Bangalore District Court
Global Agency vs Union Of India The General Mnager on 21 February, 2026
KABC170012942025
IN THE COURT OF LXXXIV ADDL. CITY CIVIL &
SESSIONS JUDGE, AT BENGALURU (CCH-85)
(Commercial Court)
THIS THE 21st DAY OF FEBRUARY 2026
PRESENT:
SRI. ANAND T. CHAVAN. B.Com.,LL.B.(Spl.)
LXXXIV ADDL. CITY CIVIL & SESSIONS JUDGE,
BENGALURU.
Com.AP.No.53/2025
Petitioner:- M/s Global Agency,
No.172, 1st Cross, 1st Block,
BSK 3rd Stage, 3rd Phase,
Bangalore-560 085.
Rep by Sri. C Satish.
(Rep. by Sri. S Vasudeva Naidu - Advocate)
V/s
Respondents:- The Union of India
Rep by
1. The General Manager,
South Western Railway,
Gadag Road, Hubli-580020.
2 Com.AP.53/2025
2. The Divisional Railway Manager,
Bangalore Division,
South Western Railway,
Bangalore-560 023.
3. The Divisional Environment
& House Keeping Manager,
Bangalore Division,
South Western Railway,
Bangalore-560 023.
4. Sri. A.V Chandrashekar,
Hon'ble High Court of Karnataka,
Former Judge, Sole Arbitrator,
Arbitration & Conciliation Centre,
Bangalore.
(R1 to 3 Rep. by Sri. Shivakumar - Adv)
(R4 formal Party)
Date of Institution of the 09.04.2025
petition
Nature of the suit (suit on Arbitration Petition under
pronote, suit for declaration Section 34 of Arbitration &
& Possession, Suit for Conciliation Act, 1996.
injunction etc.)
Date of commencement of
recording of evidence ------
Date on which judgment was 21.02.2026
pronounced
3 Com.AP.53/2025
Total Duration Year/s Month/s Day/s
00 10 12
LXXXIV Addl. City Civil & Sessions Judge,
Bengaluru.
JUDGMENT
This petition has been filed by present petitioner (Who is claimant before Arbitral Tribunal), under Section 34 of Arbitration and Conciliation Act, 1996 seeking to set aside the award dtd.02.12.2024 and published by the Arbitral Tribunal presided by Arbitral Tribunal of Sole Arbitrator Hon'ble Justice Sri. A. V Chandrashekar, Former Judge, Hon'ble High Court of Karnataka.
2. The arbitration proceedings in A.C.No.531/2022 was initiated in pursuant to order of Hon'ble High Court of Karnataka in Civil Misc. Pet (CMP) No.293/2019 dtd.17.08.2022. The petitioner was claimant and respondents No.1 to 3 herein were respondents before Arbitral tribunal. Since 4 Com.AP.53/2025 respondent No.4 Sole Arbitrator is a formal party, issuance of notice against said respondent is dispensed with as per Order dated 09.04.2025. The parties are referred as per their ranking before the Arbitral Tribunal for the sake of convenience.
3. The brief summary of the case of the Claimant before the Arbitral Tribunal in A.C.No:
531/2022 is as under:
The Respondents had called for tenders for the work of "Mechanized cleaning of Kranthiveera Sangoli Rayanna (Bengaluru) station (SBC) & other areas, including garbage collection & Disposal for a period of two years". The claimant participated in the said tender and became eligible lowest bidder. Therefore, the said work was awarded to the claimant and it entered into an Agreement vide an agreement Bearing No.B/EnHm/KSR/CLNG/2016-2017 dated 03.01.2017 with a completion period of 2 years. The petitioner had submitted its tender subject to the terms and conditions of the contract appended with General Conditions of Contract (GCC) and special 5 Com.AP.53/2025 conditions of the contract if any. The clause 3 of the General Conditions of the Contract provides for law governing the contract, which states that "The contract shall be governed by the law for the time being in force in Republic of India". Further the value of work awarded under aforesaid agreement was Rs.6,47,88,962/- for the period of 24 months reckoned from 05.11.2016 and ends on 04.11.2018.
The Clause 63 & 64 of General Conditions of Contract attached to the agreement contemplates resolution of disputes through Arbitration under Arbitration and Conciliation Act 1996 and amendments thereof. Further the tender conditions, the special conditions, specifications of contract and the GCC appended to the agreement govern the contract and in case of variance, the Special Conditions shall prevail. In pursuant to bid submitted, the work was awarded to claimant by 3rd respondent vide Letter of Acceptance dated 03.11.2016.
