2026:MHC:2 O.P.Nos.810 of 2019 & 110 of 2021

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In the High Court of Judicature at Madras

Reserved on

16.12.2025

Delivered on:

02.1.2026

Coram:

The Honourable Mr.Justice N.ANAND VENKATESH

O.P.Nos.810 of 2019 & 110 of 2021

& A.No.399 of 2021

O.P.No.810 of 2019 :

M/s.NRP Projects Pvt. Ltd.,

Chennai-14. ...Petitioner

Vs

M/s.Chennai Petroleum Corporation

Ltd., Chennai-18. ...Respondent

O.P.No.110 of 2021 :

Chennai Petroleum Corporation

Ltd., Chennai-18 rep.by its Chief

General Manager (HR & Legal)

Mr.M.Sankaranarayanan ...Petitioner

Vs

M/s.NRP Projects Pvt.Ltd.

(formerly known as M/s.NR Patel

& Co.), Chennai-14 ...Respondent

PETITIONS under Section 34 of the Arbitration and Conciliation

Act, 1996 praying

https://www.mhc.tn.gov.in/judis

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(i) to set aside the award dated 01.7.2019 in respect of Claim

Nos.A, C, D, F and G and rejection of liquidated damages of

Rs.3,06,14,810/- (part of Claim E) as set out in paragraph 65(2) (i),

(iii), (iv), (vi) and (vii) and part of paragraph 65(2)(v) and paragraph

65(3) and (4) of the award dated 01.7.2019 and to award costs of the

proceedings to the petitioner (O.P.No.810 of 2019); and

(ii) to partially set aside the award dated 01.7.2019 viz., the

impugned award dated 01.7.2019, insofar as it directs the petitioner to

pay the first respondent a sum of Rs.35,90,147/-(i.e Claim No.2)

towards refund of withheld amounts under the contract with regard to

Employee Provident Fund and Employees State Insurance along with

simple interest thereon on principal amount at the rate of 12.35% p.a.,

from 14.6.2013 till date of award and part of Claim No.5 to an extent

of Rs.4,43,073/- towards the amount deducted by the petitioner

towards the liquidated damages on change order No.1 of the contract

along with simple interest thereon on principal amount at the rate of

12.35% p.a., from 13.12.2013 till date of award and future interest on

both awarded claims at the rate of 14.35% p.a., from the date of

award and allow this petition with costs. (O.P.No.110 of 2021); and https://www.mhc.tn.gov.in/judis

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Application No.399 of 2021 filed praying to pass an interim stay

of part of the impugned award dated 01.7.2019 insofar as it directs

the applicant/petitioner to pay the respondent a sum of

Rs.35,90,147/- (i.e claim No.2) towards refund of withheld amounts

under the contract with regard to Employees Provident Fund and

Employees State Insurance along with simple interest thereon at

12.35% p.a. from 14.6.2013 till date of award and part of Claim No.5

to an extent of Rs.4,43,073/- towards the amount deducted by the

petitioner towards liquidated damages on change order No.1 of the

contract along with simple interest thereon at 12.35% p.a., from

13.12.2013 till date of award and future interest on both claims at

14.35% p.a., from date of award passed by the Sole Arbitral Tribunal

pending disposal of O.P.No.110 of 2021.

For Petitioner in

O.P.No.810 of 2019 &

Respondent in

O.P.No.110 of 2021 : Mr.Manoj Menon

For Respondent in

O.P.No.810 of 2019 &

Petitioner in

O.P.No.110 of 2021 : Mr.S.Arjun Suresh

& Mr.B.Gautham https://www.mhc.tn.gov.in/judis

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COMMON ORDER

These petitions have been filed under Section 34 of the

Arbitration and Conciliation Act, 1996 (for brevity, the Act), challenging

the award dated 01.7.2019 passed by the sole Arbitrator.

