Orissa High Court
The Marwah Company vs National Thermal Power Corporation Ltd on 17 April, 2019
Equivalent citations: AIR 2020 (NOC) 442 (ORI.), AIRONLINE 2019 ORI 53, (2019) 128 CUT LT 33 (2019) 1 ORISSA LR 1085, (2019) 1 ORISSA LR 1085
Author: Biswanath Rath
Bench: Biswanath Rath
ORISSA HIGH COURT, CUTTACK.
ARBA NO.1 OF 2011
An Appeal under Section 37(1)(b) of the Arbitration and
Conciliation Act, 1996
AFR
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The Marwah Company ... Appellant
Versus
National Thermal Power Corporation Ltd. ... Respondent
For appellant : M/s.B.Routray, D.K.Sahoo,
D.Mohapatra, P.K.Sahoo,
K.Mohanty & S.Das
For respondent : Mr.B.S.Tripathy
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PRESENT :
THE HONOURABLE MR. JUSTICE BISWANATH RATH
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Date of Hearing : 05.04.2019 & Date of Judgment : 17.04.2019
--------------------------------------------------------------------------------------------------- Biswanath Rath, J. This is an Appeal under Section 37(1)(b) of the Arbitration and Conciliation Act, 1996 assailing the judgment dated 19.11.2010 passed in Arbitration Petition No.139 of 2003 by the learned District Judge, Dhenkanal involving Arbitration Award dated 17.4.2003.
2. Short background involved in the case is that the appellant herein was entrusted with a construction contract involving construction of three identical RCC overhead tanks of 2 450 Cu.M. capacity each and one number of RCC underground tank of 2000 Cu.M. capacity with a pump house. The construction was to be undertaken in the township of Talcher Super Thermal Power Corporation, Kaniha in the district of Angul and value of contract being Rs.49,10,287.71. The tenure of the contract dated 14.2.1994 involved eighteen months period and the original date of completion of the work was 13.8.1995. For difficulties involving entrusting the supervision of the complicated civil engineering job by the non-civil engineers, defective bill of quantities given in the agreement, defective engineering design and several breaches of terms of the agreement caused huge delay and loss. Ultimately, the respondent was unable to hand over possession of the site to the appellant for construction of remaining overhead tank even after three and half years after commencement of the contract. The respondent-Company fore-closed the contract and issued a completion certificate for the contract on 29.7.1997 certifying completion of contract, which involved 50% cancellation of the contract work. The appellant submitted claim to the respondent- Company, which refused to entertain the claim of the appellant. The appellant invoked arbitration clause. In the mediation process, some of the disputes were resolved but as the matter still involved some claims and counter-claims, the dispute was referred to the Arbitrator, Mr.Jha. Mr. M.Jha, while continuing as the sole 3 Arbitrator resigned, consequent upon which Mr. B.P.Bagchi was appointed as the sole Arbitrator in place of Mr.Jha. Award was passed involving the arbitration proceeding. On the premises of defect in the award, the appellant challenged the award before the learned District Judge involving a proceeding under Sections 34(2)(a)(iii)(iv)(v) and 34(2)(b)(ii) of the Act, 1996. When the Section 34 proceeding was pending before the learned District Judge, Dhenkanal, the sole Arbitrator, Mr.D.P.Bagchi passed another award alleged to be behind the back of the appellant purportedly entertaining the application under Section 33 of the Act. In the meantime, in the fax message on 11.8.2003 the respondent asked the appellant to attend its Office at Kaniha to receive the payment involving the arbitration award. Appellant reached the Office of the respondent on 19.8.2003. On 20.8.2003 the respondent gave the appellant a photocopy of the additional award dated 11.7.2003. It is at this point of time the appellant came to know about the additional award. In spite of the appellant's attempt to convince the respondent about the illegality in the additional award and being passed behind the appellant, the respondent remained adamant and informed the appellant that in terms of the award dated 17.4.2003, a sum of Rs.7,20,668.15 was payable to the appellant and for the additional award dated 11.7.2003, the respondent deducting a sum of Rs.4,00,370/-, the balance amount 4 of Rs.3,20,290/- would be payable to the appellant but only in the event the appellant signed all papers and certified that he has received the payment in full and final and also to give a no due certificate. Considering the delay involving the payment of the dues of the appellant and finding that the respondent was in no mood of releasing any amount without a certificate is endorsed on receipt of the amount on full and final payment and further no demand certificate is issued under coercion and compulsion, the appellant gave the demanded certificates and received a cheque of Rs.3,05,959.00 and also took back the security deposit over lakhs of rupees. On the next date itself, i.e., 28.8.2003 the appellant reaching at his Office wrote a protest letter to the respondent on receipt of the lesser amount indicating the payment made is unacceptable and continued to challenge such payment by the respondent. Subsequently, the appellant also sent a letter by registered Post on 29.8.2003, which was received by the respondent on 1.9.2003. Consequent upon the above development, the appellant filed amendment of the original petition under Section 34 of the Act to bring on record the illegal additional award and also has challenged to the same thereby taking the ground that not only the additional award was passed beyond limitation period but also without notice or opportunity to the appellant herein. Section 34 proceeding was disposed of by the judgment of 5 the learned District Judge, Dhenkanal on 19.11.2010 thereby rejecting the Arbitration Proceeding holding that the appellant had no scope for raising dispute involving the award or the additional award for his signing no claim certificate, granting a no due certificate and receipt of amount offered by the respondent.
