C.R. No.3599 of 2004 (O&M) - 1 - ********* IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH C.R. No.3599 of 2004 (O&M) Date of decision:28.09.2010. Commander Works Engineers (Air Force), Chandigarh ...Petitioner Versus Sh. Kesho Ram Sharma and another ...Respondents CORAM: HON’BLE MR. JUSTICE RAKESH KUMAR JAIN Present: Mr. A.K.Bansal, Advocate, for the petitioner. Mr. R.K.Chhibbar, Senior Advocate, with Ms. Meenu Sharma, Advocate, for respondent No.1. ***** RAKESH KUMAR JAIN, J. This revision petition is directed against the judgment and decree dated 16.10.2001 passed by Additional Civil Judge (Senior Division), Amritsar by which application filed by respondent No.1 (Contractor) for making the arbitral award dated 30.09.1997 Rule of the Court was allowed, objection filed by the petitioner was dismissed and against the judgment and decree dated 19.04.2004 passed by Additional District Judge, Amritsar whereby the appeal filed by the petitioner was dismissed. In brief, the facts of the case are that C.A. No.CWE/ASR/GE(M)-24/85-86 for 'Provision of Essential Services Addition/Alterations to Certain Buildings and other Allied Service at Amritsar' was entered into between the Commander C.R. No.3599 of 2004 (O&M) - 2 - ********* Works Engineers (petitioner herein) and respondent No.1 on 25.11.1985 for an amount of `10,36,214.30. The date of commencement and extended date of completion of the work was 10.12.1985 and 06.11.1989 respectively. The final bill was accepted and signed by respondent No.1 for an amount of `1,79,935 observing “no further claim under the contract beyond the net amount of the bill”. However, the amount of final bill was paid to respondent No.1 through cheque bearing No.F-993549 dated 31.03.1991 and was received by him under protest. The receipt is undated. However, on 17.05.1991, after the settlement of the final bill, respondent No.1 raised some more claims, which were declined by the petitioner in terms of Clause 65-A of the I.A.F.W.-2249 (General Conditions of Contracts) on the ground that after settlement of the final bill, no further claim can be raised, as a result of which a dispute arose between the parties. Respondent No.1 requested the petitioner to refer the dispute to the Arbitrator to decide the claims raised after receiving the amount of final bill under protest and on the refusal of the petitioner to do so, respondent No.1 filed an application under Section 8(2) of the Indian Arbitration Act, 1940 [for short “Act of 1940”] in the Court of Sub Judge 1st Class, Amritsar for appointment of an Arbitrator. The said application was allowed on 07.11.1994 and the Chief Engineer, M.E.S., Amritsar was directed to appoint Superintending Engineer, enlisted on the approved list of the Arbitrators, with the consent of the parties, as an Arbitrator, to proceed in accordance with law to hear and decide the matter in dispute. In terms of the order of the Court, Chief Engineer, AF (WAC) Jalandhar Cantt. appointed Col. B.J.V. Rao, ACE(Plg) as Sole Arbitrator. In the pleadings submitted on behalf of the petitioner before the Arbitrator, in defence of the claim set up by respondent No.1, it was urged in para 2.1 that “at the outset, it is highlighted that the final bill of the contract agreement was accepted by the claimant without any C.R. No.3599 of 2004 (O&M) - 3 - ********* reservation and the final bill certificate was signed by him clear as per clause 65-A of IAFW-2249. It is specifically highlighted that “No further claims” shall be made by the contractor after submission of final bill and these shall be deemed to have been waived and extinguished, which means after signing the final bill, raising of claim was against the spirit of the contract, as such all the claims can be termed as afterthought and may be rejected in toto. Without prejudice our above stand, our pleading in defence for each claim are as under:-”. The Arbitrator, vide his award dated 30.09.1997 awarded `1,31,785.11 with interest @ 18% per annum w.e.f. 01.04.1991 to 30.09.1997 and future interest from 01.10.1997 to the date of payment or to the date of the decree of the Competent Court whichever is earlier, allowing a grace period of three months from 01.10.1997 to 31.12.1997, during which no interest would accrue if amount of award along with interest up to 30.09.1997 is paid. Thereafter, respondent No.1 filed an application under Sections 35 & 36 of the Arbitration and Conciliation Act, 1996 [for short “the Act”] read with Section 151 of the Civil Procedure Code, 1908 [for short “CPC”] for passing a judgment in terms of the award dated 30.09.1997 in order to make the award Rule of the Court. In the said application, objection was raised by the petitioner that the final bill was accepted and signed by respondent No.1 without any reservation as per Clause 65-A of the I.A.W.F.