IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of Decision : 09.03.2011 Arb. Case No.66 of 2005 Ram Niwas Goyal ...Petitioner Versus Northern Railway through its ...Respondents General Manager, Baroda and others CORAM: HON'BLE MR. JUSTICE HEMANT GUPTA Present : Mr. R.K.Gupta, Advocate, for the petitioner. Mr. Puneet Jindal, Advocate, for the respondents. HEMANT GUPTA, J. 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 22.05.1995. Vide the aforesaid agreement, the petitioner was awarded work of permanent way linking of B.G. Tract assembly and dismantling of turn outs and complete track renewals and other allied works in Bhitaura (excluding) to Bareilly (including) section in connection with Rampur- Bareilly doubling (Phase-II). The work was to be completed up to 21.07.1995, which was extended up to 31.12.1995. It is the case of the petitioner that the work was completed within the extended period and that the completion certificate has also been issued. The petitioner requested the respondents for payment of final bill vide letter dated 01.11.1996. Since payment of final bill was not made, the petitioner sought the resolution of Arb. Case No.66 of 2005 disputes through the arbitration on 15.01.1997. Subsequently, the petitioner was asked to sign the supplementary agreement dated 20.07.1998 before releasing his payment of final bill. The petitioner asserts that he had no choice except to sign the supplementary agreement for getting his payment released and settling of other claims as he was under financial pressure. After signing the said supplementary agreement, the payment of final bill was released. It is, thereafter, on 04.09.1998, the petitioner sought appointment of an Arbitrator, but the said request was not accepted by the respondents, which led to the filing of present petition. In reply, the respondents relied upon document dated 20.07.1998, whereby the petitioner accepted the full and final payment of the outstanding amount due from the respondents and also that of annulment of agreement (Annexure P-1). It is pleaded that the petitioner was paid a sum of Rs.74,18,178/- during the currency of agreement and a sum of Rs.2,95,707/- on finalization of all claims. In addition to the said amount, a sum of Rs.14,06,220/- was paid for the non-schedule items. It is pleaded that the claim lodged by the petitioner on 15.01.1997 stands withdrawn after execution of the document dated 20.07.1998. Thus, it is alleged that the petitioner cannot seek adjudication of the disputes through an Arbitrator after accepting the full and final payment. 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.295707.00 through the final bill bearing voucher No.011/07/98/C dated 07.17.98 (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 the 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 2 Arb. Case No.66 of 2005 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.” Learned counsel for the petitioner has relied upon a judgment of Hon’ble Supreme Court in National Insurance Co. ltd. Vs. M/s Boghara Polyfab Pvt. Ltd. AIR 2009 SC 170 to contend that the agreement actuated by fraud cannot debar the contractor to raise an dispute. The learned counsel has also relied upon Chairman and MD, NTPC Ltd. Vs. Reshmi Constructions, Builders & Contractors (2004) 2 SCC 663, to contend that even though “no demand certificate” has been issued, but the arbitration agreement can be invoked. Reliance is placed on the following: “27. Even when rights and obligations of the parties are worked out, the contract does not come to an end inter alia for the purpose of determination of the disputes arising thereunder, and, thus, the arbitration agreement can be invoked. Although it may not be strictly in place but we cannot shut our eyes to the ground reality that in a case where a contractor has made huge investment, he cannot afford not to take from the employer the amount under the bills, for various reasons which may include discharge of his liability towards the banks, financial institutions and other persons. In such a situation, the public sector undertakings would have an upper hand. They would not ordinarily release the money unless a “No Demand Certificate” is signed. Each case, therefore, is required to be considered on its own facts. 