# M/S ONGC MANGALORE PETROCHEMICALS LTD v. M/S ANS CONSTRUCTIONS LTD. & ANR

- **Citation:** [2018] 2 S.C.R. 598
- **Court:** Supreme Court of India
- **Decided:** 2018-02-07
- **Case number:** Civil Appeal No. 1659 of 2018
- **Bench:** R. K. Agrawal, Amitava Roy
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/m-s-ongc-mangalore-petrochemicals-ltd-v-m-s-ans-constructions-ltd-anr-32683
- **Pages:** 22

## Headnote

Arbitration and Conciliation Act, 1996 - s.11 - Exercise of
power under - When not justified - Appellant awarded contract to
respondent no.1 - On 21.09.2012, respondent no.1 submitted No
Dues/No Claim Certificate - On 10.10.2012, appellant made
payment of final bill to respondent no.1 - On 24.10.2012,
respondent no.1 withdrew the No Dues Certificate stating that it
was furnished under duress and coercion - Vide letter dtd.
12.01.2013 to appellant, respondent no.1 submitted claim of
Rs. 96,88,48,642/- as losses incurred during execution of the
contract, denied by appellant - Respondent no.1 sent notice to the
appellant for resolving the dispute through Arbitration, request
denied by appellant - Petition u/s.11 filed by respondent no.1 before
High Court, allowed - Held: Admittedly, No-Dues Certificate was
submitted by respondent no.1 on 21.09.2012 and on their request
Completion Certificate was issued by appellant - There is nothing
on record to prove that the said Certificate was given under duress
or coercion- After a gap of one month, i.e. on 24.10.2012,
respondent no.1 withdrew the No Dues Certificate on grounds of
coercion and duress - Claim for losses incurred during execution
of the contract was made on 12.01.2013, i.e., after a gap of 31⁄2
months, whereas the Final Bill was settled on 10.10.2012 which
was mutually signed by both the parties - When respondent no.1
accepted the final payment in full and final satisfaction of all its
claims, there was no point in raising the claim for losses incurred
during the execution of the Contract at a belated stage which creates
an iota of doubt as to why such claim was not settled at the time of
submitting Final Bills - The story about duress was an afterthought
in the background that the losses incurred during the execution of
 [2018] 2 S.C.R. 598
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the Contract were not visualised earlier by respondent No.1 - Mere
allegation that no-claim certificate was obtained under financial
duress and coercion does not lead to an arbitrable dispute - No
arbitrable dispute existed so as to exercise power u/s.11 - High
Court was not justified in exercising power u/s.11 - Contract.
Allowing the appeal, the Court
HELD: 1.1 When one refers to discharge of a 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, one
refers 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 influence practised by the other
party and is able to establish the same, then obviously the
discharge of the contract by such agreement/voucher is rendered
void and cannot be acted upon. Consequently, any dispute raised
by such party would be arbitrable. But in case the party is not
able to establish such a claim or appears to be lacking in
credibility, then it is not open to the courts to refer the dispute to
arbitration at all. [Para 19][612-E-G]
1.2 In the case at hand, the High Court allowed the appeal
filed by the contractee-respondent no.1 on the assertion that the
No Dues Certificate was given on account of coercion/undue
influence practiced by the appellant-Contractor. The contractee,
while basing its claim, relied upon the letters issued to the
appellant for releasing the payment of Running Accounts (RA)
Bills. Whether there was duress and coercion exerted against
the contractee-Company by the appellant has to be examined
keeping in mind the background in which the said letters were
exchanged between the parties. [Para 22][616-E-G]
1.3 Pursuant to taking a false claim of duress and coercion
while filing the No Dues Certificate, the contractee-Company,
vide letter dated 12.01.2013 to the appellant, submitted a claim
for Rs.96,88,48,642/- for the losses incurred during execution of
 M/S ONGC MANGALORE PETRO

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 M/S ONGC MANGALORE PETROCHEMICALS LTD.
v.
M/S ANS CONSTRUCTIONS LTD. & ANR.
(Civil Appeal No. 1659 of 2018)
FEBRUARY 07, 2018
[R. K. AGRAWAL AND AMITAVA ROY, JJ.]
Arbitration and Conciliation Act, 1996 - s.11 - Exercise of
power under - When not justified - Appellant awarded contract to
respondent no.1 - On 21.09.2012, respondent no.1 submitted No
Dues/No Claim Certificate - On 10.10.2012, appellant made
payment of final bill to respondent no.1 - On 24.10.2012,
respondent no.1 withdrew the No Dues Certificate stating that it
was furnished under duress and coercion - Vide letter dtd.
