1. This Arbitration Application is filed under Section 11 (5) and (6) of the Arbitration and Conciliation Act, 1996 (for short, ‘the Act’) by the applicant seeking to appoint an Arbitrator for resolution of disputes between the
parties as per Agreement CA No.GE/AFA/57, dated 30-03-2010.
2. The case of the applicant is that the respondents entered into an agreement vide CA No.GE/AFA/57, dated 30.03.2010 for additions/alterations to building No.370 (Naidu Block) at AFA, Hyderabad with the applicant. The
applicant started the work as per the said agreement to the pre-existed building where the work of tiles of size 300 x 300 had to be laid in 34 transit accommodations. Thereafter, respondents made changes in size of tiles from 300
x 300 to 400 x 400 size stating that 300 x 300 size tiles do not have an aesthetic look and assuring the applicant that additional expenditure that would be incurred due to change in scope of work shall be reimbursed. The
respondents have also asked for laying of concealed pipelines in 34 inches, instead of surface run pipelines as per the aforesaid agreement, at an additional cost, which the respondents again promised to reimburse. Believing the
respondents, the applicant completed the extra work entrusted to it. The applicant made numerous attempts to get the payment released for the additional work done, but on one pretext or other, respondents postponed the same.
On persistent demands, the respondents revealed that the said items used for additional renovation are not scheduled items, as such they are unable to make payments. Thereafter, the applicant issued notice, dated 30.03.2013 to
the 1st respondent asking for appointment of an arbitrator as per conditions 70 and 71 of IAFW -2249 within 30 days; that when the applicant tried to contact the respondents to settle the disputes amicably, respondents started
ignoring the applicant. Hence, the applicant filed an application, dated 15.04.2013 before the 3rd respondent, duly marking a copy to the Central Chief Commissioner, New Delhi, seeking information under Section 6 of the RTI
Act, 2005, with regard to documents pertaining to the work executed in Naidu Block (370). That the respondents issued reply to the above said letter stating that the final bill against contract quoted was signed by the applicant
agreeing that there are no specific claims and “no further claim†certificate. That as per condition No.65 of IAFW-2240, no further claims shall be made by the contractor after submission of the final bill. Since no extra claims
were listed in the final bill, the claims for the extra work has been waived off. In fact, the contemporaneous record evidences that no claims certificate was the outcome of coercion and undue influence, as the applicant was very
much pressing for its claims on the date of final bill. As such no significance can be attached to the same. It is asserted that the applicant again sent a legal notice, dated 20.12.2013 to the 1st respondent, listing out the claims and
also asking it to appoint an arbitrator as per conditions 70 and 71 of IAFW-2249 to resolve the disputes/claims. As per the terms of agreement between the parties, the applicant had fulfilled its obligation by completing the
entrusted renovation work, for which the respondents ought to have made payments as per the agreed terms. The respondents have committed breach of the agreement by not making the payments. The applicant filed
O.P.No.232 of 2014 before learned District Judge, Ranga Reddy District, for appointment of commissioner to inspect the work site and make note of the physical features of the work site, since the respondents are trying to make
alterations in the work site in order to evade making payments in the above dispute. It is stated that the attempts of the applicant did not evoke any response and the applicant has no other alternative except seeking for
appointment of arbitrator with a view to adjudicate the above mentioned dispute and consider the claim of the applicant.
3. Respondents filed counter stating that the applicant had signed the final bill without specific claims and also signed “No further claim†certificate at the time of submission of Final Bill and Final Bill amount was also received
by the applicant without any protest. As per condition 65 of IAFW-2249 (General Conditions of Contracts), forming part of the contract agreement, no further claims shall be made by the applicant after submission of final bill and
shall be deemed to have been waived and extinguished. Since the applicant sought appointment of Arbitrator only after lapse of two years from the date of receipt of Final Bill vide letter, dated 30-03-2013, initially without any
specific claims, the respondents did not agree for appointment of Arbitrator and ultimately sought for dismissal of the application.
4. Heard learned counsel for the applicant and Sri N.Rajeshwar Rao, learned Assistant Solicitor General for the respondents.
5. Learned counsel for the applicant would submit that though respondents admitted in the counter that the applicant had carried extra work, the respondents intentionally did not release the payment for the additional work done
and postponing the same on one pretext or other. Only on the assurance given by the respondents that they will pay the extra cost for extra work, the applicant had undertaken the extra work. That the respondents have not
disputed about existence of arbitration clause. That the scope of enquiry under Section 11 (6) of the Act is very limited and merits and demerits of the claims cannot be considered in this application. In support of his contention, he
placed reliance on Judgment of the Apex Court in National Insurance Company Limited v. M/s. Boghara Polyfab Private Limited 2009 (1) SCC 267.
