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Amar Nath Chand Prakash Vs. Bharat Heavy Electricals Limited - Court Judgment

LegalCrystal Citation
SubjectArbitration;Contract
CourtAllahabad High Court
Decided On
Case NumberF.A.F.O. Nos. 267 and 268 of 1970
Judge
Reported inAIR1972All176
ActsContract Act, 1872 - Sections 63; Arbitration Act, 1940 - Sections 20
AppellantAmar Nath Chand Prakash
RespondentBharat Heavy Electricals Limited
Appellant AdvocateA.D. Prabhakar, Adv.
Respondent AdvocateRajaram Agarwal, Adv.
DispositionAppeals allowed
Excerpt:
.....received on completion of contract - endorsement of under protest written - certificate of no claim issued - certain payments remained due - notice served for arbitration - no response received - case referred to court - party contended no claim lies as certificate has been issued - endorsement on document - held, both the parties should have absolute satisfaction for discharge of contract - application allowed and matter referred for arbitration. - - this also failed to evoke any response from the company. it appears that the appellant signed the declaration as well as the column no. 8. on 29-3-1965 the contractor signed the no claim declaration as well as the receipt for the money found by the company payable to the contractor, and made the endorsement of protest. it clearly..........thereafter column no. 5 deals with the receipt of payment; and it says, 'received rs. 12,374.04 as final payment in settlement of demand as per details above on account of this work by cheque no. 007805, dated 14-12-1965. this is also signed by the appellant. the signatures defacing the stamp are dated 29-3-1965 and by the side of the signature, the appellant wrote the words under protest. it appears that the appellant signed the declaration as well as the column no. 5 meant for receipt of the cheque on 29-3-1965 and also made the endorsement of 'under protest' the same day, whereas the cheque was actually prepared and delivered on 14-12-1965.6. for the appellant it was argued that the signing of the no claim declaration and the grant of a full settlement receipt was in law the discharge.....
Judgment:

Satish Chandra, J.

1. This is a plaintiff's appeal. It is directed against an order dismissing an application under Section 20 of the Indian Arbitration Act.

2. Messrs Heavy Electricals Limited gave a contract to the appellant for making certain construction work. The work was completed by the first week of March, 1965. The Company prepared a final bill of the work done by the appellant. On 29-3-1965 the appellant signed a no claim declaration and also gave a receipt in token of accepting the amount found due to the appellant. The appellant raised disputes in regard to some of the items of work, alleging short payment. Finding nq response, the appellant served a notice upon the company requiring it to appoint an arbitrator in terms of the arbitration clause contained in the contract. This also failed to evoke any response from the company. Consequently on 16th September. 1968 the appellant moved an application in court under Section 20 Arbitration Act praying that the court may require the agreement to be filed in court and refer the disputes between the parties to arbitration in accordance with the arbitration agreement.

3. The Company contested this application. It pleaded that the appellant had given a clear no claim certificate in final settlement of his claims in respect of the work done under the contract, and that he accepted payment of Rs. 12,374.04 by means of a cheque dated 14-12-1965 in full and final settlement of his dues. This amounted to the discharge of the contract, along with which the arbitration agreement extinguished, as such no dispute capable of being referred to arbitration remained in existence. The application under Section 20 was not maintainable.

4. The court below accepted the plea raised in bar and dismissed the application. Hence this appeal.

5. The final bill has at the end a printed declaration to the following effect:--

'I have no other claim outstanding against the Heavy Electricals (India) Ltd. for work done or for labour or materials supplied or on any other account and the payment of this bill shall be in final settlement of all my claims in respect of the work to which Agreement/ work order No. 3/c-vi/64 dated 20-11-1964 with the company relates.'

This declaration was signed by the appellant. Just after that there is a memorandum or payment in the final bill and thereafter column No. 5 deals with the receipt of payment; and it says, 'Received Rs. 12,374.04 as final payment in settlement of demand as per details above on account of this work by cheque No. 007805, dated 14-12-1965. This Is also signed by the appellant. The signatures defacing the stamp are dated 29-3-1965 and by the side of the signature, the appellant wrote the words under protest. It appears that the appellant signed the declaration as well as the column No. 5 meant for receipt of the cheque on 29-3-1965 and also made the endorsement of 'under protest' the same day, whereas the cheque was actually prepared and delivered on 14-12-1965.

6. For the appellant it was argued that the signing of the no claim declaration and the grant of a full settlement receipt was in law the discharge of the contract. The contractor could not thereafter raise any dispute as to the payment under the contract. With the discharge of the contract, the arbitration clause extinguished and no alleged dispute could validly be referred to arbitration. It was urged that the endorsement of 'under protest' made by the appellant on the bill did not change the situation. For the appellant reliance was placed upon words and phrases by Roland Burrows, Vol. V., page 361. There observation of Langdale, M.R. in Re: Massey (1845), 8 Beav. 458 at p. 462 has been quoted as under.--

'It is said that the money was received by the petitioner, and the receipt given under protest. These words are often used on these occasions, but they have no distinct technical meaning, unless accompanied with a statement of circumstances, showing that they were used by way of notice or protest, reserving to the party, by reason of such circumstances, a right to a taxation, notwithstanding such payment. The words have no distinct meaning by themselves, and amount to nothing unless explained by the proceedings and circumstances.'

