TMI Blog2011 (9) TMI 1082X X X X Extracts X X X X X X X X Extracts X X X X ..... ive obligations (either on account of frustration or otherwise) and consequently cancel the agreement and confirm that there are no outstanding claims or disputes. - ARBITRATION PETITION NOS. 7 & 8 OF 2009 - - - Dated:- 13-9-2011 - B.S. Chauhan J. JUDGMENT Dr. B.S. CHAUHAN, J. 1. The arbitration applications under Section 11(5) (9) of the Arbitration and Conciliation Act, 1996, hereinafter called the Act 1996 have been filed for appointment of Arbitrator in an international arbitration dispute to adjudicate the disputes/differences which have arisen between the parties. 2. The applicants are a partnership concern incorporated under the Indian Partnership Act, 1932 and have filed two applications as the dispute raised herein relate to two consignments. However, for convenience, facts and issues related to Petition No.7/2009 are being considered. 3. On 24.6.2008, a Purchase Contract bearing No. CCT/SST/027/ 240608 was entered and executed by and between the applicants and the respondents wherein the applicants agreed to sell and the respondents agreed to purchase Calibrated Lumpy Ore Fines of the approximate quantity of 40,000/- Wet Metric Tones (hereinaf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and circumstances, as the goods had already reached China and applicants were in dire need of money, they informed through their banker that they agreed to receive payment under the Letter of Credit in a sum of total claim of US$ 18,91,204.00. By email dated 7.10.2008 the respondents stated that the applicants should accept US$ 1.5 million in full and final settlement. Accordingly, an amount of US$ 1.5 million had been received by them. Subsequent thereto, the applicants had repeatedly been sending reminders to the respondents to make good the balance payment under the said purchase contract, but no payment had been made. As the respondents failed to make the payment of the balance amount, the applicants sent a legal notice dated 14.11.2008 to call upon the respondents to pay the balance amount under the purchase contract and further provided that, in view of the arbitration clause 18 contained in the purchase agreement, they should carry on friendly negotiations to settle the dispute accrued between the parties. As per the terms of the purchase agreement, arbitration can be held only in a third country. The applicants suggested to have the arbitration proceedings either i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt I of the said Act would apply where the place of arbitration is in India, even in respect of international commercial agreements, which are to be governed by the laws of another country, the parties would be entitled to invoke the provisions of Part I of the aforesaid Act and consequently the application made under Section 11 thereof would be maintainable. It clearly lays down that the provisions of Part I of the Arbitration and Conciliation Act, 1996, would be equally applicable to international commercial arbitrations held outside India, unless any of the said provisions are excluded by agreement between the parties expressly or by implication, which is not so in the instant case. (See also: Indtel Technical Services Private Limited v. W.S. Atkins Rail Limited, (2008) 10 SCC 308; and Citation Infowares Limited v. Equinox Corporation, (2009) 7 SCC 220). 10. In Venture Global Engg. Case v. Satyam Computer Services Ltd. (2008) 4 SCC 190, this Court considered the similar issue and after considering various earlier judgments, came to the conclusion that implied exclusion of provision of Part-I cannot be inferred and therefore the principles regarding the arbitral reference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is sought. The cost of arbitration shall be borne by the losing party. Thus, from the Purchase Agreement it is evident that the ore supplied must contain Fe contents not less than 63%. In case the Fe contents are less than the specified percentage, the buyers would have a right to reject the cargo. The Purchase Agreement also contains a clause providing for price adjustment in case the supplied ore does not meet the requirement of specification provided for iron ore. In case of any dispute between the parties, the agreement provides for arbitration in any third country. 13. The documents on record reveal that parties had been negotiating for the goods supplied and also in respect of payment for the same (vide emails dated 25.6.2008 and 8.9.2008). Relevant part of the email dated 25.9.2008 reads as under: ......Both cargos were rejected by end buyers due to the quality failure. In such case, we regret to say that the maximum CFR price we can work here is $110 for Zhongqiang II AND $120 FOR Fujin. Pls note current market price for cargo below 63 is only $100 and market is still on the down trend. However in consideration of the long term good cooperation between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 8.9.2008, 25.9.2008 and 7.10.2008 as referred to hereinabove, and it was in pursuance of these negotiations that the applicants had instructed their banker to accept the proposal made by the respondents and it was in pursuance of their instructions, the banker vide email dated 8.10.2009 accepted the proposal and agreed to receive a sum of US$500,000.00 as full and final settlement for the consignment in issue. The payment made was accepted by the applicants and it was after 3 months thereafter that they served a legal notice dated 14.11.2008 for making a reference to the Arbitrator. The applicants in the present application do not dispute the negotiations or giving instructions to their banker or in respect of the email by their banker to the respondents or receiving the money in lieu thereof. Therefore, the question does arise as to whether the banker's acceptance of instructions given by the applicants can be treated as full and final settlement of the dispute. The main ground in this regard had been taken in this application in Paragraph (P) as under: In spite of the fact that the Applicants had specifically informed their Bankers that an amount of US$ 1.5 millio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll and final satisfaction was acknowledged by a receipt in writing and the amount was received unconditionally. Thus there is accord and satisfaction by final settlement of the claims. The subsequent allegation of coercion is an afterthought and a devise to get over the settlement of the dispute, acceptance of the payment and receipt voluntarily given.... Having acknowledged the settlement and also accepted measurements and having received the amount in full and final settlement of the claim, there is accord and satisfaction. There is no existing arbitrable dispute for reference to the arbitration. (Emphasis added) 21. In National Insurance Company Limited v. M/s. Boghara Polyfab Private Limited, AIR 2009 SC 170, this Court held: 26. When we refer to a discharge of contract by an agreement signed by both the parties or by execution of a full and final discharge voucher/receipt by one of the parties, we refer to an agreement or discharge voucher which is validly and voluntarily executed. If the party which has executed the discharge agreement or discharge voucher, alleges that the execution of such discharge agreement or voucher was on account of fraud/coercion/undue influ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bill by mentioning without prejudice or by issuing no-dues certificate . 23. In view of the above, law on the issue stands crystallised to the effect that, in case, final settlement has been reached amicably between the parties even by making certain adjustments and without any misrepresentation or fraud or coercion, then, acceptance of money as full and final settlement/issuance of receipt or vouchers etc. would conclude the controversy and it is not open to either of the parties to lay any claim/demand against the other party. 24. The applicants have not pleaded that there has been any kind of misrepresentation or fraud or coercion on the part of the respondents. Nor it is their case that payment was sent by the respondents without any settlement/agreement with the applicants, and was a unilateral act on their part. The applicants reached the final settlement with their eyes open and instructed their banker to accept the money as proposed by the respondents. Proposal itself was on the basis of clause 5 of the Purchase Contract which provided for Price Adjustment. For a period of three months after acceptance of the money under the full and final settlement, applic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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