Acceptance of lesser sums as full settlement precludes additional claims without evidence of further entitlements, affirming accord and satisfaction under the Indian Contract Act.

1. The issue that arises for consideration in the present Appeal is whether the learned Trial Court was right in concluding that the document dated 26.09.2019 (Ex. PW1/D2 /Annexure-A9) recorded a full and final settlement, in respect of the claims that had accrued up to that date, and whether, on the evidence on record, any interference with the findings of the Trial Court can be warranted.

2. The present Appeal filed under Section 96 of the Code of Civil Procedure , 1908 [hereinafter referred to as “CPC”] read with Section 13 of the Commercial Courts Act , 2015 assails the correctness of the judgment and decree dated 03.01.2024 [hereinafter referred to as “Impugned Judgment”] passed by the Trial Court, whereby the suit instituted by the Appellant for recovery of Rs.50,41,835/- (along with interest and costs) was dismissed.

FACTUAL MATRIX

3. The salient facts, as pleaded by the parties and recorded by the Trial Court, may be briefly stated. The Appellant is a company engaged in supply, installation, testing and commissioning of Sewage Treatment Plants [hereinafter referred to as “STP”], which had subcontracted certain works from the Respondent. The Respondent is the principal contractor awarded the work of supply, installation, testing and commissioning of an 800 KLD STP at Haryana Vishwakarma Skill University, Dudhola, Palwal by IRCON Infrastructure and Services Ltd. (IISL). The dispute arises from alleged non-payment by the Respondent for materials supplied and services rendered by the Appellant under the subcontract agreement.

4. On 01.03.2019, the Respondent issued a Letter of Intent [hereinafter referred to as “LOI”] to the Appellant for the above-stated work for a contract value of Rs.1,15,00,000/- plus GST. The Bill of Quantity [hereinafter referred to as “BOQ”] annexed to the LOI provided for staged payments – Rs.10,00,000/- (advance) as per BOQ, 85% on supply/delivery of material (within 10 days of receipt), 10% on installation and 5% on testing & commissioning. Clause 7 of the LOI provided for retention money (10% of running bills, subject to a maximum of 5% of contract value) refundable after the Defect Liability Period (36 months after completion). Payments were to be made on a back-to-back basis, as IRCON was the principal releasing funds to the Respondent for onward disbursement to the Appellant.

5. The Appellant raised Tax Invoices Nos.236, 237 and 238 dated 27.03.2019 for materials aggregating to Rs.1,00,22,272/- [Ex. PW1/4 Colly /Annexure A5 (Colly)]. The Appellant asserted that it supplied the materials to the site (receipts recorded on 29.03.2019 and 31.03.2019), submitted requisite shop/plot/P&ID drawings and test reports, and appointed supervisory staff. It alleged that the Respondent failed to complete civil works or provide space/clearance for installation, thereby preventing completion of installation/testing components and the raising of further invoices.

6. As recorded in Paragraph No.2.4 of the Impugned Judgment, the total contract value under the LOI was Rs.1,15,00,000/- plus GST, i.e., Rs.1,28,80,000/-. Out of this, the Respondent had paid Rs.78,38,165/-, leaving a balance of Rs.50,41,835/- claimed by the Appellant.

7. The Respondent, in its written statement, recorded that the Appellant was a registered Micro, Small and Medium Enterprise (MSME) under the MSMED Act and that the Appellant had invoked MSME (Samadhaan) proceedings on 10.07.2019 in respect of the billed invoices, claiming Rs.45,42,272/- for Invoice Nos.236,