant's claim and required the Applicant to file undertaking as well as unconditional No Claim Certificate for releasing of the payment. After representations were made by the Applicant, the Respondents increased the amount from Rs.199.04 lacs to Rs. 216.82 lacs. In view of the financial duress which the Applicant was facing, it submitted No Claim Certificate vide its letter dated 6th August, 2005 on the condition of releasing the payment within 90 days. The validity of the No Claim Certificate was increased from time to time and lastly view letter dated 22nd March, 2006 upto 15th May, 2006. This No Claim Certificate was still not sufficient and Respondent No.2, vide its letter dated 18th April, 2006, again demanded a separate No Claim Certificate for each individual contract. Since the amount was not being disbursed, the Applicant reiterated their request from time to time orally and in writing. The letter dated 18th April, 2006 reads as under:-
“IRCON INTERNATIONAL LIMITED M/s. Ashoka Buildcon Pvt. Ltd., Dear Sir, Sub - Claim Settlement of ROB’s at Daund, Nepty & Dehre (Super structure) and Murtizapur. Ref - 1. Your letter No.ABL/Tech/Let/ 07/2005 dated 06.08.2005 2. Your letter No. NIL dated 22.03.2006. This has reference to your above cited letters and other correspondence taken place relating to settlement of claims pertaining to ROB’s at Daund, Nepty & Dehre (Super structure) and Murtizapur. You are requested to submit separate No Claim Certificate for each of these individual contracts on non judicial stamp paper of Rs.100/- as per the endorsed drafts. The No Claim Certificates as per the draft are to be signed by the authorised signatory. Further, signed No Claim Certificates should be submitted so as to reach this office within 3 days of the date mentioned in the No Claim Certificates for taking further needful action by this office towards release of payment. Thanking you. An amount of Rs.216.82 lacs was sanctioned and vide letter dated 10th May, 2006 the Applicant wrote to Respondent No.2 as under:- “Date : May 10, 2006. To, Sub.: No Claim Certificate. Ref. : Your Letter No. IRCON/WZ/ ROB-MAIN/VOL,VII/033 dated 24.04.06. Sir, 1.0 The No Claim Certificate in our letter dated 03/05/2006 were given as per your instruction as they formed preconditions to arranging payment and was given under financial duress as huge amounts with crores rupees were blocked with you. 2.0 The matter of disputed claims and consequential financial losses which are partly paid and that too without any interest and consequential accrued losses to be refer to arbitration is taken up separately. For Ashoka Buildcon Ltd. Authorised Signatory.” |
2. The Applicant vide its letter dated 8th August, 2006 requested for reference of the dispute for arbitration and resolution of the dispute in accordance with the arbitration clause of the contract. This was replied by Respondent No.2 vide letter dated 1st November, 2006 wherein it was stated that the payment was in full and final settlement of the contract agreement between the parties and also refuted the allegation of the Applicant that the No Claim Certificate was given under financial duress and the demand of the Applicant was not acceded to.
3. Clause 29 of the agreement between the parties reads as under:-
"29.0.0. ARBITRATION
29.1.1 In full supersession of what is mentioned in the tender documents, the arbitration on this tender shall be governed by the following conditions.
29.1.2 Except where otherwise provided for in the sub-contract all questions and dispute relating to the meaning of instructions herein before mentioned or as to any other question, claim, right matter of anything whatsoever, in any arising out of or relating to the sub-contract, specification, estimates, instructions, orders or these conditions or otherwise concerning the works or the execution or failure to execute the same whether arising during the progress of the work or after completion or abandonment thereof or any matter directly or indirectly connected with this agreement shall be referred to the sole arbitration of the MANAGING DIRECTOR OF IRCON INTERNATIONAL LIMITED and if the MANAGING DIRECTOR is unable or unwilling to act as such then the matter shall be referred to sole arbitration of such other person appointed by the MANGING DIRECTOR/IRCON who is willing to act as such arbitrator. There will be no objection, if the Arbitrator, so appointed is an employee of IRCON provided that the persons shall not have been directly connected with the execution of the work of the Project. In case the arbitrator so appointed is unable to act for any reasons, MANAGING DIRECTOR, IRCON in the event of such inability shall appoint another person to act as Arbitrator in accordance with the terms of the contract. Such person shall be entitled to proceed with the reference from the state at which it was left by his predecessor. It is also a term of this contract no person other than a person appointed by MANAGING DIRECTOR, IRCON as aforesaid should act as Arbitrator.
