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MANU/UP/0046/1972

Equivalent Citation: AIR1972All176

IN THE HIGH COURT OF ALLAHABAD 

F.A.F.O. Nos. 267 and 268 of 1970

Decided On: 03.11.1971

Appellants: Amar Nath Chand Prakash Vs. 

Respondent: Bharat Heavy Electricals Limited 

Hon'ble Judges/Coram: Satish Chandra and T.S. Misra, JJ.

Counsels:

For Appellant/Petitioner/Plaintiff: A.D. Prabhakar, Adv.

For Respondents/Defendant: Rajaram Agarwal, Adv.

Subject: Arbitration 

Subject: Contract 

Acts/Rules/Orders:Contract Act, 1872 - Section 63; Arbitration Act, 1940 - Section 20

Cases Referred:In Re: Massey, (1845), 8 Beav. 458;S.T.M. Bashiam Naidu v. Corporation of Madras,

MANU/TN/0421/1935;Bharat Heavy Electricals Ltd. v. H.R. Malik and Co.;Union of India v.Kishori Lal, MANU/SC/0180/1959;Kapurchand Godha v. Himayatalikhan Azamjah,MANU/SC/0030/1962;Day v. Mclea, (1889) 22 QBD 610;Shri Behari Lal Nahru v. Shri RadheyShyam, 1952 All LJ 14, MANU/UP/0366/1953

Citing Reference:

6

1

Disposition:

Appeals allowed

Case Note:Contract under protest document Section 20 of Arbitration Act, 1940 paymentreceived on completion of contract endorsement of under protest written - certificate

of no claim issued certain payments remained due notice served for arbitration - noresponse received case referred to Court party contended no claim lies as certificatehas been issued endorsement on document held, both the parties should haveabsolute satisfaction for discharge of contract - application allowed and matter

referred for arbitration.

JUDGMENT 

Discussed  

Mentioned  

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Satish Chandra, J. 

1. This is a plaintiff's appeal. It is directed against an order dismissing an application underSection 20 of the Indian Arbitration Act.

2. Messrs Heavy Electricals Limited gave a contract to the appellant for making certainconstruction work. The work was completed by the first week of March, 1965. The Company

prepared a final bill of the work done by the appellant. On 29-3-1965 the appellant signed a noclaim declaration and also gave a receipt in token of accepting the amount found due to theappellant. The appellant raised disputes in regard to some of the items of work, alleging short

payment. Finding no response, the appellant served a notice upon the company requiring it toappoint an arbitrator in terms of the arbitration clause contained in the contract. This also failedto evoke any response from the company. Consequently on 16th September. 1968 theappellant moved an application in court under Section 20 Arbitration Act praying that the courtmay require the agreement to be filed in court and refer the disputes between the parties toarbitration in accordance with the arbitration agreement.

3. The Company contested this application. It pleaded that the appellant had given a clear noclaim certificate in final settlement of his claims in respect of the work done under the contract,

and that he accepted payment of Rs. 12,374.04 by means of a cheque dated 14-12-1965 in fulland final settlement of his dues. This amounted to the discharge of the contract, along withwhich the arbitration agreement extinguished, as such no dispute capable of being referred to

arbitration remained in existence. The application under Section 20 was not maintainable.

4. The court below accepted the plea raised in bar and dismissed the application. Hence thisappeal.

5. The final bill has at the end a printed declaration to the following effect:--

"I have no other claim outstanding against the Heavy Electricals (India) Ltd. forwork done or for labour or materials supplied or on any other account and the

payment of this bill shall be in final settlement of all my claims in respect of thework to which Agreement/ work order No. 3/c-vi/64 dated 20-11-1964 with thecompany relates."