6. On the other hand, Sri N.Rajeshwar Rao, learned counsel for the respondents would submit that the applicant submitted final bill without specific claim/protest and “No further claim certificate†was signed by the applicant
at the time of submission of final bill, therefore, the accord and satisfaction has been fulfilled as per Section 63 of the Indian Contract Act. He further submitted that as per condition No.65 of IAFW 2249 forming part of the
contract agreement, no further claim shall be made by the applicant (contractor) after submission of final bill. He further submitted that the applicant had sought appointment of arbitrator only after lapse of two years from the date
of receipt of final bill vide letter, dated 30.03.2013. He submits that there is no arbitral dispute exists for referring the same to arbitration. In support of his contention, he placed reliance on a Judgment of the Apex Court in M/s
P.K Ramaiah & Co v. Chairman and Managing Director, NTPC (1994 Suppl 31 Supreme Court Cases 126.
7. In view of rival contentions of both the parties, the points that arise for consideration in this application are:
1) Whether there is accord and final satisfaction as pleaded by the respondents through the Final Bill, as pleaded by the respondents in terms of Condition No.65 of IAFW 2249 (GCC), can be valid ground to dismiss the
application?
2) Whether the applicant prima facie established coercion and undue influence in signing the Final Bill?
8. POINTS 1 & 2:
Admittedly, the applicant entered into contract agreement for additions/alterations to building No.370 (Naidu Block) at AFA, Hyderabad and that the said work had been completed by the applicant as per the termsÂ
and conditions of the Contract Agreement and Final Bill presented by the applicant was paid by the respondents and ‘no further claim’ certificate was also signed by the applicant. During the course of execution
of said work, on the request made by the respondents, the applicant states that he had attended extra work, but same is disputed by the respondents and says all amounts are paid and only after a period of two years subsequently,
the applicant addressed letter dated 30.03.2013 for appointment of an arbitrator within 30 days. For the sake of convenience, the said letter is extracted hereunder:
“To:                                                                                               Â
30.03.2013
The Commander Works Engineer (Air Force)
Bowenpally Post,
Secunderabad-500 011.
Dear Sir,
Sub: Appointment of Arbitrator-Reg.
Ref: Addition/alteration to building No.370 (Naidu Block at AFA, Hyderabad GE/AFA/57 of 2009-2010.
Please treat this letter as a notice under condition 70 & 71 of IAFW-
2249.
Kindly appoint an Arbitrator within 30 days.
Thanking you.
Yours faithfully,
For Sree Vishnu Constructions
Sd/-
VENU BABU
Proprietorâ€
 A perusal of the aforesaid letter addressed by the applicant to the 2nd respondent goes to show that the applicant simply referred to the additions/alterations made to the building No.370 (Naidu Block) at AFA, Hyderabad and
straight away requested to appoint an arbitrator within 30 days. There is no mention about the works done by the applicant i.e., additions/alterations outside the scope of contract agreement with the respondents. Without
mentioning anything with regard to the alleged payments towards additions/alterations by the respondents, the applicant straight away issued notice invoking arbitration clauses 70 & 71 of IAFW 2249. That apart, it was the
specific allegation of the learned counsel for the applicant that the amount under Final Bill was paid under coercion and undue influence, without mentioning the additions/alterations, as agreed by the respondents. But, the said
coercion and undue influence as alleged by the applicant against respondents was neither pleaded in any of the correspondence by the applicant nor was specifically adverted to in the notice invoking arbitration. Even while
invoking arbitration clauses 70 & 71 under IAFW 2249 by notice dated 30.03.2014, he did not mention about the alleged coercion and undue influence by the respondents while making payments under Final Bill. That apart, in the
subsequent correspondence by the applicant in letter dated 15.04.2013, there is no whisper about the alleged coercion and undue influence. The applicant raised such plea only in the affidavit filed in support of this application. It is
also pertinent to note here that there is no correspondence by the applicant with the respondents with regard to alleged coercion and undue influence. Except making bald statement in the affidavit, no factual foundation is laid by
the applicant either in the pleadings or in the correspondence with the respondents.
9. That apart, though it is stated that the applicant filed OP No.232 of 2014 on the file of District Judge, R.R.District, L.B.Nagar, for appointment of commissioner to inspect the work site and make note of the physical features to
the work site, there is nothing on record to show the progress in that case.