Subject as aforesaid the provisions of the Arbitration and Reconciliation Act, 1996, or any statutory modification or re-enactment thereof and the rules made thereunder and for the time being in force shall apply to the arbitration proceeding under this clause.
29.1.3 Subject as aforesaid the provision of the Arbitration and Reconciliation Act, 1996, or any statutory modification or re-enactment thereof and the rules made thereunder and for the time being in force shall apply to the arbitration proceeding under this clause."
4. The No Claim Certificate was submitted as the Respondents declined to release the payment without submission of such a Certificate, though vide its letter dated 6th August, 2005 the Applicant had already submitted No Claim Certificate, but still separate Certificate for each individual contract was insisted. After receipt of payment, vide its letter dated 10th May, 2006, the Applicant informed the Respondents that it had suffered huge financial losses and various payments were due to it on account of interest and otherwise and requested for referring the matter to the Committee for settlement in accordance with the terms of the Agreement. This request was specifically made by letter dated 8th August, 2006 which was declined by the Respondents vide their letter dated 1st November, 2006 on the ground that the agreement between the parties had become extinct on payment of Rs.2.1682 crores towards final settlement of all disputes under the contract between the parties, and arbitration clause ceased to exist and, therefore, no reference can be made to the Committee. In the letter dated 1st November, 2006, the Respondents also recorded that it was improper and unedifying on part of the Applicant to allege that it had executed the said declaration under financial duress, required the Applicant to discharge its onus of proving such duress and also stated that it was bound by the declaration. The Applicant, vide its letter dated 27th January, 2007, requested for appointment of Arbitrator, which met the same fate as the earlier request and this was communicated to the Applicant vide letter of the Respondents dated 5th February, 2007. Faced with this situation, the Applicant has filed the present Petition.
5. Reply affidavit was filed on behalf of Respondent No.2 and the execution of the Agreement was not disputed. However, the main stand taken by the Respondents in the reply was that in face of the full and final settlement offer to the Applicant by Respondent No.2 vide their letter dated 6th August, 2005 and acceptance thereof, voluntarily and of its own free will, the demand raised by the Applicant stood extinguished by accord and satisfaction and as a consequence thereof the arbitration clause contained therein ceased to exist and became inoperative. While annexing various documents in support of this contention, it is averred that it was not only on the basis of the No Claim Certificate submitted by the Applicant but it was also as a result of discussions and negotiations which took place between the parties from time to time and thus there was novation of the earlier contract. Respondent No.1 practically adopted the reply filed by Respondent No.2 in its affidavit.
6. As the entire controversy revolves on the language of the No Claim Certificate submitted by the Applicant to the Respondents and the attendant circumstances leading to issuance and thereafter immediately retracting the same, including the conduct of the parties, would be relevant to determine the controversy in question. One such No Claim Certificate can usefully be reproduced at this stage itself. The same reads as under:-
"NO CLAIM CERTIFICATE/DEED OF RELEASE/DEED OF DISCHARGE DECLARATION
We, M/s Ashoka Buildcon Pvt. Ltd., having our registered office at 1-2, Rivyer View, Ashok Stambh, Nashik - 422 002 do hereby solemnly affirm declare, and state as under:
1. WHEREAS, M/s. IRCON INTERNATIONAL LIMITED, acting on behalf of M/s. MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION LIMITED of Maharashtra Government awarded the contract to us, M/s. Ashoka Buildcon Pvt. Ltd. for the work of Construction Super Structure for Road Over Bridge at Dehre and Nepty Region under the Letter of Acceptance No. IRCON/RB/TENDER/ Dehre & Nepty/7 dated 19.03.1999 and contract agreement No.IRCON/BB/DEHRE & NEPTY/SUPER-STR/22 dated 22.04.1999/ 28.06.1999.