-2249, but the learned Additional Civil Judge (Senior Division), Amritsar, vide his judgment and decree dated 16.10.2001, allowed the application for making the award Rule of the Court and dismissed the objection of the petitioner. The statutory appeal filed by the petitioner to challenge the judgment and decree dated 16.10.2001 was dismissed by the Additional District Judge, Amritsar vide his judgment and decree dated 19.04.2004 and hence the present revision petition was filed by the petitioner which was admitted on C.R. No.3599 of 2004 (O&M) - 4 - ********* 20.05.2005 and execution in respect of the additional amount of award was ordered to be stayed. Opening his argument, learned counsel for the petitioner has submitted that the Courts below have erred in not deciding the objection raised by the petitioner about misconduct of the Arbitrator who had not decided the objection that after accepting and signing the final bill as “no further claim”, respondent No.1 could not have claimed any amount thereafter in view of Clause 65-A of the I.A.F.W.-2249 as it is provided therein that after the acceptance of final bill without any protest, all claims thereafter shall be deemed to be waived and extinguished on the part of the contractor/respondent No.1. It is submitted that objection was raised in this regard in para No.2.1 of the defence pleaded before the Arbitrator but it has not been dealt with by him nor it has been dealt with by the Courts below though they had noticed this objection in their judgments. Developing his argument, learned counsel for the petitioner has submitted that respondent No.1 had singed the final bill with following certificate: - “I/We hereby certify that I/We have performed the work under the conditions of the C.A.No.CWE/ASR/GE(M)-24/85-86 for which payment is claimed and that I/We have no further claim under this contract beyond the net amount of this bill.” It is submitted that vide his letter dated 21.02.1991, respondent No.1 had requested Garrison Engineer, Amritsar Cantt. for the payment of final bill. In reply thereto, on 28.02.1991, respondent No.1 was informed that his final bill is under audit and as soon as it is passed, he will be informed for the purpose of payment. On 27.03.1991, respondent No.1 wrote registered letter to the petitioner that he has come to know that final bill has been passed by CDA, Western Command, Chandigarh and is lying with C.R. No.3599 of 2004 (O&M) - 5 - ********* the petitioner, but the payment has not been made which is causing inconvenience and loss to respondent No.1. Thus, in this letter, prayer for releasing of payment of the final bill was made. In response to this letter, vide telegram dated 30.03.1991, the petitioner had informed respondent No.1 to the effect that “bill passed attend office to receive payment”. In reply, respondent No.1 sent a telegram dated 31.03.1991 to the effect that “send payment by post immediately; unable to attend office – Keshoram”. Thereafter, as per record, payment of a sum of `1,79,935 was made to respondent No.1 by way of cheque dated 31.03.1991 which was received by respondent No.1 by way of an undated receipt, which reads as under: - “Received cheque bearing machine No.F- 993549 dated 31.03.1991 amounting to `1,79,935 (Rupees One Lac Seventy Nine Thousand Nine Hundred Thirty Five Only) on account of payment of final bill bearing Vr. No.30/1081 dated 22.01.1990 against C.A.No.CWE/ASR/GE(M)-24/85-86. Payment received under protest. Sd/- Kesho Ram Sharma.” After receipt of payment under protest, respondent No.1 wrote a letter to the petitioner on 17.05.1991 in which, for the first time, he further put up a claim under 12 separate heads which were not part of the final bill. On 21.05.1991, the Garrison Engineer, in reply to the letter dated 17.05.1991, informed respondent No.1 that after accepting the final bill without any further claim, he is debarred under Clause 65-A of I.A.W.F.-2249 to raise fresh claim and also turned down his request for referring the dispute to the Arbitrator. Learned counsel for the petitioner has then referred to Clause 65-A of the I.A.W.F.