UNION OF INDIA & ORS.versusM/S. MASTER CONSTRUCTION CO.

                    [2011) 5 S.C.R. 853


                UNION OF INDIA & ORS.                           A
                            v.
           MIS. MASTER CONSTRUCTION CO.
             (Civil Appeal No. 3541 of 2011)
                      APRIL 25, 2011                             B
         [AFTAB ALAM AND R. M. LODHA, JJ.]

    ARBITRATION AND CONCILIATION ACT, 1996:

      s. 11 (6) - Application for appointment of arbitrator after C
submitting 'no-claim certificate' and receipt of payment of final
bill - Arbitrator appointed - Held: 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 o
be necessity to refer the dispute for arbitration at all - It may
not be proper to burden a party, who contends that 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 claimant, as E
mere plea is not enough and the claimant must prima facie
establish the same by placing material before the Chief
Justice/ his designate - In the instant case, the conduct of
contractor clearly shows that 'no claim certificates' were given
by it voluntarily and it accepted the amount of the final bill F
voluntarily and the contract was discharged voluntarily- Order
appointing the arbitrator u/s 11 (6) cannot be sustained and
is set aside.

     The respondent-contractor completed the contract
on 31.8.1998. The completion certificate was issued on G
9.9.1999. Thereafter the contractor furnished 'no claim
certificates' on 3-4-2000, 28-4-2000 and 4-5-2000, signed
the final bill on 4-5-2000, and received payment under the

                             853                                 H
    854      SUPREME COURT REPORTS              (2011] 5 S.C.R.


A final bill on 19.6.2000. However, immediately on release
  of the bank guarantee on 12.7.2000, the same day the
  contractor wrote to the appellant-employers withdrawing
  the 'no claim certificate' and also lodged certain claims.
  The Chief Engineer declined to entertain the claims. The
B contractor made an application u/s 11 of the Arbitration
  and Conciliation Act, 1996 before the Civil Judge (Senior
  Division). The application was dismissed. The
  contractor's writ petition was also dismissed by the High
  Court. The contractor's S.L.P was disposed of by the
C Supreme Court with the direction that the application be
  placed before the Chief Justice of the High Court. The
  Chief Justice decided the application u/s 11(6) holding
  that all disputes between the parties to the contract would
  be referred to the arbitration and appointed the arbitrator.
o Aggrieved, the employers filed the appeal.
         In the instant appeal filed by the employers, the
    question for consideration before the Court was: whether
    after furnishing 'no-claim certificates' and the receipt of
    payment of final bill, as submitted by the contractor, any
E   arbitrable dispute between the parties survived or the
    contract stood discharged.

          Allowing the appeal, the Court
F     · HELD: 1.1 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/
G 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

H
         UNION OF INDIA & ORS. v. MASTER                 855
               CONSTRUCTION CO.

to be lacking-in credibility, there may not be necessity to     A
refer the dispute for arbitration at all. [para 24] [866-D-F]