12.01.2013 to appellant, respondent no.1 submitted claim of
Rs. 96,88,48,642/- as losses incurred during execution of the
contract, denied by appellant - Respondent no.1 sent notice to the
appellant for resolving the dispute through Arbitration, request
denied by appellant - Petition u/s.11 filed by respondent no.1 before
High Court, allowed - Held: Admittedly, No-Dues Certificate was
submitted by respondent no.1 on 21.09.2012 and on their request
Completion Certificate was issued by appellant - There is nothing
on record to prove that the said Certificate was given under duress
or coercion- After a gap of one month, i.e. on 24.10.2012,
respondent no.1 withdrew the No Dues Certificate on grounds of
coercion and duress - Claim for losses incurred during execution
of the contract was made on 12.01.2013, i.e., after a gap of 31⁄2
months, whereas the Final Bill was settled on 10.10.2012 which
was mutually signed by both the parties - When respondent no.1
accepted the final payment in full and final satisfaction of all its
claims, there was no point in raising the claim for losses incurred
during the execution of the Contract at a belated stage which creates
an iota of doubt as to why such claim was not settled at the time of
submitting Final Bills - The story about duress was an afterthought
in the background that the losses incurred during the execution of
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the Contract were not visualised earlier by respondent No.1 - Mere
allegation that no-claim certificate was obtained under financial
duress and coercion does not lead to an arbitrable dispute - No
arbitrable dispute existed so as to exercise power u/s.11 - High
Court was not justified in exercising power u/s.11 - Contract.
Allowing the appeal, the Court
HELD: 1.1 When one refers to discharge of a 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, one
refers 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 influence practised by the other
party and is able to establish the same, then obviously the
discharge of the contract by such agreement/voucher is rendered
void and cannot be acted upon. Consequently, any dispute raised
by such party would be arbitrable. But in case the party is not
able to establish such a claim or appears to be lacking in
credibility, then it is not open to the courts to refer the dispute to
arbitration at all. [Para 19][612-E-G]
1.2 In the case at hand, the High Court allowed the appeal
filed by the contractee-respondent no.1 on the assertion that the
No Dues Certificate was given on account of coercion/undue
influence practiced by the appellant-Contractor. The contractee,
while basing its claim, relied upon the letters issued to the
appellant for releasing the payment of Running Accounts (RA)
Bills. Whether there was duress and coercion exerted against
the contractee-Company by the appellant has to be examined
keeping in mind the background in which the said letters were
exchanged between the parties. [Para 22][616-E-G]
1.3 Pursuant to taking a false claim of duress and coercion
while filing the No Dues Certificate, the contractee-Company,
vide letter dated 12.01.2013 to the appellant, submitted a claim
for Rs.96,88,48,642/- for the losses incurred during execution of
 M/S ONGC MANGALORE PETROCHEMICALS LTD. v.
M/S ANS CONSTRUCTIONS LTD. & ANR.
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the contract at Mangalore. It was claimed that the contracteeCompany could not continue with the work due to various reasons
like pooja, shifting of Idols, non-availability of free encumbrance
of site, obstruction in the blasting work, stoppage of hard rock
blasting, issues with respect to work to be given to local
contractors, non-vacation of project displaced families, permission
for forest clearance, permission for shifting of wooden logs etc.
and the huge expenditure as disclosed in the claim was incurred
by the contractee-Company due to the factors attributable to the
appellant. Clause 6.6.0 of the General Conditions of Contract
deals with "Claims by the Contractor" (contractee in the case at
hand). Clause 6.6.1.0. of the Contract states that in case of a
claim of extra compensation or remuneration, the Contractee shall
give notice in writing of its claim within 10 days from the date of
issue of orders or instructions related to any works for which the
Contractee claims such additional payment. The notice shall give
full particulars of the nature of such claim, grounds on which it is
based and the amount claimed. Unless and until notice is given,
the Contractor shall not be liable to pay extra compensation to
the Contractee. Clause 6.6.3.0 states that any claim of the
Contractee in accordance with Clause 6.6.1.0 shall be separately
included in the Final Bill prepared by it in the form of Statement
of Claims, giving particulars of the nature of claims, ground on
which it is based and the amount claimed and shall be supported
by a copy of the notice and the Contractor shall not be liable in
respect of any notified claim not specifically reflected in the Final
Bill in accordance with the provisions of Clause 6.6.3.0 which
