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2004 (1) TMI 672 - SC - Companies LawWhether an arbitration clause in a contract agreement survives despite purported satisfaction?thereof? Held that:- The fact situation in the present case, would lead to the conclusion that the arbitration agreement subsists because disputes as regard final bill arose prior to its acceptance thereof in view the fact that the same was prepared by the respondent but was not agreed upon in its entirety by the appellant herein. The appellant has not pleaded that upon submission of the final bill by the respondent herein any negotiation or settlement took place as a result whereof the final bill, as prepared by the appellant, was accepted by the respondent unequivocally and without any reservation therefor. The respondent herein immediately after receiving the payment of the final bill, lodged its protest and reiterated its claims. Interpretation and/or application of clause 52 of the agreement would constitute a dispute which would fall for consideration of the arbitrator. The effect of the correspondences between the parties would have to be determined by the arbitrator, particularly as regard the claim of the respondent that the final bill was accepted by it without prejudice. The appellant never made out a case that any novation of the contract agreement took place or the the contract agreement was substituted by a new agreement. Only in the event, a case of creation of new agreement is made out the question of challenging the same by the respondent would have arisen. The conduct of the appellant would show that on receipt of the notice of the respondent through its advocate dated 21.12.1991 the same was not rejected outright but existence of disputes was accepted and the matter was sought to be referred to the arbitration.Only when the clarificatory letter was issued the plea of settlement of final bill was raised. The finding of the High Court that a prima facie in the sense that there are triable issues before the Arbitrator so as to invoke the provisions of Section 20 of the Arbitration Act, 1940 cannot be said to be perverse or unreasonable so as to warrant interference in exercise of extraordinary jurisdiction under Article 136 of the Constitution of India. The jurisdiction of the arbitrator under the 1940 Act although emanates from the reference, it is trite, that in a given situation the arbitrator can determine all questions of law and fact including the construction of the contract agreement. Appeal dismissed.
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