Chattisgarh High Court
M/S Surendra Singh Kalra vs The General Manager, South East Central ... on 4 August, 2017
Author: Sanjay K. Agrawal
Bench: Sanjay K. Agrawal
Arb. Application No.35/2015
Page 1 of 8
NAFR
HIGH COURT OF CHHATTISGARH, BILASPUR
Arbitration Application No.35 of 2015
M/s Surendra Singh Kalra, aged 45 years, S/o Shri Balwant Singh Kalra,
Railway Contractor, R/o A-507, Harsh Ashiyana, Green Park Colony,
Near Maharana Pratap Chowk, Bilaspur, Tahsil and District Bilaspur
(C.G.)
---- Applicant
Versus
The General Manager, South East Central Railway, Bilaspur, District
Bilaspur (C.G.)
---- Non-applicant
For Applicant: Mr. Somnath Verma, Advocate.
For Non-applicant: Mr. Abhishek Sinha and Ms. S. Harshita,
Advocates.
Hon'ble Shri Justice Sanjay K. Agrawal
Order On Board
04/08/2017
1. This is an application filed seeking appointment of arbitrator on the
strength of arbitration clause contained in the contract agreement
dated 24-4-2008. The applicant entered into contract agreement
for construction of major bridge No.12 (7x12.2 m PSC) and bridge
No.38 (1x18.3 m PSC) in Pindrai Ghansore section detour
alignment in connection with Gondia Jabalpur Gauge conversion
Project. The approximate value of contract is ₹ 4,66,76,348/- and
the completion period was 18 months from the date of acceptance.
The agreement was executed on 1-2-2011. The work was finally
measured in presence of the contractor and final bill was submitted
by the contractor which was paid on 21-8-2014. Thereafter, the
applicant issued notice on 15-4-2015 stating inter alia that there is
Arb. Application No.35/2015
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price variation for additional work which he has executed and
sought appointment of arbitrator on 15-4-2015 which was replied
by the Railways stating that clause 43(2) provides for no claim and
once no claim certificate is issued by the contractor, he shall be
debarred from disputing the correctness of the items covered by no
claim certificate. Clause 63 excludes the remedy of arbitration in a
case where no claim certificate has been given by the contractor
and therefore no arbitrator can be appointed. Thereafter, the
applicant has filed this application on 17-8-2015 for appointment of
arbitrator to which reply has been filed stating that since no claim
certificate has been issued by the contractor and such claims are
excepted matters not within the purview of dispute resolution by
arbitration, that will debar him from making claim for appointment of
arbitrator as such, no arbitral dispute exists between the parties
which requires reference of dispute to the Arbitral Tribunal and the
application deserves to be rejected.
2. Learned counsel for the applicant submits that no claim was issued
by the applicant under duress and coercion and not voluntarily. No
claim was issued under compulsion on the pressure exerted by the
non-applicant Railways that unless such certificate is issued, final
payment would not be disbursed, therefore to meet the financial
liability and to overcome the hardship, no claim certificate has been
issued and it will not come in the way for appointment of arbitrator
and intervention by the court and as such, the application deserves
to be allowed.
Arb. Application No.35/2015
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3. Learned counsel for the non-applicant Railways would submit that
there is no arbitral dispute exists in view of no claim certificate
signed by the applicant under his own signature willingly and
without protest or demur as such, this will be an explicit matter
under clause 43 (2) of the contract agreement and arbitration is not
the remedy and the matter cannot be referred to arbitration under
the Arbitration and Conciliation Act, 1996. Even thereafter,
performance guarantee and security deposit were released in
favour of the applicant which he did not object and willingly
accepted. He placed reliance upon the decisions of the Supreme
Court in the matters of National Insurance Company Limited v.
Boghara Polyfab Private Limited1 and New India Assurance
Company Limited v. Genus Power Infrastructure Limited 2.
4. I have heard learned counsel appearing for the parties, considered
their rival submissions made herein-above and also gone through
the record with utmost circumspection.
5. The question for consideration would be whether accord and
satisfaction in the present case upon acceptance of entire money
and issuance of 'No Claim Certificate' was not voluntary and
whether the applicant was subjected to duress or coercion and as
such, he can validly invoke the jurisdiction of this Court under
Section 11 (6) of the Act of 1996 for appointment of arbitrator.
6. Law on this point is very much well settled. In Boghara Polyfab
Private Limited (supra), the Supreme Court has held that the party
1 (2009) 1 SCC 267
2 (2015) 2 SCC 424
Arb. Application No.35/2015
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pleading duress or coercion in issuance of No Claim Certificate is
required to establish the same. It was held as under:-
"25. We may next examine some related and
incidental issues. Firstly, we may refer to the
consequences of discharge of a contract. When a
contract has been fully performed, there is a discharge
of the contract by performance, and the contract comes
to an end. In regard to such a discharged contract,
nothing remains - neither any right to seek
performance nor any obligation to perform. In short,
there cannot be any dispute. Consequently, there
cannot obviously be reference to arbitration of any
dispute arising from a discharged contract. Whether
the contract has been discharged by performance or
not is a mixed question of fact and law, and if there is a
dispute in regard to that question, that is arbitrable.
