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2017 Supreme(Del) 2076
IN THE HIGH COURT OF DELHI AT NEW DELHI
JAYANT NATH, J.
Jaycon Infrastructure Limited - Petitioner
Versus
Soma Enterprise Limited - Respondent
O.M.P. (COMM) 240 of 2017
Decided On : 07-07-2017
Advocate Appeared:
For the Petitioner: Mr. Keshav Dayal, Ms. Geeta Mehrotra
The main legal point established in the judgment is the significance of voluntary execution of settlement agreements and the finality of findings of fact by an arbitrator in determining the validity and effect of such agreements.
Headnote:
Arbitration and Conciliation Act - Challenge to Award - 1996 - [TSA] - [Section 34] - [Summary of Acts and Sections: The court discussed the Arbitration and Conciliation Act, 1996, particularly section 34, and referred to various judgments including Union of India vs. Master Construction Company and National Insurance Company vs. M/s. Boghara Polyfab Pvt. Ltd. The court emphasized the legal position on discharge of contract, voluntary execution of discharge vouchers, and the consequences of a finding of fact by an arbitrator. The court's decision was influenced by the legal principles established in these acts and judgments, leading to the dismissal of the petition.]
Fact of the Case:
The petitioner sought to challenge an Award made by an Arbitrator under section 34 of the Arbitration and Conciliation Act, 1996, alleging coercion and duress in the execution of a Termination-cum-Settlement Agreement (TSA) between the parties. The court analyzed the circumstances surrounding the execution of the TSA and the subsequent actions of the parties.
Finding of the Court:
The court found that the TSA was not vitiated by coercion, undue influence, or pressure, and that both parties had executed it with free consent and after detailed discussions. The court also noted the consequential actions taken by the parties pursuant to the TSA, which demonstrated mutual consent and settlement of disputes.
Issues: The key issue was the validity of the TSA and its effect on the disputes between the parties. The court also considered various claims and counter-claims raised by the petitioner.
Ratio Decidendi: The court's decision was based on the finding that the TSA was executed with free consent and that the parties had taken consequential actions in accordance with its terms, leading to the settlement of disputes. The court emphasized the legal principles related to discharge of contract, voluntary execution of discharge vouchers, and the finality of findings of fact by an arbitrator.
Final Decision: The court dismissed the petition, holding that the TSA was legal and valid, and that all other claims filed by the parties ceased to be valid as the TSA dealt with all their rights and liabilities.
Jayant Nath, J.
1. Present petition is filed under section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Act”) seeking to challenge the Award dated 31.1.2017 made and published by the learned Arbitrator. The parties entered into an agreement on 12.02.2008. A part of the project work, namely, Earth Works and Structural works to be executed on 66.161 KM of the National Highway No.1 i.e. from KM 146.000 to KM 212.161 was awarded to the petitioner by the respondent vide letter of Award dated 23.2.2009. Two agreements were also signed between the parties dated 4.4.2009 for (i) Earth work and excavation for Highway and structure work of project between Km 146.000 to Km 212.161 for a sum of Rs.71.98 crores and (ii) structure work for the same area. The work was to be completed within 30 months from the date of signing of the Agreement or from the date of notice of commencement of work, whichever was later.
2. It is the case of the petitioner that there were hindrances on the part of the respondent on account of which execution of the work was delayed. It is stated by the petitioner that the work was closed in July 2011. The petitioner was not satisfied on account of alleged failure of the respondent to finalise the bills and release money and the bank guarantees. The petitioner is stated to have written various communications in this regard. The parties are stated to have entered into a Termination-cum-Settlement Agreement (hereinafter referred to as “TSA”) on 29.6.2012 to bring an end to their disputes. The petitioner, however, submits that the same was got signed by the respondent under coercion and duress.
3. Initially on a petition filed in this court being Arb. Petition No.482/2012 on 11.7.2013 Mr. Justice R.C. Lahoti (Rtd.) was appointed as the Sole Arbitrator to adjudicate the disputes between parties. Later on, learned Arbitrator, namely, Mr. Justice Mukundakam Sharma, (Retd.) was appointed as the Sole Arbitrator. The learned Arbitrator entered into reference and framed the following issues:-
i. Whether the termination cum settlement agreement dated 29.06.2012 was executed by the Claimant due to undue influence and coercion exercised by the Respondent and if so, its effect?
ii. If the aforesaid issue is answered in favour of the Respondent whether the said agreement dated 29.06.2012 constitutes an accord and satisfaction of the main contract and if so, its effect?
iii. Whether the Claimant is entitled to claim and receive any amount as claimed in the Statements of Claim and if so, to what amount?
iv. lf the aforesaid issue is answered in favour of the Claimant, whether the Claimant is also entitled to receive any interest on the awarded amount and if so, at what rate and for which period?
COUNTER CLAIM
v. Whether the Respondent is entitled to claim and receive any amount towards counter claims as claimed, and if so, what amount?
vi. Whether the Respondent is answered in favour of the Respondent, whether the Respondent is also entitled to receive any interest on the awarded amount and if so, at what rate and for which period?
vii. Whether the Claimant/Respondent is also entitled to claim the cost of the arbitration?
viii. Relief.”
4. The essential issue which is the fulcrum of the entire dispute is the TSA dated 29.6.2012. As per the petitioner this document was executed under undue influence and coercion and is not binding. As per the respondent this document brings an end to all disputes. The learned Arbitrator noted the submissions of the petitioner that the said document is a result of coercion, undue influence and pressure exerted by the respondent. The Award notes that the following facts were pleaded to press the contention of coercion, undue influence and pressure i.e.
(i) TSA was signed by the petitioner only because Bank Guarantee of Rs.36.79 crores was not returned back to the petitioner.
(ii) The respondents kept threatening invocation of the bank guarantees. They continued to retain
