2010 Supreme(P&H) 2770
PUNJAB & HARYANA HIGH COURT
Rakesh Kumar Jain, J.
Commander Works Engineers (Air Force) Chandigarh
Versus
Kesho Ram Sharma And Another
Civil Revision No. 3599 of 2004,
Decided On : SEPTEMBER 28, 2010
Headnote:
Arbitration - Final Bill - I.A.F.W.-2249 - Summary of Acts and Sections: I.A.F.W.-2249, Indian Arbitration Act, 1940, Arbitration and Conciliation Act, 1996 - The court discussed the acceptance of the final bill by the contractor with the endorsement 'no further claim' and its impact on raising further claims under Clause 65-A of I.A.F.W.-2249. The court interpreted Clause 65-A and held that the acceptance of the final bill without prejudice would close further claims arising out of the contract, regardless of the payment being received under protest. The court referred to relevant legal provisions and case law to support its decision.
Fact of the Case:
The case involved a dispute between the Commander Works Engineers and a contractor regarding claims raised after the acceptance of the final bill. The Arbitrator awarded a sum with interest, and the contractor sought to make the award Rule of the Court. The petitioner objected, but the lower courts allowed the application and dismissed the objection.
Finding of the Court:
The court found that the acceptance of the final bill without prejudice would close further claims arising out of the contract, regardless of the payment being received under protest. The court also held that the objection raised by the petitioner challenging the power of the Arbitrator to decide the claim set up by the respondent was not adequately addressed by the lower courts.
Issues: The key issue was whether the acceptance of the final bill by the contractor with the endorsement 'no further claim' would debar the contractor from raising further claims under Clause 65-A of I.A.F.W.-2249.
Ratio Decidendi: The court held that the acceptance of the final bill without prejudice would close further claims arising out of the contract, regardless of the payment being received under protest. The court also emphasized that the objection raised by the petitioner challenging the power of the Arbitrator to decide the claim set up by the respondent was not adequately addressed by the lower courts.
Final Decision: The court allowed the revision petition, set aside the impugned orders and the arbitral award, and awarded costs to the petitioner.
Rakesh Kumar Jain, J.
1. This revision petition is directed against the judgment and decree dated 16.10.2001 passed by Additional Civil Judge (Senior Division), Amritsar by which application filed by respondent No.l (Contractor) for making the arbitral award dated 30.09.1997 Rule of the Court was allowed, objection filed by the petitioner was dismissed and against the judgment and decree dated 19.04.2004 passed by Additional District Judge, Amritsar whereby the appeal filed by the petitioner was dismissed.
2. In brief, the facts of the case are that C.A. No.CWE/ASR/GE(M)-24/85-86 for Provision of Essential Services Addition/Alterations to Certain Buildings and other Allied Service at Amritsar was entered into between the Commander Works Engineers (petitioner herein) and respondent No.l on 25.11.1985 for an amount of Rs.10,36,214.30. The date of commencement and extended date of completion of the work was 10.12.1985 and 06.11.1989 respectively. The final bill was accepted and signed by respondent No.l for an amount of Rs.1,79,935/- observing "no further claim under the contract beyond the net amount of the bill". However, the amount of final bill was paid to respondent No.1 through cheque bearing No.F-993549 dated 31.03.1991 and was received by him under protest. The receipt is undated. However, on 17.05.1991, after the settlement of the final bill, respondent No.l raised some more claims, which were declined by the petitioner in terms of Clause 65-A of the I.A.F.W.-2249 (General Conditions of Contracts) on the ground that after settlement of the final bill, no further claim can be raised, as a result of which a dispute arose between the parties. Respondent No. 1 requested the petitioner to refer the dispute to the Arbitrator to decide the claims raised after receiving the amount of final bill under protest and on the refusal of the petitioner to do so, respondent No. 1 filed an application under Section 8(2) of the Indian Arbitration Act, 1940 [for short "Act of 1940"] in the Court of Sub Judge 1st Class, Amritsar for appointment of an Arbitrator. The said application was allowed on 07.11.1994 and the Chief Engineer, M.E.S., Amritsar was directed to appoint Superintending Engineer, enlisted on the approved list of the Arbitrators, with the consent of the parties, as an Arbitrator to proceed in accordance with law to hear and decide the matter in dispute. In terms of the order of the Court, Chief Engineer, AF (WAC) Jalandhar Cantt. Appointed Col. B.J.V. Rao, ACE(Plg) as Sole Arbitrator. In the pleadings submitted on behalf of the petitioner before the Arbitrator, in defence of the claim set up by respondent No.1,
it was urged in para 2.1 that "at the outset, it is highlighted that the final bill of the contract agreement was accepted by the claimant without any reservation and the final bill certificate was signed by him clear as per clause 65-A of IAFW-2249. It is specifically highlighted that "No further claims" shall be made by the contractor after submission of final bill and these shall be deemed to have been waived and extinguished, which means after signing the final bill, raising of claim was against the spirit of the contract, as such all the claims can be termed as afterthought and may be rejected in toto. Without prejudice our above stand, our pleading in defence for each claim are as under:-
".
3 The Arbitrator, vide his award dated 30.09.1997 awarded Rs.1,31,785.11 with interest @ 18% per annum w.e.f. 01.04.1991 to 30.09.1997 and future interest from 01.10.1997 to the date of payment or to the date of the decree of the Competent Court whichever is earlier, allowing a grace period of three months from 01.10.1997 to 31.12.1997, during which no interest would accrue if amount of award along with interest up to 30.09.1997 is paid. Thereafter, respondent No.l filed art application under Sections 35 & 36 of the Arbitration and Conciliation Act, 1996 [for short "the Act"] read with Section 151 of the Civil Procedu