JUDGMENT
K. Ramamoorthy, J.
1. The arbitrator passed the award on 8th May, 1992. The Union of India filed to the award. The claimant Democratic Builders was entrusted with the construction of 360 quarters for P & L Phase I in DIZ Area, New Delhi.
2. Disputes arose between the parties. The claimant statement of claims making five claims. The Union of India field a counter claim after repudiating the claims of the claimant.
3. On claim No. 1, the claimant had put his case on 12 parts claiming a sum in each of the parts. With reference to parts 5, 6, 8, 21, 11 and 12 no objections have been filed by the Union of India.
4. On part No. (i), the claimant claimed Rs. 7,000/- which was withheld by the Union of India on account of defects. The arbitrator has awarded a sum of Rs. 7,000/-.
5. The objection by the Union of India is that the defects were pointed out by the Union of India and in spite of it the arbitrator had awarded the amount.
6. The arbitrator had expressed the view that the Union of India had not filed any proof that any amount was spent on rectification of defects or any reduction item was sanctioned. The arbitrator had also noted that admittedly the work was completed on 16th August, 1995.
7. I do not find any substance on the objections raised by the Union of India. Therefore, the award on this part is confirmed.
8. Part No. (ii), this relates to recovery of Rs. 23,101/- towards penal rate recovery on 1,10,744 bricks. The arbitrator has allowed the entire amount and the reasoning is as follows :
“It is held that in the absence of any notice and any proof of loss, the recovery at double the issue rate is not justified. There is no complaint of any pilferage during progress of work. The claimants also stated that bricks remained at site for about 5 years and number of bricks got broken and good quality and unbroken bricks left with them were returned. There is no dispute about bank rate recovery. Claimants are entitled for refund of this amount.
Rs. 23,101/- is, therefore, awarded in favour of claimants for this part of claim”.
9. The fact that the bricks remained on the site for a number of years is not dispute but what is stated in the objection is that recovery was made as per the terms and conditions of the agreement. The point is whether recovery could be made at double the issue rate and the claimant did not object for the recovery at single rate. The arbitrator had only upheld the objection by the claimant for penal rate of recovery. Therefore, the reasoning given by the arbitrator cannot be said to be wrong in law. I, therefore, confirm this part of the award.
10. On Part No. (iii), claim is made for Rs. 2,555/- on the ground that the claimant committed delay in lifting of bricks. The arbitrator has expressed the view that the objector had put forth the plea that as per the terms of agreement at page 163 in Exs. R-23 and R-24 and, therefore, the levy was justified. The arbitrator has expressed the view that in the absence of notice at the appropriate time and any proof of loss, no compensation could be levied by the objector. The objector had stated in the objection petition that as per the terms and conditions of the agreement at page 163 para 4 that if the contractor failed to lift the bricks from the kiln to the site within 15 days the compensation of Rs. 20/- per one thousand bricks would have to be paid by the contractor. Therefore, the compensation of Rs. 2,555/- for late lifting of the bricks was within its powers. The arbitrator has opined that there is nothing on record to show that any written notice was issued by the kiln contractors offering bricks as per the provisions of the agreement. Therefore, no levy could be made against the claimant.
11. In my view, taken by the arbitrator cannot be interfered with.
12. Under Part No. (iv), a sum of Rs. 25,638/- was claimed as having withheld for the alleged hollow joints in brick work. The arbitrator having considered fully with reference to the documents filed by the parties had allowed Rs. 9,000/-. The Union of India would state in the objection petition that even though the arbitrator accepted the fact that the reduction has to be made as per the agreement, the arbitrator wrongly awarded Rs. 9,000/- in favour of the claimant.
13. I don’t think that the objection by the objector could be sustained in the light of the reasoning given by the arbitrator. Therefore, this part of the award is confirmed.
14. Under Part No. (vii), the claimant sought to recover Rs. 6,731/- withheld on the allegations of C.C. flooring junction hollow sound. The arbitrator has notice the documents filed by the parties and has come to the conclusion that reduction to the extent of 30% would be justified and directed the return of the 70% deduction made. The Union of India objected to this by saying that reduction was not justified.
15. I do not find any error apparent on the face of the award in the award passed by the arbitrator and, therefore, I confirm it.
16. Under Part No. (ix), a sum of Rs. 4,385/- was recovered as penal rate recovery of 6 mm dia MS Bars. The arbitrator has recovered that there is no dispute about single rate recovery and double rate recovery was not justified.
17. The objector has stated that the recovery was made as per the provisions of the agreement and it was not incumbent on the objector to prove any loss.
18. I don’t find any force in the objection raised by the objector and the award is confirmed on this part.
19. I now come to Claim No. 2, under this the claimant claimed payment for cartage of Rs. 1.6 lakhs transferred to another work and it was rejected by the arbitrator and no objections have been filed by the claimant.
20. On Claim No. 3, the claimant, made a claim for Rs. 4,30,182.00 due to 28% enhancement in rates over tendered rates for the work, executed after stipulated date of completion. The arbitrator expressed the view in the following terms :
“On consideration documents filed and arguments advance by parties, I find that work got prolonged beyond stipulated date of completion due to various hindrances by respondents and some of the hindrances continued even after stipulated date of completion. Extension of time was granted without levy of compensation by respondents. The revision in rates was demanded by claimants vide Exh. C-9 and C-10. In the present day market with inflationary trends, the prices are bound to increase due to prolongation of contract. The claimants. have calculated and increase of 40% in their S.F. based on cost indices issued by CPWD from time to item but have restricted the same to 28% increase for the work done beyond stipulated date of completion. The C.I. on 23.4.1981 was 200, on 29.1.1982 it was 217 and on 16.3.1983 the same was 245. By linear interpolation, the C.I. on stipulated date of start works to 208 and the same on stipulated date of completion works 243, thereby giving an increase in cost of about 16.5%. The details of work done, stipulated materials supplied etc. as given by claimants in their letter dated 12.11.1990 have not been disputed by respondents. Taking this figure of net work done after 25.2.1983 as given by claimants and adopting and increase of 16.5 against 40 to worked out by claimants and 28% increase referred by Chief Engineers (NDZ), I, the amount of enhancement works to about Rs. 2,50,000/-.
Rs. 2,50,000/- is, therefore, awarded in favour of the claimants for this claim”.
The arbitrator awarded Rs. 2,50,000/-.
21. The objector has stated in the objection that the extension of time beyond the stipulated date of completion was granted without levy of compensation and the contractor had given a certified dated 16.2.1984 for having not suffered any loss on account of the said delay in completing the work and as such the contractor was barred from claiming any amount in the arbitration proceedings. The certificated dated 16.2.1984 reads as follows :
“The above noted work was started after a lapse of about six months due to non-sanction of the plans from the N.D.M.C. Later it was further delayed due to non-availability of bricks etc. Consequently the work could not be completed in time and we had already applied for the extension of time about a couple of months earlier, but the extension case is not processed so far because the department is asking us to furnish an undertaking that we will not claim any damage whatsoever. In this connection we have received a number of letters from the departments.