2. In O.P.No.810 of 2019, M/s.NRP Projects Private Limited - the

claimant before the Arbitral proceedings is the petitioner whereas in

O.P.No.110 of 2021, M/s.Chennai Petroleum Corporation Limited

(CPCL) - the respondent before the arbitral proceedings is the

petitioner. Both petitions have been filed by the claimant as well as the

CPCL partly challenging the very same arbitral award.

3. Heard both.

4. The facts leading to the filing of these petitions are as follows:

(1) The CPCL, through its Consultant - one M/s.Tata Consulting

Engineers Limited, invited bids for the design, procurement and https://www.mhc.tn.gov.in/judis

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erection of tankages for its Euro IV Project at Manali, Chennai, in

which, the claimant was the successful bidder.

(2) The CPCL awarded the work vide Fax of Acceptance (FoA)

dated 21.4.2009 and a subsequent Letter of Acceptance (LoA) of

W.O.No.1035/W/051 dated 12.5.2009 was issued to the claimant, on a

lump sum contract value of Rs.38,95,01,400/- excluding Service Tax.

The stipulated period for completion of work was 15 months

commencing from 21.4.2009 and the work was required to be

completed on or before 20.7.2010.

(3) On the other hand, the work was completed only on

23.9.2011 and the final completion certificate was issued by the CPCL

on 06.11.2013. Notwithstanding the same, the CPCL recovered

liquidated damages (LDs) amounting to Rs.3,10,57,883/- from the

claimant. In the course of execution of the contract, the claimant was

required to carry out certain additional/extra works. In the meantime

after prolonged exchange of correspondences, the CPCL issued change

order No.1 on 31.10.2013 for a reduced sum of Rs.56,37,067/-. As a

consequence, disputes arose between the parties with respect to

various payments and recoveries effected by the CPCL. https://www.mhc.tn.gov.in/judis

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(4) The claimant issued a notice dated 30.5.2016 to the

respondent invoking the arbitration clause under Clause 58 of the

Special Conditions of Contract (SCC). A sole Arbitrator was appointed

and the arbitration proceedings were conducted under the Standing

Conference of Public Enterprises Forum of Conciliation and Arbitration

Rules.

(5) Pursuant thereto, the claimant filed its statement of claim by

making the following claims:

(A) Reimbursement of TDS amounting to Rs.3,51,945/- deducted

on interest recovered towards Mobilization Advance;

(B) Refund of a sum of Rs.35,90,147/- withheld towards ESI/PF

dues;

(C) Payment of Rs.2,21,30,105/- being the balance amount for

extra/additional works executed;

(D) Reimbursement of Rs.9,93,061/- incurred towards additional

bank guarantee extension charges;

(E) Refund of Rs.3,10,57,883/- recovered towards the LDs;(F)

Payment of Rs.5,45,30,196/- towards prolongation costs/ overheads https://www.mhc.tn.gov.in/judis

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for the extended contract period;

(G) Payment of Rs.50,80,073/- towards interest on delayed

payments of various bills;

(H) Interest on the aggregate claims from the date of cause of

action till realization; and

(I) Costs of arbitration.

(6) The CPCL filed its statement of defence and took a stand that

the claims were not arbitrable due to the final determination of bills by

the Engineer-In-Charge/Consultant and that the claims were barred by

limitation, as they were raised for the first time in 2016. The CPCL

further contended that there was a full and final settlement after the

claimant submitted “no-claim” and “no-due” certificates and received

payment towards the 21

st

and final bill. It was asserted that extensions

of time were granted provisionally and without prejudice to the CPCL’s

right to levy the LDs for the delay attributable to the claimant. The

claim for extra works was stated to have been settled under a mutually

agreed change order. All the other claims were denied as being

contrary to the terms of contract. https://www.mhc.tn.gov.in/judis

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(7) The sole Arbitrator, based on the pleadings, framed the

following issues:

“(i) Whether all or any of the claims made

by the claimant are maintainable under the Law

(including Laws of Limitation) and/or contract?

