No-Claim Certificate In Pre-Printed Form And Pre- Condition To The Release Of Payment Amounts To Coercion : Delhi High Court

The bench of Justices Vibhu Bakhru and Amit Mahajan held dispute between the parties cannot be said to be settled by accord and satisfaction on account of no-claim certificate given by the contractor, if the employer, as a matter of practice, requires all the contractors to furnish a pre-printed no-claim certificate as a pre-condition to release of payment under the final bill.

Facts

The parties entered into an agreement dated 18.07.2003 wherein the respondent was to carry out certain construction works for the petitioner. Thereafter, by a memo 02.09.2004, the Directorate (Works) Central Public Work Department (CPWD) added Clause 10CA to the agreement which provides for the right of respondent (contractor) to claim escalation costs. Accordingly, by letters dated 08.08.2005 and 16.08.2005, respondent sought escalation costs on account of increase in the prices of the raw material.

The project work could not be completed on time, accordingly, an EOT was given to respondent and the project work was completed in the extended time. Thereafter, respondent raised a final bill for payment. However, on 27.09.2007, the respondent issued a No-Claim Certificate (NCC) wherein it stated that the payment under the final bill shall be a full and final settlement of all its claims. However, by a subsequent letter dated 08.11.2007, respondent withdrew the NCC and claimed additional payments.

An arbitrator was appointed to adjudicate the dispute between the parties. The arbitrator held that the NCC cannot preclude the respondent from claiming additional payments as the NCC was issued under coercion for the reason that it was a pre-condition to the release of payment under the final bill. The tribunal had examined the Chief Project Manager of Petitioner who admitted that NCC is required as a matter of practice before the final payment is made. Moreover, the tribunal observed that the respondent was continuously demanding escalation costs, therefore, there was no reason for it to give upon those claims.

Aggrieved by the award, the petitioner challenged it under Section 34 of the Act, however, the learned single judge rejected the challenge and upheld the arbitral award. Accordingly, an appeal under Section 37 of the Act was filed against the impugned order.

Grounds of Appeal

The petitioner challenged the award and the order of the single judge on the following grounds:

• All the claims stood discharged by accord and satisfaction in view of the NCC given by respondent, therefore, the respondent could not, after accepting the payment under the final bill as full and final settlement of its claims, make additional claims.

Analysis by the Court

The Court held that the decision of the tribunal is based on appreciation of evidence and is a plausible one. It held that indeed the NCC was issued under coercion as the petitioner required all its contractors, as a matter of practice, to sign a pre-printed NCC before releasing the final payments.

The Court that a no-claim certificate is given under coercion if it was in a pre-printed form and a pre-condition to the release of payment under the final bill.

The Court further held dispute between the parties cannot be said to be settled by accord and satisfaction on account of no-claim certificate given by the contractor, if the employer, as a matter of practice, requires all the contractors to furnish a pre-printed no-claim certificate as a pre-condition to release of payment under the final bill. Moreover, the respondent was constantly raising demands for escalation costs in view of Clause 10A of the agreement, therefore, there is no reason, except for coercion, for the respondent to give up on all its claims and sign the NCC.

Accordingly, the Court dismissed the appeal.

Case Title: Delhi State Industrial and Infrastructure Development Corporation v. Sukumar Chand Jain

Citation: 2023 LiveLaw (Del) 93

Date: 12.01.2023

Counsel for the Appellant: Ms. Richa Dhawan and Mr. Anuj Chaturvedi

Counsel for the Respondent: Mr. Sarthak Mannan, Ms. Konika Mitra and Mr. Om Batra.

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