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2006 (11) TMI 668 - SUPREME COURT

2006 (11) TMI 668 - SUPREME COURT - TMI - Appeal (civil) 5093 of 2006 (Arising out of SLP ) No. 2753/2005, CIVIL APPEAL NO. 5097 OF 2006 (Arising out of SLP ) No.19237 of 2005) - Dated:- 20-11-2006 - DR. AR. LAKSHMANAN & ALTAMAS KABIR JJ. JUDGMENT: ALTAMAS KABIR, J. Delay condoned in S.L.P.(c) No.19237/2005. Leave granted in both the Special Leave Petitions which have been taken up together for disposal, since SLP (c) No.19237 of 2005 is directed against the main judgment and Order dated 16t .....

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duly accepted by a letter dated 14th September, 1992 with the stipulation that the work was to be completed in all respects by 30th June, 1993. It was also indicated that the work orders were to be issued within 7 days from the date of receipt of the acceptance letter. A formal contract was executed between the parties on 4th March, 1993 and the said agreement provided that the General Conditions of Contract and Standard Specifications of the South Eastern Railways shall be applicable to the co .....

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nd surplus staff. It appears that ultimately the appellant's request was turned down and certain deductions were made from the Running Bills submitted by the appellant and in fact payment was not even made for the works already done by the appellant. According to the appellant, the respondent refused to refund even the appellant's security deposit unless the appellant submitted a No-Claim Certificate in terms of Clause 43(2) of the General Conditions of Contract. Having no other alternat .....

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quested to appoint an Arbitrator for adjudication of the disputes which had arisen between the parties. In view of the failure of the respondent either to pay the dues, as demanded, or to appoint an Arbitrator, the appellant filed an application under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter called "the 1996 Act") before the Calcutta High Court for reference of its claims in terms of its letter dated 17th January, 1996 to arbitration and for appointment of .....

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le Judge of the Calcutta High Court, by his order dated 20th February, 1998, directed the matter to be placed before Hon'ble the Chief Justice for naming an Arbitrator for adjudication of the disputes. On 12th March, 1998, the Chief Justice appointed one Shri Subrata Bagchi as Sole Arbitrator to go into the disputes between the parties. The Arbitrator came to a finding that the No Claim Certificate had been signed by the appellant under duress and coercion but disallowed the various claims o .....

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the case, as Sole Arbitrator. On 25th May, 2001, Shri Law published his Award allowing the claims made by the appellant. The said Award was challenged by the respondent herein- Union of India under Section 34 of the 1996 Act, being A.P. No.193 of 2001, before the learned Single Judge of the Calcutta High Court. On behalf of the Union of India it was urged that the Arbitrator had not considered the General Conditions of Contract and in particular Rules 43(2) and 16(2) thereof. The learned Single .....

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reasons given by the Arbitrator. The learned Single Judge dismissed the application for setting aside the Award with the aforesaid observations. The matter was taken in appeal by the Union of India in APO No.212 of 2004 under Section 37 of the 1996 Act. Taking note of the No Claim Certificate, submitted by the appellant, in the light of Clause 43(2) of the General Conditions of Contract, the Division Bench came to a finding that apart from a mere statement, there was no proof of the allegation .....

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the said judgment and order of the Division Bench of the Calcutta High Court. The Union of India filed a Review Petition, being GA No.1265 of 2005, for review of the aforesaid judgment dated 16th March, 2004 but the same was also dismissed on 23rd September, 2004. SLP (C) No.2753 of 2005 is directed against the order passed on the Review Petition. Appearing in support of the two appeals, Mr.Raj Kumar Mehta, Advocate, urged that the Division Bench of the Calcutta High Court had been persuaded to .....

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terials on record to indicate that the authorities of the respondent were bent upon denying the appellant its just dues, and, on the other hand, they had deducted certain amounts which were due and payable on account of Running Bills submitted by the appellant. It was also submitted that a case had been made out before the learned Arbitrator as also the learned Single Judge that the appellant had been compelled by circumstances to submit the No Objection Certificate without which no payment even .....

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mal Power Corpn., [1994 Supp (3) SCC 126]. According to Mr.Mehta the Division Bench should have, on the other hand, taken into consideration the age old maxim Necessitas non habet legem which means that necessity knows no law. According to Mr.Mehta it was out of necessity, namely, to recover its security deposit, that a No Claim Certificate had been submitted by the appellant and the same ought not to be held as a bar against the appellant for raising claims in respect of its lawful duties. In s .....

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n the subject, including the decision in P.K. Ramaiah's case (supra), came to the conclusion that notwithstanding the submission of a No Demand Certificate, the arbitration agreement continued to subsist because of the several reasons indicated in the judgment. Having regard to the views expressed in the aforesaid judgment, Mr.Mehta submitted that the Division Bench of the Calcutta High Court had erred in relying solely on Clause 43(2) of the General Conditions of Contract and the No Claim C .....

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ubmitted a No Claims Certificate, the appellant was precluded from raising any further claims and the learned Arbitrator had committed a gross error in allowing such claim notwithstanding the prohibition contained in the said clause. Since we are called upon to consider the efficacy of Clause 43(2) of the General Conditions of Contract with reference to the subject matter of the present appeals, the same is set out hereinbelow: "43(2) Signing of "No claim" Certificate. The Contrac .....

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im Certificate" or demanding a reference to arbitration in respect thereof." A glance at the said clause will immediately indicate that a No Claim Certificate is required to be submitted by a contractor once the works are finally measured up. In the instant case the work was yet to be completed and there is nothing to indicate that the works, as undertaken by the contractor, had been finally measured and on the basis of the same a No Objection Certificate had been issued by the appella .....

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