Andhra HC (Pre-Telangana)
Chairman And Managing Director, ... vs P.K. Ramaiah And Company, Civil ... on 31 October, 1991
Equivalent citations: 1992(1)ALT100
ORDER Iyyapu Panduranga Rao, J.
1. C.R.P. No, 838 of 1990 is a revision against the order dated 6th December, 1989 in O.P.No. 166 of 1988 on the file of V Additional Judge, City Civil Court, Hyderabad appointing Sri Justice P. Chennakesav Reddi, retired Chief Justice, Gowhati High Court as sole arbitrator to adjudicate the disputes between the parties. Similarly C.R.P.No. 839 of 1999 is a revision against the order dated 6th December, 1989 in O.P.No. 167 of 1988 on the file of the V Addl. Judge, City Civil Court, Hyderabad appoint Sri Justice P. Chennakesav Reddi, retired Chief Justice, Gowhati High Court as sole arbitrator to adjudicate the disputes between the parties.
2. Since the parties in both the revisions are the same and since the points that arise for consideration in both the matters are also similar, both matters are heard together and they will be disposed of by a common judgment.
3. The points that arise for consideration in both the revisions are-
1) Whether the arbitration clause in the contract subsists in view of the contention of the revision petitioners that the first respondent received the amounts in full and final settlement of the claim under the contract in question?
2) Whether in any event the claim is in time?
3) In any event whether an arbitrator outside the arbitration clause be appointed?
4) To what relief?
4. Point No. 1:- Most of the facts which are not in dispute in both the matters are the following:
5. Manager, Contract services, National Thermal Power Corporation Limited, New Delhi called for tenders for the work of "Civil Works for C.W. System Part-II Construction of Earth Dam (Reach No. IV) from R.D. 5533 to R.D. 9100 for Ramagundam Super Thermal Power Project, Karimnagar District, Andhra Pradesh. The respondent by his letter dated 18-3-1980 tendered for the said work which was accepted. The total value of the said contract was Rs. 3,0030,050-00. Admittedly the work was completed in all respects by 15-3-1984 and handed over the Reach duly fulfilling the commitments and payments were made to the first respondent. Alleging that the first respondent is entitled to additional amounts, the first respondent had a prolonged correspondence with the officers of the N.T.P.C. and since the said correspondence did not evoke any response, the first respondent sought to invoke the arbitration clause embodied in the agreement. Since even then the correspondence from the N.T.P.C. authorities was not positive, the first respondent filed O.P.No. 167/88 for. the appointment of an arbitrator. The N.T.P.C. opposed the application alleging that the amounts were received by R-1 in full and final settlement of the agreement and hence there was no cause of action for the 1st respondent. The N.T.P.C. has further averred that in any event, the claim was barred by limitation and has also taken the contention that no arbitrator outside the purview of the arbitration clause be appointed. Rejecting the objections raised by N.T.P.C. the learned V Additional Judge, City Civil Court, Hyderabad appointed Sri Justice P. Chennakesav Reddi, former Chief Justice of Gowhati High Court as the sole arbitrator and aggrieved by the same C.R.P.No. 839/90 is filed Similarly the first respondent accepted the letter of the intent of N.T.P.C. dt. 7-2-1979 for the work of side preparation including site levelling and grading for Ramagundam Super Thermal Power Project, Karimnagar district, Andhra Pradesh. The value of the said contract is Rs. 1,74,33,334/-. R-1 finally completed the work by 24-12-1990 and payments were made to R-l regarding the said work. But the petitioner addressed series of letters to the N.T.P.C. authorities alleging that certain amounts are still outstanding from the N.T.P.C. and the N.T.P.C. replied that there was nothing outstanding to R-1 from the N.T.P.C. regarding the work in question. Since the contract embodies an arbitration clause, R-1 filed O.P.No. 166/88 for the appointment of an arbitrator. The N.T.P.C. authorities having filed a counter resisted the O.P. and raised exactly the same objections as it has raised in O.P.No. 167/88 and rejecting the said objections, the learned V Additional Judge, City Civil Court, Hyderabad appointed Hon'ble Sri. Justice P. Chennakesav Reddi, retired Chief Justice of Gowhati High Court as sole arbitrator and aggrieved by the same the N.T.P.C. has filed this revision.
