BINDRA BUILDERS Vs. IBPL GROUP OF COMPANIES

JUDGEMENT

(1.) In the present case the Petitioner had, on 25/03/1994 issued a letter to the Respondent stating the receipt of a cheque No. 173639 for Rs. 1,41,696.00 would be towards full and final payment of dues in respect of the said construction. Even there after the present petition under Section 20 of the Arbitration Act has been filed. On a reading of the petition, it is at once clear that the Petitioner has altogether failed to deal with the circumstances in which the letter dated 25/03/1994 was issued Knowing that it had issued such a letter, it was essential that the question addressed explicitly. All that has been stated is that it "seems" that some discrepancy in the account exists. In my opinion due significance and sanctity must be given to letters where full and final satisfaction is recorded. Learned counsel for the Petitioner submits that it is well settled that the issuance of a letter such as that dated 25/03/1994 does not bar the party to seek initiation of arbitration. However, in this case there must be a categorical pleading in the petition itself that the letter was extracted from the Petitioner under circumstances which would disclose that his free consent was absent As mentioned, the pleadings do not set up such a case. It would, therefore, not be appropriate for the petitioner to rely on decision stating that the issue whether there was free consent at the time of the issuance of a full and final certificate was an arbitrable dispute. Learned counsel for the Petitioner has relied on Union of India v. M/s. Ajit Mehta and Associates, Pune and Others, AIR 1990 Bombay 45. The Hon'ble Division Bench had discussed all the precedents and delivered a detailed and erudite judgement, which demands to be read. Hence I shall do no more than reproduce the ratio set down and suggest that the decision be read with care.

(2.) Learned counsel for the Petitioner has ignored the sentence underlined by me which sets down the rider and exception to the general proposition that whether there has been a full and final settlement or accord is an arbitrable dispute. It should have been explained in the plaint in detail why the full and final certification is not enforceable i.e. for absence of consent, or presence of coercion and fraud of the Respondent. If the arbitration clause has been invoked simpliciter, as has evidently been done in the present case, it will have to be held that the contract itself had come to an end and with it the Arbitration Clause which was a part and parcel of it. The accord/satisfaction is not bereft of legal efficacy. Learned counsel for the Petitioner has thereafter relied on a Division Bench judgement of this Court in Ms. Navbharat Dal Mills v. Food Corporation of India & another, AIR 1993 Delhi 87, in which it was held that it was not for the court to decide whether there was accord or satisfaction between the parties or not and that this should be referred to the Arbitrator to determine. I am unable to agree that this observation would apply even in those cases where a letter of full and final accord has been exchanged and the petition fails to set out that this letter was illegally extracted from the petitioner. Learned counsel fro the Petitioner also relied on Jiwani Engineering Works (P) Ltd. v. Union of India, AIR 1981 Calcutta 101. But this decision does not set out that a letter of full and final settlement is to be ignored and has no legal efficacy. While it does acknowledge the fact that very often 'No Claim Certificate' is demanded before payment is made, the fact set out in the present petition do not fall within that ambit. This decision was not followed by the Division Bench in Union of India v. Ajit Mehta and Associates, Pune and Others, AIR 1990 Bombay 45, and in my humble opinion rightly so.

(3.) Learned counsel for the Respondent has relied on M/s. P.K. Ramaiah and Company v. Chairman & Managing Director, National Jliemial Power Corpn; 1994 Supp. (3) Supreme Court Cases 126. In my view it applies on all fours to the dispute before me. A reading of the petition, as also the application which had been filed thereto appears to me to indicate that the Petitioner was not happy with the manner in which the accounts were drawn and was, therefore, challenging the accounts also by way of applications seeking production of sundry documents. It was not the petitioner's case in the pleadings that the letter dated 25/03/1994 was extracted. This is an onerous and strict duty cast on the Petitioner, since the reference of the parties to arbitration would have the direct effect of rendering the letter totally ineffectual. If public policy would call for protecting a party from signing a full and final receipt in order to secure payment, this public policy wold also dictate that where such certification was given willingly and without inducement or fraud, it should be honoured. The Respondent cannot be tricked into making final payment, in circumstances where the Petitioner intends to raise disputes thereafter. In the Supreme Court case it was observed as follows :