Bansal and Company vs Union of India

Sujoy Paul, J.—The applicant has filed this application u/s 11(6) of the Arbitration and Conciliation Act, 1996 (for brevity, the ''Act'') for appointment of an arbitrator.

The respondents awarded a contract for special repairs of certain dwelling units to the applicant at Gwalior. Pursuant to aforesaid contract, a work order dated 24.8.2010 was issued (Annexure A/1). The applicant successfully completed the awarded work and submitted his final bill. It is the case of the applicant that while making the payment of final bill, the chase cutting of conduit has been scored out by the respondents without any authority under the contract, namely, IAFW 2249. The applicant further contended that aforesaid scoring has been carried out by the respondents behind his back and without prior intimation and, therefore, the said amount needs to be reimbursed. The applicant preferred an application in this regard on 2.2.2013 (Annexure A/3). It is submitted that thereafter also the applicant preferred application dated 12.7.2013, Annexure A/4, which was replied by the respondents on 3.8.2013.

Shri Arun Dudawat, learned counsel for the applicant, by taking this Court to Clause 6-A and 70 of the agreement submits that the respondents have erred in not appointing the arbitrator. He submits that the respondents erred in not accepting the request made in the application dated 29.8.2013, Annexure A/6. He criticized the order dated 27.9.2013, whereby the respondents have declined the request of appointing arbitrator on the ground that after submission of final bill and accepting the amount without protest, no dispute exists and, therefore, declined to appoint the arbitrator. Shri Dudawat drew attention of this Court on Annexure R-2 dated 25.2.2013 to submit that this document itself shows that there existed a dispute.

Per Contra, Shri Chetan Kanoongo, learned counsel for the other side, relied on clause 65 of the agreement to submit that no further claim by the contractor was acceptable after submission of final bill. Such subsequent claim needs to be treated as waived and extinguished. He submits that the final bill was preferred much before 16.4.2013. Final payment was made on 16.4.2013 and thereafter nothing remains to be done in the matter. By relying on certain judgments, he submits that in absence of any live and existing dispute, there is no question of any direction for appointment of arbitrator. In para 1 of the reply, it is specifically stated that the letter dated 2.2.2013 is a fake letter. This letter was actually sent to the respondents along with the letter dated 12.7.2013, which was received by the respondents on 13.7.2013. Before that the petitioner had received the full and final payment without any protest on 16.4.2013. It is submitted that the letter dated 2.2.2013 is an after thought and a fabricated document prepared after receiving full and final settlement.

Shri Dudawat in rejoinder submissions submits that as per Annexure A/14 dated 10.2.1982 the petitioner should have been given prior opportunity of hearing before taking a decision rejecting the application seeking appointment of arbitrator.

No other point is pressed by the parties.

I have heard learned counsel for the parties and perused the record.

This is settled in law that existence of a dispute is pre-condition/sine qua non of appointment of arbitrator. It is not in dispute between the parties that final bill is passed and final amount is received by the applicant on 16.4.2013. The whole case of the applicant is based on letter dated 2.2.2013. The bone of contention of the applicant is that the said letter was submitted by the applicant much before receiving the final bill and, therefore, there existed a dispute which should have been referred to the arbitrator. The respondents have specifically denied it with the contentions reproduced above. Although in rejoinder it is urged that the applicant actually submitted this application on 2.2.2013 before Garrison Engineer but there is no material to substantiate the same. The disputed questions cannot be decided in these proceedings. There is no clinching material to show that the said application dated 2.2.2013 was submitted by the applicant before acceptance of the final bill. It is clear that final bill was accepted by the applicant without there being any protest of any nature.

Thus, the question is whether there exists any dispute after 16.4.2013 and whether the matter is arbitrable ?

Clause 65 of the agreement in no uncertain terms makes it crystal clear that further claims after submission of final bill shall be deemed to have been waived and extinguished. This clause for ready reference is reproduced as under :-

Final Bill (Applicable only to Measurement and Lump Sum Contracts).-The Final Bill shall be submitted by the Contractor on IAFW-2262 in duplicate within three months of physical completion of the Works to the satisfaction of the Engineer-in-Charge.

It shall be accompanied by all abstracts, vouchers, etc., supporting it and shall be prepared in the manner prescribed by the G.E.

No further claims shall be made by the Contractor after submission of the Final Bill and these shall be deemed to have been waived and extinguished.

The Apex Court in P.K. Ramaiah and Company Vs. Chairman and Managing Director, National Thermal Power Corpn., , opined that in cases of voluntary and unconditional acceptance of payment in full and final settlement of the contract, subsequent claim for further amount in respect of the same work cannot be treated as an arbitrable dispute. In Union of India (UOI) and Others Vs. Master Construction Co., , the Apex Court held that after voluntary and unconditional written acceptance of payment in full and final, no further claim exists. It is noteworthy that in the present case the applicant has not proved that final claim was received by him under any financial duress or coercion. In absence thereof, after accepting the final bill the dispute is no more arbitrable. Same view is taken by Supreme Court in Union of India (UOI) and Others Vs. Onkar Nath Bhalla and Sons, . The Apex Court made it clear that the court must determine existence of live dispute between the parties to the agreement and when such dispute exists, arbitrator can be appointed.

Shri Dudawat although relied on the judgment of Supreme Court in Ambica Construction Vs. Union of India (UOI), . However the said judgment has no application in the teeth of relevant provisions of the agreement. At the costs of repetition, it is made clear that in view of clause 65 of the agreement, reproduced herein above, the subsequent claim after accepting the final claim is not tenable and does not lead to a dispute which can be sent for arbitration. Annexure R/2, on which reliance is placed is of no assistance to the applicant. The said document is an internal correspondence between two authorities of the respondent-Organization. There is no conclusive material on record to show that before acceptance of final bill the applicant raised any dispute. In absence of a live dispute, I find no reason to exercise the power u/s 11(6) of the Act for appointment of arbitrator.

Application fails and is hereby dismissed.