& M.D., N.T.P.C. Ltd. Vs. M/S. Reshmi Constructions, Builders &
Contractors  Insc 1 (5 January 2004)
& S.B. Sinha. V.N. Khare, Cji.
appeal which arises out of a judgment and order dated 23-11-2001 passed by the
High Court of Kerala at Ernakulam revolves round the question as to whether an
arbitration clause in a contract agreement survives despite purported
parties to this appeal entered into an agreement for a project at Kayamkulam.
Upon completion of the work the respondent herein submitted final bill which
was allegedly not accepted by the appellant, whereafter they themselves
prepared the final bill and forwarded the same along with a printed format
being a "No Demand Certificate". The said "No Demand Certificate"
was signed by the respondent herein which is in the following terms:
of package : Earth filling in Temporary Township Part II Letter of award : LOA
No. KYM/CS/89/022/NIT- 005/LOA-065 dated 19.3.90 Name of the Contractor : Reshmi
Construction, T.C. 4/1298, Keston Road, Kowdiar,
P.O. Trivandrum 3
This is to certify that we have received all payment in full and final
settlement of the supplied and services rendered and/ or all work performed by
us in respect of the above referred LOA/ Contract and we have no other claims
whatsoever final or otherwise outstanding against NTPC. We further confirm that
we shall have no claim/ demands in future in respect of this contract of
whatsoever nature, final or otherwise."
would now request you to please release our security deposit/ contract
performance Guarantee." However, on the same day a letter dated 20-12-1990 was written by the respondent to the appellant
have completed the aforementioned work in the Kayamkulam Super Thermal Power
Project's temporary township area at Nangiarkulangara by the end of November
1990 itself. We had submitted a pre-final bill in November itself but the
authorities denied the bill and insisted final bill.
when the alleged final bill was prepared the authorities insisted that a
"No Demand Certificate" should be executed by us in favour of the
Corporation. They served us with a printed specimen of the document and
insisted that it should be typed in our own letterhead and submitted to the
N.T.P.C. We refused to submit such a document.
the authorities of N.T.P.C. threatened that unless and until we execute the
said document in favour of the Corporation, the N.T.P.C. would not effect
payment of our bill. More than six lakhs of Rupees is pending for payment vide
the alleged final bill. We have incurred huge losses in the execution of the
work purely due to the latches and lapses of the corporation. More over lakhs
and lakhs of rupees has to be paid to our Bankers, creditors suppliers,
workers, truck owners etc. etc. Under such a situation we have no other way
other than budging to the coercion of the authorities of N.T.P.C. ltd. to get
whatever they give merely for the necessity of our survival.
have to comply with the instructions of authorities of N.T.P.C. Ltd. out of our
helplessness in order to receive payment.
certificates, undertakings, etc. as aforesaid have been executed without
prejudice to our rights and claims whatsoever on account of the alleged final
money invested in the work comprises loans from the Federal Bank Ltd., private
financiers, etc. as well the Firm's own funds. Those additional sums raised by
loans have to be paid to the Bank, financiers, etc. hence under duress, coerction
and under undue influence we are signing the bill and execute such documents as
aforesaid to receive payment. Under such coercive circumstances the alleged
final bill cannot be constructed as final bill.
signing the alleged final bill under coerction, under undue influence and under
protest only without prejudice to our rights and claims whatsoever. There is no
accord and satisfaction between the contracting parties.
are therefore requested to kindly pass the final bill incorporating all the
measurements of the items such as sinkage, in and under water execution of
works, compensation for suspension of works, reimbursement of cost escalation
due to price hike of petroleum products, cost of idling, enhanced rates for
quantities executed beyond the contractual period, market rate for excess
quantities, extra additional items etc. besides the losses and damages by way
of idling of tools and plants, workmen, staff, establishment costs, capital
outlay, interest etc. as per actuals. We hope and request that your goodself
may do the needful in the matter." [Emphasis supplied] The respondent
thereafter invoked the arbitration clause by reason of a letter through his
advocate dated 21.12.91 wherein the claims under several heads as enumerated in
clause (a) to (p) thereof. Therein a request was made to refer all the disputes
and differences to a sole arbitrator for adjudication with a direction to make
and publish the award within the statutory period.
appellant herein thereafter discussed the matter at the company level and in
its proceedings it was recorded:
In case of M/s. Reshmi Constructions, Trivandrum Kerala (1(c) above) and M/s.