       National Insurance Company Limited v. Boghara Polyfab
 Private Limited 2008 (13) SCR 638 -~ (2009) 1 SCC 267; The
  Union of India v. Kishorilal Gupta & Bros Limited AIR (1959} B
 SC 1362; The Naihati Jute Mills Ltd. v: Khyaliram Jagannath
 AIR (1968) SC 522; Damodar Valley Corporatio.n v. K.K..Kar
 1974 (2) SCR 240 =(1974) 1 .sec 141; Mis. Bharat H~avy
 Electricals Limited, Ranipur v. Mis. Amar Nath Bhan Prakash
 (1982) 1 SCC 625; Union of India & Anr. v. Mis. L. K, Ahuja C
 & co. 1988 (3) SCR 402 = (1988) 3 sec 76; State. of
 Maharashtra v. Nav Bharat Builders 1994 Supp .(3) SCC 83;
 Mis. P.K. Ramaiah & Company v. Chairman & Managing
 Director, National Thermal Power Corpn. 1994 Supp (3) SCC
 126; Nathani Steels Ltd. v. Associated Constructions, 1995
 Supp (3) SCC 324; Indian Drugs & Pharmaceuticals Ltd. v.
                                                               0
  lndo Swiss Synthetics Gem Mfg. Co. Ltd. & Ors. 1995 (5)
  Suppl. SCR 189 = (1996) 1 SCC 54; United India Insurance
. v. Ajmer Singh Cotton & General Mills & Ors., 1999 (1)
  Suppl. SCR 385 = (1999) 6 SCC 400; Jayesh Engineering
  Works v. New India Assurance Co. Ltd. (2000) 10 SCC 178; E
  SBP & Co. v. Patel Ertgineering Ltd. & Anr. 2005 (4) Suppl.
   SCR 688 = (2005) 8 SCC 618; National Insurance Co. Ltd.
  v. Nipha Exports (P) Ltd. 2006 (6) Suppl. SCR 719 = (2006)
  8 SCC 156; and National Insurance Company Limited v.
  Sehtia Shoes 2008 (3) SCR 451 = (2008) 5 SCC 400 - F
  referred to

     Chairman & M.D., NTPC Ltd. v. _Reshmi Constructions,
Builders and Contractors 2004 (1) SCR 62 = (2004) 2 SCC
663 and Ambica Construction v. Union of India 2006 (9)          G
Suppl. SCR 188 = (2006) 13 SCC 475 - cited

     1.2 It cannot be overlooked that the cost of arbitration
is quite huge. It may not be proper to burden a party, who
contends that the dispute is not arbitrable on account of
    856    SUPREME COURT REPORTS              (2011] 5 S.C.R.


A discharge of contract, with huge cost of arbitration
  merely because the 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 plea must prima
B 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
C the other hand, if such plea is found to be an after-
  thought, make-believe or lacking in credibility, the matter
  must be set at rest then and there. [para 24] [866-G-H;
  867-A-B]

0      1.3 In the instant case, the certificates furnished by
  the .contractor 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 June
E 19, 2000 is not in dispute. After receipt of the payment on
  June 19, 2000, no grievance was raised or lodged by the
  contractor immediately. The authority concerned,
  thereafter, released the bank guarantee in the sum of Rs.
  21,00,000/- on July 12, 2000. It was then that on that day
  itself, the contractor lodged further claims. This appears
F to be a case falling in the category of exception noted in
  the case of Boghara Polyfab Private Limited, 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
G and coercion, without there being anything more to
  suggest that, does not lead to an arbitrable dispute.
  [para 28-29] [868-A-D]
      1.4 The conduct of the contractor clearly shows that
H 'no claim certificates' were given by it voluntarily; the
       _UNION OF INDIA & ORS. v. MASTER                 857
              CONSTRUCTION CO.
contractor accepted the amount voluntarily and the A
contract was discharged voluntarily. Thus, the order of ·
the Chief Justice in the proceedings u/s.11(6) of the 1996 ·
Act cannot be sustained and is set aside. [para 30 to 32)
[868-E-H]
                                                             8
                     Case Law Reference:
    2008 (13) SCR 638             referred to     para 16
    2004 (1 ) SCR 62              cited           para 16
    2006 (9 ) Suppl. SCR 188      cited           para 16     C
    AIR (1959) SC 1362            referred to     para 19
    1974 ( 2) SCR 240             referred to    -para 19
    (1982)   1-scc 625          · referred to     para 19     o-
    1988 ( 3 )- SCR 402          . referred to    para 19
     1994 Supp (3) sec 83         referred to     para 19
    1994 Supp (3) sec 126         referred to     para 19
                                                              E
    1995 Supp (3) sec 324         referred to     para 19
    1995 ( 5 ) Suppl. SCR 189 referred to         para 19
     1999 ( 1 ) Suppl. SCR 385 referred to        para 19
     (2000) 10   sec 178          referred to     para 19     F

     2005 (4 ) Suppl. SCR 688     referred to    - para 19
    2006 (6 ) Suppl. SCR 719      referred to     para 19
    2008 (3 ) SCR 451             referred to     para 19     G
    CIVIL APPELLATE JURISDICTION : Civil Appeal No.
3541 of 2011.

