Kundan Lal Hari Ram and Co. vs Chief Managing Director and Another

Surjit Singh, J.—By this common judgment, four Arbitration Petitions, particulars whereof are given in the title of the judgment, are being disposed, because questions raised therein are similar.

Arbitration-Petitioner was awarded four different works by the Respondents. According to Petitioner, he executed the works completely, some time in the year 1998 and submitted the bills to the Respondents, but they kept the bills pending for quite long a time. Some payments were made in the year 2005 against the bills submitted by the Petitioner, which were not in consonance with his bills, but much short of the claim made by him. However, the Petitioner was compelled to sign the vouchers that the payments, which he was receiving, were in full and final satisfaction of his claim. According to the Petitioner, he was under duress to sign those vouchers, as the payments had not been made for almost seven years, after the submission of bills. Further, according to the Petitioner, the payments, which have been made to him, are not as per the value of the work executed by him or in accordance with the contract agreement executed between him and the Respondents and that still large amounts of money are due to him, in all the four cases. He has annexed the abstract of Arbitration Clause in the agreement, with his petition. The same is Annexure A-1, in all the four petitions. Respondents having not acceded to the request of the Petitioner for appointment of Arbitrator, in terms of Clause 25 of the agreements, Petitioner has approached the Chief Justice, u/s 11(6) of the Arbitration and Conciliation Act, for appointing an Arbitrator.

Prayer of the Petitioner is opposed by the Respondents. It is stated that when the Petitioner had executed writings that he had received payment in all the four cases, in full and final satisfaction of his claim and had discharged the Respondents from their liability under the contracts, there cannot be any question of dispute being there between the parties and, hence, no Arbitrator is required to be appointed.

I, in the capacity of designate of Hon''ble the Chief Justice, have heard the learned Counsel for the parties and examined the matter, with reference to pleadings of the parties and the documents relied upon by them.

The very fact that payment of final bills, submitted by the Petitioner, had been delayed by about seven years and the same were released to him only when he furnished writings, completely discharging the Respondents of their liability by stating in those writings that the payments were received by him in full and final satisfaction of his claims, suggests that he was under duress. A person whose money is withheld by a person, who is liable to pay it, for seven years, would be prepared to give any kind of writing to receive whatsoever amount of money is offered by the person under obligation.

Hon''ble Supreme Court in National Insurance Co. Ltd. Vs. Boghara Polyfab Pvt. Ltd., has observed vide paragraph 50 at page 294 as follows:

Let us consider what a civil court would have done in a case where the Defendant puts forth the defence of accord and satisfaction on the basis of a full and final discharge voucher issued by the Plaintiff, and the Plaintiff alleges that it was obtained by fraud/coercion/undue influence and therefore not valid. It would consider the evidence as to whether there was any fraud, coercion or undue influence. If it found that there was none, it will accept the voucher as being in discharge of the contract and reject the claim without examining the claim on merits. On the other hand, if it found that the discharge voucher had been obtained by fraud, undue influence/coercion, it will ignore the same, examine whether the Plaintiff had made out the claim on merits and decide the matter accordingly. The position will be the same even when there is a provision for arbitration.

In the next following paragraph, i.e. paragraph 51, Hon''ble Apex Court has held that objection that there has been an accord and satisfaction may be determined by the Chief Justice or his designate, exercising jurisdiction u/s 11 of the Act and where the Chief Justice or his designate is satisfied prima-facie that the discharge voucher was not issued voluntarily and the claimant was under some compulsion or coercion and the matter deserved detailed consideration, he may, instead of deciding the issue himself, refer the matter to Arbitral Tribunal, with a specific direction that the said question should be decided in the first instance.

Prima-facie this is a case of duress, because payments of the Petitioner had been delayed for long, i.e. for seven years. Whether it was really a case of duress, as alleged by the Petitioner in the rejoinder or he executed the discharge voucher, voluntarily, requires detailed consideration for which the Arbitral Tribunal would be the right forum.

Consequently, all the four petitions are allowed. Shri V.K. Khurana is appointed as Arbitrator in all the four cases. His fees, in all the four cases, shall be rupees one lac (Rs. 1,00,000/-) plus rupees ten thousand (Rs. 10,000/-), on account of stationery and ministerial assistance expenses. Initially, the fees will be paid by the Petitioner. However, the Arbitrator shall finally decide, at the time of giving award, as to who is liable to pay the fees, and in case both the parties are found liable, then in what proportion.

All the four petitions stand disposed of.