M/S Modern Suppliers vs Union Of India & Anr
2009 Latest Caselaw 915 Del

     *IN THE HIGH COURT OF DELHI AT NEW DELHI

+                   A.A. No. 403/2007


%20.03.2009                       Date of decision: 20.03.2009


M/S MODERN SUPPLIERS                               .......     Petitioner
                        Through: Mr. Gurdeep Pal Singh, Advocate

                                Versus

UNION OF INDIA & ANR.                    .......          Respondents
                        Through: Mr Jitendra Kumar Singh, Advocate


CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

1.     Whether reporters of Local papers may
       be allowed to see the judgment?       No

2.     To be referred to the reporter or not?        No

3.     Whether the judgment should be reported
       in the Digest?                                      No


RAJIV SAHAI ENDLAW, J.

1. The disputes between the parties are stated to be arising out of

a works contract dated 22nd November, 1996 placed by the

respondent Railways on the petitioner. The date of completion

thereof was on 21st May, 1999. The work is stated to have been

completed by 31st March, 2002. It is the plea of the petitioner that

the respondent however delayed the preparation of the final bill,

even after the maintenance period of six months expired on 30th

September, 2002. It is, further the case of the petitioner that the

petitioner was informed that unless the petitioner was ready and

willing to sign the addendum and corrigendum and also on

supplementary agreement appended with the main agreement, the

final payment would not be released to the petitioner. The petitioner

further claims to have been informed that to be able to receive the

final payment it will have to relinquish its claims for escalation, extra

expenses, refund of recoveries etc. The petitioner claims to have

written a letter dated 16th January, 2003 to the respondent in this

regard. Though the receipt of the said letter is not denied, no reply

is stated to have been given to the same. The respondent is stated to

have prepared a payment of Rs.3,86,062/- under the final bill. The

same was released to the petitioner on 24th January, 2003, according

to the petitioner after the petitioner had signed the supplementary

agreement, addendum etc. It is further the case of the petitioner that

it wanted to sign the final bill under protest but was not permitted to

do so.

2. The petitioner after receiving payment on 24th January, 2003,

for the first time, wrote a letter dated 10th April, 2003 stating that it

was compelled to sign the final bill and other documents. The

petitioner by the said letter also invoked the arbitration clause.

3. The petitioner followed up with its letter dated 2nd December,

2003. The respondent Railways vide its letter dated 13th January,

2004 informed the petitioner that the petitioner having signed the

No Claim Certificate on its final bill and having also singed the

supplementary agreement, the arbitration clause contained in the

principal agreement had ceased to have any effect and was deemed

to be non-existent for all purposes.

4. The petitioner made representations dated 11th February,

2004, 3rd March, 2004 & 20th July, 2004. Finally, a letter dated 21st

September, 2004 was sent by the respondent stating that the matter

had been re-examined and the claims found not referable to

arbitration being excepted matter under clause of 63 of GCC1999

applicable to the contract. Reference was also made to the earlier

letter dated 13th January, 2004 which was stated to be holding good.

5. The petitioner sent another letter dated 10th November, 2004

stating that GCC1989 and not GCC1999 was applicable to the

contract and again asking the respondent to re-consider the matter.

6. The respondent vide its letter dated 3rd December, 2004 wrote

that there was a typographical error in the earlier letter dated 21st

September, 2004 and accepting that GCC 1989 was applicable. It

was further conveyed that the office letter dated 13th January, 2004

held good.

7. There is no communication on record after 3rd December,

2004. Ultimately this application under Section 11(6) of the Act

came to be filed on 10th September, 2007. The respondent Railways

filed a reply contending inter-alia that the claims made by the

petitioner for Rs.4,00,000/- for balance amount of escalation and

Rs.1,50,000/- as increased cost after expiry of original completion

date and till execution and completion of works are excepted matters

covered by clauses 21.5 and 9.2 of the special conditions of contract.

Reliance in this regard is placed on General Manager, Northern

Railways Vs. Sarvesh Chopra AIR 2002 SC 1272.

8. It is further pleaded that as many as nine extensions for

completion of work were granted to the petitioner with frozen

indices PVC as of 15th September, 2001. It is further pleaded that

the petitioner after signing the supplementary agreement and in

which it is recorded that the arbitration clause contained in the

principal agreement shall cease to have any effect and shall be non

existence for all purposes is not entitled to invoke the arbitration

clause. The other claims of the petitioners are also disputed but we

are in this application not concerned with the said disputes between

the parties.