    From the Judgment & Order dated 08.12.2006 of the High
                                                              H
          858      SUPREME COURT REPORTS                [2011] 5 S.C.R.


     A    Court of Punjab and Haryana at Chandigarh in Arbitration Case
          No. 87 of 2006.
·'             Brijender Chahar, Nishant Patel, C.S. Khan, Shamsuddin
         . Khan (for D.S. Mahra) for the Appellants.
     B         lndu Malhotra, Jyoti Mendiratta, Prerna Priyadarshini for
          the Respondents.

                The Judgment of the Court was delivered by

                R.M. LODHA, J. 1. Leave granted.
     c
             2. This appeal, by special leave, arises from the order
       dated December 8, 2006 passed by the Chief Justice of the
       Punjab and Haryana High Court in the proceedings under
       Section 11 (6) of the Arbitration and Conciliation Act, 1996 (for
     D short, '1996 Act') whereby he held that all disputes between the
       parties to the contract have to be referred to the arbitration and
       appointed Mr. M.S. Liberahan, retired Chief Justice of Andhra
       Pradesh High Court, as sole arbitrator to decide the disputes
       between the parties.
     E
             3. The respondent - M/s. Master Construction Company
       (for short, 'the contractor') - was awarded a contract (CA No.
       CEBTZ-14/95-96) on September 17, 1995 by the first
       appellant-Union of India - for the work, 'provisions of OTM
     F accommodation and certain essential technical buildings' to be
       erected and installed at Bhatinda. The first phase of the work
       was to be completed by July 20, 1996 and the second phase
       by January 20, 1997.

            4. The agreement between the parties made IAFW-2249
     G an integral part of the contract. Condition 70 thereof provided
       mode for resolution of disputes and differences between the
       parties through arbitration.

            5. The work is said to have been completed by the
     H contractor, albeit belatedly, on August 31, 1998. The completion
         UNION OF INDIA & ORS. v. MASTER                     859
        CONSTRUCTION CO. [R.M. LODHA, J.]

certificate was issued on September 9, 1999.                         A

     6. The contractor furnished no-claim certificates on April
3, 2000, April 28, 2000 and May 4, 2000 and the final bill was
signed on May 4, 2000.
                                                                     B
     7. The payment of final bill was released to the contractor
on June 19, 2000. Thereafter, the bank guarantee amounting
to Rs. 21,00,000/- was also release.d on July 12, 2000.
Immediately after release of the bank guarantee, on that very
day, i.e. July 12, 2000, the contractorwrote to the appellants
withdrawing 'no-claim certificates'; italso lodged certain claims.   C

     8. The Chief Engineer, Bhatinda Zone, Bhatinda
(Appellant No. 3 herein) vide his letter dated July 13, 2000
declined to entertain the claims of the contractor on the ground
that the final bill has· been accepted by the· contractor after      D
furnishing the 'no-claim certificates' and no claim under the
contract remained.

     9. The contractor vide its letter dated September 10, 2000
requested the Engineer-in-Chief, Army Headquarters, Kashmir
House; New Delhi (Appellant No. 2 herein) to refer the disputes      E
between the parties for resolution to the arbitrator. The
contractor stated in that letter that if the arbitrator was not
appointed within 30 days from the date of request, it may be
constrained to seek the remedy as may be available under the
law.                                                                 F

     10. As no arbitrator was appointed by the appellants
despite the request made in the letter dated September 10,
2000, the contractor made an application under Section 11 of
the 1996 Act before the Civil Judge, (Senior Division), Bhatinda     G
on January 10, 2001. The application, after contest, was
dismissed by the Civil Judge, Senior Division, Bhatinda on
January 6, 2003.