3. Assailing the order passed by the learned District Judge, Dhenkanal dated 19.11.2010 involving Arbitration Petition No.139 of 2003, Sri Saswat Das, learned counsel for the appellant submitted that for his taking the plea, the endorsement of no claim certificate and giving a certificate of no dues were under peculiar situation further coupled with duress and coercion adopted by the respondent and for the inordinate delay in resolving the issue raised by the appellant, the appellant remains compelled to provide such certificate on receipt of the amount and further for the involvement of challenge to the additional award on the premises of entertaining an issue after inordinate delay and passing an additional award behind the back of the appellant that too without issuing notice to the appellant even, Sri Das, learned counsel for the appellant contended that the learned District Judge failed in appreciating the above aspect and has arrived at the wrong and illegal conclusion, which unless be interfered with it will lead to a bad judgment.
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Taking help of the decisions of the Hon'ble apex Court in the case of Asian Techs Ltd. vrs. Union of India & others : (2009) 4 SCC (Civ) 203 and R.L.Kalathia & Company vrs. State of Gujarat : (2011) 2 SCC 400, Sri S.Das, learned counsel for the appellant drawing attention of this Court to the decisions as cited above submitted that the appellant's case has the support of the above decisions. It is in the premises, Sri Das, learned counsel for the appellant prayed this Court for interfering with the impugned judgment passed by the learned District Judge, Dhenkanal and setting aside the same.
4. Sri B.S.Tripathy, learned counsel for the respondent-N.T.P.C. while seriously objecting the submissions made by Sri Das, learned counsel for the appellant, taking this Court to the materials available on record more particularly the endorsement of the appellant for having received the dues in full and final settlement of the dispute, further for the appellant also furnishing a certificate of no dues to the respondent, further the learned District Judge taking into account the above issues and giving his finding that for the above development there did not remain any dispute to be considered in the arbitration case, submitted that there is no infirmity in the impugned judgment requiring this Court to interfere with the same.
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Sri Tripathy, learned counsel for the respondent apart from the above submission taking this Court to several decisions of the Hon'ble apex Court, such as Pooran Chand Nangia vrs. National Fertilizers Ltd. : (2003) 8 SCC 245 and New India Assurance Company Ltd. vrs. Genus Power Infrastructure Ltd. involving Civil Appeal No.10784 of 2014 (Special Leave Petition (Civil) No.24652 of 2013) for the support of law, submitted that the impugned judgment is legally sustainable, therefore, requiring no interference in the same.
5. Considering the rival contentions of the parties, this Court finds, the admitted facts involving the dispute remained that the appellant was awarded with a contract, which was rescinded for some reasons or other. There has been dispute involving non- payment of the dues of the appellant, for which Arbitration Clause has been invoked, the arbitration award is also passed. During course of challenge of the arbitration award before the learned District Judge involving Arbitration Petition No.139 of 2003 and a development particularly the additional award is coming to picture in view of additional award the respondent deducts the awarded amount involving the additional award from the original awarded amount and making the payment of the balance dues of the appellant involved herein. The appellant again being noticed receiving dues on furnishing certificate of receipt of the same as 8 full and final payment and also granting certificate of no dues, on the very next date, the appellant issuing a protest letter involving such refusal of payment and on a day or two after again issuing a registered Post notice resisting such demand indicating that the certificate whatever has been kept by the respondent are under compulsion besides on duress and coercion. Considering all the above, the learned District Judge disposed of the Section 34 application dismissing the claim of the appellant on the premises of receipt of balance dues on issuing certificate of full and final settlement of the amount as well as no dues debars the person to continue with such litigation.
