Kunj Bihari Construction Co. Pvt. ... vs Bptp Ltd.
2009 Latest Caselaw 3820 Del

*            IN THE HIGH COURT OF DELHI AT NEW DELHI


                                              Date of Reserve: September 11, 2009
                                              Date of Order: September 17, 2009

+Arb.283/2008
%                                                           17.09.2009
     Kunj Bihari Construction Co. Pvt. Ltd.                 ...Petitioner
     Through: Mr. S.D. Singh with Mr. Rahul Kumar Singh, Advocates

       Versus

       BPTP Ltd.                                             ...Respondent
       Through: Mr. A.K. Thakur with Mr. Rajiv Arora, Advocates


       JUSTICE SHIV NARAYAN DHINGRA

1.     Whether reporters of local papers may be allowed to see the judgment?

2.     To be referred to the reporter or not?

3.     Whether judgment should be reported in Digest?


       JUDGMENT

1. The petitioner has preferred this petition under Section 11(6) of the

Arbitration & Conciliation Act, 1996 seeking appointment of an arbitrator in

terms of arbitration agreement between the parties for resolution of disputes

between the parties. The petitioner had undertaken civil construction work for

the respondent under a contract and the petitioner's contention is that its

dues had not been paid fully. Respondent had not denied existence of

arbitration agreement but has taken the stand that the present petition was

not maintainable since the petitioner has accepted full and final payment and

after accepting full and final payment against the contract, the petitioner was

not entitled to raise disputes.

2. The respondent is inferring full and final payment because of a letter

dated 23rd April, 2008 written by respondent to the petitioner, the operative

Arb.P 283 of 2008 Kunj Bihari Const. Co.P.Ltd. vs. BPTP Ltd. Page 1 Of 5 part of which reads as under:

"Dear Sir, Please find enclosed herewith cheque no.937466 dated 22.04.2008 for Rs.2,51,749/- (Rupees Two Lacs Fifty One Thousand Seven Hundred and Forty Nine Only) drawn on Punjab National Bank Faridabad towards full and final settlement for the subject work awarded vide work order and its subsequently amendments under reference. The security deposit deducted from your bills as per work order condition will be released separately as per terms and condition of work order.

You are requested to the acknowledge the receipt."

3. The petitioner received the above cheque by making following

endorsement on the letter itself:

"Cheque No.937466 received against R/A Bill"

4. After receiving this cheque, petitioner wrote letter dated 1 st May, 2008

to the respondent protesting that the cheque received by it was not against

full and final settlement as mentioned vide respondent's letter and stated

that the petitioner had claims in respect of extra /additional items like

abnormal rate hike in structural steel, drastic deviation / reduction in the

scope of work as per original contract. The petitioner in this letter stated that

it had further claim of Rs.37 lac and also claimed the security deposit etc

amounting to Rs.2,83,000/-.

5. It is apparent that the petitioner had not executed a receipt having

received full and final payment for the contract. The respondent relied on

Union of India & Ors. v Talson Builders 2008(3) Arb. LR. 542 (SC) and

Arb.P 283 of 2008 Kunj Bihari Const. Co.P.Ltd. vs. BPTP Ltd. Page 2 Of 5 contended that the receipt issued by petitioner amounted to full and final

settlement and the Court should decide the issue whether there was any

dispute left for arbitration or not.

6. There is no doubt that while appointing an arbitrator under Section

11(6) of the Act the Court has to consider whether any live dispute was there

between the parties and for this Court can consider the aspect if the

petitioner has already received full and final payment and was raising dispute

after giving a satisfaction of full and final payment. However, it is settled law

that in order to infer full and final settlement; the Court has to consider the

facts of each case.

7. The respondent relied on Bhagwati Prasad Pawan Kumar v Union of

India (2006) 5 Supreme Court Cases 311. In Bhagawti Prasad (supra), Union

of India had written following letter to the contractor:

" In case the above offer is not acceptable to you, the cheque should be returned forthwith to this office; failing which it will be deemed that you have accepted the offer in full and final satisfaction of your claim.

The retention of this cheque and/or encashment thereof will automatically amount to acceptance in full and final satisfaction of your above claim without reason and you will be estopped from claiming any further relief on the subject."

Despite receipt of above letter along with the cheque, the petitioner

encashed the cheque and did not return the cheque. The Supreme Court

observed that the acceptance of the two cheques by the appellant amounted

to acceptance of offer contained in the letter written by Union of India.

Arb.P 283 of 2008 Kunj Bihari Const. Co.P.Ltd. vs. BPTP Ltd. Page 3 Of 5 Retaining and encashment of the cheques amounted to full and final

settlement of all claims of the contractor.

8. The situation in the present case is altogether different. In the present

case, after the work was executed and final bill of the petitioner pending,

respondent forwarded a cheque to the petitioner stating that the payment

amounted to full and final settlement. However, the petitioner did not receive

the payment as full and final settlement and received the said cheque stating

that it was against running bill and after about a week of receipt of cheque,

the petitioner lodged a protest stating that the amount received by it could

not have been termed as full and final settlement.

9. I consider that the full and final settlement has to be inferred only in

those cases where the employer offers an amount after completion of work

as full and final settlement and the contractor accepts the amount also as full

and final settlement either in writing or by his conduct. If the contractor after

taking the amount against final bill as full and final settlement offer of

employer, does not raise dispute for considerable time and keeps silent, it

would amount to acceptance of amount as full and final settlement or while

accepting the amount, the contractor gives a receipt that he has received the

amount as full and final settlement, such acceptance would be termed as full

and final settlement. Where the amount is offered as full and final settlement

but is not accepted as a full and final settlement and a protest is made, it

cannot be termed as full and final settlement.

10. In view of my foregoing discussion, it cannot be termed as a case of full

and final settlement. I, therefore, allow this petition and appoint Shri G.P.

Arb.P 283 of 2008 Kunj Bihari Const. Co.P.Ltd. vs. BPTP Ltd. Page 4 Of 5 Thereja, Additional District Judge (retired) as the arbitrator to adjudicate the

disputes inter se parties.

September 17, 2009                                   SHIV NARAYAN DHINGRA J.
rd




Arb.P 283 of 2008   Kunj Bihari Const. Co.P.Ltd. vs. BPTP Ltd.     Page 5 Of 5