Order
1. Leave granted.
2. Under the order of this Court dated 7-2-1997, notice was issued to the respondent for final disposal of the special leave petition in view of the receipt dated 23-10-1993 given by the respondent to the appellants. Accordingly, we have heard both the sides.
3. The appellants had entered into a contract dated 8-8-1988 with the respondent for construction of their building at Dehradun on the terms and conditions set out in that contract. According to the appellants, several extensions were granted to the respondent for completion of the building. Ultimately, the contract was terminated by them on 28-7-1992. According to the appellants, they have paid a total amount of Rs 2.63 lakhs (approximately) to the respondent under the said contract. The final payment has been made under a receipt dated 23-10-1993 which is signed by the Project Manager for and on behalf of the respondent. It states:
“Received a sum of Rs 2,19,245 vide Cheque No. 9526281 dated 23-10-1993 from the Director, Wildlife Institute of India, Dehradun on behalf of Shri Vijay Kumar Garg, Sector 9-B, Chandigarh in full and final settlement of our final bill for the construction work and other dues as per our agreement entered between the Director, Wildlife Institute of India and Vijay Kumar Garg, Vide No. A/11-7/88-WII (II) dated 8-8-1988. No further claim of whatsoever on any ground will be taken up in any court of law or arbitration. Any claim arising on account of Labour Act or otherwise will be our responsibility.”
4. After the signing of this receipt, the respondent did not do anything for a period of almost one year. On 30-8-1994, the respondent addressed a letter to the appellants in which for the first time, he set out 18 claims against the appellants in respect of the same contract and demanded payment. He also asked for appointment of an arbitrator. Even in this letter, there is no reference to the receipt given by him on 23-10-1993. Nor is there any allegation that the amount was received under protest or that the respondent had been, in any manner, pressurised into giving that receipt. There is also another letter of 21-10-1994 from the respondent to the appellants in which he invoked the arbitration clause and stated that he would apply to the court for appointment of an arbitrator. In reply, the appellants by their letter dated 1-11-1994 pointed out that the receipt signed by the respondent on 23-10-1993 clearly stated that all the bills of the respondent had been settled in full and no further claim whatsoever would be taken up in any court of law or arbitration. Even, at this stage, no reply was given by the respondent to this contention. The respondent, thereafter, filed a suit under Section 20 of the Arbitration Act in which the Additional Civil Judge has passed an order on 17-12-1996 directing the appointment of an arbitrator in terms of that order. An appeal from this order has been dismissed by the Division Bench of the High Court.
5. Looking to the facts in the present case and the circumstances which are apparent from the correspondence exchanged between the parties in connection with the signing of the receipt of 23-10-1993, it is clear that the final payment was accepted by the respondent in full satisfaction of all his claims under the contract and that there was no dispute outstanding. After the receipt of the said amount also, the respondent has not lodged any protest nor has he alleged any pressure being put upon him for signing the receipt.
6. It is also necessary to refer to the arbitration clause under the contract which clearly provides that if the contractor does not make any demand for arbitration in respect of any claim in writing within 90 days of receiving the intimation from the appellants that the bill is ready for payment, the claim of the contractor will be deemed to have been waived and absolutely barred and the appellants shall be discharged and released of all liabilities under the contract in respect of these claims. The liability, therefore, of the appellants ceases if no claim of the contractor is received within 90 days of receipt by the contractor of an intimation that the bill is ready for payment. This clause operates to discharge the liability of the appellants on expiry of 90 days as set out therein and is not merely a clause providing a period of limitation. In the present case, the contractor has not made any claim within 90 days of even receipt of the amount under the final bill. The dispute has been raised for the first time by the contractor 10 months after the receipt of the amount under the final bill.
7. In the premises, the High Court was not right in referring the alleged dispute to arbitration. The appeal is, therefore, allowed. The impugned order of the High Court is set aside. No costs.