On completion of the work, the Claimant was entitled to get back the security deposit and for 6 Com.AP.53/2025 returning the performance guarantee along with the final bill. According to the Claimant, the Respondents requested the Claimant to submit a No Claim Certificate along with the final bill and the same was submitted by the Claimant under financial duress, on 22.04.2019. It is averred by the Claimant that after the change in the tax regime w.e.f. 01.07.2017, the Claimant put the Respondents on notice about the enhancement of indirect tax, vide letter dated 12.09.2017 requested to clarify and determine the classification of the contract in hand as to whether it is service contract or work contract and to assess the impact of the new law on this contract. On 13.11.2017 the Claimant put the Respondents on notice about the increase in the rates of wages and hence, requested to suitably compensate the Claimant. Claimant is stated to have put the Respondents on notice about the huge losses incurred by the Claimant because of the increase in tax due to the impact of GST regime and the huge increase in the rates of wages. This was done on 7 Com.AP.53/2025 30.10.2018 by addressing a letter to the Respondents. Thereafter, just one month before completion of work, respondents granted extension of time for a period of 4 months vide its letter dated 31.10.2018. Respondents had intimated the Claimant to continue the contract on the ground that continuance of contract and payment of GST are different issues and will have to be dealt separately. In this regard, the Respondents called upon the Claimant to furnish the details of the payment of GST, with a certificate from its Chartered Accountant. The original contract completed on 04.11.2018, but work was continued as no contract finalized for subsequent period under duress at request of respondents. While accepting the extension granted for a further period of 4 months, it was put to the notice of respondents that there was hike of about 43% on minimum wages A and claimant was reluctant to continue work incurring losses. In the light of huge raise in wages, the Claimant expressed its unwillingness to continue to execute the work. In 8 Com.AP.53/2025 this regard, a letter was addressed on 02.11.2018. It is the case of the Claimant that inspite of these letters, the Respondents did not take any steps and as such Claimant invoked clauses 63 and 64 of GCC r/w 12(5) of Arbitration & Conciliation Act, 1996 by issuing a notice dated 26.03.2019. As there was no response, the Claimant approached the Hon'ble High Court of Karnataka by way of CMP No.293/2019 seeking appointment of Arbitrator.
It is averred that the Claimant submitted its "No Claim Certificate" vide letter dated 22.04.2019 and also furnished the final bill for settlement. After the settlement of the final bill and refund of security deposit and the performance guarantee, Claimant chose to withdraw its No Claim Certificate dated 22.04.2019 vide letter dated 02.05.2019 on the ground that No Claim Certificate had been furnished by the Claimant under financial duress to get release of the final bill and the security deposit.
Under above circumstances, the Claimant claimed total sum of Rs.3,47,44,496/- from 9 Com.AP.53/2025 respondents under the following heads:
Claim No.1- Penalty and interest imposed by 93,01,844/- GST authority Claim No.2- Increase labour charges for the 13,91,452/- period from 01.02.2017 to 31.03.2017 Claim No.3- Difference of labour wages for 1,15,223/- the period from 01.02.2017 to 31.03.2017 Claim No.4- Difference of labour wages for 94,32,231/- the period from 01.04.2017 to 31.03.2018 Claim No.5- Difference of labour wages for 7,71,610/- the period from 01.04.2017 to 31.03.2018 Claim No.6- Difference of skilled labour 52,24,364/- wages for the period from 01.04.2018 to 30.09.2018 Claim No.7- Difference of labour wages for 4,22,538/-
the period from 01.04.2018 to 30.09.2018 Claim No.8- Difference of labour wages for 36,56,784/- the period from 01.10.2018 to 01.03.2019 Claim No.9- Difference of labour wages for 2,93,130/- the period from 01.10.2018 to 01.03.2019 Claim No.10- GST and difference of wages 38,35,320/-
Claim No.11- Costs 3,00,000/-
Total 3,47,44,496/-
These amongst other grounds, the Claimant
has requested Tribunal to pass an award directing the Respondents to pay a sum of Rs.3,47,44,496/- with interest for pre-reference period from the date 10 Com.AP.53/2025 of entitlement, along with pendente lite and future interest at 18% per annum and to award costs of these proceedings including the advocates' fee at 2% on the claim amount.
4. The Respondents have appeared before the tribunal and filed their Statement of Objections through respondent No.3:- The respondents have denied their liability to pay the amount and interest claimed in petition. It is further contended by respondents that the claims are not maintainable either on law or on facts. It is averred that the tenderer, while quoting his rates should take into account the anticipated costs on manpower, as per the prevailing minimum wages of central sphere and the presumption is that the Claimant had visualized this aspect and had quoted its rates. Further respondents have relied upon Clause 40 of Special Conditions of Contract which states that the period of contract may be extended for 6 months from the date of expiry of contract subject to satisfactory performance on the same terms, 11 Com.AP.53/2025 conditions and rate accepted in the tender and that the agreement is to be executed without any scope for enhancement. Therefore, it is averred that the Claimant had entered into a contract with eyes wide open and therefore it cannot turn around at this stage and take a different stand. It is averred that the Claimant has made claims by ignoring the PVC calculation formula. It is further averred that the Claimant was the qualified bidder and became L1 after tender opening. It is averred that if the Claimant felt that the PVC price variation component was not going to address the future increase in labour costs and other costs which could be well forecasted by considering the previous indices, the claimant should not have agreed for the rates.
5. It is further averred that the Claimant, as per clause 43.2 of GCC submitted a No Claim Certificate on 22.04.2019 claiming the final bill as well as the refund of security deposit and performance guarantee. Accordingly entire claim made in the NOC and the final bills were released to the Claimant. It is 12 Com.AP.53/2025 stated that as per clause 63 of GCC, matters pertaining to clause 43(2) of GCC is an Excepted Matter and hence same is not arbitrable. Further respondents have relied upon a decision of the Hon'ble Supreme Court rendered in the case of National Insurance Company Limited Vs. Boghara Polyfab Pvt. Ltd. AIR 2009 SC 170 in which it is held that the party cannot be permitted to approbate and reprobate. It is specifically contended by respondents that, as per clause 16(2) of GCC no interest is payable on the earnest money on the security deposit. The petition is not maintainable either in law or on facts and hence it is requested to dismiss the claim petition. These amongst other grounds, respondents have prayed to dismiss the claim petition of claimant with cost.
6. Learned Arbitrator upon considering the statement of claim and statement of objections filed by both parties has framed following five issues.
