ARUNODAYA COAL AGENCY RAIPUR Vs. WESTERN COALFIELDS LTD

JUDGEMENT

(1.) In this Appeal under Section 37 of Arbitration and Conciliation Act, 1996, referred to as "Act" hereafter, appellant contractor challenges the judgment dated 3/7/2006 delivered by the Principal District Judge, Nagpur in Misc Civil Application 157/2004 filed before him under its Section 34 for quashing and setting aside of order dated 28/1/2004 passed by sole arbitrator accepting the defence of present respondent employer WCL that because of accord and satisfaction there was no arbitrable dispute between parties. Sole Arbitrator has delivered the order dated 28/1/2004 after appreciation of evidence produced by parties and after hearing the arguments. The parties point out from various earlier orders of this Court that appeal is to be heard finally at admission stage. Accordingly "Admit". Rule made returnable forthwith and heard finally by consent.

(2.) It is not in dispute that contractor was successful in tender process for work regarding excavation, transportation and spreading of earth at colliery of respondent employer WCL. Work began as per schedule and agreement no. 194/1999 -- 2000 signed between parties. Contractor continued to get payment through running account bills up to 7 bill. In the eighth on account bill, contractor alleged that unilaterally Rs. 9 lakh were deducted by employer on the pretext that there was overpayment to contractor up to 7th on account running bill. He therefore registered his protest by letter and also in eighth bill and he got the payment after deduction. Before the start of work, area where excavation had to be done was surveyed jointly and the initial reduced level plan (R.L.Plan) was jointly signed by both the sides. The employer asserted that there were some error committed in recording the initial reduced level's and therefore volume of earth work evaluated was in excess of the actual quantity of the earth work and hence deduction was effected in eighth on account bill. Though this was not accepted by contractor he continued to work and also got payments under subsequent on account bills. The 17th on account bill was final bill and contract was closed thereafter. Contractor then approached Chairman cum Managing Director of present respondent/employer with request to appoint an arbitrator to settle the dispute pertaining to eighth on account bill and accordingly sole arbitrator came to be appointed. Employer raised preliminary objection that there was no arbitrable dispute and therefore Arbitration proceedings needed to be dropped. The arbitrator recorded evidence and also took note of rival arguments and in paragraph 6 proceeded to analyze the facts. Contractor was found to be working contractor with respondents who executed contracts in past and was continuing to execute work even in present. He was fully aware of the system of acceptance of final measurements and giving a "no claim" certificate in the final bill. The arbitrator therefore found that signing of final bill under coercion was not even the remotest possibility. The arbitrator also found that after deduction in eighth on account bill, there was continuous dialogs between employer and contractor regarding the deduction and the contractor was convinced regarding the correctness of the deduction made. The arbitrator also noticed that on account bills after eighth bill were without any protest and in every successive bill there was certificate that contractor accepted the measurement. The arbitrator found that this indicated that contractor got convinced that deduction was not wrongful. It was found that in final bill total quantity of work done was shown as 672313 cubic meters as against the committed quantity in the agreement as 631000 cubic meters. After completion of work, contractor voluntarily applied for additional 10% of quantity and above all he gave an absolute no claim certificate in the final bill. The final measurements of volume were accepted by him not only in that bill but also in the abstract of final bill without any protest. It was found that after eighth on account bill the signatory on behalf of contractor was changed and he no where recorded any protest on the bills nor he came forward as a witness to prove that any undue influence was exercised on him by employer to sign the bills. It was also noticed that contractor did not complain to employer WCL or to its Chairman cum Managing Director about any coercion or duress. It was also noticed that despite protest eighth on account bill was paid to contractor. The arbitrator also found that unduly long time was taken by contractor to complete the contract but then employer did not inflict any penalty on him and all this negated theory of any coercion or duress. In paragraph 7 of impugned order dated 28/1/2004 several judgments cited as precedents by both the sides are appreciated and thereafter the employer's application under section 16 of Act is allowed and it is concluded that contract No.194/1999 -- 2000 was closed with accord and satisfaction and there was no arbitrable dispute.

(3.) Appellant/Contractor then approached Principal District Judge (PDJ) at Nagpur in MCA 157/2004 under Section 34 of Act challenging the above order of sole arbitrator. After appreciating the facts and the case law cited, learned P. D. J. has maintained the order of sole arbitrator. In paragraph 11 of judgment delivered on 3/7/2006, the lower court observes that letter dated 12/5/2000 sent by employer WCL requested the contractor to sign eighth bill as otherwise it could not have been processed. Vide letter dated 7/9/2000 contractor was informed that discrepancy in measurement of initial level was brought to his notice in the month of February and March 2000. This letter revealed that employer had constituted the committee to ascertain the excess payments made to the contractor and the committee presided over by the officer Shri Sen reported that joint measurements were wrong in view of the initial measurement recorded by employer before issuing tender. As contractor was not ready to accept report given by Shri Sen, another officer Shri Singh, senior survey officer was appointed and he also gave similar report. The letter also called upon contractor to give justification of his claim regarding so-called excess work. He was again asked to go through the level book and other measurements and letter shows that such verification was also done. Later dated 27/2/2001 of employer WCL revealed that Shri Singh was appointed as per choice of contractor and letter also contained allegation that manipulation was done jointly by employer's and contractor's representative. Learned P. D. J. has also found that protest lodged was withdrawn by contractor. In paragraph 12 it is noticed that contractor did not deny specific allegation of manipulation and did not take any action or made no request for referring the issue to arbitrator. On the contrary he withdrew his protest shown on eighth bill. This has been treated as important circumstances to uphold finding of accord and satisfaction. In paragraph 14, learned lower court observes that the contractor not only withdrew protest shown in eighth bill but he did not show such protest in respect of remaining nine bills. He signed on final bill without protest and he gave no claim certificate also.