Akona Sum System Works, Lal Bagh Lko Throu Its Partner v. U. P. Bridge Corporation Ltd. Lko Throu Its MD
2019-04-18
RAJAN ROY
body2019
DigiLaw.ai
JUDGMENT : RAJAN ROY, J. 1. Heard Sri Ratensh Chandra learned counsel for the applicant and Sri Shishir Jain learned counsel for the opposite parties. 2. This is an application under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act, 1996'). This application was filed on 15.10.2012 and has remained pending since then. 3. Counter affidavit and supplementary counter affidavit have been filed by the opposite parties disputing the very existence of the Arbitration clause as alleged in the application and secondly, submitting that there has been a full and final settlement of the claim which has been accepted by the applicant himself but it has not been disclosed in the application, therefore, even otherwise the application is liable to be rejected. The arbitration clause in this case reads as under:- fookn dh n'kk esa eq[; ifj;kstuk ÁcU/kd ¼dkuiqj½] mŒÁŒ jkT; lsrq fuxe fyfeVsM] dkuiqj dk fu.kZ; nksuksa i{kksa dks ekU; gksxkA** 4. On a bare reading of the aforesaid clause in the light of the decisions of the Supreme Court in the case Bharat Bhushan Bansal vs. U.P. Small Industries Corporation Ltd., (1999) 2 SCC 166 Kanpur and subsequent decision in the case of State of Orrisa vs. Bhgyadhar Dash, 2007 7 SCC 406 it does not appear to be an arbitration clause. Firstly, there is no intention to refer any dispute or difference between the parties to arbitration, secondly, the decision on dispute on the dispute referred therein does not appear to be a judicial one. There appears to be no obligation therein to afford the parties or their representatives a full hearing, and receive evidence from them. The decision of the Chief Project Manager, Kanpur U.P. Bridge Corporation Ltd., referred herein is not contemplated as a judicial and final determination as observed by the Supreme Court in the case of Bhagyadhar Dash (supra), but the decision of one party which is open to challenge by the other party in a Court of law. 5. However, even assuming that there is an arbitration clause, the fact of the matter is that although there is a reference to two agreements one bearing No. 9 and other bearing No.13, both dated 05.12.2009, only one agreement bearing No.13 has been annexed with the application.
5. However, even assuming that there is an arbitration clause, the fact of the matter is that although there is a reference to two agreements one bearing No. 9 and other bearing No.13, both dated 05.12.2009, only one agreement bearing No.13 has been annexed with the application. In respect of both agreements a letter dated 16.12.2010 was written by the General Manager of the applicant addressed to the D.P.M, U.P. State Bridge Corporation Ltd., Farrukhabad, that the applicant was agreeable to dismantle its batching plants and requested to close the contract upto dated 31.12.2010 and release the balance payment and security, as early as possible. It is not out of place to mention that on 04.12.2010 itself, the agreement in question was cancelled and the reference to the letter dated 04.12.2012 in the letter of the applicant dated 16.12.2010 is a reference to the said letter, cancelling the agreement. In response to the aforesaid letter of the applicant dated 16.12.2010 the opposite parties herein acted upon the same and as stated in para 4 of the supplementary counter affidavit, finalized the bills of applicant and full and final payments of the bill were made which were received by the applicant without any objection. The security deposit by the applicant was also released on 26.02.2011 and 14.03.2011. Thereafter, on 18.03.2011, one of the partners of the applicant firm, Sri R.B. Rathore gave a certificate on his letter to the D.P.M, U.P. State Bridge Corporation Ltd., Farrukhabad in continuation of the earlier letter dated 16.12.2010 on behalf of the applicant dated 16.12.2010 certifying that partnership firm has received full and final payment with security against the agreement no.8/ agreement no.9 dated 12.09.2009 and agreement no.13/agreement no.9 dated 05.12.2009. The latter agreements are the subject matter of this application under Section 11 of the Act, 1996. 6. Most importantly the last line of the certificate states that "there is no dispute/claim against the U.P. State Bridge Corporation Ltd., in respect of above said agreements". These documents were not disclosed by the applicant while filing the application under Section 11 of the Act, 1996 on 15.10.2012. Most importantly, the applicant firm never repudiated these transactions before filing the application under Section 11 of the Act, 1996 on 15.10.2012.