-2249, which reads as under: - “65-A. Final Bill (Applicable only to Term C.R. No.3599 of 2004 (O&M) - 6 - ********* Contracts).- The Final Bill shall be submitted by the Contractor on I.A.F.W.- 2262 in duplicate, accompanied by all supporting abstracts, couchers, etc., except I.A.Fs.W.-2158 and 1833 prepared in the manner prescribed by the G.E. within three months of physical completion of the Works to the satisfaction of the Engineer-in- Charge. In respect of Works orders arising out of unit requisitions or M.E.S. inspections for maintenance and repairs, any portion of such an order which remains uncompleted at the date of the next subsequent requisition or inspection may, purely to facilitate payment of completed Work and without prejudice to any other right or remedy of Government in respect of any such delay, be deleted and the Works Order, as so amended forthwith, billed for final payment. No further claims shall be made by the Contractor after submission of a Final Bill and these shall be deemed to have been waived and extinguished. The Contractor shall be entitled to be paid the full measured value of the Works Order, less the value of payments made on account and of any charges properly preferred under the Conditions of Contracts for Government Stores, etc. supplied on repayment, subject to the certification of the final bill by the G.E. C.R. No.3599 of 2004 (O&M) - 7 - ********* When fractions of a rupee occur in the totals of bills, fractions less than half a rupee shall be disregarded and half a rupee and over taken as a rupee. No charges shall be allowed to the Contractor on account of the preparation of a final bill.” It is urged by learned counsel for the petitioner that after the acceptance of final bill with endorsement of “no further claim”, all subsequent claims are deemed to have been waived by the contractor/respondent No.1 and, thus, the claims which have been now set up by respondent No.1, after the payment of final bill, were not arbitrable by the Arbitrator. Therefore, the Arbitrator has misconducted himself in traveling beyond the agreement between the parties. In support of his submission, he has relied upon a Division Bench decision of the Sikkim High Court in Arbitration Appeal No.3 of 2000 titled as Sagarmull Agarwala Vs. Union of India and another, decided on 15.10.2001, a Single Bench judgment of this Court in the case of Tuli Construction Company P. Ltd. Vs. Union of India and another, 2005(2) PLR 613 and a judgment of the Supreme Court in the case of Steel Authority of India Ltd. Vs. J.C.Budharaja, Government and Mining Contractor, (1999) 8 Supreme Court Cases 122. He has also argued that the Arbitrator has erred in awarding 18% interest on the amount determined as payable to respondent No.1. In reply, learned counsel for respondent No.1 has vehemently argued that the question raised by the petitioner cannot be adjudicated upon by this Court as it has limited jurisdiction in view of Section 30(a) of the Act of 1940 which provides that an arbitral award shall not be set aside except in the case when the Arbitrator has misconducted himself or the proceedings. In this regard, it is submitted that there is no question of any misconduct C.R. No.3599 of 2004 (O&M) - 8 - ********* on the part of the Arbitrator or the proceedings as the question which has been raised before this Court was never raised before the Arbitrator much-less the Courts below, whose judgments and decrees are under challenge in this revision petition. In this regard, he has relied upon a judgment of the Supreme Court in the case of Bank of Bihar Vs. Mahabir Lal and others, AIR 1964 Supreme Court 377. He has further strenuously asserted that respondent No.1 had not relinquished the claim which have been set up before the Arbitrator since he had received the payment of the final bill under protest and as such, the rigours of Clause 65-A of the I.A.F.W.