JUDGMENT
S. Jagadeesan, J.
1. The appeal is directed against the order of the learned Judge dated 9.1.1998 in O.P.840 of 1995 wherein the Award of the Arbitrator passed in favour of the appellant was set aside.
2. The short facts necessary for the disposal of the appeal are:
The appellant entered into a contract on 29.7.1988 for the construction of a retaining wall. The estimate of the work was Rs. 16,84,631-70. The tender value was less by 24% at Rs. 12,79,553-25. Since the work was not completed even beyond the extended time, the contract was terminated. According to the appellant 70% of the work had been completed as on the date of termination i.e., in February, 1991.
3. The appellant raised a dispute for the enhanced claim in respect of the work completed. The matter was referred to the Arbitrator. Before the Arbitrator, the respondent raised an objection that the appellant signed the bill in full settlement of the claim and received the amount and as such it is not open to him to claim any enhanced amount.
4. However, the Arbitrator, without adverting to the question as to whether the appellant is entitled to claim the enhanced amount irrespective of the signing of the final bill in full settlement of their claim, proceeded with the enquiry and passed the impugned Award.
5. The respondent filed O.P.840 of 1995 for setting aside the award of the Arbitrator dated 23.11.1994. The learned Judge set aside the award, agreeing with the contention of the respondent that the appellant is not entitled to raise a dispute with regard to the enhanced claim after signing the bill for final settlement of the claim. As against the same, the present appeal was filed.
6. The only contention of the learned counsel for the appellant is that inspite of the receipt of the amount by the appellant by signing the bill in full and final settlement of the claim, it is always open to the appellant to raise a dispute for arbitration in respect of the enhanced claim.
7. In fact we had an occasion to decide an identical question recently in M/s. NADAMUNI REDDY & SONS v. THE SUPERINTENDING ENGINEER, TAMIL NADU SLUM CLEARANCE BOARD (O.S.A.234 of 1997 dated 10.12.2002) where we have held that the question to be decided by the Arbitrator is as to whether there was any final settlement between the parties by which the appellant is disentitled to claim any enhanced amount and confirmed the order of the learned Judge, setting aside the award for the reasons given by us and remanded the matter to the Arbitrator to decide the question.
8. While doing so, we placed reliance on the judgment of the Karnataka High Court. In fact the Division Bench of the Karnataka High Court had an occasion to deal with the identical issue in the case of KONDA REDDY v. UNION OF INDIA where it was contended on behalf of the Union of India that the accord and satisfaction reached by payment of final bill put an end to the contract and the arbitration clause thereunder. Consequently there is no arbitral dispute between the parties for reference. The learned Judges disagree with such contention in the following terms:
“It is, however, open for the respondents to urge before the arbitrator that in view of the accord and satisfaction reached in the case and the settlement of all the alleged claims, the appellant has no right to raise the dispute and ask for its adjudication. If such a contention is raised, it would be proper for the arbitrator to decide that question before going into the merits of the disputed claim. A Full Bench decision of this court in M.S. RAMIAH v. STATE OF KARNATAKA M.F.A. No. 353/74 – Opinion of the Full Bench rendered on 24.11.1978 to which one of us (K. Jagannatha Shetty, J.) was a party, has taken a similar view. It was observed:
“In conceivable cases, even the existence or non existence of a dispute might itself assume the character of a dispute for adjudication by the arbitrators. The arbitrators are also competent to decide whether that dispute is excluded from arbitration clause. ‘An arbitration agreement may explicitly empower the arbitrator to decide whether or not a particular dispute is within the arbitration agreement.’ (See Hudson’s Building and Engineering Contracts – Ninth Edition – page 658). But even if there is no such express power unless the dispute is expressly excluded from the arbitration clause “an arbitrator is always entitled to enquire whether or not he has jurisdiction.” (See Russe) on Arbitration – 18th Edition – page 73.”
It is, therefore, open to the Arbitrator to decide the question, if raised, whether there has been a settlement of all the claims arising in connection with the contract having regard to the effect of the accord and satisfaction.”
From the above principle laid down by the Division Bench of the Karnataka High Court, it is clear that the Arbitrator has got jurisdiction or authority to decide the question of the entitlement of the contractor for enhanced claim, inspite of the signing of the final bill by the contractor.
9. The Apex Court in UNION OF INDIA v. L.K. AHUJA & CO has held as follows:
“It is true that on completion of the work, right to get payment would normally arise and it is also true that on settlement of the final bill, the right to get further payment gets weakened but the claim subsists and whether it does subsist, is a matter which is arbitrable.”
From the above principle, it is clear that the question as to whether the appellant is entitled to claim enhanced amount subsequent to the signing of the final bill itself is arbitrable dispute and in such circumstance, it is for the Arbitrator to decide the same.
10. Consequently we confirm the order of the learned Judge, setting aside the award of the Arbitrator for the reasons stated above, though we are not agreeable with the reason given by the learned Judge for setting aside the award. Since the award is set aside, the matter has to go back to the Arbitrator for the reference.
11. If the same Arbitrator is available, the appellant is directed to give a letter to the Arbitrator along with the copy of this judgment and the Arbitrator is directed to decide the matter afresh. If the same Arbitrator is not available, the respondent is directed to nominate an Arbitrator as per the terms of the contract within four weeks from today. In either case, the Arbitrator is directed to complete the reference and pass an Award within three months from the date of taking the arbitration on file. Accordingly the appeal is disposed of. No cost.