The mere payment of the final bill does not extinguish live disputes for arbitration, and the existence of a conciliation procedure is not a mandatory requirement before invoking arbitration.

VALMIKI J. MEHTA, J.

1. This first appeal under Section 37 of the Arbitration and Conciliation Act, 1996 impugns the judgment of the court below dated 17.8.2006 whereby the objections filed by the appellant/objector under Section 34 of the Arbitration and Conciliation Act have been dismissed.

2. Disputes and differences between the parties arose on account of a contract work of construction given to the respondent/contractor by the appellant under the contract agreement no. 01/EE/CD-VII/96-97 for execution of certain construction work in 136 numbers additional chambers for Supreme Court lawyers at plot nos. AB 20-21 of Bhagwan Das Road, New Delhi. The contract work entailed fixing of Aluminum Doors and Windows, Ventilators Partition, pre-laminated particle Board Glazed Shutters, Fibre Glass Reinforced Shutters, etc. The contract in question was completed on 1.9.1997 and the final bill finalized on 19.1.1998. Disputes were referred to arbitration in terms of the order dated 4.4.2002 of a Division Bench of this Court in a writ petition and by which order the issues of arbitability of disputes was left open. The issues of arbitability of the disputes were the issues as regards Clauses 9 and 25 of the contract and these issues were dealt with by the arbitrator in terms of his interim award dated 27.9.2002 holding that disputes were alive/not finally settled and hence arbitrable. Final award was thereafter passed by the arbitrator on 15.12.2004 allowing some of the claims of the respondent/contractor. These two awards being the interim award dated 27.9.2002 and the final award dated 15.12.2004 were the subject matter of the objections filed by appellant before the court below and which has been dismissed in terms of the impugned judgment dated 17.8.2006.

3. Two arguments are urged on behalf of the appellant for setting aside the award and the impugned judgment dated 17.8.2006. The first argument which is raised is in view of with Clause 9 of the contract between the parties. On the basis of Clause 9 it is argued that once a final bill is prepared and amount of the final bill is released to the contractor/respondent, then no disputes survive which are live disputes and which will require adjudication in arbitration. The second argument which is urged is as per the Clause 25 of the contract and which specifies that arbitration cannot be invoked unless the procedure of conciliation provided as a pre-condition is resorted to, and since in the present case, it is argued, that the preliminary procedure of conciliation was not resorted to before invoking of arbitration, hence, the disputes in question were not arbitrable.

4. The main argument as regards Clause 9 have been dealt with by the court below in paras 19 and 20 of the impugned judgment, and these paras read as under:-

“19. Further in the present case, it has been submitted on behalf of the petitioner that final award dated 15.12.2004 passed by the ld. Arbitrator is illegal and wrong and is against the terms and condition of the contract/agreement between the parties. It is further submitted that the aforesaid final award dt. 15.12.2004 is also violative of the section 34 of the Arbitration and Conciliation Act and is also against the substantive law. It has been submitted on behalf of the petitioner that while passing the impugned award dt. 15.12.2004 ld. Arbitrator has not taken into consideration the clause 9 of the agreement/contract which stipulates that the claimants were required to submit final bill within three months of the physical completion of works and that all the claims made by the contractor after submission of the final bill shall be deem to have been waived and extinguished. It has been submitted on behalf of the petitioner that ld. Arbitrator has failed to appreciate that the final bill was accepted by the claimant/respondent without any objection and as such after the submission of the final bill, the claim made by the contractor is deemed to have been wa