C.S. Prakash, (1(d) above) of Perumbavoor, Kerala, the total payment for the
works done were effected, the final bills have been settled without protest and
the no-dues certificate in the standard proforma have been submitted by the
seek legal opinion in the matter, we have approached Mr. B.S. Krishnan, a
leading advocate from Cochin. On detailed study of the claims of
the agencies and considering legal conditions, the advocate has advised us to
appoint arbitrator/s nominated by CMD of NTPC, immediately. Accordingly our
advocate has written suitable replies to the contractor's advocate Shri NT
John, of Trivandrum, informing them that they will hear
from NTPC regarding appointment of an arbitrator in terms of the contract
Submitted to appoint arbitrator/s for the four contract packages at para 1.0
above, please." The appellant thereafter by its letter dated 13th February, 1992 replied thereto stating:
client acting upon the notice, though defective, takes it that all your claims
are disputed ones and hence are to be resolved by Arbitration. Please note that
the reference to arbitration does not mean that there is admission that the
disputes are arbitrable. Many of the claims raised are beyond the terms of the
contract and the Arbitrator will have not jurisidiction to deal with them. This
is a matter which has to be taken up later and not at the stage of appointment
of an Arbitrator.
appointing authority, my client refrains from commenting upon in any manner, on
the merits or otherwise of the disputes which your notice has set out.
be noticed that your client has already taken the final bill and has issued 'no
dues' certificate. This is not merely accord and satisfaction, but bringing the
contract to an end.
client will hear from my client as regards the appointment of the Arbitrator in
terms of the contract conditions shortly." [Emphasis supplied] A purported
correction in the said notice was issued by the advocate of the appellant
Correction in the notice is issued by way of Reply notice is signed on behalf
of M/s. Rashmi Constructions, Trivandrum reg.
My Regd. Notice No. P3-G1/92/582 dt. 13.2.92.
instructions from my clients, the Chairman & Managing Director, National
Thermal Power Corporation Ltd. NTPC Bhavan, New Delhi 110 003, I issue the following notice:
reply notice issued by me under reference number cited above, it was stated
that the notice issued by you on behalf of your clients M/s. Rashmi
Constructions, Trivandrum was returned since it was not
signed by you and that the notice is sent back as the same was signed on your
behalf by your client. On scrutiny I find that the notice is returned by you
after the same is signed by you and not by your client on your behalf. In
paragraph 2 of the reply notice, I stated that the notice is defective. It was
so stated because of the mistaken impression that the notice is signed by your
client and not by you. I stated that the mistake is in advert at and the same
is regretted. I would like to bring to your notice one more fact which was
omitted to be stated in the reply notice sent earlier. I have already stated
that your client has issued 'no dues' certificate. The final bill is accepted
by your client without any protest. This is further followed up by your client
receiving the security deposit released on 21.1.92; that is after the expiry of
the stipulated period reckoned from the date when the contract came to an end.
other respects the reply notice earlier sent stands." The respondent
herein filed an application under Section 20 of the Arbitration Act, 1940
before the Hon'ble Subordinate Judge's Court Mavelikkara and in terms of a
judgment and order dated 30.6.1994 the said application was dismissed.
Aggrieved, the respondent herein preferred an appeal before the High Court of Kerala
which was allowed by reason of the impugned order.
