TaxTMI 
TaxTMI 
2018 (2) TMI 411
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt-Contractor on 17.03.2008. The total contract value as per the Letter of Acceptance (LOA) was Rs. 163,25,68,576/- which was subsequently revised to Rs. 195,68,24,399.02/- vide letter dated 20.09.2010 and the completion period was also extended upto 30.11.2010. (b) On 21.09.2012, the Contractee Company submitted a No Dues/No Claim Certificate certifying the payment of all the bills and in total settlement of all the claims whatsoever against the Contract. Thereafter, on 10.10.2012, the appellant herein-the Contractor Company made a payment of the final bill of Rs. 20.34 crores to the Contractee Company. (c) Subsequently, on 24.10.2012, the Contractee Company withdrew letter dated 21.09.2012 for "No Dues/No Claim Certificate" stating that it was a pre-requisite condition for release of their long due legitimate payment against the works executed under the Contract and the same was furnished by the Contractee Company under duress and coercion of the appellant-Contractor. (d) The Contractee-Company, vide letter dated 12.01.2013 to the appellant-Contractor, submitted a claim of Rs. 96,88,48,642.00 for the losses incurred during execution of the contract at Mangalore. On 19.06.2013,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e RA Bills in full but it was to be done merely on the assessment of the Engineer-in charge. The High Court erred in referring to few letters exchanged much prior to the Final Bill. In fact, the alleged claims were never brought up at the time of issuance of Final Bill or No Dues Certificate on 21.09.2012 and now at this stage it is not open for the contractee-Company to raise the issue of losses incurred during the execution of the Contract. 8) Learned senior counsel finally contended that when both the parties to a contract confirm in writing that the contract has been fully and finally discharged by performance of all obligations and there are no outstanding claims or disputes, court will not refer the subsequent claim or dispute to arbitration. There was complete accord and satisfaction of the contract between the parties and nothing further was left to be done by either parties. The High Court was not right in allowing the petition filed by the contractee-Company and no case is made out for referring the dispute to Arbitration and also for the payment of the alleged amount to the contractee-Company. 9) Per contra, learned counsel for the contractee-Respondent No. 1 herein su....
X X X X Extracts X X X X
X X X X Extracts X X X X
....continue with the work due to various reasons like pooja, shifting of idols, non-availability of free encumbrance of site, obstruction in the blasting work, stoppage of hard rock blasting, issues with respect to work to be given to local contractors, non-vacation of project displaced families, permission for forest clearance, permission for shifting of wooden logs etc. and the huge expenditure as disclosed in the claim was incurred by the contractee-Company due to the factors attributable to the appellant-Contractor. 13) Learned counsel finally contended that the "No Dues Certificate" was filed by the contractee-Company under duress owing to their huge payment pending towards the appellant-Contractor which was rightly withdrawn for the losses incurred due to the appellant-Contractor. Further, when there is an Arbitration clause in the agreement, the contractee Company has the right to invoke the same. The High Court was right in allowing the petition filed by the contractee-Company and no interference is sought for by this Court in this regard. Discussion: 14) The appellant Contractor-ONGC Mangalore Petrochemicals Ltd. invited tender for "Award of Work for Site Grading, Construc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....its Arbitrator. The contractee-Company filed a Civil Miscellaneous Petition under Section 11 of the Arbitration and Conciliation Act, 1996 (in short 'the Act') for the appointment of an Arbitrator in lieu of the nominee arbitrator of the appellant-Contractor so that the said arbitrator along with the nominee arbitrator already appointed by the contractee-Company agree upon the appointment of the third/presiding arbitrator for constitution of a three member Arbitral Tribunal as per the agreed terms of the Contract for adjudicating upon the dispute arising out of execution of the Contract. 17) Learned senior counsel for the appellant-Contractor, after taking us through the material on record, submitted that the contract has come to an end and the obligations therein have been discharged and there is no point of raising a belated claim in the form of losses incurred during the execution of the Contract that too after submitting the Final Bills as well as the No Dues Certificate. In support of his claim, learned senior counsel relied upon a decision of this Court in Union of India and Others vs. Master Construction Co. (2011) 12 SCC 349 wherein it was held as under:- "18. In our opi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....oucher/receipt by one of the parties, we refer to an agreement or discharge voucher which is validly and voluntarily executed. If the party which 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 practised 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. * * * 51. The Chief Justice/his designate exercising jurisdiction under Section 11 of the Act will consider whether there was really accord and satisfaction or discharge of contract by performance. If the answer is in the affirmative, he will refuse to refer the dispute to arbitration. On the other hand, if the Chief Justice/his designate comes to the conclusion that the full and final settlement receipt or discharge voucher was the result of any fraud/coercion/undue influence, he will have to hold that there was no discharge of the contract and consequently, refer the dispute to arbitration. Alternatively, where the Chi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....payment on 19-6-2000, no grievance was raised or lodged by the contractor immediately. The authority concerned, thereafter, released the bank guarantee in the sum of Rs. 21,00,000 on 12-7-2000. It was then that on that day itself, the contractor lodged further claims." 