ASHOKE KUMAR DASADHIKARI, J.
The petitioner has filed this application under Section 34 of the Arbitration and Conciliation Act, 1996 challenging the award made and published by S. K. Mitra, sole Arbitrator on 31st December, 2009.
The respondent herein awarded Work Order No. CAL/MMD/325/Erect-II dated 10th January, 2001 to the petitioner for laying of Dockpipe Lines (both overground and underground) that two Nos. 700 dia/and 1 No. 450 dia pipes from TP-11 to Pump House Tank Farm (inside IOCL, existing terminal) Pertaining to Docklines Projects at Paradeep for Indian Oil Corporation Ltd. All the terms and conditions as agreed between the respondent and Indian Oil Corporation Ltd. were binding on the claimant on back to back basis. The petitioners accepted the price as mentioned in the Work Order was Rs. 4,56,32,176/- inclusive of all taxes and duties. It was a lump sum turnkey contract for laying of Dockpipe lines along with allied mechanical, civil and electrical works completing all respect includes commissioning at Paradeep (Orissa). The petitioner accepted the price on lump sum basis as would appear from their letter dated October 13, 2000. The stipulated completion period was 36 weeks from the date of placement of Work Order.
Disputes and differences arose between the petitioner and the respondent in execution of such work and the petitioner invoked arbitration clause No. 53 of the general conditions of contract vide their letter dated 9th July, 2004 for appointment of arbitrator. The Chairman cum Managing Director of respondent by his letter dated 20th July, 2004 appointed Shri K.R. Saha, General Manager of the Respondent, as sole Arbitrator for adjudication of the disputes/differences, claims and counter claims of both parties in support of the above contract. Objection was raised by the petitioner against such appointment and Shri K.R. Saha had to resign. Thereafter, S.K. Mitra was appointed as sole Arbitrator for adjudication of the disputes/differences, claims and counter claims of both parties. The sole Arbitrator entered upon the reference on 5th May, 2006. Both the petitioner and the respondents filed their respective statement of claims and counter statement and also counter claims along with various documents relied upon by the respective parties. Both petitioner and the respondent appeared before the learned Arbitrator and argued their case through their learned Advocates and submitted their written notes on arguments. The learned Arbitrator have gone through the statement of claims, counter claims replies, rejoinders, and the written notes of arguments and passed the award upon considering all materials on record as well as the submissions of the learned Advocates and or Counsel appearing for the parties. Mr. Mitra, learned Senior Counsel appearing for the petitioner submitted that the learned Arbitrator did not go into the dispute in question but, rendered a finding in the award that the petitioner had submitted their final bill on 11th September, 2002 for Rs. 4,56,32,176/- without raising any dispute. Consequently, the learned Arbitrator has recorded a finding that the petitioner had waived their right in respect of their claims which was submitted to the respondents on 16th February, 2003 which clearly indicates that the petitioner had not waived their right in respect of disputed items and further confirm that the petitioner has raised dispute in that regard. Mr. Mitra, learned Senior Counsel drawn attention of this Court to the letter dated December 16, 2003 wherein the petitioner raised a further bill for extra work which was sent to the respondent and according to him the said bill remained unpaid and the learned Arbitrator did not decide as regards the said unpaid bill thereby framing a issue in that regard. On the other hand, the learned Arbitrator have concluded that the letter issued by the petitioner on 5th February, 2004 recording therein that the petitioner has received all payments except works contract tax and 1% value of the contract towards commissioning of the subject work and the contract of accord was not induced by any duress or coercion and as such no interference with the settlement agreement dated 5th February, 2004 is called for and further held as such none of the claims of the claimant i.e. petitioner are arbitrable and therefore, disallowed such claim. The learned Arbitrator awarded that the respondent is bound to pay to the petitioner in terms of agreement dated 5th February, 2004 the balance works contract tax if any payable and 1% commissioning charges, if