Holding

The contractual clauses 65 and 65A are unambiguous, bind the parties and the arbitrator, and in the absence of a finding that the final bill was vitiated, the arbitrator had no jurisdiction to award claims after the final bill, rendering the award illegal and without jurisdiction.

Summary

The Union of India and others entered into a contract with M/s. Bharat Enterprise for repair work, which required the contractor to submit a final bill and a No Claims Certificate. The contractor submitted the final bill on 13‑02‑2002, but payment was delayed for over a year, after which the contractor raised additional claims. The appellant sought to dismiss these claims invoking contract clauses 65 and 65A, which prohibit any claim after the final bill. The arbitrator rejected the Section 16 application and later allowed three of the later claims in the award. The appellant challenged the award under Section 34; the High Court set aside the award, but the Supreme Court held that the clauses are clear, binding on the arbitrator, and that without a finding that the final bill was vitiated by duress or other factors, the arbitrator had no jurisdiction to entertain post‑final‑bill claims. Consequently, the award was illegal, the High Court order was set aside, and the appellants were ordered to pay Rs 3 lakhs as full and final settlement.

Issues considered

The arbitrator's jurisdiction to entertain claims submitted after the final bill and No Claims Certificate under contract clauses 65 and 65A.
Whether the order of the arbitral tribunal under Section 16 rejecting the appellant's application is appealable under Section 37 of the Arbitration and Conciliation Act.
Whether the final bill and No Claims Certificate can be set aside on the ground of duress or other vitiating factors.
The effect of public‑policy and unfair‑contract arguments on the enforceability of clauses 65 and 65A.
The legality and jurisdiction of the arbitral award that allowed post‑final‑bill claims.

Legislation cited

Arbitration and Conciliation Act, 1996s. 16(2), s. 16(3), s. 34, s. 37
Indian Contract Act, 1872s. 15, s. 16, s. 17, s. 18
Specific Relief Act, 1963s. 31(1)

Subjects

ArbitrationFinal BillNo Claims CertificateContractual ClausesJurisdictionSection 16Section 34Section 37DuressPublic PolicyAward Set Aside

Judgment

[2023] 8 S.C.R. 803 803

UNION OF INDIA & ORS. A
v.
M/S. BHARAT ENTERPRISE
(Civil Appeal Nos. 3441-3442 of 2015)
MARCH 23, 2023 B
[K. M. JOSEPH, KRISHNA MURARI AND
B. V. NAGARATHNA, JJ.]
Arbitration and Conciliation Act, 1996 – Arbitrator passed
an award allowing claims which were submitted after the submission
C
of the final bill (containing No Claims Certificate) by the
Respondent-Contractor – During the arbitration, the appellant filed
an application u/s.16 invoking clauses 65 and 65A of the Contract
which interdicted the submission of a new claim after the submission
of the final bill – Application rejected – Petition filed by the
appellant u/s.34 challenging the award, allowed – Order set aside D
by High Court in appeal u/s.37 – Held: When a contractor seeks to
wriggle out of a final bill or a ‘no claims due certificate’ which he
has submitted, he must establish a case that a final bill or a
certificate of no further claims was the result of any of the vitiating
factors under the law – Sans such finding, the final bill would stand
E
– If the final bill cannot be overridden by any factors known to law
then the clauses relied upon by the appellants in this case would
operate – There was no finding by the Arbitrator that the final bill
and the no claims certificate were vitiated – The clauses in the
contract were binding not only on the parties but also on the
Arbitrator – Going against the terms of clauses 65 and 65A would F
indeed render the Award illegal being contrary to the contract and,
therefore, without jurisdiction – If the clauses operate, the inevitable
result is the arbitrator could not have traveled outside of the
contractual prohibition and passed an award allowing claims
submitted after the submission of the final bill – While, the reasoning
G
adopted by the High Court cannot be subscribed to, it cannot also
be lost sight of that the amounts in question are fairly meagre and
the final bill was settled only after long delay of over an year – It
was apparently the long delay in the payment of the final bill amount
which led to the raising of the new claims – Perhaps, if the final bill
itself was not kept pending for such a long time, the entire dispute H
803
804 SUPREME COURT REPORTS [2023] 8 S.C.R.

A may not have arisen at all – Impugned order set aside – Appellants
to pay Rs.3 lakhs to the respondent in full and final settlement of its
claims – Constitution of India – Art. 136.
Arbitration and Conciliation Act, 1996 – ss.16(2), (3), 34, 37
– Plea of the respondent that the order dtd. 04.03.2009 passed by
B the Arbitrator u/s.16 had attained finality as the same was not
impugned u/s.37 – Held: Under s.37(2)(a), an appeal lies to the
Court from an order of the Arbitral Tribunal accepting the plea
referred to in sub-sections (2) and (3) of s.16 – This means that an
appeal can be preferred against the order of the Arbitral Tribunal
allowing the plea that the Arbitral Tribunal does not have jurisdiction
C – Similar is the case with reference to an order which is rendered
appealable u/s.16(3) – Thereunder also, it is the plea that the Arbitral
Tribunal is exceeding the scope of its authority which is allowed
which is rendered appealable – In the present case, by order
dtd.04.03.2009, the Arbitral Tribunal did not allow the plea be it u/
D s.16(2) or u/s.16(3) – On the other hand, the Tribunal rejected the
plea of the appellants – Therefore, no appeal could have been filed
u/s.37 against the order dtd.04.03.2009 – An order passed by the
Arbitral Tribunal rejecting the plea u/s.16(2) or 16(3) being part of
the Award itself, it is open to the parties to challenge the same when
a petition is filed u/s.34 challenging the Award.
E
Arbitration – Arbitrator is a creature of the parties and the
contract – As Arbitrator he cannot stray outside the contours of the
contract – He is bound to act within its confines – A disregard of
the specific provisions of the contract would incur the wrath of the
Award being imperiled.
F
Allowing the appeals, the Court
HELD: 1.1 The clauses which have been relied upon by
the appellants are clear and unambiguous. What they interdict is
the submission of a new claim after the submission of the final
G bill. If there are any claims left after the submission of the final
bill, the parties have agreed that they shall stand waived. These
are the clauses which are binding not only on the parties but also
on the Arbitrator. Going against the terms of clauses 65 and 65A
would indeed render the Award vulnerable on the basis that it is
illegal being contrary to the contract and, therefore, without
H jurisdiction. There may be cases where a final bill may be submitted
UNION OF INDIA & ORS. v. M/S. BHARAT ENTERPRISE 805

