Dalveer Bhandari, J.

1. Delay condoned.

2. Leave granted.

3. This appeal is directed against the judgment and order dated 12.01.2007 passed by the High Court of Punjab and Haryana at Chandigarh in Arbitration Case No.34 of 2004.

4. Brief facts which are necessary to dispose of this appeal are recapitulated as under:

6. The respondent Contractor had sent a legal notice 4 to the General Manager, Northern Railways, Baroda House, New Delhi immediately after receiving the entire amount in pursuance to the settlement of his full and final claim with the appellant. The legal notice sent by the respondent did not even mention the fact of entering into the supplementary agreement with the appellant and receiving the entire amount of Rs.2,07,49,099/-. The respondent deliberately suppressed the material facts and thereafter filed an Arbitration Case No.34/2004 before the High Court of Punjab and Haryana. The court without appreciating these facts, by an impugned judgment, referred the claim of the respondent-Contractor to the two arbitrators.

7. The appellant-Union of India is seriously aggrieved by the impugned judgment of the High Court and submitted that after receiving the entire amount, the respondent also signed the supplementary agreement and thereafter the respondent was not justified in invoking the arbitration.

8. Learned Additional Solicitor General appearing on behalf of the Union of India has strenuously submitted that the matter is no longer res integra and is covered 5 by a series of judgments for almost a century. He referred to the judgment of Privy Council in Payana Reena Saminathan v. Pana Lana Palaniappa 14 (1913-14) 41 IA 142 (reiterated in Union of India v. Kishorilal Gupta & Bros . AIR 1959 SC 1362) which reads as under:-

9. He submitted that this judgment has been approved and followed by this court even in the year 2009.

10. Learned Additional Solicitor General also placed on record the judgment of this court in State of Maharashtra v. Nav Bharat Builders 1994 Supp (3) SCC 83. In this case, the court observed that the dispute between the parties were conclusive and the respondent fully and finally accepted the claim and thereafter received the amount. 6 Thus, there was accord and satisfaction of the claim relating to labour escalation charges and thereafter the matter could not have been referred to the arbitration.

11. Learned Additional Solicitor General also relied on another judgment of this court in M/s P.K. Ramaiah and Company v. Chairman & Managing Director, National Thermal Power Corpn. 1994 Supp (3) SCC 126. In this case also the respondent received the amount in full and final settlement of his claim. Consequently, there was an accord and satisfaction and thereafter no arbitrable dispute remained for reference to the arbitration.

12. This court in Nathani Steels Ltd. v. Associated Constructions 1995 Supp (3) SCC 324 also had an occasion to examine the similar case. The court observed that after settling the entire matter and receiving the payment, it was not open to the respondent to treat the settlement as non est and proceed to invoke the Arbitration clause.

13. This court in a relatively recent case has examined the legal position once again in the case of National Insurance Company Limited v. Boghara Polyfab Private Limited (2009) 1 SCC 267. In para 25 of the said judgment , 7 the court observed as under:-

14. The court further observed in para 29 as under:-

15. In this case the court relied on earlier judgments of this court and reiterated the legal position which has been crystallized by a series of judgments where both the parties to a contract confirmed in writing that the contract has been fully and finally discharged by the parties and there was no outstanding claim or dispute and thereafter the matter could not have been referred to the arbitration.

16. In a celebrated book, Russell on Arbitration, 19th Edn., p.396, it is stated that "an accord and satisfaction may be pleaded in an action on award and will constitute a good defence".

17. In our considered view, on the basis of the above settled legal position that when the parties by a supplementary agreement obtained a full and final discharge 9 after paying the entire amount, which was due and payable to the contractor, thereafter the contractor would not be justified in invoking arbitration because there was no arbitral dispute for reference to the arbitration.

18. In view of the settled legal position, the impugned judgment is unsustainable and is accordingly set aside. The appeal is allowed accordingly. The parties to bear their own costs.

.....................J (DALVEER BHANDARI) .....................J (DEEPAK VERMA) New Delhi;

September 10, 2010.