shall be deemed to have been waived by the Contractee. [Para
23][617-B-G]
1.4 From the materials on record, it is found that the
contractee-Company had issued the "No Dues/No Claim
Certificate" on 21.09.2012, it had received the full amount of the
final bill being Rs. 20.34 crores on 10.10.2012 and after 12 days
thereafter, i.e., only on 24.10.2012, the contractee-Company
withdrew letter dated 21.09.2012 issuing "No Dues/No Claim
Certificate". Apart from it, the Final Bill was mutually signed by
both the parties to the Contract accepting the quantum of work
done, conducting final measurements as per the Contract, arriving
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at final value of work, the payments made and the final payment
that was required to be made. The contractee-Company accepted
the final payment in full and final satisfaction of all its claims. In
the present facts and circumstances, the raising of the Final Bill
and mutual agreement of the parties in that regard, all claims,
rights and obligation of the parties merge with the Final Bill and
nothing further remained to be done. Further, the appellant issued
the Completion Certificate dated 19.06.2013 pursuant to which
the appellant was discharged of all the liabilities. With regard to
the issue that the "No Dues Certificate" had been given under
duress and coercion, there is nothing on record to prove that the
said Certificate had been given under duress or coercion and as
the Certificate itself provided a clearance of no dues, the
contractee could not now turn around and say that any further
payment was still due on account of the losses incurred during
the execution of the Contract. The story about duress was an
afterthought in the background that the losses incurred during
the execution of the Contract were not visualised earlier by the
contractee. As to financial duress or coercion, nothing of this
kind is established prima facie. Mere allegation that no-claim
certificates have been obtained under financial duress and
coercion, without there being anything more to suggest that, does
not lead to an arbitrable dispute. The conduct of the contractee
clearly shows that "No Claim Certificate" was given by it
voluntarily; the contractee accepted the amount voluntarily and
the contract was discharged voluntarily. [Para 24][617-H; 618A-F]
1.5 Admittedly, "No Dues Certificate" was submitted by
the contractee-Company on 21.09.2012 and on their request
Completion Certificate was issued by the appellant-Contractor.
The contractee, after a gap of one month, that is, on 24.10.2012,
withdrew the "No Dues Certificate" on the grounds of coercion
and duress and the claim for losses incurred during execution of
the Contract site was made vide letter dated 12.01.2013, i.e.,
after a gap of 3 1⁄2 (three and a half) months whereas the Final Bill
was settled on 10.10.2012. When the contractee accepted the
final payment in full and final satisfaction of all its claims, there is
no point in raising the claim for losses incurred during the
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execution of the Contract at a belated stage which creates an
iota of doubt as to why such claim was not settled at the time of
submitting Final Bills that too in the absence of exercising duress
or coercion on the Contractee by the appellant-Contractor. The
plea raised by the contractee-Company is bereft of any details
and particulars, and cannot be anything but a bald assertion. In
the circumstances, there was full and final settlement of the claim
and there was really accord and satisfaction and no arbitrable
dispute existed so as to exercise power under Section 11 of the
Act. [Para 25][618-G-H; 619-A-C]
Union of India and Others v. Master Construction Co.
(2011) 12 SCC 349 : [2011] 5 SCR 853 ; New India
Assurance Co. Ltd. v. Genus Power Infrastructure Ltd.
(2015) 2 SCC 424 : [2014] 12 SCR 360 ; National
Insurance Company Limited v. Boghara Polyfab Private
Limited (2009) 1 SCC 267 : [2008] 13 SCR 638 ;
R.L. Kalathia & Co. v. State of Gujarat (2011) 2 SCC
400 : [2011] 1 SCR 391 - referred to.
Case Law Reference
[2011] 5 SCR 853
 referred to
 Para 17
[2014] 12 SCR 360
 referred to
 Para 18
[2008] 13 SCR 638
 referred to

 Para 20
[2011] 1 SCR 391
 referred to
 Para 21
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1659
of 2018.
From the Judgment and Order dated 12.01.2015 of the High Court
of Karnataka at Bengaluru in CMP No. 35 of 2014.
P. S. Narasimha, Sr. Adv, Prabhat Kumar, Shauth Kumar Mahale,
S. R. Kamalacharan, Rajesh Mahale, Krutin Joshi, Advs. for the
Appellant.
P. Vinay Kumar, Ms. Sadiqua Fatma, Ms. Grusha Mehta, Advs.
for the Respondents.
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The Judgment of the Court was delivered by
R. K. AGRAWAL, J. 1. Leave granted.
2. This appeal is directed against the final judgment and order
dated 12.01.2015 passed by the High Court of Karnataka at Bengaluru
in C.M.P. No. 35 of 2014 whereby learned single Judge of the High
Court allowed the petition filed by the respondent No. 1- Company for
appointment of an arbitrator for resolution of the dispute between the
appellant-Company and respondent No. 1-Company.
