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2001 DIGILAW 733 (KER)

ABY ABRAHAM MATHEW v. HINDUSTAN NEWSPRINT LTD.

2001-12-10

K.A.MOHAMMED SHAFI

body2001
ORDER K. A. MOHAMED SHAFI, J. - R.P. No. 439/2001 is filed by the respondent in M.F.A. 808/1997 to review the judgment dated 13.8.2001 passed by this Court in M.F.A. R.P. No. 440/2001 is filed by the respondent in M.F.A. No. 1300/1997 to review the judgment dated 13.8.2001 passed by this Court in the M.F.A. Since the petitioner and the respondent are the same and the issues involved in both the review petitions are identical and also a common judgment was pronounced in both the M.F.As., these review petitions are heard and disposed of by this common order. By the common judgment in M.F.A. Nos. 808 and 1300/1997 this Court allowed the appeals, set aside the decree and judgments passed by the lower Court and remanded the cases to the lower Court for fresh disposal in accordance with law after giving opportunity to both sides to adduced evidence. In O.P. Arb. 7/94 and O.P. Arb. 94/92 filed by the petitioner herein before the lower Court seeking to appoint an Arbitrator to adjudicate the dispute between the petitioner and the respondent with regard to the agreement entered into between the petitioner and the respondent, the respondent contended that the arbitration O.Ps. are not maintainable since there is no arbitrable issue as the contract between the petitioner and the respondent were discharged by acceptance of the final bill in full settlement of the entire claim by the respondent in the respective cases and the claim relating to escalation made by the petitioner is not sustainable since there is no provision in the agreement regarding escalation. The lower Court overruled both the contentions raised by the respondent and by judgment dated 2.11.1996 allowed both the O.Ps. and directed the respondent to refer the dispute raised by the petitioner to the Arbitrator named in the agreement for adjudication. Hence the respondent preferred the above appeals. This Court after finding that both the contentions raised by the respondent herein in the appeals require consideration by the lower Court, remanded the cases of the lower Court for fresh disposal after giving opportunity to both sides to adduce further evidence since this Court found the evidence already adduced insufficient to enter a finding on those issues. This Court after finding that both the contentions raised by the respondent herein in the appeals require consideration by the lower Court, remanded the cases of the lower Court for fresh disposal after giving opportunity to both sides to adduce further evidence since this Court found the evidence already adduced insufficient to enter a finding on those issues. The above review petitions are filed by the respondent in the above appeals contending that there is an error apparent on the face of the record since the legal point at issue has been well settled by repeated judicial pronouncements of this Court as well as the Supreme Court and judgment under review passed by this Court is contrary to the settled position of law and if the judgment passed by this Court is allowed to sustain, it will result in miscarriage of justice. It is also contended that certain salient points could not be placed before this Court by the counsel for the review petitioner before the judgment was passed and therefore those errors have crept in the judgment. The counsel for the respondent vehemently submitted that this Court passed the judgment under review in accordance with law after hearing the counsel appearing on both sides and there is absolutely no mistake in the judgment much less any error apparent on the face of the record warranting review of the judgment under Order 47, Rule 1 of C.P.C. It is well settled that when the law is settled by the Supreme Court, which is binding upon the High Courts and the lower Courts, a decision rendered by the court contrary to such law laid down by the Supreme Court constitutes an error apparent on the face of the record justifying review under Order 47, Rule 1 of the C.P.C. In the decision in Jamna Kuer vs. Lal Bhadur (AIR (37) 1950 Federal Court 131), the Federal Court has held that where there is an error apparent on the face of the record whether the error occurred by reason of the counsel's mistake or it crept in by reason of an oversight on the part of the Court is not a circumstances which can affect the exercise of jurisdiction of the Court to review its decision. In the decision in Venkatachalam, I.T.O. vs. Bombay D. & M. Co. In the decision in Venkatachalam, I.T.O. vs. Bombay D. & M. Co. Ltd. (AIR 1958 SC 875), the Supreme Court has held that mistake apparent from the record includes obvious errors of law and the same should be rectified by resorting to review. This Court in the decision in Pathrose Kuttan (AIR 1969 Kerala 186), following the above decision of the Supreme Court has held that the phrase 'error