and the contention is taken that the final bill was submitted under A
duress. In such a case, it may be open to the claimants to urge
and the Arbitrator to find that the final bill was itself vitiated on
account of the fact that it was brought about by duress or any
other vitiating factors under law. If such an event had taken place
then that may have been sufficient to non-suit the appellants. In
B
other words, if under the terms of the agreement, there is an
embargo against the Arbitrator embarking upon and attempting
to find merit in any claim which is not part of the final bill, an
award so countenancing a claim would be illegal. However, on
the other hand, if the case is that the final bill itself should not be
given life as it was born out of coercion or any other vitiating C
factor and the Arbitrator renders a finding on material as is
sufficient in law then the Award of the Arbitrator may not be
attacked on the ground that he travels beyond the contractual
provisions. [Paras 17, 18][822-G-H; 823-A-D]
1.2 On 13.02.2002, the respondent has indeed submitted a D
final bill. It is a year thereafter on 25.02.2003, that the respondent
sent a letter inter alia urging that the final bill dated 13.02.2002
was not paid and is signed under protest. Subsequently, it would
appear that the respondent has filed an affidavit on 24.05.2003.
It is ignoring all this that notice was sent for referring the matter
to arbitration. By order dated 12.11.2007, the High Court E
proceeding under Section 11 of the Act appointed an Arbitrator.
During the course of the arbitration, on 03.08.2008, the appellants
filed an application under Section 16 of the Act invoking clauses
65 and 65A of the Contract. The said application came to be
rejected on 04.03.2009. The Arbitrator has proceeded to reject F
the application filed by the appellants under Section 16 on the
basis of the order dated 12.11.2007 passed by the High Court.
The Arbitrator further draws inspiration from the fact that the
application seeking modification of the order dated 12.11.2007
was dismissed on 04.12.2007. The Arbitrator further found that
the agreement entered into between the parties subsequent to G
the order dated 12.11.2007 would indicate that disputes indeed
exist. What is, however, conspicuous by its absence is any finding
by the Arbitrator, that the final bill dated 13.02.2002 was the result
of duress or any other vitiating factors. [Paras 19, 20][823-E-H]
H
806 SUPREME COURT REPORTS [2023] 8 S.C.R.

A 1.3 An appeal lies to the Court from an order of the Arbitral
Tribunal accepting the plea referred to in sub-sections (2) and
(3) of Section 16. This means that an appeal can be preferred
against the order of the Arbitral Tribunal allowing the plea that
the Arbitral Tribunal does not have jurisdiction. Similar is the
case with reference to an order which is rendered appealable
B
under Section 16(3) of the Act. Thereunder also, it is the plea
that the Arbitral Tribunal is exceeding the scope of its authority
which is allowed which is rendered appealable. In this case, by
order dated 04.03.2009, the Arbitral Tribunal has not allowed
the plea be it under section 16(2) or under Section 16(3). On the
C other hand, the Tribunal has rejected admittedly the plea of the
appellants. Therefore, no appeal could have been filed under
Section 37 against the order dated 04.03.2009. An order passed
by the Arbitral Tribunal rejecting the plea under Section 16(2) or
16(3) being part of the Award itself, it is open to the parties to
challenge the same when a petition is filed under Section 34 of
D
the Act challenging the Award. This is the scheme of the Act.
This is apparently to confine a right to appeal to those cases where
accepting a plea of a party would bring the arbitration to a halt. In
fact, the order dated 04.03.2009 has been referred to in the Award
and it has been treated as part of the Award. It is thereafter that
E in a proceeding that the District Court has allowed the petition
filed under Section 34 by the appellants. It is no doubt true that
the salutary principle which has been enunciated by this Court in
Central Inland Water Transport Corporation being in accord with
constitutional principles must receive due consideration.
However, it cannot be torn out of context. More importantly, as
F
already noticed when a contractor seeks to wriggle out of a final
bill or a ‘no claims due certificate’ which he has submitted, as in
a civil Court so before the Arbitrator, he must establish a case
that a final bill or a certificate of no further claims was the result
of any of the vitiating factors under the law. Sans such finding, the
G final bill would stand. If the final bill cannot be overridden by any
factors known to law then the clauses relied upon by the
appellants in this case would operate. There is no finding by the
Arbitrator that the final bill and the no claims certificate were
vitiated. The clauses in the contract were binding on the
H
UNION OF INDIA & ORS. v. M/S. BHARAT ENTERPRISE 807

respondent. It cannot be departed from invoking the principle in A
Central Inland Water Transport Corporation. It is not the case of
the contractor that when the contract was entered into, it was in
circumstances which attracted the principles laid down therein.
If the clauses operate, the inevitable result is the arbitrator could
not have traveled outside of the contractual prohibition and passed
B
an award allowing claims which were submitted after the
submission of the final bill. [Paras 22, 23, 25 and 26][824-F-H;
825-A-B; 826-A-D]
Central Inland Water Transport Corporation & Anr. v.
Brojo Nath Ganguly AIR 1986 SC 1571 : [1986] 2 SCR
278 – referred to. C

1.4 While this Court cannot subscribe to the reasoning
adopted by the High Court, it cannot also be lost sight of that the
amounts in question are fairly meagre and the final bill remained
unpaid for long period of time. It was apparently the long delay in
the payment of the final bill amount which led to the raising of the D
new claims. Perhaps, if the final bill itself was not kept pending
for such a long time, the entire dispute may not have arisen at all.
Having regard to all the facts and circumstances, while this Court
is inclined to set aside the impugned order, the interests of justice
would require that the respondent is paid a lumpsum amount in E
full and final satisfaction of all his claims. The impugned judgment
is set aside. However, the appellants will pay a sum of Rs.3 lakhs
(Rupees Three Lakhs only) to the respondent which will be in
full and final settlement of the claims of the respondent. [Paras
28, 29][826-G-H; 827-E]
F
Bharat Coking Coal Ltd. v. Annapurna Construction
(2003) 8 SCC 154 : [2003] 3 Suppl. SCR 122; Union
of India and Others v. Master Construction Company
(2011) 12 SCC 349 : [2011] 5 SCR 853; Union of India
v. Parmar Construction Company (2019) 15 SCC 682 :
G
[2019] 5 SCR 1009; PSA SI CAL Terminate (P) Ltd. v.
Board of Trustees of V.O. Chidambranar Port Trust
Tuticorin 2021 SCC Online SC 508; Union of India
and Others v. Master Construction Company (2011) 12
SCC 349 : [2011] 5 SCR 853; National Insurance
H
808 SUPREME COURT REPORTS [2023] 8 S.C.R.