Bhatt, the learned counsel appearing on behalf of the appellant urged that as
the contract itself came to an end upon execution of the "No Demand
Certificate" and together with the same the arbitration clause also
perished. In support of the said contention, reliance has been placed on M/s.
P.K. Ramaiah and Associated Constructions [1995 Supp (3) SCC 324].
Bhatt further urged that as in its application under Section 20 of the
Arbitration Act, the respondent did not raise a plea that they had been coerced
to submit the "No Demand Certificate", the High Court committed a
manifest error in passing the impugned judgment.
learned counsel appearing on behalf of the respondent, on the other hand,
submitted that in the facts and circumstances of the case neither any new
contract has come into being nor there was any accord and satisfaction of the
learned counsel appearing on behalf of the respondent also contended that
despite coming to an end of the contract, the arbitration clause survives and
all questions arising out of or in relation to the execution of the contract
are referable to arbitration. Reliance in this connection has been placed on
Assurance Co. Ltd. [(2000) 10 SCC 178].
arguments of learned counsel for the parties, the questions that arise for our
Whether after the contract comes to an end by completion of the contract work
and acceptance of the final bill in full and final satisfaction and after
issuing a No Demand Certificate by the contractor, can any party to the
contract raise any dispute for reference to arbitration?
Whether in view of letter dated 20.12.1990 sent by the respondent contractor
the arbitration clause contained in the agreement can be invoked ?
Whether the arbitration clause in the agreement has perished with the contract?
In this context it is relevant to refer the arbitration clause contained in the
agreement which runs as under:
Except where otherwise provided for in the contract all questions and disputes
relating to the meaning of the specifications, designs, drawing and
instructions herein before mentioned and as to the quality of workmanship or
materials used on the work or as to any other question, claim, right, matter or
thing whatsoever in any way arising out of or relating to the contract, designs
drawing, specifications, estimates, instructions, orders or these conditions or
otherwise concerning the works; or the execution or failure to execute the same
whether arising during the progress of the work or after the completion or
abandonment thereof shall be referred to the sole arbitration of the General
Manager of National Thermal Power Corporation Ltd.; and if the General Manager
is unable or unwilling to act: to the sole arbitration of some other person
appointed by the Chairman and Managing Director; National Thermal Power
Corporation Ltd. willing to act as such arbitrator. There will be no objection
if the arbitrator so appointed is an employee of National Thermal Power
Corporation Ltd. and that he had to deal with the matters to which the contract
relates and that in the course his duties as such he had expressed views on all
or any of the matters in dispute or difference. The arbitrator to whom the matter
is originally referred being transferred or vacating his office or being unable
to act for any reason as aforesaid should act as arbitrator and if for any
reason, that is not possible; the matter is not to be referred to arbitration
as aforesaid the provision of the Arbitration Act, 1940 or any statutory
modification or reenactment thereof and the rules made thereunder and for the
time being in force shall apply to the arbitration proceeding under this
a term of the contract that the party invoking arbitration shall specify the
disputes or disputes to be referred to arbitration under this clause together
with the amount or amounts claimed in respect of each such dispute.
arbitrator(s) may from time to time with consent of the parties enlarge the
time, for making and publishing the award.
work under the Contract shall, if reasonable possible, continue during the
arbitration proceedings and no payment due or payable to the Contractor shall
be withheld on account of such proceedings.
Arbitrator shall be deemed to have entered on the reference on the date he
issues notice to both the parties fixing the date of the first hearing.
Arbitrator shall give a separate award in respect of each dispute or difference
referred to him.
venue of arbitration shall be such place as may be fixed by the Arbitrator in
his sole discretion.
award of the arbitrator shall be final, conclusive and binding on the all
parties to this contract. The cost of arbitration shall be borne by the parties
to the dispute, as may be decided by the arbitrator (s).
event of disputes or differences arising between one public sector enterprise
and a Govt. Department or between two public sector enterprises the above
stipulations shall not apply, the provisions of B.P.E. Office Memorandum No.