As directed by the department, we are furnishing herewith the following undertaking :
“That we have not suffered any losses during the suspension of work and we will not claim anything on this account.
We hope that now the department would process the case at the earliest and grant necessary extension of time immediately”.
In the reply to the objection petition, the claimant has stated as under :
“The objectors contention that the learned Arbitrator has wrongly awarded a sum of Rs. 2.50 lakhs in favour of the petitioners on the basis of wrong findings that completion of the work delayed/prolonged due to hindrances posed by the respondents is denied. The complete facts relating to the reasons of delay in execution of work have been duly gone into an adjudicated upon by the learned Arbitrator before arriving at the finding that the delay was caused on account of reasons resting with the respondents. Merely grant of extension does not debar the petitioners from claim of compensation/loss. Both the parties had made submissions in relation to purported certificated dated 16.12.1994. The said letter was others obtained by the respondents/objectors under coercion as huge amounts due to the petitioners in relation to balance payment due towards work executed and amount of security deposit was not being released unless such letter is given.
It is settled law that whether the claim of a party have been settled in full and final or otherwise the same is an issue which is required to be adjudicated upon by the Arbitrator. The petitioners had duly informed the respondent regarding the reasons of delay and the fact that he was being subjected to losses on that account. The objectors contention treat as per decision of the Hon’ble High Court, damages cannot be awarded is denied. The requirements for establishing the liability of the respondents in relation to the claim of damages had been duly established before the learned Arbitrator. The petitioners would respectfully state that the quality/sufficiency of evidence for establishing any claim lies within the domain of the Arbitrator and this Hon’ble Court is not to sit in appeal/revision/review against the same. In view of the submissions, the objection filed by the objectors being meritless deserves out right rejection resulting in making the impugned award a rule of the Court”.
22. The arbitrator had not given any finding that Ex. R-52 was taken under coercion by the Union of India. The arbitrator has noticed two times that there was a such certificate by the claimant. In one paragraph the arbitrator states. “They pleaded that this cannot be attributed as breach on the part of respondents and necessary extension of time was granted without any levy of compensation and at the paragraph extracted above the arbitrator had also noticed extension of time was granted without levy of compensation by respondents”.
23. Having noticed this contention, the arbitrator, as observed by me above, has not come to the conclusion that the certificate was taken by the Union of India after exercising coercion on the claimant.
24. The claimant also had not proved his case of coercion when he was consenting party to the letter dated 16.2.1984 in and by which he had relinquished all claims of compensation, he cannot turn round and say that there was delay on the part of Union of India and that was the reason for extension of time, and therefore, he would be entitled to compensation.
25. In my view, the arbitrator has committed an error which is apparent on the face of the record and that would also be a legal misconduct in ignoring the certificate dated 16.2.1984 as on of moment in deciding the claim of the claimant. The plea of coercion and duress must be specifically pleaded and cogent evidence should be adduced by the party to establish that case. In the absence of any proof the arbitrator cannot award any amount on this claim.
26. Mr. Vipin Sanghi, learned counsel for the claimant relied upon the decision of the Calcutta High Court in Jiwani Engg. Works (P) Ltd. v. U.O.I. . The learned single Judge of the Calcutta High Court had observed that it is a notorious fact that the Departments compel that contractors to sign the documents at the time of payment and therefore, the certificate dated 16.2.1984 should be viewed in that context.
27. I unable to agree. The Court cannot take judicial notice of such facts. The facts of each case to be considered and when documents are voidable the party concerned cannot proceed on that basis that the documents are void and, therefore, should be completely ignored.
28. Mr. Vipin Sanghi, learned counsel referred to the judgment of the Andhra Pradesh High Court reported in Superintending Engineer, Somasila Project, Nellore Distt. and another v. R. Ramana Reddy , in particular paragraph 7 of the judgment. The learned Judge of the Andhra Pradesh High Court has referred to similar aspect and he had observed that a Division Bench of the Calcutta High Court apparently referring to the decision of the single Judge in (supra), which is only by a single Judge of the Calcutta High Court. Be that as it may, in the light of the settled position and when there are specific provisions in the Contract Act we cannot ignore the letter dated 16.2.1984 as being void and proceed to consider the claim made by the claimant. The Supreme Court has laid down that an arbitrator cannot act in total disregard of the law of the land.
29. I am of the view that the contractor had assumed that he can put forth a plea of duress and that is the proof of his case, and he has presumed that he is not obliged to go any further to obtain the relief before the arbitrator. The documents R-52 were specifically projected by the Union of India and no challenge was made by the Contractor.
30. The question of duress had been subject matter of consideration by the Courts for a long time and the principles, in my view, had taken a definite shape and they are well settled. In Markell v. Horner ((1915) 3 KB 106 : 1914 All. ER 595), the Court had noticed the following :
“Now turning to the other view that is presented, can he recover as for money paid involuntarily and under protest ? Upon the evidence I think that something such as he, describes occurred at the commencement of his career at 32, Lamb Street. The defendant’s witnesses have forgotten it, but I think something of that sort, substantially as he describes it, did occur. On the other hand, I do not feel at all convinced that with regard to subsequent occasions there was any pointed protest against payment of tolls in principle. I have very little doubt there were disputes and protests as to amounts. I may say at one that if the protests were, as one of the witnesses said, continued and repeated until they became a joke, that proves far too much for the plaintiff’s case, because the protests passing into a standing joke passed out of the sphere of effective protests; they came to indicate a grumbling acquiescence and were not what they must be to satisfy the rule that there must be a declaration that the transaction was not closed but that the payment, which was only made for the relief of a deadlock, was to be reclaimed. There is no magic in the use of a protest, though I strongly suspect the plaintiff and his witnesses of thinking when they gave their evidence that there was. It may mean, I think it did mean, at any rate after the lapse of some time, that the plaintiff merely objected to payment, not that he kept the question alive. This has been left to sleep for twelve years. The books containing the earlier payments have been destroyed with the priceless records of these amounts debited to the plaintiff, and I can only conclude that the transaction was regarded as closed and payments acquiesced in. This in my view is the sense of the matter whichever way the case is looked at. The plaintiff did not want to challenge the defendant’s right, though he was ready enough to claim his money back when some one else had shown that the money was wrongly claimed. I put to the defendant’s counsel the case of Windsor Bridge. For years and years passengers paid tolls; they did not like it, but they supposed, wrongly, that they had to pay. They never dreamt of testing it until one fine day some one arose who did test it and showed that no tolls were due. Is it to be said that every one who had passed over the bridge for the last six years could recover his half-penny back ? In my view both common sense and common law forbid any such claim. The transactions were closed and left closed without any substantial statement”.