6. This Court, therefore, is called upon to examine a question as to whether the appellant had the scope to challenge the award and the additional award involved herein even after furnishing the certificate of full and final payment and "no dues certificate" and there applies the principle of acquiescence ?
7. Coming to the factual aspect involved in the case as borne from the pleading, the submission and the recording of the learned District Judge, this Court finds, after the additional award was passed, the respondent informed the appellant that in terms of the award dated 17.4.2003, it was entitled to a sum of Rs.7,20,668.15 and at the same time for the involvement of additional award in favour of the respondent allowing deduction of 9 Rs.4,00,370.00, the appellant was told to be entitled to a sum of Rs.3,20,298.00. It is consequent upon such information and after obtaining the certificate indicated herein above, the respondent handed over a cheque of Rs.3,05,959.00 along with T.D.S. Certificate of Rs.10,631/- on 27.8.2003 to the appellant as final payment. Records also borne on 28.8.2003, i.e. after a day the appellant wrote a protest letter to the respondent indicating that it has received the amount under duress and it is not accepting such payment as final payment. Further it also appears, the appellant again sent a letter by registered Post with A.D. on 20.8.2009 to the respondent and the respondent received the same on 1.9.2003 as per the Postal Acknowledgement. This development was thus brought by way of amendment to the Arbitration Petition No.139/2003. Looking to the contents in the letters and the pleading herein by the respective parties including no denial by the respondent even after receipt of such protest, this Court finds, for the appellant's suffering for a long period involving payment of dues to it, the appellant had no other option than to accede to the demand of the respondent to grant the above two certificates. Further while accepting the dues whatever paid by the appellant on 27.8.2003 within one day thereafter, the appellant sent a protest on 28.8.2003 not only that on 29.8.2003 also sent a registered Post protest, which was received by the respondent on 10 1.9.2003. For the development taking place indicated herein above, this Court finds, even though the rights and obligations of the party is worked out, the contract does not come to an end and although it may not be strictly in place but for the development taking place in quick succession thereafter, this Court cannot shut its eyes to the ground reality. It is at this stage, considering the impugned order involved herein, this Court finds, the learned District Judge failed in appreciating the above aspect and simply relying on a decision of the Hon'ble apex Court in Pooran Chand Nangia (supra) dismissed the Arbitration Petition on the premises the appellant granting appropriate certificates indicated herein and as such has no scope to continue with the Arbitration Petition and challenging the award involved therein. Looking to the said decision, this Court finds, the case involved therein was a clear case of the petitioner therein accepting the award unequivocally and accepting the awarded amount without any reservation. This Court further finds, the decision of the Hon'ble apex Court relied on did not involve a case like this where there is serious objection to the payment made in between and involving a written protest in quick succession. This Court finding this glaring difference in the judgment relied on by the learned District Judge and for non- consideration of the effect of material aspect, such as the appellant having a serious response to the payment involving the dispute, 11 this Court is to answer the question framed herein in favour of the appellant observing that for the peculiar situation involved herein, the appellant had still a chance to continue with the arbitration proceeding and there is no application of law of acquiescence to the appellant.
8. For the citations at Bar, this Court now proceeds to take the citation at the instance of Sri Tripathy, learned counsel for the respondent involving Civil Appeal No.10784/2014 (Special Leave Petition (Civil) No.24652/2013 decided on 4th December, 2014. This Court finds, this decision deals with a case of bald plea of fraud of coercion, duress or undue things and the party therein failing to establish a prima facie case at least. For the learned District Judge involving the case at hand not entering into a decision on the allegation/protest of the petitioner involved therein as of now, this decision has no application to the case at hand.
9. Taking into account the decision cited at the Bar by the appellant, the decision in Asian Techs Ltd. vrs. Union of India & others : (2009) 4 SCC (Civ) 203, in paragraphs-17 & 18, the Hon'ble apex Court held as follows :-
"17. It has been held by this Court in National Insurance Company Ltd vs. Boghara Polyfab Pvt. Ltd(2009) 1 SCC 267 that even in the case of issuance of full and final discharge/settlement voucher/no-dues certificate the arbitrator or Court can go into the question whether the liability has been satisfied or not. This decision has followed the view taken in Chairman and Managing 12 Director, NTPC Ltd. vs. Reshmi Constructions, Builders and Contractors (2004) 2 SCC 663 (vide paragraphs 27 and 28).