2. We, M/s. Ashoka Buildcon Pvt. Ltd., engaged in carrying on business with the registered office at 1-2, River View, Ashok Stambh, Nashik-422 002, have executed the aforementioned work in pursuant to M/s IRCON International Limited's Letter of Acceptance No.IRCON/BB/TENDER/Dehre & Nepty/7 dated 19.03.1999 and contract agreement No.IRCON/BB/DEHRE & NEPTY/SUPER-STR/11 dated 22.04.1999/28.06.1999.
3. Certain disputes arose during and after execution of the above said work. We, M/s. Ashoka Buildcon Pvt. Ltd., approached MSRDC requesting to resolve the disputes, and MSRDC constituted a committee for settlement of the disputes. The committee recommended payment of an amount of Rs.34.79 Lakhs in our favour, towards settlement of the disputes, communicated to us vide IRCON's letter No. IRCON/WZ/ROB-Main/01/239 dated 24.03.2003. After going through recommendations of the committee we represented vide our letter No.ABPL/Tech/MSRDC/Claims/21/4 dated 21.04.2003 for reconsideration of the recommendations, to which the committee did not agree to revise recommended amount of Rs.34.79 Lakhs, as communicated to us vide IRCON's letter No. IRCON/WZ/ROB-Main/1/461 dated 18.06.2003.
4. We, M/s. Ashoka Buildcon Pvt. Ltd., confirm that we have agreed to accept Rs. 34.79 lakhs (Rupees Thirty four Lakhs Seventy Nine Thousand only) towards full and final settlement of all our dues, claims, issues and contentions directly/or indirectly relating to the above said contract with M/s. IRCON International Ltd., under and with reference to above said contract agreement No. IRCON/BB/ DEHRE & NEPTY/SUPER-STR/11 dated 22.04.1999/28.06.1999 related to aforesaid work shall stand fully and finally settled and we hereby give complete and effective discharge and release to M/s. IRCON International Ltd.
NOW THIS DEED OF NO CLAIM WITNESSTH AND THE PARTY HEREBY AGREE AS FOLLOWS,
1. We, Ashoka Buildcon Pvt. Ltd. accept the revised recommendation of the above said committee as communicated to us vide IRCON's letter No. IRCON/WZ/ROB/Main/1/461 dated 18.06.2003 and agree to accept payment of Rs.34.79 lakhs (Rupees Thirty four lakhs Seventy Nine Thousand only) towards full and final satisfaction of all our disputes under the aforesaid contract.
2. We, Ashoka Buildcon Pvt. Ltd., hereby, undertake that no future recourse for any claim or dispute whatsoever shall be raised by us for consideration of MSRDC or IRCON or by Arbitration or in Court of Law in respect of all our past and existing claims or any future claims in respect of above said work and contract directly and/or indirectly related to the said contract/work as the same are satisfied in full.
3. We, Ashoka Buildcon Pvt. Ltd., therefore, furnish this undertaking that the said Contract Agreement No. IRCON/BB/DEHRE & NEPTY/SUPER-STR/11 dated 22.04.1999/28.06.1999 has been closed and all our claims/disputes etc. directly and/or indirectly attached and arising from the said contract/work shall stand fully satisfied upon receipt of aforesaid monies and that we release IRCON International Limited and MSRDC from all contractual obligations at our own free will, without any duress whatsoever.
4. We, Ashoka Buildcon Pvt. Ltd., irrevocably state, declare and confirm that now we have no claim, demand or action whatsoever, again IRCON International Limited and MSRDC and our all claims are duly settled, satisfied and being paid. We hereby, given complete unconditional and irrevocable discharge to IRCON International Limited and MSRDC subject to payment of the said amount of Rs.34.79 lakhs (Rupees Thirty four Lakhs Seventy Nine Thousand only) within a period of 30 days from the 04 day of May, 2006 (date of signing of NOC).
