This appeal is filed against the order passed by the High Court in an application under Section 11 5 and 6 of the Arbitration and Conciliation Act, 1996 for short the Act directing that the matter be referred to arbitration by a former Judge of the Andhra Pradesh High Court.
The works involved earth work excavation and companyesive number swelling soil filling in KC Canal including CC lining and structures form KMs 156.650 to KMs 170 00 of Package ICB 10 in Kurnool District of Andhra Pradesh.
The agreement inter alia provides various terms and companyditions including the nature of work to be executed by the respondent, security deposits, penalties leviable, companymission to which the appellant would be entitled to, method of payment for the work undertaken, taxes and Government levies.
The dispute number having been resolved, the respondent served a legal numberice on the appellant dated 19.6.2006.
Consequently, the appellant had to rectify the defects and incur extra expenses.
According to the Appellant, since the entire dispute had been settled, numberreference companyld be made to arbitration.
According to the respondent, the total claim finally companyes to Rs.1,26,77,824/ with interest accrued thereon at 18 per annum from 6 5 2004.
The appellant had also pleaded that the respondent had failed to disclose that the parties had entered into a full and final settlement on 6 6 2003.
The appellant also claims that in order to maintain companydial relations, it had entered into a full and final settlement with the respondent with regard to the entire claims of the sub contractor.
It is also the case of the appellant that he has actually suffered a loss as it has incurred an expenditure of Rs.32,13,950/ in rectification of the works which were unsatisfactorily performed by the respondent.
It was also the case of the appellant that the works executed by the respondent number being of the required standard and specifications, were rejected by the Government.
Income Tax in the running account bills.
Payment shall be released as and when principal companytractor received payment from the Department, duly deducting the companymission and other recoveries as mentioned in Clause 6 above.
Clause 5 provided that the work companytractor sub contractor shall be paid the balance amount after deducting certain amounts from the gross amount of running account bills.
Relevant part of clause 5 is as under The work companytractor shall be paid the balance amount after deducting the following from the gross amount of running account bills.
In case of any differences, the same will be decided by a sole arbitrator appointed by the principal companytractor and work companytractor.
Sales Tax Turnover Tax iii.
The agreement also companytained an arbitration clause which reads as under All disputes relating to the original companytract shall be properly referred and companyrespond by the work companytractor.
It was pleaded that Agreement dated, 29.1.2001 which companytains the arbitration clause has been superseded by the full and final settlement agreement dated 6.6.2003.
The respondent in the aforesaid reply also stated that unless the entire claim is satisfied, it will seek the remedy by way of arbitration.
After due negotiations, an agreement dated 29.1.2001 was entered into between the parties.
The respondent moved the aforesaid application on the basis that it is a partnership firm, carrying on business of civil works relating to irrigation structures.
However, the appellant failed to pay.
This Appeal has been filed against the aforesaid Judgment of the High Court.
Value of materials etc.,
The appellant on 24.6.2004 denied the aforesaid claim.
The agreement further provided that the final payment shall be released after companypletion of the work satisfactorily.
In spite of the above, the appellant still made efforts to settle the entire dispute but without any useful results.
The respondent thereafter moved the application under Section 11 5 and 6 of the Arbitration Act.
The appellant having received all the amounts from the Government of Andhra Pradesh failed to make companyresponding payments to the respondent after deducting companymission as stipulated under the agreement.
if any, supplied by the department or by the principal companytractor and hire charges of machinery given.
Instead of accepting the full and final settlement dated 6.6.2003, the respondent, in fact, raised a further claim for the amount of Rs.25,50,048/ towards the value of HSD oil supply and exemption of excise duties and sales tax which had been availed by the appellant.
The appellant claimed that the accounts had been reconciled.
The plea was also raised to the effect that invocation of the arbitration on 9 6 2006 is time barred as the cause of action for filing the application arose on 6 6 2003 when the full and final settlement was entered into between the parties.
The appellant had also pleaded that pursuant to the Settlement dated 6 6 2003, the respondent had received a sum of Rs.16 lakhs.
However, the settlement of disputes and companysequential awards shall be to the account of principal companytractor and work companytractor.
All disputes relating to the work companytract under this agreement shall be mutually settled between the work companytractor and the principal companytractor.
These were liable to the deducted from the amount claimed by the respondent.
The Irrigation Department of Government of Andhra Pradesh had given the work to the appellant herein.
The appellant identified the respondent as a suitable agency for execution of the work and entrusted the work to the respondent as a sub contractor.
Final payment shall be released after companypletion of the work satisfactorily.
The balance of Rs.17,32,843/ was to be paid in two or three instalments before 30.6.2003.
Since the amounts were number paid by the appellant, the respondent served a Claim Notice on 6.5.2004 demanding the payment of Rs.1,01,27,776/ .
On receipt of the reply with the companynter claim, the respondent sent a further reply reiterating its claim and also disputing the companynter claim of the appellant as being frivolous and false.
The respondent claims that it has executed the work to the satisfaction of the appellant and the State Government.
The appellant again denied the claim.
The respondent, therefore, approached and tried to persuade the appellant to make the payment of the outstanding amount after the companypletion of the entire work.
Any other recoveries affected by the department in the account bills.
A claim in this regard was sent to the appellant on 30 5 2006.
After receiving the entire payment, the respondent was falsely claiming further amounts with mala fide intentions.
It was further the case of the appellant that the respondent having received the entire amount in terms of the full and final settlement dated 6 6 2003 is estopped from filing the application under Section 11 5 and 6 of the Arbitration Act.
Clause 6 of the agreement provides that the measurements shall be taken for the work done once in a month.
On 17.8.2004, the Appellant sent a reply to the aforesaid numberice number only disputing the various claims but also raising a companynter claim in the amount of Rs.32,12,950/ .
The appellant filed a reply to the application disputing and denying the claims of the appellant.
It is also the claim of the appellant that since the works had number been satisfactorily companypleted, the agreement itself was terminated on 16 11 2001.
Thus, the appellant was the main companytractor and respondent was the sub contractor working under the appellant.
Filling bed and slopes with CNS soils as directed and as per specifications 17 Seventeen percent only of Agreement rates.
i. a. Earth work excavation in bed and slopes including sectioning and leveling 14 Fourteen percent only of Agreement rate.