-2249 would not come in his way. In this regard, he has relied upon a decision of the Supreme Court in the case of M/s. Shetty's Construction Co. Pvt. Ltd. Vs. M/s. Konkan Railway Corpn. Ltd. and another etc. etc., AIR 2000 Supreme Court 122. He has further submitted that though the receipt of payment of the final bill is allegedly undated, but the cheque was drawn by respondent No.1 on 31.03.1991 towards payment of the final bill and immediately on 17.05.1991, respondent No.1 had raised the other claims which were within limitation and in this regard he has relied upon a decision of the Supreme Court in the case of Union of India and another Vs. M/s. L.K.Ahuja and Co., AIR 1988 Supreme Court 1172. I have heard both learned counsel for the parties and perused the record carefully with their able assistance. From the arguments raised by both learned counsel for the parties, the question emerges for the purpose of adjudication is as to “whether acceptance of the final bill by a contractor with the endorsement “no further claim” would debar him from raising further claim under Clause 65-A of I.A.F.W.-2249 or he would be entitled to raise further claim in case the amount of final bill is accepted by him under protest”. Before searching the answer to the aforesaid question, it C.R. No.3599 of 2004 (O&M) - 9 - ********* would be pertinent to mention that the facts are not much in dispute as the final bill drawn by the petitioner on 22.01.1990 of an amount of `1,79,935 was accepted by respondent No.1/contractor with a certificate of “no further claim under the contract beyond the net amount of the bill” and in the correspondence dated 21.02.1991 and 27.03.1991, which have been referred to by me in the earlier part of the judgment, when respondent No.1 was requesting for the release of payment of the final bill, he had not referred to the claim which have been set up by him after the acceptance of the final bill vide his letter dated 17.05.1991. In view of these facts, the question is as to “whether there is a sanctity to final bill or to the receipt of the final bill in terms of Clause 65-A of the I.A.F.W.-2249 which forms part of the contract”. In order to appreciate this question, Clause 65-A of the I.A.F.W.-2249 has to be cautiously gone into, which provides that final bill has to be submitted by the contractor on I.A.F.W.-2262 in duplicate, accompanied by all supporting abstracts, vouchers, etc., except I.A.Fs.W.-2158 and 1833 prepared in the manner prescribed by the G.E. within three months of physical completion of the Works to the satisfaction of the Engineer- in-Charge. In respect of Works orders arising out of unit requisitions or M.E.S. Inspections for maintenance and repairs, any portion of such an order which remains uncompleted at the date of the next subsequent requisition or inspection may, purely to facilitate payment of completed Work and without prejudice to any other right or remedy of Government in respect of any such delay, be deleted and the works order, as so amended forthwith, billed for final payment, but no further claims shall be made by the contractor after acceptance of a final bill and these shall be deemed to have been waived and extinguished. The language of Clause 65-A of I.A.F.W.-2249 gives finality to the final bill and debars the contractor from raising any further bill after the final bill is accepted. Thus, in my view, the sine qua non is the acceptance of the final bill without C.R. No.3599 of 2004 (O&M) - 10 - ********* prejudice and not the acceptance of the amount of payment of final bill under protest which could give a further lease of life to respondent No.1 to raise new claims after the culmination of the contract between the parties. Thus, in my view, the acceptance of final bill without prejudice by respondent No.1 would close his further claim arising out of the contract and would not entitle him to raise further claims only on the ground that he had received the payment of final bill under protest. In the judgment relied upon by learned counsel for the petitioner in the case of Sagarmull Agarwala (supra), the Division Bench of the Sikkim High Court supports his contention. In the said case, the contractor had given “No Claim Certificate” towards full and final settlement, but lateron he turned around and said that he had singed the said certificate under pressure, otherwise his payment of final bill would have been withheld by the department. However, after signing the final bill he had not issued any protest letter. The Division Bench considered Clause 65-A of the I.A.F.W.