3. Brief facts:
(a) Respondent No. 1-the Contractee Company was awarded a
Contract for "Site Grading, Construction of Roads, Water Drains and
Compound Wall for Aromatic Complex at Mangalore" in Mangalore
SEZ by the appellant-Contractor on 17.03.2008. The total contract value
as per the Letter of Acceptance (LOA) was Rs. 163,25,68,576/- which
was subsequently revised to Rs. 195,68,24,399.02/- vide letter dated
20.09.2010 and the completion period was also extended upto 30.11.2010.
(b) On 21.09.2012, the Contractee Company submitted a No Dues/
No Claim Certificate certifying the payment of all the bills and in total
settlement of all the claims whatsoever against the Contract. Thereafter,
on 10.10.2012, the appellant herein-the Contractor Company made a
payment of the final bill of Rs. 20.34 crores to the Contractee Company.
(c) Subsequently, on 24.10.2012, the Contractee Company
withdrew letter dated 21.09.2012 for "No Dues/No Claim Certificate"
stating that it was a pre-requisite condition for release of their long due
legitimate payment against the works executed under the Contract and
the same was furnished by the Contractee Company under duress and
coercion of the appellant-Contractor.
(d) The Contractee-Company, vide letter dated 12.01.2013 to the
appellant-Contractor, submitted a claim of Rs. 96,88,48,642.00 for the
losses incurred during execution of the contract at Mangalore. On
19.06.2013, the appellant-Contractor issued a Completion Certificate
stating that the works awarded under the Contract have been executed
and completed in all respects and no claim certificate has also been
submitted by the Contractee-Company. After several communication in
writing, the appellant-Contractor, vide letter dated 25.07.2013, denied
the claim of the contractee-Company.
 M/S ONGC MANGALORE PETROCHEMICALS LTD. v.
M/S ANS CONSTRUCTIONS LTD. & ANR.
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(e) Vide letter dated 14.09.2013, the contractee-Company sent a
notice to the appellant-Contractor for resolving the dispute between the
parties through Arbitration as envisaged under Article 9.0.2.0 to the
Contract and appointed Mr. K. Mohandas, Former General Manager
(Law)- SBI as its Arbitrator. The appellant-Contractor, vide letter dated
18.10.2013 denied the request of the contractee-Company as not tenable
in law.
(f) Being aggrieved by the decision of the appellant-Contractor in
not referring the dispute to Arbitration, the contractee-Company preferred
a C.M.P. No. 35 of 2014 before the High Court of Karnataka at Bangalore.
(g) Learned single Judge of the High Court, vide judgment and
order dated 12.01.2015, allowed the petition filed by the contracteeCompany.
(h) Being aggrieved by the order dated 12.01.2015, the appellantContactor has filed this appeal by way of special leave before this Court.
4. Heard Mr. P.S. Narasimha, learned senior counsel for the
appellant-Company and Mr. P. Vinay Kumar for the Respondents.
Point for consideration:
5. The only point for consideration before this Court is whether
the respondent-Contractee Company has made out a case for referring
the dispute to Arbitration?
Rival Submissions:
6. Learned senior counsel for the Contractor-the appellant
Company strenuously contended that the High Court erred in holding
that the contractee-Company established a case to show that there was
a genuine and serious dispute regarding the claim and that the claim that
No Dues Certificate/No Claim Certificate was issued under duress/
coercion is erroneous and unsustainable. Learned senior counsel further
contended that there was no withholding of payment and the extension
was granted subject to the contractee-Company's request and the
contract does not provide for escalation of costs.
7. Learned senior counsel further contended that the delay in
payment does not arise at all because as per Clause 6.4.0.0, there was
no obligation cast upon the Contractor to pay the RA Bills in full but it
was to be done merely on the assessment of the Engineer-in charge.
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The High Court erred in referring to few letters exchanged much prior
to the Final Bill. In fact, the alleged claims were never brought up at the
time of issuance of Final Bill or No Dues Certificate on 21.09.2012 and
now at this stage it is not open for the contractee-Company to raise the
issue of losses incurred during the execution of the Contract.
8. Learned senior counsel finally contended that when both the
parties to a contract confirm in writing that the contract has been fully
and finally discharged by performance of all obligations and there are no
outstanding claims or disputes, court will not refer the subsequent claim
or dispute to arbitration. There was complete accord and satisfaction of
the contract between the parties and nothing further was left to be done
by either parties. The High Court was not right in allowing the petition
filed by the contractee-Company and no case is made out for referring
the dispute to Arbitration and also for the payment of the alleged amount
to the contractee-Company.