Lord Reading C.J. had observed as follows :
“Upon the second head of claim the plaintiff asserts that he paid the money not voluntarily but under the pressure of actual or threatened seizure of his goods, and that he is therefore entitled to recover it as money had any received. If the facts proved support this assertion the plaintiff would, in my opinion, be entitled to succeed in this action.
If a person with knowledge of the facts eyes money, which he is not in law bound to pay, and in circumstances implying that he is paying it voluntarily to close the transaction, he cannot recover it. Such a payment is in law like a girl, and the transaction cannot be reopened. If a person pays money, which he is not bound to pay, under the compulsion of urgent and pressing necessity or of seizure, actual or threatened, of his goods he can recover it as money had any received. The money is paid not under duress in the strict sense of the term, as that implies duress of person, but under the pressure of seizure of detention of goods which is analogous to that of duress. Payment under such pressure establishes that the payment is not made voluntarily to close the transaction (per Lord Abinger C.B. and per Parke B in Atlee v. Bckhouse (3 M&W 633, 646, 650). The payment is made for the purpose of averting a treatment evil and is made not with the intention of giving up a right but under immediate necessity and with the intention of preserving the right to dispute the legality of the demand (per Tindal C.J. in Valpy v. Manley (I.C.B. 564, 602, 603). There are numerous instances in the books of successful claims in this form of action to recover money paid to relieve goods from seizure. Other familiar instances are cases such as Parker v. Great Ry. Co (7 Man & G. 253), where the money was paid to the railway company under protest in order to induce them to carry goods which they were refusing to carry except at rates in excess of those they were legally entitled to demand. These payments were made throughout a period of twelve months, always accompanied by the assertion that they were made under protest, ant it was held that the plaintiffs were entitled to recover the excess payments as money had and received, on the ground that the payments were made under the compulsion of urgent and pressing necessity. That case was approved in Great Western Ry. Co. v. Sutton (L.R. 4 H.L. 226, 249), when the judges were summoned to the House of Lords to give their opinion. Wiles J., in stating his view of the law, said : “when a man pays more than he is bound to do by law for the performance of a duty which the law says is owned to him for nothing or for less than he has paid, there is a compulsion or conclusion in respect of which he is entitled to recover the excess by condition indebiti, or action for money hand and received. This is every day’s practice as to excess freight”. That is a clear and accurate statement in accordance with the views expressed by Blackburn J. in the same case and adopted by the House of Lords. It treats such claims made in this form of action as matters of ordinary practice and beyond discussion. (See also per Lord Chelmsford in Lancashire and Yorkshire Ry. Co. v. Gidlow (LR 7 II. L. 517, 527).
This principle of law is so well settled that it cannot be challenged, and I find nothing in Brisbane v. Dacres (5 Taunt, 143), to the contrary. Indeed the general proposition of law is not disputed; but it was contended, and the learned judge found, that the plaintiff had not brought himself within it, mainly because, (1) the payments were not accompanied by a declaration or assertion to the defendant that the plaintiff did not intend to give up his right to recover the money, and (2) the protests for a period of years had degenerated into a sort of grumbling acquiescence and were in effective. I doubt whether Rowlatt, J. intended to find that there must be anything in the shape of an express notice or declaration to the defendant of the plaintiff’s intention to keep alive his right to recover. It is clear, and was indeed admitted at the Bar, that no express words are necessary and that the circumstances attending the payments and the conduct of the plaintiff when making them may be a sufficient indication to the defendant that the payments were not made with the intention of closing the transactions. I do not think that the mere fact of a payment under protest would be sufficient on entitle the plaintiff to succeed; but I think that it affords some evidence, when accompanied by other circumstances, that the payment was not voluntarily made to end the matter.
At the beginning of the dispute there was a definite assertion of right by the defendant to recover the tolls and that a denial of that right by the plaintiff followed by an actual seizure of goods of the plaintiff. The plaintiff upon the advice of his solicitor, then made the payment under protest, Subsequently, and during the long period of years whenever the plaintiff challenged the defendant’s right, there was seizure or a threat of the plaintiff goods. A threat intended to be followed be seizure is equivalent for this purpose to a seizure. (See per Creswell J. in Valpy v. Manley). Disputes arose both as to the right to exact the tolls and as to the amount in particular cases. Notable instances occurred in 1902, 1903, 1905 and 1909. The disputes always ended either in seizure or a threat to seize, and the plaintiff then paid under protest. The defendant from the first asserted his right to recover payment of the tolls by a distress levied upon the plaintiff’s goods, and if the defendant was legally entitled to the tolls he could enforce payment by these means. It appears to me upon the evidence that the plaintiff throughout the whole period of years believed that if he did not pay his goods would be seized. No doubt, as time progressed, and the protests were frequently repeated, they were at times made by the plaintiff’s servants to the defendant’s servants in a laughing and jocular manner. The plaintiff had, however, given definite instructions that payments were never to be made except under protest, and these instructions that payments were never be made except under protest, and these instruction were invariably followed. I cannot think that the protest lost their effectiveness by reason of the length of period during which they were persistently made, or because they were at times accompanied by a laugh or jesst. The persistence during so long a period serves rather to show that the plaintiff would not acquiesce in the defendant’s demands.
I come to the conclusion that the plaintiff never intended to depart, and never did depart, from the course taken by him at the commencement of the dispute. In order to preserve his right to recover, it is not, in my opinion, necessary that on every occasion there should be a refusal to pay by the plaintiff followed by seizure. It was not necessary to go through this form. The circumstances of these payments and the conduct of the plaintiff throughout the period for years satisfy me that he never made the payments voluntarily, that he never intended to given his right to recover the sums paid, and that he only paid because he knew that a refusal to pay would be immediately followed by seizure of his goods, as in fact did happen whenever he disputed the defendant’s right and refused to pay. The pressure of seizure was always present to his mind, and never ceased to operate upon it whenever demand for tolls was made. I am also satisfied that the circumstances of the payments and the conduct of the plaintiff were a sufficient indication to the defendant that the plaintiff did not intend to give up his right to recover. If any assertion or declaration of his intentions was necessary it was made to the defendant at the time and in the circumstances of the payment”.
31. In 1949 (1) AER 980 the Court of Appeal had also considered the matter.
32. In Barton v. Armstrong and others ((1975) 2 All. ER 465 PC), this is a case from the Supreme Court of New South Wales. The facts as noticed by the Privy Council are as follows :
“This is an appeal by the leave of the Supreme Court of New South Wales from a decree of that court (Mason JA and Taylor A-JA, Jacobs JA dissenting) made on 30th June, 1971. That decree dismissed the appeal of the appellant. Alexander Barton, against a decree of Street J. made on 19th December, 1968 which dismissed a suit brought by Barton against the respondents in which he sought a declaration that a deed dated 17th January, 1967 made between Barton and the first fourteen respondents and certain deeds ancillary thereto had been executed by him under duress exerted by the first respondent. Alexander Ewan Armstrong, and were void so far as concerned him”.