apparent on the face of the record' appearing in Order 47, Rule 1 is not limited to errors of fact but extends to errors of law as well. In the decision in Shatrunjit vs. Md. A. Azim Khan (AIR 1971 SC 1474), the Supreme Court has observed as follows : "It is the law which all along was there from 1952. The deeming provision is fully effective and operative as from 25 May, 1953 when the 1952 Act came into force. The result is that the Court is to apply the legal provisions as it always stood. It would, therefore, be error on the face of the record. The error would be that the law that was applied was not the law which is applicable." Therefore, if in fact the judgment under review is passed by this Court contrary to the law laid down by the Supreme Court it is amenable to the provisions of review under Order 47, Rule 1 of the C.P.C. being error apparent on the face of the record. The contention raised by the respondent in the O.P. and the appeal is that since the review petitioner had accepted the final bill in full and final settlement of the entire claim, that endorsement made by him estops from raising a claim for arbitration in the above O.Ps. since there is no arbitrable dispute between the parties. This Court remanded the O.Ps. to the trial Court for fresh disposal after setting aside the judgment to enable the parties to adduce further evidence in support of the contention of the respondent that there is full and final settlement of the contract and there is no arbitrable dispute between the parties and the contention of the review petitioner that there was no final settlement of the claim between the parties. The counsel for the review petitioner submitted that the question whether there is an accord and satisfaction of the contract is a matter to be adjudicated by the Arbitrator and the Civil Court has no jurisdiction to enter a finding as to whether there is full and final settlement of the disputes between the parties and whether there is an arbitrable issue between the parties or not. In the decision in Damodar Valley vs. K. K. Kar (AIR 1974 SC 158), the Supreme Court has observed as follows : "Similarly the question whether there has been a settlement of all the claims arising in connection with the contract also postulates the existence of the contract. The principles laid down by Sarkar, J., in Kishorilal Gupta Bros's case, (1960) 1 SCR 493 = AIR 1959 SC 1362, that accord and satisfaction does not put an end to the arbitration clause was not dissented from by the majority. On the other hand proposition (6) seems to lend weight to the views of Sarkar, J." In the decision in Bharat Heavy Electricals Ltd. vs. Amar Nath Bhan Prakash ((1982) 1 SCC 625), the Supreme Court has held that the question whether there was discharge of the contract by accord and satisfaction or not is a dispute arising out of the contract and to be referred to arbitration and therefore, an application under Section 20 of the Arbitration Act filed by a party to the contract must be allowed and the dispute between the parties including the aforesaid question should be referred to arbitration. In the decision in Union of India vs. M/s. L.K. Ahuja & Co. (AIR 1988 SC 1172 = 1988 (1) Arb. LR 375), the Supreme Court has observed as follows : "In order to be entitled to ask for a reference under Section 20 of the Act, there must be an entitlement to money and a difference or dispute in respect of the same. It is true that on completion of the work, right to get payment would normally arise and it is also true that on settlement of the final bill, the right to get further payment gets weakened but the claim subsists and whether it does subsist, is a matter which is arbitrable." In the decision in Jayesh Engineering Works vs. New India Assurance Co. Ltd. ((2000) 10 SCC 178 = 2000 (Suppl.) Arb. Ltd. ((2000) 10 SCC 178 = 2000 (Suppl.) Arb. LR 458 (SC)), the Supreme Court has observed as follows : "Whether any amount is due to be paid and how far the claim made by the appellant is tenable are matter to be considered by the Arbitrator. In fact, whether the contract has been fully worked out and whether the payment have been made in full and final settlement are questions to be considered by the Arbitrator when there is a dispute regarding the same." From the above pronouncements of the Supreme Court from the year 1974 onwards consistently till date it is clear that the question whether the contract is discharged by accord and satisfaction is a matter to be decided by the Arbitrator. The counsel for the respondent submitted that in the decision in Hindustan Paper Corporation vs. N. A. Mathew (1987 (1) KLT 241), a Division Bench of this Court has held that where the parties have by mutual consent recorded satisfaction of all the claims which arose under the contract and full and final payment has been made and accepted, nothing remains to be done under the contract and the contract ceased to exist and in such circumstances there is no