Jagannath Choudhury, Special Class Contractor, BBSR v. State Of Orissa
2016-07-27
BISWANATH RATH
body2016
DigiLaw.ai
JUDGMENT : BISWANATH RATH, J. This arbitration proceeding filed under Section 11 of the Arbitration and Conciliation Act, 1996 praying therein for appointment of Arbitrator in exercise of power under Section 11 of the Arbitration & Conciliation Act, 1996 for adjudication of the dispute between the parties. 2. In filing the application, the petitioner contended that the petitioner is a reputed Super Class Contractor Firm in the State of Odisha and is undertaking several construction work of road, bridges, canals etc. under different departments of the State Government and has successfully completed several such contracts, which are of very high value. In the process, the petitioner was awarded with the contract work “Construction of left bank canal from RD 50.50 Km. to 55.50 Km. with all structures other than H.R. and C.R.” of Rengali Irrigation Project for a value of Rs.15,65,44,778.00. The parties entered into an agreement bearing Agreement No.LCB-2/97-98 having the date of commencement of the contract work as 31.12.1997 and the stipulated date of completion was 30.12.1999. It is the case of the petitioner that soon after execution of the agreement, the petitioner mobilized men, material and machineries at the work site and started execution of contract work. But during execution of the contract work, petitioner faced several hindrances like delay in acquiring the private lands, non-receipt of clearance from the forest department, delay in diversion of existing high power electric lines/towers from the canal alignment and frequent obstructions created by the local villagers. There also existed frequent change of drawing, designing and alignment of the work, non-payment of R.A. bills and escalation, variation in work/extra work also seriously affected the progress of the work. Finding the completion of the work beyond the control of the petitioner and that the delay of execution of the work was not attributable to the petitioner, the petitioner completed the work with the cooperation of the opponent not only by extending the date of completion of work till 31.12.2007 but with the benefit of price escalation from time to time. Considering the approach of the petitioner, the opponent also approved the deviation statement vide order No.31235 dated 21.11.2009. It is alleged that in spite of extension of time and awarding benefit of price escalation and approval of the final deviation statement, some dues in respect of the petitioner is still remain unsettled.
Considering the approach of the petitioner, the opponent also approved the deviation statement vide order No.31235 dated 21.11.2009. It is alleged that in spite of extension of time and awarding benefit of price escalation and approval of the final deviation statement, some dues in respect of the petitioner is still remain unsettled. The petitioner claimed that following Clause-43 of the condition of the contract, he is very much entitled to the benefit of price escalation on the basis of price index up to the last quarter of 2007 and the same is not paid to him. Considering the request of the petitioner in the matter of illegal deduction of certain amount, the objection of the petitioner was forwarded by the Executive Engineer to the Superintending Engineer vide its letter No.5035 dated 4.9.2010 and in the meanwhile the Superintending Engineer has forwarded the same to the Chief Engineer vide its letter dated 6.10.2010 for consideration. Unfortunately, it did not yield any result. Finding no resolution of the matter, petitioner invoked for settlement of the dispute under Clause 23 of the condition of Contracts and by letter dated 4.7.2012 requested the Engineer-in-Charge to expedite the action for payment of his legitimate dues, which also yielded no result compelling the petitioner to prefer appeal before the employer vide his letter dated 21.11.2012 and it is how pending before the Chief Engineer-opposite party no.2. Finding no response from the opponent, the petitioner claimed to have compelled to request this Court for invoking power under Section 11 of the Arbitration & Conciliation Act, 1996 for appointment of an arbitrator for adjudicating the dispute between the parties. 3. In response to the aforesaid action of the petitioner, the opposite party nos. 1 to 3 filing a common response in some and substance contended that the arbitration proceeding as led is not maintainable either in fact or law. The arbitration proceeding is also wholly misconceived. It is next pointed out by the opposite party nos.1 to 3 that the provision of Clause 23.1 of the conditions of Contract has no application to the facts of the present case.