commissioning at all takes place. Mr. Mitra, learned Senior Counsel further submitted that this finding and/or conclusion of the learned Arbitrator is contrary to the evidence on record, which clearly indicates that apart from the final bill dated 11th September, 2002, the petitioner even prior to receipt of further payment from the respondent on 5th February, 2004, had also submitted their claim to the respondent on 16th February, 2003 which clearly indicates that the petitioner had not waived their right in respect of disputed items. It is emphatically submitted that the letter issued by the petitioner on 5th February, 2004 is under duress and coercion which the learned Arbitrator have not decided and moreover recording of accord and satisfaction by the Arbitrator, ignoring the evidence on record is perverse and the award is against the public policy. According to Mr. Mitra the letter dated 5th February, 2004 was issued by the petitioner to get the balance admitted dues of Rs. 47,85,253.60 when the respondent was not releasing the said amount and, in fact, such letter was issued to the respondent out of economic duress and financial coercion exercise by the said respondents. Mr. Mitra referred a letter dated 19th January, 2004 which is an evidence of duress and financial coercion. It was also submitted by Mr. Mitra that the respondent had insisted that payment of the admitted amount would not be released to the petitioner unless ?No Claim certificate? was issued by the petitioner. It was in these circumstances the petitioner had no option but to accept the payment released by the respondent on 5th February, 2004. However, immediately on receipt of the payment, the petitioner had informed by its letter dated 17th February, 2004 that they have accepted the payment in partial settlement of the petitioner?s dues under duress and coercion. Thus, the economic duress and financial coercion has been established by the petitioner based on the documents on record. It is alleged that the learned Arbitrator did not consider this issue but recorded a finding that there was accord and satisfaction on the ground that the last payment was received by the petitioner unconditionally.
Accordingly, Mr. Mitra submits that the award dated 31st December, 2009 should be set aside. Mr. Mitra in support of his contentions referred a judgment reported in (2004) 2 SCC 663. In that case it was decided that requiring the claimant to issue an undated receipt acknowledging receipt of a smaller sum than its claim in full and final settlement as a condition for releasing of an admitted lesser amount has been held to be unfair, irregular and illegal and requires to be deprecated. He also cited another decision reported in (2004) 2 SCC 663 (Chairman and MD, NTPC Ltd. vs. Reshmi Constructions, Builders & Contractors). Other decision cited by Mr. Mitra is reported in (2011) 2 SCC Page 400 (R.L. Kalathia and Company vs. State of Gujarat). It was also submitted by Mr. Mitra Learned Senior Counsel appearing for the petitioner that accord and satisfaction is a question of fact which the arbitrator should have considered in the light of the attending circumstances which the learned Arbitrator have failed in the instant case. Mr. Mitra also submitted that on 5th February, 2004 no such MOU has been signed although it was recorded by the learned Arbitrator that the same was signed between the parties. Ultimately, Mr. Mitra submitted the Hon?ble Court in exercise of its power under Section 34 (4) of the Arbitration and Conciliation Act, 1996, may remand the matter to the arbitral tribunal.
Mr. Chaudhuri, learned Counsel for the respondent submitted, referring the quotation of the petitioner dated 29th November, 2000 that the said contract was a ?lump sum turnkey contract? for a price of Rs. 4,56,32,176/- and the said price are lump sum, firm price for all segments and that no escalation is applicable which would also appear from the Work Order dated 10th January, 2001 issued by the respondent, referring to several previous correspondence including the revised order dated 29th November, 2000 by the petitioner. My attention was drawn to Clause 32 to the terms and conditions which is Annexure 1 (Pg. 73 to 76 of the paper book Vol. 1) and the said clause reads as follows :-
?In addition to the above, for completion of the entire project under this contract if any additional jobs are involved and/or any modification/alteration in any existing/proposed facilities to meet the operational needs of IOCL, the same shall be carried out at no extra cost.?
