CHAIRMAN AND M.D., N.T.P.C. LTD. versus M/S RESHMI CONSTRUCTIONS, BUILDERS & CONTRACTORS

Citation: [2004] 1 S.C.R. 62 · Decided: 05-01-2004 · Supreme Court of India · Bench: V.N. KHARE · Disposal: Dismissed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
B 
CHAIRMAN AND M.D., N.T.P.C. LTD. 
v. 
MIS RESHMI CONSTRUCTIONS, BUILDERS & CONTRACTORS 
JANUARY 5, 2004 
[V.N. KHARE, CJ. AND S.B. SINHA, J.] 
Arbitration Act, 1940-Section 20-Rejection of final bill by the company 
submitted by contractor-Acceptance of final payment by the contractor and 
C giving no-dues certificate under protest and without prejudice-Contractor 
invoking arbitration clause as per the contract-Company taking the plea that 
on acceptance of final payment, the contract comes to an end and hence 
contractor cannot invoke arbitration clause under the contract-Validity of-
Held, on facts, the arbitration clause in the contract subsists since the payment 
was accepted by contractor under protest and without prejudice. 
D 
Respondent-contractors submitted a final bill for payment to 
appellant on completion of the contract work. The appellant rejected the 
•final bill of the respondent. The appellants themselves prepared the final 
1 
bill and obtained from the respondent a no-dues Certificate. The 
respondent gave the no-dues certificate on receipt of the final payment 
E from the appellant. The respondent lodged its protest with the appellant 
stating that t:he no-dues certificate was executed by the respondent under 
duress and coercion by the appellant for receipt of the payment of the final 
bill from the appellant; that it was execnted under protest without its 
prejudice to the rights and claims available under the contract; that there 
F is no accord and satisfaction between the contracting parties; and that the 
amount stated in the final bill furnished by the respondent be paid as per 
the terms of the contract. 
The respondent invoked the arbitration clause in the contract and 
issued a notice to the appellant to appoint a sole arbitrator for adjudication 
G of the disputes. The appellant initially accepted for the appointment of 
an arbitrator. Later the appellant issued a letter to the respondent 
clarifying that on acceptance of the final bill and after giving a no-dues 
certificate by the respondent, the contract comes to an end and hence the 
respondent cannot invoke the arbitration clause contained in the contract. 
H 
62 
N.T.P.C. v. RESHMI CONSTRUCTIONS BUILDERS & CONTRATCTORS 
63 
The respondent filed an application under Section 20 of the A 
Arbitration Act, 1940 before the trial court for intervention. The 
application of the respondent was dismissed by the trial court. The appeal 
of the respondent was allowed by High Court. 
In appeal, the appellant contended that on acceptance of the final 
bill and after giving a no-dues certificate by the respondent, the contract B 
comes to an end and hence the respondent cannot invoke the arbitration 
clause contained in the contract; and that the respondent, in the 
application under Section 20 of the Arbitration Act, did not raise a plea 
that they had been coerced to s~bmit the No Demand Certificate. 
The respondent contended that there was no accord and satisfaction 
of the contract agreement; that the arbitration clause survives despite 
coming to an end of the contract; and that all the disputes in relation to 
the execution of the contract are referable to arbitration. 
Dismissing the appeal, the Court 
HELD: I. I. The arbitration agreement subsists because: 
c 
D 
(i) the disputes as regards the final bill arose prior to the acceptance 
by the respondent since the same was prepared by the respondent but was 
not agreed upon by the appellant; 
E 
(ii) the appellant has not pleaded that on submission of the final bill 
by the respondent, any negotiation or settlement took place as a result 
whereof the final bill, as prepared by the appellant, was accepted by the 
respondent unequivocally and without any reservation therefore; 
p 
(iii) the respondent, immediately after receiving the payment of the 
final bill, lodged its proiest before the appellant and reiterated its claims. 
(iv) the interpretation of the agreement would constitute a dispute 
which would .fall for consideration of the arbitrator. 
G 
(v) the effect of the correspondences between the parties would have 
to be determined by the arbitrator particularly as regard the claim of the 
).. 
respondent that the final bill was accepted by it without prejudice. 
(vi) the appellant never made out a case that any novation of the H 
64 
SUPREME COURT REPORTS 
[2004) I S.C.R. 
A contract agreement took place or the contract agreement was substituted 
by a new agreement. 
(vii) 

Excerpt shown. Read the full judgment & AI analysis in Lexace.