(ii) Whether the claimant is entitled for a

total claim of Rs. 22,80,48,002/- (Rupees

twenty-two crores eighty lakhs forty-eight

thousand and two only) as set out in paragraph

‘X’ of statement of claim, comprising of the

following claims:

A. A sum of Rs.3,51,945/- (Rupees Three

lakhs fifty-one thousand nine hundred and forty-

five only) towards reimbursement of TDS

deduced on interest payment?

B. A sum of Rs.35,90,147/- (Rupees

thirty-five lakhs ninety thousand and one

hundred and forty-seven only) towards refund of

ESI/PF?

C. A sum of Rs.2,21,30,105/- (Rupees two

crores twenty-one lakhs thirty thousand one

hundred and five only) towards change order

No.1 pertaining to technical extra works and

whether the claimant has carried out additional

work to the extent claimed as above? https://www.mhc.tn.gov.in/judis

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D. A sum of Rs.9,93,061/- (Rupees nine

lakhs ninety-three thousand sixty-one only)

towards additional bank guarantee charges paid

for extension of bank guarantees?

E. A sum of Rs.3,10,57,883/- (Rupees

three crores ten lakhs fifty-seven thousand eight

hundred and eighty-three only) towards refund

of liquidated damages?

F. A sum of Rs.5,45,30,196/- (Rupees five

crores forty-five lakhs thirty thousand one

hundred and ninety-six only) towards cost of

overheads?

G. Whether the claimant is entitled to

claim interest towards the alleged delayed

payments, and if so to what extent (Claim No.

G)?

(iii) Whether there has been an accord and

satisfaction in respect of the claim for additional

works made by the claimant (Claim No.C)?

(iv) Whether there has been full and final

settlement of the claims made by the claimant?

(v) Whether the claimant is entitled to

interest on any of the claims and if so, at what

rate (Claim No.H)?

(vi) Whether either of the parties is

entitled to cost and if so, to what extent?” https://www.mhc.tn.gov.in/judis

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(8) Before the sole Arbitrator, the claimant examined CW.1 and

marked Ex.C.1 to Ex.C.168 and the respondent (CPCL) examined RW.1

and marked Ex.R.1 to Ex.R.21.

(9) The sole Arbitrator, upon consideration of the facts and

circumstances of the case and upon appreciation of the evidence on

record, passed the following Award:

“1. Whether all or any of the claims made

by the claimant are maintainable under the law

including laws of limitation) and/or contract?

And

2. Whether the Claimant is entitled to a

total claim Rs.22,80,48,002/- as set out in

paragraph ‘X’ of statement of claim?

i. Claim ‘A’ of the claimant for

Rs.3,51,945/- towards reimbursement of TDS

deducted on interest payment is rejected, both

on the ground of limitation and on merits.

ii. Claim ‘B’ of the claimant for refund of

withheld amount towards ESI/PF for

Rs.35,90,147/- is allowed and the respondent

(CPCL) is directed to pay Rs.35,90,147 to the

claimant (NRP).

iii. Claim ‘C’ of the claimant for a sum of

Rs.2,21,30,105/- towards change order No.1 https://www.mhc.tn.gov.in/judis

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pertaining to technical extra works, though

within the limitation period, the claim is rejected

on merit.

iv. Claim ‘D’ of the claimant for a sum of

Rs.9,93,061/- towards additional bank guarantee

charges for extension of bank guarantee is

rejected both on the ground of limitation and on

merit.

v. Claim ‘E’ of the claimant for an amount

Rs.3,10,57,883/- towards refund of liquidated

damages though within the limitation period is

rejected on merit. However, an amount of

Rs.4,43,073/- deducted towards liquidated

damages on change order No.1 is allowed in

favour of the claimant. The respondent (CPCL) is

directed to pay an amount of Rs.4,43,073/- to

the claimant (NRP).

vi. Claim ‘F’ of the claimant for an amount

of Rs.5,45,30,196/- towards cost of overheads is

rejected both on the ground of limitation and on

merit.

vii. Claim ‘G’ of the claimant for interest

towards alleged delayed payment is rejected on

merit.

