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2012 DIGILAW 844 (MP)

M. A. P. Projects v. Sahara Prime City Limited

2012-09-03

PRAKASH SHRIVASTAVA

body2012
ORDER 1. The petitioner has filed the present application under section 11(5) and 8 of the Arbitration and Conciliation Act, 1996 with a prayer to appoint the arbitrator to resolve the dispute between the parties. 2. The petitioner’s case in brief is that a contract was entered into between the parties for construction work and the petitioner by accepting the terms and conditions had signed the work order. Thereafter a supplementary work order was got executed. There was some delay in the execution of the contract, therefore, the dispute arose between the parties and on 27.11.2006 the petitioner was informed about the decision to hold the construction work till further instructions. No instructions thereafter were given to recommence and/or complete the incomplete work. According to the petitioner he was forced to sign an undertaking as a pre- condition for release of cheque of Rs.9,86,512/- notwithstanding its claim being unsettled for various other issues. Vide communication dated 19.6.2010, the petitioner had made a request to the respondents to settle the claim or refer the matter to arbitration. The said letter was duly received and acknowledged by D.K. Singh, Project Manager of the respondent but no action was taken in pursuance to the said letter, therefore, the petitioner approached this Court. 3. The respondent has filed the reply raising the plea that on 31.8.2010 a meeting took place at the Zonal Office of the respondent at Nagpur for settlement of the dispute between the petitioner and the respondent, in which the settlement took place and the petitioner has been paid Rs.9,86,612/- by cheque as full and final settlement. A further issue has been raised that a statutory notice of appointment of arbitrator was not sent. The receipt of the notice dated 19.6.2010 has been denied. 4. In the rejoinder the petitioner has raised the issue that the undertaking (Annexure P-6) and the minutes of meeting dated 30.8.2010 (Annexure R-1) were got executed by undue influence and coercion, therefore, they are not binding. 5. In the present matter the execution of the agreement containing the arbitration clause is not in dispute. The clause No.24.0 relating to the settlement of disputes reads as under : “24.0 Settlement of disputes. -- If any dispute arises under this work it shall be first settled amicably between the parties. 5. In the present matter the execution of the agreement containing the arbitration clause is not in dispute. The clause No.24.0 relating to the settlement of disputes reads as under : “24.0 Settlement of disputes. -- If any dispute arises under this work it shall be first settled amicably between the parties. In the event of the dispute, controversy or claim not settled amicably, it shall be referred to sole arbitrator to be appointed by Sahara India Pariwar and award given by such arbitrator shall be binding and non-appealable on both parties.” 6. Having heard the learned counsel for the parties, it is noticed that there is dispute between the parties in respect of final settlement of the claim of the petitioner in the meeting dated 31.8.2010 (Annexure R-1). The petitioner has raised the plea that the said minutes of the meeting and undertaking was got signed by him under pressure and undue coercion. 7. The Supreme Court in the matter of National Insurance Company Limited v. Boghara Polyfab Private Limited, reported in (2009)1 SCC 267 , has held that whether a contract has been discharged by performance is a mixed question of fact and law, and if there is a dispute in regard to that question, that is arbitrable. A party which has executed the discharge agreement/voucher alleges fraud/coercion/undue influence practised by the other party and is able to establish the same, then obviously the discharge of such contract by such agreement/voucher is rendered void and cannot be acted upon. Consequently, any such dispute raised by the executor of the discharge agreement/voucher would be arbitrable. In the said judgment, it has been held by the Supreme Court that : “24. What is however clear is when a respondent contends that the dispute is not arbitrable on account of discharge of the contract under a settlement agreement or discharge voucher or no-claim certificate, and the claimant contends that it was obtained by fraud, coercion or undue influence, the issue will have to be decided either by the Chief Justice/his designate in the proceedings under section 11 of the Act or by the Arbitral Tribunal as directed by the order under section 11 of the Act. A claim for arbitration cannot be rejected merely or solely on the ground that a settlement agreement or discharge voucher had been executed by the claimant, if its validity is disputed by the claimant. 26. A claim for arbitration cannot be rejected merely or solely on the ground that a settlement agreement or discharge voucher had been executed by the claimant, if its validity is disputed by the claimant. 26. When we refer to a discharge of contrct 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 valid 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.” 8. The Supreme Court in the matter of National Insurance Company Ltd. (supra), after taking note of the previous judgments on the point has held that : “44. None of the three cases relied on by the appellant lay down a proposition that mere execution of a full and final settlement receipt or a discharge voucher is a bar to arbitration, even when the validity thereof is challenged by the claimant on the ground of fraud, coercion or undue influence. Nor do they lay down a proposition that even if the discharge of contract is not genuine or legal, the claims cannot be referred to arbitration. In all the three cases, the Court examined the facts and satisfied itself that there was accord and satisfaction or complete discharge of the contract and that there was no evidence to support the allegation of coercion/undue influence.” 9. It has also been settled by the Supreme Court in the matter of National Insurance Company Ltd. (supra), that either Chief Justice or his designate exercising jurisdiction under section 11 of the Act will consider whether there was really accord and satisfaction or disicharge of contract by performance or alternatively on being prima facie satisfied that the matter deserves detailed consideration, he may instead of deciding 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. 10. 10. In the present matter also there is a serious dispute in respect of the signing of the minutes of meeting dated 31.8.2010 (Annexure R-1) and execution of the undertaking (Annexure P-6) under undue influence and coercion. Such an issue needs to be decided after permitting the parties to lead evidence. Therefore, considering the circumstances of the present case, I deem it appropriate that instead of deciding the issue at this stage, it would be more appropriate to refer the matter to the arbitrator with a specific observation that the said question would be decided by the arbitrator in the first instance. A dispute has also been raised by the respondents in respect of the service of notice dated 19.6.2010 (Annexure P-7) which contains the acknowledgment of receipt said to have been signed by D.K. Singh. Though notice appears to have been served upon the respondent but a final finding in this regard can be recorded after the evidence is led by the parties. Therefore, this issue is also left open to be decided by the Arbitrator at the initial stage itself. 11. Considering the entire circumstances of the case, Hon’ble Mr. Justice S.P. Khare (retired) R/o A-1, 202, Shehnai Residency, A.B. Road, Indore is appointed as sole arbitrator for deciding the dispute between the parties. The parties are directed to appear before the learned arbitrator on 17.9.2012. 12. The arbitration case is accordingly disposed of.