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TMI Blog2019 (11) TMI 717X X X X Extracts X X X X X X X X Extracts X X X X ..... other hand, it has come on record that all concerned gave effect to the terms set out in AoA by offering revised rates to SDJV in conformity with the agreed rates referred to in AoA and which payment was received and availed of by SDJV/SSPPL without any demur. Whether the AoA has the effect of undoing and abrogating the arbitration clause predicated in the Contract Agreement? - HELD THAT:- It is not unknown in commercial world that the parties amend original contract and even give up their claims under the subsisting agreement. The case on hand is one such case where the parties consciously and with full understanding executed AoA whereby the contractor gave up all his claims and consented to the new arrangement specified in AoA including that there will be no arbitration for the settlement of any claims by the contractor in future. Having chosen to adopt that path, it is not open to the contractor to now take recourse to arbitration process or to resurrect the claim which has been resolved in terms of the amended agreement, after availing of steep revision of rates being condition precedent. The impugned judgment of the High Court is set aside - Appeal allowed. - CIVIL A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f AIL, by executing a Power of Attorney (for short, PoA ) dated 09.09.2005 in favour of SSPPL, in accordance with Clause 3.3 of the JVA. 4. SDJV was successful being the highest bidder and was awarded tender for the said project on 17.01.2006. That was followed by a Contract Agreement dated 09.03.2006 (for short, Contract Agreement ) for executing the stated contract between the WAPCOSL and SDJV. Along with the said agreement, WAPCOSL and SDJV signed certain documents to be read with the Contract Agreement and to form part and parcel thereof. Out of several such documents, Conditions of Particular Applications (for short CoPA ) is the relevant one for the purpose of this case. Clause 20.1 thereof deals with Contractor s claim and Clause 20.6 deals with Arbitration and it is under these clauses, the respondent No. 1 has rested its case, that is, arbitrability and the power to invoke arbitration. 5. Be that as it may, the consideration of the Contract Agreement was ₹ 253.84 Crores. However, the same was raised to ₹ 470.40 Crores, on a representation made by SDJV. Once again, there was further change by way of revised rates, after a meeti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or acknowledged by both the parties (AIL and SSPPL) shall be valid and be entertained by WAPCOSL. 10. Notwithstanding the abovementioned letters sent by AIL, upon rejection of the claims of SDJV by the Technical Committee, on 28.10.2016, SSPPL, unilaterally, espousing claims of SDJV proceeded to invoke the arbitration process, under clause 20.6 of CoPA and also appointed a nominee arbitrator, vide letter dated 12.11.2016. WAPCOSL, in response, vide letter dated 05.12.2016, recorded that since SDJV is a joint venture entity and the authority of SSPPL to represent AIL has been revoked, the appointment of arbitrator by SSPPL, unilaterally, is illegal in terms of clause 4.2 of the Contract Agreement and clause 3.2 of the JVA. 11. Resultantly, SSPPL filed a petition on behalf of SDJV against WAPCOSL under Section 11(6) of the Arbitration Act (bearing number Arb. P. 810/2016) before the High Court of Delhi, wherein it has been asserted that the PoA dated 15.07.2005 given by AIL in its favour is still in force and forms part of the Contract Agreement dated 09.03.2006. This assertion is factually incorrect. In that, the PoA was executed as a follow up docume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was also impressed by the fact that SSPPL had 95 per cent shareholding in SDJV as against only 5 per cent shareholding of AIL, the other partner. For that reason, it went on to observe that AIL cannot be permitted to derail the arbitration process commenced for and on behalf of SDJV through SSPPL. The High Court was also impressed by the fact that despite the execution of AoA, the Technical Committee entertained the appeals filed by SDJV in respect of certain items. That goes to show that even the Technical Committee was of the view that the dispensation regarding settlement of further claims of SDJV could be pursued and the arrangement arrived under AoA between the parties cannot be treated as full and final settlement. Resultantly, SDJV was well within its rights to take recourse to arbitration for resolution of the disputes in that regard. Further, the fact as to whether SDJV was entitled for the relief, regarding the claims raised, was a matter within the exclusive domain of the Arbitral Tribunal. The High Court, therefore, allowed the Arbitration Petition and appointed a sole Arbitrator for resolution of the disputes between the parties. 16. Feeling aggrieved, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 20.6 of FIDIC. Going by the Contract Agreement read with relevant clauses of CoPA and FIDIC, it is obvious that the parties had agreed for resolution of all their differences or disputes arising from the Contract Agreement by process of settlement of disputes and arbitration. 20. In the present case, however, in due course, because of fortuitous situation, the parties had to agree to amend certain terms and conditions of the Contract Agreement and to provide for revised contract rates. That was done after due negotiations, as is evinced from the correspondence exchanged between SDJV and WAPCOSL vide letters dated 15.09.2011 and 17.09.2012 and the recitals of the AoA itself. Finally, the parties (SDJV and WAPCOSL in particular) executed a formal Amendment of Agreement (AoA) on 09.06.2015. The same records the new arrangement eventually agreed upon between the parties. It will be useful to first refer to the preamble of the AoA which reads thus: 1.0 Preamble Consequent upon the modification of rates of certain Items of works in January 2013 which is subject to special terms and conditions, the Amendment to the Original Agreemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct clauses the decision of CMD, WAPCOS will be final and binding to the Contractor. . 22. It may be useful to now advert to clauses 1.2 and 1.3 of Section 01 of the AoA, which read thus: REVISED COST AND RELATED TERMS AND CONDITIONS Clause 1.0 . .. .. The revision of cost/modified rates of above item are subject to the following: 1.1 . . . 