3. Whether there has been an accord and

satisfaction in respect of the claim for additional

works made by the claimant (Claim No.C)? https://www.mhc.tn.gov.in/judis

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My finding is that in this contract there is

an accord and satisfaction in respect of the claim

for additional works made by the claimant.

4. Whether there has been full and final

settlement of the claims made by the claimant?

My finding is that there has been full and

final settlement of the claims made by the

claimant in terms of the contract except the

claim for refund of withhold amount towards

ESI/PF by the respondent.

5. Whether the claimant is entitled to

interest on any of the claims and if so, at what

rate (Claim No.4)?

The Claimant is entitled for interest on the

following claims:

(i) Claim for Rs.35,90,147/- towards

refund of ESI/PF amount, the claimant is entitled

for simple interest on the principal amount at the

rate of 12.35% from 14.6.2013 till the date of

this award.

(ii) An amount of Rs.4,43,073/-, the

amount deducted by the respondent towards

liquidated damages on change order No.1 the

claimant is entitled for simple interest on the

principal amount at the rate of 12.35% from

13.12.2013 till date of this award. https://www.mhc.tn.gov.in/judis

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(iii) In case there is default on the

respondent to make the above payment within

30 days of the award, the claimant is also

entitled for a future interest at the rate of

14.35% simple interest on the principal amount

from the date of award to the actual date of

payment.

6. Whether either of the parties is entitled

to cost and if so, to what extent?

Both parties to bear their respective

costs.”

(10) Aggrieved by the same, the present petitions have been

filed before this court by both the claimant as well as the CPCL.

5. The learned counsel appearing on behalf of the claimant made

the following submissions:

CLAIM A- Reimbursement of TDS – Rs.3,51,945/-:

The sole Arbitrator failed to appreciate that the CPCL did not

dispute the quantum of Rs.3,51,945/- remitted as TDS and the

CPCL raised the defence of non-receipt of Form 16A - TDS

certificate for the first time only in its statement of defence filed

on 31.3.2017. https://www.mhc.tn.gov.in/judis

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The finding that the claim is time barred, by calculating

limitation from the date of tax remittance on 16.7.2010, is

erroneous. In the construction contracts, limitation commences

only from the date of payment of the final bill, i.e., December

2013, as all earlier payments are interim in nature.

CLAIM C - Claims for Extra /Additional Works –

Rs.2,21,30,105/-

The sole Arbitrator erred in rejecting the claims in respect of 14

out of 16 items of extra works by recording only the summary

observations, which were devoid of any independent analysis or

reasoning. This was done despite the categorical admission of

R.W.1 in the cross-examination that all the 16 items were

executed by the claimant. The said works were beyond the

original scope of the contract and were carried out pursuant to

the instructions of the owner.

The CPCL coerced the claimant into accepting a reduced "change

order" for Rs.56,37,067/- on 31.10.2013 by withholding all

contractual payments for over two years when the initial bill was

submitted on 04.11.2011. https://www.mhc.tn.gov.in/judis

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CLAIM D – Additional Bank Guarantee Charges for extension of

Bank Guarantees - Rs.9,93,061/-

The sole Arbitrator erred in rejecting the claim of Rs.9,93,061/-

towards additional bank guarantee charges as time-barred

without considering the fact that the bank guarantees were kept

valid up to 30.10.2012 and were cancelled by the claimant only

on 30.10.2013.

CLAIM E – Refund of the LDS - Rs.3,10,57,883/-:

The levy of LDs amounting to Rs.3,10,57,883/- is untenable as

R.W.1 admitted that the delay was assessed only for road works

and not for the overall project delay of 14 months.