The learned Judges further observed as under :
“It is hardly surprising that is no direct authority on the point for, if A threatens B with death if he does not execute some document and B, who takes A’s threats seriously, executes the document it can be only in the most unusual circumstances that there can be doubt whether the threats operators to induce him to execute the document. But this is a most unusual case and the findings of fact made below do undoubtedly raise the question whether it was necessary for Barton in order to obtain relief to establish that he would not have executed the deed in question but for the threats. In answering this question in favour of Barton Jacobs JA relied both on a number of old common law authorities on the subject of ‘duress’ and also by way of analogy on later decisions in equity with regard to the avoidance of deeds on the ground of fraud. Their Lordships do not think that the common law authorities are of any real assistance for it seems most unlikely that the authors of the statements relied on had the sort of problem which has arisen here in mind at all. On the other hand they think that the conclusion to which Jacobs JA came was right and that it is supported by the equity decisions. The scope of common law duress was very limited and at a comparatively early began to grant relief in cases where the disposition in question had been procured by the exercise of pressure which the Chancellor considered to be illegitimate although it did not amount to common law duress. There was a parallel development in the field of dispositions induced by fraud. At common law the only remedy available to the man defrauded was an action for deceit but equity in the same period in which it was building the doctrine of ‘undue influence’ came to entertain proceedings to set aside dispositions which had been obtained by fraud : see Holdsworth’s History of English Law (Vol. 38, p. 51). There is an obvious analogy between setting aside a disposition for duress or undue influence and setting it aside for fraud. In each case to quote the words of Holmes J. in Fairbanks v. Snow ((1887) 13 NE at 598), the party has been subjected to an improper motive for action. Again the similarity of the effect in law of metes and doles in connection with dispositions of property is noted by Stair in his Institutions of the Law of Scotland (Book IV, 40, 25). Had Armstrong made a fraudulent misrepresentation to Barton for the purpose of inducing him to execute the deed of 17th January, 1967 the answer to the problem which has arisen would have been clear. If it were established that Barton did not allow the representation to affect his judgment then he could not make it a ground for relief even though the representation was designed and known by Barton to be designed to affect his judgment. If on the other hand Barton relied on the misrepresentation Armstrong could not have defeated his claim to relief by showing that there were other more weighty causes which contributed to his decision to executed the dead, for in this filed the court does not allow an examination into the relative importance of contributory causes. “Once make out that there has been anything like deception, and no contract resting in any degree on that foundation an stand (per Lord Cranworth LJ in Reynell v. Sprye ((1852) 1 De GM & G 660 at 708), see also the other cases referred to in Cheshire and Fifoot’s Law of Contract (8th Edn. (1972) 250, 251). Their Lordships think that the same rule should apply in cases of duress and that if Armstrong’s threats were ‘a’ reason for Barton’s executing the deed he is entitled to relief even though he might well have entered into the contract if Armstrong had uttered no threats to induce him to do so”.
Eventually, the P.C. allowed the appeal holding that the documents were executed under duress. Why I am referring to this case is that before a party could succeed on the ground of duress it should place all the materials before the court and a mere assertion of a particular position cannot be a substitute of proof of it. In NORTH Ocean Shipping Co. Ltd. v. Hyundai Construction Co. Ltd. and another. The Altantic Baron ((1978) 3 All. ER 1170), the Queen’s Bench Division had considered this aspect of the matter as under :
“This special case stated by two arbitrators raises questions of considerable difficulty, novelty and importance. The claimants (the owners) are a ship owing company in the Livanos group who on 10th April 1972 entered into a ship building contract in writing with the first respondents, a South Korean shipbuilding Company. Before the ship had been completed, there was on 20th February, 1974, an assignment by the first respondents of their rights under the contract to the second respondents and in the arbitration the two respondents were both treated as one. A point does arise on the assignment of 29th February, 1974, with which I will deal later, it does not appear, however, to have featured very largely in the arbitration and the joinder of the second respondents was made with the agreement of all concerned. Both respondents were South Korean companies and are called in the special case and this judgment ‘the yard’.
The contract was to build for the owners a single screw steam turbine tanker of 259,000 dead-weight tons subsequently named the Atlantic Baron. The purchase price was fixed at US $ 30,950,000. Article III, which was headed ‘liquidated damages’, stated that the contract price should not be subject to adjustment except in the even of certain contingencies thereinafter set put dealing with insufficient speed, exercise fuel consumption and variations in the dead-weight tonnage. None of these contingencies is relevant to the present dispute.
By Art. XI the price was to be paid in five installments, the first on the signing of the shipbuilding contract, the second on notification that prefabrication had been commenced, the third within six working days of advice that the keel had been laid and the fourth within six working days of advance that the vessel had been floated. The fifth and final installment was expressed to be payable on tender or by the yard and acceptance by the owners of delivery of the vessel.
The first installment was duly paid on 28th April, 1972. The difficulties in the case however arose from the facts that on 12th February, 1973 the United States dollar was devalued by ten per cent, the Korean currency following suit. Consequent on this the yard put forward a claim to an increase in the purchase price of the ship of ten per cent in respect of all installments of the price after the first, which had of course already been paid before the American devaluation. This excess was eventually paid under circumstance which have to be carefully examined and the claim in the arbitration by the owners is for US $ 3,010,250 in respect of illegal over payment subject to an admitted counter claim by the yard for a relatively small sum of US $ 209,678.03 which the owners admitted as an allowances to be set off against the large sum claimed by them.
The question of law for the decision of the court is whether the owners are entitled to recover from the yard sums paid by the owners to the yard inn excess of the price provided in the agreement dated 10th April, 1972, less the small sums admittedly owing from the owners to the yard already mentioned. Subject to the decision of the court on the question of law two arbitrators held that the owner’s claim failed completely and that the yard’s counter succeeded in full.
The owner’s claim is for money had and received in that the additional ten per cent in fact paid by them on all instalments subsequent to the first was paid involuntarily either under a contract made for no consideration or, if there were consideration, by the threat by the yard to break their contract by ceasing to construct the ship, form of conduct by the yard described by the owners as economic duress, for which as a basis for rendering an agreement voidable I was referred to a number of authorities, mainly Australian”.
“Having reached the conclusion that there was consideration for the agreement made 28th and 29th June, 1973, I must next consider whether even if that agreement, varying the terms of the original shipbuilding contract of 10th April, 1972, was made under a threat to break that original contract and the various increased installments were made consequentially under the varied agreement, the increased sums can be recovered as money had and received. Counsel for the owners submitted that they could be, provided they were involuntary payments and not made, albeit perhaps with some grumbling, to close the transaction.
