UNION OF INDIA & Ors. v. MIS. MASTER CONSTRUCTION CO

5 S.C.R. 853 UNION OF INDIA & ORS. v. MIS. MASTER CONSTRUCTION CO. (Civil Appeal No. 3541 of 2011) APRIL 25, 2011 [AFTAB ALAM AND R. M. LODHA, JJ.] A B ARBITRATION AND CONCILIATION ACT, 1996: s. 11 (6) - Application for appointment of arbitrator after C submitting 'no-claim certificate' and receipt of payment of final bill - Arbitrator appointed - Held: Where the dispute raised by the claimant with regard to validity of the discharge voucher or no-claim certificate or settlement agreement, prima facie, appears to be lacking in credibility, there may not o be necessity to refer the dispute for arbitration at all - It may not be proper to burden a party, who contends that dispute is . not arbitrable on account of discharge of contract, with huge cost of arbitration merely because plea of fraud, coercion, duress or undue influence has been taken by claimant, as E mere plea is not enough and the claimant must prima facie establish the same by placing material before the Chief In the instant case, the conduct of Justice/ his designate - contractor clearly shows that 'no claim certificates' were given by it voluntarily and it accepted the amount of the final bill F voluntarily and the contract was discharged voluntarily- Order appointing the arbitrator u/s 11 (6) cannot be sustained and is set aside.

The respondent-contractor completed the contract on 31.8.1998. The completion certificate was issued on G 9.9.1999. Thereafter the contractor furnished 'no claim certificates' on 3-4-2000, 28-4-2000 and 4-5-2000, signed the final bill on 4-5-2000, and received payment under the 853 H 854 SUPREME COURT REPORTS (2011] 5 S.C.R. A final bill on 19.6.2000. However, immediately on release of the bank guarantee on 12.7.2000, the same day the contractor wrote to the appellant-employers withdrawing the 'no claim certificate' and also lodged certain claims. The Chief Engineer declined to entertain the claims. The B contractor made an application u/s 11 of the Arbitration and Conciliation Act, 1996 before the Civil Judge (Senior Division). The application was dismissed. The contractor's writ petition was also dismissed by the High Court. The contractor's S.L.P was disposed of by the C Supreme Court with the direction that the application be placed before the Chief Justice of the High Court.

The Chief Justice decided the application u/s 11(6) holding that all disputes between the parties to the contract would be referred to the arbitration and appointed the arbitrator. o Aggrieved, the employers filed the appeal. In the instant appeal filed by the employers, the question for consideration before the Court was: whether after furnishing 'no-claim certificates' and the receipt of payment of final bill, as submitted by the contractor, any E arbitrable dispute between the parties survived or the contract stood discharged. Allowing the appeal, the Court F · HELD: 1.1 There is no rule of the absolute kind. In a case where the claimant contends that a discharge voucher or no-claim certificate has been obtained by fraud, coercion, duress or undue influence and the other side contests the correctness thereof, the Chief Justice/ G his designate must look into this aspect to find out at least, prima facie, whether or not the dispute is bona fide and genuine.

Where the dispute raised by the claimant with regard to validity of the discharge voucher or no-claim certificate or settlement agreement, prima facie, appears H UNION OF INDIA & ORS. v. MASTER CONSTRUCTION CO. 855 to be lacking-in credibility, there may not be necessity to A refer the dispute for arbitration at all. [para 24] [866-D-F] National Insurance Company Limited v. Boghara Polyfab Private Limited 2008 (13) SCR 638 -~ (2009) 1 SCC 267; The Union of India v. Kishorilal Gupta & Bros Limited AIR (1959} B SC 1362; The Naihati Jute Mills Ltd. v: Khyaliram Jagannath AIR (1968) SC 522; Damodar Valley Corporatio.n v. K.K .. Kar 1974 (2) SCR 240 =(1974) 1 .sec 141; Mis. Bharat H~avy Electricals Limited, Ranipur v. Mis. Amar Nath Bhan Prakash (1982) 1 SCC 625; Union of India & Anr. v. Mis. L. K, Ahuja C & co. 1988 (3) SCR 402 = (1988) 3 sec 76; State. of Maharashtra v. Nav Bharat Builders 1994 Supp .(3) SCC 83; Mis.

P.K. Ramaiah & Company v. Chairman & Managing Director, National Thermal Power Corpn. 1994 Supp (3) SCC 126; Nathani Steels Ltd. v. Associated Constructions, 1995 Supp (3) SCC 324; Indian Drugs & Pharmaceuticals Ltd. v. lndo Swiss Synthetics Gem Mfg. Co. Ltd. & Ors. 1995 (5) Suppl. SCR 189 = (1996) 1 SCC 54; United India Insurance . v. Ajmer Singh Cotton & General Mills & Ors., 1999 (1) Suppl. SCR 385 = (1999) 6 SCC 400; Jayesh Engineering Works v. New India Assurance Co. Ltd. (2000) 10 SCC 178; E SBP & Co. v. Patel Ertgineering Ltd. & Anr. 2005 (4) Suppl. SCR 688 = (2005) 8 SCC 618; National Insurance Co. Ltd. v. Nipha Exports (P) Ltd. 2006 (6) Suppl. SCR 719 = (2006) 8 SCC 156; and National Insurance Company Limited v. Sehtia Shoes 2008 (3) SCR 451 = (2008) 5 SCC 400 - referred to F 0