-2249 and held that if the contractor has given “No Claim Certificate”, then he is debarred from raising further claim as his right to make a claim was deemed to have been waived and extinguished in view of Clause 65-A. It was also observed that there is accord and satisfaction of the final settlement of the claims by the appellant, which goes to the root of the case. In the case of Tuli Construction Company P. Ltd. (supra), the final bill was accepted, but after 2- ½ months, it was alleged that it has been obtained through coercive means. This Court had held that when the final payment was received, the contract itself came to an end and the arbitration clause ceased to operate. In this case, the contractor had given “No Claim/No Dues Certificate” at the time of preparation of final bill and had also received the final payment without any protest, whereas in the case in hand, the payment was received under protest. However, I am of the considered opinion C.R. No.3599 of 2004 (O&M) - 11 - ********* that even if the payment is received under protest, it would not improve the case of respondent No.1 if he had not raised any objection at the time when the final bill was drawn and had given his satisfaction of “no further claim” to it because Clause 65-A of I.A.F.W.-2249 only deals with the final bill and not with the payment of final bill. Now, referring to the second limb of the argument raised by learned counsel for respondent No.1 that the petitioner had not raised this issue before the Arbitrator much-less before the Courts below, therefore, it cannot be agitated before this Court is concerned, in this regard, I have already made a reference to the objection raised by the petitioner in para No.2.1 of his pleadings of defence before the Arbitrator and also before the Courts below, but the said issue has not been dealt with either by the Arbitrator or by the Courts below. Though the objection raised by the petitioner goes to the root of the case inasmuch as it challenges the power of the Arbitrator to decide the claim set up by respondent No.1. The judgment relied upon by learned counsel for respondent No.1 in this regard in the case of Bank of Bihar (supra) is not applicable to the facts and circumstances of the present case because in that case it was held that where a statement appears in the judgment of a Court that a particular thing happened or did not happen before it, it ought not ordinarily to be permitted to be challenged by a party unless both the parties to the litigation agree that the statement is wrong, or the Court itself admits that the statement is erroneous. The remedy of a party aggrieved is by way of review. In the present case, had this plea not been taken and noticed by the Courts below in the judgments, then the judgment relied upon by learned counsel for respondent No.1 in the case of Bank of Bihar (supra) would have some relevance because in that eventuality the allegation of the petitioner in the present case that he had raised objection and was not dealt with by the Arbitrator or by the Courts below, would not have been considered, but once this argument or objection is C.R. No.3599 of 2004 (O&M) - 12 - ********* specifically mentioned in the pleadings and also noticed by the Courts below in its judgments, but lateron they have not been dealt with at all, then the fault lies with the Courts below and not with the petitioner. In so far as the judgment in the case of Union of India (supra) is concerned, in that case the contractor had executed construction works and given no claim declaration, but subsequently claimed certain amount as due on contracts and claimed reference to Arbitrator within three years. The question decided was that the application under Section 20 of the Act of 1940 would be maintainable. Again, this judgment is not applicable to the facts and circumstances of the present case as there is no question of any limitation. The last judgment relied upon by learned counsel for respondent No.1 in the case of M/s. Shetty's Construction Co. Pvt. Ltd. (supra) is also not applicable to the facts and circumstances of the present case because it was held in that case that if the contractor himself treats the claims at an earlier stage to be in a fluid state and not final, then he can always raise claim thereafter, but in the present case while accepting and signing the final bill, the contractor/respondent No.1 had specifically endorsed “no further claim” which means that it was not in a fluid state but had come to an end. No other point has been raised. In view of above discussion, the question raised by learned counsel for the petitioner is answered in his favour, the present revision petition is thus allowed and the impugned orders as well as the arbitral award are set aside with costs. September 28, 2010 (RAKESH KUMAR JAIN) vinod* JUDGE