United Construction Company vs National Thermal Power Corporation and another

The applicant herein, is a registered firm and had entered into a contract for construction of certain quarters in CISF area, of Ramagundam Super Thermal Power Corporation. The said contract was executed on 11-11-1991. The applicant contends that he has completed the work to the entire satisfaction of the respondent-Corporation. It is alleged that during the progress of the said work, the Minimum Wages Act as prevalent in Andhra Pradesh was revised and amended and accordingly the petitioner/applicant was required to make enhanced payment by 55% over and above the wages which were payable to the workers at the time of execution of the contract. The petitioner/applicant submits that he is entitled to reimbursement of such increase in payment of wages to the workers. Secondly, it is alleged that the work had gone beyond the original date of completion duo to the acts or lapses on the part of the respondent. Such acts or lapses have been stated in the petition. It is alleged that the applicant was required to incur extra overhead cliarges due to prolongation of the contract period. Another claim made is of Rs.1,00,000/- towards increase in the quantum of teak-wood in the manufacture of window-shutters. The respondents are bound to make payment towards this increase. Claim No.4 is regarding increase in cost of GI wire mesh. The petitioner has thus claimed that they are entitled to total amount of Rs.24,20,163/- under these four heads. The petitioner submits that they have invoked Clause 56 of the General conditions of the contract for seeking arbitration, which was not accepted by the respondents. Notice was given by the petitioner on 13-9-1996 to the respondent under Clause 56 of the contract to refer the matter to the arbitrator. On 14-10-1996, the respondent informed that the claim to refer the matter to the arbitrator was untenable and was negatived. As a result, the present application has been made u/s 11 of the Arbitration and Conciliation Act, 1996.

The respondents have resisted the petition. It is not disputed that the petitioner was awarded the contract of work and that the petitioner has completed the work. It is, however, denied that there was any liability of the respondents to pay an account of additional wages required to be paid by the petitioner in view of increase in the minimum wages. It is also denied that the work was entirely satisfactory. The delay in work was not due to any lapse on the part of the respondent. The main objection raised by the respondents is that after completion of the work, the applicant/ petitioner signed the measurement books in respect of all the measurements of work and the bills preferred by them were processed, and the amount was paid to them. The applicant received the amount in full and final settlement of the contract and has submitted "No Demand Certificate". The said certificate issued by the applicant states as follows:

"Notwithstanding any protest recorded by us in any correspondence, documents, measurement books and/or final bills etc., we waive all our rights to lodge any claim or protest in future under this contract. We are issuing this No Demand Certificate in favour of NTPC Limited with full knowledge and with our free consent without any undue influence, misrepresentation, coercion etc."

It is therefore urged that in view of the No Demand Certificate issued by the petitioner, there is complete accord and satisfaction of the petitioner''s claim. This certificate was issued on 28-11-1994 and the petitioner in fact received all the payments soon after the of issuance of such No Demand Certificate. It is only on 31-5-1996 that the petitioner raised the dispute for the first time and later on gave a notice on 13-9-1996. This is apart from the fact that there is no merit in the claim intrinsically and in view of the accord and satisfaction. The petition is not maintainable as there is no arbitrable dispute subsisting.

After hearing the Counsel on either side, I think there is considerable force in the contention raised by the respondents. It is worth noticing that in the application the petitioner has suppressed the fact that he had issued a "No Demand Certificate" and accepted the amount paid to him after the bill was processed by the respondent. Naturally, there was also no plea that No Demand Certificate was issued under any pressure or coercion. However, the petitioner in reply to the counter has accepted that such No Demand Certificate, as stated by the respondents, was in fact issued by him. In the reply which has been filed on 17-12-1997, it is alleged that the certificate was issued because it was in a format and proforma prepared by the respondent-Corporation. It was for the first time contended that ''no objection certificate'' cannot be construed as discharge of the contract and docs not disentitle the petitioner to seek reference of dispute to the arbitration.

The question therefore is whether any arbitrable dispute really existed at the time when the present application/petition was filed in the Court by the petitioner. The respondents have produced along with counter "No Demand Certificate" issued by the petitioner-company. No doubt, the said "No Demand Certificate" is in a profornia. However, there is absolutely nothing to show that the petitioner was coerced or pressurised to sign the said certificate. The said certificate was issued by the petitioner only after the work was over. The petitioner accepted the amount after giving this "No Demand Certificate" obviously in full and final settlement of its claim. The learned Counsel for the petitioner, however, relies on following cases for his contention that even after such "No Demand Certificate" is issued, if a dispute is raised, the petitioner is entitled to seek reference to the arbitrator:

(1) Union of India (UOI) and Another Vs. L.K. Ahuja and Co., .