These documents were not disclosed by the applicant while filing the application under Section 11 of the Act, 1996 on 15.10.2012. Most importantly, the applicant firm never repudiated these transactions before filing the application under Section 11 of the Act, 1996 on 15.10.2012. It is only after the filing of the counter affidavit and supplementary counter affidavit that a stand has been taken in the rejoinder affidavit that the said certificate dated 18.03.2011 was issued under compulsive circumstances, albeit half heartedly as an after thought and vaguely, as would be evident from the rejoinder affidavit filed by the applicant to the counter affidavit. All that has been stated in paragraph 4 of the rejoinder affidavit in response to paragraphs 4,5 and 6 of the counter affidavit/ objections is a bald denial to the effect that "it is submitted that under duress and compulsive circumstances a letter dated 18.03.2011 was issued or else the security and other pending bills would not have been released in favour of the applicant." Now, security money had already been released prior to 18.03.2011 and the payments had also been made to the applicant prior to issuance of the certificates, therefore, apart from the fact that this explanation is factually incorrect and is absolutely vague, this could not be the basis for repudiating any full and final settlement which would have been arrived at prior to filing of this application and was not disclosed. Now reference may also be made to the supplementary rejoinder affidavit wherein also vague and frivolous averments have been made in paragraph 4 thereof that the certificate was issued under duress. 7. The legal position is very well settled in this regard by the Supreme Court in the case Union of India and others vs. Master Construction Co., & others, (2011) 12 SCC 349 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 the same by placing material before the Chief Justice/his designate. In the present case there is absolutely no such material, but only bald averments. In another decision New India Assurance Co., Ltd., vs. Genus Power Infrastructure Ltd. and others, (2015) 2 SCC 424 a similar view was taken and in fact a reference was made to the decision in Master Construction Company (supra).
In the present case there is absolutely no such material, but only bald averments. In another decision New India Assurance Co., Ltd., vs. Genus Power Infrastructure Ltd. and others, (2015) 2 SCC 424 a similar view was taken and in fact a reference was made to the decision in Master Construction Company (supra). Paragraphs 7, 8 and 9 of the said judgment read as under:- "7. The question that arises is whether the discharge in the present case upon acceptance of compensation and signing of subrogation letter was not voluntary and whether the claimant was subjected to compulsion or coercion and as such could validly invoke the jurisdiction under Section 11 of the Act. The law on the point is clear from following decisions of this court. In National Insurance Co. Ltd. vs. Boghara Polyfab Pvt. Ltd. in paras 26 and 51 it was stated as under:- "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 practiced 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." 8. In the decision rendered in Union of India vs. Master Construction Co. this court observed as under: "18. In our opinion, there is no rule of the absolute kind. In a case where the claimant contends that a discharge voucher or no-claim certificate has been obtained by fraud, coercion, duress or undue influence and the other side contests the correctness thereof, the Chief Justice/his designate must look into this aspect to find out at least, prima facie, whether or not the dispute is bona fide and genuine. Where the dispute raised by the claimant with regard to validity of the discharge voucher or no-claim certificate or settlement agreement, prima facie, appears to be lacking in credibility, there may not be a necessity to refer the dispute for arbitration at all. 19. It cannot be overlooked that the cost of arbitration is quite huge-most of the time, it runs into six and seven figures. It may not be proper to burden a party, who contends that the dispute is not arbitrable on account of discharge of contract, with huge cost of arbitration merely because plea of fraud, coercion, duress or undue influence has been taken by the claimant. A bald plea of fraud, coercion, duress or undue influence is not enough and the party who sets up such a plea must prima facie establish the same by placing material before the Chief Justice/his designate. If the Chief Justice/his designate finds some merit in the allegation of fraud, coercion, duress or undue influence, he may decide the same or leave it to be decided by the Arbitral Tribunal.