A Company Limited v. Boghara Polyfab Private Limited
(2009) 1 SCC 267 : [2008] 13 SCR 638; SBP & Co. v.
Patel Engineering Ltd. and Another (2005) 8 SCC 618
: [2005] 4 Suppl. SCR 688; Tahera Khatoon (D)By LRs.
v. Salambin Mohammad (1999) 2 SCC 635 : [1999] 1
SCR 901 – referred to.
B
Case Law Reference

[2003] 3 Suppl. SCR 122 referred to Para 4, 10

[2011] 5 SCR 853 referred to Para 6
C
[2019] 5 SCR 1009 referred to Para 6

[2011] 5 SCR 853 referred to Para 11

D [2008] 13 SCR 638 referred to Para 12, 13

[2005] 4 Suppl. SCR 688 referred to Para 14

[1986] 2 SCR 278 referred to Para 24, 25

E [1999] 1 SCR 901 referred to Para 28

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 3441-
3442 of 2015.

From the Judgment and Order dated 11.02.2014 and 23.04.2014
F of the High Court of Punjab & Haryana at Chandigarh in FAO No. 4290
of 2013 and RA No. 66-CII of 2014 in FAO No. 4290 of 2013.

K. M. Nataraj, ASG, R. Bala, Sr. Adv., Ms. Vishakha,
Mrs. Swarupama Chaturvedi, Sharath Nambiar, Shlok Chandra, Arvind
Kumar Sharma, Advs. for the Appellants.
G
Ms. Praveena Gautam, Pawan Shukla, Ms. Indira Goswami, Aman
Sharma, Ms. Akanksha Tyagi, Advs. for the Respondents.

H
UNION OF INDIA & ORS. v. M/S. BHARAT ENTERPRISE 809

The Judgment of the Court was delivered by A
K. M. JOSEPH, J.
1. A contract was entered into between the parties for the repair
of bathrooms and other allied works on 02.07.2001. It would appear that
time was extended up to 19.01.2002. The respondent-Contractor
submitted final bill on 13.02.2002. It contained a No Claims Certificate. B
The said amount claimed by the respondent apparently was not paid
immediately. The respondent it would appear made several reminders
regarding the non-payment of the final bill for a period of one year.
Following many reminders by the respondent regarding the non payment
of the final bill, according to the respondent, it sent a list of additional C
claims on 25.02.2003 and in the said letter, claimed that the letter and the
Final bill should be considered as under protest. The respondent signed
affidavit dated 24.05.2003 which according to the respondent was
prepared by the appellant and which provided for the withdrawal of the
letter dated 25.02.2003. An undertaking was also got signed from the
respondent on 12.09.2003. Thereafter, respondent on 14.11.2003 revoked D
the affidavit and undertaking on account of non payment of the bill and
purported to give the final notice invoking the arbitration clause contained
in the contract for the non payment of claims due. It is, thereafter, on
25.11.2003, that the appellant made payment of Rs.100358/-. This was
followed by letter dated 08.09.2004 by which the respondent sought to E
invoke the arbitration clause and appointment of arbitrator. Later, on
12.11.2007, a petition was moved under Section 11(6) of the Arbitration
and Conciliation Act, 1996 (hereinafter referred to as ‘Act’ for brevity)
for appointment of an arbitrator. The same was allowed. A fresh
agreement for arbitration was entered into on 22.11.2007 providing for
appointment of a new Arbitrator. Suffice it to notice that a former District F
and Sessions Judge came to be appointed as sole arbitrator. The appellant
filed an application under Section 16 for dismissal of the claims. The
appellant invoked clauses 65 and 65A of the contract. This application,
no doubt, was rejected on 04.03.2009 by the Arbitrator. Thereafter, the
Arbitrator entered upon the merits of the matter and passed Award dated G
16.07.2009. There were a total of 10 claims. The Arbitrator disallowed
seven out of the ten claims while it allowed three claims. The claims
were allowed with rate of interest which we need not notice at this
stage. The petition filed by the appellant under Section 34 of the Act
came to be allowed by the District Judge. It is this order passed by the
H
810 SUPREME COURT REPORTS [2023] 8 S.C.R.

A District Judge under Section 34 which stands overturned by the impugned
order in an appeal under Section 37 of the Act.
2. We have heard Col. R. Balasubramanium, learned senior
counsel for the appellants, and Ms. Praveena Gautam, learned counsel
for the respondent.
B 3. The only controversy which we are called upon to resolve is
whether the impugned order is sustainable having regard to clauses 65
and 65A of the Contract.
4. The contention of the learned senior counsel for the appellants
is that the impugned order is in the teeth of law laid down by this Court
C in Bharat Coking Coal Ltd. vs. Annapurna Construction (2003) 8
SCC 154. He also points out that the said view has been followed in
PSA SI CAL Terminate (P) Ltd. v. Board of Trustees of V.O.
Chidambranar Port Trust Tuticorin 2021 SCC Online SC 508. In a
nutshell, the argument is as follows:
D 5. He contends that the Arbitrator cannot travel outside the
boundaries of the contact. In fact, he is fully bound by the terms of the
contract. In the terms of the contract which are apposite in the context
of the dispute before us, there is a prohibition against the Contractor
supplementing the claims in the final bill by including claims which are
E not found in the final bill. In the facts of this case, he would submit that
this is precisely what has happened by pointing out the final bill which
was submitted on 13.02.2002 and the claims allowed are later raised.
He would submit that the High Court was clearly in error in tiding over
this insuperable barrier in law and granting relief. The reasoning which
has weighed with the High court is sought to be brought under a cloud as
F being unsustainable in the teeth of the judgments rendered by this Court
referred to hereinbefore.
6. Per contra, Ms. Praveena Gautam, learned counsel for the
respondent, lays store by the law laid down by this Court in Union of
India and Others v. Master Construction Company (2011) 12 SCC
G 349 and the judgment in Union of India v. Parmar Construction
Company (2019) 15 SCC 682. She would point out that there was a
long delay in signing the final bill and the Arbitrator has only awarded the
amounts which were found due. It is further contended that an attempt
made under Section 16(2) of the Act to shake the premise of the
Arbitrator’s jurisdiction failed. It is pointed out that the said decision has
H
UNION OF INDIA & ORS. v. M/S. BHARAT ENTERPRISE 811
[K. M. JOSEPH, J.]

not been challenged under Section 37 of the Act. It is also pointed out A
that in the facts of this case, at any rate, the Court may not exercise its
jurisdiction based on an appeal generated by the State filed under Article
136 of the Constitution.
ANALYSIS
7. Clauses 65 and 65A of the Contract read as follows: B