1. Whether the claimant proves that it is entitled to recover a sum of Rs.3,47,44,496/- from the 13 Com.AP.53/2025 respondent as per claims 1 to 11 mentioned in abstract of claims at page 17 of the claim statement?
2. Whether the respondent proves that the claim is not maintainable since the claimant has issued a No Claim Certificate?
3. Whether the claimant is entitled for interest, if so, what is the rate of interest to be awarded, on which amount and the date from which it is payable?
4. Whether there should be any order for costs as per Section 31A of the Arbitration & Conciliation Act, 1996, if so, what is the costs to be awarded and from whom it is recoverable?
5. To what reliefs and award the parties are entitled for?
7. Learned Sole Arbitrator has considered issue no.2 as Preliminary issue and posted the matter for hearing on said issue. It shows that respondents have addressed their arguments on said Preliminary issue and despite sufficient opportunity, claimants have not chosen to advance their arguments on the same. Thereafter on 02.12.2024 the tribunal has proceeded to pass the impugned award by answering the Preliminary Issue No.2 in the Affirmative. The award passed by learned Sole Arbitrator is extracted 14 Com.AP.53/2025 as under:-
i. The claim petition is dismissed in its entirety.
ii. The claimant shall pay a sum of Rs.4,50,000/- to the respondents towards Legal Fee and Miscellaneous fee.
iii. The respondents are entitled to recover their share of arbitrator's fee, administrative and sitting fee paid to this centre.
iv. Office to provide the particulars to the parties about the arbitrator's fee, administrative and sitting fee paid to this centre as their respective share.
v. The requisite Stamp duty shall be payable on the Award as per the Karnataka Stamp Act 1957.
8. Aggrieved by impugned award, the respondent has preferred this petition urging following grounds.
a. It is averred that, the learned arbitrator has not afforded opportunity by granting sufficient time as requested by the petitioner counsel with personal vendetta as the counsel for the petitioner in the other matter before the same Hon'ble Arbitrator filed application under Section 13(2) of Arbitration And Conciliation Act 1996 as he was biased and no 15 Com.AP.53/2025 opportunity is granted to present the case of the counsel in that case.
b. It is further averred that, award discloses that, oral evidence adduced is NIL and the petitioner's counsel was not afforded any opportunity to present his case by granting sufficient time for oral arguments, keeping in mind the personal enmity created with the petitioner's counsel in other matter.
c. The petitioner in Para 9 of its claim statement pleaded financial duress in submitting the no claim certificate to receive legitimate amounts of final bill, performance guarantee and security deposit. If financial duress is pleaded in submitting the no claim certificate and if such no claim certificate submitted is before the final bill is passed, then there is no accord and satisfaction in issuing such no claim certificate as per the settled position of law declared by the Hon'ble Apex Court in National Insurance Company Vs Boghara Polyfeb Pvt Ltd. Therefore the Hon'ble Arbitrator failed to consider the settled position of law in passing the award and committed an error and hence award dated 02.12.2024 is perverse and liable to be set aside.
d. It is further averred that, the petitioner wanted to rely upon the Judgment of Bombay High Court rendered in A2Z Vs Union of India to support the claims of petitioner before the Arbitral Tribunal if an 16 Com.AP.53/2025 opportunity was afforded to present its' case, as was sought by the petitioner. As the Arbitrator refused grant time to present oral arguments and present case, the petitioner lost the opportunity of supporting his case with settled position of law before the Arbitral Tribunal.
e. It is further contended by claimant that, the Arbitral Tribunal failed to consider the terms and conditions of the contract in awarding the costs in favour of respondents in violation of Clause 64(6), which provides that cost of arbitration shall be borne by respective parties and such costs inter alia includes the fee of arbitrator, as per the rates fixed by railway board from time to time and fee shall be borne equally by both parties. Further fee payable to arbitrator would be governed by the instructions issued on the subject by railway board from time to time irrespective of fact that whether arbitrator is appointed by Railway Administration or by court of law unless specifically directed by the court otherwise on the matter. Hence awarding of cost in favour of respondents is total violation of said express terms of contract and arbitrator cannot traverse beyond terms of contract.
f. It is further contended by claimant that no reasons have been furnished in award to dismiss the claim petition, except relying upon No Claim Certificate and 17 Com.AP.53/2025 judgment of Hon'ble Apex Court in National Insurance Company V/s Bhogara Polyfeb Private Limited.
g. It is further contended that failure to consider the effect of certain material documents is misconducted on part of arbitration, an apparent defect and in such event award is liable to be set aside and remitted back to arbitrator for reconsideration. Such failure of arbitrator to consider effect of certain material documents results miscarriage of justice and as such award suffers from error apparent on face of it.
h. It is further averred arbitrator misconducts himself, if he ignores documents which are material and important for arriving just and fair decision and goes to the root of controversy. Such an award suffers from error on the face of it.
i. It is further contended that arbitrator failed to appreciate the terms and conditions of the contract as well settled position of law. Hence award is bad and same is liable to be set-aside.