9. It is therefore clear that a bald plea of fraud, coercion, duress or undue influence is not enough and the party who sets up a plea, must prima facie establish the same by placing material before the Chief Justice/his designate. Viewed thus, the relevant averments in the petition filed by the respondent need to be considered, which were to the following effect: "(g) That the said surveyor, in connivance with the respondent Company, in order to make the respondent Company escape its full liability of compensating the petitioner of such huge loss, acted in a biased manner, adopted coercion, undue influence and duress methods of assessing the loss and forced the petitioner to sign certain documents including the claim form. The respondent Company also denied the just claim of the petitioner by their acts of omission and commission and by exercising coercion and undue influence and made the petitioner Company sign....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e of a contract by an agreement signed by both the 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 which 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 practised 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. But in case the party is not able to establish such a claim or appears to be lacking in credibility, then it is not open to the courts to refer the dispute to arbitration at all. 20) In support of the claim of duress and coercion while issuing the said Certificate, learned counsel for the contractee-Company has taken us through a decision of this Court in National Insurance Company Limited vs. Boghara Polyfab Private Limited (2009) 1 SCC 267 wherein it was held as under:- "24. What is however clear is when a respondent ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the issue himself, refer the matter to the Arbitral Tribunal with a specific direction that the said question should be decided in the first instance. 52. Some illustrations (not exhaustive) as to when claims are arbitrable and when they are not, when discharge of contract by accord and satisfaction are disputed, to round up the discussion on this subject are: (i) A claim is referred to a conciliation or a pre-litigation Lok Adalat. The parties negotiate and arrive at a settlement. The terms of settlement are drawn up and signed by both the parties and attested by the conciliator or the members of the Lok Adalat. After settlement by way of accord and satisfaction, there can be no reference to arbitration. (ii) A claimant makes several claims. The admitted or undisputed claims are paid. Thereafter negotiations are held for settlement of the disputed claims resulting in an agreement in writing settling all the pending claims and disputes. On such settlement, the amount agreed is paid and the contractor also issues a discharge voucher/no-claim certificate/full and final receipt. After the contract is discharged by such accord and satisfaction, neither the contract nor any dispu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ondent. Therefore, the accord and satisfaction is binding and valid and there cannot be any subsequent claim or reference to arbitration." 21) Learned counsel further relied upon a decision of this Court in R.L. Kalathia & Co. vs. State of Gujarat (2011) 2 SCC 400 wherein it was held as under:- "10. Before going into the factual matrix on this aspect, it is useful to refer the decisions of this Court relied on by Mr Altaf Ahmed. In NTPC Ltd. v. Reshmi Constructions, Builders & Contractors1 which relates to termination of a contract, one of the questions that arose for consideration was: "(i) Whether after the contract comes to an end by completion of the contract work and acceptance of the final bill in full and final satisfaction and after issuing a 'no-demand certificate' by the contractor, can any party to the contract raise any dispute for reference to arbitration?" While answering the said issue this Court held: "27. Even when rights and obligations of the parties are worked out, the contract does not come to an end inter alia for the purpose of determination of the disputes arising thereunder, and, thus, the arbitration agreement can be invoked. Although it may not be ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t Mangalore. It has been claimed that the contractee-Company could not continue with the work due to various reasons like pooja, shifting of Idols, non-availability of free encumbrance of site, obstruction in the blasting work, stoppage of hard rock blasting, issues with respect to work to be given to local contractors, non-vacation of project displaced families, permission for forest clearance, permission for shifting of wooden logs etc. and the huge expenditure as disclosed in the claim was incurred by the contractee-Company due to the factors attributable to the appellant-Contractor. Clause 6.6.0 of the General Conditions of Contract deals with "Claims by the Contractor" (contractee in the case at hand). Clause 6.6.1.0. of the Contract states that in case of a claim of extra compensation or remuneration, the Contractee shall give notice in writing of its claim within 10 days from the date of issue of orders or instructions related to any works for which the Contractee claims such additional payment. The notice shall give full particulars of the nature of such claim, grounds on which it is based and the amount claimed. Unless and until notice is given, the Contractor shall not be....