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2018 DIGILAW 1408 (GAU)

Krishna Devi v. Union of India

2018-09-21

ACHINTYA MALLA BUJOR BARUA

body2018
JUDGMENT : Achintya Malla Bujor Barua, J. Heard. Mr. S Sahoo, learned counsel for the appellant. Also heard Ms. A Gayan, learned CGC appearing for the respondent authorities. 2. The husband of the appellant entered into a contract with the respondent authorities through the Garrison Engineer, Tezpur at Sonitpur for construction of permanent armament section under the Garrison Engineer, Air Force Tezpur, Assam. The husband of the appellant completed the work allotted to him and thereupon the final bills were prepared. As the husband of the appellant could not wait any further for the bills to be paid, he accepted the amount paid to him by the respondent authorities and in doing so had also endorsed a remark "no further claim certificate". According to the appellant, the amount paid to the husband of the appellant was not full amount that the respondent authorities were required to pay and that he was entitled to some more amounts. Consequent thereof, the husband of the appellant by a letter dated 11.01.1993 raised a dispute and requested that as provided in the contract agreement, an Arbitrator be appointed to decide the matter. 3. When the request for appointment of an Arbitrator was not entertained by the respondent authorities, the appellant preferred an application under Section 20 of the Arbitration Act of 1940 (for short, the Act of 1940) before the appropriate Court at Delhi. But by an order dated 04.11.1997, the application of the appellant under Section 20 of the Act of 1940 was dismissed on the ground of lack of territorial jurisdiction. On an appeal being carried before the High Court at Delhi, the same was also dismissed, but at the same time, it is stated that the petition preferred by the husband of the appellant was returned. In the meantime, the husband of the appellant died and the appellant being the legal heir continued with the proceeding. 4. In the aforesaid circumstances, an application under Section 20 of the Act of 1940 was preferred before the Court of the learned District Judge at Sonitpur at Tezpur which was numbered as TS(Arb)No.19/2003. The said application under Section 20 was dismissed by the Judgment and Order dated 10.05.2004 against which the present arbitration appeal has been preferred by the appellant. 5. It is taken note of that by relying upon the Judgment of this Court rendered in Union of India Vs. The said application under Section 20 was dismissed by the Judgment and Order dated 10.05.2004 against which the present arbitration appeal has been preferred by the appellant. 5. It is taken note of that by relying upon the Judgment of this Court rendered in Union of India Vs. Raj Brothers, (2000) 1 GauLT 286, a conclusion was arrived that as the husband of the appellant had accepted the payment by endorsing that "no further claim certificate", therefore, the same cannot be a subject matter of a dispute to be settled by an Arbitrator and that the same can only be raised and settled in an appropriate suit being filed for cancellation of the concerned documents. In this appeal, the conclusion arrived at by the learned District Judge in the petition under Section 20 by relying upon the aforesaid provisions made by this Court in Raj Brothers' case is assailed on the ground that the proposition of law laid down in Raj brothers' case is not the good law, inasmuch as, the Supreme Court in a similar circumstances, had decided otherwise, and, secondly, there being a conflict between the proposition of law laid down by the High Court and the Supreme Court, the proposition as laid down by the Supreme Court would prevail. 6. Ms. A Gayan, learned CGC on the other hand, raises a contention that the petition under Section 20 of the Act of 1940, otherwise, would also not be maintainable, inasmuch as, after the enactment of the Arbitration and Conciliation Act of 1996 (for short, the Act of 1996), all such proceedings would be governed under the provisions of Act of 1996 and would not further be governed by the Act of 1940. According to the learned CGC, therefore, the application of the appellant under Section 20 of the Act of 1940 would not be maintainable. 7. On a factual examination of the aspect, as available on record, it is taken note of that by the communication dated 11.01.1993, the husband of the appellant had made a request to the respondent authorities that on being dissatisfied with the amount paid to him, he would like to raise a dispute and accordingly the request was made for appointment of an Arbitrator. It is also taken note of that the request for appointment of an Arbitrator was also stated and reiterated in a subsequent communication dated 09.04.1994. It is also taken note of that the request for appointment of an Arbitrator was also stated and reiterated in a subsequent communication dated 09.04.1994. Even if we construe the later communication of 09.04.1994 to be a request for appointment of an Arbitrator, still we arrive at a factual situation where a request for Arbitrator was made atleast on 09.04.1994, if not earlier. 