9. The respondents have appeared before this Court and filed their written Arguments, where in it is averred that, the petition is frivolous, vexatious and not maintainable either in law or on facts and same 18 Com.AP.53/2025 is liable to be dismissed in limine. It is further averred that tribunal framed five issues, out of which it treated Issue No.2 as preliminary issue with regard to maintainability of claim petition. It is further averred that the tribunal recorded in para No.13 of the award that in spite of giving several opportunities to the learned counsel for claimant, no oral arguments have been advanced on behalf of claimant and thereafter it has given 10 days time from 20.11.2024 to file written synopsis in support of case of claimant. However since no written synopsis is filed in support of the case of the claimant, the case is decided on the basis of pleadings and documents of parties. Hence the petitioner did not contest the case before tribunal and it shows lack of diligence on their part to pursue the case before the tribunal. It is further averred that the arbitral tribunal has observed that petitioner has submitted No Claim Certificate with regard to tendered work on 22.04.2019 to respondent and accordingly respondent has refunded security deposit and EMD 19 Com.AP.53/2025 amount of Rs.36,44,379/- in favour of petitioner on 22.04.2019 itself as observed in para No.20 of Arbitral Award. Further as per Clause No.43.2 of GCC the contractor shall not be entitled to make any claim whatsoever against the railway under or by virtue of or arising out of the contract nor railways shall entertain or consider any such claims made by contractor, after signing such No Claim Certificate by the claimant after the works are finally measured up. Thus contractor shall be debarred from disputing the correctness of the items covered by No Claim Certificate or demanding the clearance to arbitration in respect thereof. Hence by relying upon aforesaid clause and supporting citations produced by respondent, learned Sole Arbitrator has proceeded to answer Issue No.2 in the Affirmative with the speaking order in accordance with law. It is further averred that the Learned Arbitration has relied upon several caselaws and Clause 63 of GCC, which states that matter pertaining to Clause 43(2) of GCC falls under excepted matters and it is non arbitrable. Thus 20 Com.AP.53/2025 the tribunal has held that the claims put forth by petitioner are not in accordance with law and accordingly it has dismissed the claim petition by holding that petitioner is not entitled to get any award amount or interest or other relief. It is further averred that petitioner has not mentioned any sufficient grounds to set aside the award passed by the arbitral tribunal under Sec.34 of Arbitration and Conciliation Act and these amongst other grounds, it is prayed to dismiss the present petition.
10. The following points arise for consideration:
1. Whether the petitioner substantiates that impugned award passed by Learned Sole Arbitration in AC No.531/2022 dtd.02.12.2024 is in breach of fundamental public policy of India and suffers from patent illegality, requiring it to be set aside?
2. Whether the petitioner has made out any grounds under Section 34 of Arbitration & Conciliation Act, 1996 so as to Set aside the impugned Award dated 02.12.2024 passed by the learned Sole Arbitrator in the arbitration proceedings A.C.No.531/2022?
21 Com.AP.53/2025
3. What order?
11. The records of A.C.No.531/2022 are secured from concerned Arbitration and conciliation Centre. Heard arguments of both sides. Perused records.
12. The following findings are on above points:
Point No.1 & 2:- In the Negative Point No.3:- As per final order for following:-
REASONS
13. Point No.1 & 2:- These two points are taken together for consideration to avoid repetition of facts. It is settled law that the Court while dealing with an application under Section 34 of Arbitration & Conciliation Act, 1996 is required to exercise its jurisdiction within the frame work of Section 34 and Section 34 (2A) of the Act. Where two views are possible in respect of a dispute, the view taken by the Arbitrator cannot be found fault with by the Court. The petitioners have to establish that the impugned order is against the fundamental law of India and it is patently illegal. In order to determine 22 Com.AP.53/2025 the suit it is useful to refer to Section 34 of Arbitration and Conciliation Act, 1996 which reads as under:
Section 34: Application for setting aside arbitral award:-
(1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub- section (3).
(2) An arbitral award may be set aside by the Court only if- (a) the party making the application establishes on the basis of the record of the arbitral tribunal that-
(i) a party was under some incapacity; or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration:
Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or
23 Com.AP.53/2025
(v) the composition of the arbitral Tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or
(b) the Court finds that-
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or
(ii) the arbitral award is in conflict with the public policy of India.
[Explanation 1.-For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,-
(i) the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81; or
(ii) it is in contravention with the fundamental policy of Indian law; or
(iii) it is in conflict with the most basic notions of morality or justice.
Explanation 2.-For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.
(2A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award:
Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by reappreciation of evidence.
24 Com.AP.53/2025 (3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral Tribunal:
Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter.
(4) On receipt of an application under sub-section (1), the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral Tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral Tribunal will eliminate the grounds for setting aside the arbitral award.
(5) An application under this section shall be filed by a party only after issuing a prior notice to the other party and such application shall be accompanied by an affidavit by the applicant endorsing compliance with the said requirement.
(6) An application under this section shall be disposed of expeditiously, and in any event, within a period of one year from the date on which the notice referred to in sub-section (5) is served upon the other party.
14. At the outset it is necessary to consider one of ground urged by claimant/petitioner that, learned arbitrator has not afforded any opportunity by 25 Com.AP.53/2025 granting sufficient time to the counsel for petitioner due to personal vendetta as the counsel for petitioner in other matter before same arbitrator filed an application under Section 13(2) of Arbitration Act as he was biased. In this regard the counsel for petitioner has relied upon Annexure H unsigned copies of Presentation form and application produced at page no.242 of the petition in AC Case No. 463/2022.
