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Madhya Pradesh High Court · body

2019 DIGILAW 400 (MP)

MEHTA SAIYYED (JV) v. UNION OF INDIA

2019-05-17

PRAKASH SHRIVASTAVA

body2019
ORDER : – By this arbitration case under section 11(6) of the Arbitration and Conciliation Act, 1996 the applicant has prayed for appointment of the independent arbitrator for resolving the dispute between the parties. 2. The case of the applicant is that in pursuance to the tender floated by the respondent, the applicant had submitted the bid on 24-6-2015 which was accepted by the respondents vide letter dated 16-11-2015. The applicant had submitted the earnest money of Rs. 33,33,400/- along with the tender form and after acceptance of tender, he had also submitted the performance guarantee in the form of FDR to the tune of Rs. 2,93,55,200/- and the agreement dated 29-1-2016 was executed between the parties containing the arbitration clause. The dispute had arisen between the parties and thereafter on 17-4-2017 respondent No. 4 had communicated to the applicant about the short closing of the contract agreement work and the petitioner was required to submit No Objection Certificate vide communication dated 17-4-2017. The applicant vide letter dated 18-5-2017 had conveyed to the Chief Administrative Officer that No Objection Certificate is only for the short closure of the contract without prejudice to the available legal remedies. The applicant had signed the final bill dated 19-9-2017 under protest and the respondent No. 4 vide letter dated 20-9-2017 had requested the applicant to certify the reason of protest and the applicant vide letter dated 25-9-2017 had clarified all the aspects of his protest. In spite of the continuous protest, supplementary agreement dated 4-11-2017 was executed which according to the applicant was under duress and the applicant was forced to sign unconditional No Claim Certificate dated 4-11-2017 as the Bank Guarantee and security deposit to the tune of Rs. 1,50,64,671/- were lying with the respondent and the final bill was also not paid. The petitioner had made the representation dated 5-11-2017 and the security deposit and bank guarantee of the applicant was released vide letter dated 6-11-2017 after signing the supplementary agreement and unconditional No Claim Certificate on 4-11-2017. The applicant had sent the legal notice dated 5-1-2018 for appointment of arbitrator and vide reply dated 13-3-2018 the Dy. General Manager for the General Manager had refused to agree for the demand of arbitration. Hence the applicant has filed the present arbitration case. 3. The applicant had sent the legal notice dated 5-1-2018 for appointment of arbitrator and vide reply dated 13-3-2018 the Dy. General Manager for the General Manager had refused to agree for the demand of arbitration. Hence the applicant has filed the present arbitration case. 3. The respondents by filing the reply has taken the stand that the applicant had submitted the No Objection Certificate on 18-5-2017 for short closure of the work and had signed final bill on 19-9-2017 and supplementary agreement and unconditional No Objection Certificate on 4-11-2017, hence it is not open to him to avail the remedy of arbitration in terms of Para 43(2) of the General Clauses of Contract. The claim was also disputed on merit in the reply. 4. Learned counsel for the applicant submits that final bill and No Objection Certificate was signed under protest and immediately thereafter objection to the final bill was sent and though supplementary agreement was signed but the right was reserved and the objection was raised, hence these documents signed under duress will not take away the applicant’s right to avail the remedy of arbitration. 5. As against this, learned counsel for the respondents has opposed the prayer by submitting that the applicant had signed the No Objection Certificate, supplementary agreement, final bill and unconditional No Claim Certificate, therefore, he cannot now pray for appointment of arbitrator to resolve the dispute. 6. Having heard the learned counsel for the parties and on perusal of the record, it is noticed that the agreement dated 29-1-2016 between the parties is not in dispute. It is also not in dispute that this agreement contains the arbitration clause. A reliance has been placed on Clause 42 of the Special Conditions of Contract (General) (Clause No. 64 of GCC) which is the arbitration clause in the matter. Though supplementary agreement was entered into on 4-11-2017 mentioning about recession of all the terms and conditions including the arbitration clause but this supplementary agreement was signed by the applicant by maintaining its earlier protest, hence with this supplementary agreement the right of the applicant to invoke the arbitration clause had not come to an end. That apart, the applicant vide communication dated 5-11-2017 sent to the General Manager had specifically objected to the supplementary agreement. That apart, the applicant vide communication dated 5-11-2017 sent to the General Manager had specifically objected to the