But there is an exception. Where both parties to a
contract confirm in writing that the contract has been
fully and finally discharged by performance of all
obligations and there are no outstanding claims or
disputes, courts will not refer any subsequent claim or
dispute to arbitration. Similarly, where one of the
parties to the contract issues a full and final discharge
voucher (or no due certificate as the case may be)
confirming that he has received the payment in full and
final satisfaction of all claims, and he has no
outstanding claim, that amounts to discharge of the
contract by acceptance of performance and the party
issuing the discharge voucher/certificate cannot
thereafter make any fresh claim or revive any settled
claim. Nor can he seek reference to arbitration in
respect of any claim.
26. When we refer to a discharge of contract by an
agreement signed by both 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
who 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."
7. In the matter of Union of India and others v. Master
Arb. Application No.35/2015
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Construction Company3, the Supreme Court has held that 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. It was 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 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 in 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 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. On the other hand, if
such plea is found to be an after-thought, 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
3 (2011) 12 SCC 349
Arb. Application No.35/2015
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concerned authority, 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."
8. Recently, in Genus Power Infrastructure Limited (supra), Their
Lordships again emphasized the need for material to be placed
before the Chief Justice/his designate establishing the plea of
coercion or duress and held as under:-
"10. In our considered view, the plea raised by the
respondent is bereft of any details and particulars, and
cannot be anything but a bald assertion. Given the fact that there was no protest or demur raised around the time or soon after the letter of subrogation was signed, that the notice dated 31.03.2011 itself was nearly after three weeks and that the financial condition of the respondent was not so precarious that it was left with no alternative but to accept the terms as suggested, we are of the firm view that the discharge in the present case and signing of letter of subrogation were not because of exercise of any undue influence. Such discharge and signing of letter of subrogation was voluntary and free from any coercion or undue influence. In the circumstances, we hold that upon execution of the letter of subrogation, there was full and final settlement of the claim. Since our answer to the question, whether there was really accord and satisfaction, is in the affirmative, in our view no arbitrable dispute existed so as to exercise power under section 11 of the Act. The High Court was not therefore justified in exercising power under Section 11 of the Act."
9. The question for consideration would be whether the applicant has been able to establish the plea of coercion and duress in issuance of No Claim Certificate.
10. The applicant issued no claim certificate under his own letter head and his own signature on 31-5-2012 which states as under: -
Sub: No claim certificate for the work of "Execution of works for construction of major bridge No. 12(7x12.2m PSC) and bridge No.38(1x18.3m PSC in Pindrai-Arb. Application No.35/2015 Page 7 of 8
Ghansore section on detour alignment in connection with Gondia-Jabalpur Gauge conversion project. Agreement No.: C.A.No.73/Br.No.12 & 38/Pindrai- Ghansore/CEC/SECR/08 x.x.
It is to inform you that I have completed all the works on dt. 29.02.12 satisfactorily. The final measurements are accepted by me & there is no claim from my side against the above quoted agreement. Hence you are requested to kindly release my security deposit at the earliest.
11. Not only this, thereafter, performance guarantee was released in favour of the applicant on 6-5-2014 and security deposit was also released on 9-10-2014 and on that basis, rights and obligations under the contract stand discharged and the contractual obligations came to an end. The application for appointment of arbitrator was filed on 17-8-2015 in which it has been stated in paragraph 2 that certificate was obtained under threat of non-preparation of final bill and non-payment, but it has not been substantiated by filing any material on record.
12. The applicant's conduct in issuing no claim certificate under his own seal and signature on his letter-pad and even after the issuance of no claim certificate, obtaining performance guarantee on 6-5-2014 and release of security deposit on 9-10-2014 would show that the plea of duress taken by the applicant is not sincere and it is only in order to overcome the difficulty in getting such a claim.
13. In my considered opinion, the applicant has failed to establish the plea that 'No Claim Certificate' has been signed under duress or Arb. Application No.35/2015 Page 8 of 8 coercion. No material has been brought on record to establish such plea. No details and particulars have been given and no protest or demur was made by the applicant at the time when 'No Claim Certificate' was signed on 31-5-2012 or soon after the letter was signed on 31-5-2012. Even after when the notice of this application was served to the non-applicant, no such plea was taken in the application. Such a plea of duress is absolutely lacking in this entire application and material filed by the applicant. Therefore, in my view the issue is not arbitral in view of clause 43 (2) of the general conditions of contract. Thus, I am of the opinion that the satisfaction accorded by the applicant by accepting final bill and issuing no claim, was voluntary and not under duress or coercion. It was full and final satisfaction of claim and therefore no arbitral dispute exists in order to exercise the power under Section 11(6) of the Arbitration and Conciliation Act, 1996 following the principles of law laid down by the Supreme Court in Boghara Polyfab Private Limited (supra), Master Construction Company's case (supra) and Genus Power Infrastructure Limited (supra).
14. Accordingly, the arbitration application for appointment of arbitrator deserves to be is hereby dismissed leaving the parties to bear their own cost(s). However, this will not bar the applicant for resolution/ adjudication of dispute in accordance with law.
Sd/-
(Sanjay K. Agrawal) Judge Soma