(2) Union of India (UOI) and Another Vs. Sohoun Constructions, .

(3) Ravindra Anant Deshmukh Vs. City and Industrial Development Corporation of Maharashtra Ltd., .

It may at once be stated that the decisions of High Court of A.P. and Bombay High Court in Union of India v. Sohoun Constructions (supra) and Ravindra Anant Deshmukh v. City and Industrial Development Corpn of Maharashtra (supra) are based on the decision of the Supreme Court in Union of India v, L.K.Ahuja and Company (supra). It is necessary to see all these cases one by one. No doubt, in the case-2 supra, His Lordship Justice Syed Shah Mohammed Quadri (as he then was) has held that existence of "No Claim Certificate" docs not bar reference u/s 20 of the Arbitration Act. His Lordship referred to the Supreme Court decision in I supra for this proposition. Thus, the judgment was solely based on the Supreme Court judgment. Similarly, in the case 3 supra, the Bombay High Court relied on the above decision of Supreme Court and para 6 of the judgment clearly shows that the Judges of Bombay High Court drew support for their conclusion from the decision of Supreme Court referred to above. The Supreme Court decision in 1 supra has, in para 8 observed:

"It is true that on completion of the work, right to get payment would normally arise and it is also true that on settlement of the final bill, the right to get further payment gets weakened but the claim subsists and whether it does subsist, is a matter which is arbitrable."

However, the decision in the said case was mainly concerning the question of limitation. Para-6 of the judgment will show that for a valid claim for reference u/s 20 of the Arbitration Act, 1940, it was necessary that there should be arbitration agreement and the application must be made within the time stipulated. The judgment of the Supreme Court in 1 supra has been explained in subsequent decision of Apex Court in P.K. Ramaiah and Company Vs. Chairman and Managing Director, National Thermal Power Corpn., . In this case, the clause which is identical to Clause-56 in the present case under the terms of contract was subject-matter of consideration. The Apex Court held that a dispute can be referred only if there was an arbitrable dispute. Such dispute must exist or subsist at the time when reference is sought. The Supreme Court observed: "Admittedly the appellant acknowledged in writing accepting the correctness of the measurements as well as the final settlement and received the amount. Thereafter no arbitrable dispute arises for reference." The Supreme Court also referred to the decision in Damodar Valley Corporation Vs. K.K. Kar, , and pointed out that in Damodar Valley Corporation ''.v case the respondent while submitting his bill, did not certify that it was in full and final settlement of all payments and that there was no other claim subsisting and, received the amount of the bill by reserving his claim. In such circumstances it was found that the dispute still existed and was not finally settled. The Court specifically considered L.K.Ahuja and Company''s case (supra) and pointed out "that was not a case of accord and satisfaction and was one of pleading bar of limitation without prior rejection of the claim. Therefore, the ratio therein is of little assistance". The Court further pointed out that in cases where the High Courts merely followed LK.Ahuja and Company''s case, did not lay down any new law. The Court said that admittedly when full and final satisfaction was acknowledged by a receipt in writing and thereafter the amount is received unconditionally, the accord and satisfaction by the final settlement of claim comes into effect. Subsequent allegation of coercion is an after-thought and a device to get over the settlement of the dispute. These observations clearly show that making subsequent allegation of coercion etc. has no meaning as it is an after-thought and device to get over the settlement of dispute.

I have already pointed out that in the instant case, after issuing the ''No Demand Certificate'' in ftill and final satisfaction of the claim, the petitioner not only accepted the amount, but did not raise any dispute till May, 1996 which was almost after one-and-a-half year. Further, no allegation was made even in the present petition that coercion or undue influence or pressure was mere. It was only for the first time in the reply-affidavit filed in December, 1997 that such a plea has been raised. As pointed out in P.K.Ramaiah and Company''s case (supra), this is an afterthought and device to get over settlement of dispute.

In view of the decision in P.K.Ramaiah and Company''s case (supra) and the explained ambit of LK.Ahuja and Company''s case (supra), the decisions of A.P.High Court and Bombay High Court are of no help because they are based on decision of Supreme Court in L.K.Ahuja and Company''s case (supra).

In the circumstances, I find that there is accord and satisfaction by the admitted ''No Demand Certificate'' signed and issued by the petitioner on 28-11-1994. As there is no arbitrable dispute existing, the petition is meritless and has to be dismissed. The petition is accordingly dismissed without any order as to costs.