2000 (10) TMI 909 - HC - Companies Law

Summary

Issues:
1. Whether the letter dated 25-3-1994, indicating full and final payment, bars the initiation of arbitration proceedings.
2. Whether the absence of consent or presence of coercion and fraud invalidate the full and final certification.
3. Whether disputes challenging accounts should be referred to arbitration.
4. Whether the petitioner's failure to assail the validity of the letter disentitles them from raising arbitrable points.

Analysis:

1. The petitioner issued a letter indicating full and final payment, but failed to address the circumstances of its issuance. The court emphasized the significance of such letters and the need for explicit pleading regarding coercion or absence of free consent to challenge their validity. The court cited precedents highlighting that the arbitration clause may subsist despite full settlement if there are allegations of coercion, mistake, or misrepresentation.

2. The court noted that the petitioner's failure to explain why the full and final certification was unenforceable, due to absence of consent or coercion, led to the conclusion that the contract had ended, rendering the arbitration clause ineffective. The court distinguished cases where a letter of full and final accord was exchanged without indicating coercion or fraud, emphasizing the legal efficacy of such agreements.

3. The respondent challenged the accounts drawn by the petitioner, highlighting the petitioner's duty to explicitly state if the letter indicating full and final payment was extracted. The court emphasized the importance of protecting parties from signing such certifications to secure payment, while also honoring agreements made willingly and without fraud. The court referenced arbitration clauses and observed that no arbitrable dispute arises if parties acknowledge and accept final settlements.

4. The court concluded that the petitioner's failure to challenge the validity of the letter in specific terms disentitled them from raising arbitrable points. Had the pleadings indicated coercion or fraud, the dispute would have been referred for arbitration. The court dismissed the petition and all pending applications, highlighting the petitioner's obligation to address the validity of the full and final certification explicitly.