If the Chief Justice/his designate finds some merit in the allegation of fraud, coercion, duress or undue influence, he may decide the same or leave it to be decided by the Arbitral Tribunal. On the other hand, if such plea is found to be an afterthought, make-believe or lacking in credibility, the matter must be set at rest then and there. 22. The above certificates leave no manner of doubt that upon receipt of the payment, there has been full and final settlement of the contractor's claim under the contract. That the payment of final bill was made to the contractor on 19-6-2000 is not in dispute. After receipt of the payment on 19-6-2000, no grievance was raised or lodged by the contractor immediately. The authority concerned, thereafter, released the bank guarantee in the sum of Rs 21,00,000 on 12-7-2000. It was then that on that day itself, the contractor lodged further claims." 9. It is therefore clear that a bald plea of fraud, coercion, duress or undue influence is not enough and the party who sets up a plea, must prime facie establish the same by placing material before the Chief Justice/his designate. Viewed thus, the relevant averments in the petition filed by the respondent need to be considered, which were to the following effect:- (g) That the said surveyor, in connivance with the Respondent Company, in order to make the Respondent Company escape its full liability of compensating the Petitioner of such huge loss, acted in a biased manner, adopted coercion undue influence and duress methods of assessing the loss and forced the Petitioner to sign certain documents including the Claim Form. The Respondent Company also denied the just claim of the Petitioner by their acts of omission and commission and by exercising coercion and undue influence and made the Petitioner Company sign certain documents, including a pre-prepared discharge voucher for the said amount in advance, which the Petitioner Company were forced to do so in the period of extreme financial difficulty which prevailed during the said period. As stated aforesaid, the Petitioner Company was forced to sign several documents including a letter accepting the loss amounting to Rs.6,09,55,406/- and settle the claim of Rs.5,96,08,179/- as against the actual loss amount of Rs.28,79,08,116/- against the interest of the petitioner company.
As stated aforesaid, the Petitioner Company was forced to sign several documents including a letter accepting the loss amounting to Rs.6,09,55,406/- and settle the claim of Rs.5,96,08,179/- as against the actual loss amount of Rs.28,79,08,116/- against the interest of the petitioner company. The said letter and the aforesaid pre-prepared discharge voucher stated that the petitioner had accepted the claim amount in full and final settlement and thus, forced the petitioner company to unilateral acceptance the same. The petitioner company was forced to sign the said document under duress and coercion by the Respondent Company. The Respondent Company further threatened the petitioner Company to accept the said amount in full and final or the Respondent Company will not pay any amount toward the fire policy. It was under such compelling circumstances that the petitioner company was forced and under duress was made to sign the acceptance letter." 8. The aforesaid decisions were followed in a recent decision of the Supreme Court in Civil Appeal No. 1659 of 2018 M/s ONGC Manglore Petrochemicals Ltd., vs. M/s ANS Constructions Ltd. & another decided on 07.02.2018, wherein, it has been held that in case the parties are not able to establish a claim that the execution of such discharge or final settlement was on account of fraud/coercion/undue influence practiced by other party or such claim appears to be lacking in credibility, then it is not open to the courts to refer the dispute to arbitration. 9. Sri Ratnesh Chandra also placed reliance on the case of Jagdish chander vs. Ramesh Chander and others, (2007) 5 SCC 719 to submit that fraud is apparent as the claim was of 5 crores but only one crore was paid, therefore, it said that the contract was not finally settled. The certificate dated 18.03.2011clearly mentions a full and final settlement, which does not necessarily mean the claim as made earlier but the claim which was finally accepted and for which a certificate was issued to close the contract. 10. In view of the facts and reasons discussed hereinabove, this Court is of the view that the plea of coercion etc. is an after thought. It is vague and unsubstantiated and lacking in merit , therefore, the matter is not required to be referred to arbitration. 11. The application is accordingly rejected.