15. In view of aforesaid contentions of petitioner /claimant, it is necessary to refer the proceedings in Arbitration Case No.531/2022. On perusal of the order sheet of the tribunal in AC No.531/2022, it shows that, the claimant has filed his claim petition along with documents on 15.10.2022 and both parties have deposited their shares of initial arbitration fee. It further shows that the respondents have filed their objections statement before Learned Arbitration on 05.10.2023. It further shows that, counsels for both parties have appeared before the Arbitral Tribunal on 20.11.2023 and thereafter the 26 Com.AP.53/2025 matter is posted on 20.12.2023 for framing of issues. Thereafter on 21.12.2023 the Tribunal has framed the issues in presence of counsels for both parties and considering the nature of Issue No.2, the tribunal has treated the Issue No.2 as preliminary issue. Thereafter as per submission of counsel for respondent that, the said issue involves question of law, the tribunal has posted the matter for hearing on said preliminary issue. Thereafter on 22.01.2024, 11.03.2024, 19.04.2024 and 14.06.2024 the tribunal has adjourned the matter and finally posted the case for hearing on preliminary issue on 04.07.2024. Thereafter on 04.07.2024 the counsels for respondents has addressed his arguments on preliminary issue and as per request of claimants side the matter is posted for arguments of claimants on preliminary issue on 08.08.2024 and then on 29.08.2024, 25.09.2024, 24.10.2024, 20.11.2024. In the meanwhile on 24.10.2024 as per submissions of both sides, the tribunal has observed that one year time of mandate of said tribunal has completed 27 Com.AP.53/2025 on 05.10.2024 and by accepting submissions of both sides, the tribunal as extended it's mandate till 04.04.2025 under Sec.25(a) of Arbitration and Conciliation Act. Thereafter when matter was finally posted for arguments of claimants side on preliminary issue on 20.11.2024, the counsel for claimant has again sought adjournment to address their arguments on preliminary issue and tribunal by considering the time already granted to claimants side, has not accepted the request of claimant side. However the tribunal by granting 10 days time to learned counsel for claimant to furnish his written arguments along with citations if any by serving copy to respondents side has reserved the case for passing award. Thereafter the sole arbitrator has passed impugned award on 02.12.2024, i.e. after 12 days from the date of reserving the matter for award. The Ordersheet clearly shows that no written arguments are submitted by present claimant within stipulated period of 10 days, as per liberty granted by the tribunal.
28 Com.AP.53/2025
16. Hence though the petitioner has specifically alleged in petition that, learned arbitrator has not afforded any opportunity by granting sufficient time to the counsel for petitioner with personal vendetta as the counsel for petitioner in other matter before same arbitrator filed an application under Section 13(2) of Arbitration Act as he was biased and for said reason he did not grant any opportunity to the counsel for petitioner to present the case, no such allegations are made by claimant before the tribunal nor on said ground petitioner has sought for substitution of arbitrator by invoking relevant provisions of Arbitration and Conciliation Act. On plain reading of aforesaid entire order sheet, it clearly shows that learned arbitrator has framed aforesaid issues with notice to both parties and considering submissions of respondents side has treated the issue No.2 as preliminary issue and same has not been questioned or challenged by claimant before tribunal. Further the aforesaid proceedings before Arbitral tribunal sufficiently shows that, 29 Com.AP.53/2025 learned Arbitrator has afforded sufficient opportunity to both parties, especially to petitioner to address their arguments on preliminary issue on various dates and also to file their written submissions within stipulated time. Hence absolutely there is no ground to believe at this stage that, learned arbitrator acted in bias and passed aforesaid award without affording proper opportunity to petitioner of being heard. Thus on plain reading of proceedings of above arbitration case, it shows that despite sufficient opportunity the petitioner has not chosen to put forth his arguments on preliminary issue. Hence the above contentions raised by petitioner/ claimant in present case do not hold any water nor same can be considered as a ground to set aside the arbitral award.
17. Further though petitioner has alleged that no oral evidence has been adduced in aforesaid matter, when learned arbitrator has decided to consider the issue No.2 as preliminary issue in view of question of law involved in such issue, question of affording opportunity to both parties to lead their evidence on 30 Com.AP.53/2025 such issue, which is purely based upon settled principles of law does not arise. Hence the above grounds urged by petitioner/ claimant that the award is vitiated for not recording of evidence cannot be believed.
18. Learned Counsel for petitioner has vehemently argued that in pursuance of the bid submitted, the said work was awarded to the claimant by the 3rd respondent vide letter of Acceptance dated 03.11.2016 which is much prior to the date of implementation of the GST Law. Therefore, the petitioner at any stretch of imagination cannot foresee the upcoming new enactment of GST Law and quote the rate in cognizance of the same. It is further argued by said counsel that, during VAT regime, contracts in the nature of rendering services were exempted from Service Tax as well as VAT. Whereas in the new GST act, the contracts in the nature of services such as subject contract in hand have been brought within the ambit of GST law chargeable at 18%, which was not considered by 31 Com.AP.53/2025 petitioner while submitting the bid. It is further argued that, issuance of JPO by the respondents expressly amends the contract and as a result the petitioner is entitled to receive the net GST payable under the contract as per the invoices raised from time to time. Hence, as respondents failed to pay the net payables of GST as per JPO, the petitioner is entitled with legal litigations with GST department has issued notices and passed orders against the demanding huge amounts of GST arrears in respect of the contracts between petitioner and the respondents. It is further argued by said counsel that, respondents No.1 failed to comply with the JPO vide its dated 06.02.2018 issued by the GM/SWR to neutralize the effect of GST on contracts which have been executed and entered in to prior to implementation of GST.