8. In order to appreciate the objection raised by Ms. A Gayan, learned CGC that the application under Section 20 of the Act of 1940 is not maintainable, we are required to examine the relevant provisions as to in what manner the Act of 1996 repeals the earlier Act of 1940. 9. The appropriate provision of repeal and saving as provided under Section 85 of the Act of 1996 is as follows: "85. Repeal and savings: Sub Section (1) of Section 85 inter alia provides that the Arbitration (Protocol and Convention) Act, 1937, the Arbitration Act, 1940 and the Foreign Awards (Recognition and Enforcement) Act, 1961 are hereby repealed. At the same time, Sub- Section (2) provides, notwithstanding such repeal,- (a) the provisions of the said enactments of the Act of 1940 shall apply in relation to arbitral proceedings which commenced before this Act came into force unless otherwise agreed by the parties but this Act shall apply in relation to arbitral proceedings which had commenced after the Act of 1996 came into force." 10. The meaning of the expression 'arbitral proceeding' can be found in the provision of Section 21 of the Act of 1996, which is as follows: "Section 21: Commencement of arbitral proceedings.-Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent." 11. A reading of Section 21 of the Act of 1996 shows that the arbitral proceeding in respect of a particular dispute commenced on a date on which the request of the dispute to be referred to arbitration is received by the respondent. In the instant case, it is evident from the materials available on record that the appellate authorities had at least received the request for appointment of an Arbitrator made through the communication dated 09.04.1994. In the instant case, it is evident from the materials available on record that the appellate authorities had at least received the request for appointment of an Arbitrator made through the communication dated 09.04.1994. The respondent authorities had nowhere denied that they had not received the said communication and further the said communication is also available on record. 12. It being so, we arrive at a conclusion that through the request for appointment of an Arbitrator by the communication dated 09.04.1994, a arbitral proceeding in respect of the present dispute has commenced. 13. It being so when the arbitral proceeding had under the law commenced by virtue of the communication dated 09.04.1994, therefore, under the provisioins of Section 85(2) of the Act of 1996, such arbitral proceeding, which had commenced, admittedly before coming into force of the said Act is saved and such proceeding shall be governed by the provision of the Act of 1940. 14. In view of such conclusion, the contention raised by the respondent authorities that the application of the appellant under Section 20 of the Act of 1940 is not maintainable, in view of the subsequent enactment and the repeal provision contained in the Act of 1996 is not acceptable. 15. Now on the question as to whether the learned District Judge was right in dismissing the application of the appellant under Section 20 of the Act of 1940, by relying on the propositions of law laid down by this Court in Raj Brothers case we now examine the proposition as laid down in Raj Brothers case as well as by the Supreme Court in two of its decisions on the similar question. 16. In Raj Brothers case in paragraph 8, it has been held that once a person gives a certificate of final settlement of his contractual claims, it will be rather unfair on his part to go back on his words so as to ask for settlement of some new claims by taking the plea that while certifying the final settlement he was either misled in giving the certificate or that he gave such certificate under duress or under some compulsion and such dispute cannot be settled by arbitration. Paragraph 8 of Raj Brothers is as under: "8. Paragraph 8 of Raj Brothers is as under: "8. once a person gives a certificate of final settlement of his contractual claims, it will be rather unfair on his part to go back on his words so as to ask for settlement of some new claims allegedly remaining to settle under the same contract on the plea that while certifying the final settlement he was either misled in giving the certificate or that he gave such certificate under duress or under some compulsion, where such plea is raised the first question which would arise will be whether the certificate of final settlement of the claims arising from the contract was given voluntarily or under coercion. This question in my opinion cannot be settled by the Arbitrator...." 