The CPCL failed to establish any actual loss, which is a sine qua

non for the imposition of the LDs and more particularly in view of

the fact that the storage tanks were put to use prior to the

completion of the road works on 23.9.2011.

CLAIM F – Prolongation costs/Overheads for extended contract

period – Rs.5,45,30,196/-:

The claimant is entitled to prolongation costs of Rs.5,45,30,196/-

for the 14-month extended period, as the delays were not https://www.mhc.tn.gov.in/judis

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attributable to the claimant and the CPCL itself had confirmed

the continuous deployment of men and machinery at the site.

Therefore, the rejection of the claim by the sole Arbitrator is

erroneous.

CLAIM G – Interest on delayed payments – Rs.50,80,073/-:

The CPCL made illegal deductions and withheld payments

contrary to the terms of contract, thereby entitling the claimant

to interest of Rs.50,80,073/- calculated at the rate of 12.35%

per annum.

CLAIM I – Cost of Arbitration – Rs. 16,84,153/-:

The claimant is entitled to costs of arbitration as the arbitral

proceedings were necessitated solely due to the illegal withholding of

payments by the CPCL.

6. Per contra, the learned counsel appearing on behalf of the

CPCL made the following submissions:

Preliminary Objections:

Accord & Satisfaction: The “Accord and Satisfaction” arises

from the no due certificates dated 26.8.2013 and 12.9.2013 https://www.mhc.tn.gov.in/judis

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issued by the claimant, which would establish that the payment

of the 21st and final bill constituted full and final settlement. The

claimant neither pleaded nor substantiated any coercion at the

time of issuing these two no due certificates and instead,

accepted the final payments without any demur or protest,

thereby confirming the finality of the settlement.

Limitation: Claims A, D, and F are ex-facie barred by limitation,

as the cause of action arose upon completion of works on

23.9.2011 whereas the arbitration clause was invoked only on

30.5.2016, which was well beyond the three-year statutory

period.

Claim A - TDS on Interest on Return of Mobilisation Advance-

Rs.3,51,945/-: 

The sole Arbitrator rightly rejected this claim, as the claimant

failed to furnish Form 16A for 2009-2010 within one-month

period prescribed under Rule 31(2) of the Income Tax Rules,

which prevented the CPCL from obtaining timely tax credit.

Claim B – Provident Fund (Rs.35,90,147/-):

The award of Rs.35,90,147/- is patently illegal, as it is based on

an arbitrary and incomplete Provident Fund Authority’s report https://www.mhc.tn.gov.in/judis

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dated 28.3.2014, which disregards the absence of any evidence

of discharge and relies on an inspection period from April 2012

to February 2014 that bears no relation to the contract period

from 21.4.2009 to 23.9.2011.

The sole Arbitrator failed to consider the no-objection certificates

and the waiver of the claim under Clause 9.7.4 of the General

Conditions of Contract (GCC) due to the claimant’s omission in

the final bill dated 01.11.2013. The finding contradicts Clauses

15.2 and 15.6.3 of the SCC, which would expressly empower the

CPCL to withhold the funds until RPFC Challan/receipts were

furnished.

Claim C - Change Orders- Rs. 2,21,30,105/-:

The sole Arbitrator rightly rendered a finding that the valuation

of extra works was mutually settled at Rs.56,37,067/- pursuant

to meetings held on 19.3.2013 and 12.7.2013. The claimant’s

subsequent attempt to claim an inflated sum of Rs.2,21,30,105/-

was impermissible, given their prior written acceptance of the

rates.

The sole Arbitrator rightly found that the items now claimed as

"extra" were either within the scope of the original contract or https://www.mhc.tn.gov.in/judis

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pertained to re-work necessitated by the claimant’s poor

workmanship, such as internal roof welding due to cracks

discovered during testing.

Claim D - Bank Guarantee Charges- Rs.9,93,061/-:

The sole Arbitrator rightly found that the extension of bank

guarantees was a mandatory requirement under Clause 8.5.1 of

the GCC and the claimant complied with it without raising any

contemporaneous objection nor included any charges in the

Running Account (RA) Bill.