9. Per contra, learned counsel for the contractee-Respondent
No. 1 herein submitted that during the execution of Contract, the
contractee Company raised Running Account Bills (RA Bills) to the
Contractor-Company for the expenses incurred towards carrying out
the construction work but the same were cleared with inordinate delay
and even the final bill to the tune of Rs. 20.34 crores was released by
the appellant- Contractor only when the contractee Company furnished
"No Dues/No Claim Certificate" dated 21.09.2012. Upon submitting
the above Certificate, the appellant-Contractor issued a Completion
Certificate approving the work carried out by the contractee under the
Contract.
10. Learned counsel for the contractee-Company further submitted
that since the appellant-Contractor was not clearing the legitimate and
genuine dues payable under the RA Bills and was always at the mercy
of the appellant-Contractor for the release of payment from the very
beginning of the Contract, the last payment of Rs. 20.34 crores and the
release of performance bank guarantee was deliberately withheld by
the appellant-Contractor. The work got completed on 30.06.2011 and it
was only after the submission of No-Dues Certificate on 21.09.2012,
the final payment was released. Due to non-payment of RA Bills on
time, the contractee-Company was under severe financial crunch and
could not have refused to issue the "No Dues Certificate" which was
issued under duress and has no meaning in the eyes of law.
 M/S ONGC MANGALORE PETROCHEMICALS LTD. v.
M/S ANS CONSTRUCTIONS LTD. & ANR.[R. K. AGRAWAL, J.]
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11. Learned counsel further submitted that it is prima facie evident
that there is a genuine and serious dispute between the parties which
requires the appointment of an Arbitrator under the clauses of the
Contract to adjudicate upon the claims made by the contractee and it
will cause grave injustice to the party if the claims are not adjudicated in
terms of the Contract. Learned counsel further submitted that under
these circumstances, the withdrawal of No Dues/No Claim Certificate,
which was given under duress, is not an afterthought and in a number of
decisions of this Court it has been held that if a party who has executed
the discharge agreement or discharge voucher alleges that execution of
such document was on account of fraud/coercion/undue influence
practiced by the other party then such discharge of the contract by such
agreement would be rendered void and cannot be acted upon.
12. Learned counsel further submitted that the contracteeCompany could not continue with the work due to various reasons like
pooja, shifting of idols, non-availability of free encumbrance of site,
obstruction in the blasting work, stoppage of hard rock blasting, issues
with respect to work to be given to local contractors, non-vacation of
project displaced families, permission for forest clearance, permission
for shifting of wooden logs etc. and the huge expenditure as disclosed in
the claim was incurred by the contractee-Company due to the factors
attributable to the appellant-Contractor.
13. Learned counsel finally contended that the "No Dues
Certificate" was filed by the contractee-Company under duress owing
to their huge payment pending towards the appellant-Contractor which
was rightly withdrawn for the losses incurred due to the appellantContractor. Further, when there is an Arbitration clause in the agreement,
the contractee Company has the right to invoke the same. The High
Court was right in allowing the petition filed by the contractee-Company
and no interference is sought for by this Court in this regard.
Discussion:
14. The appellant Contractor-ONGC Mangalore Petrochemicals
Ltd. invited tender for "Award of Work for Site Grading, Construction
of Roads, Storm Water Drains & Compound Wall for Aromatic Complex
at Mangalore". The bid document was issued by M/s Toyo Engineering
India Limited (TEIL)-Respondent No. 2 herein on behalf of the OMPL
(the contractor) being their Project Management Consultant. M/s ANS
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Constructions Limited-Respondent No. 1 herein submitted its bid on
15.11.2007. Respondent No. 1 herein was awarded the Contract vide
Letter of Acceptance (LOA) dated 17.03.2008. The total Contract Value
was estimated at Rs. 163,25,68,576/- which was later on revised to Rs.
195,68,24,399.02, pursuant thereto, the completion period was also
extended upto 30.11.2010.
15. During the subsistence of the contract, the contractee-Company
raised RA Bills for the expenses incurred towards carrying out the
construction work. It is evident on record that the contractee-Company
made several requests to the appellant-Contractor to clear their legitimate
and genuine dues payable under the Bills which was paid to them after
inordinate delay. It is also the claim of the contractee-Company that the
contractee was compelled to file No Dues Certificate/No Claim
Certificate dated 21.09.2012 in order to get the release of the Final Bill
under the Contract. On 10.10.2012, the contractor-Company made the
payment of the final bill of Rs. 20.34 crores to the contractee-Company.
After the release of the Final Bill, the contractee-Company withdrew
the "No Dues/No Claim Certificate" stating that the letter dated
21.09.2012 was pre-requisite condition for release of their long due
legitimate payment against the works executed under the Contract and
the same was furnished under duress and coercion of the appellantContractor. Further, on 12.01.2013, the contractee-Company submitted
a claim for Rs. 96,88,48,642.00 for the losses incurred during execution
of the contract at Mangalore.