19. The counsel for petitioner has further argued that, the claim No.1 is for an amount of Rs.93,01,844/- and penalty along with interest if any as applicable/imposed by GST authority which got 32 Com.AP.53/2025 emanated as an additional net burden on implementation of the GST @ 18% from 01.07.2017 to 31.05.2019 for a period of 23 months. It is further argued by counsel for petitioner that, the Claim No.2 to Claim No.10 claimed in statement of claims were pertaining to increased labour wages from 05.11.2016 to 05.02.2019. The claim No.11 is GST on difference of wages claimed under claim No.2 to 10 @ 18%. Further, the petitioner had intended to produce the orders issued by the Ministry of Labour and Employment, Government of India amending the minimum wages for various sectors of workers time to time after the award of the contract, which were enforced by the respondents in dispersing the payment to the workers engaged by the petitioner.
20. It is further argued by counsel for petitioner that, the Hon'ble Tribunal failed to consider the material evidence placed before it and aforesaid statement of claims and it erred in passing award on preliminary issue without considering above aspect 33 Com.AP.53/2025 and also without affording proper opportunity to petitioner/claimant. It is further argued that, learned arbitrator has committed an error in considering the material evidence in the form of tender conditions in evaluating the claims of the petitioner while passing the award thus the award is perverse and liable to be set aside.
21. However on perusal of the award and other materials placed on record, it show that, as per serious contention raised by respondents side with regard to the very maintainability of suit, learned arbitrator has framed aforesaid Issue No.2 with regard to non maintainability of claim petition in view of issuance of No Claim Certificate in favour of claimant. Learned arbitrator has specifically observed that, claimant being contractor having furnished the No Claim Certificate and having received all the dues based on final bill cannot seek any enhancement.
22. On perusal of materials on record, the tribunal has appreciated the grounds urged by respondents side and it has specifically observed that, Clause 43 34 Com.AP.53/2025 of Agreement specifically states that rates quoted should be inclusive of all taxes as his being levied or may be levied in future and no increase in such rates will be permissible if the taxes rates are increased. Ld. Arbitrator has also considered the contentions of respondents that, as per Clause 5 of the Agreement states that the Railway administration is not liable to pay any extra charge for under taking the work of cleanliness on his own costs.
23. Further learned arbitrator has extracted the No Claim Certificate issued by claimant before respondents dtd.22.04.2019 after completion of contract for period in between 04.11.2016 to 04.02.2019 including the extension period. The said certificate clearly shows that claimant has admitted to have received the payment for the entire contract period and it does not have any claims from railways. Hence he has prayed to arrange the refund of the security deposits recovered from the running bills and EMD. Learned arbitrator has further relied upon another letter of claimant dtd.02.05.2019 35 Com.AP.53/2025 withdrawing the No Claim Certificate wherein the claimant by reiterating the completion of contract awarded by respondents has specifically stated that, it is withdrawing the No Claim Certificate issued dtd.22.04.2019, since they have claims to be received from respondents, for which they have already requested GM/SWR for appointing an arbitrator vide letter dtd.26.03.2019. Thus it is crystal clear and undisputed that, though claimant has issued No Claim Certificate, subsequently it has withdrawn it by way of aforesaid letter dtd.02.05.2019.
24. Learned arbitrator has considered release of security deposit and EMD amount of Rs.36,44,379/- to claimant by respondents on 22.04.2019 itself on the basis of aforesaid No Claim Certificate and filing of aforesaid letter withdrawing No Claim Certificate by claimant after lapse of 10 days on specific ground of economic duress. The tribunal has further considered letter addressed by respondents to claimant referring Clause 36 of GCC, which is 36 Com.AP.53/2025 extracted as under:-
"The contractor shall not be entitled to make any claim "whatsoever" against the railway under or by virtue of or arising out of this contract, nor shall the railway entertains or considers any such claim, if made by the contractor after he shall have signed a No Claim Certificate" in favour of the railway, in such for as shall be required by the railway after the works are finally measured up and paid for by the railway. The contractor shall be debarred from disputing the correctness of the items covered by "No Claim Certificate" or demanding a clearance to arbitration in respect thereof."
25. Hence on plain reading of aforesaid clause, it shows that, the said clause clearly debars right of claimant from making any claim whatsoever against the respondents/railways under or by virtue of or arising out of above contract, nor respondents/ railways are liable to entertain or consider any such claim of contractor, after issuance of "No Claim Certificate" by claimant in favour of the respondents. Hence the very right of claimant from disputing the correctness of the claims covered by "No Claim Certificate" or demanding referral of matter to 37 Com.AP.53/2025 arbitration is doubtful. Further the above clause prohibits the claimant from making any claim after submitting the No Claim Certificate and receiving all amounts due to him.
26. Considering all these aspects, learned arbitrator has rightly observed that, in the present case also final bill had been mutually signed by both the parties subsequent to the respondent issuing a completion certificate on 22.03.2019 certifying that the work of mechanized cleaning of Krantiveera Sangollirayanna Station (SBC) and other areas for a period of 2 years including the extension period was completed on 04.02.2019 satisfactorily. Accordingly the claimant submitted a No Claim Certificate on 22.04.2019 and received all the dues. However after expiry of 10 days claimant has issued aforesaid letter dated 02.05.2019 withdrawing its NOC, without mentioning that it was withdrawing the No Claim Certificate due to financial duress. As rightly observed by learned Arbitrator, the claimant has not whispered anything in Letter dated 02.05.2019 that 38 Com.AP.53/2025 claimant had issued No claim Certificate under financial duress or he is withdrawing the same for said reason. Further, it is not denied and disputed that, such a plea is raised by claimant for the first time in the claim statement without any particulars. Hence the findings of the tribunal that, after having accepted the final payment in full and final satisfaction of all its claims, the claimant had no right to seek further claim, cannot be found fault.