BPE/GL-001/76/MAN/2 (110-75-BPE(GM-1) dated 1st January 1976 or its amendments for arbitration
shall be applicable." Clause 52 of the agreement reads as follows:
The final bill shall be submitted by the contractor within three months of
physical completion of the works. No further claims shall be made by the
contractor after submission of the final bill and these shall be deemed to have
been waived and extinguished. Payment of those items of the bill in respect of
which there is no dispute and of items in dispute, for quantities and at rates
as approved by Engineer-in-Charge, shall be made within the period specified
hereunder, the period being reckoned from the date of receipt of the bill by the
Contract amount not exceeding Rs. 5 lakhs Four months.
Contract Amount exceeding Rs. 5 lakhs Six months.
payment of the amount of the final bills payable as aforesaid has been made,
the Contractor may if he so desires, reconsider his position in respect of the
disputed portion of the final bill and if he fails to do so within 90 days, his
disputed claim shall be dealt with as provided in contract." [Emphasis
supplied] The issues are required to be determined having regard to the facts
as which arise for consideration whether by reason of the act of the parties
the old contract was substituted by a new contract. Only in the event a new
contract came into being, the arbitration agreement cannot be invoked.
Valley Corporation vs. K.K. Kar [(1974) 1 SCC 141],this Court held:
appears to us that the question whether there has been a full and final
settlement of a claim under the contract is itself a dispute arising 'upon' or
'in relation to' or 'in connection with' the contract. These words are wide
enough to cover the dispute sought to be referred." Normally, an accord
and satisfaction by itself would not affect the arbitration clause but if the
dispute is that the contract itself does not subsist, the question of invoking
the arbitration clause may not arise. But in the event it be held that the
contract survives, recourse to the arbitration clause may be In Bharat Heavy Electricals
Limited (supra) this Court observed that whether there was discharge of the
contract by accord and satisfaction or not is a dispute arising out of a
contract and is liable to be referred to arbitration.
again in L.K. Ahuja (supra) Sabyasachi Mukharji, J., as the learned Chief
Justice then was, laid down the ingredients of Section 20 of the Arbitration
appears that these questions were discussed in the decision of the Calcutta
High Court in Jiwnani Engineering Works Pvt. Ltd. v. Union of India [AIR 1978
Cal 228] where one of us (Sabyasachi Mukharji, J.) was a party and which held
after discussing all these authorities that the question whether the claim
sought to be raised was barred by limitation or not, was not relevant for an
order under Section 20 of the Act. Therefore, there are to aspects.
whether the claim made in the arbitration is barred by limitation under the
relevant provisions of the Limitation Act and secondly, whether the claim made
for application under Section 20 is barred. In order to be a valid claim for
reference under Section 20 of the Arbitration Act, 1940, it is necessary that
there should be an arbitration agreement and secondly differences must arise to
which the agreement in question applied and, thirdly, that must be within time
as stipulated in Section 20 of the Act.
held that having regard to the fact that the existence of an arbitration
agreement was not denied and there had been an assertion of claim and denial
thereof, the matter would be arbitrable. It was observed:
order to be entitled to ask for a reference under Section 20 of the Act, there
must be an entitlement to money and a difference or dispute in respect of the
same. It is true that on completion of the work, right to get payment would
normally arise and it is also true that on settlement of the final bill, the
right to get further payment get weakened but the claim subsists and whether it
does subsist, is a matter which is arbitrable.
