Whether a claim subsists after the completion of work and receipt of payment as 'full and final settlement' is an arbitrable dispute to be decided by the arbitrator.

(1) THE appellant offered Tenders I and II to the respondents, pursuant to which certain civil works were carried out and in respect of which they made a claim for payment of money. Although several claims had been made by the appellant, ultimately on 6-2-1989, the respondents intimated the appellant to receive a cheque for a sum of Rs 2,79,600 in full and final settlement of the works relating to Tenders I and II. The appellant acknowledged the same by endorsing on the said letter stating that he had received the said amount as full and final settlement and he had no further claim in that regard. Thereafter, he wrote a letter dated 24-2-1989 stating that his statement that payment had been accepted by him on 6-2-1989 in full and final settlement is not correct and still there are outstanding dues which need to be paid otherwise the matter will have to be referred to arbitration in terms of clause 37 of the agreement. Pursuant to the said notice each of the parties nominated their respective arbitrators. At that stage, an application was filed under Section 33 of the Arbitration Act seeking a declaration that the agreement dated 7-4-1981 between the parties no longer subsists as the work has already been completed and the payment was received by Respondent 1 in full and final settlement. It was also contended that the clause providing for reference of disputes to arbitration is not attracted in such a situation. In an identical situation, this Court in Union of India v. L.K. Ahuja & Co. held that on completion of work, the right to get money would normally arise thereafter on settlement of the final bill, the right to get further payment gets weakened but whether the claim subsists or not, is a matter which is arbitrable. When this direction was cited before the High Court, the same was distinguished by stating that it was a decision on its own facts and has no application to the case. We find that this view does not appear to be correct. Whether any amount is due to be paid and how far the claim made by the appellant is tenable are matters to be considered by the arbitrator. In fact, whether the contract has been fully worked out and whether the payments have been made in full and final settlement are questions to be considered by the arbitrator when there is a dispute regarding the same. We, therefore, set aside the order made by the High Court and dismiss the application filed under Section 33 of the Arbitration Act. Now proceedings before the arbitrator/s will have to be continued in accordance with law.

(2) THE appeal is allowed. No costs.