In this book reference has also been made to S.T.M. Bashiam Naidu v. Corporation of Madras : AIR1935Mad625 to the effect that the value of the phrase 'under protest' is to safeguard the position of the person who makes the payment and to ensure that it may not be said that the payment he made was a voluntary one. According to Langdale's M.R.'s observations, significance of 'under protest' has to be judged in the context of the prevailing circumstances. In the Madras case the protest was made by the person making the payment. It was held, that where a tenant pays certain rent under protest in pursuance of a demand for excessive rent and it is found that the demand is illegal and unreasonable, the tenant is entitled to refund of the amount which was not legally due to landlord. In view of this decision, the making of the endorsement of under protest is to safeguard the position of the person making it and to ensure that it may not be said that he was doing the act voluntarily.

7. In the present case none of the parties led any oral evidence. The endorsement of under protest has been made on the final bill. We have to construe the document in order to ascertain the intention of the contractor in making such an endorsement and of the Company in permitting such an endorsement to be made.

8. On 29-3-1965 the Contractor signed the no claim declaration as well as the receipt for the money found by the Company payable to the contractor, and made the endorsement of protest. The contractor was disputing the correctness of the calculations of the Manager of computing the amounts in the final bill. He was not disputing that the amount calculated by the company as payable to him was due to him. He was claiming much more and therefore he could not possibly make a protest to the receipt of the amount specified by the Company. The grievance was that the payment was less than his demand. His making the endorsement that he was receiving the amount under protest could only mean that he was challenging the correctness of the bill and that he was preserving to himself the right to question it. The endorsement dispelled an Intention to remit the performance in regard to the balance of his claim. It clearly evidenced that the receipt of the amount was not unconditional so as to effect a discharge of the contract. On the contrary it safeguarded the position of the contractor and indicated that he was not accepting the payment without any reservation.

9. In F.A.F.O. No. 156 of 1971, Bharat Heavy Electricals Ltd. v. H.R. Malik and Co. decided on 5-10-1971 (All), we held that a no claim declaration by itself does not affect a fresh agreement so as to discharge the original agreement between the parties. It was held that the decision of the Supreme Court in Union of India v. Kishori Lal : [1960]1SCR493 , does not lead to any contrary position because there the principle laid down was that whether the parties entered into a fresh agreement was a question of intention and the ascertainment of the intention of the parties was essentially a question of fact

10. Learned counsel for the respondent company, however, invited our attention to the decision of the Supreme Court in Kapurchand Godha v. Himayatalikhan Azamjah : [1963]2SCR168 . In that case the appellant at first gave a receipt stating, inter alia, that he had received a sum of Rs. 8,75,000/- in full and final payment of the balance of rupees twenty lacs allowed by the Government in respect of his claim dated 15-2-1948, reserving, however, the right to recover the balance amount due to him under the said pronote. The authorities, however, refused to make the payment on such a conditional receipt Thereupon the appellant recorded a satisfaction of full payment and granted a receipt which unconditionally stated, received payment in full. The Supreme Court held that Section 68 of Indian Contract Act read with illustration (c) appended to that section apply to the facts and the appellants having accepted payment in full satisfaction of their claim were not entitled to sue for the balance. It will be seen that in that case the payment was accepted in discharge of the whole claim, at the time of the acceptance of the payment no condition or reservation was made. In the present case the appellant specifically stated that he was receiving the money under protest That was clearly making a reservation, and the reservation could only be that this acceptance of the payment was not in discharge of the contract. Consequently it cannot be said that the appellant dispensed with or remitted the performance of the contract for the rest of his dues.

11. In that very decision the Supreme Court referred to the decision in Day v. Mclea (1889) 22 QBD 610, in which it was observed:

'If a person sends a sum of money on the terms that it is to be taken, if at all, in satisfaction of a larger claim: and if the money is kept it is a question of fact as to the terms upon which it is so kept Accord and satisfaction imply an agreement to take the money in satisfaction of the claim in respect of which it is sent If the accord is a question of agreement, there must be either two minds agreeing or one of the two persons acting in such a way as to induce the other to think that the money is taken in satisfaction of the claim, and to cause him to act upon that view. In either case it is a question of fact.'

12. Applying this principle we find that there was no accord and satisfaction in the sense of bilateral consensus of intention. The appellant made it clear that he was accepting the money under protest, that is, conditionally. Under the circumstances it cannot be said that signing the no claim certificate and the grant of the receipt amounted to discharge of the contract.

13. Learned counsel also relied upon Shri Behari Lal Nahru v. Shri Radhey Shyam : AIR1953All745 . In that case the tenant Bent a cheque for the balance of the rent due payable by him. The landlord accepted the cheque without any objection. It was held that the landlord by his conduct accepted the condition which the tenant imposed when sending the cheques towards the payment of the rent and it was not open to him to go back upon those conditions and say that he accepted the cheques in part satisfaction. This case is clearly distinguishable because here the cheque was accepted under protest.

14. Undeniably the appellant raised disputes with regard to certain items. The respondent company denied the validity of the appellant's claim. We have been taken through the items of claims made by the appellant. It is clear that the disputes do arise out of the contract between the parties. The application under Section 20 of the Arbitration Act was competent and the court below ought to have referred the disputes to arbitration in. accordance with, the arbitration clause.

15. In the connected appeal No. 268 of 1970 the facts are slightly different. In that case the contractor signed the no claim certificate but he did not sign column No. 5 of the final bill in regard to the receipt of the payment. In accordance with our decision in F.A. F.O. No. 156 of 1971 (All), referred to above, mere signing of a no claim certificate would not amount to discharge of the contract or act as an estoppel to bar the contractor from raising disputes with the company. It appears that subsequently a cheque for certain amount was given to the contractor and it was cashed by him but he did not pass any receipt for it. The mere cashing of the cheque could not mean discharge of the contract.

16. In the result both the appeals succeed and are allowed. The impugned orders are set aside. The matter is sent back to the court below for matting a reference to arbitration in accordance with law.


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