Submission of a No Claim Certificate under duress does not invalidate the arbitration clause, and disputes arising from a discharged contract can still be referred to arbitration if the validity of the discharge is disputed.

In this Application under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the Act"), the Applicant prays for a direction for appointment of an Arbitrator in terms of Section 11 of the Act to resolve the dispute that had arisen between the parties. The Applicant was appointed as Nominated Sub-contractor as a result of the agreement between Respondent Nos. 1 and 2 and was awarded the construction of Road Over Bridge at Daund, Nepty and Dehre and Murtizapur. The Applicant completed this construction work and submitted certain claims before Respondent No. 2 for sanction and also requested Respondent No. 1 to form a Committee to review the said claims. When the bills were pending clearance, which according to the Applicant were of a huge amount, Respondent No. 1 issued a letter dated 8th February, 2002 calling upon the Applicant to waive its right of arbitration and give an undertaking that the decision of the Committee would be binding on the Applicant. The Applicant by its letter dated 9th March, 2002, addressed to the Minister of PWD, informed that it had no intention to request for arbitration if its disputes were amicably settled by the Committee. In case if the decision of the Committee was not acceptable to either of the party it should be left open for the parties to invoke Arbitration clause of the Agreement. Respondent No. 2 vide its letter dated 24th March, 2003 then informed the Applicant that it proposed to make payment of Rs. 199.04 lacs against the Applicant's claim and required the Applicant to file undertaking as well as unconditional No Claim Certificate for releasing of the payment. After representations were made by the Applicant, the Respondents increased the amount from Rs. 199.04 lacs to Rs. 216.82 lacs. In view of the financial duress which the Applicant was facing, it submitted No Claim Certificate vide its letter dated 6th August, 2005 on the condition of releasing the payment within 90 days. The validity of the No Claim Certificate was increased from time to time and lastly view letter dated 22nd March, 2006 upto 15th May, 2006. This No Claim Certificate was still not sufficient and Respondent No. 2, vide its letter dated 18th April, 2006, again demanded a separate No Claim Certificate for each individual contract. Since the amount was not being disbursed, the Applicant reiterated their request from time to time orally and in writing. The letter dated 18th April, 2006 reads as under:-

"IRCON INTERNATIONAL LIMITED

IRCON/WZ/ROB-MAIN/Vol. VIII/26

18/04/2006

M/s. Ashoka Buildcon Pvt. Ltd. 1-2, River View, Near Ashok Stambh, Nasik 422002.

Dear Sir,

Sub. - Claim Settlement of ROB's at Daund, Nepty & Dehre (Super structure) and Murtizapur.

Ref. - 1. Your letter No. ABL/Tech/Let/07/2005 dated 06.08.2005.

2. Your letter No. NIL dated 22.03.2006.

This has reference to your above cited letters and other correspondence taken place relating to settlement of claims pertaining to ROB's at Daund, Nepty & Dehre (Super structure) and Murtizapur. You are requested to submit separate No Claim Certificate for each of these individual contracts on non judicial stamp paper of Rs. 100/- as per the endorsed drafts. The No Claim Certificates as per the draft are to be signed by the authorised signatory. Further, signed No Claim Certificates should be submitted so as to reach this office within 3 days of the date mentioned in the No Claim Certificates for taking further needful action by this office towards release of payment.

Thanking you.

Yours faithfully, For and on behalf of IRCON International Ltd. (V.D. Kewalramani) JGM (Civil) Encl.: 3 Nos Draft No Claim Certificates."

An amount of Rs. 216.82 lacs was sanctioned and vide letter dated 10th May, 2006 the Applicant wrote to Respondent No. 2 as under:-

"Date: May 10, 2006.

To,

Jt. General Manager IRCON INTERNATIONAL LTD.,

Central Rly's New Administrative Bldg. 7th Floor,

D.N.