supplementary agreement. The applicant had signed the final bill on 19-9-2017 under protest and on 20-9-2017 the respondents had sent the communication to the applicant mentioning that since the final bill was signed under protest, therefore, the applicant should give the clarification for the protest. The applicant had sent the reply dated 25-9-2017 stating that on account of the delay for various reasons on the part of the respondents, the applicant had to face the financial problem, hence he had prayed for the payment in respect of the work done as per rule. 7. So far as the objection of the respondent based upon Clause 43(2) of the General Conditions of Contract is concerned, as per the said clause after signing the No Claim Certificate, the contractor is not entitled to make any claim against the Railway. In this case the No Claim Certificate was said to have been signed by the applicant on 4-11-2017. The applicant has come up with the plea that No Claim Certificate and the supplementary agreement were got signed from the applicant under pressure and duress. This plea is prima facie supported from the fact that after signing the unconditional no claim certificate and supplementary agreement on 4-11-2017, the security deposit and bank guarantee was released on 6-11-2017. Hence such a plea relating to obtaining of these certificates under pressure needs to be examined before the arbitrator after permitting the parties to lead evidence. Hence, AC cannot be rejected on this ground at this stage. The respondent has also raised the plea that the claim was not submitted within 90 days. The applicant had sent the communication dated 25-9-2017 for payment within 90 days and had also sent the legal notice dated 5-1-2018 to the General Manager for appointment of the arbitrator by specifying the claim within 180 days. 8. The Supreme Court in the matter of National Insurance Co. Ltd. vs. Boghara Polyfab Private Limited, reported in (2009) 1 SCC 267 has held that if the party which has executed discharge agreement/voucher alleges fraud, coercion etc. 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. Ltd. vs. Boghara Polyfab Private Limited, reported in (2009) 1 SCC 267 has held that if the party which has executed discharge agreement/voucher alleges fraud, coercion etc. 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 dispute raised by the executor of the discharge agreement/voucher would be arbitrable. In the matter of Ambica Construction vs. Union of India, reported in (2006) 13 SCC 475 in a case where the No Claim Certificate demanded by the Railway from the contractor where the work was still pending, it has been found that issuance of the No Claim Certificate by the contractor is indicative of coercion and duress and contractor is entitled to claim arbitration reference under the contract. This Court also in the matter of Rajendra Kumar vs. Union of India and another, 2014(4) M.P.L.J. 82 vide order dated 8-5-2014 passed in AC No. 12/2008 in similar circumstances had rejected the objection relating to disposal of the AC on the ground of No Claim Certificate by observing that such an issue is to be raised before the arbitrator. 9. Counsel for the respondent has placed reliance upon the judgment of the Supreme Court in the matter of ONGC Mangalore Petrochemicals Ltd. vs. ANS Constructions Ltd., reported in (2018) 3 SCC 373 , wherein it has been held that if the party which executes agreement/discharge voucher, alleges that the execution of such discharge agreement or voucher on account of fraud, coercion etc. but is not able to establish such a claim or appears to be lacking in credibility, then it is not open to the Courts to refer the dispute to the arbitration at all. In the present case the situation is entirely different because prima facie material relating to the coercion and undue influence has been produced by the applicant. Counsel for the respondent has also placed reliance upon the judgment of the Supreme Court in the matter of New India Assurance Company Limited vs. Genus Power Infrastructure Limited, reported in (2015) 2 SCC 424 wherein it has been held that the party taking the plea of fraud, coercion, duress or undue influence must prima facie establish the said allegation by placing the material on record. In the present case sufficient material in this regard has been placed on record. Hence, I am of the opinion that this issue needs to be examined and decided by the learned arbitrator after permitting the parties to lead evidence. 10. In the aforesaid circumstances, I am of the opinion that a case for appointment of an independent arbitrator for resolving the dispute between the parties is made out. Hence I propose to appoint Shri Justice A. M. Naik (Red. High Court Judge) to be the learned Arbitrator for resolving the dispute. 11. Let the declaration in terms of section 11(8) and 12(1) of the amended Arbitration Act in the prescribed form as contained in the 6th Schedule of the Act be obtained from the proposed Arbitrator by the Principal Registrar of this Court before the next date of hearing. List on 8-7-2019.