No Claim Certificate obtained under Coercion as a Pre Condition to Release Payment to Contractor is invalid, Read

The Calcutta High Court has observed that claim certificate obtained under coercion as a pre-condition to release payment to Contractor is invalid. 

The single-judge bench of Justice Krishna Rao was adjudicating upon an application under Section 34 of the Arbitration & Conciliation Act, 1996 for setting aside of the award passed by the Ld. Sole Arbitrator. 

 

The petitioner had published a tender notice for renovation and interior design works at Bishnupur Tourist Lodge. The respondent had participated in the said tender process and accordingly on the recommendation of Project Management Consultant (PMC), the respondent was empanelled to participate in the Price Bid by depositing 2 % earnest money. After negotiation with the respondent, the petitioner accepted the rate quoted by the respondent. As per the contract the time for completion of the work was 180 days. The date of completion was 13.01.2009 and the actual date of completion was 20.12.2008. After the execution of the work, the respondent asked for the payment of 2,06,95,041.24/-.

After considerable delay for making the payment, the petitioner agreed to pay a sum of Rs. 84,15,886.94/- on the condition that the respondent should give an undertaking indicating that the respondent will not make any further claim. The respondent had submitted an undertaking in which it is mentioned that the respondent will have no further claim beyond the said amount. After the submission of the undertaking the petitioner has paid an amount of Rs. 80,17,981.00/- out of the total amount of Rs. 84,15,886.94/-.

Even after frequent request of the respondent, the petitioner did not release the remaining amount and therefore the respondent had invoked the provision of Arbitration and Conciliation Act, 1996
for appointment of Arbitrator and accordingly by the order of this Court the Ld. Sole Arbitrator was appointed. The Ld. Sole Arbitrator had passed an award by allowing the following claim of the respondent and had rejected the counter claim made by the petitioner. Learned Counsel for the petitioner before this court submitted that in the absence of the oral evidence, Ld. Arbitrator has passed the impugned award on the basis of presumption and assumption without determining the admissibility, relevance and weight of the documentary evidence available on record. The learned counsel further submitted that the finding of the Ld. Arbitrator that the undertaking submitted by the respondent was under pressure is patently illegal in view of the facts that the Ld. Arbitrator has based its finding almost on the fact that the letter submitted by the respondent to the petitioner was not replied by the petitioner and therefore, the statement made in the letter specially regarding the meeting was uncontroverted.

Learned Counsel for the respondent submits that in the letter of undertaking , the respondent has categorically mentioned that “In the course of the said meeting we were intimated from your end
that unless and until we accept in full whatever the payment that will be found due to us by WBTDCL, no payment will be made to us’. In the said letter, the respondent further mentioned that “in the circumstances, we have no other alternative but to agree to your instructions and directions.” By referring the said letter, the Ld. Counsel for the respondent submits that the letter, itself speaks that the alleged undertaking is not voluntarily and is being taken by coercion or threat. The respondent had made all together 7 claims before the Ld. Arbitrator out of which 5 claims were allowed and 2 claims were rejected.

In the present case even after completion of the actual work awarded as well as the extra work as directed by the petitioners, the respondent has completed the said work. The petitioners have not made full payment to the respondent. The petitioners have threatened the respondent that if the respondent will not accept the payment, the respondent will not get any payment. The petitioner even after the receipt of under taking have not paid the full amount to the respondent. Ld. Arbitrator before entering into the claims raised by the respondent had decided the said issue and come to the conclusion that the letter was received by the petitioners and even after receipt of the said letter, the petitioners have not denied the contents of the same and petitioners have not made the full and final payment to the respondent. The Ld. Arbitrator has also considered the last payment was made to the petitioner on 9th August 2009 and while receiving the said amount the petitioner has made an endorsement “without prejudice”.

High Court's Observation

In the view of the above the court find that the Ld. Arbitrator has considered the issue raised by the petitioner and has appropriately decided the same and come to conclusion that dispute raised by
the respondent is arbitrable and had decided accordingly. The Court further observed that while deciding the claims and counter claims made by the parties, the Ld. Arbitrator has decided each and
every issues raised by the parties and has passed an reasoned order thus the Award does not require any interference.

Case Title:  West Bengal Tourism Development Corporation Limited Versus Supratik Banerjee & Anr.  

 

Case Details: AP 206 of 2013

Bench: Justice Krishna Rao

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(With input from news agency language)

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