Withdrawal of a claim does not necessarily preclude a party from demanding further payment and seeking adjudication by arbitration. Accord and satisfaction by payment of the final bill does not terminate the agreement and the arbitration clause.

( 1 ) THIS appeal concerns with the right of the appellant to have his claim referred to arbitration for adjudication. The I Addl. Civil Judge, Civil Station, bangalore who tried the ma,tter as O. S. No. 173 of 1977, dismissed the appellant's application filed under S. 20 of the Arbitration Act. This appeal is preferred against that order.

( 2 ) THE parties rested their case only on their pleadings and the terms of the agreement. They did not produce any oral evidence.

( 3 ) WE will give a brief summary of the facts avoiding as far as possible the controversial matters. The appellant was a railway contractor. He entered into an agreement with the respondents for execution of certain works including the work of "doubling of track between Renigunta and Balapalleearth work forming bank and cutting etc. " earmarked between chainage 0 and 10,600 Reach-I. As per the terms of the agreement, the respondents were to point out the lands and places where work had to be carried out and supplies were required to be made. The respondents were further required to give the details of the materials required with the specifications and the quantities. They were also required to give the drawings of the works to be executed. It was only thereafter the appellant was required to commence the works entrusted to him. The respondents did not attend to those preliminary requirements. in time, and there was considerable delay on their part in performing their obligations. Consequently, the appellant had to wait for his turn to commence the execution of the works.

( 4 ) THE period prescribed under the agreement for completion of the works was, however, extended, and the appellant completed all the prescribed works on June 27, 1975. On July 1, 1975, he made a claim for additional payments at higher rates on various items of works executed by him. On September 10, 1975, he restricted the additional claim to Rs. four lakhs and odd. He did not, however, pursue that claim. He had a second thought over the matter. On October 31, 1975, he wrote a short letter informing the respondents that in order to develop good relationship with the administration, he was withdrawing the said additional claim.

( 5 ) ON November 14, 1975, the respondents paid the final bill at the rates agreed upon in the agreement. They also refunded the security deposit. The appellant, notwithstanding his desire to maintain the good relationship with the administration, could not perhaps, resist the temptation to claim something more. On May 24, 1977, he asked the respondents to pay him 5. 7 lakhs as compensation for the loss suf- ferred by him due to the delay in performing the contractual obligations by the respondents. But the respondents did not even reply to that notice. The appellant then called upon the respondents to refer the said claim to arbitration under clause 63 (1) of the general conditions of the agreement. The respondents, as usual, turned down that demand. So, the appellant moved the court below with an application under S. 20 of the Arbitration Act for a reference to arbitration. The respondent opposed that application.

( 6 ) UPON the rival contentions raised in the pleadings, the lower court framed the following issues for consideration: 1. Whether the plaintiff has made out a case for making a reference to the arbitrators as per the provisions of the indian Arbitration Act? 2. If so' whether the plaintiff is entitled to the said reference? on the first question, the Court held that the dispute arising out of the appellant's claim falls within the said arbitration clause. But while coming to the second question, it declined to make a reference. The Court held that the appellant was estopped from raising the dispute since' he had earlier made such a claim and unconditionally withdrew it. The Court based its conclusion solely on the appellant's letter dated October 31, 1975.

( 7 ) IN this appeal, there was no argument before us with regard to the leg