27. Further, the tribunal has taken note of aforesaid aspects and relied upon case law between ONGC Mangalore Petrochemical Ltd., V/s ANS Constructions Ltd. The relevant portion of caselaw is extracted as under:-
Hon'ble Supreme Court in Civil Appeal No.1659 of 2018 (Arising out of Special Leave Petition (C) No.12939 of 2015) between M/s ONGC Mangalore Petrochemicals Ltd., V/s ANS Constructions Ltd., & Anr.
"9. Per contra, learned counsel for the contractee- Respondent No.1 herein submitted that during the execution of Contract, the contractee Company raised Running Account Bills (RA Bills) to the Contractor-Company for the expenses incurred towards carrying out the construction work but 39 Com.AP.53/2025 the same were cleared with inordinate delay and even the final bill to the tune of Rs.20.34 Crores was released by the appellant-Contractor only when the contractee Company furnished "No Dues/No Claim Certificate" dated 21.09.2012. Upon submitting the above Certificate, the appellant- Contractor issued a Completion Certificate approving the work carried out by the contractee under the Contract.
24. From the materials on record, we find that the contractee-Company had issued the "No Dues/No Claim Certificate" on 21.09.2012, it had received the full amount of the final bill being Rs. 20.34 crores on 10.10.2012 and after 12 days thereafter, i.e., only on 24.10.2012, the contractee-Company withdrew letter dated 21.09.2012 issuing "No Dues/No Claim Certificate". Apart from it, we also find that the Final Bill has been mutually signed by both the parties to the Contract accepting the quantum of work done, conducting final measurements as per the Contract, arriving at final value of work, the payments made and the final payment that was required to be made. The contractee- Company accepted the final payment in full and final satisfaction of all its claims. We are of the considered opinion that in the presents facts and circumstances, the raising of the Final Bill and mutual agreement of the parties in that regard, all claims, rights and obligation of the parties merge with the Final Bill and nothing further remains to be done. Further, the appellant-Contractor issued the Completion Certificate dated 19.06.2013 40 Com.AP.53/2025 pursuant to which the appellant-Contractor has been discharged of all the liabilities. With regard to the issue that the "No-Dues Certificate" had been given under duress and coercion, we are of the opinion that there is nothing on record to prove that the said Certificate had been given under duress or coercion and as the Certificate itself provided a clearance of no dues, the contractee could not now turn around and say that any further payment was still due on account of the losses incurred during the execution of the Contract. The story about duress was an afterthought in the background that the losses incurred during the execution of the Contract were not visualised earlier by the contractee. As to financial duress or coercion, nothing of this kind is established prima facie. Mere allegation that no- claim certificates have been obtained under financial duress and coercion, without there being anything more to suggest that, does not lead to an arbitrable dispute. The conduct of the contractee clearly shows that "no-claim certificate" was given by it voluntarily; the contractee accepted the amount voluntarily and the contract was discharged voluntarily. Conclusion:
25. Admittedly, No-Dues Certificate was submitted by the contractee-Company on 21.09.2012 and on their request Completion Certificate was issued by the appellant-Contractor. The contractee, after a gap of one month, that is, on 24.10.2012, withdrew the No Dues Certificate on the grounds of coercion and duress and the claim for losses incurred during 41 Com.AP.53/2025 execution of the Contract site was made vide letter dated 12.01.2013, i.e., after a gap of 3 ½ (three and a half) months whereas the Final Bill was settled on 10.10.2012. When the contractee accepted the final payment in full and final satisfaction of all its claims, there is no point in raising the claim for losses incurred during the execution of the Contract at a belated stage which creates an iota of doubt as to why such claim was not settled at the time of submitting Final Bills that too in the absence of exercising duress or coercion on the Contractee by the appellant-Contractor. In our considered view, the plea raised by the contractee-
Company is bereft of any details and particulars, and cannot be anything but a bald assertion. In the circumstances, there was full and final settlement of the claim and there was really accord and satisfaction and 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."
28. The tribunal has elaborately considered facts and circumstances of present case, in the light of ratio laid down in aforesaid Judgment of Hon'ble Supreme Court and considering similar facts of present case., it has come to conclusion that the very claim petition is not maintainable in view of filing of no claim certificate by claimant/petitioner. While 42 Com.AP.53/2025 appreciating similar facts and circumstances of aforesaid caselaw, the tribunal has observed that, in said case also the contractor ANS Construction submitted a No Due Certificate on 21.09.2012 in total sale settlement of all claims against ONGC Mangalore Petrochemicals Ltd., and it was paid 20.34 Crores towards final bills. Thereafter contractor addressed a letter on 20.10.2012 withdrawing its No Claim Certificate dtd.21.09.2012 stating that it was perquisite conditions for release of their long due legitimate payment against their works executed under the contractor and same was furnished by it under duress and coercion of awarding company. Thus the said contractor submitted claim of Rs.96,88,48,642/-, which was denied by awarding company. Thereafter CMP filed by contractor before Hon'ble High Court of Karnataka for appointment of arbitrator, was allowed on 12.01.2015 and on challenge of said order dtd.12.01.2015 by ONGC Petrochemical before Hon'ble Supreme Court in aforesaid case, the Hon'ble Supreme Court held that, 43 Com.AP.53/2025 when claimant claims huge sum by way of damages and when he is keen to have settlement to avoid litigations, voluntarily reduced the claims and requests for settlement and when he agrees to settle the claim and obtain full and final discharge voucher, even if he might have agreed for settlement due to financial compulsions and commercial pressurizes or economic duress, decision was his pre-choice as there would be no threat or coercion or compulsion by the respondents. Hence Under such circumstances the accord and satisfaction is binding and valid and there cannot be subsequent claim or reference to arbitration. The tribunal has further narrated that, the ratio of Hon'ble Supreme Court in above case, that when nothing is established prima facie with regard to the allegation of financial duress or coercion and when there is nothing more to suggest that, there is no arbitrable dispute and hence, ultimately the order appointment of arbitrator made by the Hon'ble High Court under Section 11 is set aside by allowing the civil appeal.