Furthermore, the claim is independently barred by limitation as

the liability for these charges arose as early as 10.9.2011 while

the arbitration clause was invoked only on 30.5.2016.

Claim E - LDs – Rs.4,43,072/-:

The refund claimed by the claimant amounting to Rs. 4,43,072/-

is contrary to the contract. A conjoint reading of Clause 7.4.1 of

the GCC and Clause 51.2.1 of the SCC establishes that the

change order works squarely fall under the definition of the word

"work". As per Clause 51.2.3 of the SCC, the original https://www.mhc.tn.gov.in/judis

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construction schedule remains binding unless specifically

amended.

Therefore, the finding of the sole Arbitrator that the LDs could

not be levied due to the lack of a separate schedule for change

order No.1 is patently illegal.

The sole Arbitrator rightly sustained the recovery of

Rs.3,10,57,883/- as the claimant completed the works with a

14-months’ delay attributable to its failure to adhere to the

original timelines, causing a financial loss of Rs.4 Crores to the

CPCL, as the Diesel Hydro Treating Plant could not function

optimally.

Claim F – Overheads - Rs.5,45,30,196/-:

This claim was rightly rejected as the contract contains no

provision for the Hudson Formula and time extensions were

granted on the express condition that the claimant would not be

entitled to compensation for extended stay or escalation. 

The sole Arbitrator rightly found that the inordinate delay was

entirely attributable to the claimant thereby denied prolongation

charges. https://www.mhc.tn.gov.in/judis

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Award of Interest:

The grant of interest violates Section 31(7)(a) of the Act and the

express terms of the contract and more specifically Clause 9.3.5

of the GCC, which prohibits interest on disputed claims. 

The sole Arbitrator erroneously awarded pre-award interest

at 12.35% from 14.6.2013 and 13.12.2013 and future interest

at the rate of 14.35% without providing reasons, exceeding the

"cash credit rate" cap.

7. This Court has carefully considered the submissions made on

either side and perused the materials available on record and the

award passed by the Sole Arbitrator.

8. The main issues that were focussed on the side of the

claimant are as follows:

(a) the deductions made towards the LDs to the tune of

Rs.3,10,57,883/- and the findings rendered by the sole Arbitrator in

this regard;

(b) the rejection of the claim made towards the charges paid for

extension of bank guarantee to the tune of Rs.9,93,061/- and the https://www.mhc.tn.gov.in/judis

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findings rendered by the sole Arbitrator in this regard;

(c) the claim made towards return of the TDS amount to the

tune of Rs.3,51,945/- and the findings rendered by the sole Arbitrator

in this regard; and

(d) the claim for extra/additional works to the tune of

Rs.2,76,69,908.30 Ps and the rejection of the same on the ground of

accord and satisfaction and the findings rendered by the sole Arbitrator

in this regard.

9. On the contrary, on the side of the CPCL, the main focus of

the arguments was towards the refund of the provident fund to the

tune of Rs.35,90,147/- and the claim for interest made by the claimant

that was entertained and granted by the sole Arbitrator at the rate of

12.35% from 14.6.2013 and 13.12.2013 respectively till the date of

the award and a further interest at 14.35% from the date of award till

the date of payment for all those claims granted in favour of the

claimant. https://www.mhc.tn.gov.in/judis

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10. This Court has carefully considered the submissions of the

learned counsel on either side and perused the materials available on

record and more particularly the impugned award.

11. At the outset, this Court has to necessarily deal with the

issue of accord and satisfaction and full and final settlement since the

finding that is going to be rendered under this head will determine as

to whether this Court can go into the merits of the other claims made

by the claimant.

12. In order to properly understand these issues, the sequence

of events right from the beginning have to be carefully taken note of.

