ORDER
S. Ananda Reddy, J.
1. This application is filed under Section 11 (6) and (8) of the Arbitration and Conciliation Act, 1996 (for short ‘the Act’), seeking appointment of an Arbitrator for adjudication of the disputes between the applicant and the respondents.
2. It is stated that the applicant was awarded the work of replacement of bridge timbers with new steel channel sleepers of various bridges referred to in the tender notice as well as in the agreement, the total value of which was Rs. 37,05,240/- and the work was to be executed within a period of six months from the date of acceptance letter. The acceptance letter is dated 13-05-1998. The work is to be completed by 12-11-1998. It is stated that subsequently a regular agreement was also executed between the parties on 31 -12-1998. As per the terms of the agreement, the petitioner undertook to execute the work and in the process, started manufacturing the sleepers and according to the applicant, by July, 1998 the applicant has completed the fabrication of 250 numbers of steel channel sleepers. However, for fixing the said sleepers, bearing plates and other fittings have to be supplied by the respondent railways. Though the applicant requested the respondents for arranging the supply of fittings and other required material, the respondents were not ready with the necessary fittings.
3. Further, according to the applicant, as T-angles of 100 x 100 x 10 mm were out of manufacturing range in the market, the same were altered, and as per the drawings supplied on 30-11-1998, though the work was to be completed by 12-11-1998, further there is variation in the quantity of steel for M.S. Pad plate. In view of the change in the drawings and as against the estimated quantity of 6.9 M.T. it has gone up to over 19 M.T. This was the result of wrong estimations made by the respondents at the time of calling the tenders. Due to this, the applicant had suffered heavy loss. Though increased rate was demanded, the same was not considered.
4. It is further stated by the applicant that though the respondent department was unable to supply the fittings till December, 1998, having invested heavily in the manufacture and supply of sleepers, the applicant carried out the work and requested for release of 90% of the payment with reference to item-1 of the schedule, but the respondents have released only a small amount by February, 1999 to the extent of Rs. 5,46 lakhs. Further, according to the applicant, because of the delay in execution of the work, the workmen engaged by the applicant, of which 15 are special workers apart from other unskilled workers for fixing the sleepers, they were kept idle as fittings were not supplied, therefore, the applicant was made to incur additional expenditure due to the idle labour. Finally it was stated that the respondents have also changed certain works and got additional agreements executed, and finally the work was completed with reference to the 12 bridges by 08-01 -2003, and final bill was prepared on 16-01 -2003 and the amounts were paid.
5. Since the respondents did not consider the claim of the applicant for awarding suitable amounts for the claims, the applicant sent a letter dated 18-02-2003 specifying the claims and also seeking appropriate relief, and in case if the railways are not acceptable, requested to refer the same for arbitration. As there was no response to the same, again a letter dated 18-12-2004 was sent to the 1st respondent the General Manager, South Central Railway, reiterating the claims and seeking to resolve the same, failing which, to make a reference to the arbitration, for which a reply was received from the respondents dated 22-02-2005, rejecting all the claims referring to the ‘no claim’ certificate submitted by the applicant. It is stated that subsequently also another representation was made by letter dated 04-07-2005 which was received by the respondents on 06-07-2005, seeking a reference of the disputes for arbitration, even the said request also was rejected by the respondents, hence the applicant was constrained to file this application.
6. A counter is filed on behalf of the respondents, disputing and denying the claims of the applicant. In the counter it is specifically denied (sic. stated) that the delay if any was only on account of the applicant and not on account of the respondents. The respondents have admitted the fact that the tenders submitted by the applicant were accepted for execution of the replacement of timber sleepers with iron sleepers and also the execution of the agreement dated 31-12-1998 between the parties and also admitted that six months period is the time for completion of the execution of the work. But, however, it is stated that in view of the request made by the applicant, time was extended from time to time without imposing any penalty, and finally after completion of the work, the measurements were taken and even final bill was prepared against which the applicant submitted ‘no claim’ certificate and requested release of the security deposit which was also received without any protest, therefore, there is no further claim in terms of clause-42 of the General Conditions of the Contract, which was also made part of the agreement between the parties. In the counter, it is also disputed as to the receipt of the letter dated 18-02-2003 and according to the respondents, the earliest communication received from the applicant is only on 18-12-2004 and the said communication is clearly beyond 90 days as contemplated underclause-64 of the General Conditions of Contract, therefore, the applicant is not entitled to raise such a claim, especially in the light of clause-43-(2) of General Conditions of Contract which prohibits raising of any dispute after acceptance of the final measurements as well as submission of ‘no claim’ certificate and also having received the final bill amount as well as security deposit without raising any protest. In the counter, it was also referred to various decisions and even the claims made by the applicant with reference to each of the claims were also dealt with and negatived.