This declaration was signed by the appellant. Just after that there is a memorandum or

payment in the final bill and thereafter column No. 5 deals with the receipt of payment; and itsays, "Received Rs. 12,374.04 as final payment in settlement of demand as per details aboveon account of this work by cheque No. 007805, dated 14-12-1965. This Is also signed by theappellant. The signatures defacing the stamp are dated 29-3-1965 and by the side of thesignature, the appellant wrote the words under protest. It appears that the appellant signed thedeclaration as well as the column No. 5 meant for receipt of the cheque on 29-3-1965 and alsomade the endorsement of 'under protest' the same day, whereas the cheque was actually

prepared and delivered on 14-12-1965.

6. For the appellant it was argued that the signing of the no claim declaration and the grant of afull settlement receipt was in law the discharge of the contract. The contractor could notthereafter raise any dispute as to the payment under the contract. With the discharge of the

contract, the arbitration clause extinguished and no alleged dispute could validly be referred toarbitration. It was urged that the endorsement of 'under protest' made by the appellant on thebill did not change the situation. For the appellant reliance was placed upon words and phrasesby Roland Burrows, Vol. V., page 361. There observation of Langdale, M.R. in Re: Massey(1845) 8 Beav. 458 has been quoted as under.--

"It is said that the money was received by the petitioner, and the receipt givenunder protest. These words are often used on these occasions, but they have nodistinct technical meaning, unless accompanied with a statement of circumstances,

showing that they were used by way of notice or protest, reserving to the party, by

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dispensed with or remitted the performance of the contract for the rest of his dues.

11. In that very decision the Supreme Court referred to the decision in Day v. Mclea (1889) 22QBD 610 in which it was observed:

"If a person sends a sum of money on the terms that it is to be taken, if at all, insatisfaction of a larger claim: and if the money is kept it is a question of fact as to

the terms upon which it is so kept Accord and satisfaction imply an agreement totake the money in satisfaction of the claim in respect of which it is sent If theaccord is a question of agreement, there must be either two minds agreeing or one

of the two persons acting in such a way as to induce the other to think that themoney is taken in satisfaction of the claim, and to cause him to act upon that view.In either case it is a question of fact."

12. Applying this principle we find that there was no accord and satisfaction in the sense of bilateral consensus of intention. The appellant made it clear that he was accepting the moneyunder protest, that is, conditionally. Under the circumstances it cannot be said that signing theno claim certificate and the grant of the receipt amounted to discharge of the contract.

13. Learned counsel also relied upon Shri Behari Lal Nahru v. Shri Radhey ShyamMANU/UP/0366/1953 : AIR1953All745 . In that case the tenant Bent a cheque for the balanceof the rent due payable by him. The landlord accepted the cheque without any objection. It washeld that the landlord by his conduct accepted the condition which the tenant imposed whensending the cheques towards the payment of the rent and it was not open to him to go back

upon those conditions and say that he accepted the cheques in part satisfaction. This case isclearly distinguishable because here the cheque was accepted under protest.

14. Undeniably the appellant raised disputes with regard to certain items. The respondentcompany denied the validity of the appellant's claim. We have been taken through the items of claims made by the appellant. It is clear that the disputes do arise out of the contract betweenthe parties. The application under Section 20 of the Arbitration Act was competent and the

court below ought to have referred the disputes to arbitration in. accordance with, thearbitration clause.

15. In the connected appeal No. 268 of 1970 the facts are slightly different. In that case thecontractor signed the no claim certificate but he did not sign column No. 5 of the final bill inregard to the receipt of the payment. In accordance with our decision in F.A. F.O. No. 156 of 1971 (All), referred to above, mere signing of a no claim certificate would not amount to

discharge of the contract or act as an estopped to bar the contractor from raising disputes withthe company. It appears that subsequently a cheque for certain amount was given to thecontractor and it was cashed by him but he did not pass any receipt for it. The mere cashing of the cheque could not mean discharge of the contract.

16. In the result both the appeals succeed and are allowed. The impugned orders are set aside.The matter is sent back to the court below for matting a reference to arbitration in accordancewith law.

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