“CONDITION NO.”65.
Final Bill (Applicable only to Measurement and LumpSum
Contracts).- The Final Bills shall be submitted by the Contractor
on I.A.F.W.-2262 in duplicate within three months of physical C
completion of the Works to the satisfaction of the Engineer-in-
Charge.
It shall be accompanied by all abstracts, vouchers,etc.,
supporting it and shall be prepared in the manner prescribed
by the G.E. D
No further claims shall be made by Contractor after
submission of the Final Bill and these shall be deemed to have
been waived and extinguished.
The Contractor shall be entitled to be paid the final sum
less the value of payments already made on account, subject E
to the certification of the final bill by the G.E.
No charges shall be allowed to the Contractor on
account of the preparation of the final bill.”
CONDITION NO.”65-A.
F
Final Bill (Applicable only to Term Contracts). - The
Final Bill shall be submitted by the Contractor on I.A.F.W.2262
in duplicate, accompanied by all supporting abstracts, vouchers,
etc., except I.A.F.W.- 2158 and 1833 prepared in the manner
prescribed by the G.E. within three months of physical
completion of the Works to the satisfaction of the Engineer-in- G
Charge. In respect of works orders arising out of unit
requisitions or M.E.S. inspections for maintenance and repairs,
any portion of such an order which remains uncompleted at
the date of the next subsequent requisition or inspection may,
purely to facilitate payment of completed Work and without H
812 SUPREME COURT REPORTS [2023] 8 S.C.R.

A prejudice to any other right or remedy of Government in respect
of any such delay, be deleted and the Works Order, as so
amended forthwith, billed for final payment.
No further claims shall be made by the Contractor after
submission of a Final Bill and these shall be deemed to have
B been waived and extinguished. The Contractor shall be entitled
to be paid the full measured value of the Works Order, less the
value of payments made on account and of any charges
properly preferred under the Conditions of Contracts for
Government Stores, etc. supplied on repayment, subject to the
certification of the final bill by the G.E.
C
When fractions of a rupee occur in the totals of bills,
fractions less than half a rupee shall be disregarded and half a
rupee and over taken as a rupee.
No charges shall be allowed to the Contractor on
D account of the preparation of a final bill.”
8. The Arbitrator comes on the scene as a result of the agreement
between the parties. Not unnaturally, the fundamental and primary
foundation for the Arbitrator to settle the dispute is the contract between
the parties. An Arbitrator is a creature, in other words, of the parties and
E the contract. It is elementary that as Arbitrator he cannot stray outside
the contours of the contract. He is bound to act within its confines. A
disregard of the specific provisions of the contract would incur the wrath
of the Award being imperiled. This position cannot be in the region of
dispute.

F 9. There is another scenario. This relates to a claim that there is
accord and satisfaction. On the one hand, it is sought to be rebuffed by
the case of the contractor that the accord and satisfaction was brought
about by vitiating factors which are contemplated essentially in sections
15 to 18 of the Indian Contract Act, 1872. In other words, where the
case of the contractor that a No Claim Certificate is given under duress
G or coercion, this may be the subject matter of inquiry by the Arbitrator. It
may be open to the Arbitrator to find merit in the complaint of the
contractor and to reject the case of accord and satisfaction and to proceed
to examine the merits of the claim of the contractor and to award
compensation in accordance with law in a given case. These distinct
streams of cases and therefore differences in the judicial approach is
H
what essentially arise for our consideration.
UNION OF INDIA & ORS. v. M/S. BHARAT ENTERPRISE 813
[K. M. JOSEPH, J.]

10. In Bharat Coking Coal Ltd. v. Annapurna Construction A
(2003) 8 SCC 154, this Court considered inter alia the effect of an
Arbitrator failing to consider the relevant clauses of the contract. It is on
the said premise that the Court proceeded to hold inter alia as follows:
“Findings
9. Only because the respondent has accepted the final bill, the B
same would not mean that it was not entitled to raise any claim. It
is not the case of the appellant that while accepting the final bill,
the respondent had unequivocally stated that he would not raise
any further claim. In absence of such a declaration, the respondent
cannot be held to be estopped or precluded from raising any claim. C
We, therefore, do not find any merit in the said submission of Mr
Sinha.
40. However, as noticed hereinbefore, this case stands on a
different footing, namely, that the arbitrator while passing the award
in relation to some items failed and/or neglected to take into D
consideration the relevant clauses of the contract, nor did he take
into consideration the relevant materials for the purpose of arriving
at a correct fact. Such an order would amount to misdirection in
law.”
In the same vein is the judgment of this Court reported in PSA E
SICAL Terminate (P) Ltd.1
11. On the other hand, is the decision reported in Master
Construction Company 2.
12. We must notice the following facts:
F
Firstly, the case arose under Section 11 of the Act.
Upon completion of the work in question, the completion certificate
was issued and this was followed by the contractor furnishing a No
Claim Certificate. The final bill was signed. Thereafter, the payment of
the final bill was made within a period of little over a month. Thereafter,
it would appear that the contractor wrote to the appellant withdrawing G
the No Claim Certificate. The employer (the appellant) declined to
entertain the claims on the ground that the final bill was accepted by the
1
PSA SI CAL Terminate (P) Ltd. v. Board of Trustees of V.O. Chidambranar Port Trust
Tuticorin 2021 SCC Online SC 508.
2
Union of India and Others v. Master Construction Company (2011) 12 SCC 349. H
814 SUPREME COURT REPORTS [2023] 8 S.C.R.

A contractor after furnishing the No Claim Certificate. It was in the context
of the said facts that this Court after an exhaustive review of earlier
case law which we must notice included the judgment of this Court
reported in National Insurance Company Limited v. Boghara Polyfab
Private Limited (2009) 1 SCC 267 went on to hold as follows:
B “23. The present, in our opinion, appears to be a case falling in the
category of exception noted in Boghara Polyfab (P) Ltd. [(2009)
1 SCC 267 : (2009) 1 SCC (Civ) 177] (p. 284, para 25). 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
C anything more to suggest that, does not lead to an arbitrable dispute.
The conduct of the contractor clearly shows that “no-claim
certificates” were given by it voluntarily; the contractor accepted
the amount voluntarily and the contract was discharged voluntarily.”
13. In National Insurance Company Limited3 this Court inter
D alia held as follows:
“The questions for consideration
15. In this case existence of an arbitration clause in the contract
of insurance is not in dispute. It provides that “if any dispute or
E difference shall arise as to the quantum to be paid under this policy
(liability being otherwise admitted) such difference shall,
independently to all other questions be referred to the decision of
a sole arbitrator”. The rival contentions give rise to the following
question for our consideration:

F In what circumstances, a court will refuse to refer a dispute
relating to quantum to arbitration, when the contract specifically
provides for reference of disputes and differences relating to the
quantum to arbitration? In particular, what is the position when a
respondent in an application under Section 11 of the Act, resists
reference to arbitration on the ground that the petitioner has issued
G a full and final settlement discharge voucher and the petitioner
contends that he was constrained to issue it due to coercion, undue
influence and economic compulsion?
17. The decision in Kishorilal Gupta [AIR 1959 SC 1362 : (1960)
1 SCR 493] was followed and reiterated in several decisions
H including Naihati Jute Mills Ltd. v. Khyaliram Jagannath [AIR
UNION OF INDIA & ORS. v. M/S. BHARAT ENTERPRISE 815
[K. M. JOSEPH, J.]

