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Rajasthan High Court · body

2016 DIGILAW 440 (RAJ)

Sharma Construction and Engineers v. Managing Director, Wonder Cement Limited

2016-03-18

MOHAMMAD RAFIQ

body2016
JUDGMENT Mohammad Rafiq, J. This is an application filed by M/s Sharma Construction and Engineering under Section 11(4) read with Section 11(6) of the Arbitration and Conciliation Act, 1996, for appointment of sole arbitrator for adjudicating its claim arising out of work order dated 07.11.2009 awarded by respondent for construction of boundary wall. The work order was granted to applicant on certain terms and conditions, which were reduced in writing. Such terms and conditions were accepted by applicant, who put his signature thereon on 07.11.2009, according to which, appellant was to construct boundary wall for cement plant of respondent near Nimbahera within three months from the date of issue of work order. Applicant claims that he has completed the work within stipulated time but respondent did not make entire payment and that a sum of Rs.40,00,000/- was still due. Clause 14 of the work order stipulated that all disputes arising out of or in relation to contract or any breach thereof, shall be first referred to arbitration in accordance with the provisions of the Arbitration and Conciliation Act, 1996 at Rajasthan, and in case, the dispute is not resolved by arbitration the matter shall be referred to the Court of Udaipur. Applicant first submitted application to respondent on 29.01.2013 requesting therein to refer the dispute to sole arbitrator as per Clause 14, supra. When no action was taken, applicant served a legal notice through his counsel on 12.03.2013. It is also argued that in compliance of order of this court dated 04.09.2015 passed in this application, applicant has filed an additional affidavit in support of the contention that he sent reminders for outstanding dues between the period from 2010 and 2013, thus there was no delay in filing this application. Learned counsel for applicant, in support of his case, has relied on judgment of the Supreme Court in Swastik Gases (P)Ltd. v. Indian Oil Corpn. Ltd. - (2013) 9 SCC 32 . 2. Respondent, in reply to application, contended that work was completed way back. Applicant was required to complete the work within three months from the date of execution of contract, thus latest by February, 2010, but the work was completed somewhere in the month of July, 2010, i.e. with delay of five months. Applicant raised bill of Rs.55,31,853/-. 2. Respondent, in reply to application, contended that work was completed way back. Applicant was required to complete the work within three months from the date of execution of contract, thus latest by February, 2010, but the work was completed somewhere in the month of July, 2010, i.e. with delay of five months. Applicant raised bill of Rs.55,31,853/-. Respondent, after verification of quantity of work done as per agreed rates and deducting TDS amounting to Rs.26,848/-, as also Works Contract Tax of Rs.60,771/-, released amount of Rs.48,24,230/-. Applicant then raised another bill dated 28.09.2010, wherein a further amount of Rs.2,23,508/- was claimed, which was also paid by respondent. Respondent made payment of the amount of that bill, and applicant, after receiving payment, has clearly mentioned on the invoice that the payment is accepted in full and final for the work done. Applicant issued the receipt dated 28.09.2010 specially stating that 'quantity and amount full & final accepted'. Applicant therefore cannot maintain the application. Even otherwise the applicant has filed present application with delay at highly belatedly stage, more than two years after completion of work. It is also argued that applicant in para 3 of rejoinder has categorically accepted the fact of issuing receipt with remark that quantity and amount has been accepted in full and final. Learned counsel for respondent, in support of the case, has relied on judgments of the Supreme Court in Union of India v. Master Construction Company - (2011) 12 SCC 349 and New India Assurance Company Limited v. Genus Power Infrastructure Limited - (2015) 2 SCC 424 . 3. In view of the stand taken by respondent, this court, by order dated 04.09.2015, required applicant to file an additional affidavit showing that there existed an arbitral dispute and whether he, having issued receipt of aforesaid amount as full and final settlement of his claim, sent reminders to respondent for payment of remaining amount. 