6. Admittedly the agreement entered into between the parties in both the matters is almost similar and both the contracts contain arbitration clause.
7. Clause 56 reads as follows:
"Except where otherwise provided for in the contract all questions and disputes relating to the meaning of the specifications, designs, drawings and instructions herein before mentioned and as to the quality of workmanship or materials used on the work or as to any other question, claim, right, matter or thing whatsoever in any way arising out of or relating to the contract, designs, drawings, specifications, estimates, instructions, orders or these conditions or otherwise concerning the works, or the execution or failure to execute the same whether arising during the progress of the work or after the completion or abandonment thereof shall be referred to the sole arbitration of the General Manager of National Thermal Power Corporation Ltd., and if the General Manager is unable or unwilling to act, to the sole arbitration of some oilier person appointed by the Chairman and Managing Director, National Thermal Power Corporation Limited, willing to act as such arbitrator. There will be no objection if the arbitrator so appointed i9 an employee of National Power Corporation Ltd., and that he had to deal with the matters to which the contract relates and that in the course of his duties as such he had expressed views on all or any of the matters in dispute or difference. The arbitrator to whom the matter is originally referred being transferred or vacating his office or being unable to act for any reason as aforesaid at the time of such transfer, vacation of office or inability/to act as Chairman and Managing Director, National Thermal Power Corporation Ltd., shall appoint another person to act as arbitrator in accordance with the terms of contract."
8. Thus, there is no dispute about the fact that the contracts contain the arbitration clause referred to above. But Sri Srinivasa Murthy, the learned counsel for the N.T.P.C. submits that in both the matters the 1st respondent contractor has received the monies in full and final settlement and as such there is nothing further to be negotiated much less to be arbitrated between the parties and thus there is no matter arbitrable. On the contra it is the contention of the first respondent that whether there was a settlement or not itself is a dispute arising out of the contract which the arbitrator alone could decide out of the contract which the arbitrator alone could decide and hence it is submitted that the arbitration clause survives and an arbitrator has to be appointed who has to enquire into the question of the alleged settlement. Thus the learned counsel for the first, respondent submits that even in the event of the revision petitioner contending that there was a full and final settlement, the matter is to be arbitrated.
9. Before proceeding further it is to be noted that there is no dispute about the fact that Clause 56 of the General conditions of the contract which is marked as Ex.A-1 speaks of the arbitration clause and the same is not at all in dispute.
10. It is to be further noted that in C.R.P.No. 838/90 the contractor received the final payment on 19-5-1981 having made an endorsement to the following effect:
"Final measurements and payments accepted in full and final settlement of the contract."
Similarly in C.R.P.No. 839/90 the final bill was paid on 5-6-1984 to the contractor who made an endorsement to the following effect:
"Accepted in full and final settlement to the contract."
These facts are not in dispute.
11. The Revision Petitioner strongly relies upon a decision reported in Union of India v. Ajit Mehta & Associates, . This is a case where final bill was submitted by the firm without any condition or reservations. The firm also has given 'no claim' certificate. Further when the bill was paid the firm had passed unconditional receipt saying that the said amount was received in full and final settlement of its claim. But later the firm tried to dispute with regard to the bills and made further claims. Under the said circumstances Justice Sawant (as he then was) observed as follows having considered various decisions cited before him:
"Thus the authorities discussed above can be said to lay down the law that in spite of full and final settlement of the claim, the arbitration clause in the contract may subsist where the party invoking it alleges that in fact there was no accord and satisfaction for some reasons such as the final bill was submitted on misrepresentation, without prejudice, under protest etc., for then that itself becomes a dispute arbitrable under the clause. However when there is no such allegation made when invoking the arbitration clause, and it is invoked simplicited, it will have to be held that the contract itself had come to an end and with it the arbitration clause which is a part and parcel of it. We have come across no decision which has taken a contrary view. On the other hand the decisions discussed above support our conclusion."
