Accord and satisfaction barred arbitration of a labour escalation claim after full and final settlement was accepted and acted upon.

A labour escalation claim ceased to be arbitrable once the contractor accepted the Government's quantified offer in writing as full and final settlement, received payment, and expressly withdrew the claim in the suit. The Court treated this conduct as accord and satisfaction, meaning the dispute no longer subsisted as an arbitration controversy under Section 20 of the Arbitration Act, 1940. A later challenge to the correctness of the settled amount could not reopen a claim that had already been concluded by settlement.

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Issues: Whether the labour escalation claim stood concluded by accord and satisfaction so as to exclude arbitration under Section 20 of the Arbitration Act, 1940.

Analysis: The contractor accepted the Government's quantified offer in writing as a full and final settlement of the labour escalation claim and thereafter received payment, coupled with an express withdrawal of that claim in the suit. Once the settlement was accepted and acted upon, the dispute regarding labour escalation ceased to subsist as an arbitrable controversy. A later challenge to the correctness of the amount could not revive an arbitration reference for that settled claim.

Conclusion: The labour escalation claim was finally settled and was not open to arbitration.

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