     11. Being not satisfied with the order dated January 6,         H
    860       SUPREME COURT REPORTS                   [2011] 5 S.C.R.


A   2003, the contractor challenged that order by filing a writ
    petition before the High Court of Punjab and Haryana.

         12. The Division Bench of the High Court heard the parties
    and by its order dated May 20, 2004 dismissed the contractor's
B   writ petition.

        13. The contractor challenged the High Court's order by
  filing a special leave petition before this Court. This Court
  disposed of the special leave petition on January 3, 2006 by
C directing that the application filed by the contractor under
  Section 11 of the 1996 Act shall be placed before the Chief
  Justice of the Punjab and Haryana High Court, for appropriate
  order thereon. This Court, consequently, set aside the orders
  of the High Court and the lower court.

D        14. It was then that the Chief Justice of the Punjab and
    Haryana High Court decided the application filed by the
    contractor under Section 11 (6) of the 1996 Act and passed the
    order impugned in the present appeal.

E         15. Mr. Brijender Chahar, learned senior counsel for the
    appellants made two-fold submission : (i) that no arbitrable
    dispute existed between the parties as full and final payment
    has been received by the contractor voluntarily after submission
    of 'no-claim certificates' and the final bill, and (ii) that, in any
    case, the Chief Justice in exercise of his power under Section
F   11 (6) ought to have given due regard to the arbitration clause
    and appointed the arbitrator in terms thereof.

        16. Ms. lndu Malhotra, learned senior counsel for the
  contractor, on the other hand, vehemently contended that the
G whole case of the contractor from the very beginning had been
  that 'no-claim certificates' were given by the contractor under
  the financial duress and coercion as the appellants had
  arbitrarily withheld the payment. She would submit that the issue
  whether 'no-claim certificates' were given voluntarily or under
H financial duress, is an issue which must be decided by the
          UNION OF INDIA & ORS. v. MASTER                      861
         CONSTRUCTION CO. [R.M. LODHA, J.]

arbitrator alone and it is for this reason that the Chief Justice,     A
in the proceedings under Section 11 (6), has referred the
disputes between the parties to the arbitrator. In this regard,
she heavily relied upon a recent decision of this Court in the
case of National Insurance Company Limited v. Boghara
Polyfab Private Limited 1 • She also referred to two earlier           B
decisions of this Court, namely, Chairman & M.D., NTPC Ltd.
v. Reshmi Constructions, Builders and Contractors 2 and
Ambica Construction v. Union of lndia 3 •

     17. That IAFW-2249 was made an integral part of the               C
contract between the parties and condition 70 thereof provided
for mode of resolution of disputes and differences between the
parties through arbitration is not in dispute. Condition 70
(arbitration clause) reads as under :

      "70. Arbitration-All disputes, between the parties to the        D
      Contract (other than those forwhich the decision of the
      C.W.E. or any other person is by the Contract expressed
      to be final and binding) shall, after written notice by either
      party to the Contract to the other of them, be referred to
      the sole arbitration of an Engineer Officer to be appointed      E
      by the authority mentioned in the tender documents.

      Unless both parties agree in writing such reference shall
      not take place until after the completion or alleged
      completion of the works or termination or determination of       F
      the contract under Condition Nos. 55, 56 and 57 hereof.

      Provided that in the event of abandonment of the works
      or cancellation of the Contract under Condition Nos. 52,53
      or 54 hereof, such reference shall not take place until
      alternative arrangements have been finalized by the              G
      Government to get the works completed by or through any
      other Contractor or Contractors or Agency or Agencies.
1.   (2009) 1 sec 267.
2.   (2004) 2 sec 663.
3.   (2006) 13 sec 475.                                                H
    862       SUPREME COURT REPORTS                   [2011] 5 S.C.R.