Thus this decision categorically lays down that there the party invoking the arbitration clause alleges that in fact there was no accord and satisfaction for some reasons such as that the final bill was submitted on misrepresentation or without prejudice or under protest etc., the arbitration clause subsists and in cases where there was no such allegation the contract itself had come to an end and with it the arbitration clause which is a part and parcel of the contract. Admittedly in this case the amount was received unconditionally and in full and final settlement of the entire claim. It is to be further seen that a perusal of the allegations made in O.P.Nos. 166 and 167/88 categorically shows that not even an allegation is made to the effect that the letter given by the first respondent evidencing full and final settlement was in fact given under coercion, mistake or misrepresentation or without prejudice or under protest. It is to be further seen that it is not even alleged either in the lower court or before this court that the letter alleging final settlement was given by the contractor 1st respondent under coercion, mistake or misrepresentation or without prejudice or under protest. Under these circumstances in the light of the decision referred to above, no credence be given to the contention raised by the contractor that the arbitration clause still survives.
12. The learned counsel appearing for the contractor relies upon a decision reported in Cochin Refineries Ltd., v. C.S.Co., etc., Kottayam, . This is a case where the contract between the Company and the contractor was having an arbitration clause, after completion of the contract the contractor recording full and final settlement received money; after three years the contractor raised certain claims contending that settlement was recorded under coercion while the company contended that the contract was discharged by settlement and hence arbitration clause did not survive. In the said circumstances it was observed as follows:
"When one party says that there was full and final settlement and the opposite party says that it was not voluntary but under compelling circumstances and he has got claims, that is also a matter that could be decided only by the arbitrator." (vide para 15) This judgment is quite in accordance with the judgment of Justice Sawanth, as he then was, referred to above. As already discussed above there is no whisper in the petitions that the amount was received by the 1st respondent contractor in full and final settlement either under coercion, fraud or misrepresentation or even by mistake and in the absence of any such contention the 1st respondent contractor is not entitled to state that the arbitration clause still survives. Thus, this decision is not helpful to the contractor. This decision also takes the same view as was taken by Justice Sawanth, (as he then was) in the Bombay decision referred to above. In view of the above decisions, I am of the clear opinion that there was nothing to be arbitrated upon between the parties as the amount was received by the 1st respondent contractor in full and final settlement of the claim without any protest or even without any allegation that the said payment was received under coercion, mistake, misrepresentation, without prejudice or under protest. Hence I find that there is nothing to be arbitrable under the agreement Accordingly I hold under this point.
13. Points 2 & 3:- Mr. K. Srinivasa Murthy, the learned counsel appearing for the revision petitioners submits that in any event the claim of the contractor is barred by limitation since the said claim is not made within three years from the date on which the revision petitioner denied liability to pay anything more after the passing of the final bill. He further submits that in any event the arbitrator as mentioned in the arbitration clause has to be appointed and appointment of an arbitrator outside the purview of the arbitration clause is not valid. On the contra, Sri Venugopal Reddy, advocate appearing for the contractor submits that the question whether the claim is barred by limitation or not has to be decided by the arbitrator. He further submits that there is preponderance of authority to see that an outsider can be appointed as an arbitrator when the revision petitioner has not chosen to exercise the option under the arbitration clause. Both sides have referred to number of decisions in support of their respective contentions. In view of the stand taken by me under point No. 1 it is not necessary to consider these points. Accordingly I hold on these points.
14. Point No. 4:- In the result both the revision petitions are allowed setting aside the order of the lower court in both the matters and both the O.Ps. are dismissed. No costs.