Judgment

Dalveer Bhandari, J.

1. Delay condoned.

2. Leave granted.

3. This appeal is directed against the judgment and order dated 12.01.2007 passed by the High Court of Punjab and Haryana at Chandigarh in Arbitration Case No.34 of 2004.

4-5. Brief facts which are necessary to dispose of this appeal are recapitulated as under:

The respondent contractor was awarded a contract by the Northern Railway vide Contract Agreement No.74-W/1/1/307/WA/CDG dated 01.05.2002, for execution of "Earthwork in formation in filling Construction of all minor bridges within the Zone, including retaining wall, side drains and other protection works and allied works in Zone No.8 from Km.25 to Km.42 in Punjab area in connection with new BG Rail Link from Chandigarh to Ludhiana". The Contract Agreement also provided for execution of Supplementary Agreement. The contract was executed by the respondent and the entire amount due and payable to the contractor - respondent was paid to him by a Supplementary Agreement dated 27.04.2004, which reads as under:

"SUPPLEMENTARY AGREEMENT

Article of agreement made this day 27th April in the year two thousand four between the President of India, acting through the Northern Railway administration having his office at Dy CE/C-II/CD hereinafter called the Railway of the one part and nil of the second part. Whereas the party hereto of the other part executed on agreement with the party hereto of the first part being agreement number 740/1/1/207 dated 13.2.2001 for the performance nil hereinafter called the 'Principal Agreement'.

And whereas it was agreed by and between the parties hereto that the works would be completed by the party hereto the second part on 31.10.2003 dated last extended' and whereas the party hereto of the second part has executed the work to the entire satisfaction of the party hereto of the first part already made payment of the party hereto of the second part diverse sums from time to time aggregating to Rs.19891584.07 including the final bill bearing voucher No.362-C/C-II/CDG dated 27.3.2004 the receipt of which is hereby acknowledged by the party hereto of the second part in full and final settlement of all his/its claims under the principal agreement.

And whereas the party hereto of the second part have received further sum of 26849531 through the final bill bearing voucher NO.362-C/0-II CDG dt. 27.3.2004 (the receipt of which is hereby acknowledge by the party thereto of the second part) from the party hereto the first part in full and final settlement of all his/its disputed claims under principal agreement.

Now it is hereby agreed by and between the parties in the consideration of sums already paid (by the party hereto of the first part to the party hereto of the second part against all outstanding dues and claims for, all works done under the aforesaid principal agreement including/excluding the security deposit the party hereto of the second part have no further dues of claims against the party hereto the first part under the said Principal Agreement. It is further agreed by and between the parties that the party hereto of the second part has accepted the said sums mentioned above in full and final satisfaction of all its dues and claims under the said Principal Agreement.

It is further agreed and understood by and between the parties that in consideration of the payment already made, under the agreement, the said Principal Agreement shall stand finally discharged and rescinded all the terms and conditions including the arbitration clause.

It is further agreed and understood by and between the parties that in consideration of the payment already made, under the agreement, the said Principal Agreement shall stand finally discharged and rescinded on the terms and conditions including the arbitration clauses.

It is further agreed and understood by and between the parties that the arbitration clause contained in the said principal agreement shall cease to have any effect and/or shall be