1.2 The balance pending claims of Contractor stands buried and it was agreed by the Contractor that, no claims will be raised by Contractor on any of the pending/settled claims/other claims resulting out of the correspondences made so far and there will be no arbitration for the settlement of claims. It is agreed that the Contractor shall not be paid any further amount on claim/additional rate for new item of work settled or pending over and above the payments already released to the contractor. 1.3 In future, no claim of Contractor on any account shall be entertained. However any claim arising out of force majeure shall be examined. Here, we may also take note of Section02 of A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... makes it amply clear that any other clauses/items other than the AoA will be governed by Original Agreement (Contract Agreement) and in case of any dispute, the decision of CMD, WAPCOSL will be final and binding on the contractor. Clause 1.5 of the AoA makes it further clear that in case of any inconsistency between the Contract Agreement and AoA, the terms specified in AoA will prevail. Clause 1.6 of the preamble postulates that in case of any dispute on technical specifications and interpretation of any contract clauses, the decision of CMD, WAPCOSL will be final and binding on the contractor. Section01 of AoA then deals with revised cost and related terms and conditions. Clause 1.0 thereof provides that the revision of cost/modified rates of the items referred to therein will be subject to clauses 1.2 and 1.3, amongst others. Clause 1.2 of Section01 envisages that the balance pending claims of contractor stands buried and it has been agreed by the contractor, that no claims will be raised by the contractor on any of the pending/settled claims/other claims resulting out of correspondences made so far and there will be no arbitration for the settlement of claims. Clause 1.3 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ully completed before that date. It is also not disputed that the project was inaugurated by the Prime Minister of India and the President of Afghanistan on 04.06.2016. The terms agreed upon between the parties and as recorded in AoA dated 09.06.2015 was the outcome of steep revision of rates. These circumstances are germane whilst answering the question under consideration. We have no manner of doubt that the purport of the terms and conditions incorporated in the AoA dated 09.06.2015 are unambiguous expression of intent to supersede the arbitration agreement incorporated in Contract Agreement dated 09.03.2006 and to resolve all the contentious issues regarding the claims of SDJV, in the manner specified therein. 29. The High Court, however, rejected the argument of the appellant(s) herein on the following basis: 10.5 What is, however, not disputed is that as a matter of fact, the J.V. entity had lodged its claim with the Engineer appointed under the C.A. and upon the Engineer repelling its claim, five appeals were lodged with the Technical Committee which rejected the same by way of a common order dated 28.10.2016. A perusal of the order of the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SDJV, that in our view cannot undo the effect of terms and conditions of AoA which had annulled the arbitration clause in the Contract Agreement. There are at least two other tangible reasons to overturn the stated opinion of the High Court. First, the Technical Committee was, as a matter of fact, constituted under clause 2.1 of Section 02 of AoA by the CMD of WAPCOSL, as is evident from the communication dated 21.10.2015 sent by WAPCOSL to SDJV. That fact has been restated in the subsequent correspondence. The Technical Committee was, therefore, not constituted in terms of Clause 20.1 of CoPA as has been erroneously assumed by the High Court. Second, the fact that the Technical Committee processed the appeals instituted by SDJV does not mean that WAPCOSL had waived the terms and conditions of AoA, in particular clauses 1.2 and 1.3 of Section01 thereof. No averment is found in the Arbitration Petition to even remotely suggest that it was a case of waiver express or tacit, by WAPCOSL qua the stipulation specified in clauses 1.2 and 1.3 of Section01 of AoA. Hence, this reason weighed with the High Court is manifestly wrong and cannot stand the test of judicial scrutiny. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement and the same being untenable in law, it must necessarily follow that the Arbitration Petition filed for and on behalf of SDJV through SSPPL was not maintainable. In other words, the Arbitration Petition should have been rejected for lack of subsisting or existing arbitration agreement between the parties on the date of filing of Arbitration Petition. 34. It is not unknown in commercial world that the parties amend original contract and even give up their claims under the subsisting agreement. The case on hand is one such case where the parties consciously and with full understanding executed AoA whereby the contractor gave up all his claims and consented to the new arrangement specified in AoA including that there will be no arbitration for the settlement of any claims by the contractor in future. Having chosen to adopt that path, it is not open to the contractor to now take recourse to arbitration process or to resurrect the claim which has been resolved in terms of the amended agreement, after availing of steep revision of rates being condition precedent. We may usefully rely on the underlying principle expounded by this Court in Damodar Valley Corporat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) . . . (iv) . . . (v) A claimant makes a claim for a huge sum, by way of damages. The respondent disputes the claim. The claimant who is keen to have a settlement and avoid litigation, voluntarily reduces the claim and requests for settlement. The respondent agrees and settles the claim and obtains a full and final discharge voucher. Here even if the claimant might have agreed for settlement due to financial compulsions and commercial pressure or economic duress, the decision was his free choice. There was no threat, coercion or compulsion by the respondent. Therefore, the accord and satisfaction is binding and valid and there cannot be any subsequent claim or reference to arbitration. Further, in Nathani Steels Ltd. v. Associated Constructions 1995 Supp (3) SCC 324, this Court observed as follows: 3......Even otherwise we feel that once the parties have arrived at a settlement in respect of any dispute or difference arising under a contract and that dispute or the difference is amicably settled by way of a final settlement by and between the parties, unless that settlement is set aside ..... X X X X Extracts X X X X X X X X Extracts X X X X
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