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M/s ONGC Mangalore Petrochemicals Ltd. v. M/s ANS Constructions Ltd. & Anr.

Civil Appeal · 2018 INSC 111Decided 7 Feb 2018
Civil Appeal No. 1659 of 2018
Justice R.K. Agrawal · Justice Amitava Roy

Background

ONGC Mangalore Petrochemicals Ltd. (the contractor) had awarded a road, drainage, and compound-wall construction contract to ANS Constructions Ltd. (the contractee) at its Mangalore SEZ site. After completing the work, the contractee signed a "No Dues/No Claim Certificate" in September 2012, following which it received its final bill payment of about Rs. 20.34 crore. About a month later, the contractee withdrew that certificate, claiming it had been signed under duress to get its pending payment released, and then raised a fresh claim of nearly Rs. 97 crore for losses allegedly suffered during execution of the work. When the contractor refused to arbitrate this new claim, the contractee went to the Karnataka High Court, which appointed an arbitrator; the contractor then appealed to the Supreme Court.

Decision Breakdown

The Supreme Court held that a bald, unsupported allegation of coercion or duress is not enough to reopen a contract that both parties have already settled through a signed final bill and a "No Dues Certificate": the party alleging duress must place real material on record to establish it, which the contractee here had not done. The Court noted the contractee raised no protest at the time of signing the certificate or receiving payment, and only cried duress roughly a month later, with the detailed loss claim following more than three months after that: conduct the Court found undermined the credibility of the duress claim. Relying on its own precedents (including National Insurance Co. v. Boghara Polyfab and Union of India v. Master Construction Co.), the Court held there was genuine "accord and satisfaction" discharging the contract, so no arbitrable dispute survived, and the High Court's order referring the matter to arbitration was set aside.

Lesson Learnt

Once a contractor or vendor signs a final bill and a "no dues" certificate and accepts the final payment without objection, they cannot later claim that document was signed "under duress" and reopen old claims unless they can actually produce concrete evidence of coercion at the time: a vague, after-the-fact allegation will not be enough to force the other side back into arbitration or litigation.

Official source (sci.gov.in)View Judgment (PDF)

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