Coal India Limited Vs. M/S. Paul Builders - Court Judgment

A. Lala, J.

1. This is an application under section 33 of the Arbitration Act challenging the scope and effect of the Arbitration agreement dated 26th September, 1987 amongst various other reliefs.

2. According to the petitioner, on arbitrable dispute exists which can be adjudicated by the learned Arbitrator appointed herein. In support of such submission Mr. P.C. Sen, learned counsel appearing for the petitioner has drawn my attention to the page 26A of the petition being photocopy of a document and stated that there is no claim outstanding as against the work and the respondent received tha amount in full and fianl settlement of the claim. Acceptance by the respondent is without demur. Therefore the principle of estoppel applies againsl the respondents from making any further claim whatsoever in connection thereto and/or arising out of the contract including damages after such acceptance without demur. In support of his contention he has referred a judgment reported in 1994 Supp (3) SCC 126 (P.K. Ramaiah and Company v. Chairman and Managing Director National Thermal Power Corporation).

3. Mr. Pradip Kumar Dutta, learned counsel appearing for the respondent joined issues therein by saying that the judgment of the Supreme Court as above is restricted only on the factual circumstances of that particular case wherein reference to an arbitration is yet to be started. In the instant case that chapter is over when the petitioner participated in the proceeding before the court for such reference and when upon hearing the parties, court was pleased to appoint an Arbitrator and referred the dispute before him. Moreover in the instant case at least 25 effective sittings were held before the Arbitrator upon being framing of issues where the petitioner is very much party. Witness on behalf of the respondent was examined. In answering various questions in cross-examination and In specific of the Arbitrator being question No. 453 the witness deposed 'my claims were not included in the final bill -- whatever is appearing in this bill I have accepted as full and final settlement. I have stated earlier also that I have no outstanding claim against the final bill--but I have other claims which are not related with the final bill.' The Interpretation of Mr. Dutta is that the claim in respect of the final bill may be settled but that does not necessarily mean his client has given up all other claims arising within the scope and ambit of the widely covered Arbitration clause.

4. In support of his agrument Mr. Dutta referred a judgment reported in : [1987]3SCR569 (Prasun Roy v. The Calcutta Metropolitan Development Authority and Another) wherein the Supreme Court held that though a party is aware from the beginning that by reason of some disability the matter Is legally incapable of being submitted to arbitration, participates in arbitration proceedings without protest and fully avails of the entire arbitration proceedings and then when he sees that the award has gone against him comes forward to challenge the whole of the arbitration proceedings as without jurisdiction on the ground of a known disability, the same cannot be allowed. Principle is that a party shall not be allowed to blow, hot and cold simultaneously. Long participation and acquiescence in the proceeding preclude such a party from contending that the proceeding was without jurisdiction.

5. Mr. Dutta also referred another judgment reported in : AIR1988SC2045 (M/s. Nilkantan & Bors. Construction v. Superintending Engineer, National Highways, Salem & Ors.) which supports the earlier decision and says that if the parties to the reference either agree to the method of appointment or afterwards acquiescence in the appointment made with full knowledge of all the circumstances, they will be precluded from objecting to such appointment as invalidating subsequent proceedings.

6. Mr. Dutta further cited a judgment reported in : [1974]2SCR240 (Damodar Valley Corporation v. K.K. Kar). The above case was considered in the latter judgment reported in 1994 Supp (3) SCC 126 but factually distinguished by saying '.... while submitting his bill did not give the receipt as desired' which is the crux of the case. According to Mr. Sen there is marked distinction between the claim with and without demur. But other aspect of the judgment reported in : [1974]2SCR240 should not be escaped from the notice which is that the question whether there had been a full and final settlement of a claim under the contract was itself a dispute arising 'upon' or in relation to or 'in connection with' the contract. A claim for damges was a dispute or difference which arose between the parties and was 'upon' or 'in relation to' or 'in connection with' the contract and the reference to the arbitrator by one parly was not barred. However in reply to the submission Mr. Sen argued that the petitioner has statutory right to come before the court challenging the scope and effect of the agreement at any point of lime. Secondly the claim is without demur, therefore no claim lies before the arbitrator. Thirdly scope and effect of the judgment reported in : [1987]3SCR569 is in respect of disability which is different from arbitrability of the dispute as such above judgment has no application in the present case.

7. I have carefully considered rival contentions of the parties to come to the following findings :

(a) No doubt the petitioner has statutory right to come before this court challenging the existence or validity of the arbitration agreement of an award or to have the effect of either determined, in other words, before or after passing the award but at what point of time court will interference that is dependable upon the facts and circumstances of each case. Balance of convenience speaks that in the present situation law of acquiescence prevails over question of arbltrability of the dispute.

(b) Question of acceptance of payment is in full and final settlement or only in respect of final bill leaving others, in other words, with or without demur is triable issue before the learned Arbitrator. The court cannot interfere with the proceeding before the learned Arbitrator at this stage and prejudge the issue of accord and satisfaction.

(c) The question of disability cannot be independent from the arbitrability. If there is no arbitrable issue before an Arbitrator, such Arbitrator may be disable to act. Therefore disability and arbitrability may be supplementary to each other as and when occasion arises like the present situation.

8. Therefore, I hold in favour of the respondent. This applicalion is hereby dismissed but no order as to costs.

9. As a result of such dismissal lime to make an published award by the learned Arbitrator is extended for 4(four) months from the date of communication of the order but with a summery power so that the proceeding may be expedited by the learned Arbitrator without awaiting for procedural formalities and in the manner which will be just fit, proper and equitable for such expeditious proceedings for making and publishing the award within such period.

In view as above, the application being A.P. No. 83 of 1987 is also disposed off.

Arbitrator and all parties are to act on a xeroxed signed copy of the operative part of the order upon usual undertaking.

10. Application disposed off