10. It is pertinent to note that the applicant failed to offer any plausible explanation for not raising the issue of coercion and undue influence immediately after payment under Final Bill. As already observed supra, the applicant,
after receiving the payments under Final Bill, had signed ‘no further claim’ certificate. Since the full and final payment is made in the Final Bill and the applicant signed ‘no further claim’ certificate, as the arbitration
application is liable to be dismissed on that ground alone, since the applicant signed the same without any protest/objection. A party who comes to the court, must come with clean hands. When fraud, undue influence and coercion
is pleaded, at least some factual foundation must be laid in the pleadings, which is lacking. In the present application, by way of passing reference made allegations of undue influence and coercion, as such, this application is liable
to be dismissed on that ground alone. When once there is full and final satisfaction, there exists no arbitral dispute, as rightly contended by the learned counsel for the respondents.
11. Since invocation of arbitration is prior to Amendment Act, 2015, the provisions of said Act, 2015 are not applicable to such arbitral proceedings which have commenced in terms of the provisions of Section 21 of the Principal
Act, unless otherwise agreed by the parties. (see Union of India vs. Parmar Construction Company (2019) 15 SCC 682.] The aforesaid principle was followed in the case of Union of India v. Pradeep Vinod Construction
Company reported in 2020 (2) SCC 464.
While considering an application under Section 11(6) of the Act, the Hon’ble Supreme Court held that if the party is unable to establish a claim of undue influence or fraud, or appears to be lacking in credibility, it is not open to
the Court to refer the dispute to arbitration. (see ONGC Mangalore Petrochemicals v. ANS Constructions Limited 2018 (3) SCC 373. )A bald plea of undue influence is not sufficient, the applicant has to establish a prima facie
case. Without establishing the prima facie case, fraud and undue influence by placing material on record, applicant is not entitled for referring the matter to the arbitration.
(see New India Assurance Company Limited v. Genus Power Infrastructure Limited (2015) 2 SCC 424). When once one of the parties adopts a path of full understanding and executes a document in furtherance of the same, it is
not open to him to take recourse of arbitration thereafter. (see Wapcos Limited v. Salma Dam Joint Venture reported in 2020 (3) SCC 169[2019 SCC Online 1464].
12. In National Insurance Co., Limited v. Boghara Polyfab Private Limited (supra), the Hon’ble Supreme Court has enunciated three categories of issues that may arise where the intervention of the Court is sought for
appointment of an arbitral Tribunal in an application under Section 11 of the Act. Para 17 of the said decision reads as follows:-
“17. Where the intervention of the Court is sought for appointment of an Arbitral Tribunal under Section 11, the duty of the Chief Justice or his designate is defined in SBP & Co. This Court identified and segregated the
preliminary issues that may arise for consideration in an application under Section 11 of the Act into three categories, that is (i) issues which the Chief Justice or his Designate is bound to decide; (ii) issues which he can also
decide, that is issues which he may choose to decide; and (iii) issues which should be left to the Arbitral Tribunal to decide.
17.1 The issues (first category) which Chief Justice/his designate will have to decide are:
(a) Whether the party making the application has approached the appropriate High Court.
(b) Whether there is an arbitration agreement and whether the party who has applied under Section 11 of the Act, is a party to such an agreement.
17.2 The issues (second category) which the Chief Justice/his designate may choose to decide (or leave them to the decision of the arbitral tribunal) are:
(a) Whether the claim is a dead (long barred) claim or a live claim.
(b) Whether the parties have concluded the contract/ transaction by recording satisfaction of their mutual rights and obligation or by receiving the final payment without objection.
17. 3 The issues (third category) which the Chief Justice/his designate should leave exclusively to the arbitral tribunal are :
(i) Whether a claim made falls within the arbitration clause (as for example, a matter which is reserved for final decision of a departmental authority and excepted or excluded from arbitration).
(ii) Merits or any claim involved in the arbitration…â€
Even according to the principle laid down in the aforesaid judgment, which is relied on by the learned counsel for the petitioner, in the second category, it is clarified that those issues can either be decided by the Chief Justice or his
designate may choose to decide or leave them to the decision of the arbitral tribunal with regard to whether the claim is a dead (long barred) claim or a live claim and whether the parties have concluded the contract/ transaction
by recording satisfaction of their mutual rights and obligation or by receiving the final payment without objection. In this case, the respondents have taken plea with regard to full and final settlement by way Final Bill and the
applicant pleaded undue influence and coercion, but failed to prima facie establish the same, as such, this Court took up that issue and found that there is full and final satisfaction.
13. In the decision relied upon by the learned counsel for the respondents in M/s P.K Ramaiah & Co’s case (supra), the Hon’ble Apex Court held that if accord and satisfaction is established, no arbitral dispute exists for
referring to arbitration.
14. In view of above facts and circumstances, there is no merit in the Arbitration Application. Accordingly, the same is dismissed. There shall be no order as to costs. As a sequel thereto, miscellaneous petitions, if any, pending
shall stand closed.