1968 SC 522] , Damodar Valley Corpn. v. K.K. Kar [(1974) 1 A
SCC 141] and Indian Drugs & Pharmaceuticals Ltd. v. Indo
Swiss Synthetics Gem Mfg. Co. Ltd. [(1996) 1 SCC 54] In
Damodar Valley Corpn. [(1974) 1 SCC 141] this Court observed
: (SCC p. 145, para 7)
“7. … A contract is the creature of an agreement between the B
parties and where the parties under the terms of the contract
agree to incorporate an arbitration clause, that clause stands apart
from the rights and obligations under that contract, as it has been
incorporated with the object of providing a machinery for the
settlement of disputes arising in relation to or in connection with
that contract. The questions of unilateral repudiation of the rights C
and obligations under the contract or of a full and final settlement
of the contract relate to the performance or discharge of the
contract. Far from putting an end to the arbitration clause, they
fall within the purview of it. A repudiation by one party alone does
not terminate the contract. It takes two to end it, and hence it D
follows that as the contract subsists for the determination of the
rights and obligations of the parties, the arbitration clause also
survives. This is not a case where the plea is that the contract is
void, illegal or fraudulent, etc. in which case, the entire contract
along with the arbitration clause is non est, or voidable. As the
contract is an outcome of the agreement between the parties it is E
equally open to the parties thereto to agree to bring it to an end or
to treat it as if it never existed. It may also be open to the parties
to terminate the previous contract and substitute in its place a
new contract or alter the original contract in such a way that it
cannot subsist. In all these cases, since the entire contract is put F
an end to, the arbitration clause, which is a part of it, also perishes
along with it.”
18. Section 16 of the Act bestows upon the Arbitral Tribunal, the
competence to rule on its own jurisdiction. Sub-section (1) of the
section reads thus: G
“16. Competence of Arbitral Tribunal to rule on its
jurisdiction.—(1) The Arbitral Tribunal may rule on its own
jurisdiction, including ruling on any objections with respect to the
existence or validity of the arbitration agreement, and for that
purpose,— H
816 SUPREME COURT REPORTS [2023] 8 S.C.R.

A (a) an arbitration clause which forms part of a contract shall be
treated as an agreement independent of the other terms of the
contract; and
(b) a decision by the Arbitral Tribunal that the contract is null and
void shall not entail ipso jure the invalidity of the arbitration clause.”
B 22. Where the intervention of the court is sought for appointment
of an Arbitral Tribunal under Section 11, the duty of the Chief
Justice or his designate is defined in SBP & Co. [(2005) 8 SCC
618] This Court identified and segregated the preliminary issues
that may arise for consideration in an application under Section 11
C of the Act into three categories, that is, (i) issues which the Chief
Justice or his designate is bound to decide; (ii) issues which he
can also decide, that is, issues which he may choose to decide;
and (iii) issues which should be left to the Arbitral Tribunal to
decide.

D 22.1. The issues (first category) which the Chief Justice/his
designate will have to decide are:
(a) Whether the party making the application has approached the
appropriate High Court.
(b) Whether there is an arbitration agreement and whether the
E party who has applied under Section 11 of the Act, is a party to
such an agreement.
22.2. The issues (second category) which the Chief Justice/his
designate may choose to decide (or leave them to the decision of
the Arbitral Tribunal) are:
F
(a) Whether the claim is a dead (long-barred) claim or a live
claim.
(b) Whether the parties have concluded the contract/transaction
by recording satisfaction of their mutual rights and obligation or
by receiving the final payment without objection.
G
22.3. The issues (third category) which the Chief Justice/his
designate should leave exclusively to the Arbitral Tribunal are:
(i) Whether a claim made falls within the arbitration clause (as
for example, a matter which is reserved for final decision of a
H departmental authority and excepted or excluded from arbitration).
UNION OF INDIA & ORS. v. M/S. BHARAT ENTERPRISE 817
[K. M. JOSEPH, J.]

(ii) Merits or any claim involved in the arbitration.” A
14. We may notice that this is a judgment which was rendered in
the regime which was put in place by the larger Bench decision of this
Court reported in SBP & Co. v. Patel Engineering Ltd. and Another
(2005) 8 SCC 618. In fact, it is also a case arising under Section 11 of
the Act. The Court went on to deal with the question of non-arbitrability B
of disputes. It categorises the cases broadly into three categories, as
can be seen from paragraphs 22.1 to 22.3. We must notice that following
the insertion of Section 11(6A) by the Arbitration and Conciliation
(Amendment) Act, 2016, with effect from 2015, there has been a change
in law but we need not be detained by the said aspect as that may not be
fully apposite for the purposes of the case. We may notice the following C
statements as well in National Insurance (supra):
49. Obtaining of undated receipts-in-advance in regard to regular/
routine payments by government departments and corporate sector
is an accepted practice which has come to stay due to administrative
exigencies and accounting necessities. The reason for insisting D
upon undated voucher/receipt is that as on the date of execution
of such voucher/receipt, payment is not made. The payment is
made only on a future date long after obtaining the receipt. If the
date of execution of the receipt is mentioned in the receipt and
the payment is released long thereafter, the receipt acknowledging E
the amount as having been received on a much earlier date will
be absurd and meaningless. Therefore, undated receipts are taken
so that it can be used in respect of subsequent payments by
incorporating the appropriate date. But many a time, matters are
dealt with so casually that the date is not filled even when payment
is made. Be that as it may. But what is of some concern is the F
routine insistence by some government departments, statutory
corporations and government companies for issue of undated “no-
dues certificates” or “full and final settlements vouchers”
acknowledging receipt of a sum which is smaller than the claim in
full and final settlement of all claims, as a condition precedent for G
releasing even the admitted dues. Such a procedure requiring the
claimant to issue an undated receipt (acknowledging receipt of a
sum smaller than his claim) in full and final settlement, as a
condition for releasing an admitted lesser amount, is unfair, irregular
and illegal and requires to be deprecated.
H
818 SUPREME COURT REPORTS [2023] 8 S.C.R.

