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2012 Supreme(Cal) 251

IN THE HIGH COURT OF CALCUTTA
Sanjib Banerjee, J.
STATE OF WEST BENGAL
VS.
N. BHAKAT & CO.
A.P. No. 435 of 2008
Decided on : March 28, 2012

Advocates Appeared:
Samrat Sen, Paritosh Sinha, Amitava Ghosh, Navojit Mukherjee appeared for the parties.

An exception clause in an agreement is not to be regarded as absolute in certain circumstances, such as when the contractor has claimed the amount prior to the completion of the work.

Headnote:

ARBITRATION - ANNULMENT OF AWARD - ACCORD AND SATISFACTION - CLAIM COULD NOT HAVE BEEN CARRIED TO REFERENCE - CONTRACTOR HAD NO CLAIM - PAYMENT OF CONTRACTOR'S SEVENTH RA AND FINAL BILL ON AUGUST 5, 1986, DISCHARGED EMPLOYER'S OBLIGATION - LETTERS EXCHANGED BETWEEN PARTIES DID NOT SUGGEST ANY GRIEVANCE EXPRESSED OR RECORDED BY CONTRACTOR - NO ORAL EVIDENCE ADDUCED BY CLAIMANT - ARBITRATOR'S CONCLUSION BASED ON MATERIAL BEFORE HIM - NO ERROR OF JURISDICTION OR SERIOUS IRREGULARITY - AWARD UPHELD.

Fact of the Case:

Contractor claimed payment for escalation, idle labor, and idle establishment. Employer resisted the claim, contending that the contractor had no claim and that the employer's obligation was discharged upon payment of the contractor's seventh RA and final bill on August 5, 1986. The contractor argued that the claim could be carried to reference and that the letters exchanged between the parties did not suggest any grievance expressed or recorded by the contractor. The contractor did not adduce any oral evidence before the arbitrator.

Finding of the Court:

The arbitrator found that the contractor was constrained to receive the final payment and issue a discharge accordingly even before a sum of Rs.17,000/- on account of balance security deposit had been refunded to the contractor. The arbitrator did not find that the delay between August, 1986 and February, 1987, when the contractor protested for the first time, was of great significance. The court held that the arbitrator's conclusion was based on the material before him and that there was no error of jurisdiction or serious irregularity.

Issues: 1. Whether the claim could have been carried to reference? 2. Whether the contractor had a claim? 3. Whether the employer's obligation was discharged upon payment of the contractor's seventh RA and final bill on August 5, 1986? 4. Whether the letters exchanged between the parties suggested any grievance expressed or recorded by the contractor? 5. Whether the contractor adduced any oral evidence before the arbitrator?

Ratio Decidendi: 1. The court held that the claim could be carried to reference as the arbitration agreement was wide enough to accommodate it. 2. The court held that the contractor had a claim as the contractor was constrained to receive the final payment and issue a discharge accordingly even before a sum of Rs.17,000/- on account of balance security deposit had been refunded to the contractor. 3. The court held that the employer's obligation was not discharged upon payment of the contractor's seventh RA and final bill on August 5, 1986 as the contractor was constrained to receive the final payment. 4. The court held that the letters exchanged between the parties did not suggest any grievance expressed or recorded by the contractor. 5. The court held that the contractor did not adduce any oral evidence before the arbitrator.

Final Decision: The court upheld the award except for the amount of Rs.38,300/- granted under the second head of claim on account of idle labor which appeared to be a repeat of the fourth head of claim under idle establishment. The court directed the employer to pay the contractor Rs. 7,19,038/- with interest thereon at 12 percent per annum till date as awarded and with further interest at 6 percent per annum from the date of the order on the principal sum of Rs.7,19,038/- till payment.

JUDGMENT

The Court : A seemingly irrelevant submission on behalf of the respondent contractor afforded the Court an opportunity for course correction and appreciate that the quality and quantity of the evidence that was before the arbitrator and that may have satisfied the arbitrator may ordinarily not be gone into by a Court in proceedings for annulment of an arbitral award.

2. The primary ground urged by the petitioner in the present petition under sections 30 and 33 of the Arbitration Act, 1940 is that the claim could not have been carried to the reference since the contractor had no claim at all and, upon payment of the contractor's seventh RA and final bill on August 5, 1986, the obligation of the employer stood completely discharged. In support of such case of accord and satisfaction, the petitioner refers to the letters dated August 5, 1986, August 25, 1986, November 21, 1986, February 15, 1987, February 27, 1987 and March 21, 1988. The petitioner suggests that notwithstanding it being evident from one or more of the letters that a reservation was expressed by the contractor at a later stage after receiving the payment against the final bill, it is evident that there was no grievance expressed or recorded by the contractor within any reasonable time of receipt of the final payment that the contractor had to accept such payment under coercion or duress or any other compulsion. The petitioner submits that parole evidence was essential for the claimant in the reference to establish that the employer was not discharged after the claimant received the payment without recording any immediate protest. The petitioner says that in the absence of oral evidence being adduced on behalf of the claimant in the reference, the arbitrator was bound to go by the contents of the letters that had been exchanged between the parties during the relevant period. The petitioner proceeds to add that nothing in those letters would suggest that there was anything that weighed on the contractor for the contractor to be constrained to accept the final payment without any protest.

3. It may have been relevant to go into the contents of the several letters referred to above and, in any event, to at least two of them which were issued several months after the final payment had been received on which a case of the contractor having received the final payment under protest may have been founded. But in the context of the assessment that is appropriate in this jurisdiction, which is supervisory and not appellate, it would be injudicious to refer to or re-appreciate matters of evidence before the arbitrator; whether to justify or criticise the award.

4. There is a line in one of the minutes which recorded that the contractor was not desirous of adducing oral evidence. The contractor did not proffer any reason for not calling any witness. The award does not record any reason as to why the contractor did not attempt to adduce oral evidence. Yet, it is submitted on behalf of the contractor, without any backing in support thereof in the pleadings, that the person in control of the contractor firm at the relevant time had expired prior to the reference being taken up, or, at any rate, prior to the time when the question of oral evidence came up. Since that was not a ground which was cited by the contractor for not adducing oral evidence and the reason is not recorded either in the award or in the affidavit filed on behalf of the contractor, such submission has to be regarded as utterly irrelevant and cannot be given any credence. What such submission highlights, however, is that there would be many considerations as to how the quality or the quantity of the evidence would weigh with one and how it would be seen by another. Once an arbitrator or arbitral tribunal, the consensual forum of the parties, is posted with the authority to adjudicate upon the disputes covered by the arbitration agreement, the tribunal is also accorded the jurisdiction to find the tools to m
















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