18.Apart from the above, it has been held by this Court in Board of Trustees, Port of Calcutta vs. Engineers- De-Space-Age (1996) 1 SCC 516, that a clause like clause 11 only prohibits the department from entertaining the claim, but it did not prohibit the arbitrator from entertaining it. This view has been followed by another Bench of this Court in Bharat Drilling & Treatment Pvt. Ltd. vs. State of Jharkhand & others in Civil Appeal No. 10216 of 2003 decided on 20th August, 2009."
Similarly getting into the decision in R.L.Kalathia & Company vrs. State of Gujarat : (2011) 2 SCC 400, this Court finds, the Hon'ble apex Court in paragraphs-12 & 13 discussed and held as follows :-
"12. In National Insurance Company Limited vs. Boghara Polyfab Private Ltd., (2009) 1 SCC 267, the question involved was whether a dispute raised by an insured, after giving a full and final discharge voucher to the insurer, can be referred to arbitration. The following conclusion in para 26 is relevant:-
"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 practised 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."
13) From the above conclusions of this Court, the following principles emerge:
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(i) Merely because the contractor has issued "No Due Certificate", if there is acceptable claim, the court cannot reject the same on the ground of issuance of "No Due Certificate".
(ii) Inasmuch as it is common that unless a discharge certificate is given in advance by the contractor, payment of bills are generally delayed, hence such a clause in the contract would not be an absolute bar to a contractor raising claims which are genuine at a later date even after submission of such "No-claim Certificate".
(iii) Even after execution of full and final discharge voucher/receipt by one of the parties, if the said party able to establish that he is entitled to further amount for which he is having adequate materials, is not barred from claiming such amount merely because of acceptance of the final bill by mentioning "without prejudice" or by issuing `No Due Certificate'."
Reading the aforesaid decision, this Court finds, the claim of the appellant has also the support of the decision in (2009) 1 SCC 267, (2009) 4 SCC (Civ) 203 and also (2011) 2 SCC 400. This Court here taking into account another decision of the Hon'ble apex Court in Chairman & MD. NTPC Ltd. vrs. Reshmi Construction, Builders & Contractors : (2004) 2 SCC 663 involving the NTPC, the respondent herein getting into a case of similar situation, the Hon'ble apex Court in paragraphs-18 & 27 held as follows :-
"18. Normally, an accord and satisfaction by itself would not affect the arbitration clause but if the dispute is that the contract itself does not subsist, the question of invoking the arbitration clause may not arise. But in the event it be held that the contract survives, recourse to the arbitration clause may be taken (See Union of India v. Kishorilal Gupta and Naihati Jute Mills Ltd. v. Kyaliram Jagannath).14
27. Even when rights and obligations of the parties are worked out, the contract does not come to an end inter alia for the purpose of determination of the disputes arising thereunder, and, thus, the arbitration agreement can be invoked. Although it may not be strictly in place but we cannot shut our eyes to the ground reality that in a case where a contractor has made huge investment, he cannot afford not to take from the employer the amount under the bills, for various reasons which may include discharge of his liability towards the banks, financial institutions and other persons. In such a situation, the public sector undertakings would have an upper hand. They would not ordinarily release the money unless a "No-Demand Certificate" is signed. Each case, therefore, is required to be considered on its own facts."
10. For the view of this Court in paragraphs-6 and 7 and the support of the decisions, vide (2004) 2 SCC 663, (2009) 4 SCC (Civ) 203 and also (2011) 2 SCC 400, this Court finds, the impugned judgment by the District Judge involving Arbitration Petition No.139 of 2003 is not sustainable in the eye of law. In the result, this Court interfering with the impugned judgment and setting aside the same remits the matter back to the District Judge, Dhenkanal or the District Judge competent presently involving NTPC to take up the issue involved and decide the Arbitration Petition No.139 of 2003 on its own merit afresh.
11. The Arbitration Appeal succeeds. There is no order as to cost.
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(Biswanath Rath, J.) Orissa High Court, Cuttack.
The 17th April, 2019/mkr, secy.