ASSOCIATED CONSTRUCTION Vs. PAWANHANS HELICOPTERS PVT LTD

JUDGEMENT

(1.) Leave granted.

(2.) The respondent, Pawanhans Helicopters Pvt. Ltd. (hereinafter called "Pawanhans") a Government of India undertaking, floated two tenders for allocation of work for construction of a compound wall and a bridge over a nala. Pursuant to the aforesaid information, several tenders were received and the tenders of the appellant (hereinafter called the "contractor") were ultimately accepted. Pursuant to the aforesaid, two formal agreements providing for the terms and conditions of the contract in the shape of general conditions of the contract and special conditions of the contract governing the execution of work were duly signed on 12th October 1999. As per the contract the work was required to be completed within four months. It appears that on account of some delay which was attributable to Pawanhans, the work did not proceed as per schedule and the contractor accordingly informed Pawanhans by letters dated 15th February 1990, 23rd February 1990, 24th March 1990, 26th June 1990 and 6th July 1990 that the work was getting delayed as the requisite facilities for its completion had not been provided and highlighting several factors attributable to it had supervened which had led to the delay. The contractor also in the meanwhile vide letters dated 27th July 1990 and 6th August 1990 requested the respondent to release the outstanding bills against the work already completed and also requested for the "Virtual Completion Certificate" vide letter dated 25th August 1990. As some work on the compound wall still remained to be completed, the contractor agreed to take up this assignment subject to waiver of the discount of 8.2% which was to be given to Pawanhans till then and the completed works were duly handed over to Pawanhans on the 12th November 1990. The contractor had also submitted a bill dated 23rd June 1991 and it was conveyed to Pawanhans that it expected compensation on account of the variation in the terms of the contract. Pawanhans thereupon advised the contractor to submit a final bill which too was submitted. The bill was verified by Pawanhans and referred to the contractor yet again with objections. The contractor vide letter dated 21st November 1991 disputed the verification as being without any foundation and also reserved its right to seek arbitration. After a protracted correspondence, Pawanhans vide letter of 9th December 1991 advised the contractor to submit a "No Claim Certificate" as a pre-condition for the release of the balance payment. The contractor wrote to Pawanhans that it was in dire need of finances and was being subjected to duress but nevertheless submitted a "No Dues Certificate" dated 17th February 1992 once again specifically highlighting that the same was being issued under duress. It appears that despite the issuance of the aforesaid certificate, Pawanhans still did not release the payment on which the contractor wrote another letter dated 5th May 1992 and several letters thereafter but again to no effect, and on the contrary received a letter dated 8th June 1992 from Pawanhans asking for a "No Dues Certificate" as per the enclosed specimen without attaching any condition to the same. The contractor, now in a desperate situation, submitted yet another "No Claim Certificate" dated 18th June 1992 as per directions. After receiving the aforesaid document, Pawanhans in its letter dated 9th February 1993 informed the contractor that a period of two months would be required for the scrutiny of its bills and vide letter dated 21st May 1993 also intimated that the bills had been submitted for verification by the Architect/Engineer as per the terms of the contract and that in case it was willing to defray the payment, the matter could be referred to arbitration. The contractor finally received a communication dated 8th June 1993 pointing out that as all payments due under the contract had been made and as a "No Dues Certificate" had been furnished, no further amount was due. The contractor accordingly served a notice dated 28th June 1993 on Pawanhans invoking the clause relating to arbitration. The matter was referred to arbitration by two registered Architects as per the clause. The contractor submitted its statement of claim for the outstanding amount plus compensation and damages on 6th August 1994. The arbitrators passed two awards on 31st December 1996, one with respect to the contract for the compound wall and the second for the construction of the bridge awarding certain amounts to the contractor. Aggrieved by the awards, Pawanhans filed two separate petitions under sections 30 and 33 of the Arbitration Act, 1940 before the Bombay High Court for a direction that the awards be set aside. The learned Single Judge in his judgment and order dated 9th December 1998 held that clauses 18 and 34 of the contract when read together, provided for the payment of escalation charges as the work had not been completed within four months on account of the fault on the part of the respondent and that the said clauses did not prohibit such a payment, more particularly as time was the essence of the contract and as the contract was not on a fixed price, the prohibition of escalation was if at all to be read during the period of contract only. The learned Single Judge also repelled the arguments of the respondent that after having submitted the final bill on 25th October 1991, it was not open to the appellant herein to submit a second final bill on 2nd February 1993 by observing that the payment received on the 4th July 1993 as a consequence of the bills submitted on 25th October 1991, was under duress and it is on that account that the appellant had given the aforesaid certificate. Some objections raised by the respondent herein were however accepted by the learned Single Judge and the award was accordingly modified and it is the admitted case that the aforesaid modification has been accepted and was not challenged before the Division Bench by the contractor.

(3.) The Division Bench then examined the issues raised by the contractor as to whether that "No Due Certificate" had been given under duress and held that there was no evidence to show that the said certificate had been given under duress or coercion and as the certificate itself provided a clearance of no dues, the contractor could not now turn and say that any further payment was still due on account of the second final bill. The Division Bench accordingly allowed the appeal. The matter is before us in these circumstances.