A         Provided always that commencement or continuance of any ·
          arbitration proceeding hereunder or otherwise shall not in
          any manner militate against the Government's right of
          recovery from the contractor as provided in Condition 67
          hereof.
B
          If the Arbitrator so appointed resigns his appointment or
          vacates his office or is unable or unwilling to act due to
          any reason whatsoever, the authority appointing him may
          appoint a new Arbitrator to act in his place. ·

c         The arbitrator shall be deemed to have entered on the
          reference on the date he issues notice to both the parties,
          asking them to submit to him their statement of the case
          and pleadings in defence.

D         The Arbitrator may proceed with the arbitration, exparte,
          if either party, inspite of a notice from the Arbitrator fails
          to take part in the proceedings.

          The Arbitrator may, form time to time with the consent of
          the parties, enlarge, the time upto but not exceeding one
E         year from the date of his entering on the reference, for
          making and publishing the award.

          The Arbitrator shall give his award within a period of six
          months from the date of his entering on the reference or
F         within the extended time as the case may be on all matters,
          referred to him and shall indicate his findings, along with
          sums awarded, separately on each individual item of
          dispute.

          The venue of Arbitrator shall be such place or places as
G         may be fixed by the Arbitrator in his sole discretion.

          The award of the Arbitrator shall be final and binding on
          both parties to the contract.

          If the value of the claims or counter claims in an arbitration
H
          UNION OF INDIA & ORS. v.. MASTER                    863
         CONSTRUCTION CO. [R.M. LODHA, J.]
      referred exceeds Rs. 1 lakh the arbitrator shall give           A
      reasons for the award".

      18. The controversy presented before us does not concern
the existence of arbitration agreement butit relates to whet.her
after furnishing 'no-claim certificates' and the receipt of payment
                                                                      8
of final bill, as submitted by the contractor, any arbitrable
dispute between the parties survived or the contract stood
discharged. Before we turn to the factual aspect, it is
appropriate to carefully consider the decision of this Court in
Boghara Polyfab Private Limited1 at some length as the
learned senior counsel for the contractor placed heavy reliance       C
on it.
     19. In Boghara Polyfab Private Limited1 , this Court
surveyed a large number of earlier decisions of this Court,
namely, The Union of/ndia v. Kishorilaf Gupta & Bros4., The D
Naihati Jute Mills Ltd. v. Khyaliram Jagannath 5 , Damodar
Valley Corporation v. K.K. Kar°, Mis. Bharat Heavy Electricals
Limited; Ranipur v. Mis. Amar Nath Bhan Prakash7 , Union of
India & Anr. v. Mis. L.K. Ahuja & Co. 8 , State of Maharashtra
v. Nav Bharat Builders9 , Mis. P.K. Ramaiah & Company v. E
Chairman & Managing Director, National Thermal Power
Corpn. 10 , Nathani Steels Ltd. v. Associated Constructions11 ,
Indian Drugs & Pharmaceuticals Ltd. v. lndo Swiss Synthetics
Gem Mfg. Co. Ltd. & Ors. 12 , United India Insurance v. Ajmer
Singh Cotton & General Mills & Ors. 13 , Jayesh Engineering
                                                                      F
4.   AIR (1959) SC 1362.
5.   AIR (1968) SC 522.
6.   (1974) 1 sec 141.
1. (1982) 1 sec 625.
8. (1988) 3 sec 76.                                                   G
9. 1994 Supp (3) 83.
10. 1994 Supp (3) sec 126.
11. 1995 Supp (3) SCC 324.
12. (1996) 1 sec 54.
13. (1999) 6 sec 400.                                                 H
    864       SUPREME COURT REPORTS                   [2011] 5 S.C.R.