supplied] This aspect of the matter has also been considered in Jayesh Engineerng
Works (supra) wherein following L.K. Ahuja (supra) it was held:
any amount is due to be paid and how far the claim made by the appellant is
tenable are matters to be considered by the arbitrator. In fact, whether the
contract has been fully worked out and whether the payments have been made in
full and final settlement are questions to be considered by the arbitrator when
there is a dispute regarding the same." In M/s. P.K. Ramaiah and Company
(supra) the amount was received unconditionally. The full and final satisfaction
was acknowledged by a separate receipt in writing. In that situation the
following finding was recorded :
there is accord and satisfaction by final settlement of the claims. The
subsequent allegation of coercion is an afterthought and a devise to get over
the settlement of the dispute, acceptance of the payment and receipt
voluntarily given." We, however, may observe that the quotation from
Russell on Arbitration may not be apt inasmuch as at the stage of reference
what would be a good defence is not a matter to be taken into consideration.
again in Nathani Steels Ltd. (supra) the disputes and differences were amicably
settled by and between the parties and in that view of the matter it was held
that unless and until the statement is set aside, the arbitration clause cannot
is not the position here.
appellant herein did not raise a question that there has been a novation of
contract. The conduct of the parties as evidenced in their letters, as noticed
hereinbefore, clearly go to show that not only the final bill submitted by the
respondent was rejected but another final bill was prepared with a printed
format that a "No Demand Certificate" has been executed as other
final bill would not be paid. The respondent herein, as noticed hereinbefore,
categorically stated in its letter dated 20.12.1990 that as to under what
circumstances they were compelled to sign the said printed letter. It appeares
from the appendix appended to the judgment of the learned Trial Judge that the
said letter was filed even before the trial court. It is, therefore, not a case
whether the respondent's assertion of "under influence or coercion"
can be said to have been taken by way of an afterthought.
when rights and obligations of the parties are worked out the contract does not
come to an end inter alia for the purpose of determination of the disputes
arising thereunder, and, thus, the arbitration agreement can be invoked.
Although it may not be strictly in place but we cannot shut our eyes to the ground
reality that in the cases where a contractor has made huge investment, he
cannot afford not to take from the employer the amount under the bills, for
various reasons which may include discharge of his liability towards the banks,
financial institutions and other persons. In such a situation, the public
sector undertakings would have an upper hand. They would not ordinarily release
the money unless a 'No Demand Certificate' is signed. Each case, therefore, is
required to be considered on its own facts.
necessitas non habet legem is an old age maxim which means necessity knows no
law. A person may sometimes have to succumb to the pressure of other party to
the bargain who is on a stronger position.
may, however, hasten to add that such a case has to be made out and proved
before the Arbitrator for obtaining an award.
this stage, the Court, however, will only be concerned with the question
whether triable issues have been raised which are required to be determined by
leading to passing an order by the courts of law directing the parties to get
their disputes determined by domestic tribunal selected by them having regard
to the correspondences exchanged between the solicitors came up for ER 594]
wherein it was held:
I have already recounted, the plaintiff's solicitor may have had in mind that
if there were an arbitration clause various matters could be sorted out cheaply
and quickly under it. There is no evidence, in my judgment, that when he
drafted the terms of the arbitration clause he had in mind that it would not
apply to a repudiation of the contract by the defendants. He is a solicitor; he
is clearly an experienced solicitor; and he should have appreciated (and I feel
certain he did) that the arbitration clause which he drafted, and which was
accepted by the defendants, would cover every aspect of the contract, including
repudiation. But, apart altogether from what the plaintiff's solicitor had in
mind, there is no evidence at all as to what the defendant company had in mind
when it agreed to accept the arbitration clause, and it was wrong, in my
judgment, for the Judge to say that neither party had in mind that it would
apply to the summary dismissal of the plaintiff. It follows, therefore, that at
the very beginning of his judgment the judge misdirected himself as to the
construction of the arbitration clause and what it was mended to deal
with." Even correspondences marked as without prejudice may have to be
interpreted differently in different situations.
