ONGC MANGALORE PETROCHEMICALS LTD. versus M/S ANS CONSTRUCTIONS LTD. & ANR.

Citation: [2018] 2 S.C.R. 598 · Decided: 07-02-2018 · Supreme Court of India · Bench: R.K. AGRAWAL · Disposal: Appeal(s) allowed

Cited by 3 judgment(s) · cites 4 · see the full citation network in Lexace

Judgment (excerpt)

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598
SUPREME COURT REPORTS
[2018] 2 S.C.R.
 M/S ONGC MANGALORE PETROCHEMICALS LTD.
v.
M/S ANS CONSTRUCTIONS LTD. & ANR.
(Civil Appeal No. 1659 of 2018)
FEBRUARY 07, 2018
[R. K. AGRAWAL AND AMITAVA ROY, JJ.]
Arbitration and Conciliation Act, 1996 – s.11 – Exercise of
power under – When not justified – Appellant awarded contract to
respondent no.1 – On 21.09.2012, respondent no.1 submitted No
Dues/No Claim Certificate – On 10.10.2012, appellant made
payment of final bill to respondent no.1 – On 24.10.2012,
respondent no.1 withdrew the No Dues Certificate stating that it
was furnished under duress and coercion – Vide letter dtd.
12.01.2013 to appellant, respondent no.1 submitted claim of
Rs. 96,88,48,642/- as losses incurred during execution of the
contract, denied by appellant – Respondent no.1 sent notice to the
appellant for resolving the dispute through Arbitration, request
denied by appellant – Petition u/s.11 filed by respondent no.1 before
High Court, allowed – Held: Admittedly, No-Dues Certificate was
submitted by respondent no.1 on 21.09.2012 and on their request
Completion Certificate was issued by appellant – There is nothing
on record to prove that the said Certificate was given under duress
or coercion– After a gap of one month, i.e. on 24.10.2012,
respondent no.1 withdrew the No Dues Certificate on grounds of
coercion and duress – Claim for losses incurred during execution
of the contract was made on 12.01.2013, i.e., after a gap of 3½
months, whereas the Final Bill was settled on 10.10.2012 which
was mutually signed by both the parties – When respondent no.1
accepted the final payment in full and final satisfaction of all its
claims, there was no point in raising the claim for losses incurred
during the execution of the Contract at a belated stage which creates
an iota of doubt as to why such claim was not settled at the time of
submitting Final Bills – The story about duress was an afterthought
in the background that the losses incurred during the execution of
  [2018] 2 S.C.R. 598
598
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the Contract were not visualised earlier by respondent No.1 – Mere
allegation that no-claim certificate was obtained under financial
duress and coercion does not lead to an arbitrable dispute – No
arbitrable dispute existed so as to exercise power u/s.11 – High
Court was not justified in exercising power u/s.11 – Contract.
Allowing the appeal, the Court
HELD: 1.1 When one refers to discharge of a contract by
an agreement signed by both the parties or by execution of a full
and final discharge voucher/receipt by one of the parties, one
refers to an agreement or discharge voucher which is validly and
voluntarily executed. If the party which has executed the
discharge agreement or discharge voucher, alleges that the
execution of such discharge agreement or voucher was on
account of fraud/coercion/undue influence practised by the other
party and is able to establish the same, then obviously the
discharge of the contract by such agreement/voucher is rendered
void and cannot be acted upon. Consequently, any dispute raised
by such party would be arbitrable.  But in case the party is not
able to establish such a claim or appears to be lacking in
credibility, then it is not open to the courts to refer the dispute to
arbitration at all.  [Para 19][612-E-G]
1.2 In the case at hand, the High Court allowed the appeal
filed by the contractee-respondent no.1 on the assertion that the
No Dues Certificate was given on account of coercion/undue
influence practiced by the appellant-Contractor.  The contractee,
while basing its claim, relied upon the letters issued to the
appellant for releasing the payment of Running Accounts (RA)
Bills. Whether there was duress and coercion exerted against
the contractee-Company by the appellant has to be examined
keeping in mind the background in which the said letters were
exchanged between the parties. [Para 22][616-E-G]
1.3 Pursuant to taking a false claim of duress and coercion
while filing the No Dues Certificate, the contractee-Company,
vide letter dated 12.01.2013 to the appellant, submitted a claim
for Rs.96,88,48,642/- for the losses incurred during execution of
 M/S ONGC MANGALORE PETROCHEMICALS LTD. v.
M/S ANS CONSTRUCTIONS LTD. & ANR.
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SUPREME COURT REPORTS
[2018] 2 S.C.R.
the contract at Mangalore. It was claimed that the contractee-
Company could not continue with the work due to various reasons
like pooja, shifting of Idols, non-availabil

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