2020 (6) TMI 828 - HC - Indian Laws

Court dismisses Arbitration Application due to full satisfaction under Section 65 Indian Contract Act

M/s Sree Vishnu Contractions Versus The Engineer in Chief AND Others.

The court dismissed the Arbitration Application, finding that the applicant's acceptance of the Final Bill and the 'no further claim' certificate ... Seeking to appoint an Arbitrator for resolution of disputes between the parties - construction of ADM-cum- Tech Accommodation (13) rooms at Hakimpet, Hyderabad - accord and final satisfaction as pleaded by the respondents through the Final Bill, as pleaded by the respondents in terms of Condition No.65 of IAFW 2249 (GCC) - applicant prima facie established coercion and undue influence in signing the Final Bill or not. HELD THAT:- It is pertinent to note that the applicant failed to offer any plausible explanation for not raising the issue of coercion and undue influence immediately after payment under Final Bill. The applicant, after receiving the payments under Final Bill, had signed ‘no further claim’ certificate. Since the full and final payment is made in the Final Bill and the applicant signed ‘no further claim’ certificate, as the arbitration application is liable to be dismissed on that ground alone, since the applicant signed the same without any protest/objection. A party who comes to the court, must come with clean hands. When fraud, undue influence and coercion is pleaded, at least some factual foundation must be laid in the pleadings, which is lacking - In the present application, by way of passing reference made allegations of undue influence and coercion, as such, this application is liable to be dismissed on that ground alone. When once there is full and final satisfaction, there exists no arbitral dispute, as rightly contended by the learned counsel for the respondents. Since invocation of arbitration is prior to Amendment Act, 2015, the provisions of said Act, 2015 are not applicable to such arbitral proceedings which have commenced in terms of the provisions of Section 21 of the Principal Act, unless otherwise agreed by the parties - When once one of the parties adopts a path of full understanding and executes a document in furtherance of the same, it is not open to him to take recourse of arbitration thereafter. In the decision relied upon by the learned counsel for the respondents in PK. RAMAIAH VERSUS C& MD NATIONAL THERMAL POWER CORPORATION NTPC [1993 (10) TMI 346 - SUPREME COURT], the Hon’ble Apex Court held that if accord and satisfaction is established, no arbitral dispute exists for referring the matter to arbitration. There is no merit in the Arbitration Application. Accordingly, the same is dismissed. Issues Involved:1. Accord and final satisfaction through the Final Bill as per Condition No. 65 of IAFW 2249 (GCC).2. Establishment of coercion and undue influence in signing the Final Bill.Issue-wise Detailed Analysis:1. Accord and Final Satisfaction as per Condition No. 65 of IAFW 2249:The applicant entered into a contract for the construction of ADM-CUM-Tech Accommodation at Hakimpet, Hyderabad, and completed the work as per the contract terms. The applicant presented the Final Bill, which was paid by the respondents, and a 'no further claim' certificate was signed by the applicant. The respondents argued that the applicant signed the Final Bill without any specific claims or protests, fulfilling the accord and satisfaction as per Section 65 of the Indian Contract Act. The applicant's subsequent request for arbitration was based on claims for additional work, which the respondents disputed, stating that all payments were made and no further claims were valid after the Final Bill. The court noted that the applicant did not mention additional work or payments in the notice invoking arbitration clauses 70 and 71 of IAFW 2249. The court concluded that the applicant's acceptance of the Final Bill and signing of the 'no further claim' certificate indicated full and final satisfaction, thereby negating any arbitral dispute.2. Establishment of Coercion and Undue Influence:The applicant alleged coercion and undue influence in signing the Final Bill and the 'no further claim' certificate. However, the court found that these allegations were not substantiated in any correspondence or notices by the applicant. The applicant failed to provide a plausible explanation for not raising these issues immediately after the payment under the Final Bill. The court emphasized that a party must come to court with clean hands and provide a factual foundation for claims of fraud, undue influence, or coercion. In this case, the applicant's allegations were deemed to be bald statements without any supporting evidence. The court cited precedents, including the Supreme Court's decision in National Insurance Co. Ltd. v. Boghara Polyfab Pvt. Ltd., which categorized issues that the court must decide, including whether the parties have concluded the contract by recording satisfaction of their mutual rights and obligations. The court found that the applicant failed to establish a prima facie case of coercion or undue influence, leading to the conclusion that no arbitral dispute existed.Conclusion:The court dismissed the Arbitration Application, concluding that the applicant's acceptance of the Final Bill and the 'no further claim' certificate indicated full and final satisfaction, and the applicant failed to establish coercion or undue influence. The court emphasized that without a prima facie case, the matter could not be referred to arbitration. The application was dismissed with no order as to costs, and any pending miscellaneous petitions were also closed.