According to the learned Counsel for the respondent no extra cost is required to be paid for any additional job if require to be carried out to meet the optional needs. Learned Counsel pointed out Clause 14.3 of the salient terms and conditions being Annexure 1 to the Work Order dated 10th January, 2001 and submits that the said clause refers to final payment and the raising of the bills which specifically stipulates that final measurement certificate/bill shall be prepared by the representative of IOCL/the respondent and the contractors within one month from the completion of the work and if there shall be any dispute of item or items of work then IOCL/EPI shall be entitled to withhold the entire balance payment and the contractors shall submit the list of disputed item before the final measurement certificate is prepared and signed by the contractors and if he fails to do so his claims shall be deemed to have been fully waived and absolutely extinguished in respect of such disputed items. The said clause being 14.3 reads as follows :-
?The Final measurement certificate/Bill shall be prepared by the representative of IOCL/EPI and contractors within one month from the completion of the work subject to the claim of IOCL/EPI against the contractors for compensation of liquidated damages or otherwise as provided in the said Works Order. Measurement Certificates prepared by IOCL?s site engineer or by a person authorized by Dy. General Manager (E), IOCL will not be taken as final unless the Dy. General Manager (E), IOCL or his representative on his behalf approves such Measurement Certificates. The Dy. General Manager?s (E) IOCL or his representative?s Certificates or measurement and the total amount payable by IOCL/EPI shall be final and binding on the contractors and the payment and receipt of the contractors shall absolutely discharge IOCL/EPI from all claims of the contractors. If there shall be any dispute for the item or items of work then IOCL/EPI shall be entitled to withhold the entire balance payment and the contractors shall submit a list of disputed item before the final Measurement Certificate is prepared and signed by the contractors and if he fails to do so his claims shall be deemed to have been fully waived and absolutely extinguished in respect to such disputed items.?
It was submitted that since it was a ?back to back? contract between the petitioner and the respondent and also with that of the respondent and IOCL the clause for final payment viz. Clause 14.3 is identical with that of the clause of final payment of the contract that the respondent had with IOCL. Thus, it is clear from the aforesaid clause that the contractor shall submit a list disputed item or items before the final measurement certificate is prepared and signed by the contractors but in the instant case it was not done. It is pertinent to mention here that the petitioner completed the work on 7th September, 2002. In the instant case the petitioner never raised any such dispute within the stipulated period of one month after completion of the work rather they raised their total final Bill of Rs. 4,56,32,176/- dated 11th September, 2002 and sent the same under a cover of a letter dated 11th September, 2002. Such Bill was raised without any protest, objection or dispute of any nature whatsoever. It was further submitted that from time to time petitioner was raising various R.A. Bill (Running Account Bills) and the last of such R.A. Bill being R.A. dated 11th September, 2002 was for Rs. 11,34,655 and the cumulative value of the said R.A. Bill was Rs. 4,52,94,734/-. Thus, the total cumulated value of the Running Account Bills of the petitioner was about Rs. 4.53 crores. The final Bill raised by the petitioner was for Rs. 4.56 crores in terms of the contract being a fixed lump sum price.
The respondent, on the basis of the final Bill raised by the petitioner, raised its final Bill with IOCL accordingly and obtained payment in respect thereof from IOCL on or about 8th December, 2003 and the said fact was to the knowledge of the petitioner as would appear from the petitioner?s letter dated 13th December, 2003 where the petitioner demanded the release of it?s 10% payment which according to the petitioner was about 45 lakhs. Thus it is evident that the petitioner had come to know that the respondent had received its total final Bill payment including liquidated damages from IOCL. Therefore, it would be also evident that the petitioner admitting that total payment could be only 4.56 crores and no further.
