TMI Blog2004 (1) TMI 672X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be executed by us in favour of the Corporation. They served us with a printed specimen of the document and insisted that it should be typed in our own letterhead and submitted to the N.T.P.C. We refused to submit such a document. But the authorities of N.T.P.C. threatened that unless and until we execute the said document in favour of the Corporation, the N.T.P.C. would not effect payment of our bill. More than six lakhs of Rupees is pending for payment vide the alleged final bill. We have incurred huge losses in the execution of the work purely due to the latches and lapses of the corporation. More over lakhs and lakhs of rupees has to be paid to our Bankers, creditors suppliers, workers, truck owners etc. etc. Under such a situation we have no other way other than budging to the coercion of the authorities of N.T.P.C. ltd. to get whatever they give merely for the necessity of our survival. We have to comply with the instructions of authorities of N.T.P.C. Ltd. out of our helplessness in order to receive payment. Hence this letter. The certificates, undertakings, etc. as aforesaid have been executed without prejudice to our rights and claims whatsoever on account of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the advocate has advised us to appoint arbitrator/s nominated by CMD of NTPC, immediately. Accordingly our advocate has written suitable replies to the contractor's advocate Shri NT John, of Trivandrum, informing them that they will hear from NTPC regarding appointment of an arbitrator in terms of the contract conditions. 6.0 Submitted to appoint arbitrator/s for the four contract packages at para 1.0 above, please. The appellant thereafter by its letter dated 13th February, 1992 replied thereto stating: My client acting upon the notice, though defective, takes it that all your claims are disputed ones and hence are to be resolved by Arbitration. Please note that the reference to arbitration does not mean that there is admission that the disputes are arbitrable. Many of the claims raised are beyond the terms of the contract and the Arbitrator will have not jurisidiction to deal with them. This is a matter which has to be taken up later and not at the stage of appointment of an Arbitrator. As appointing authority, my client refrains from commenting upon in any manner, on the merits or otherwise of the disputes which your notice has set out. It may be noticed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tt, the learned counsel appearing on behalf of the appellant urged that as the contract itself came to an end upon execution of the No Demand Certificate and together with the same the arbitration clause also perished. In support of the said contention, reliance has been placed on M/s. P.K. Ramaiah and Company Vs. Chairman Managing Director, National Thermal Power Corpn. [1994 Supp (3) SCC 126] and Nathani Steels Ltd. Vs. Associated Constructions [1995 Supp (3) SCC 324]. Mr. Bhatt further urged that as in its application under Section 20 of the Arbitration Act, the respondent did not raise a plea that they had been coerced to submit the No Demand Certificate , the High Court committed a manifest error in passing the impugned judgment. The learned counsel appearing on behalf of the respondent, on the other hand, submitted that in the facts and circumstances of the case neither any new contract has come into being nor there was any accord and satisfaction of the contract agreement. The learned counsel appearing on behalf of the respondent also contended that despite coming to an end of the contract, the arbitration clause survives and all questions arising out of or in rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll or any of the matters in dispute or difference. The arbitrator to whom the matter is originally referred being transferred or vacating his office or being unable to act for any reason as aforesaid should act as arbitrator and if for any reason, that is not possible; the matter is not to be referred to arbitration at all. Subject as aforesaid the provision of the Arbitration Act, 1940 or any statutory modification or reenactment thereof and the rules made thereunder and for the time being in force shall apply to the arbitration proceeding under this clause. It is a term of the contract that the party invoking arbitration shall specify the disputes or disputes to be referred to arbitration under this clause together with the amount or amounts claimed in respect of each such dispute. The arbitrator(s) may from time to time with consent of the parties enlarge the time, for making and publishing the award. The work under the Contract shall, if reasonable possible, continue during the arbitration proceedings and no payment due or payable to the Contractor shall be withheld on account of such proceedings. The Arbitrator shall be deemed to have entered on the reference on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tlement of a claim under the contract is itself a dispute arising 'upon' or 'in relation to' or 'in connection with' the contract. These words are wide enough to cover the dispute sought to be referred. Normally, an accord and satisfaction by itself would not affect the arbitration clause but if the dispute is that the contract itself does not subsist, the question of invoking the arbitration clause may not arise. But in the event it be held that the contract survives, recourse to the arbitration clause may be taken. [See Union of India Vs. Kishorilal Gupta (AIR 1959 SC 