16. The appellant-Contractor, vide letter dated 25.07.2013, rejected
the claim of the contractee-Company on the ground that the Contractee
has submitted No Dues/No Claim Certificate and withdrawal of the
same on the ground that it was obtained under duress and coercion is
wrong, incorrect and not tenable in law. Being aggrieved by the rejection
of their claim, the contractee-Company invoked the Arbitration clause
under the Contract and appointed its Arbitrator. The appellant-Contractor,
vide letter dated 18.10.2013, declined to nominate its Arbitrator. The
contractee-Company filed a Civil Miscellaneous Petition under Section
11 of the Arbitration and Conciliation Act, 1996 (in short 'the Act') for
the appointment of an Arbitrator in lieu of the nominee arbitrator of the
appellant-Contractor so that the said arbitrator along with the nominee
arbitrator already appointed by the contractee-Company agree upon the
appointment of the third/presiding arbitrator for constitution of a three
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M/S ANS CONSTRUCTIONS LTD. & ANR.[R. K. AGRAWAL, J.]
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member Arbitral Tribunal as per the agreed terms of the Contract for
adjudicating upon the dispute arising out of execution of the Contract.
17. Learned senior counsel for the appellant-Contractor, after
taking us through the material on record, submitted that the contract has
come to an end and the obligations therein have been discharged and
there is no point of raising a belated claim in the form of losses incurred
during the execution of the Contract that too after submitting the Final
Bills as well as the No Dues Certificate. In support of his claim, learned
senior counsel relied upon a decision of this Court in Union of India
and Others vs. Master Construction Co. (2011) 12 SCC 349 wherein
it was held as under:-
"18. In our opinion, there is no rule of the absolute kind. In a case
where the claimant contends that a discharge voucher or no-claim
certificate has been obtained by fraud, coercion, duress or undue
influence and the other side contests the correctness thereof, the
Chief Justice/his designate must look into this aspect to find out at
least, prima facie, whether or not the dispute is bona fide and
genuine. Where the dispute raised by the claimant with regard to
validity of the discharge voucher or no-claim certificate or
settlement agreement, prima facie, appears to be lacking in
credibility, there may not be a necessity to refer the dispute for
arbitration at all.
19. It cannot be overlooked that the cost of arbitration is quite
huge-most of the time, it runs into six and seven figures. It may
not be proper to burden a party, who contends that the dispute is
not arbitrable on account of discharge of contract, with huge cost
of arbitration merely because plea of fraud, coercion, duress or
undue influence has been taken by the claimant. A bald plea of
fraud, coercion, duress or undue influence is not enough and the
party who sets up such a plea must prima facie establish the same
by placing material before the Chief Justice/his designate. If the
Chief Justice/his designate finds some merit in the allegation of
fraud, coercion, duress or undue influence, he may decide the
same or leave it to be decided by the Arbitral Tribunal. On the
other hand, if such plea is found to be an afterthought, makebelieve or lacking in credibility, the matter must be set at rest then
and there."
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18. Further, learned senior counsel relied upon a judgment of this
Court in New India Assurance Co. Ltd. vs. Genus Power Infrastructure
Ltd. (2015) 2 SCC 424 wherein this Court has held as under:-
7. The question that arises is whether the discharge in the present
case upon acceptance of compensation and signing of subrogation
letter was not voluntary and whether the claimant was subjected
to compulsion or coercion and as such could validly invoke the
jurisdiction under Section 11 of the Act. The law on the point is
clear from following decisions of this Court. In National Insurance
Co. Ltd. v. Boghara Polyfab (P) Ltd in paras 26 and 51 it was
stated as under:
"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 influence practised by the other party and is
able to establish the same, then obviously the discharge of the
contract by such agreement/voucher is rendered void and
cannot be acted upon. Consequently, any dispute raised by
such party would be arbitrable.
* *
 *
51. The Chief Justice/his designate exercising jurisdiction under
Section 11 of the Act will consider whether there was really accord
and satisfaction or discharge of contract by performance. If the
answer is in the affirmative, he will refuse to refer the dispute to
arbitration. On the other hand, if the Chief Justice/his designate
comes to the conclusion that the full and final settlement receipt
or discharge voucher was the result of any fraud/coercion/undue
influence, he will have to hold that there was no discharge of the
contract and consequently, refer the dispute to arbitration.
Alternatively, where the Chief Justice/his designate is satisfied
prima facie that the discharge voucher was not issued voluntarily
and the claimant was under some compulsion or coercion, and
that the matter deserved detailed consideration, he may instead
 M/S ONGC MANGALORE PETROCHEMICALS LTD. v.
M/S ANS CONSTRUCTIONS LTD. & ANR.[R. K. AGRAWAL, J.]