On or about 12th December, 2003 the petitioner by its letter informed the respondent that after completion of the work the quantities were measured and certified by the respondent?s side and accordingly Bill was prepared and submitted to the respondent for a sum of Rs. 4,83,27,271/- which is a cumulative amount of Rs. 4,56,32,396/- previous amount and a further addition for Rs. 26,94,876. The petitioner requested the respondent to consider the same and release the balance payment as the contract is based on the unit rates and not a lump sum contract. According to the learned Counsel this was purely and after thought and contrary to the terms and conditions of the contract. The learned Counsel pointed out that the respondent has received the payment against the final Bill on 8th December, 2003 on the basis of the final raised by the petitioner and the petitioner had knowledge of receipt of such payment and they have written their letter on 13th December, 2003 to release the payment. Since the respondent have received the payment as against final Bill on 8th December, 2003, the petitioner issued the letter Dated 12th December, 2003 deliberately and with illmotive to extract money unlawfully. It was submitted that the dispute was raised for the first time by the petitioner by its letter dated 16th December, 2003 when the petitioner demanded for payment in terms of subsequent Bills and such demand is not on the basis of the final Bill dated 11th September, 2002. It is submitted that the respondents refused to make payment for any additional amount, in as much as the respondent had already acted upon the final Bill dated 11th September, 2002 and had received its payment from Indian Oil Corporation on 8th December, 2003 which is in the knowledge of the petitioner. By its letter dated 9th January, 2004 the petitioner pointed out that the respondents officials clearly stated that no payment of additional works/quantities executed more than specified in the work order could be made and such stand of the respondent was fair as the contract was a lump sum contract and the respondent has already obtained its payment from IOCL on the basis of the final Bill raised by the petitioner. He also submitted that for the purpose of creating a cause of action to initiate legal proceedings the petitioner mischievously recorded that balance payment was agreed to be released by the respondent only after getting a ?NO Claim certificate? from the petitioner. The learned Counsel pointed out that by letter dated January 27, 2004 the petitioner confirmed the heads under which balance payment was due to the petitioner, which included the balance payment from final Bill and other heads, and in the event such payment was received, only two outstanding issues would remain viz. works contract tax and 1% value of contract towards commissioning. However, a further meeting was held between the petitioner and the respondent on 5th February, 2004 and the minutes of the said meeting indicates that only discussion was pertaining to works contract tax and after such discussion as recorded in the minutes the petitioner on 5th February, 2004 obtained its balance payment and confirmed the receipt of such payment by a letter dated 5th February, 2004 and raised the only outstanding issues of work contract tax and 1% value towards commissioning. And it is only after 12 days from receiving its payment on 5th February, 2004, the petitioners by its letter dated 17th February, 2004 for the first time raised the allegation of duration and coercion. The respondent by its letter dated 19th March, 2004 duly replied and the allegation of duress or coercion was specifically denied. In that letter it was specifically mentioned that the petitioner has received all amounts payable in terms of contract and admitted and acknowledged such payment in writing. It was also said that the work contract tax is under assessment which is not unjustifiably with held and so far commissioning charges are concerned no commissioning has been made.
According to Mr. Chaudhuri as per the arbitration agreement matter was referred to the Arbitrator and the respondent contested the alleged claim of the petitioner and after considering the evidence of record and respective contentions as well as submissions of both parties the Arbitrator made the award dated 31st December, 2009, inter alia, holding that there was accord and satisfaction and the contract accord was not induced by any duress or coercion and as such no interference with the settlement agreement dated 5th February, 2004 was called for.