arbitrable issue to be referred to the Arbitrator. In that judgment the Division Bench of this Court has observed as follows : "Where the parties have by mutual consent recorded satisfaction of all claims which arose under the contract, and full and final payment has been made and accepted, nothing remains to be done under the contract, and the contract has therefore ceased to exist. In such circumstances, counsel points out, the arbitration clause, though collateral and supplementary, but being an integral part of the contract, has no separate life of its own. This argument is perfectly valid provided the facts support it." Relying upon the above ruling the counsel for the respondent submitted that since the petitioner has made endorsement in the final bill that it is in full discharge of his claim due from the respondent and therefore, applying the principles laid down in the above decision of the Division Bench of this Court the entire contract is discharged and nothing subsists between the parties to be referred to arbitration under Section 20 of the Arbitration Act. The above contention of the respondent is not sustainable in view of the consistent dictum laid down by the Supreme Court that whether the contract has been fully worked out and whether the payments have been made in full and final settlement are questions to be considered by the Arbitrator. Moreover, in the decision in Ittyrah vs. State of Kerala (ILR 1987 (1) Kerala 182), one of the Judges who constituted the Division Bench which pronounced the judgment Hindustan Paper Corporation vs. N. A. Mathew (supra), has held that whether the amount has been accepted by the claimant in full and final settlement itself is a question which the Arbitrator has to decide. Though the judgment reported in ILR 1987 (1) Kerala 182 was pronounced on 26.5.1986 and the judgment reported in 1967 (1) KLT 241 was pronounced by the Division Bench on 15.10.1986, there is no reference to the decision reported in ILR 1987 (1) Kerala 182 in the judgment pronounced by the Division Bench. Moreover, in a subsequent decision in Cochin Refineries Ltd. vs. C.S. Company (1987 (2) KLT 637 = 1988 (2) Arb. LR 189), a Single Judge of this Court has referred to the above decision reported in 1987 (1) KLT 241 and observed that the decision is confined to the facts of M.F.A. 130/1986 which came up for consideration of the Division Bench in that reported decision wherein the parties had by mutual consent recorded satisfaction of all the claims and full and final payment has been made and accepted leaving nothing to be done under the contract and the contract itself cease to exist and cannot be extended to other cases where the facts are different. Moreover, in the latest decision of the Supreme Court reported in (2000) 10 SCC 178 referred to above, the Supreme Court has laid down that the questions whether contract has been fully worked out and whether the payments have been made in full and final settlement are questions to be considered by the Arbitrator when there is a dispute regarding the same. Therefore, in this case the question whether the contract is fully discharged by the payment of the final bill in full satisfaction of the contract is a matter to be considered and decided by the Arbitrator and not by the Court. Therefore, in this case the question whether the contract is fully discharged by the payment of the final bill in full satisfaction of the contract is a matter to be considered and decided by the Arbitrator and not by the Court. It is true that the petitioner has raised the contention that he made the endorsement in the bill under duress and compulsion in order to facilitate the passing of the bill for payment and not intending to record full satisfaction of the contract. Even though it is contended by the counsel for the respondent that the above aspect whether the endorsement has been made voluntarily recording full satisfaction and discharge of the contract or due to compulsion by the petitioner is to be decided by the Civil Court and not by the Arbitrator, it is not sustainable in view of the categoric pronouncement of the Supreme Court referred to above. Under the circumstances it is clear that the judgment passed by the lower Court directing to refer the dispute to the Arbitrator is perfectly legal and sustainable. Hence, the judgment passed by this Court in the above M.F.As. reversing the judgment passed by the trial Court and remanding the same to the trial Court for disposal, is manifestly erroneous and in contravention of the law laid down by the Supreme Court in that behalf. Hence, there is error apparent on the face of the record in the common judgment passed by this Court in the above M.F.As. which is liable to be reviewed. Therefore, the above review petitions are allowed. The common judgment passed by this Court dated 13.8.2001 in the above M.F.As., are reviewed. The judgments passed by the lower Court are confirmed and the appeals are dismissed.