JUDGMENT
K.S. Radhakrishnan, J.
1. This appeal is preferred by Union of India and the Divisional Railway Manager, Southern Railway against the judgment in OS (Arb.) No. 15 of 1994 of the 2nd Addl. Sub Judge, Ernakulam, directing them to file the original agreement No. 34/TVC/90 dated 7.5.1990 and directing the parties to file a joint panel of arbitrators so as to appoint an arbitrator for settling the disputes and difference between the parties.
2. The work in question related to “rationalization of watering arrangements provision of 225 Kilo Litres ground level reservoir, 90 Kilo Litres RCC High level tank near South Over Bridge and alternation to distribution pipe lines.” Formal agreement was executed by the parties on 7.5.1990. The work was not completed in time, which according to the contractor was due to the default on the part of the Railways. Railways however, maintained the stand that the time for competition of the work had to be extended because of the delay in completing the work by the contractor. Both sides raised their respective contentions before the the court below highlighting the default committed by each other. Contractor submitted an amount of Rs. 6,66,300/- is still due to him under various heads. Railways denied all the claims. Railways submitted that the contractor had failed to return large quantities of excess M.S. rods supplied to him and consequently there was delay in settling the final bill. It was stated though the work was completed and the final measurement was taken on 15.3.92 the payment could not be made since the claimant did not return the M.S. rods in time. The contractor returned the M.S. rods only on 15.9.1992 and after that payment was effected. The claimant then received the final payment on furnishing a “no claim certificate”. Security deposit received from the contractor was also released to him on the strength of “no claim certificate”. Railways submitted after having received the amount and the security deposit etc. the claimant is estopped from raising any further claim. Counsel also referred to Clause 43(2) of the general conditions of contract entered into between the parties.
3. Counsel appearing for the contractor however, submitted that even if final bill was settled by furnishing “no claim certificate” the contractor is still entitled to raise his claims. Counsel submitted mere fact that the final bill had been cleared would not mean that there is accord and satisfaction within the meaning of Section 63 of the Contract Act. Counsel placed reliance on the decisions of the Apex Court in Kishorilal Gupta’s case (AIR 1959 SC 1362), Damodar Valley v. K.K. Kar (AIR 1974 SC 158), Bharat Heavy Electricals Ltd. v. Amar Nath Bhan Prakash ((1982) 1 SCC 625), Union of India v. M/s. L.K. Ahuja & Co. (AIR 1988 SC 1172), Jayesh Engineering Works v. New India Assurance Co. Ltd., (2000) 10 SCC 178 ETC. Counsel submitted that the decisions of the Apex Court in AIR 1988 SC 1172 and (2000) 10 SCC 178 are squarely applicable to the facts of this case. Counsel also placed decisions of the Apex Court in P.K. Ramath’s case (1994 Suppl. 3 SCC 126), Nathani Steels Ltd. v. Associated Constructions (1995 Supp. (3) SCC 324) and in Union of India v. Popular Builders (2000) 8 SCC 1. Counsel also submitted in any view of the matter the question whether there is accord and satisfaction and whether the contract has been fully worked out and whether the payments have been effected in full and final settlement are questions to be decided by the arbitrator and hot by the Sub Court. Counsel also made reference to the decision of this Court in Ittyarah v. State of Kerala (ILR 1987 (1) Ker. 182) and also in Union of India v. M/s. Asian Techs Ltd.
(ILR 2002 (2) Ker. 501. Reference was also made to the decision of this court in Aby Abraham Mathew v. Hindustan News Print Ltd. (2001 (1) KLT 517). Counsel appearing for the Railways placed reliance on the decision of the Apex Court in Wild Life Institute of India, Dehradun v. Vijay Kumar Garg ((1997) 10 SCC 528).
