IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of Decision : 23.02.2011 Arb. Case No.92 of 2007 M/s Natha Singh Government Contractor ...Petitioner Versus Union of India and others ...Respondents CORAM: HON'BLE MR. JUSTICE HEMANT GUPTA Present : Mr. P.S.Rana, Advocate, for the petitioner. Mr. A.S.Rakhra, Advocate, for Mr. P.K.Dutta, Advocate, for the respondents. HEMANT GUPTA, J. (ORAL) The petitioner has invoked the jurisdiction of this Court under Section 11 of the Arbitration and Conciliation Act, 1996 (for short ‘the Act’) for appointment of an Arbitrator in respect of the disputes arising out an Agreement dated 07.09.2006. The petitioner was awarded work of construction of Bridge (128- A (1 x 61.00 M Span) on Mukerian Hydel Channel consisting of Pile foundation of 1.20 meter dia and RCC abutments etc. in Uchi Bassi- Mukerian Block Section in C/W doubling bat; Jal Cantt. Pathankot Jamu Tawi). In pursuance of the said contract, the petitioner completed the work allotted. It was on 08.06.2007 vide Annexure A-2, the petitioner sought resolution of disputes between the parties through an Arbitrator to be Arb. Case No.92 of 2007 appointed under the contract Agreement in terms of Condition No.64 of general conditions of the Contract. In reply, the respondents have inter alia relied upon that the petitioner was paid a sum of Rs.31,15,638.10 till 11.01.2007 and that the petitioner has accepted a total amount of Rs.48,88,982.82 including payment of Rs.17,73,344.72 as full and final settlement on 26.04.2007. The respondents also relied upon a supplementary agreement dated 26.04.2007, whereby the petitioner is said to have agreed to revoke before the agreement between the parties. The relevant clauses from the supplementary agreement read as under: “And whereas the party hereto of the second part have received further sum of Rs.1773344.72 through the final bill bearing voucher No.12/A/cs/Dy.CE/C/JUC dated 24.04.07 (the receipt of which is hereby acknowledged by the party thereto of the second part) from the party hereto the first part in full and final settlement of all his/its disputed claims under Principal Agreement. Now it is hereby agreed by and between the parties in the consideration of sums already paid by the party hereto of the first part to the party hereto of the second part against all outstanding dues and claims for, all works done under the aforesaid Principal Agreement including/excluding the security deposit the party hereto of the second part have no further dues of claims against the party hereto the first part under the said Principal Agreement. It is further agreed by and between the parties that the party hereto of the second part has accepted the said sums mentioned above in full and final satisfaction of all its dues and claims under the said Principal Agreement. It is further agreed by and between the parties that the party hereto of the second part has accepted the said sums mentioned above in full and final satisfaction of all its dues and claims under the said Principal Agreement. It is further agreed and understood by and between the parties that in consideration of the payment already made, under the agreement, the said Principal Agreement shall stand finally discharged and rescinded all the terms and conditions including the arbitration clauses. 2 Arb. Case No.92 of 2007 It is further agreed and understood by and between the parties that in consideration of the payment already made, under the agreement, the said Principal Agreement shall cease to have any effect and/or shall be deemed to be non-existent for all purposes.” The petitioner has filed rejoinder to the written statement, wherein it is asserted that the supplementary agreement was got signed in advance from the petitioner much prior to final payment on 26.04.2007. It is pleaded that had the applicant not signed the supplementary agreement for getting final amount, the respondents would not have paid the amount due under the final bill i.e. Rs.17,73,344.72 vide voucher dated 26.04.2007. It is also pleaded that supplementary agreement is hit by Section 28 of the Indian Contract Act, 1872. In addition, the petitioner relied upon a communication dated 18.01.2007, whereby the petitioner claimed for the additional items of work performed not covered by the Agreement and the communication dated 03.02.2007, wherein the claim of the petitioner was not less than Rs.25 lacs. Learned counsel for the petitioner has vehemently argued that the supplementary agreement relied upon by the respondents cannot debar the petitioner from raising arbitration disputes, as such agreement suffers from fraud, coercion and undue influence. Therefore, it is not a valid agreement, which can be relied upon by the respondents. In support of said the contention, learned counsel for the petitioner has relied upon the judgments of Hon’ble Supreme Court in National Insurance Co. ltd. Vs. M/s Boghara Polyfab Pvt. Ltd. AIR 2009 SC 170 and Asian Techs Limited Vs. Union of India and others (2009) 10 SCC 354 as well as judgments of this Court in Natha Singh Government Contractor Vs. Punjab State Electricity Board and Others 2009(1) Arb. LR 604 and M/s Ram Kumar Bansal Vs. Union 3 Arb. Case No.92 of 2007 of India and others (Arbitration