7. The learned Counsel for the applicant reiterating the averments made in the application, contended that clause-43(2) of General Conditions of Contract was inserted only by way of amendments to the General Conditions of Contract brought in December, 1998, since the tender submitted by the applicant was earlier to the said amendments, the said amended clause has no application to the present case. The learned Counsel contended that since there are number of variations with reference to the work entrusted to the applicant, with reference to which there were serious disputes and as the respondents did not resolve the said disputes even after completion of the work, a request was made either to resolve the said disputes or to refer the same for arbitration. The respondents, to the first communication after the completion of the work, there was no response and with reference to the second communication there was a communication rejecting the claim, therefore, a final legal notice was issued on 04-07-2005 which was also replied negativing the claim, therefore, the applicant has come up with the present application. The learned Counsel contended that when once the work was entrusted to the applicant even before the amendment of the General Conditions of Contract, the General Conditions of Contract that existed as on the date of entrusting the work would apply and not the subsequently amended clauses of General Conditions of Contract, therefore, there is no prohibition for the applicant to raise a claim even after accepting the final bill and also receiving the amount in pursuance of the said final bill without any protest, therefore, the claim made by the applicant, seeking reference for arbitration is not barred by clause-43(2) as the same has no application to the present case. The learned Counsel also relied upon a decision of this Court in Union of India v. Vengamamba Engineering Co. . where a Division Bench of this Court held that the contractor having accepted the final bill without any protest, he had no arbitral dispute. However, in a case where by reason of subsequent agreement there has been negation of contract, the Court may not refuse to appoint an arbitrator as having regard to the provisions of 1996 Act all such disputes can be raised before the arbitrator, therefore, sought for appointment of an arbitrator.
8. The learned Counsel appearing for the respondents, on the other hand, opposed the contentions of the applicant. The learned Counsel reiterated the stand of the railways that the applicant having accepted the measurements as per the final bill and also submitted a ‘no claim’ certificate and thereafter received the final payment as well as the security deposit, there cannot be any claim subsequent to that, as such claims are clearly prohibited and barred under clause-43(2) of the General Conditions of Contract. The learned Counsel also contended that there are certain variations with reference to the specifications as well as works executed, the same were negotiated and settled between the parties and in fact, additional agreements were also executed subsequent to the original agreement dated 31-12-1998, therefore, there cannot be any further claims. The learned Counsel also contended that even assuming that clause-43(2) of General Conditions of Contract was as a result of the amendment which was made in December, 1998, but the final agreement between the parties was executed on 31-12-1998 well after the alleged amended General Conditions of Contract, therefore, clause-43(2) equally applies to the present work as the original agreement was executed subsequent to the insertion of clause-43(2) of the General Conditions of Contract, even though the tenders were called for prior to the said date and work was also entrusted. The learned Counsel also contended that as per various judgments referred to in the counter, it is well settled that when once a contractor accepted the measurements as well as the final bill and received the payment without any protest, he is not entitled to seek any reference of the alleged dispute since no disputes could be raised after the final bill when it was accepted without any demur. The learned Counsel also relied upon the decisions in Muddu Krishna Rangaiah v. Union of India . in M. Krishna Rangaiah v. Union of India . in Y. Babu Raov. Union of India . in P.K. Ramaiah v. Chairman and M.D. National Thermal Power Corpn. 1994 Supp(3) SCC 126. and in Nathani Steels Ltd. v. Associated Constructions1995 Supp. (3) SCC 324.in support of his contention that when once the final bill was accepted without any protest, the applicant is debarred from raising any disputes. The learned Counsel also reiterated the stand of the respondents that the applicant raised a dispute only in the month of December, 2004 by sending a communication dated 18-12-2004 which was replied suitably by rejecting the same, therefore, sought for dismissal of the application.
9. From the above rival contentions, the issue to be considered is whether an Arbitrator is required to be appointed in the facts and circumstances of the case.
10. Admittedly, the work was entrusted by the respondents to the applicant for replacement of timber sleepers with iron sleepers with reference to 12 bridges specified in the work order. The acceptance letter was dated 13-05-1998 and as per the said acceptance letter the work was to be completed by 12-11-1998, however, the work was not completed by the said date, even by his own version, the applicant got manufactured the sleepers only by July, 1998 and was awaiting for the supply of fittings and other material that are to be supplied by the respondents for execution of the work. It is also an admitted fact that the regular agreement between the parties was executed on 31-12-1998. It is the case of the applicant that there were variations of works that are specified under the work order placed with the applicant which was not seriously disputed by the respondents, but, however, the stand of the respondents was that there was mutual settlement by negotiations and additional agreements were also executed between the parties, and finally the work was extended within the extended period by 08-01 -2003 and final bill was prepared on 16-01 -2003. The amount payable under the final bill was received by the applicant even along with the security deposit amount having submitted ‘no claim’ certificate.