A   Works v. New India Assurance Co. Ltd. 14 , SBP & Co. v. Patel
    Engineering Ltd. & Anr. 15 , National Insurance Co. Ltd. v. Nipha
    Exports (P) Ltd. 16 and National Insurance Company Limited
    v. Sehtia Shoes17 . With regard to the jurisdiction of the Chief
    Justice/his designate in the proceedings under Section 11 of
B   the 1996 Act, this Court culled out the legal position in
    paragraph 51 (page 294) of the report as follows :
          "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
c         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
D         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
E         under some compulsion or coercion, and that the matter
          deserved detailed consideration, he may instead 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. n
F      20. The Bench in Boghara Polyfab Private Limited1 in
  paragraphs 42 and 43 (page 291), with reference to the cases
  cited before it, inter alia, noted that there were two categories
  of the cited cases; (one) where the Court after considering the
  facts found that there was a full and final settlement resulting in
G accord and satisfaction, and there was no substance in the
  allegations of coercion/undue influence and, consequently, it
    14. (2005) 10 sec 118.
    15. (2005) 8 sec 618.
    16. (2006) 8 sec 1se.
H   11. (2008) 5 sec 400.
         UNION OF INDIA & ORS. v. MASTER                        865
        CONSTRUCTION CO. [R.M. LODHA, J.]

was held that there could be no reference of any dispute to             A
arbitration and (two) where the court found some substance in
the contention of the claimants that 'no dues/claim certificates'
or 'full and final settlement discharge vouchers' were insisted
and taken (either in printed format or otherwise) as a condit;on
precedent for release of the admitted dues and thereby giving           B
rise to an arbitrable dispute.
      21. In Boghara Polyfab Private Limited1, the
consequences of discharge of the contract were also
considered. In para 25 (page 284), it was explained that when
a contract has been fully performed, then there is a discharge          C
of the contract by performance and the contract comes to an
end and in regard to such a discharged contract, nothing
remains and there cannot be any dispute and, consequently,
there cannot be reference to arbitration of any dispute arising
from a discharged contract. It was held that the question               D
whether the contract has been discharged by performance or
not is a mixed question of fact and law, and if there is a dispute
in regard to that question, such question is arbitrable. The
Court, however, noted an exception to this proposition. The
exception noticed is that where both the parties to a contract          E
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, courts will not refer any
subsequent claim or dispute to arbitration. Yet another
exception noted therein is with regard to those cases where             F
 one of the parties to the contract issues a full and final discharge
voucher (or no-dues certificate, as the case may be) confirming
that he has received the payment in full and final satisfaction
of all claims, and he has no outstanding <flaim. It was observed
that issuance of full and final discharge voucher or no-dues
 certificate of that kind amounts to discharge of the contract by       G
 acceptance or performance and the party issuing the discharge
voucher/certificate cannot thereafter make any fresh claim or
revive any settled claim nor can it seek reference to arbitration
in respect of any claim.
                                                                        H
    866      SUPREME COURT REPORTS                  [2011] 5 S.C.R.