Case No.131 of 2008 decided on 04.09.2009). As per the judgment in National Insurance Co. Ltd. case (supra), the fact whether the agreement is actuated by fraud, coercion and undue influence is required to be, prima facie, examined by this Court while exercising the jurisdiction under Section 11(6) of the Act. It was held to the following effect: “18. What is however clear is when a respondent contends that the dispute is not arbitrable on account of discharge of the contract under a settlement agreement or discharge voucher or no-claim certificate, and the claimant contents that it was obtained by fraud, coercion or under influence, the issue will have to be decided either by the Chief Justice/his designate in the proceedings under Section 11 of the Act or by the Arbitral Tribunal as directed by the order under Section 11 of the Act. A claim, for arbitration cannot be rejected merely or solely on the ground that a settlement agreement or discharge voucher had been executed by the claimant, if its validity is disputed by the claimant.” In view of the above, if the facts of the present case are examined, I do not find that the petitioner has made sufficient case in support of its plea that the supplementary agreement is actuated by fraud, coercion and undue influence. Though 08.04.2007 is the date put up by the petitioner under his signatures on the said agreement as against 26.04.2007 on behalf of the respondents, but the fact remains that as against the claim of Rs.25 lac or so, the petitioner has been paid a sum of Rs.17,73,344.72 in full and final satisfaction of its claim. The petitioner has not denied the acceptance of the aforesaid amount. After the receipt of the said amount, there is no objection raised by the petitioner that its signatures were obtained in advance as is 4 Arb. Case No.92 of 2007 pleaded in the rejoinder and there was any coercion, fraud or undue influence. In fact, in the notice issued after the payment was released i.e. 08.06.2007, the petitioner has not made any grievance in respect of his signatures being obtained in advance as is pleaded in the rejoinder. The petitioner has not even disclosed the signing of the agreement on 08.04.2007 in his petition under Section 11 of the Act. Such fact has been asserted for the first time in the rejoinder to the written statement filed by the respondents. The petitioner has not disputed the execution of the supplementary agreement at the first opportunity after receiving of payment; in the demand notice dated 08.06.2007 or in petition under Section 11 (6) of the Act. Therefore, the plea in the rejoinder is an after thought. Thus, the supplementary agreement cannot be said to be executed from the petitioner by fraud, coercion and undue influence. In Asian Techs Limited case (supra), the Court has said that even in the case of issuance of full and final discharge settlement, the Arbitrator or Court can go into the question whether the liability has been satisfied or not. The aforesaid case arises out of Arbitration Act, 1940. In the present case, the petitioner having accepted in the supplementary agreement that full and final settlement has been received, there is no dispute, which is referable to an Arbitrator. In Natha Singh Government Contractor and M/s Ram Kumar Bansal’s cases (supra), it has been held that issue of discharge voucher or a no claim certificate would not make proceedings legally untenable in view of the assertions made on behalf of the petitioner that certificate, discharge voucher and other documents were executed under coercion and undue influence. It was found that it is not possible in the proceedings relating to appointment of an Arbitrator to examine the merits of the said contention 5 Arb. Case No.92 of 2007 and to record a finding, whether or not the alleged coercion or undue influence in any way vitiated the efficacy of the documents executed by the petitioner. In the present case, the facts on record leave no manner of doubt, that the plea of supplementary agreement actuated by fraud, coercion or undue influence has been raised only in the rejoinder, an after thought and untenable. The argument that the Supplementary Agreement is hit by Section 28 of the Indian Contract Act is again not sustainable. Section 28 of the Indian Contract Act read as under: “28. Agreements in restraint of legal proceedings, void – Every agreement – (a) by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights; or (b) which extinguishes the rights of any party thereto, or discharges any party thereto, from any liability, under or in respect of any contact on the expiry of a specified period so as to restrict any party from enforcing his rights” By virtue of the supplementary agreement, the petitioner is not prohibited from enforcing his rights, but what is prohibited is the fact of acceptance of full and final payment. It is the full and final settlement of the claim, which is recognized in the supplementary agreement. Such settlement debars the petitioner from raising disputes in respect of the agreement. In view of the above, I do not find that any case is made out for referring the disputes to an Arbitrator. Consequently, the petition is dismissed. 6 Arb. Case No.92 of 2007 23.02.2011 (HEMANT GUPTA) Vimal JUDGE 7