A 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
B
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
C 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.”
15. Before we proceed to finally rule on the issues which have
been raised, we must notice the rationale of the High Court in the
D impugned judgment. We deem it appropriate to set down the following
reasoning in this regard. After referring to the clauses which we have
already extracted viz., clauses 65 and 65A, we find the following:
“The contract terms and conditions require submission of the final
bill within three months of physical completion of the works to the
E satisfaction of the Engineer-in-Charge. There is no dispute that
the final bill was presented within the time prescribed. Clauses 65
and 65-A, though set a boundary on the Contractor to submit its
bill, but does not speak of the time within which the final bill is to
be discharged by the employer. Admittedly, when the dispute was
referred to Arbitration, the Contractor made further claims before
F the arbitrator which were adjudicated in arbitral proceedings after
hearing the employer and the claims were by and large allowed.
If the final bill was presented on 13.2.2002, and payment of the
same was made belatedly on 25.11.2003 to the pecuniary
disadvantage of the Contractor, then it would appear not to lie in
G the mouth of the Engineer-in-Charge/employer to invoke an
exclusionary clause as is found embedded in Clause 65-A. If such
a clause were to operate, then it would even take away the
Arbitrator’s discretion and jurisdiction to award interest pendente
lite and future interest etc. which the law permits and such a
claim would also constitute a valid claim which can be awarded.
H In any case, such a clause I am inclined to think would be opposed
UNION OF INDIA & ORS. v. M/S. BHARAT ENTERPRISE 819
[K. M. JOSEPH, J.]

to public policy and operate unfairly, and should be understood in A
the light of what the Supreme Court enunciated in Central Inland
Water Transport Corporation & Anr. vs. Brojo Nath Ganguly, AIR
1986 SC 1571, thus expanding the sphere of the law of contracts
and subjecting it to the test of reasonableness or fairness of a
clause in a contract where there is inequality of bargaining power.
B
Extracts from the judgment can be profitably quoted:-
“Article 14 of the Constitution guarantees to all persons equality
before the law and the equal protection of the laws. This
principle is that the Courts will not enforce and will, when called
upon to do so, strike down an unfair and unreasonable contract,
or an unfair and unreasonable clause in a contract entered into C
between parties who are not equal in bargaining power. The
above principle will apply where the inequality of bargaining
power is the result of the great disparity in the economic
strength of the contracting parties. It will apply where the
inequality is the result of circumstances, whether of the creating D
of the parties or not. It will apply to situations in which the
weaker party is in a position in which he can obtain goods or
services or means of livelihood only upon the terms imposed
by the stronger party or go without them. It will also apply
where a man has no choice, or rather no meaningful choice,
but to give his assent to a contract or to sign on the dotted line E
in a prescribed or standard form or to accept a set of rules as
part of the contract, however, unfair unreasonable or
unconsionable a clause in that contract or form or rules may
be. This principle will not apply when the bargaining power of
the contracting parties is equal or almost equal. mis principle F
may not apply where both parties are businessmen and the
contract is a commercial transaction. In today’s complex world
of giant corporations with their vast infrastructural organisations
and with the State through its instrumentalities and agencies
entering into almost every branch of industry and commerce,
there can be myriad situations which result in unfair and G
unreasonable bargains between parties possessing wholly
disproportionate and unequal bargaining power. The Court must
judge each case on its own facts and circumstances when
called upon to do so by a party under section 31(1) of the
Specific Relief Act, 1963.” H
820 SUPREME COURT REPORTS [2023] 8 S.C.R.

A Then further;
“In the vast majority of cases, however, such contracts with
unconscionable term are entered into by the weaker party under
pressure of circumstances, generally economic, which results
in inequality of bargaining power, Such contracts will not fall
B within the four corners of the definition of “undue influence”
as defined by section 16(1) of the Indian Contract Act. The
majority of such contracts are in a standard or prescribed form
or consist of a set of rules. They are not contracts between
individuals containing terms meant for those individuals alone.
Contracts in prescribed or standard forms or which embody a
C set of rules as part of the contract are entered into by the party
with superior bargaining power with a large number of persons
who have far less bargaining power or no bargaining power at
all. Such contracts which affect a large number of persons or
a group or groups of persons, if they are unconscionable, unfair
D and unreasonable are injurious to the public interest. To say
such a contract is only voidable would be to compel each person
with whom the party with superior bargaining power had
contracted to go to Court to have the contract adjudged voidable.
This would only result in multiplicity of litigation which no Court
should encourage and also would not be in public interest. Such
E a contract or such a clause in a contract ought, therefore, to be
adjudged void under section 23 of the Indian Contract Act, as
opposed to public policy,”
And still further;

F “The Indian Contract Act does not define the expression “public
policy” or “opposed to public policy”. From the very nature of
things, such expressions are incapable of precise definition.
Public policy, however, is not the policy of a particular
government. It connotes some matter which concerns the public
good and the public interest. The concept of what is for the
G public good or in the public interest or what would be injurious
or harmful to the public good or the public interest has varied
from time to time. As new concepts take the place of old,
transactions which were once considered against public policy
are now being upheld by the courts and similarly where there
H has been a well-recognized head of public policy, the courts
UNION OF INDIA & ORS. v. M/S. BHARAT ENTERPRISE 821
[K. M. JOSEPH, J.]

have not shirked from extending it to new transactions and A
changed circumstances and have at times not even flinched
from inventing a new head of public policy. The principles
governing public policy must be and are capable on proper
occasion, of expansion or modification. Practices which were
considered perfectly normal at one time have today become
B
abnoxious and oppressive to public conscience. If there is no
head of public policy which covers a case, then the court must
in consonance with public conscience and in keeping with public
good and public interest declares such practice to be opposed
to public policy. Above all, in deciding any case which may not
be covered by authority Indian Courts have before them the C
beacon light of the Preamble to the Constitution. Lacking
precedent, the Court can always be guided by that light and
the principles underlying the Fundamental Rights and the
Directive Principles enshrined in our Constitution.”
It is not the case that the payment of the final bill was made D
promptly and delay in payment alone should constitute a separate
ground for submission of the bills by the Contractor on closer
scrutiny of his claims to make fresh claims which may have escaped
contractor’s notice at the time of presentation of the final bill. In
human affairs, such situations can and do arise and the courts can
and should make an allowance for them to be accommodated for E
adjudication on the merits of such claims. Therefore, I find myself
unable to subscribe to the reasoning adopted by the learned District
Judge, Chandigarh in non-suiting the petitioner and shutting out
his case for examination of the ‘further claims’ beyond those
pressed in the original claim petition on the materials on record F
and that too only by virtue of oppressive exclusion in Clause 65-
A. Delay in payment of dues would itself give rise to an actionable
claim for interest accruing by virtue of default in payment of final
bills, keeping money beyond reasonable time in the pocket of the
employer.”
G
16. Thereafter, the High Court also proceeds to refer to the
subsequent agreement, the order by which the Arbitrator was appointed,
the agreement which is entered into and finally, it is found as follows:
“Mr. Manohar Lall, learned counsel appearing for the appellant
points out that the Arbitrator in the present case was appointed H
822 SUPREME COURT REPORTS [2023] 8 S.C.R.