28. Further, necessitas non habet legem is an age-old maxim which means necessity know no law. A person may sometimes have to succumb to the pressure of the other party to the bargain who is in a stronger position.” On behalf of the respondents, reliance is placed upon a judgment rendered in Union of India and others Vs. Onkar Nath Bhalla and sons (2009) 7 SCC 350. It is held that where the applicant has signed 3 Arb. Case No.66 of 2005 final bill and no further claim certificate without any reservation and also got the final bill without any protest, then the applicant is not entitled to seek appointment of an Arbitrator. The applicant would be deemed to waive his right as per the conditions of the Contract to seek adjudication of the disputes by an Arbitrator. Learned counsel for the respondent also relies upon Hon’ble Supreme Court judgment reported as S.K.Jain Vs. State of Haryana and another (2009) 4 SCC 357 to contend that the argument of unequal bargaining power vitiating the agreements, has no application in case of commercial contracts. In addition thereto, learned counsel for the respondents referred to an order passed by this Court in Arbitration Case No.92 of 2007 decided on 23.02.2011 titled ‘M/s Natha Singh Government Contractor Vs. Union of India and others’, wherein in somewhat identical circumstances the dispute was said to be not arbitral. Learned counsel for the respondents has also relied upon an order passed by this Court in Arbitration Case No.24 of 2005 decided on 20.03.2007 titled ‘M/s Mittal Construction Co. Vs. Union of India and others’. I have heard learned counsel for the parties and find that the petitioner has not been able to make out a case for the appointment of an arbitrator in the present case. The Hon’ble Supreme Court in Reshmi Constructions case (supra) was dealing with the provisions of Section 20 of the Arbitration Act. In the aforesaid case, words “No Due Certificate” was on a printed format. The Contractor immediately after receiving the payment of final bill, lodged its protest and reiterated its claim for money. In National Insurance Co. Ltd. case (supra), the court has held that the fact whether the agreement is actuated by fraud, coercion and undue influence is 4 Arb. Case No.66 of 2005 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 Onkar Nath Bhalla’s case (supra), the Hon’ble Supreme Court has set aside an order of appointment of an Arbitrator with the following observations: “11. It is the specific case of the appellants that the respondent could not have raised yet another claim, as the respondent after signing on the final bill without any protest or reservation has waived its right as per the conditions of the contract. The Court without considering that whether any dispute exists between the parties, could not have appointed an arbitrator.” In S.K.Jain’s case (supra), the Hon’ble Supreme Court held to the following effect: “8. It is to be noted that the plea relating to unequal bargaining power was made with great emphasis based on certain observations made by this Court in Central Inland Water Transport Corporation Ltd. Vs. Brojo Nath Ganguly (1986) 3 SCC 156. The said decision does not in any way assist the appellant, because at para 89 it has been clearly stated that the concept of unequal bargaining power has no application in case of commercial contracts.” 5 Arb. Case No.66 of 2005 Coming to the facts of the present case, though the petitioner raised claim on 15.01.1997, but on 20.07.1998 a supplementary agreement was executed as mentioned above. The petitioner submitted its demand on 4.9.1998 and sought appointment of an arbitrator without asserting a single word that the document dated 20.07.1998 has been obtained by fraud, coercion and undue influence. The relevant extract of communication dated 04.09.1998 reads as under: “A photocopy of my letter dated 15.01.1997 enclosed for ready reference. I am really sorry to say that almost 1 - 1½ year has been passed yet arbitration has not been constituted after invocation of arbitration payment of final bill and security deposit has been released but nothing has been paid to me against remaining claims. Please refer my remaining claims to the Arbitrators for adjudication and oblige falling which I shall be compelled to go to the court of law at your risk and cost. I was also asked to sign certain documents and orally informed that if I did not sign the required documents, payments would not be released. All these were signed under duress and pressurized tactic. These are not binding upon me as I had already invoked arbitration.” In the petition under Section 11 of the Act filed before this Court, the only averment made to dispute the supplementary agreement is that the petitioner was pressed for finances and had no choice except to sign the supplementary agreement. The said averment is not sufficient to dispute the execution of the supplementary agreement. The petitioner has not disputed the said agreement soon after the payment was released or when the petitioner raised demand on 04.09.1998. The silence of the petitioner till 4.9.1998; not raising any dispute and protest soon after the supplementary agreement was signed and the cryptic pleadings in the petition under section 6 Arb. Case No.66 of 2005 11 of the Act do not make out a case that prima-facie, the supplementary agreement is actuated by fraud, undue influence or coercion. In view of the above, I find that the petitioner has executed an agreement accepting full and final payment and consequently waived his right to seek appointment of an arbitrator. Therefore, there is no dispute, which can be referred to an Arbitrator. Dismissed. 09.03.2011 (HEMANT GUPTA) Vimal JUDGE 7