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of deciding the issue himself, refer the matter to the Arbitral
Tribunal with a specific direction that the said question should be
decided in the first instance."
8. In the decision rendered in Union of India v. Master
Construction Co this Court observed as under:
 "18. In our opinion, there is no rule of the absolute kind. In a
case where the claimant contends that a discharge voucher or
no-claim certificate has been obtained by fraud, coercion, duress
or undue influence and the other side contests the correctness
thereof, the Chief Justice/his designate must look into this aspect
to find out at least, prima facie, whether or not the dispute is bona
fide and genuine. Where the dispute raised by the claimant with
regard to validity of the discharge voucher or no-claim certificate
or settlement agreement, prima facie, appears to be lacking in
credibility, there may not be a necessity to refer the dispute for
arbitration at all.
 19. It cannot be overlooked that the cost of arbitration is quite
huge-most of the time, it runs into six and seven figures. It may
not be proper to burden a party, who contends that the dispute is
not arbitrable on account of discharge of contract, with huge cost
of arbitration merely because plea of fraud, coercion, duress or
undue influence has been taken by the claimant. A bald plea of
fraud, coercion, duress or undue influence is not enough and the
party who sets up such a plea must prima facie establish the same
by placing material before the Chief Justice/his designate. If the
Chief Justice/his designate finds some merit in the allegation of
fraud, coercion, duress or undue influence, he may decide the
same or leave it to be decided by the Arbitral Tribunal. On the
other hand, if such plea is found to be an afterthought, makebelieve or lacking in credibility, the matter must be set at rest then
and there.
* *
*
 22. The above certificates leave no manner of doubt that upon
receipt of the payment, there has been full and final settlement of
the contractor's claim under the contract. That the payment of
final bill was made to the contractor on 19-6-2000 is not in dispute.
After receipt of the payment on 19-6-2000, no grievance was
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raised or lodged by the contractor immediately. The authority
concerned, thereafter, released the bank guarantee in the sum of
Rs 21,00,000 on 12-7-2000. It was then that on that day itself, the
contractor lodged further claims."
9. It is therefore clear that a bald plea of fraud, coercion, duress
or undue influence is not enough and the party who sets up a plea,
must prima facie establish the same by placing material before
the Chief Justice/his designate. Viewed thus, the relevant
averments in the petition filed by the respondent need to be
considered, which were to the following effect:
"(g) That the said surveyor, in connivance with the respondent
Company, in order to make the respondent Company escape
its full liability of compensating the petitioner of such huge loss,
acted in a biased manner, adopted coercion, undue influence
and duress methods of assessing the loss and forced the
petitioner to sign certain documents including the claim form.
The respondent Company also denied the just claim of the
petitioner by their acts of omission and commission and by
exercising coercion and undue influence and made the petitioner
Company sign certain documents, including a pre-prepared
discharge voucher for the said amount in advance, which the
petitioner Company were forced to do so in the period of
extreme financial difficulty which prevailed during the said
period. As stated aforesaid, the petitioner Company was forced
to sign several documents including a letter accepting the loss
amounting to Rs 6,09,55,406 and settle the claim of Rs
5,96,08,179 as against the actual loss amount of Rs 28,79,08,116
against the interest of the petitioner Company. The said letter
and the aforesaid pre-prepared discharge voucher stated that
the petitioner had accepted the claim amount in full and final
settlement and thus, forced the petitioner Company to unilateral
acceptance of the same. The petitioner Company was forced
to sign the said document under duress and coercion by the
respondent Company. The respondent Company further
threatened the petitioner Company to accept the said amount
in full and final or the respondent Company will not pay any
amount towards the fire policy. It was under such compelling
circumstances that the petitioner Company was forced and
under duress was made to sign the acceptance letter."
 M/S ONGC MANGALORE PETROCHEMICALS LTD. v.
M/S ANS CONSTRUCTIONS LTD. & ANR.[R. K. AGRAWAL, J.]
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10. In our considered view, the plea raised by the respondent is
bereft of any details and particulars, and cannot be anything but a
bald assertion. Given the fact that there was no protest or demur
raised around the time or soon after the letter of subrogation was
signed, that the notice dated 31-3-2011 itself was nearly after
three weeks and that the financial condition of the respondent
was not so precarious that it was left with no alternative but to
accept the terms as suggested, we are of the firm view that the
discharge in the present case and signing of letter of subrogation
were not because of exercise of any undue influence. Such
discharge and signing of letter of subrogation was voluntary and
free from any coercion or undue influence. In the circumstances,
we hold that upon execution of the letter of subrogation, there
was full and final settlement of the claim. Since our answer to the
question, whether there was really accord and satisfaction, is in
the affirmative, in our view no arbitrable dispute existed so as to
exercise power under Section 11 of the Act. The High Court was
not therefore justified in exercising power under Section 11 of the
Act."