17. But on the other hand, the Supreme Court in its decision rendered in Chairman & M.D., N.T.P.C. Ltd vs Reshmi Constructions, Builders & Contractors, (2004) 2 SCC 663 in paragraph 26 & 27 has held as under: "26. ................... The respondent herein, as noticed hereinbefore, categorically stated in its letter dated 20.12.1990 that as to under what circumstances they were compelled to sign the said printed letter......" "27. Even when rights and obligations of the parties are worked out the contract does not come to an end inter alia for the purpose of determination of the disputes arising thereunder, and, thus, the arbitration agreement can be invoked. Although it may not be strictly in place but we cannot shut our eyes to the ground reality that in the cases where a contractor has made huge investment, he cannot afford not to take from the employer the amount under the bills, for various reasons which may include discharge of his liability towards the banks, financial institutions and other persons. In such a situation, the public sector undertakings would have an upper hand. They would not ordinarily release the money unless a 'No Demand Certificate' is signed. Each case, therefore, is required to be considered on its own facts. 18. Further the Supreme Court in National Insurance Company Ltd. Vs. Boghara Polyfab Private Ltd., (2009) 1 SCC 267 at paragraph 52(iii) has held as thus: "52(i)............................ (ii)............................ (iii). (iii) A contractor executes the work and claims payment of say Rupees Ten Lakhs as due in terms of the contract. 18. Further the Supreme Court in National Insurance Company Ltd. Vs. Boghara Polyfab Private Ltd., (2009) 1 SCC 267 at paragraph 52(iii) has held as thus: "52(i)............................ (ii)............................ (iii). (iii) A contractor executes the work and claims payment of say Rupees Ten Lakhs as due in terms of the contract. The employer admits the claim only for Rupees six lakhs and informs the contractor either in writing or orally that unless the contractor gives a discharge voucher in the prescribed format acknowledging receipt of Rupees Six Lakhs in full and final satisfaction of the contract, payment of the admitted amount will not be released. The contractor who is hard pressed for funds and keen to get the admitted amount released, signs on the dotted line either in a printed form or otherwise, stating that the amount is received in full and final settlement. In such a case, the discharge is under economic duress on account of coercion employed by the employer. Obviously, the discharge voucher cannot be considered to be voluntary or as having resulted in discharge of the contract by accord and satisfaction. It will not be a bar to arbitration." 19. From the aforesaid propositions of law laid down by the Supreme Court, it is discernible that where a contractor is either compelled to sign in a printed letter certifying the satisfaction on the amount paid to him or in a situation where the contractor cannot afford not to take from employer the amount of bills which are being offered to him, such a situation does not debar the contractor to raise a dispute through an arbitration proceeding, if, otherwise, there is an arbitration agreement between the parties. 20. It has also been held by the Supreme Court that the discharge of his entitlement of the further amount is under economic duress on account of coercion employed by the employer and certainly such discharge cannot be considered to be voluntary or has resulted in discharge of the contract by according his satisfaction and that such situation will not also be a bar for an arbitration proceeding. 21. 21. In view of the proposition of law laid down by the Supreme Court, the provision of this Court in Raj Brothers case that once a person gives a satisfaction of final settlement of his contractual claim, a dispute as against the same cannot be raised by means of an Arbitrator is in contradiction to the proposition laid down by the Supreme Court. It is a settled law that when there is a conflict in the proposition of law laid down by a High Court in respect of a subject matter with that of the proposition laid down by the Supreme Court, the proposition of law laid down by the Supreme Court would prevail over the law laid down by the High Court. Accordingly, in the instant case, we are of the view that the proposition of law laid down by this Court in Raj Brothers case would be inapplicable and on the other hand, the proposition of law laid down by the Supreme Court in Reshmi Construction and Boghara Polyfab Private Ltd would have to prevail. 22. As the Judgment and Order dated 10.05.2004 of the learned District Judge in dismissing the application of the appellant under Section 20 of the Act of 1940 is solely based on the proposition of law laid down by this Court in Raj Brothers case, which apparently is in conflict with the proposition of law laid down by the Supreme Court in Reshmi Construction and Boghara Polyfab Private Ltd., we are of the view that the Judgment and Order dated 10.05.2004 of the learned District Judge is unsustainable in law. Accordingly the same is set aside. 23. The Judgment and Order dated 10.05.2004 being set aside, the matter is now remanded back to the learned District Judge for an appropriate adjudication of the application of the appellant under Section 20 of the Act of 1940 on its own merit and strictly as per law. 24. In terms of the above, this appeal stands allowed. 25. Send back the LCR.