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1994 DIGILAW 297 (ORI)

J. K. AGARWALLA v. NATIONAL ALUMINIUM CO. LTD.

1994-10-03

ANIL DEV SINGH

body1994
JUDGMENT A.K. Padhi, J. - Challenging the order dated 24.8.1993 passed by Subordinate Judge, Angul in Arbitration Misc. Case No. 58 of 1990 allowing the application under Section 33 of the Arbitration Act, 1940 this Civil Revision has been filed. 2. The brief facts necessary for adjudication of this Civil Revision are stated hereunder. Opposite Party No.1, The National Aluminium Company Limited (in short NALCO), an undertaking of Government of India dealing with manufacturing of Aluminium. 3. Opposite Party No. 1 called for tender for work of "Balance Work of Construction of Facility "Building". The petitioners being the lowest tenders, his tender was accepted and after due formalities, opposite party No. 1 entered into an agreement with the petitioner for the work "Balance Works of construction of Facility Building" vide work order dated 10.12.1984. One Development Consultants Private Limited (DCPL) was appointed as Consulting Engineers to supervise the work to do the needful according to the instruction of the opposite party-NALCO. The contract price between parties was fixed at Rs. 12,58,000/-. Written agreement between the parties was also executed after which petitioner started construction as per work order. The work was completed on 31.3.1986. During continuance of work, petitioner was submitting the running bills. In the year 1986, petitioner-contractor submitted his final bill. He also submitted 'no claim certificate' which is required to be submitted as per the terms of the agreement. On 1.8.1989, measurement were made and the petitioner-contractor accepted the same. On 15.12.1989 the amount as per the final bill was paid by the NALCO to the petitioner. On 5.7.1990 the petitioner-contractor raised dispute about the final bill and claimed reimbursement of Rs. 32,61,902/- on the ground that he has executed extra work as per direction of competent authorities. On 10.7.1990, notice was issued by the petitioner calling upon the opposite parties, for reimbursement of the demanded amount and also calling upon the opposite party to refer the matter for arbitration in terms of clause 88 of the general conditions of the contract as per the agreement. 4. On 10.7.1990, notice was issued by the petitioner calling upon the opposite parties, for reimbursement of the demanded amount and also calling upon the opposite party to refer the matter for arbitration in terms of clause 88 of the general conditions of the contract as per the agreement. 4. On receipt of the aforesaid notice, opposite party filed an application under Section 33 of the Arbitration Act, 1940 praying for a declaration that there existed no arbitration agreement between the parties as contractor-petitioner had received the entire amount as per the final bills submitted by him for which the contract between the parties had come to an end, and therefore, arbitration clause had perished along with the contract between the parties. The petitioner-contractor no more can invoke the arbitration clause for a appointment of an arbitrator. The application under Section 33 of the Arbitration Act, 1940, was registered as Arbitration Misc. Case No. 58/90. 5. On receiving notice, petitioner-contractor appeared and filed its written statement. 6. Various documents were exhibited in the court on behalf of the NALCO and petitioner-contractor. After considering documents, the learned Subordinate Judge declared that arbitration in between the parties was no more available to be invoked as the contract between the parties had come to an end and therefore, the petitioner-contractor is not entitled to call upon NALCO to appoint any arbitrator under the Arbitration Clause 88 of the general conditions of the contract in between the parties. 7. Challenging this order, Mr. Pai learned counsel appearing for the petitioner submitted that since bill submitted by the petitioner-contractor arose out of the main agreement in between the parties, arbitration clause was still operative. Acceptance of final bill did not bring the contract between the parties to an end. The demand of the amount was the ground of escalation of prime and for the additional work petitioner had undertaken as per the direction of the authorities. Execution of additional work and escalation price during continuance of the contract, being part of the agreement between the parties, even after the payment of the final bill, arbitration Clause 88 could be invoked by the petitioner contractor. Letter dated 5th July, 1990 indicates that Arbitration Clause still subsisted. 