4. In the light of the above mentioned decisions cited by either side we may examine the questions raised in this case. It is well settled that the question whether there was discharge of the contract by accord and satisfaction is a dispute arising out of the contract and is liable to be referred to arbitration and consequently an application under Section 20 of the Arbitration Act would lie. It is also clear from various decisions laid down by the Apex Court that whether any amount is due to be paid and how far the claim is tenable are matters to be considered by the arbitrator. In fact whether the contract has been fully worked out and whether the payments have been made in full and final settlement are questions to be considered by the arbitrator when there is a dispute regarding the same. There cannot be any quarrel regarding the above mentioned proposition. However, each case has to be decided on facts of each case on the basis of the terms and conditions upon which the agreement was entered into by the parties. The mere fact that a dispute has been raised, the court is not obliged to invoke Section 20 and direct the parties to submit the agreement before the court for appointment of arbitrator. When provision is clear and the facts are well borne out by records the parties need not be relegated to the arbitration proceedings. Apex Court in (1997) 10 SCC 528 (supra) while interpreting arbitration clause in a given agreement held:
“In view of the provision in the arbitration clause the liability of the appellants ceases if no claim of the contractor is received within 90 days of receipt by the contractor of an intimation that the bill is ready for payment. This clause operates to discharge the liability of the appellants on expiry of 90 days as set out therein and is not merely a clause providing a period of limitation. In the present case the contractor has not made any claim within 90 days of even receipt of the amount under the final bill. The dispute has been raised for the first time by the contractor 10 months after the receipt of the amount under the final bill.”
The court held that no reference to arbitration is necessitated under Section 20. We are of the view the decision referred to hereinbefore and especially in Ahuja’s case and Jayesh Engineering Works’s case (supra) do not lay down a different principle. Those are all cases where “no claim certificate” was never submitted by the contractor and there was no provision similar to Clause 43(2). In the instant case, contractor on completion of the work had sent letter dated 24.11.92 certifying that he has no claims against the Railways in respect of the work in question. In this case, the contractor as well as the Railways in the prescribed form have already certified that all the claims have been settled. We may extract the relevant portion in the final contract certificate:
Certified that the contractor has completed the work satisfactorily and there is no claim against the contract as far as this agreement is concerned.
Sd/- Asst. Engineer (S.Rly.)
Ernakulam.
Certified that all the items of works under this agreement have been fully and finally measured and I have no claim against this agreement.
Sd./-Contractor.
(See page 180 of the files produced by the Railways.)
We may also refer to letter dated 24.11.1992 sent by the contractor to the Senior Divisional Engineer, Southern Railway, which reads as follows:
I have completed the above work long back and the final bill is also submitted to your office for payment. I therefore request you to release the total security deposit amount that has been recovered from my part bills till date in respect of the above work. As you are aware, the final bill itself has been inordinately delayed by the department and it is only fair on your part to help me atleast now by rleasing the security deposit amount also along with the final bill payment.
Sir, already I have lost very heavily on this work and I am financially crippled and in a very difficult situation. I have brought this matter to your notice on various occasions earlier. I therefore once again request you to release the security deposit also together with the final bill payment without further delay.
In this connection I hereby certify that I have no claims against the Railway in respect of the above work.
The files produced before us in the above case would positively show that the contractor had received the final bill as well as security amount. In this connection we may refer to Clause 43(2) of the agreement which reads as follows:
“The Contractor shall not be entitled to make any claim whatsoever against the Railway under or by virtue of of arising out of this contract, nor shall the Railway entertain or consider any such claim, if made by the Contractor after he shall have signed a “No claim” certificate in favour of the Railway, in such form as shall be required by the Railway, after the works are finally measured up.”
The above mentioned clause would estop the contractor from raising further claim if he has signed “no claim certificate”. We find from the files made available as well as the pleadings of the parties that the contractor had submitted no claim certificate. He has received the final bill. He has also received the security deposit and the retention amount. Final bill was paid on 24.11.1992. A18 claim was made only on 24.6.1993. Further as per the agreement the liability of the Railway ceases if no claim is made by the contractor within 90 days of the receipt by the contractor of an intimation that the final bill is ready for payment. In the instant case claim was made after a period of 7 months after settling all the claims.
5. In view of the above mentioned circumstance we are of the view that the Railway is justified in contending that the contractor is estopped from raising the
claims when he has already submitted a “no claim certificate” as provided under Clause 43(2) of the agreement. As per Clause 43(2) the contractor is not entitled to make any claim whatsoever against the Railways under or by virtue of or arising out of the contract. Agreement also debarred the Southern Railway from entertaining or considering any such claim, if made by the contractor after signing the “no claim certificate” prepared by the Railway. Under such circumstance we are of the view that the court below was not justified in directing the party to file the original agreement before the court for the purpose of appointing arbitrator.
Under such circumstance appeal would stand allowed and O.S. (Arb.) No. 15 of 1994 stands dismissed. In the facts and circumstances of the case the parties would bear their respective costs.