The arbitration proceeding is also wholly misconceived. It is next pointed out by the opposite party nos.1 to 3 that the provision of Clause 23.1 of the conditions of Contract has no application to the facts of the present case. It is specifically submitted by the opposite party nos.1 to 3 that this clause is applicable in two contingencies i.e. (i) any work demanded from the contractor by the employer considered to be outside the scope of the contract or (ii) considers any drawing, record or ruling of the Engineer-in-Charge on any matter in connection with or arising out of the contract or the carrying out of the work to be acceptable. Clause 23 is clear as to in respect of which an arbitration can be preferred. It is further claimed that the disputes involved under Annexure-7 are not within the purview of Clause 23 of the terms of contract. It is further contended by the opposite party nos.1 to 3 that the Clause 23.1 does not permit settlement of future disputes consequently invocation of the provision of Clause 23.1 for settlement of dues is wholly misconceived. It is further contended by the opposite parties 1 to 3 that the work was completed on 01.12.2007 and the final bill was prepared on 8.12.2007 vide 51st Running Account Bill vide M.B.No.467/06. The 52nd and 53rd Running Account Bills were prepared only for price-escalation adjustment and payments have been made accordingly in the year 2010. The petitioner-contractor having accepted the amount determined by the authority unopposed and without indication of any further claim, he is now stopped to have any future claim and as such there is no requirement of appointment of an Arbitrator at this stage. In justifying their claim, the opposite parties 1 to 3 have also relied on three decisions, which are as follows: M/s. P.K.Ramaiah and Company v. Chairman & Managing Director, National Thermal Power Corpn., 1994 Supp (3) Supreme Court Cases 126, Nathani Steels Ltd. v. Associated Constructions, 1995 Supp (3) Supreme Court Cases 324 and Union of India and others v. Master Construction Company, (2011) 12 Supreme Court Cases 349. 4.
4. From the facts narrated in the application for appointment of Arbitrator and its objection, this Court finds that the petitioner makes a claim for arbitration of the dispute raised by him on the premises that in spite of extension of time and awarding benefit of price escalation and approval of final deviation statement, some dues in respect of the petitioner still remain unsettled. Petitioner further pleaded that his such claim not only being entertained by Executive Engineer but the same has also been forwarded to the Superintending Engineer from his consideration and finding no response, he was constrained to invoke the settlement of the dispute clause, on applying 23 of the conditions of contract and under the circumstances, claim raised by the petitioner cannot be treated outside the conditions of contract. Reading of document vide Annexures-9 and 10, clearly discloses same relates to illegal deduction of certain amount from the final bill which is related to the same contract. Further reading of averments made in paragraph 5 and the contents of documents vide Annexures-5 and 6, the claim prima facie pointing out to the particular contract and certain act involving the contract whereas the opposite party has the sole objection that the claim from the side of the petitioner appears to be future dispute and further since the petitioner has accepted the final payment without endorsing any objection, he is precluded from taking a reverse plea. Petitioner even though pleaded that the claims involved necessitating a arbitration proceeding is not future claim but from reading of the Clause 23 of the contract, this Court finds the petitioner miserably failed to dislodge the allegation of the opposite parties 1 to 3 that the claim raised by him is outside the scope of the contract looking to the provision contained in Clause 23 of the contract. For both parties relying on Clause 23.1 of the terms of contract, it is necessary here to refer to Clause 23.1 of the terms of the contract, which quoted as herein below: “If the Contractor considers any work demanded of him to be outside the scope of the contract or considers any drawing, record or ruling of the Engineer-in-Charge, on any matter in connection with or arising out of the contract or the carrying out of work to be unacceptable, he shall promptly ask the Engineer-in-Charge in writing for written instruction or decision.
There upon the Engineer-in-Charge shall give his written instructions or decision within a period of thirty days of such request. Upon receipt of the written instruction or decision the Contractor shall promptly proceed without delay to comply with such instruction or decision. If the Engineer-in-Charge fails to give his instruction or decision in writing within a period of thirty days after being requested or if the contractor is dissatisfied with the instruction or decision of the Engineer-in-charge, the contractor may within thirty days after receiving instruction or decision of Engineer-in-Charge appeal to the Employer who shall afford an opportunity to the contractor to be heard and to offer evidence in support of his appeal. The employer shall give his decision within a period of thirty days after the contractor has given the said evidence in support of his appeal”. 5. From the fact narration of the case, the claim of the petitioner clearly appears to be inside the scope of the contract. Hence, Clause 23.1 of the terms of contract cannot come to the rescue of the petitioner and for agreement on the conditions contained in the terms of contract, parties not only bound by the same and this Court finds the opposite parties get the benefit of said protection. Coming to the other aspect of the matter, this Court finds the conduct of the petitioner already established that the final payment was received by him voluntarily. There is even no allegation of duress or coerce by the opposite parties in the matter of receipt of final payment. Thus, the petitioner is stopped from raising any further claim and requiring the dispute resolved through Arbitrator in exercise of power under Section 11 of the Arbitration & Conciliation Act, 1996. Hon’ble Apex Court in deciding a similar situation in the case of National Insurance Company limited v. Boghara Polyfab Private Limited, (2009) 1 Supreme Court Cases 267 referring to several decisions of the very Apex Court, in paragraph 25 of the said judgment held as follows: “We may next examine some related and incidental issues. Firstly, we may refer to the consequences of discharge of a contract. When a contract has been fully performed, there is a discharge of the contract by performance, and the contract comes to an end. In regard to such a discharged contract, nothing remains neither any right to seek performance nor any obligation to perform.