8. Mr. I. Mohanty appearing on behalf of NALCO, submitted that final bill was submitted by the contractor on 22.9.1986 as per Ext. Letter dated 5th July, 1990 indicates that Arbitration Clause still subsisted. 8. Mr. I. Mohanty appearing on behalf of NALCO, submitted that final bill was submitted by the contractor on 22.9.1986 as per Ext. 1 along with 'no claim certificate.' The petitioner-contractor received the amount as claimed by him in the final bill on 15.12.1989. The contractor-petitioner received the payment without any protest. After the work was executed and the petitioner-contractor received the money, in final settlement, the contract between the parties has come to an end. It was further submitted that as per the written statement of petitioner-contractor, the claim amount were not executed in pursuance of agreement between the parties for which also arbitration clause 88 cannot be invoked. 9. From the rival contentions of both the parties, the most question that arises for consideration is whether in the facts and circumstances as aforesaid, the conclusion of Subordinate Judge, Angul that the contract between the parties came to an end and therefore, the petitioner-contractor can no more invoke the arbitration clause as it perished along with the contract, is in accordance with law or the same can be interfered with by this court on a conclusion that the same is erroneous. 10. In order to decide the question in issue, clause 88 which is arbitration clause of the General Conditions of Contract between the parties needs notice. 10. In order to decide the question in issue, clause 88 which is arbitration clause of the General Conditions of Contract between the parties needs notice. "88 Arbitration All disputes or differences whatsoever which shall at any time arise between the parties hereto touching or concerning the works or the execution or maintenance thereof this Contract or the rights touching or concerning the works or the execution or maintenance thereof of this contract of the construction meaning operation or effect thereof or to the rights or liabilities of the parties or arising out of or in relation thereto whether during or after completion of the contract or whether before or after determination, for closure or breach of the Contract (other than those in respect of which the decision of any person is by the Contract expressed to be final and binding) shall after written notice by either party to the contract either of them and to the Appointing Authority hereinafter mentioned be referred for adjudication to a sole Arbitrator to be appointed as hereinafter provided." Admitted facts are that the petitioner and NALCO had entered into an contract for the work "Balance work of construction of facility building." As per the agreement between the parties, it is the contractor who is required to prepare and submit the bills. Final bill was submitted in the year 1986 by petitioner. This final bill was checked and cleared by NALCO. The petitioner received the final payment on the final bills submitted by him with the endorsement which has been exhibited as Ext. 1/a. "Ext. 1/a. Accepted the bill in full and final settlement. We do not have any claim except the final bill. Sd/- 1.8.1989." This no claim certificate clearly indicated that the petitioner had no claim outstanding against NALCO on that day. Thereafter, on 3.7.1990, the petitioner-contractor raised his dispute about the final bill and claimed reimbursement of his payment of Rs. 32,61,902/- and issued notice calling upon the opposite party to appoint a Arbitrator on 10.7.1990. In the written statement filed by opposite party-contractor to the application under Section 33 of the Arbitration Act, 1940, the petitioner has stated. "......... Thereafter, on 3.7.1990, the petitioner-contractor raised his dispute about the final bill and claimed reimbursement of his payment of Rs. 32,61,902/- and issued notice calling upon the opposite party to appoint a Arbitrator on 10.7.1990. In the written statement filed by opposite party-contractor to the application under Section 33 of the Arbitration Act, 1940, the petitioner has stated. "......... signed the final bill in full and final settlement of the same in measurement book on 1.8.1989 it is relevant as well as important to note that while signing the measurement book on 1.8.1989 the opposite party clearly wrote therein that except the final bill he has no other claim against NALCO ........ The opposite party submits hat as this matter of Arbitration for which notice has been given the dispute arose for additional nature of work not within the contract of Rs. 12,58,000/-, but additional work is not within the perifery of that contract of 12.58 lakhs to 19.77 lakhs, the petitioner's contention that the Arbitration clause has ceased is a wrong interpretation of fact and law. In fact, the claim of the opposite party is just and should be referred for arbitration as per clause 88 of the General Conditions of Contract. As this is not an objection for 12.58 lakhs but for the additional nature of work done by the opposite party the objection at that stage would have been meaningless and the opposite party has rightly raised the objection at the proper time and at the proper place. The opposite party cannot be debarred to raise this objection and cannot be estopped. It may be mentioned here that the admitted fact in the petition asked by the opposite party to finalise the material reconciliation relating to the store materials issued to the opposite party on 5.5.1988 which is two years thereafter indicates the callousness and putting the opposite party into harassment by the petitioner ...... In fact, there was no opportunity left to the opposite party for such objection as the present dispute is for the additional work covering from 12.58 lakhs to 19.77 lakhs." 11. In M/s. Unit Construction Co. Pvt. Ltd. v. M/s. National Aluminium Co. Ltd. ((1994) 1 Ori LR 155), almost identical question of law basing on similar facts came up for consideration before this court. In M/s. Unit Construction Co. Pvt. Ltd. v. M/s. National Aluminium Co. Ltd. ((1994) 1 Ori LR 155), almost identical question of law basing on similar facts came up for consideration before this court. The question arose before his Lordship was, after acceptance of final bill, any dispute raised by the contractor with NALCO is arbitrator or the arbitration clause perished on the conclusion of the agreement between the parties. In the aforesaid decided case, the contractor-petitioner had submitted the final bill and had received payment with a 'no claim certificate' and the opposite party in the decided case was same as opposite party No. 1 in this case i.e., NALCO. Considering the above facts and various decisions such as (Union of India v. M/s. L.K. Ahuja & Co. ( AIR 1988 SC 1172 ), (Union of India v. Mehta and Associates, Puna ( AIR 1990 Bom 45 ) his Lordship observed : "Agreement between the parties with an arbitration clause therein which marks a claim arbitrable and a reference could be made to the arbitrator. But if the agreement itself has come to an end, an arbitration clause of the agreement cannot survive independently and consequently, any further dispute or claim cannot become arbitrable and any reference to an arbitrator by invoking such arbitration clause which does not subsist is impetent and, therefore the learned Sub-ordinate Judge rightly held the reference made in the present case to be incompetent." His Lordship was also required to answer the question whether application under. Section 33 of the Arbitration Act, 1940 was at all entertainabel. Considering the ratio of (Jawahar Lal Barman v. Union Of India ( AIR 1962 SC 378 ) his Lordship opined application under Section 33 of the Arbitration Act to be entertainable. The facts of this case are almost identical to that of the aforesaid Civil Revision. 12. As per the agreement between the parties, it is the contractor who is required to submit the final bill as per clause 7.2 at page 59 of the General Conditions of Contract and on his submission of final bill, NALCO was to finalise his final bill. Therefore, it is the petitioner who had brought the contract to an end by his submission of final bill. Therefore, it is the petitioner who had brought the contract to an end by his submission of final bill. This is also inconsonance of the written statement filed by the petitioner in paragraph 14 that notice for arbitration was given for the dispute that arose for additional nature of work and not within the contract of 1259 lakhs, the specific statement being "additional work is not within the perifery of that contract of 12.59 lakhs to 19.77 lakhs." 13. In that view of the matter, considering the provision of clause 88 of the General Conditions of contract and submission of the final bill by the petitioner and acceptance of the final payment on 1.8.1989, I hold that the agreement between the parties came to an end. It is the agreement between the parties with as arbitration clause therein which makes a claim arbitrable, but since the agreement itself has come to an end, the arbitration clause of the agreement cannot survive independently and therefore any further dispute between the parties cannot become arbitrable. I find no infirmity in the conclusion arrived by the learned Subordinate Judge, Angul that the arbitration clause along with agreement had come to an end at the time of issuance of notice for arbitration is not assailable and therefore, the Civil Revision has no merit and the same is dismissed, and in the circumstances of the case there shall be no order as to costs. Revision dismissed. *-*-*-*-*