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2013 DIGILAW 677 (JK)

K. R. Traders v. Union Of India

2013-11-21

DHIRAJ SINGH THAKUR

body2013
1. This is a petition under Section 11 of the Jammu and Kashmir Arbitration and Conciliation Act, 1997, for appointment of an independent arbitrator to settle and adjudicate upon the dispute arising out of a contract agreement arrived at between the parties, bearing No 10-A/Cs/Dy.CE/C/PTK dt. 1.3.2008. 2. The issue that arises for consideration is as to whether the petitioner can seek such a reference in view of execution of a supplementary agreement dt.7.5.2011, between the petitioner and the respondent No.3-Dy.Chief Engineer/Const., Northern Railways, Pathankot, whereby the petitioner had accepted a sum of Rs. 52534/-, as mentioned in the said agreement in full and final settlement of his dues under the principal agreement. 3. The contract in this case was for unloading of PRC sleepers, Rails, Rails from Railway BFR at Chhann Arorian, Hiran Nagar, Vijaypur, Jammu Yard etc., as also leading and stacking of PRC sleepers, Rails at various locations from Ghagwal to Budhi Station and transportation of Miscellaneous P.Way material in connection with doubling from JRC-PTK-JAT section. 4. The contention of the respondents is that having executed the supplementary agreement and having received the amount without any objection or demur, the petitioner cannot now turn around and seek reference after everything had been concluded between the parties as reflected in the supplementary agreement. 5. Heard learned counsel for the parties. 6. A reference to the supplementary agreement dt. 7.5.2011, arrived at between the parties, inter alia shows that in receipt of the sum as mentioned in the said agreement, by the petitioner, the parties had agreed as under:- "Now it is hereby agreed by and between the parties in the consideration of sums already paid by the party hereto of the first part to the party hereto of the second part against all outstanding dues and claims for, all works done under the aforesaid Principal Agreement including/excluding the security deposit the party hereto of the second part have no further dues of claims against the party hereto of the first part under the said Principal Agreement. It is further agree by and between the parties that the party hereto of the second part has accepted the said sums mentioned above in full and final satisfaction of all its dues and claims under the said Principal Agreement. It is further agree by and between the parties that the party hereto of the second part has accepted the said sums mentioned above in full and final satisfaction of all its dues and claims under the said Principal Agreement. It is further agreed by and between the parties that the party hereto of the second part has accepted the said sums mentioned above in full and final satisfaction of all its dues and claims under the said Principal Agreement. It is further agreed and understood by and between the parties that in consideration of the payment already made, under the agreement, the said Principal Agreement shall stand finally discharged and rescinded all the terms and conditions including the arbitration clauses. It is further agreed and understood by and between the parties that in consideration of the payment already made, under the agreement, the said Principal Agreement shall cease to have any effect and/or shall be deemed to be non-existent for all purposes." 7. Counsel for the petitioner urged that the aforesaid supplementary agreement had been executed under undue coercion and threat. It is submitted that the petitioner had not willingly accepted the said agreement. The respondents had, in fact, threatened that in case, the petitioner did not agree to the execution of the aforementioned supplementary agreement, he would be saddled with penalties besides retaining the security deposit etc. 8. It is in this context, the learned counsel for the petitioner urged that the petitioner had been forced to execute the supplementary agreement. 9. The only averment made with regard to the circumstances in which the supplementary agreement had been executed is in paragraphs 28 and 29 of the petition, wherein it is stated as under:-I "28. That the approach of the respondents is totally arbitrary and illegal. The petitioner had been compelled to submit and sign the documents without which the respondents have declined to release the genuine claims of the petitioner. The petitioner was made to sign the documents under the force of compulsion and the circumstances where such an atmosphere was created under coercion whereby the petitioner was left with no choice than to sign the document for getting his payment released from the respondents. The petitioner was made to sign the documents under the force of compulsion and the circumstances where such an atmosphere was created under coercion whereby the petitioner was left with no choice than to sign the document for getting his payment released from the respondents. The said documents signed under compulsion and obtained by the respondents in unfair manner cannot be relied upon and deprive the petitioner from getting his legitimate claims which he had suffered at the hands of the respondents. 29. That immediately after receiving the letter dated 30.3.2012, the petitioner has clarified his stand and explained the position under what circumstances he was forced to give us certificate for getting his pending payments to the tune of lacs of rupees which were otherwise withheld by the respondents illegally and refuse to release the same without making the petitioner signed the documents.........." 