5. The aforesaid recitals shall form the integral part of this declaration.
SIGNED AND DELIVERED BY THE WITHINAMED ASHOKA BUILDCON PVT. LTD. ACTING THROUGH Shri. DILIP D. KOTHARI (Authorised Signatory) Sd/- DULY AUTHORISED TO SIGN THIS NO CLAIM CERTIFICATE DEED . Place : Mumbai Date : 04/05/2006 Witness Signature : Sd/- Signature : Sd/- |
7. As is evident, three separate No Claim Certificates for three contracts were issued on 4th May, 2006 which were retracted by the Applicant vide their letter dated 10th May, 2006. In other words, there was hardly any time lost by the Applicant in retracting its No Claim Certificate. According to the Applicant, it had tried its best to persuade the Respondents to reasonably settle its claim. The matter was then examined by the Claim Settlement Committee appointed for that purpose. In its letter dated 21st April, 2003 the Applicant laid emphasis on huge amounts/claims due to it. This was replied to by the Respondent by its letter dated 18th June, 2003 where it required the Applicant, while giving acceptance to total sum of Rs. 216.82 lakhs, to attend the office of the Respondents for signing of "No Claim Certificate" so that release of payment of award amounts could be processed. In other words, even for the processing of the awarded amounts submitting of No Claim Certificate was insisted by the Respondents all throughout. Of course, in the correspondence exchanged between the parties, it was stated by the Applicant that it was accepting the payment unconditionally and had also submitted No Claim Certificate. According to the Applicant, No Claim Certificate was a result of duress and financial crisis caused by the Respondents themselves and as such is not binding and it is entitled to refer the matter to the Arbitration, whilst according to the Respondents full and final settlement is a clear legal impediment in the way of the Applicant to claim any amounts and as such it amounts to novation of contract.
8. In the No Claim Certificate, it was, inter alia, also recorded as follows:-
"2. We, Ashoka Buildcon Pvt. Ltd., hereby, undertake that no future recourse for any claim or dispute whatsoever shall be raised by us for consideration of MSRDC or IRCON or by Arbitration or in Court of Law in respect of all our past and existing claims or any future claims in respect of above said work and contract directly and or indirectly related to the said contract/work as the same are satisfied in full.
3. We, Ashoka Buildcon Pvt. Ltd., therefore, furnish the undertaking that the said Contract Agreement No.IRCON/BB/DEHRE & NEPTY/SUPER-STAR/11 dated 22.04.1999/28.06.1999 has been closed and all our claims/disputes etc. directly and/or indirectly attached and arising from the said contract/work shall stand fully satisfied upon receipt of aforesaid monies and that we release IRCON International Limited and MSRDC from all contractual obligations at our own free will, without any duress whatsoever."
The above paragraphs even debar the Applicant from taking legal remedy available to it in law and as such is an undue influence, pressure or duress exercised by the Respondents upon the Applicant.
9. Learned Counsel appearing for the Applicant in support of his contentions relied upon the judgments of the Supreme Court in (i) National Insurance Co. Ltd. Vs. M/s. Boghara Polyfab Pvt. Ltd., 2008(4) R.A.J. 557 (SC) : [2008 ALL SCR 2533], (ii) M/s. Ambica Construction Vs. Union of India, 2007 Arb. W.L.J. 11 (SC), (iii) Chairman & M.D., N.T. P.C. Ltd. Vs. Reshmi Constructions, Builders & Contractors, 2004(1) R.A.J. 232 (SC), and (iv) the judgment of the Andhra Pradesh High Court in G. Venkata Reddy & Co., Engineers & Contractors Vs. Vice Chairman & Managing Director, A.P. Mineral Development Corporation Limited (APMDC Limited), 2008 Arb. W.L.J. 341 (AP). In all these cases, the plea of undue influence, furnishing of No Claim Certificate or recording complete satisfaction and giving up all claims had been taken by the Respondents. However, the Courts have taken the view that in the facts and circumstances of those cases, it was a matter which could not affect arbitration clause to the extent that it would stand wiped out or render the contract between the parties as non-existent.