19. When we refer to discharge of a 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 influence practised by the other party
and is able to establish the same, then obviously the discharge of the
contract by such agreement/voucher is rendered void and cannot be
acted upon. Consequently, any dispute raised by such party would be
arbitrable. But in case the party is not able to establish such a claim or
appears to be lacking in credibility, then it is not open to the courts to
refer the dispute to arbitration at all.
20. In support of the claim of duress and coercion while issuing
the said Certificate, learned counsel for the contractee-Company has
taken us through a decision of this Court in National Insurance Company
Limited vs. Boghara Polyfab Private Limited (2009) 1 SCC 267
wherein it was held as under:-
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 "24. What is however clear is when a respondent contends that
the dispute is not arbitrable on account of discharge of the contract
under a settlement agreement or discharge voucher or no-claim
certificate, and the claimant contends that it was obtained by fraud,
coercion or undue influence, the issue will have to be decided
either by the Chief Justice/his designate in the proceedings under
Section 11 of the Act or by the Arbitral Tribunal as directed by the
order under Section 11 of the Act. A claim for arbitration cannot
be rejected merely or solely on the ground that a settlement
agreement or discharge voucher had been executed by the
claimant, if its validity is disputed by the claimant.
 50. Let us consider what a civil court would have done in a
case where the defendant puts forth the defence of accord and
satisfaction on the basis of a full and final discharge voucher issued
by the plaintiff, and the plaintiff alleges that it was obtained by
fraud/coercion/undue influence and therefore not valid. It would
consider the evidence as to whether there was any fraud, coercion
or undue influence. If it found that there was none, it will accept
the voucher as being in discharge of the contract and reject the
claim without examining the claim on merits. On the other hand, if
it found that the discharge voucher had been obtained by fraud/
undue influence/coercion, it will ignore the same, examine whether
the plaintiff had made out the claim on merits and decide the
matter accordingly. The position will be the same even when there
is a provision for arbitration.
 51. The Chief Justice/his designate exercising jurisdiction under
Section 11 of the Act will consider whether there was really accord
and satisfaction or discharge of contract by performance. If the
answer is in the affirmative, he will refuse to refer the dispute to
arbitration. On the other hand, if the Chief Justice/his designate
comes to the conclusion that the full and final settlement receipt
or discharge voucher was the result of any fraud/coercion/undue
influence, he will have to hold that there was no discharge of the
contract and consequently, refer the dispute to arbitration.
Alternatively, where the Chief Justice/his designate is satisfied
prima facie that the discharge voucher was not issued voluntarily
and the claimant was under some compulsion or coercion, and
that the matter deserved detailed consideration, he may instead
 M/S ONGC MANGALORE PETROCHEMICALS LTD. v.
M/S ANS CONSTRUCTIONS LTD. & ANR.[R. K. AGRAWAL, J.]
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of deciding the issue himself, refer the matter to the Arbitral
Tribunal with a specific direction that the said question should be
decided in the first instance.
52. Some illustrations (not exhaustive) as to when claims are
arbitrable and when they are not, when discharge of contract by
accord and satisfaction are disputed, to round up the discussion
on this subject are:
 (i) A claim is referred to a conciliation or a pre-litigation Lok
Adalat. The parties negotiate and arrive at a settlement. The
terms of settlement are drawn up and signed by both the parties
and attested by the conciliator or the members of the Lok
Adalat. After settlement by way of accord and satisfaction,
there can be no reference to arbitration.
 (ii) A claimant makes several claims. The admitted or
undisputed claims are paid. Thereafter negotiations are held
for settlement of the disputed claims resulting in an agreement
in writing settling all the pending claims and disputes. On such
settlement, the amount agreed is paid and the contractor also
issues a discharge voucher/no-claim certificate/full and final
receipt. After the contract is discharged by such accord and
satisfaction, neither the contract nor any dispute survives for
consideration. There cannot be any reference of any dispute
to arbitration thereafter.
 (iii) A contractor executes the work and claims payment of
say rupees ten lakhs as due in terms of the contract. The
employer admits the claim only for rupees six lakhs and informs
the contractor either in writing or orally that unless the
contractor gives a discharge voucher in the prescribed format
acknowledging receipt of rupees six lakhs in full and final
satisfaction of the contract, payment of the admitted amount
will not be released. The contractor who is hard-pressed for
funds and keen to get the admitted amount released, signs on
the dotted line either in a printed form or otherwise, stating
that the amount is received in full and final settlement. In such
a case, the discharge is under economic duress on account of
coercion employed by the employer.