A under Section 11 of the Act by the Chief Justice of this Court
exercising jurisdiction under the Act by order dated 12.11.2007
after recognizing and identifying the dispute and difference which
had arisen between the parties that demanded resolution through
arbitration process in terms of the arbitration clause signed by the
parties. This jurisdictional issue was pressed before the Arbitrator
B
by the employer itself and a preliminary issue was accordingly
framed and answered in favour of the appellant and Clause 65-A
was duly noticed and interpreted in a manner which appeals to
this court as a correct exposition of the law. Besides, the Arbitrator
in his award dated 4.3.2009 (Annexure A-3) found from the
C agreement dated 22.11.2007 that dispute still exists between the
parties, which is evident from the recitals in the agreement, which
reads as follows:
“The new arbitrator shall decide all the disputes between the
parties”
D The award ought not to have been tinkered with by the
Learned District Judge, Chandigarh for the reason that
jurisdiction stood denuded by operation of the offending part
of Clause 65 and 65-A cannot be read as waiver or
extinguishment of right of a contractor, much less by deeming
E fiction as Clause 65-A does, to lay further claims after the
presentation of the final bill if money or interest is demonstrably
owed by the offer or of the contract to the contractor. Thus,
these two clauses justly deserve to be read against the offer or
of the works contract in the light of the well established doctrine
of contra proferentum applicable to the law of contracts.
F
For the foregoing reason, this appeal is allowed and the
impugned judgment dated 10.7.2013 passed by the learned
District Judge, Chandigarh is set aside.”
17. The clauses which have been relied upon by the appellants
G are clear and unambiguous. What they interdict is the submission of a
new claim after the submission of the final bill. If there are any claims
left after the submission of the final bill, the parties have agreed that
they shall stand waived. These are the clauses which are binding not
only on the parties but also on the Arbitrator. Going against the terms of
clauses 65 and 65A would indeed render the Award vulnerable on the
H
UNION OF INDIA & ORS. v. M/S. BHARAT ENTERPRISE 823
[K. M. JOSEPH, J.]

basis that it is illegal being contrary to the contract and, therefore, without A
jurisdiction.
18. There may be cases where a final bill may be submitted and
the contention is taken that the final bill was submitted under duress. In
such a case, it may be open to the claimants to urge and the Arbitrator to
find that the final bill was itself vitiated on account of the fact that it was B
brought about by duress or any other vitiating factors under law. If such
an event had taken place then that may have been sufficient to non-suit
the appellants. In other words, if under the terms of the agreement,
there is an embargo against the Arbitrator embarking upon and attempting
to find merit in any claim which is not part of the final bill, an award so
countenancing a claim would be illegal. However, on the other hand, if C
the case is that the final bill itself should not be given life as it was born
out of coercion or any other vitiating factor and the Arbitrator renders a
finding on material as is sufficient in law then the Award of the Arbitrator
may not be attacked on the ground that he travels beyond the contractual
provisions. Bearing in mind these principles, we will examine the matter D
with reference to the facts which are not in dispute in this case.
19. On 13.02.2002, the respondent has indeed submitted a final
bill. It is a year thereafter on 25.02.2003, that the respondent sent a
letter inter alia urging that the final bill dated 13.02.2002 was not paid
and is signed under protest. Subsequently, it would appear that the E
respondent has filed an affidavit on 24.05.2003. It is ignoring all this that
notice was sent for referring the matter to arbitration. By order dated
12.11.2007, the High Court proceeding under Section 11 of the Act
appointed an Arbitrator. During the course of the arbitration, on
03.08.2008, the appellants filed an application under Section 16 of the
Act invoking clauses 65 and 65A of the Contract. The said application F
came to be rejected on 04.03.2009.
20. We have scanned the contents of the said order. The Arbitrator
has proceeded to reject the application filed by the appellants under
Section 16 on the basis of the order dated 12.11.2007 passed by the
High Court. The Arbitrator further draws inspiration from the fact that G
the application seeking modification of the order dated 12.11.2007 was
dismissed on 04.12.2007. The Arbitrator further found that the agreement
entered into between the parties subsequent to the order dated 12.11.2007
would indicate that disputes indeed exist. What is, however, conspicuous
by its absence is any finding by the Arbitrator, that the final bill dated H
13.02.2002 was the result of duress or any other vitiating factors.
824 SUPREME COURT REPORTS [2023] 8 S.C.R.

A 21. Learned counsel for the respondent would point out that the
order dated 04.03.2009 passed by the Arbitrator under Section 16 had
attained finality as the same was not impugned under Section 37 of the
Act. Section 37 of the Act reads as follows:
“37.Appealable orders.—(1) An appeal shall lie from the following
B orders (and from no others) to the Court authorised by law to
hear appeals from original decrees of the Court passing the order,
namely:—
(a) refusing to refer the parties to arbitration under section 8;
(b) granting or refusing to grant any measure under section 9;
C
(c) setting aside or refusing to set aside an arbitral award under
section 34.]
(2) Appeal shall also lie to a court from an order of the arbitral
tribunal—
D (a) accepting the plea referred to in sub-section (2) or sub-section
(3) of section 16; or
(b) granting or refusing to grant an interim measure under section
17.
(3) No second appeal shall lie from an order passed in appeal
E under this section, but nothing in this section shall affect or
takeaway any right to appeal to the Supreme Court.”
22. An appeal lies to the Court from an order of the Arbitral Tribunal
accepting the plea referred to in sub-sections (2) and (3) of Section 16.
This means that an appeal can be preferred against the order of the
F Arbitral Tribunal allowing the plea that the Arbitral Tribunal does not
have jurisdiction. Similar is the case with reference to an order which is
rendered appealable under Section 16(3) of the Act. Thereunder also, it
is the plea that the Arbitral Tribunal is exceeding the scope of its authority
which is allowed which is rendered appealable. In this case, by order
G dated 04.03.2009, the Arbitral Tribunal has not allowed the plea be it
under section 16(2) or under Section 16(3). On the other hand, the Tribunal
has rejected admittedly the plea of the appellants. Therefore, no appeal
could have been filed under Section 37 against the order dated 04.03.2009.
An order passed by the Arbitral Tribunal rejecting the plea under Section
16(2) or 16(3) being part of the Award itself, it is open to the parties to
H challenge the same when a petition is filed under Section 34 of the Act
UNION OF INDIA & ORS. v. M/S. BHARAT ENTERPRISE 825
[K. M. JOSEPH, J.]

