FACTS:
The respondent, M/s Master Construction Company, was awarded a contract by the first appellant, Union of India, for the work, ‘provisions of OTM accommodation and certain essential technical buildings’ to be erected and installed at Bhatinda. The agreement between the parties made IAFW–2249 an integral part of the contract. Condition 70 thereof provided mode for resolution of disputes and differences between the parties through arbitration. The work was said to have been completed by the contractor, albeit belatedly. The contractor furnished no-claim certificates thrice and then signed the final bill. Immediately after release of the bank guarantee, on that very day, the contractor wrote to the appellants withdrawing ‘no-claim certificates’; it also lodged certain claims.
The contractor requested the Engineer-in-Chief, Army Headquarters, Kashmir House, New Delhi (Appellant No. 2 herein) to refer the disputes for resolution to the arbitrator. The contractor also stated that if the arbitrator was not appointed within 30 days from the date of request, it may be constrained to seek the remedy as may be available under the law. As no arbitrator was appointed by the appellants despite the request, the contractor made an application under Section 11(6) of the Arbitration and Conciliation Act, 1996 before the Civil Judge, Bhatinda. The application, after contest, was dismissed.
Being not satisfied with the order, the contractor challenged that order by filing a writ petition before the High Court of Punjab and Haryana. The Division Bench of the High Court heard the parties and dismissed the contractor’s writ petition. The contractor challenged the High Court’s order by filing a special leave petition before the Apex Court and the same was disposed by directing that the application shall be placed before the Chief Justice of the Punjab and Haryana High Court, for appropriate order thereon. The present appeal, thus, arose from the order passed by the Chief Justice of the Punjab and Haryana High Court whereby he held that all disputes between the parties to the contract have to be referred to the arbitration and appointed Mr. M.S. Liberahan, retired Chief Justice of Andhra Pradesh High Court, as sole arbitrator to decide the disputes between the parties.
ISSUE FOR CONSIDERATION:
Whether after furnishing ‘no-claim certificates’ and the receipt of payment of final bill, as submitted by the contractor, any arbitrable dispute between the parties survived or the contract stood discharged?
ARGUMENTS BY THE APPELLANT(S):
The learned counsel for the appellants made two-fold submission-
- that no arbitrable dispute existed between the parties as full and final payment has been received by the contractor voluntarily after submission of ‘no-claim certificates’ and the final bill,
- that, in any case, the Chief Justice in exercise of his power under Section 11(6) ought to have given due regard to the arbitration clause and appointed the arbitrator in terms thereof.
ARGUMENTS BY THE RESPONDENT:
The learned counsel for the contractor, however, contended that the issue whether ‘no-claim certificates’ were given voluntarily or under financial duress, is an issue which must be decided by the arbitrator alone and it is for this reason that the Chief Justice has referred the disputes between the parties to the arbitrator. In this regard, reliance was placed upon a recent decision in the case of National Insurance Company Limited v Boghara Polyfab Private Limited, (2009) 1 SCC 267.
HELD:
In the opinion of the Hon’ble Court, in a case where the claimant contends that a 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. 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. 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 or otherwise.
Referring to the facts of the present case, the Court observed that the terms mentioned on the certificate executed by the contractor at the time of receiving payment on account of final bill, leaves no doubt that upon receipt of the payment,there has been full and final settlement of the contractor’s claim under the contract. 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 appeal was, accordingly, allowed and the impugned order passed by the Chief Justice of the High Court of Punjab and Haryana was set aside.