Certainly this is the well-established position if payments are made, for example, to avoid the wrongful seizure of goods where there is no prior agreement to make such payments. The best known English case to this effect is probably Maskell v. Horner where the plaintiff had over many years paid illegal tolls on his goods offered for sale in the vicinity of Spital fields Market. The plaintiff had paid under protest, though the process was so prolonged that the protests became almost in the nature of jokes, though the plaintiff had in fact suffered seizures of his goods when he had not paid. Lord Reading CJ did not say that express words of protest were always necessary, though they might be useful evidence to negative voluntary payments; the circumstances taken as a whole must indicate that the payments were involuntary. Buckley LJ regarded the making of a protest before paying to avoid the wrongful seizure of one’s goods as ‘a further factor’, which went to show that the payment was not voluntary. Pickford LJ likewise retarded the fact of protest as some indication that the prayer intended to resist the claim.
There are a number of well known examples inn the books of English cases where the payments made have been involuntary by reason of some wrongful threatened action or inaction in relation to goods and have subsequently been recovered, but where the issue has not been complicated by the payments having been made under a contract. Some of these cases have concerned threats to size, seizure or wrongful detention of goods. Maskell v. Horner being the best known modern example of the former two categories and Astley v. Reynolds ((1731) 2 Str. 915, 93 ER 939), a good example of the later category, where a pawnbroker refused to release plate when the plaintiff tendered the money lent and, on demand, more than the legal rate of interest, since without this the pawnbroker would not release the plaintiff’s plate. The plaintiff recovered the excess, as having paid it under compulsion and it was held no answer than an alternative remedy might lie in trover.
Counsel for the owners referred me to other cases decided in this country bordering on Western Railway ((1844) 7 Man & G 253, 135 ER 107), approved in Great Western Railway v. Sutton (supra), it was held that the railway was not entitled to differentiate adversely between charges on goods made against one carrier or packer using the railway and others. Excess charges payable by such persons were recovered. In advising the House of Lords, Wiles J. said (LR 4 HL 226 at 249) :
“….. I have always understood that when a man pays more than he is bound to do by law for the performance of a duty which the law says is owed to him for nothing, or for less than he has paid, there is a compulsion or concussion in respect of which he is entitled to recover the excess by condition indebiti, or action for money had and received. This is every day’s practice as to excess freight”.
Another case, decided in 1844 on which counsel for the owners relied was Close v. Phipps ((1844) 7 Man & G 586, 135 ER 236), in which the attorney of a mortgaged threatened to sell the mortgaged property unless certain costs, to which he was no entitled, were paid in addition to the mortgage money. The additional costs were paid under protest and were subsequently recovered as money had and received. It was stressed in argument right, I think, that this was a case of money paid under duress, the duress being a threatened breach of contract, though in Goff and Jones on The Law of Restitution ((1966), p. 149), the case is categorised as an example of duress of goods. Another very unusually case is Fernley v. Branson ((1851) 20 LJQB 178). In that case there was a submission to two arbitrators and an umpire the terms including that ‘the costs and expenses of the submission and reference and award to be made shall be in the discretion of the arbitrators or their umpire, who may award and direct by and to whom the same shall be paid’. When the award, made by the umpire alone, was ready, he informed the parties that this was ready to be taken up on payment of over Ponds 379, made up mainly of fees and expenses of the umpire and arbitrators. Eventually the award was taken up and the fees requested paid but these were by the consent of the umpire and one arbitrator taxed by a taxing master and reduced, the reductions being accepted by the two mentioned, but not by the other arbitrator, Mr. Branson. He was accordingly sued in the country court for the excess of some Ponds 49 and held liable to pay this. The decision was upheld on appeal on the basis that the payment was due as money had and received Wightman J. thought it unnecessary to refer to the decisions respecting money paid under duress of goods, since these cases were not questioned by counsel. He relied on the terms in the submission I have quoted but the court decided that these only gave the tribunal the power to decide who should pay the costs, but not to fix costs which were unreasonably high. It is difficult to know how to categorise this case, since there was no duress of goods. In Goff and Jones (Law of Restitution (1966) p. 155). it is attributed to the quasi-public position of the arbitral tribunal, but counsel for the owners rightly pointed out that the role of the arbitrator is contractual and that he can sue for his fees. There has been considerable discussion in the books whether, if an agreement is made under duress of goods to pay a sum of money and there is some consideration for the agreement, the excess sum can be recovered. The authority for this suggested distinction in Skeate v. Beale ((1840) 11 AD & E1 983, 113 ER 688). It was there said by Lord Denman CJ that an agreement was not void because it was made under duress of goods, the distinction between that case and the cases of money paid to recover goods wrongfully, seized being said to be obvious in that the agreement was not compulsorily but voluntarily entered into. In the slightly later case of Wakefield v. Newborn ((1844) 6 WB 276 at 281, 115 ER 107 to 109), Lord Denman CJ referred to cases such as Skeate v. Beale as ‘that class where the parties have come to a voluntary settlement of their concerns, and have chosen to pay what is found due’. Kerr J. in The Siboen and The Sibotre ((1976) 1 Lloyd’s Rep 293), give strong expression to the view that the suggested distinction based on Skeate v. Beale would not be observed today. He said, though orbiter, that Skeate v. Beale would not justify a decision that :
“if, for instance, I should be compelled to sign a lease or some other contract for a nominal but legally sufficient consideration under an imminent threat of having my house burnt down or a valuable picture slashed, though without any threat of physical violence to anyone, I do not think the law would uphold the agreement”.
I was referred to a number of case decided overseas : Nixon v. Furphy ((1925) 25 SR (NSW) 151), Knuston v. Bourkes Syndicate ((1941) 3 DLR 593), and Re Hooper and Grass Contract ((149) VLR 269), all of which have a similarity to Close v. Phipps ((1844) 7 Man & G. 586, 135 ER 236). Perhaps their greatest importance, however, is the quotation in the first mentioned from the judgment of Isaacs J. in Smith William Charlick Ltd. ((1924) 34 CLR 38 at 56), where he said :
“It is conceded that the only ground on which the promise to repay could be implied is “compulsion”. The payment is said by the respondent not to have been lm2″, voluntary” but “forced” from it within the contemplation of the law ….
“Compulsion” in relation to a payment of which refund is sought, and whether it is also variously called “coercion”, “extortion”, “exaction” or “force”, includes every species of duress or conduct analogous to duress, actual or threatened, exacted by on behalf of the payee and applied to the person or the property or any right of the person who pays …. Such compulsion is a legal wrong, and the law provides, and the law provides a remedy by raising a fictional promise to repay”.
These case do not, however, expressly deal with the position arising when the threat or compulsion results in a new or varied contract. This was, or something very like it, however, the position in T. A. Sundell & Sons Pvt. Ltd. v. Emm Yannoulatos (Overseas) Pvt. Ltd. (1956 SR (NSW) 323). In that case, the plaintiff had originally entered into a contract to buy from the defendant a quantity of galvanised iron at Pound 100.15 S. a ton and had established a letter of credit in favour of the defendant seller accordingly. The iron was to come from France and some months after the contract had been entered into the seller said that an increase in price of probably Pound 27 was inevitable and requested that the letter of credit be increased, otherwise the plaintiff would not get his iron. Eventually the buyer on 17th April sent the seller a fresh order for the same quantity of iron at Pound 140 per ton, but asking the seller to acknowledge that the buyer should have the right to contend that the original contract required the seller to supply the iron at Pound 109.15 S. a ton. The buyer amended and increased his letter of credit accordingly, but the seller in acknowledging the buyer’s letter did not accept the terms laid down in it. Eventually the iron arrived before the arguments had been resolved and full use was made of the increased letter of offer.
