No Absolute Estoppel From Raising Dispute Even If 'No-Claim' Or 'Discharge Certificate' Was Signed: Rajasthan High Court

Rajasthan High Court has reaffirmed that there cannot be an absolute rule of estoppel wherein one is not allowed to raise a dispute even after he/she had signed a no claim or discharge certificate, and each case should be looked into on its own facts and circumstances.

The bench of Justice Sudesh Bansal was hearing an application for the appointment of an arbitrator filed against Rajasthan State Industrial Development And Investment Corporation (“RIICO”). The applicant was allotted a plot by RIICO and it was alleged that despite fulfilling all the allotment conditions the allotment was cancelled and the security deposit was returned only after deducting an amount.

The application was opposed by RIICO arguing that the allotment was validly cancelled only pursuant to a breach of conditions by the applicant. And when the amount was returned after making due deductions, the same was accepted by the applicant without any protest.

The counsel for RIICO further submitted that in this light it could be said that the applicant had virtually consented to the cancellation of allotment as well as the deductions made from the security deposit. Hence, the reference of the dispute to arbitration and the application for appointment of arbitrators was just an afterthought and the same should be dismissed.

Rejecting the argument submitted by the counsel for RIICO, the Court first highlighted that no evidence had been submitted by RIICO showing that the refunded amount was accepted by the applicant as a full and final settlement.

Secondly, the Court referred to the Supreme Court case of Union of India v Parmar Construction Company in which it was observed that every case had to be seen on its own facts and there could not be an absolute estoppel against anyone from raising a dispute even though the person might have signed a no claim or discharge certificate.

In the background of the abovementioned case, the Court held that,

“This Court does not find any strong ground to hold that the applicant is estopped to raise the dispute, merely on the basis of receiving the balance amount refunded by RIICO. Therefore, such contention raised by and on behalf of respondents is hereby rejected.”

Similarly, the Court also rejected other contentions raised by RIICO and accordingly, the application was allowed by the Court which appointed a sole arbitrator for the dispute.

Title: M/s Shakti Foundation v the Chairman, Rajasthan State Industrial Development And Investment Corporation & Anr.

Citation: 2024 LiveLaw (Raj) 232

Counsel for Applicant: Mr. Abhishek Bhardwaj

Counsel for Respondent (RIICO): Ms. Pooja Nuwal

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