4. All that has been stated in the additional affidavit filed by applicant, is that the payment was not made at prescribed rate. For instance, as per Annexure-A annexed with work order dated 07.11.2009, prescribed rate for work assigned in respect of hard rock without blasting, was Rs.200/-, whereas payment made to applicant was at the rate of L 100/- only. All that has been stated in the additional affidavit filed by applicant, is that the payment was not made at prescribed rate. For instance, as per Annexure-A annexed with work order dated 07.11.2009, prescribed rate for work assigned in respect of hard rock without blasting, was Rs.200/-, whereas payment made to applicant was at the rate of L 100/- only. It was further stated that in reply to the application, that the respondent has stated that an amount of Rs.48,24,230/- has been released to applicant but details thereof have not been given as to for which work said payment has been released. Only half of the due amount has been paid to the applicant. 5. This does not in any manner controvert the assertion made by respondent that payment of last bill of Rs.2,23,508.67 submitted by applicant was made by respondent and that applicant, while giving receipt thereof, categorically stated that he accepted the amount and quantity towards full and final settlement. In fact, respondent has asserted that last bill dated 28.09.2010 raised by applicant was only of Rs.2,23,508.67 and that was raised after receiving major payment of Rs.48,24,230/-. Payment of last bill dated 28.09.2010, was also cleared by respondent. It does not appeal to reason when much more than that amount was due why applicant passed on receipt, for both quantity and amount, as full and final settlement of dues and having received the last payment, as afore-noted, why did he not raise any further bill. No assertion has been made by applicant whether any bill in addition to the last bill was ever raised by applicant. No details have been furnished by applicant in additional affidavit as to when reminder was sent, after receiving the aforesaid payment towards full and final settlement of dues both in terms of quantity and amount. 6. Judgment of the Supreme Court in Swastik Gases, supra, relied on by learned counsel for applicant, dealt with the question of exclusion/restriction of jurisdiction as also territorial jurisdiction and therefore does not in any manner help him. 7. The Supreme Court in Union of India and Others v. Master Construction Company, supra, dealt with question whether after furnishing 'no-claim certificates' and receipt of payment of final bill, as submitted by contractor, any arbitrable dispute between the parties survived or contract stood discharged. 7. The Supreme Court in Union of India and Others v. Master Construction Company, supra, dealt with question whether after furnishing 'no-claim certificates' and receipt of payment of final bill, as submitted by contractor, any arbitrable dispute between the parties survived or contract stood discharged. Revisiting its various previous judgments, the Supreme Court, in the facts of that case, held that there has been full and final settlement of the contractor's claim under the contract and the case did not fall in the category of exceptional case. 8. In National Insurance Company Limited v. Boghara Polyfab (P) Ltd., - (2009) 1 SCC 267 , the appellant prima facie failed to establish any kind of financial duress or fraud/coercion/undue influence. It was held that no-claim certificates have been obtained under financial duress and coercion, and that, without there being anything more to suggest that, this does not lead to an arbitrable dispute. The conduct of the contractor clearly shows that 'no claim certificates' were given by it voluntarily; the contractor accepted the amount voluntarily and the contract was discharged voluntarily. The Supreme Court, in para 26 and 51 of the report, observed thus: "26. When we refer to a discharge of 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. 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. 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 Chief Justice/his designate is satisfied prima facie that the discharge voucher was not issued voluntarily and the claimant was under some compulsion or coercion, and that the matter deserved 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." 9. The Supreme Court, in a recent judgment in New India Assurance Company Limited v. Genus Power Infrastructure Limited, supra, while dealing with same question, held that a bald plea of fraud, coercion, duress or undue influence is not enough and the party, who sets up such plea, must prima facie establish said allegation by placing material before the Chief Justice/his designate. 10. In fact, in the instant case, applicant himself has in the rejoinder admitted that while passing on receipt to respondent of last bill, it was noted therein that quantity and amounts were accepted as full and final. In the present case, the applicant has not even set up a case of fraud, coercion, duress or undue influence, let alone produce any prima facie material to show existence of any arbitral dispute. It must be therefore held that there does not survive or subsist any arbitrable dispute. The application is therefore dismissed.