9. I have recently in M/s S.K. Sharma Vs. Union of India

MANU/DE/0147/2009 dealt with the plea of maintainability of

arbitration after signing such an agreement. Relying upon National

Insurance Co. Ltd. Vs. Boghra Polyfab Pvt. Ltd.

MANU/SC/4056/2008 it was concluded that depending upon the

facts of each case and conduct of the parties it has to be determined

whether the full and final settlement discharges the arbitration

agreement in the original contract or not.

10. As far as the present case is concerned, admittedly the

petitioner, prior to signing the agreement rescinding the arbitration

clause, had vide letter dated 16th January, 2003 written that it was

being coerced to sign the said documents to be able to receive the

amounts due according to the respondent also to the petitioner

under the final bill. The petitioner had in the said letter also

informed the respondent that it will be entitled to invoke the

arbitration clause even after signing such documents. It is not

disputed that the final payment was released to the petitioner only

after it signed the said documents. The petitioner within a month of

receiving the final payment invoked the arbitration clause on 10 th

April, 2003. All these factors show that the full and final settlement

and/or recession of contract was not consensual and there was an

element of coercion in the same, which has been deprecated by the

Apex Court in Boghra Polyfab (supra).

11. The respondent Railways, however, vide letter dated 13th

January, 2004 rightly or wrongly refused the request of the

petitioner for arbitration. What is of significance is that the petition

has been filed after more than three years thereof, on 10th

September, 2007. Of course, the respondent even after 13th January,

2004, on 21st September, 2004 and 3rd December, 2004 both within

three years prior to the institution of the petition again refused the

request of the petitioner for arbitration, however, relying upon the

earlier letter dated 13th January, 2004 and also stating therein that

two of the claims fell within excepted matters. The petitioner even

after the last letter waited for two years and nine months to file the

petition.

12. In my view, the petitioner is not entitled to succeed on this

ground alone. The petitioner has allowed the matter to become stale.

The Apex court in SBP & Co. Vs. Patel Engineering Ltd. (2005) 8

SCC 618 has held that while exercising the power under Section

11(6) the question whether the claim was a dead one or a long

barred claim that was sought to be resurrected and whether the

parties had concluded the transaction by recording satisfaction of

their mutual rights and applications or by receiving the final

payment without objection has to be adjudicated. I find the claim in

the present case in the entirety of the facts and circumstances to be

such.

13. There was an element of finality to the letter dated 13th

January, 2004 of the respondent. The petitioner merely by making

repeated representations cannot revive a claim which has become

time barred. The record does not show that there was anything in

the conduct of the respondent to lead the petitioner to believe that

his claims were being considered. Merely because the respondent

Railways wrote letters dated 21st September, 2004 and 3rd

December, 2004 reiterating the stand taken in the letter dated 13th

January, 2004 and also adding thereto would not revive a claim

which had become time barred.

14. The nature of the claim of the petitioner is also relevant in this

regard. For the petitioner to succeed on the plea of coercion, there

has to be an element of urgency. The petitioner could have invoked

the arbitration clause at the time of writing the letter dated 16th

January, 2003 i.e., before signing full and final settlement; but the

petitioner did not do so because it had the urgency to receive the

monies due and which according to the petitioner were being denied

to it. If that be the position, then the petitioner ought to have acted

in right earnest after receiving the payments. The conduct of the

petitioner of having slept over its rights, if any, for a period over

three years disentitles the petitioner from after such long lapse of

time approaching this Hon'ble court for under Section 11(6) of the

Act. The petitioner by such long lapse of time has lost the right to

agitate coercion in the matter of signing of the supplementary

agreement, rescinding the arbitration agreement and full and final

settlement and has allowed the said documents to attain finality.

15. This court in Rajesh Kumar Garg Vs MCD 149 (2008) DLT

343 held the limitation for applying under Section 11(6) to be three

years from the accrual of cause of action. I find the cause of action

to have accrued to the petitioner in the present case, in any case on

13th January, 2004. The petition is barred by time.

16. Having held so, there is no need to adjudicate the plea of the

respondent of two of the claims falling in excepted matter.

17. The petition/application is dismissed. No costs.

RAJIV SAHAI ENDLAW JUDGE March 20, 2009 PP