would be the effect of without prejudice offer has been Oliver L.J. speaking
for the Court of Appeals held:
the end, I think that the question of what meaning is given to the words
"without prejudice" is a matter of interpretation which is capable of
variation according to usage in the profession. It seems to be that, no issue
of public policy being involved, it would be wrong to say that the words were
given a meaning in 1889 which isimmutable ever after, bearing in mind that the
precise question with which we are concerned in this case did not arise in
Walker v. Wilsher, 23 Q.B.D. 335, and the court did not deal with it. I think
that the wide body of practice which undoubtedly exists must be treated as
indicating that the meaning to be given to the words is altered if the offer
contains the reservation relating to the use of the offer in relation to
costs." and Another [(1988) 1 All ER 549]:
rule which gives the protection of privilege to 'without prejudice'
correspondence 'depends partly on public policy, namely the need to facilitate
compromise, and partly on 'implied agreement' as Parker LJ stated in South Shropshire
DC v Amos  1 All ER 340 at 343,  1 WLR 1271 at 1277. The nature of
the implied agreement must depend on the meaning which is conventionally
attached to the phrase 'without prejudice'. The classic definition of the
phrase is contained in the judgment of Lindley LJ in Walker v. Wilsher (1889) 23 QBD 335 at
is the meaning of the words "without prejudice"? I think they mean
without prejudice to the position of the writer of the letter if the terms he
proposes are not accepted. If the terms proposed in the letter are accepted a
complete contract is established, and the letter, although written without
prejudice, operates to alter the old state of things and to establish a new
one.' Although this definition was not necessary for the facts of that
particular case and was therefore strictly obiter, it was expressly approved by
this court in Tomlin v Standard Telephones and Cables Ltd.  3 All ER 201
at 204, 205,  1 WLR 1378 at 1383, 1385 per Danckwerts LJ and Ormrod J.
he dissented in the result, on this point Ormrod J agreed with the majority.)
The definition was further cited with approval by both Oliver and Fox LJJ in
this court in Cutts v. Head  1 All ER 597 at 603, 610,  Ch. 290 at
judgment, it may be taken as an accurate statement of the meaning of 'without
prejudice', if that phrase be used without more. It is open to the parties to
the correspondence to give the phrase a somewhat different meaning, e.g. where
they reserve the right to bring an offer made 'without prejudice' to the
attention of the court on the question of costs if the offer be not accepted
(See Cutts v. Head) but subject to any such modification as may be agreed
between the parties, that is the meaning of the phrase. In particular, subject
to any such modification, the parties must be taken to have intended and agreed
that the privilege will cease if and when the negotiations 'without prejudice'
come to fruition in a concluded agreement." Meaning the words
"without prejudice" come up for consideration before this Court in
Superintendent (Tech. I) Central 113] wherein it has been held:
Appellate Collector has clearly used the words "without prejudice"
which also indicate that the order of the Collector was not final and
irrevocable. The term "without prejduce" has been defined in Black's
Law Dictionary as follows:
an offer or admission is made 'without prejduce', or a motion is defined or a
bill in equity dismissed 'without prejudice', it is meant as a declaration that
no rights or privileges of the party concerned are to be considered as thereby
waived or lost, except in so far as may be expressly conceded or decided. See,
also Dismissal Without Prejudice.
in Wharton's Law Lexicon the author while interpreting the term 'without
prejudice' observed as follows:
words import an understanding that if the negotiation fails, nothing that has
passed shall be taken advantage of thereafter; so, if a defendant offers,
'without prejudice', to pay half the claim, the plaintiff must not only rely on
the offer as an admission of his having a right to some payment.
is that nothing written or said 'without prejudice' can be considered at the
trial without the consent of both parties not even by a Judge in determining
whether or not there is good cause for depriving a successful litigant of costs
. The word is also frequently used without the foregoing implications in
statutes and inter partes to exclude or save transactions, acts and rights from
the consequences of a stated proposition and so as to mean 'not affecting',
'saving' or 'excepting'.
short, therefore, the implication of the term 'without prejudice' means
the cause or the matter has not been decided on merits,
fresh proceedings according to law were not barred."
appellant has in its letter dated 20th December, 1990 has used the term
'without prejudice'. It has explained the situation under which the amount
under the 'No Demand Certificate' had to be signed. The question may have to be
considered from that angle. Furthermore, the question as to whether the
respondent has waived its contractual right to receive the amount or is
otherwise estoppel from pleading otherwise will itself be a fact which has to
be determined by the arbitral tribunal.
