1993 (10) TMI 346 - SC - Companies Law

Whether there exists arbitrable dispute between the parties. Clause 57 of the contract providing arbitration? Held that - It is not shown to us that the Chief Construction Manager was competent to acknowledge the liability or an authority to refer the dispute for arbitration. So neither his letters binds the respondent nor operates as an estoppel. Admittedly the full and final satisfaction was acknowledged by a receipt in writing and the amount was received unconditionally. Thus there is accord and satisfaction-by final settlement of the claims. The subsequent allegation of coercion is an after thought and a devise to get over the settlement of the dispute, acceptance of the payment and receipt voluntarily given. In Russal on Arbitration, 19th Ed., p. 396 it is stated that an accord and satisfaction may be pleaded in an action on award and will constitute a good defence. Accordingly, we hold that the appellant having acknowledged the settlement and also accepted measurements and having received the amount in full and final settlement of the claim, there is accord and satisfaction. There is no existing arbitrable dispute for reference to the arbitration. The High Court is, therefore, right in its finding in this behalf. The appeals are dismissed but in the circumstances without costs.

Issues:
1. Interpretation of contract terms regarding arbitration clause.
2. Acknowledgment of full and final settlement of claim.
3. Estoppel and coercion in obtaining settlement.
4. Existence of arbitrable dispute post-settlement.
5. Application of accord and satisfaction doctrine.

Analysis:
1. The case involved a dispute over a contract for site leveling and grading for a thermal power project. The appellant claimed to have completed the work within the stipulated time frame but was denied further payment. The issue arose regarding the interpretation of the arbitration clause in the contract (Clause 57), which mandated arbitration for disputes arising out of the contract terms. The clause specified the process for appointing an arbitrator in case of a dispute, emphasizing the need for a subsisting dispute for arbitration to be initiated.

2. The appellant's contention was that the full and final settlement of the claim was not unconditional as he disputed the settlement immediately after acknowledging it. The respondent argued that the settlement, acknowledged by the appellant, precluded the existence of any pending dispute for arbitration. The High Court found that the appellant had accepted the final payment in full settlement of the contract, thereby negating the need for arbitration due to the absence of an arbitrable dispute.

3. The appellant further argued estoppel against the respondent, claiming that the respondent's actions, including promises to refer the dispute for arbitration, created an obligation to arbitrate. The appellant alleged coercion in obtaining the settlement, seeking to invalidate the settlement and trigger arbitration. However, the court found that the acknowledgment of final settlement through a written receipt and acceptance of payment constituted accord and satisfaction, barring the existence of an arbitrable dispute.

4. The court referenced previous judgments to support its finding that in cases where there was no receipt accepting the settlement, disputes remained arbitrable. However, in the present case, the appellant had unconditionally acknowledged the settlement, accepted the payment, and received the amount in full and final settlement. Therefore, the court held that no subsisting dispute existed post-settlement, rendering arbitration unnecessary.

5. Ultimately, the court dismissed the appeal, upholding the High Court's decision that there was no arbitrable dispute due to the accord and satisfaction resulting from the acknowledgment and acceptance of the settlement. The court emphasized that the subsequent claim of coercion was an afterthought and did not negate the voluntary acceptance of the settlement. Consequently, the court found no grounds for arbitration, affirming the absence of a dispute eligible for arbitration.

This detailed analysis of the judgment highlights the key legal issues, interpretations of contract terms, acknowledgment of settlement, and the application of relevant legal doctrines in determining the need for arbitration in the case.

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