1362) and Majhati Jute Mills Vs. Khvalirsa (AIR 1968 SC 522). In Bharat Heavy Electricals Limited (supra) this Court observed that whether there was discharge of the contract by accord and satisfaction or not is a dispute arising out of a contract and is liable to be referred to arbitration. Yet again in L.K. Ahuja (supra) Sabyasachi Mukharji, J., as the learned Chief Justice then was, laid down the ingredients of Section 20 of the Arbitration Act stating: 6. It appears that these questions were discussed in the decision of the Calcutta High Court in Jiwnani Engineering Works Pvt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vise to get over the settlement of the dispute, acceptance of the payment and receipt voluntarily given. We, however, may observe that the quotation from Russell on Arbitration may not be apt inasmuch as at the stage of reference what would be a good defence is not a matter to be taken into consideration. Yet again in Nathani Steels Ltd. (supra) the disputes and differences were amicably settled by and between the parties and in that view of the matter it was held that unless and until the statement is set aside, the arbitration clause cannot be invoked. Such is not the position here. The appellant herein did not raise a question that there has been a novation of contract. The conduct of the parties as evidenced in their letters, as noticed hereinbefore, clearly go to show that not only the final bill submitted by the respondent was rejected but another final bill was prepared with a printed format that a No Demand Certificate has been executed as other final bill would not be paid. The respondent herein, as noticed hereinbefore, categorically stated in its letter dated 20.12.1990 that as to under what circumstances they were compelled to sign the said printed letter. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perienced solicitor; and he should have appreciated (and I feel certain he did) that the arbitration clause which he drafted, and which was accepted by the defendants, would cover every aspect of the contract, including repudiation. But, apart altogether from what the plaintiff's solicitor had in mind, there is no evidence at all as to what the defendant company had in mind when it agreed to accept the arbitration clause, and it was wrong, in my judgment, for the Judge to say that neither party had in mind that it would apply to the summary dismissal of the plaintiff. It follows, therefore, that at the very beginning of his judgment the judge misdirected himself as to the construction of the arbitration clause and what it was mended to deal with. Even correspondences marked as without prejudice may have to be interpreted differently in different situations. What would be the effect of without prejudice offer has been considered in Cutts Vs. Head and Another [(1984) 2 WLR 349] wherein Oliver L.J. speaking for the Court of Appeals held: In the end, I think that the question of what meaning is given to the words without prejudice is a matter of interpretation which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e used without more. It is open to the parties to the correspondence to give the phrase a somewhat different meaning, e.g. where they reserve the right to bring an offer made 'without prejudice' to the attention of the court on the question of costs if the offer be not accepted (See Cutts v. Head) but subject to any such modification as may be agreed between the parties, that is the meaning of the phrase. In particular, subject to any such modification, the parties must be taken to have intended and agreed that the privilege will cease if and when the negotiations 'without prejudice' come to fruition in a concluded agreement. Meaning the words without prejudice come up for consideration before this Court in Superintendent (Tech. I) Central Excise, I.D.D. Jabalpur and Others Vs. Pratap Rai [(1978) 3 SCC 113] wherein it has been held: The Appellate Collector has clearly used the words without prejudice which also indicate that the order of the Collector was not final and irrevocable. The term without prejduce has been defined in Black's Law Dictionary as follows: Where an offer or admission is made 'without prejduce', or a motion is define ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an election from which he cannot resile. (2) That he will be regarded, in general at any rate, as having so elected unless he has taken a benefit under or arising out of the course of conduct, which he has first pursued and with which his subsequent conduct is inconsistent. In American Jurisprudence, 2nd Edition, Volume 28, 1966, Page 677-680 it is stated: Estoppel by the acceptance of benefits: Estoppel is frequently based upon the acceptance and retention, by one having knowledge or notice of the facts, of benefits from a transaction, contract, instrument, regulation which he might have rejected or contested. This doctrine is obviously a branch of the rule against assuming inconsistent positions. As a general principle, one who knowingly accepts the benefits of a contract or conveyance is estopped to deny the validity or binding effect on him of such contract or conveyance. This rule has to be applied to do equity and must not be applied in such a manner as to violate the principles of right and good conscience. The fact situation in the present case, would lead to the conclusion that the arbitration agreement subsists because: (i) Disputes as regard fina ..... X X X X Extracts X X X X X X X X Extracts X X X X
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