The buyer thereafter sued to recover the excess he had paid through the increased letter of credit as having been paid under ‘practical compulsion’. The first point taken in answer to this was that the original contract was varied or superseded by a new contract made on 17th April and the accordingly the buyer was obliged thereunder to pay. This argument failed since the court found there was no consideration for the provision of the increased letter of credit. The second point argued was that a payment could not be said to have been made under ‘practical compulsion’ where a threat was made by the payee to withhold from the payer a contractual right as distinct from a right of possession of property, a statutory right or some proprietary right. This is was argued would be to break new ground and would be contrary to what was said by Lord Summer in Sinclair v. Brougham ((1914) AC 398 at 453-454 (1914-15) All. ER Rep 622 at 649), against extending the action for money had and received. These arguments were rejected by the court who cited the passage from the judgment of Issacs J. (Smith v. William Charlick Ltd. ((1924), 34 CLR 38 at 56), set out above emphasising by italics the words ‘or any right’ of the person paying under compulsion. It would seem, therefore, that the Australian courts would be prepared to allow the recovery of excess money paid, even under a new contract, as the result of a threat to break an earlier contract, since the threat or compulsion would be applied to the original contractual right of the party subject to the compulsion or economics duress. This also seems to be the view in the United States, where this was one of the grounds of decision in King Construction Company v. Smith Electric Co. ((1961) 350 SW 2D 940). This view also accords with what was said in D & C Builders Ltd. v. Rees ((1965) 3 All. Er 837 at 841 : (1966) 2 QB 617 at 625), per Lord Denning MR : ‘No person can insist on a settlement procured by intimidation’.
Counsel for the owners also relied on two English cases of the last century as showing that even when a contract has been entered into to pay an excess amount the remedy by way of a claim for money had and received is available. The first of these was Hills v. Street ((1828) 5 Bing 37, 130 ER 973). There a broker was in possession of goods detrained for rent. The party detrained on was anxious to have time to pay the rent and that the goods should not be sold. A written request was demanded by the broker and an undertaking to pay expenses given. Yet despite what appears to have been an agreement the party detrained on was held entitled to recover excess expenses charged by the broker. There was no voluntary payment. The second was Tamvaco v. Simpson ((1866) LR 1 CP 363), cited in Goff and Jones (Law of Restitution (1966), p. 151) as being inconsistent with the so-called rule based on Skeate v. Beale (supra). The case in however, a difficult one to follow and draw conclusions from since the courts were limited to answering two questions on a case stated. Counsel for the owners further relied on the Chancery case or Ormes v. Beadel ((1860) 2 Giff 166, 66 ER 70), reversed on appeal on the ground of affirmation or acquiescence (1860) 2 De GF & J 333, 45 ER 649. as showing that in equity a contract entered into under circumstances of acute economics pressure, increased by the refusal of an architect to pay a builder a sum which the court found was a fair and just demand for work done, would be set aside in equity.
I may here usefully cite a further short passage from the valuable remarks of Kerr J. in The Siboen and The Sibotre (supra), where after referring to three of the Australian cases I have cited he said :
“It is true in that case, and in all the three Australian cases, it was held that there had been no consideration for the settlement which the courts reopened. But I do not think that it would have made any difference if the defendants in these cases had also insisted on some purely nominal but legally sufficient consideration. If the contract is void the consideration would be recoverable in quasi-contract : if it is voidable equity could rescind the contract and order the return of the consideration”.
It also interesting at this point to quote a few sentences from an article entitled ‘Duress as a Vitiating Factor in Contract’ by Mr. Beatson, Fellow of Merton College, Oxford (1974) CLJ 97 at 108 :
“It is submitted that there is no reason for making a distinction between actual payment agreements to pay. If that is so there is nothing to prevent a court from finding that duress of goods is a ground upon which the validity of a contract can be impeached …. The law was accurately stated by the courts of South Carolina as early as 1795, when it was said that” …. whenever assumes it will lie for money extorted by duress of goods, a party may defend himself against any claim upon him for money to be paid in consequence of any contract made under similar circumstances”.
Before proceedings further it may be useful to summarise the conclusion I have so far reached. First, I do not take the view that the recovery of money paid under the duress other than to the person is necessarily limited to duress to goods falling within one of the categories hitherto established by the English cases. I would respectfully follow and adopt the broad statement of principle laid down by Issacs J. Smith v. William Charlick Ltd. (supra), cited earlier and frequently quoted and applied in the Australian cases. Secondly, from this it follows that the compulsion may take the form of ‘economics duress’ if the necessary facts are proved. A threat to break a contract may amount to such ‘economic duress’. Thirdly, if there has been such a form of duress leading to a contract for consideration. I think that contract is a voidable one which can be avoided and the excess money paid under it recovered.
I think the facts found in this case to establish that the agreement to increase the price by ten per cent reached at the end of June, 1973 was caused by what may be called ‘economic duress’. The yard were adamant in insisting on the increased price without having any legal justification for so doing and the owners realised that the yard would not accept anything other than an unqualified agreement to the increase. The owners might have claimed damages in arbitration against the yard with all the inherent unavoidable uncertainties of litigation, but in view of the position of the owners vis-a-vis their relations with Shell it would be unreasonable to hold that this is the course they should have taken : see Astely v. Reynolds (supra). The owners made a very reasonable offer of arbitration coupled with security for any award in the yard’s favour that might be made, but this was refused. They then made their agreement, which can truly I think be said to have been made under compulsion, by the telex of 28th June without prejudice to their rights. I do not consider the yard’s ignorance of the Shell charter material. It may well be that had they known of it they would have been even more exigent”.
If I am right in the conclusion reached with some doubt earlier that there was consideration for the ten per cent increase agreement reached at the end of June, 1973, if it be right to regard this as having been reached under a kind of duress in the form of economic pressure, then what is said in Chitty on Contracts (24th Edn. (1977) Vol. 1, para 442, P. 207), to which both counsel referred me, is relevant, namely that a contract entered into under duress is voidable and not void :
“that a person who has entered into the contract may either affirm or avoid such contract after the duress has ceased; and if he has so voluntarily acted under it with a full knowledge of all the circumstances he may be held bound on the ground of ratification, or if, after escaping from the duress, he takes no steps to set aside the transaction, he may be found to have affirmed it”.
On appeal in Ormes v. Beadel ((1860) 2 De GF & J 333, 45 ER 649), and in Kerr J’s case The Sibben and The Sibotre (supra), there was on the facts action which was held to amount to affirmation or acquiescence in the form of taking part in an arbitration pursuant to the impugned agreement. There is nothing comparable to such action here.
