The court reinforced that disputes arising from no claim certificates should generally be referred to arbitration unless they are manifestly time-barred or without subsisting dispute.

ORDER (ORAL)

(Video-Conferencing)

1. This matter was adjourned on the last date of hearing in view of a submission, by Mr. J.K. Singh, learned Counsel for the respondent, to the effect that, as the petitioner had given a no claim certificate and accepted the final payment made against the bill without notice, the claims of the petitioner stood discharged on the principles of accord and satisfaction and that, therefore, no subsisting arbitrable dispute survived.

2. He had, for the said purpose, relied on the judgment of the Supreme Court in UOI v. Onkar Nath Bhalla & Sons [2009(7) SCC 350]. The law has, since, developed and a three Judge Bench of the Supreme Court has, in its judgment in Vidya Drolia v. Durga Trading Corpn. [(2021) 2 SCC 1], held that even where there is a disputed no-claim certificate or a plea of discharge of the liability on the ground of novation or accord and satisfaction is raised, the matter should appropriately be referred to arbitration by the Arbitral Tribunal and that it is only where, "it is manifest that the claims are ex facie time barred and dead or there is no subsisting dispute" that the Court can, at the referral stage, refuse to refer the matter to arbitration. The judgment also states that the appropriate course to be followed by the Court in all cases would be to refer the matter to arbitration, even where a plea of non-arbitrability of the dispute is raised except where the dispute is manifestly in the nature of "deadwood", meaning, thereby, that reference to arbitration would be a futile exercise. Para 148 of the report in Vidya Drolia [(2021) 2 SCC 1], which has been cited, approvingly, by a subsequent judgment of the Supreme Court in Secunderabad Cantonment Board v. B. Ramachandraiah & Sons [MANU/SC/0185/2021 : AIR 2021 SC 1391], reads thus:

"Section 43(1) of the Arbitration Act states that the Limitation Act, 1963 shall apply to arbitrations as it applies to court proceedings. Sub-section (2) states that for the purposes of the Arbitration Act and Limitation Act, arbitration shall be deemed to have commenced on the date referred to in Section 21. Limitation law is procedural and normally disputes, being factual, would be for the arbitrator to decide guided by the facts found and the law applicable. The court at the referral stage can interfere only when it is manifest that the claims are ex facie time-barred and dead, or there is no subsisting dispute. All other cases should be referred to the Arbitral Tribunal for decision on merits. Similar would be the position in case of disputed "no-claim certificate" or defence on the plea of novation and "accord and satisfaction". As observed in Fili Shipping Co. Ltd. v. Premium Nafta Products Ltd. MANU/UKHL/0067/2007; 2007 UKHL 40 : 2007 Bus LR 1719 (HL), it is not to be expected that commercial men while entering transactions inter se would knowingly create a system which would require that the court should first decide whether the contract should be rectified or avoided or rescinded, as the case may be, and then if the contract is held to be valid, it would require the arbitrator to resolve the issues that have arisen."

(Emphasis supplied)

3. Paras 3 to 9 of the present petition, which set out the dispute, as per the petitioner, may be reproduced thus:

"3. That the work pertaining to "Annual Zone for Maintenance of Track in the section of SSE/P.Way/GZB-1 & SSE/P.Way/GZB-II under ADEN/GZB" was awarded to the petitioner vide Acceptance Letter dated 29.06.2015 for Rs. 1,61,70,701.00/- (Rupees One Crore Sixty One Lac Seventy Thousand Seven Hundred One Only) and the stipulated date of completi