Mr. Chaudhuri, submitted that the three cases relied upon by the petitioner for the proposition that whether the accord and satisfaction is vitiated by coercion or whether the allegation of coercion is an after thought are required to be determined by the arbitrator but in the instant case the Arbitrator have gone into the factual background and upon considering the evidence on record as well as submissions made on behalf of both sides, has come to a definite conclusion that the contract of accord was not induced by any duress or coercion. The Arbitrator also concluded that as per the original Bill dated 11th September, 2002 the petitioner was paid by the respondents and the petitioner have received such payment unconditionally without any protest and/or prejudice and has raised the alleged plea of duress and coercion subsequently after receiving the payment in full and final settlement. Mr. Chaudhuri also submitted that recording of accord and satisfaction is lawful and valid by settlement of all claims excluding work contract tax and commissioning charges. The Arbitrator, thus, given nil award, but recorded that the respondent was bound to pay the balance work contract tax if any payable and 1% commissioning charges if commissioning at all takes place. Mr. Chaudhuri, have cited two decisions first of which is reported in AIR 1981 Calcutta 1995 (Union of India vs. D. Bose). In that case the Division Bench of Calcutta High Court after considering Section 63 of the Indian Contract Act has clearly opined that the question as to whether the claim of the respondent stood discharge by accord and satisfaction was a question of fact and a dispute well within the ambit of arbitration clause and the Arbitrator decided the said question. Accordingly, it was submitted that in the instant case also the Arbitrator has gone into the dispute and decided that there is contract of accord and as such there is no scope to raise any grievance against the award published by the learned Arbitrator. The second case which was cited by the learned Counsel (Sarvesh Chopra vs. Ircon International Ltd.) reported in MANU/DE/0519/2010 the Division Bench of Delhi High Court has held the finding of Arbitrator ?there was no substance in the allegation that the Claimant was forced to sign the No Claim certificate? being a finding of fact which is not perverse and ought not to have been looked into by this Court which would appear from Paragraph 8 of the judgment. According to him no case of perversity of finding of the Arbitrator has been made out in the instant case by the petitioner and, therefore, this application is liable to be rejected and/or dismissed.
I have heard the learned Counsel of both parties and considered the submissions made by them as well as the materials available on record including the award passed by the sole Arbitrator on 31st December, 2009. I find from records and correspondences that it was a lump sum turnkey contract for Rs. 4,56,32,176/- for laying of Dock lines along with allied mechanical, civil and electrical works complete in all respects. I also find that it was a contract for firm price without any escalation clause. It appears from Clause 32 to the terms and conditions that, for completion of the entire project under this contract, if any additional jobs are involved and/or modification/alteration in any existing/proposed facilities to meet the operational needs of IOCL, the same shall be carried out at no extra cost. It also appears from Clause 14.3 of the salient terms and conditions that final measurement certificate/Bill shall be prepared by the representative of IOCL/EPI and the contractors within one month from the completion of the work and if there shall be any dispute for the item or items of work then IOCL/EPI (respondent herein) shall be entitled to withhold the entire balance payment and the contractors (the petitioner herein) shall submit a list of disputed items before the final measurement certificate is prepared and signed by the contractors and if the contractors fails to do so their claims shall be deemed to have been waived fully and absolutely extinguished in respect of such disputed items. Admittedly, the work was completed on 7th September, 2002 and final Bill was raised on 11th February, 2002 without raising any objection. It is pertinent to mention that before raising the final Bill no dispute was raised as required to be done under Clause 14.3 as aforesaid. On the basis of the final Bill the respondents raised their Bill against Indian Oil Corporation and they have received the final Bill paid by IOCL on 8th December, 2003 which was in the knowledge of the petitioner and the petitioner by their letter dated 13th December, 2003 asked the respondents to release the 10% balance payment and the petitioner received such payment on 5th February, 2004 in full and final settlement except two items i.e. works contract tax and 1% value of contract towards commissioning for which a MOU was signed by the parties. It is evident from the award itself that the sole Arbitrator has gone into the issue and after taking note of all the factual aspects the sole Arbitrator have rightly come to the conclusion that the claimant have waived their rights in respect of all disputed items and that the contract of accord was not induced by any duress or coercion and as such no interference with the settlement agreement dated 5th February, 2004 is called for. The findings of the sole Arbitrator including his conclusion is quoted hereunder :-