44 Com.AP.53/2025
29. Further learned arbitrator has also strongly relied upon caselaws reported under (2011) 11 SCC 349 between Union of India and Ors V/s Master Constructions and New India Assurance Company Ltd., V/s Genus Power Infrastructure Ltd., reported under (2015) 2 SCC 424, which are referred by Hon'ble Supreme Court in above judgment of ONGC Mangalore Vs. M/s. ANS constructions, wherein it was held that even a bald plea of fraud, coercion, duress or undue influence is not enough and the party who sets up such special plea, must primafacie establish the same by placing enough materials.
30. Further learned arbitrator has considered the aforesaid case laws in the factual background of present case and specifically observed that, in present case also No Claim Certificate issued by present claimant as a prerequisite conditions for release of dues, legitimate payments against the work executed under the respondents and said no claim certificate was withdrawn by claimant 45 Com.AP.53/2025 subsequently, without any specific allegations that no claim certificate was issued under duress or coercion.
31. Further as rightly observed by the tribunal, mere bald averments of financial duress or economic duress would be insufficient. Further the plea of fraud, coercion, misrepresentation of facts and duress or special pleas which requires specific particulars to be mentioned in pleadings. Further if such particulars are mentioned and specific pleadings are made, such pleas will have to be proved with higher degree of the proof which is equivalent to one insisted in criminal cases.
32. Hence considering aforesaid aspects, learned Arbitrator has rightly come to conclusion that, the decision of Hon'ble Supreme Court in ONGC Mangalore Petrochemical Limited is aptly applicable to the facts of the present case and the same is binding on the Arbitral tribunal under Article 141 of the Constitution of India, in view of identical situation. Considering all these aspects, the tribunal has rightly held that, the present claim of claimant is 46 Com.AP.53/2025 not maintainable in view of submission of No claim certificate and it has answered aforesaid Preliminary issue i.e. Issue No.2 in the affirmative, with cogent reasons.
33. Further counsel for claimant/ petitioner has vehemently argued that, the Arbitral Tribunal failed to consider the terms and conditions of the contract in awarding the costs in favour of respondents in violation of Clause 64(6), which provides that cost of arbitration shall be borne by respective parties and such costs inter alia includes the fee of arbitrator, as per the rates fixed by railway board from time to time and fee shall be borne equally by both parties. He has further argued that, when such fee would be governed by the instructions issued by railway board, awarding of cost in favour of respondents is total violation of said express terms of contract and arbitrator cannot traverse beyond terms of contract. However admittedly Sec.31-A of Arbitration and Conciliation Act empowers the arbitral tribunal to determine whether costs are payable by one party to 47 Com.AP.53/2025 another, to fix amount of such costs and when such costs are to be paid. The learned arbitrator has considered the facts and circumstances of the case and has come to conclusion with regard to liability of claimant to pay aforesaid cost of Rs.4,50,000/- to respondents towards legal and miscellaneous fees incurred by them. Accordingly learned arbitrator in exercise of power conferred under Sec.31A of Arbitration Act has awaded cost of Rs.4,50,000/- to respondents from claimant side towards legal fee and miscellaneous fee. Under such circumstances when the arbitral tribunal has imposed aforesaid costs with cogent reasons by exercising powers under Sec.31A of Arbitration Act directing unsuccessful party to pay the cost to successful party, there is no reason to believe that the arbitrator has traversed beyond terms of contract.
34. Therefore, for the reasons stated in foregoing paras, it clearly shows that, absolutely no grounds are made out by petitioner to hold that the award passed by Learned Sole Arbitrator is against the 48 Com.AP.53/2025 public policy of India and existing laws and also to believe that the said award suffers from patent illegality. Hence absolutely no grounds are made out by the petitioner to set-aside the impugned award of the arbitration. For these reasons, petition deserves to be dismissed with costs. Accordingly, Point Nos.1 and 2 are answered in the Negative.
35. Point No.3:- For the reasons stated and findings given on point Nos.1 and 2, following is:
ORDER The petition filed under Section 34 of Arbitration and Conciliation Act 1996 seeking to set aside the Arbitral Award passed by Learned Sole Arbitrator in AC No.531/2022 is dismissed with costs.
Send back original records to Arbitration and Conciliation Center, Bengaluru.
49 Com.AP.53/2025 Office to send soft copies of this judgment to the email IDs of both parties, if such email Ids are furnished.
[Dictated to the Stenographer Grade-III, directly on the computer, typed by her, then corrected and signed by me and pronounced in the Open Court, dated this the 21st day of February 2026] Digitally signed by ANAND T ANAND CHAVAN T CHAVAN Date: 2026.02.25 16:17:15 +0530 (ANAND T. CHAVAN) LXXXIV Addl.City Civil & Sessions Judge, Bengaluru.