A         22. In paragraph 26 (pages 284-285), this Court in
    Boghara Polyfab Private Limited1 held that if a party which has
    executed the discharge agreement or discharge voucher,
    alleges that the execution of such document was on account
    of fraud/coercion/undue influence practised by the other party,
B   and if that party establishes the same, then such discharge
    voucher or agreement is rendered void and cannot be acted
    upon and consequently, any dispute raised by such party would
    be arbitrable.
       23. In paragraph 24 (page 284) in Boghara Polyfab Private
C Limited1, this Court held that a claim for arbitration cannot be
  rejected merely or solely on the ground that a settlement
  agreement or discharge voucher has been executed by the
  claimant. The Court stated that such dispute will have to be
  decided by the Chief Justice/his designate in the proceedings
D undsr Section 11 of the 1996 Act or by the Arbitral Tribunal.
        24. In our opinion, there is no rule of the absolute kind. In
  a case where the claimant contends ~hat a discharge voucher
  or no-claim certificate has been obtained by fraud, coercion,
  duress or undue influence and the other side contests the
E 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,
F appears to be lacking in credibility, there may not be necessity
  to refer the dispute for arbitration at all. It cannot be overlooked
  that the cost of arbitration is quite huge - most of the time, it
  runs in six and seven figures. It may not be proper to burden a
  party, who contends that the dispute is not arbitrable on account
G 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 plea must prima facie establish the same by placing
H material before the Chief Justice/his designate. If the Chief
            UNION OF INDIA & ORS. v. MASTER                       ·867
           CONSTRUCTION CO. [R.M. LODHA, J.]
Justice/his designate finds some merit in the allegation of fraud,        A
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 after-thought, make-believe
or lacking in credibility, the matter must be set at restthen and
fuere.                                                                    B
     25. In light of the above legal position, we now turn to the
facts of the present case.
       26. At the time of receiving payment on account of final
bill, the contractor executed the certificate in the following terms      C

         "a)    I/we hereby certify that I/we have performed the work
                under the condition of the contract agreement No.
                CEBTZ-14/95-96, for which payment is claimed and
                that /!we have no further claims under CA No.             0
                CEBTZ-14195~96. ,

         b) ·   Received rupees two lakhs fifteen thousand one
                hundred seventy eight only. This payment is in full
                and final settlement of all money dues under CA
                No. CEBTZ-14195-96 and I have no further claims           E
                in respect of the CA No. CEBTZ-14195-96."
                                        (emphasis supplied by us)
     27. The contractor also appended the following certificate:
     "It is certified that I have prepared this final bill for claiming   F
     entire payment due to me from this contract agreement.
     The final bill includes all claims raised by me from time to
     time irrespective of the fact whether they. are admitted/
     accepted by the· department or not. I now categorically
     certify that I have no more claim in respect of this contract        G
     beyond those already included in this final bill by me and
     the amount so claimed by me shall be in full and final
     satisfaction of all my claims under this contract agreement.
     I shall however, receive my right to raise claim to the extent
     disallowed to me from this final bill."
                                                                          H
    868       SUPREME COURT REPORTS                  [2011] 5 S.C.R.


A         28. 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 June 19,
    2000 is not in dispute. After receipt of the payment on June 19,
B   2000, no grievance was raised or lodged by the contractor
    immediately. The concerned authority, thereafter, released the
    bank guarantee in the sum of Rs. 21,00,000/- on July 12, 2000.
    It was then that on that day itself, the contractor lodged further
    claims.
C        29. The present, in our opinion, appears to be a case falling
    in the category of exception noted in the case of Boghara
    Polyfab Private Limited (Para 25, page 284). As to financial
    duress or coercion, nothing of this kind is established prima
    facie. Mere allegation that no-claim certificates have been
D   obtained under financial duress and coercion, without there
    being anything more to suggest that, does not lead to an
    arbitrable dispute.
          30. The.conduct of the contractor clearly shows that 'no
    claim certificates' were given by it voluntarily; the contractor
E   accepted the amount voluntarily and the contract was
    discharged voluntarily.
         31. We are, thus, unable to sustain the order of the Chief
    Justice in the proceedings under Section 11 (6) of the 1996 Act.
    In view of our finding above, it is not necessary to consider the
F   alternative submission made by the senior counsel for the
    appellants that the Chief Justice in exercise of his power under
    Section 11 (6) ought to have appointed the arbitrator in terms
    of the arbitration clause and the appointment of Mr. M.S.
    Liberahan, retired Chief Justice of Andhra Pradesh High Court,
G   was not in accord with the arbitration agreement.
         32. The appeal is, accordingly, allowed. The impugned
    order dated December 8, 2006 passed by the Chief Justice
    of the High Court of Punjab and Haryana is set aside. The
    parties shall bear their own costs.
H R.P.                                              Appeal allowed.