Firstly, we may refer to the consequences of discharge of a contract. When a contract has been fully performed, there is a discharge of the contract by performance, and the contract comes to an end. In regard to such a discharged contract, nothing remains neither any right to seek performance nor any obligation to perform. In short, there cannot be any dispute. Consequently, there cannot obviously be reference to arbitration of any dispute arising from a discharged contract. Whether the contract has been discharged by performance or not is a mixed question of fact and law, and if there is a dispute in regard to that question, that is arbitrable. But there is an exception. Where both the parties to a contract confirm in writing that the contract has been fully and finally discharged by performance of all obligations and there are no outstanding claims or disputes, courts will not refer any subsequent claim or dispute to arbitration. Similarly, where one of thee parties to the contract issues a full and final discharge voucher (or no-due certificate, as the case may be) confirming that he has received the payment in full and final satisfaction of all claims, and he has no outstanding claim, that amounts to discharge of the contract by acceptance of performance and the party issuing the discharge voucher/certificate cannot thereafter make any fresh claim or revive any settled claim nor can it seek reference to arbitration in respect of any claim”. This view of the Hon’ble Apex Court also gets support of a subsequent decision of the Hon’ble Apex Court in the case of Union of India and others v. Master Construction Company, (2011) 12 Supreme Court Cases 349. 6. Now considering the decision cited by the petitioner in the case of Gayatri Project Limited v. Sai Krishna Construction, (2014) 13 Supreme Court Cases 638.
6. Now considering the decision cited by the petitioner in the case of Gayatri Project Limited v. Sai Krishna Construction, (2014) 13 Supreme Court Cases 638. For difference in the factual position clearly narrated in paragraph 17 of the said decision, the decision referred to in this paragraph has no application to the case at hand, In the case of M/s. P.K.Ramaiah and Company v. Chairman & Managing Director, National Thermal Power Corpn., 1994 Supp (3) Supreme Court Cases 126, the Hon’ble Apex Court held as follows: “On those facts, this Court held that although there was alleged payment as final satisfaction of the contract, yet as the respondent did not give any receipt accepting the settlement of the claim, the payment was unilateral, so the dispute still subsisted and therefore it was arbitrable dispute and the reference was valid. In Bhan Prakash case also there was no full and final settlement and payment was not received under a receipt. In L.K.Ahuja & Co case, this Court while laying the general law held that if the bill was prepared by the department, the claim gets weakened. That was not a case of accord and satisfaction but one of pleading bar of limitation without prior rejection of the claim. Therefore, the ratio therein is of little assistance. The Calcutta High Court merely followed the statement of law laid in Ahuja & Co. case. It is not shown to us that the Chief Construction Manager was competent to acknowledge the liability or an authority to refer the dispute for arbitration. So neither his letter binds the respondent nor operates as an estoppels. Admittedly the full and final satisfaction was acknowledged by a receipt in writing and the amount was received unconditionally. Thus there is accord and satisfaction by final settlement of the claims. The subsequent allegation of coercion is an afterthought and a devise to get over the settlement of the dispute, acceptance of the payment and receipt voluntarily given. In Russell on Arbitration, 19th Edn., p.396 it is stated that “an accord and satisfaction may be pleaded in an action on award and will constitute a good defence”. Accordingly, we hold that the appellant having acknowledged the settlement and also accepted measurements and having received the amount in full and final settlement of the claim, there is accord and satisfaction. There is no existing arbitrable dispute for reference to the arbitration.
Accordingly, we hold that the appellant having acknowledged the settlement and also accepted measurements and having received the amount in full and final settlement of the claim, there is accord and satisfaction. There is no existing arbitrable dispute for reference to the arbitration. The High Court is, therefore, right in its finding in this behalf. The appeals are dismissed but in the circumstances without costs”. 7. Looking to the factual position narrated hereinabove, the observation made hereinabove, particularly, keeping in view the fact that the petitioner’s claim remained within the scope of the contract and that he has received the full and final settlement without any protest and the law laid down by the Hon’ble Apex Court reflected hereinabove, this Court finds the claim of the petitioner for appointment of Arbitrator is unsustainable. Consequently, the Arbitration Petition stands dismissed. Parties are to bear their own cost.