11. Now the dispute is that according to the applicant, a letter was sent on 18-02-2003 raising a demand with reference to certain claims for which there was no reply and thereafter only in December, 2004 i.e. after20 months, the respondent (sic. applicant) sent another communication to the respondents, reiterating the claims. The said claims were rejected by the respondents by their communication dated 22-02-2005. Not satisfied with the said reply received by the applicant, a legal notice was sent on 04-07-2005 and therafter the applicant has come up with the present application.
12. The stand of the respondents was that since the applicant received the final bill amount having submitted ‘no claim’ certificate and also received the security deposit, is debarred from making a claim. It is the case of the applicant that clause-43(2) of General Conditions of Contract was inserted by way of amendment in the month of December, 1998, since the work was entrusted to the applicant much prior to the said date, the said clause would not apply to the present case. But as admittedly the agreement was entered into between the partieson31-12-1998. Therefore, it is not open to the applicant to contend that clause-43(2) of General Conditions of Contract would not apply to the agreement in question. The General Conditions of Contract are applicable to all the contract works entrusted by the respondents, therefore, clause-43(2) would apply as any other clauses of the contract.
13. A perusal of the said clause-43(2) of General Conditions of Contract clearly shows that once the final bill is accepted, the contractor shall not be entitled to make any claim whatsoever against the railway under or arising out of this contract, nor shall the railway entertain or consider any such claim, if made by the contractor, after he signed a ‘No claim’ certificate in favour of the railway. In view of the specific bar, the applicant is precluded from raising such a plea, and in fact, in terms of clause-64 of General Conditions of Contract, the matter covered underclause-43 would be an excepted matter where no arbitration could be allowed.
14. Though the applicant relied upon the decision of this Court in Union of India v. Vengamamba Engineering Co. (1 supra), but that is a case where the Division Bench accepted the claim for reference in view of the subsequent agreement entered into and further in view of the legal position as was on the date of the said judgment, the Division Bench also held that all the disputes can be raised before the arbitrator for adjudication. But the legal position has changed altogether, now with reference to the jurisdiction, this Court is obligated to decide before appointing an arbitrator for adjudication of the other disputes, in the light of the later decision of the Larger Bench of the Apex Court in S.B.P. & Co. v. Patel Engineering Ltd. and Anr. 2005 (7) SCJ 461 : (6) ALI 37. 1 (DN SC) : 2005 (7) Supreme 610. Further, in all the decisions relied upon by the respondents, it was consistently held that where ‘no claim’ certificate was submitted, the dispute is not arbitrable.
15. In Muddu Krishna Rangaiah v. Union of India (2 supra), a learned single Judge of this Court took the said view which was confirmed by a Division Bench with reference to the same applicant. Again in Y. Babu Rao v. Union of India (4 supra), it was held that ‘no claim’ certificate filed and bill amount was received without any protest which was treated as a new agreement between the parties, not to lay any further claim in the matter, therefore, the application for referring the dispute to arbitration, invoking arbitration clause in the earlier agreement, which has perished in view of the fresh agreement, therefore, not maintainable.
16. In P.K. Ramaiah v. Chairman and M.D., National Thermal Power Corpn. (5 supra), the Apex Court held that where the contractor had voluntarily and unconditionally accepted in writing and received the payments in full and final settlement of the contract, the subsequent claim for further amount in respect of the same work was not an arbitral dispute. To the same effect is the decision in the case of Nathani Steels Ltd. v. Associated Constructions (6 supra) where it was held that once dispute is amicably settled between the parties finally, arbitration clause cannot be invoked by the party to resolve the same on the ground of mistake in the settlement unless the settlement is first set aside in proper proceedings.
17. In the light of the above legal position, if we examine the facts of the present case, admittedly, the work was completed by 08-01-2003 and final bill was prepared on 16-01-2003 with reference to which ‘no claim’ certificate was submitted by the applicant and received the amount payable under the said final bill. In view of the said acceptance of the final bill and receipt of the amount under the final bill without any protest, which was not even disputed, the applicant is prohibited from raising any dispute with reference to the execution of the work executed under the agreement with reference to which, the final bill was made and accepted.
18. Under the above circumstances, the. Arbitration Application is devoid of merit, and the same is, accordingly, dismissed. No costs.