UNION OF INDIA & ORS. versus M/S. MASTER CONSTRUCTION CO.

Citation: [2011] 5 S.C.R. 853 · Decided: 25-04-2011 · Supreme Court of India · Bench: AFTAB ALAM · Disposal: Appeal(s) allowed

Cited by 9 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

[2011) 5 S.C.R. 853 
UNION OF INDIA & ORS. 
v. 
MIS. MASTER CONSTRUCTION CO. 
(Civil Appeal No. 3541 of 2011) 
APRIL 25, 2011 
[AFTAB ALAM AND R. M. LODHA, JJ.] 
ARBITRATION AND CONCILIATION ACT, 1996: 
A 
B 
s. 11 (6) - Application for appointment of arbitrator after C 
submitting 'no-claim certificate' and receipt of payment of final 
bill - Arbitrator appointed - Held: Where the dispute raised 
by the claimant with regard to validity of the discharge 
voucher or no-claim certificate or settlement agreement, 
prima facie, appears to be lacking in credibility, there may not o 
be necessity to refer the dispute for arbitration at all - It may 
not be proper to burden a party, who contends that dispute is . 
not arbitrable on account of discharge of contract, with huge 
cost of arbitration merely because plea of fraud, coercion, 
duress or undue influence has been taken by claimant, as E 
mere plea is not enough and the claimant must prima facie 
establish the same by placing material before the Chief 
Justice/ his designate - In the instant case, the conduct of 
contractor clearly shows that 'no claim certificates' were given 
by it voluntarily and it accepted the amount of the final bill F 
voluntarily and the contract was discharged voluntarily- Order 
appointing the arbitrator u/s 11 (6) cannot be sustained and 
is set aside. 
The respondent-contractor completed the contract 
on 31.8.1998. The completion certificate was issued on G 
9.9.1999. Thereafter the contractor furnished 'no claim 
certificates' on 3-4-2000, 28-4-2000 and 4-5-2000, signed 
the final bill on 4-5-2000, and received payment under the 
853 
H 
854 
SUPREME COURT REPORTS 
(2011] 5 S.C.R. 
A final bill on 19.6.2000. However, immediately on release 
of the bank guarantee on 12.7.2000, the same day the 
contractor wrote to the appellant-employers withdrawing 
the 'no claim certificate' and also lodged certain claims. 
The Chief Engineer declined to entertain the claims. The 
B contractor made an application u/s 11 of the Arbitration 
and Conciliation Act, 1996 before the Civil Judge (Senior 
Division). The application was dismissed. The 
contractor's writ petition was also dismissed by the High 
Court. The contractor's S.L.P was disposed of by the 
C Supreme Court with the direction that the application be 
placed before the Chief Justice of the High Court. The 
Chief Justice decided the application u/s 11(6) holding 
that all disputes between the parties to the contract would 
be referred to the arbitration and appointed the arbitrator. 
o Aggrieved, the employers filed the appeal. 
In the instant appeal filed by the employers, the 
question for consideration before the Court was: whether 
after furnishing 'no-claim certificates' and the receipt of 
payment of final bill, as submitted by the contractor, any 
E arbitrable dispute between the parties survived or the 
contract stood discharged. 
Allowing the appeal, the Court 
F 
· HELD: 1.1 There is no rule of the absolute kind. In a 
case where the claimant contends that a discharge 
voucher or no-claim certificate has been obtained by 
fraud, coercion, duress or undue influence and the other 
side contests the correctness thereof, the Chief Justice/ 
G his designate must look into this aspect to find out at least, 
prima facie, whether or not the dispute is bona fide and 
genuine. Where the dispute raised by the claimant with 
regard to validity of the discharge voucher or no-claim 
certificate or settlement agreement, prima facie, appears 
H 
UNION OF INDIA & ORS. v. MASTER 
855 
CONSTRUCTION CO. 
to be lacking-in credibility, there may not be necessity to A 
refer the dispute for arbitration at all. [para 24] [866-D-F] 
National Insurance Company Limited v. Boghara Polyfab 
Private Limited 2008 (13) SCR 638 -~ (2009) 1 SCC 267; The 
Union of India v. Kishorilal Gupta & Bros Limited AIR (1959} 
B 
SC 1362; The Naihati Jute Mills Ltd. v: Khyaliram Jagannath 
AIR (1968) SC 522; Damodar Valley Corporatio.n v. K.K .. Kar 
1974 (2) SCR 240 =(1974) 1 .sec 141; Mis. Bharat H~avy 
Electricals Limited, Ranipur v. Mis. Amar Nath Bhan Prakash 
(1982) 1 SCC 625; Union of India & Anr. v. Mis. L. K, Ahuja C 
& co. 1988 (3) SCR 402 = (1988) 3 sec 76; State. of 
Maharashtra v. Nav Bharat Builders 1994 Supp .(3) SCC 83; 
Mis. P.K. Ramaiah & Company v. Chairman & Managing 
Director, National Thermal Power Corpn. 1994 Supp (3) SCC 
126; Nathani Steels Ltd. v. Associated Constructions, 1995 0 
Supp (3) SCC 324; Indi

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