On the other hand, the findings of fact in the special case present difficulties whether one is proceeding on the basis of a voidable agreement reached at the end of June 1973 or whether such agreement was void for want of consideration, and it were necessary in consequence to establish that the payments were made involuntarily and not with the intention of closing the transaction.
I have already stated that no protest of any kind was made by the owners after their telex of 28th June, 1973, before their claim in this arbitration on 30th July, 1975, which was shortly after, in July of that year, the Atlantic Baroness, a sister ship of the Atlantic Baron, had been tendered, though as I understand it, she was not accepted and arbitration proceedings in regard to her are in consequence taking place. There was therefore a delay between 27th November, 1974, when the Atlantic Baron was delivered and 30th July, 1975, before the owners put forward their claim. the owners were, therefore, free from the duress on 27th November, 1974 and took no action by way of protest or otherwise between their important telex of 28th June, 1973 and their formal claim for the return of the excess ten per cent paid 30th July, 1975, when they nominated their arbitrator. One cannot dismiss this delay as of no significance, though I would not consider it conclusive by itself. I do not attach any special importance to the lack of protest made at the time of the assignment, since the documents made no reference to the increased ten per cent. However, by the time the Atlantic Baron was due for delivery in November 1974 market conditions had changed radically, as is found in the special case and the owners must have been aware of this. The special case finds, as stated earlier, that the owners did not believe that if they made any protest in the protocol of delivery and acceptance the yard would have refused to deliver the vessel or the Atlantic Baroness and had no reason so to believe. Counsel for the owners naturally stressed that in the rather carefully expressed findings in the special case, there is no finding that if at the time of the final payments the owners had withheld payment of the additional ten per cent, the yard would not have delivered the vessel. However, after careful consideration, I have come to the conclusion that the important points here are that (i) since there was no danger at this time in registering a protest, (ii) the final payments were made without any qualification, and (iii) were followed by a followed by a delay until 31st July, 1975 before the owners put forward their claim, the correct inference to draw, taking an objective view of the facts, is that the action and inaction of the owners can only be regarded as an affirmation of the variation in June 1973 of the terms of the original contract by the agreement to pay the addition a ten per cent. In reaching this conclusion I have not, of course, overlooked the findings in the special case (that the owners never intended to affirm the agreement for extra payments) but I do not think that an intention on the part of the owners not to affirm the agreement for the extra payments, not indicated to the yard, can avail them in view of their overt acts. As was said in Deacon v. Transport Regulation Board ((1958) VR 458 at 460), in considering whether a payment was made voluntarily or not : “No secret mental reservation of the does is material. The question is what would his conduct indicate to a reasonable man as his mental state. I think this test is equally applicable to the decision this court has to make whether a voidable contract has been affirmed or not and I have applied this test in reaching the conclusion I have just expressed.
I think I should add very shortly that having considering the many authorities cited, even if, I had come to a different conclusion on the issue about consideration, I would have come to the same decision adverse to the owners on the question whether the payments were made voluntarily in the sense of being made to close the transaction.
I accordingly answer the question of law in the negative with the consequences set out in the award.”
33. In Pao On and others v. Lau Yiu and another (1979 (3) AER 65 (PC) : AC 614), the question was whether the contract was enforceable as the consent of the defendants was induced by duress. At page 78 the P.C. dealt with the aspect of the duress in the following terms :
“Duress, whatever form it takes, is a coercion of the Will so as to vitiate consent. Their Lordships agree with the observation of Kerr J. in the Siboen and the Sibotre (supra), that in a contractual situation commercial pressure is no enough. There must be present some factor, ‘which could in law be regarded as a coercion of his Will so as to vitiate his consent’. This conception is in line with what was said in this Board’s decision in Barton v. Armstrong (supra) by Lord Wilberforce and Lord Simon of Glaisdale, observations with which the majority judgment appears to be in agreement. In determining whether there was a coercion of Will such that there was to true consent, it is material to enquire whether the person alleged to have been coerced did or did not protest; whether, at the time he was allegedly coerced into making the contract. He did or did not have an alternative course open to him such as an adequate legal remedy; whether he was independently advised, and whether after entering the contract he took steps to avoid it. All these matters are, as was recognised in Maskell v. Horner ((1915) 3 KB 106 = (1914) All. ER Rep. 595), relevant in determining whether he acted voluntarily or not.
In the present case there unanimity amongst the judges below that there was no coercion of Lau’s Will. In the court of Appeal the trial judge’s finding (already quoted) that Lau considered the matter thoroughly, chose to avoid litigation, and formed the opinion that the risk in giving the guarantee was more apparent than real was upheld. In short, there was commercial pressure, but no coercion. Even, if this Board was disposed, which it is not, to take a different view, it would not substitute its opinion for that of the judges below on this question of fact.
It is, therefore, unnecessary for the Board to embark on an enquiry into the question whether English law recognises a category of duress known as ‘economic duress’. But, since the question has been fully argued in this appeal, their Lordships will indicate very briefly the view which they have formed. At common law money paid under economic compulsion could be recovered in an action for money had and received : see Astley v. Reynolds. (supra) The compulsion had to be such that the party was deprived of ‘his freedom of exercising his Will’ (2 Star 915 at 916). It is doubtful, however, whether at common Law any duress other than duress to the person sufficed to render a contract voidable : see Blackstone’s Commentaries (12th Edn. (1793). Vol. 1, PP. 130-131) and Skeate v. Beale (supra). American law (Williston on Contracts (3rd Edn. (1970), Ch. 47’s) now recognises that a contract may be avoided on the ground of economic duress. The commercial pressure alleged to constitute such duress must, however, be such that the victim must have entered the contract against his Will, must have had no alternative course open to him, and must have been confronted with coercive acts by the party exerting the pressure : see Williston on Contracts (3rd Edn. (1970) Ch. 47, S. 1603). American Judges pay great attention to such evidential matters as the effectiveness of the alternative remedy available, the fact or absence of protest, the availability of independent advice, the benefit received, and the speed with which the victim has sought to avoid the contract. Recently two English Judges have recognised that commercial pressure may constitute duress the pressure of which can render a contract voidable : see Kerr J. in The Siboen and The Sibotre and Mocatta J. In North Ocean Shipping Co. Ltd. v. Hyundai Construction Co. Ltd. ((1978) 23 All. ER 1170). Both stressed that the pressure must be such that the victim’s consent to the contract was not a voluntary act on his art. In their Lordship’s view, there is nothing contrary to principle in recognising economic duress as a factor which may render a contract voidable, provided always that the basis of such recognition is that it must amount to a coercion of Will, which vitiates consent. It must be shown that the payment made or the contract entered into was not a voluntary act.”
