LexM/S. GAYATRI PROJECT LTD. versus M/S. SAI KRISHNA CONSTRUCTION
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A B [2013] 14 S.C.R. 1138 M/S. GAYATRI PROJECT LTD. v. MIS. SAi KRISHNA CONSTRUCTION (Civil Appeal No. 1854 of 2007) NOVEMBER 28, 2013 [SURINDER SINGH NIJJAR AND RANJANA PRAKASH DESAI, JJ.] Arbitration and Conciliation Act, 1996 - s. 11 (5) and (6) C - Application under - Maintainability - Civil works relating to irrigation structures - Granted to appellant by the State Government of Andhra Pradesh - Appellant was the main contractor and respondent was the sub-contractor working under the appellant - Agreement dated 29-01-2001 entered D between the two parties contained an arbitration clause - Claim of respondent that it had executed work to the satisfaction of the appellant and the State Government; but appellant having received all the amounts from the State Government failed to make corresponding payments to the E respondent after deducting commission as stipulated under the agreement - Counter claim of appellant that the accounts had been reconciled and that the parties had signed a full and final settlement document on 6. 6. 2003 - Full and final settlement dated 6. 6. 2003 not accepted by respondent - F Dispute not resolved - Respondent moved application ul s. 11 (5) and (6) for appointment of Arbitrator - Plea of appellant that the application was liable to be dismissed inasmuch as agreement dated 29.1.2001 which contains the arbitration clause had been superseded by the full and final G settlement agreement dated 6. 6. 2003; and respondent having received the entire amount in terms of the "full and final settlement" dated 6-6-2003 was estopped from filing the application u/s. 11 (5) and (6) - According to appellant, since the entire dispute had been settled, no reference could be H 1138 GAYATRI PROJECT LTD. v. SAi KRISHNA 1139 CONSTRUCTION made to arbitration - High Court, however, allowed the A application u/s. 11 (5) and (6) - . On appeal, held: The question as to whether letter dated 6-6-2003 would constitute a "full and final settlement" would have to be determined on proper appreciation of the evidence led by the parties - It is open to two interpretations - Which of the two interpretations is B ultimately accepted will have to be decided by the appropriate forum - Appellant is relying on the alleged settlement by way of defence - Respondent has not accepted the same - Nor has the respondent denied the execution of the document - Respondent has also not claimed that the fulr and final c settlement was signed under coercion, undue influence, fraud, misrepresentation or mistake - Furthermore, appellant did not make any claim on the basis of the settlement - It would have been different, if the appellant had made a claim on the basis of settlement which was denied by the respondent by one or D more of the defences - In such circumstances, it would have to be held that the settlement can only be challenged in "proper proceedings" ..:. However, in the instant case, since there is no acceptance of the full and final settlement by the respondent which has been relied upon by the appellant, the issue clearly had to be left to the Arbitrator to be adjudicated. E Nathani Steels Ltd. vs. Associated Constructions 1995 Supp (3) SCC 324; National Insurance Company Limited vs. Boghara Polyfab Private Limited (2009) 1 SCC 267: 2008 (13) SCR 638 - referred to. F Case Law Reference: 1995 Supp (3) SCC 324 referred to 2008 (13) SCR 638 referred to Para 10 Para 11 CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1854 of 2007. G From the Judgment & Order dated 20.12.2006 of the High Court of Judicature of Andhra Pradesh at Hyderabad in H 1140 SUPREME COURT REPORTS [2013] 14 S.C.R. A Arbitration Application 55 of 2006. Arun Kathpalia, Angad Mehta, Sayooj Mohandas M., Sanooja M., Abhijit Sengupta for the Appellant. 8 K. Swami, Prabha Swami, Nikhil Swami for the Respondent. c D The following Order of the Court was delivered ORDER 1. This appeal is filed against the order passed by the High Court in an application under Section 11 (5) and (6) of the Arbitration and Conciliation Act, 1996 (for short the 'Act') directing that the matter be referred to arbitration by a former Judge of the Andhra Pradesh High Court. 2. The respondent moved the aforesaid application on the basis that it is a partnership firm, carrying on business of civil works relating to irrigation structures. The Irrigation Department of Government of Andhra Pradesh
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