Laws of England, 4th Edition, Vol.16 (Reissue) para
957 at page 844 it is stated:
the principle that a person may not approbate and reprobate a special species
of estoppel has arisen. The principle that a person may not approbate and
reprobate express two propositions:
That the person in question, having a choice between two courses of conduct is
to be treated as having made an election from which he cannot resile.
That he will be regarded, in general at any rate, as having so elected unless
he has taken a benefit under or arising out of the course of conduct, which he
has first pursued and with which his subsequent conduct is inconsistent."
In American Jurisprudence, 2nd Edition, Volume 28, 1966, Page 677-680 it is
by the acceptance of benefits:
is frequently based upon the acceptance and retention, by one having knowledge
or notice of the facts, of benefits from a transaction, contract, instrument,
regulation which he might have rejected or contested. This doctrine is
obviously a branch of the rule against assuming inconsistent positions.
general principle, one who knowingly accepts the benefits of a contract or
conveyance is estopped to deny the validity or binding effect on him of such
contract or conveyance.
rule has to be applied to do equity and must not be applied in such a manner as
to violate the principles of right and good conscience." The fact
situation in the present case, would lead to the conclusion that the
arbitration agreement subsists because:
Disputes as regard final bill arose prior to its acceptance thereof in view the
fact that the same was prepared by the respondent but was not agreed upon in
its entirety by the appellant herein;
The appellant has not pleaded that upon submission of the final bill by the
respondent herein any negotiation or settlement took place as a result whereof
the final bill, as prepared by the appellant, was accepted by the respondent
unequivocally and without any reservation therefor;
The respondent herein immediately after receiving the payment of the final bill,
lodged its protest and reiterated its claims.
Interpretation and/or application of clause 52 of the agreement would
constitute a dispute which would fall for consideration of the arbitrator.
The effect of the correspondences between the parties would have to be
determined by the arbitrator, particularly as regard the claim of the
respondent that the final bill was accepted by it without prejudice.
The appellant never made out a case that any novation of the contract agreement
took place or the the contract agreement was substituted by a new agreement.
Only in the event, a case of creation of new agreement is made out the question
of challenging the same by the respondent would have arisen.
The conduct of the appellant would show that on receipt of the notice of the
respondent through its advocate dated 21.12.1991 the same was not rejected
outright but existence of disputes was accepted and the matter was sought to be
referred to the arbitration.
Only when the clarificatory letter was issued the plea of settlement of final
bill was raised.
The finding of the High Court that a prima facie in the sense that there are triable
issues before the Arbitrator so as to invoke the provisions of Section 20 of
the Arbitration Act, 1940 cannot be said to be perverse or unreasonable so as
to warrant interference in exercise of extraordinary jurisdiction under Article
136 of the Constitution of India.
The jurisdiction of the arbitrator under the 1940 Act although emanates from
the reference, it is trite, that in a given situation the arbitrator can
determine all questions of law and fact including the construction of the
contract agreement. (See Pure Helium India Pvt. Ltd. SCALE 553).
The cases cited by the learned counsel for the appellant [P.K. Ramaiah and
Company (supra) and Nathani Steels (supra)] would show that the decisions
therein were rendered having regard to the finding of fact that the contract
agreement containing the arbitrator clause was substituted by another agreement.
Such a question has to be considered and determined in each individual case
having regard to the fact situation obtaining therein.
the reasons aforementioned, we are of the opinion that there is no infirmity in
the impugned judgment. This appeal is, therefore, dismissed. No Costs.