Whether the arbitration agreement stands discharged on acceptance of amount and signing no claim/discharge certificate?

No claim certificate is voluntary and free from coercion / undue influence and accordingly held that there is no live claim subsists, which is arbitrable after the discharge of the contract by accord and satisfaction.

The Hon’ble Supreme Court in the matter of Union of India vs. Parmar Construction Company, Civil Appeal No(s). 3303 – 3319 of 2019, considered the question whether the arbitration agreement stands discharged on acceptance of amount and signing no claim/discharge certificate?

The cases can fall under two categories, the one category wherein there was full and final settlement resulting in accord and satisfaction and there was no substance in the allegations of coercion/undue influence.  In the second category of cases, the Court found some substance in the contention of the claimants that “no­dues/no claims certificate or discharge vouchers” were insisted and taken (either on a printed format or otherwise) as a condition precedent for release of the admitted dues and consequently this Court held that the disputes are arbitrable.

A rebutable presumption could be drawn that when a no claim has been furnished in the prescribed format at the time of final bills being raised with unilateral deductions made even that acceptable amount will not be released, unless no claim certificate is being attached to the final bills. On the stated facts, para 52(iii) referred to by this Court in National Insurance Company Limited vs. Boghara Polyfab Private Limited(supra) indeed covers the cases of the present contractors with whom no option has been left and being in financial duress to accept the amount tendered in reference to the final bills furnished and from the discharge voucher which has been taken to be a defence by the appellants prima facie cannot be said to be voluntary and has   resulted   in   the   discharge   of   the   contract   by   accord   and satisfaction as claimed by the appellants.  In our considered view, the arbitral dispute subsists and the contract has not been discharged as being claimed by the appellants employer(s) and all the contentions in this regard are open to be examined in the arbitral proceedings.

The Court concluded that prima facie there is an evidence on record to justify that no claim certificate or letter of subrogation was voluntary and free from coercion/undue influence and accordingly held that there is no live claim subsists, which is arbitrable after the discharge of the contract by accord and satisfaction.