10. This Court in the case of National Insurance Co. Ltd. [2008 ALL SCR 2533] (supra) had, after detailed discussion on the subject and referring to the judgment of the Supreme Court, held as under:-
"7. The learned counsel appearing for the applicant, while relying upon the judgment of the Supreme Court in the case of Chairman and MD, NTPC Ltd. Vs. Reshmi Constructions, Builders and Contractors, (2004)2 SCC 663, argued that the dispute with regard to the recording of full and final settlement or complete discharge is a question of fact, which can be gone into by the arbitral tribunal itself and in that regard arbitration clause can be invoked for reference of that dispute. In that case the Supreme Court was concerned whether accordance of satisfaction under the contract itself can be referred to the arbitration and the question was answered in the affirmative by the court and the court held as under:
"Normally, an accord and satisfaction by itself would not affect the arbitration clause for even when rights and obligation of the parties are worked out, the contract does not come to an end, inter alia, for the purpose of determination of disputes arising thereunder, and, thus, the arbitration agreement can be invoked; but if the dispute is that the contract itself does not subsist, the question of invoking the arbitration clause may not arise. But in the event it be held that the contract survives, recourse to the arbitration clause may be taken."
8. It may be noticed that the above judgment pronounced by the Supreme Court is prior to the law enunciated by the Supreme Court in the case of S.B.P & Co. Vs Patel Engineering and Ltd. Anr. - 2005(8) SCC 618 : [2006(1) ALL MR (S.C.) 156]. However, that itself would be of no prejudice to the interest of the applicant. There can be very serious dispute with regard to the genuineness and effect of the discharge voucher to be construed as full and final settlement, leaving no scope for subsisting any further dispute.
xxxxx xxxxx xxxxx
The question of coercion and undue influence should be kept open in the facts and circumstances of the case and parties should be permitted to lead evidence before the Arbitrator even on this issue."
11. This judgment of the Court was assailed before the Supreme Court, where the Supreme Court, in addition to the above, while dismissing the Appeal, held as under:-
"18. What is however clear is when a respondent contends that the dispute is not arbitrable on account of discharge of the contract under a settlement agreement or discharge voucher or no-claim certificate, and the claimant contends that it was obtained by fraud, coercion or under influence, the issue will have to be decided either by the Chief Justice/his designate in the proceedings under section 11 of the Act or by the arbitral Tribunal as directed by the order under section 11 of the Act. A claim for arbitration cannot be rejected merely or solely on the ground that a settlement agreement or discharge voucher had been executed by the claimant, if its validity is disputed by the claimant.
19. We may next examine some related and incidental issues. Firstly, we may refer to the consequences of discharge of a contract. When a contract has been fully performed, there is a discharge of the contract by performance, and the contract comes to an end. In regard to such a discharged contract, nothing remainsneither any right to seek performance nor any obligation to perform. In short, there cannot be any dispute. Consequently, there cannot obviously be reference to arbitration of any dispute arising from a discharged contract. Whether the contract has been discharged by performance or not is a mixed question of fact and law, and if there is a dispute in regard to that question, that is arbitrable. But there is an exception. Where both parties to a contract confirm in writing that the contract has been fully and finally discharged by performance of all obligations and there are not outstanding claims or disputes, courts will not refer any subsequent claim or dispute to arbitration. Similarly, where one of the parties to the contract issues a full and final discharge voucher (or no due certificate as the case may be) confirming that he has received the payment in full and final satisfaction of all claims, and he has no outstanding claim, that amounts to discharge of the contract by acceptance of performance and the party issuing the charge voucher/ certificate cannot thereafter make any fresh claim or revive any settled claim. Nor can he seek reference to arbitration in respect of any claim. When we refer to a discharge of contract by an agreement signed by both parties or by execution of a full and final discharge voucher/ receipt by one of the parties, we refer to an agreement or discharge voucher which is validly and voluntarily executed. If the party who has executed the discharge agreement or discharge voucher, alleges that the execution of such discharge agreement or voucher was on account of fraud/coercion/undue influence practiced by the other party and is able to establish the same, then obviously the discharge of the contract by such agreement/voucher is rendered void and cannot be acted upon. Consequently, any dispute raised by such party would be arbitrable."
