Case: M/s ONGC Mangalore Petrochemicals Ltd Vs. M/s ANS Constructions Ltd. &amp; Another

a) Respondent No.Contractee Company was awarded a Contract forGrading, Construction of Roads, Water Drains and Compound Wall for Aromatic Complex atin Mangalore SEZ by theon 17.03.2008. The total contract value as per the Letter of Acceptance (LOA) was Rs. 163,25,68,576/which was subsequently revised to Rs. 195,68,24,399.02/vide letter dated 20.09.2010 and the completion period was also extended upto 30.11.2010.(b) On 21.09.2012, the Contractee Company submitted a No Dues/No Claim Certificate certifying the payment of all the bills and in total settlement of all the claims whatsoever against the Contract. Thereafter, on 10.10.2012, the appellantContractor Company made a payment of the final bill of Rs. 20.34 crores to the Contractee Company.(c) Subsequently, on 24.10.2012, the Contractee Company withdrew letter dated 21.09.2012 forstating that it was acondition for release of their long due legitimate payment against the works executed under the Contract and the same was furnished by the Contractee Company under duress and coercion of they, vide letter dated 12.01.2013 to thesubmitted a claim of Rs. 96,88,48,642.00 for the losses incurred during execution of the contract at Mangalore. On 19.06.2013, theissued a Completion Certificate stating that the works awarded under the Contract have been executed and completed in all respects and no claim certificate has also been submitted by theAfter several communication in writing, thevide letter dated 25.07.2013, denied the claim of theVide letter dated 14.09.2013, thesent a notice to thefor resolving the dispute between the parties through Arbitration as envisaged under Article 9.0.2.0 to the Contract and appointed Mr. K. Mohandas, Former General Manager (Law)SBI as its Arbitrator. Thevide letter dated 18.10.2013 denied the request of theas not tenable in law.(f) Being aggrieved by the decision of thein not referring the dispute to Arbitration, thepreferred a C.M.P. No. 35 of 2014 before the High Court of Karnataka at Bangalore.(g) Learned single Judge of the High Court, vide judgment and order dated 12.01.2015, allowed the petition filed by theBeing aggrieved by the order dated 12.01.2015, thehas filed this appeal by way of special leave before this Court.

Court's reasoning:
In the case at hand, the High Court allowed the appeal filed by the contractee on the assertion that the No Dues Certificate was given on account of coercion/undue influence practiced by theThe contractee, while basing its claim, relied upon the letters issued to thefor releasing the payment of RA Bills. Whether there has been duress and coercion exerted against thetor has to be examined keeping in mind the background in which the said letters have been exchanged between the parties.Learned counsel for thecategorically submitted the relevant dates for our perusal to show that RA Bills were raised on various dates for making payments to suppliers and others but were advertently delayed causing grave financial crisis to theto carry out the works and losses on account of delay in settling the claims of theperiodically. However, it is contended from the side of thethat the High Court was not right in considering it a genuine and serious dispute regarding the claim made and the conduct of the parties as reflected in the correspondence exchanged between the parties disclosing that theencountered several financialPursuant to taking a false claim of duress and coercion while filing the No Dues Certificate, thevide letter dated 12.01.2013 to thesubmitted a claim for Rs. 96,88,48,642.00 for the losses incurred during execution of the contract at Mangalore. It has been claimed that thecould not continue with the work due to various reasons like pooja, shifting of Idols,f free encumbrance of site, obstruction in the blasting work, stoppage of hard rock blasting, issues with respect to work to be given to local contractors,f project displaced families, permission for forest clearance, permission for shifting of wooden logs etc. and the huge expenditure as disclosed in the claim was incurred by thedue to the factors attributable to theClause 6.6.0 of the General Conditions of Contract deals with(contractee in the case at hand). Clause 6.6.1.0. of the Contract states that in case of a claim of extra compensation or remuneration, the Contractee shall give notice in writing of its claim within 10 days from the date of issue of orders or instructions related to any works for which the Contractee claims such additional payment. The notice shall give full particulars of the nature of such claim, grounds on which it is based and the amount claimed. Unless and until notice is given, the Contractor shall not be liable to pay extra compensation to the Contractee. Clause 6.6.3.0 states that any claim of the Contractee in accordance with Clause 6.6.1.0 shall be separately included in the Final Bill prepared by it in the form of Statement of Claims, giving particulars of the nature of claims, ground on which it is based and the amount claimed and shall be supported by a copy of the notice and the Contractor shall not be liable in respect of any notified claim not specifically reflected in the Final Bill in accordance with the provisions of Clause 6.6.3.0 which shall be deemed to have been waived by theFrom the materials on record, we find that thehad issued theon 21.09.2012, it had received the full amount of the final bill being Rs. 20.34 crores on 10.10.2012 and after 12 days thereafter, i.e., only on 24.10.2012, thewithdrew letter dated 21.09.2012 issuingApart from it, we also find that the Final Bill has been mutually signed by both the parties to the Contract accepting the quantum of work done, conducting final measurements as per the Contract, arriving at final value of work, the payments made and the final payment that was required to be made. Theaccepted the final payment in full and final satisfaction of all its claims. We are of the considered opinion that in the presents facts and circumstances, the raising of the Final Bill and mutual agreement of the parties in that regard, all claims, rights and obligation of the parties merge with the Final Bill and nothing further remains to be done. Further, theissued the Completion Certificate dated 19.06.2013 pursuant to which thehas been discharged of all the liabilities. With regard to the issue that thead been given under duress and coercion, we are of the opinion that there is nothing on record to prove that the said Certificate had been given under duress or coercion and as the Certificate itself provided a clearance of no dues, the contractee could not now turn around and say that any further payment was still due on account of the losses incurred during the execution of the Contract. The story about duress was an afterthought in the background that the losses incurred during the execution of the Contract were not visualised earlier by the contractee. As to financial duress or coercion, nothing of this kind is established prima facie. Mere allegation thatcertificates have been obtained under financial duress and coercion, without there being anything more to suggest that, does not lead to an arbitrable dispute. The conduct of the contractee clearly shows thatas given by it voluntarily; the contractee accepted the amount voluntarily and the contract was dischargedWhen we refer to discharge of a contract by an agreement signed by both the parties or by execution of a full and final discharge voucher/receipt by one of the parties, we refer to an agreement or discharge voucher which is validly and voluntarily executed. If the party which has executed the discharge agreement or discharge voucher, alleges that the execution of such discharge agreement or voucher was on account of fraud/coercion/undue influence practised by the other party and is able to establish the same, then obviously the discharge of the contract by such agreement/voucher is rendered void and cannot be acted upon. Consequently, any dispute raised by such party would be arbitrable. But in case the party is not able to establish such a claim or appears to be lacking in credibility, then it is not open to the courts to refer the dispute to arbitration at all.