The statement of law in Chatty of Contract 27th Edn. 1994, edition is found in paragraph 7.001. In Universe Tanships Inc. of Monrovia v. International Transport Workers Federation and others (1 (1983) A.C. 366). Lord Diplock had observed that the rationale was that the parties’ consent was induced by a pressure which the law does not regard as legitimate with the consequence that the consent is treated in law as revocable.
34. In Halsbury’s Laws of England 4th Edn. Vol. 9 the statement of law is stated in the following terms :
“By duress is meant the compulsion which a person acts through fear of personal suffering as from injury to the body or from confinement, actual or threatened. A threat of a criminal prosecution for which there is sufficient ground is not such duress as Will vitiate a contract made in consequence thereof, provided that there is valuable consideration for the contract, and that there is no agreement to stifle the prosecution. There is no duress simply because a party has to enter into a contract be reason of statutory compulsion, or the fact that the other party is monopoly supplier. Moreover, as a general rule, a threat of civil proceedings or bankruptcy proceedings does not amount to duress, whether there is goods foundation for the proceedings or not, but it may do so if it is intended and calculated, having retard to the circumstances, to cause terror in the particular case. The question whether imprisonment or threatened imprisonment does or does not constitute duress depends upon whether the imprisonment is lawful or unlawful.
A contract obtained by means of duress exercised by on party over the other is at very lease voidable, and may perhaps be void; but if it is voluntarily acted upon by the party entitled to avoid, it will become binding on him. The duress must be actually existing at the time of the making of the contract, and the personal suffering may be that of the husband or wife or near relative of the contracting party, but that of a stranger or a master is not sufficient.”
35. Therefore, R-52 in law is voidable. The contractor should have taken steps in accordance with the provisions of the Contract Act, 1872. The concept of duress though, not specifically mentioned in the Act, it is taken into the Act but the contractor meant to say that by giving a promise that the contractor would be allowed to continue with the work under compelling circumstances the documents were obtained by him. There was no free consent by the contractor in executing the document R-52. Section 13 of the Contract Act defines in the following terms :
“”Consent” defined – Two or more persons are said to consent when they agree upon the same thing in the same sense. Section 14 defines free consent as follows :
“”Free consent” defined – Consent is said to be free when it is not caused by :
(1) coercion, as defined in Section 15, or
(2) undue influence, as defined in Section 16, or
(3) fraud, as defined in Section 17, or
(4) misrepresentation, as defined in Section 18, or
(5) mistake, subject the provisions of Sections 20, 21 and 22.
Consent is said to be so caused when it would not have been given but for the existence of such coercion, undue influence, fraud, misrepresentation or mistake.”
Therefore, if a person has given free consent to a particular transaction be cannot turn out and challenge the documents unless he is able to satisfy the requirement of the provisions mentioned in section of the Contract Act. The respondent Union of India exercised coercion on him. It is also not the case of the contractor that the Union of India exercised ‘undue influence’. Section 17 of the Contract Act defines fraud in the following terms :
“”Fraud” defined – “Fraud” means and includes any of the following acts committed by a party to a contract, or with his connivance, or by his agent, with intent to deceive another party thereto or his agent, or to induce him to enter into the contract :
(1) the suggestion, as a fact, of that which is not true, by one who does not believe it to be true :
(2) the active concealment of a fact by one having knowledge or belief of the fact;
(3) a promise made without any intention of performing it;
(4) any other act fitted to deceive;
(5) any such act or omission as the law specially declares to be fraudulent.”
By saying that duress was exercised by Union of India the contractor would try to bring his case under sub-section (3) and sub-section (4) of this Section 18. The contractor is trying to bring it under Section 18 of the Contract Act, where misrepresentation is defined. Section 18 reads as follows :
“”Misrepresentation” defined – “Misrepresentation” means and includes :
(1) the positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true;
(2) any breach of duty which, without an intent to deceive, gains an advantage to the person committing it, or any one claiming under him, by misleading another to his prejudice, or to the prejudice of any one claiming under him;
(3) causing, however innocently, a party to an agreement to make a mistake as to the substance of the thing which is the subject of the agreement.”
Section 19 lays down that when consent is caused by coercion, fraud or misrepresentation the agreement is voidable. Section 19 reads as follows :
“Voidability of agreement without free consent – When counsel to an agreement is caused by coercion, fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused.
A party to a contract, whose consent was caused by fraud or misrepresentation, may, if he thinks fit, insist that the contract shall be performed, and that he shall be put in the position in which he would have been if the representation made had been true.”
By Section 3 of the Indian Contract (Amendment) Act, 1899 (VI of 1899) the words ‘undue influence’ were taken out of Sections 19 and 19A was inserted providing for setting aside the contract introduced by undue influence. Therefore, if it is the case of undue influence by the contractor still the contract is voidable under Sections 101 to 104 of the Evidence Act, 1872, the burden is on the contractor.
36. In the light of the position of law the contractor cannot be rest content by stating that documents on R-52 were brought about under duress and therefore they should completely be ignored. When no attempt has been made by the contractor to challenge these two documents the award of the arbitrator cannot be said to be in accordance with law.
37. The view of the arbitrator that “I am of the view that the claimants are entitled to extra cost due to prolongation of the contract for which they are not responsible” cannot be sustained.
38. The learned counsel for the contractor invited my attention to the decision of this court in M/s. Metro Electric Co. v. Delhi Development Authority (AIR 1980 Delhi 266), for the proposition that the objector Union of India cannot escape out of the situation when breach was committed by it and the ratio of the above decision would apply and the award by the arbitrator of Rs. 1,04,000/- was perfectly in order and Union of India cannot challenge it under Section 30 of the Arbitration Act, 1940.
39. I am quite unable to appreciate this argument when the contractor himself did not come forward with any claim on the question relating to R-52 and, therefore, the question whether the objector had committed breach would not arise for consideration. Accordingly, the award made by the arbitrator on claim No. 3 is set aside.
40. On claims No. 4 and 5, no objections have been filed by the Union of India.
41. The Union of India made a counter claim before the arbitrator claiming Rs. 11,387/- on account of rectification of defect in the work. The arbitrator has said “In the absence of any notice within the maintenance period which expired on 15.2.1986 and also in the absence of any consent by claimants in this regard, the reduction in rates is held to be not justified. Ext. R-141 dated 27.2.1986 relied by respondents is after the maintenance period was over. The counter claim of respondents is, therefore, not justified and nothing is awarded for this counter claim.”
42. In the objection petition it is stated that the Department had spent money on rectification and, therefore, it was justified in seeking to recover the amount. As could be seen from the extract above from the award, Ext. R-141 was written by the Department on 27.2.1986, which was after the maintenance period.
43. I do not find any error in the findings of the arbitrator in this counter claim.
44. In fine, the award is made rule of the court subject to what I have stated above and there shall be a decree directing the Union of India to pay sum of Rs. 60,641/- to the claimant with simple interest @ 14% per annum form the date of the award till realisation. There shall be no order as to costs.