challenging the Award. This is the scheme of the Act. This is apparently A
to confine a right to appeal to those cases where accepting a plea of a
party would bring the arbitration to a halt. In fact, we notice that the
order dated 04.03.2009 has been referred to in the Award and it has
been treated as part of the Award.
23. It is thereafter that in a proceeding that the District Court has B
allowed the petition filed under Section 34 by the appellants. We may
notice that the High Court, in the impugned order, while dealing with the
plea under clauses in question has, inter alia, held as follows:
“The contract terms and conditions require submission of the final
bill within three months of physical completion of the works to the C
satisfaction of the Engineer-in-Charge. There is no dispute that
the final bill was presented within the time prescribed. Clauses 65
and 65A, though set a boundary on the Contractor to submit its
bill, but does not speak of the time within which the final bill is to
be discharged by the employer. Admittedly, when the dispute was
referred to Arbitration, the Contractor made further claims before D
the arbitrator which were adjudicated in arbitral proceedings after
hearing the employer and the claims were by and allowed. If the
final bill was presented on 13.02.2002, and payment of the same
was made belatedly on 25.11.2003 to the pecuniary disadvantage
of the Contractor, then it would appear not the lie in the mouth of E
the Engineer-in-Charge/employer to invoke an exclusionary clause
as is found embedded in Clause 65-A. If such a clause were to
operate, then it would even take away the Arbitrator’s discretion
and jurisdiction to award interest pendente lite and future interest
etc. which the law permits and such a claim would also constitute
a valid claim which can be awarded. In any case, such a clause I F
am inclined to think would be opposed to public policy and operate
unfairly, and should be understood in the light of what the Supreme
Court enunciated in Central Inland Water Transport Corporation
& Anr. vs. Brojo Nath Ganguly & A1R1986 SC 1571, thus
expanding the sphere of the law of contracts and subjecting it to G
the test of reasonableness or fairness of a clause in a contract
where there is inequality of bargaining power.”
24. It is thereafter that the High Court has referred to the judgment
of this Court in Central Inland Water Transport Corporation & Anr.
v. Brojo Nath Ganguly AIR 1986 SC 1571 as noticed by us. H
826 SUPREME COURT REPORTS [2023] 8 S.C.R.

A 25. It is no doubt true that the salutary principle which has been
enunciated by this Court in Central Inland Water Transport
Corporation4 being in accord with constitutional principles must receive
due consideration. However, it cannot be torn out of context. More
importantly, as we have already noticed when a contractor seeks to
wriggle out of a final bill or a ‘no claims due certificate’ which he has
B
submitted, as in a civil Court so before the Arbitrator, he must establish
a case that a final bill or a certificate of no further claims was the result
of any of the vitiating factors under the law. Sans such finding, the final
bill would stand. If the final bill cannot be overridden by any factors
known to law then the clauses relied upon by the appellants in this case
C would operate. There is no finding by the Arbitrator that the final bill and
the no claims certificate were vitiated. The clauses in the contract were
binding on the respondent. It cannot be departed from invoking the
principle in Central Inland Water Transport Corporation5. It is not
the case of the contractor that when the contract was entered into, it
was in circumstances which attracted the principles laid down therein.
D
26. If the clauses operate, the inevitable result is the arbitrator
could not have traveled outside of the contractual prohibition and passed
an award allowing claims which were submitted after the submission of
the final bill.
E 27. We cannot be entirely unmindful, however, of the fact that
after submission of the final bill on 13.02.2002, the said bill was settled
only after long delay of over an year. While it may be true that there is
no finding that the final bill was the product of any duress or coercion,
the respondent did have a case that the final bill was the result of the
pressure on account of non-payment of her claims and therefore, the
F respondent agreed to receive the undisputed amounts. But at the same
time, there is no finding as such.
28. While we cannot subscribe to the reasoning adopted by the
High Court, we cannot also lose sight of the fact that the amounts in
question are fairly meagre and the final bill remained unpaid for long
G period of time. It was apparently the long delay in the payment of the
final bill amount which led to the raising of the new claims. Perhaps, if
the final bill itself was not kept pending for such a long time, the entire
dispute may not have arisen at all. We cannot lose sight of another aspect
also. This Court has, in the judgment reported in Tahera Khatoon (D)By
H LRs. v. Salambin Mohammad (1999) 2 SCC 635 laid down the guiding
UNION OF INDIA & ORS. v. M/S. BHARAT ENTERPRISE 827
[K. M. JOSEPH, J.]

principles for the exercise of jurisdiction in an appeal generated under A
Article 136 of the Constitution even after the grant of leave under Article
136. We may notice in this regard, the following paragraphs:
19. We may in this connection also refer to Municipal Board,
Pratabgarh v. Mahendra Singh Chawla [(1982) 3 SCC 331 :
1983 SCC (L&S) 19] wherein it was observed that in such cases, B
after declaring the correct legal position, this Court might still
say that it would not exercise discretion to decide the case on
merits and that it would decide on the basis of equitable
considerations in the fact situation of the case and “mould the
final order”.
C
20. In view of the above decisions, even though we are now dealing
with the appeal after grant of special leave, we are not bound to
go into merits and even if we do so and declare the law or point
out the error — still we may not interfere if the justice of the case
on facts does not require interference or if we feel that the relief
could be moulded in a different fashion.” D

29. Having regard to all the facts and circumstances, while we
are inclined to set aside the impugned order, we also feel that the interests
of justice would require that the respondent is paid a lumpsum amount in
full and final satisfaction of all his claims. Accordingly, the appeals are
allowed. The impugned judgment is set aside. However, we direct that E
the appellants will pay a global sum of Rs.3 lakhs (Rupees Three Lakhs
only) to the respondent which will be in full and final settlement of the
claims of the respondent. The said payment of the amount of Rs.3 lakhs
shall be effected within a period of six weeks from today.
No orders as to costs. F

Divya Pandey Appeals allowed.
(Assisted by : Roopanshi Virang, LCRA)

G

H