10. From a perusal of the record, it appears that the agreement expressing full and final settlement was executed on 7.5.2011. The petitioner for the first time issued a notice dt. 17.10.2011 to the respondents, invoking the arbitration clause for referring the disputes to the arbitration for adjudication of the same by an arbitrator. Thereafter, a reminder was sent to the respondents on 14.3.2012. In response to the request for reference of disputes to the arbitrator, the respondents vide their letter dt. 30.3.2012, clearly expressed that the arbitration clause had ceased to exist in view of the supplementary agreement and the principal agreement finally discharged. 11. It is for the first time that the petitioner through his letter dt. 2.5.2012, addressed to the respondent No.4-Chief Administrative Officer/Const., Northern Railway, Headquarter Office, Kashmere Gate Delhi, stated that the supplementary agreement had been executed under undue coercion with threat of withholding the pending payment to the tune of lacs of rupees. 12. The aforementioned letter is general in nature and does not inspire confidence in this court that the supplementary agreement dt. 7.5.2011 had been executed under any threat or coercion. What can be gauged from the facts which unfold through the record is that the `petitioner, with a view to get released the payment, had agreed to execute a supplementary agreement. The aforementioned letter is general in nature and does not inspire confidence in this court that the supplementary agreement dt. 7.5.2011 had been executed under any threat or coercion. What can be gauged from the facts which unfold through the record is that the `petitioner, with a view to get released the payment, had agreed to execute a supplementary agreement. It was a decision taken in the commercial interest of the petitioner as can be seen from the subsequent conduct of the petitioner from the date of execution of the supplementary agreement till the date, he sought reference of the disputes and finally upon refusal of reference by the respondents. It is for the first time that the petitioner took a plea of undue coercion in his letter dated 2.5.2012. Any person under undue threat or coercion would not wait for so many months to claim that he had been forced or coerced into execution of document/supplementary agreement. 13. In case, it were a case of execution of the agreement under undue coercion or threat, there would have been an immediate response by the petitioner to the respondents reflecting the circumstances in which the said agreement came to be executed. 14. From the pleadings on record and the documents annexed with the petition, the petitioner has failed to satisfy this court that there was any undue coercion or threat at the time of execution of the supplementary agreement. 15. In Nathani Steels Ltd v. Associated Constructions, 1995 Supp (3) SCC 324 before the Apex Court, a dispute arose between the parties on account of non-completion of the contract, which came to be settled by and between the parties, which settlement came to be reduced in writing. This document reflected the amicable settlement of the disputes between the parties on the terms and conditions set out therein. Subsequently, the contractor realized that there was a calculation mistake in regard to the amount in question on his part and thereupon invoked the arbitration clause. The appellant before the court contended that in view of the disputes or the differences having been finally settled between the parties, it was not open to the claimant-respondents to unilaterally brush aside the settlement and invoke the arbitration clause. 16. The appellant before the court contended that in view of the disputes or the differences having been finally settled between the parties, it was not open to the claimant-respondents to unilaterally brush aside the settlement and invoke the arbitration clause. 16. The Apex Court in the judgment supra in paragraph 3 held as under: ".....Even otherwise, we feel that once the parties have arrived at a settlement in respect of any dispute or difference arising under a contract and that dispute or the difference is amicably settled by way of a final settlement by and between the parties, unless that settlement is set aside in proper proceedings, it cannot lie in the mouth of one of the parties to the settlement to spurn it on the ground that it was a mistake and proceed to invoke the arbitration clause. If this is permitted the sanctity of contract, the settlement also being a contract, would be wholly lost and it would be open to one party to take the benefit under the settlement and then to question the same on the ground of mistake without having the settlement set aside. In the circumstances, we think that in the instant case, since the dispute or difference was finally settled and payments were made as per the settlement, it was not open to the respondent unilaterally to treat the settlement as non est and proceed to invoke the Arbitration clause. We are, therefore, of the opinion that the High Court was wrong in the view that it took." 17. This was subsequently followed in New India Assurance Co. Ltd. v. Sri Venkata Padmavathi R&B Rice Mill, (2000) 10 Supreme Court Cases 334. 18. Applying the ratio of the aforementioned judgment to the facts of the present case, it will be clear that having executed a supplementary agreement dated, 7th of May, 2011, reflecting full and final settlement between the parties, the petitioner cannot invoke the arbitration clause without having the settlement set aside in proper proceedings inasmuch as the settlement dated 7th of May, 2011 is itself a contract between the parties. Even otherwise, the petitioner has failed to satisfy this court that there was any undue coercion or threat at the time of execution of the supplementary agreement. 19. For the reasons mentioned hereinabove, this petition fails and is accordingly dismissed.