20. While discharge of contract by performance refers to fulfilment of the contract by performance of all the obligations in terms of the original contract, discharge by 'accord and satisfaction' refers to the contract being discharged by reason of performance of certain substituted obligations. The agreement by which the original obligation is discharged is the accord, and the discharge of the substituted obligation is the satisfaction. A contract can be discharged by the same process which created it, that is by mutual agreement. A contract may be discharged by the parties to the original contract either by entering into a new contract in substitution of the original contract; or by acceptance of performance of modified obligations in lieu of the obligations stipulated in the contract. The classic definition of the term 'accord and satisfaction' given by the Privy Council in Payana Reena Saminathan Vs. Pana Lana Palaniappa, 41 IA 142 (reiterated in Kishorilal Gupta ) is as under:
"The 'receipt' given by the appellants and accepted by the respondent, and acted on by both parties proves conclusively that all the parties agreed to a settlement of all their existing disputes by the arrangement formulated in the 'receipt'. It is a clear example of what used to be well known as common law pleading as 'accord and satisfaction by a substituted agreement'. No matter what were the respective rights of the parties inter se they are abandoned in consideration of the acceptance by all of a new agreement. The consequence is that when such an accord and satisfaction takes place the prior rights of the parties are extinguished. They have in fact been exchanged for the new rights; and the new agreement becomes a new departure, and the rights of all the parties are fully represented by it."
12. In the case of M/s. Ambica Construction (supra), the Supreme Court relied upon the judgment of that Court in Reshmi Constructions, Builders & Contractors (supra), where the Court, while applying Maxim "Necessitas non habet legem", in respect of issuance of No Claim Certificate took the view that it could no longer be said that such a clause in the contract would be an absolute bar to a contractor rising claims which are genuine, even after submission of such No Claim Certificate.
13. In the present case, genuinity of the claim of the Applicant can hardly be disputed at least for the purpose of reference alone. It is not the case of the Respondents that they had themselves spelt out what was due and payable to the Applicant and the Applicant accepted the same without any protest and/or submitted the No Claim Certificate. In fact, even what according to the Respondents was due was not paid and the payment was kept back till submission of No Claim Certificate by the Applicant. Predominant position of the Respondents by itself was an influence over the Applicant to whom the amounts were due and were not being paid except for their signing the documents on the dotted lines commanded by the Respondents. This does not, in any way, destroy or completely extinguish the original contract and in particular the arbitration clause. The arbitration clause between the parties was wide enough to include reference of dispute to the Arbitral Tribunal during the subsistence of the agreement and even upon its conclusion if there was genuine dispute in regard to the claims raised by the Applicant. It is not novation of the contract in its true concept. The amounts awarded to the Applicant were not even 1/3rd of its claim. This itself shows that the complete claim of the Applicant was not justly and fairly dealt with and paid by the Respondents.
14. Reliance placed by the learned Counsel appearing for the Respondents upon the judgment of the Supreme Court in Nathani Steels Ltd. Vs. Associated Constructions, 1995 Supp (3) SCC 324 to contend that once the dispute is amicably settled between the parties finally, arbitration clause cannot be invoked by a party to resolve the same on the ground of mistake in settlement. Firstly, on facts, this judgment has no application to the case in hand. Secondly, the Supreme Court clearly held that once the parties arrived at a settlement in relation to a dispute arising under a Contract, that dispute or difference having been amicably settled, reference to arbitration may not lie. It must be noticed that the exception carved out by Court itself is that unless the settlement is set aside in proper proceedings, such an approach would be in conformity with the maintaining sanctity of contract. A settlement firstly is a voluntarily act and essentially should be result of free will of the parties and not under a duress or undue influence. Thus, I am unable to accept the objection raised by the Respondents to the maintainability of the petition as well as reference of a dispute to arbitration.
15. Another objection which has been raised on behalf of the Respondents while relying upon Section 64 of the Indian Contract Act is that even if a reference is to be made, the Petitioner should be called upon to deposit the amounts already received by it. In other words, it should be directed to restore the status as on the date of submission of the No Claim Certificates and consequent payment of amount under duress. This, according to learned Counsel appearing for the Applicant, cannot be done inasmuch as it has already done the work much in excess of payment received. It will be most inequitable to direct status quo ante as prayed.
16. In view of the provisions of Section 16 of the Arbitration and Conciliation Act, 1996, I am of the considered view that it is not necessary for this Court to examine the merit, or otherwise of the respective contentions raised by the parties. The parties are at liberty to raise the issue before the learned Arbitrator.
17. Resultantly, this Petition is allowed, leaving the parties to bear their own costs. The Respondents are hereby directed to appoint an Arbitrator in terms of Clause 29.1.2 of the Agreement to adjudicate upon the disputes between the parties.