?I have perused the relevant provision of the contract relating to final bill and I have found that either the list of disputed items is submitted before measurement certificate is prepared and signed by the contractor and to wait for payment till the matters are settled OR altematively sign the final measurement certificates and get the payment immediately. The contractor therefore is required to choose from the above two altematives for getting the final bill payment. The contractor, the Claimant herein submitted their final bill on 11.09.2002 of Rs. 4,56,32,176.00. This was done by the Claimant without raising an iota of protest or raised any dispute. Therefore, the Claimant had waived their rights in respect of all disputed items if any. Based on the final bill of the Claimant, the Respondent settled the contractual payment amount on or around 8.12.2003 with M/s IOCL. However, before the bill amount is released through IOCL, the Claimant sent another bill purported to be final bill dtd. 12.12.2003 for Rs. 4,83,27,271.00, for which the Respondent expressed their contractual inability to pay the alleged amount. The Claimant thereafter preferred to surrender additional claims and settled the matter for immediate release of payment as per their original final bill dtd. 11.09.2002. Claimant received the payment of Rs. 47,85,253.60 made by the Respondent by tow separate cheques based upon settlement and the same was received by the Claimant unconditionally and without any protest or prejudice. On receipt of the amount of final bill excluding the amounts relating to WCT and commissioning charges, the Claimant raised the plea of duress/coercion and re-agitated their additional claims. Since the provisions relating to final bill were known to the Claimant being applicable on back to back basis. The claimant was required to submit the disputed items. But this was never done and the payment of final bill was received by the Claimant after signing the final measurement certificate. The payment was received unconditionally, therefore, there is accord and satisfaction by settlement of all the claims excluding WCT and commissioning charges.
I, therefore, conclude that the contract of accord was not induced by any duress or coercion and as such no interference with the settlement agreement dtd. 05.02.2004 is called for. As such none of the claims of the Claimant and the Respondent are arbitrable and are therefore disallowed. The award in favour of either party is NIL. However, the Respondent is bound to pay to the Claimant in terms of the agreement dtd. 05.02.2004 the balance works contract tax, if any payable and 1% (one per cent) commissioning charges, if commissioning at all takes place. I am not inclined to award any cost to any
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of the parties and both the parties are ordered to bear their respective costs. The Award is made and published accordingly at Kolkata on 31st December, 2009.? It is evident from records that it is only after receiving the final payment on 5th February, 2004 by and under letter dated 17th February, 2004 for the first time the petitioner raised an allegation of duress and coercion and claim was made for releasing the outstanding payment which was denied by the respondents in their reply dated 19th March, 2004. It is also evident from records that there is no such clause in the agreement for which the petitioner can claim any amount of money for any short of extra work. It is also evident that it is only after coming to know the final payment made by IOCL to the respondent on 8th December, 2003, the petitioner issued all such letters with the allegation that unless ?no claim certificate? is issued by the petitioner the payment won?t be released. It appears from record that on 12th December, 2003 for the first time the petitioners claimed release of the balance payment which is based on the unit rates and not a lump sum contract and significantly such letter was issued after 8th December, 2003 when the respondent received final payment from IOCL. Thus, it appears that the claim and the contention of petitioners are all after thought and such allegations have been made to create a cause of action and to realize extra amount of money for which they are not entitled. I have considered the judgment cited by the learned Senior Counsel appearing on behalf of the petitioner which are pertaining to pre-reference stage and has no applicability in the facts and circumstances of the present case. I find substance in these submissions of learned Counsel for the respondent that the question as to whether the claim of respondents stood discharge by accord and satisfaction was a question of fact and a dispute well within the ambit of arbitration clause. Here in the instant case the learned Arbitrator on the factual background of the case and upon considering the relevant materials on record, factually decided there is accord and satisfaction. Such findings made by the Arbitrator is correct, lawful and valid. In my opinion the learned Arbitrator have entered into the dispute and considered the materials on record and have rightly arrived at a decision that the contract of accord was not induced by any duress or coercion and, therefore, none of the claims of the petitioner and the respondent are arbitrable and accordingly disallowed. The sole Arbitrator have rightly held that the respondent is bound to pay to the claimant, in terms of the agreement dated 5th February, 2004, the balance works contract tax, if any payable and 1% commissioning charges if commissioning at all takes place. Accordingly, I hold that there is no merit in this application filed by the petitioner and, therefore, the same is rejected.