13. The tender was floated by the CPCL and on 21.4.2009, the

FoA was issued in favour of the claimant for the purpose of design,

procurement, fabrication, installation, testing and commissioning of six

intermediate storage tanks and other works connected therewith to be

executed by the claimant. The FoA was issued for a lump sum value of

Rs.38,95,01,400/- and the timeline for the completion of the works

mentioned thereunder was 15 months from the date of the FoA. https://www.mhc.tn.gov.in/judis

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Therefore, the work was supposed to be completed before 20.7.2010.

The works inter alia included installation and commissioning of two

diesel and four naphtha storage tanks. The CPCL was in the process of

setting up a diesel hydro treatment plant to comply with Bharat Stage

IV Norms. The LoA dated 12.5.2009 was issued, which stipulated the

LDs at 0.5% per week or part thereof towards the delay subject to a

maximum of 10%.

14. Six extensions were granted by the CPCL on 20.7.2010,

29.10.2010, 01.2.2011, 05.4.2011, 28.7.2011 and 08.9.2011 and the

work was completed by the claimant only on 23.9.2011 after nearly 14

months from the original time schedule.

15. It is the case of the claimant that on 14.10.2011 and

14.5.2012, the final bill was raised for Rs.4,33,52,136/- namely

R.A.Bill No.20 and final bill after completion of the works.

16. For some reason, this alleged final bill was not filed either

before the sole Arbitrator or before this Court and what is available is

only the covering letter dated 14.5.2012. In so far as this final bill is https://www.mhc.tn.gov.in/judis

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concerned, the specific case of the CPCL is that the differential amount

between what was claimed by the claimant and what was paid by the

CPCL after deducting the LDs was settled subsequently.

17. On 04.11.2011, the claimant submitted the bill pertaining to

the extra works or the change order works that were carried out by

them in addition to the original scope of works. The claimant raised a

bill for a sum of Rs.2,76,69,908.30 Ps towards extra works. Initially,

the CPCL rejected this bill in toto on 13.6.2012. Thereafter, a meeting

was held between the representatives of both the claimant as well as

the CPCL and also the CPCL’s Project Consultant (PMC) on 19.3.2013

wherein it was agreed that some of the items contained in the extra

works bill dated 04.11.2011 would be deleted and that the amounts

charged as against some of the items in the extra works bill would be

reduced.

18. On 03.4.2013, the claimant revised their claim towards the

extra works and reduced their claim to Rs.1,00,83,149/- as against the

earlier claim of Rs.2,76,69,908.30 Ps. On receipt of the same, the

CPCL found that some of the claims were inflated and therefore, the https://www.mhc.tn.gov.in/judis

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claimant was called upon to reduce their claim towards the extra

works.

19. Once again, a meeting was held on 12.7.2013, in which, it

was agreed between the parties that the value of extra works or the

change order works would amount to Rs.56,37,067/-. On 26.8.2013,

the claimant issued a no due certificate stating that apart from

payment of bill No.21 and final bill and towards the extra works

amounting to Rs.63,33,808/- as per part B, no further monies would

be due and payable under the contract. Since the no due certificate

was not in the proper format, the CPCL asked the claimant to give it in

a proper format and accordingly, on 12.9.2013, a fresh no due

certificate was issued, which stated that the claimant certified that the

payment against the 21

st

bill and final bill and the bill for extra works

should be the full and final settlement of the work executed against

the subject contract.

20. The CPCL issued a change order towards the extra works or

the change order works for Rs.56,37,067/- and the claimant endorsed

the value of the change order works as “accepted.” The claimant had https://www.mhc.tn.gov.in/judis

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also raised RA bill No.21 and final bill for a sum of Rs.74,69,993.29 Ps

towards the original scope and the extra works or change order works

claim, on 01.11.2013. On 13.12.2013, the CPCL paid an amount of

Rs.61,73,322/- after deducting the TDS of Rs.4,56,180/- and the LDs

on the extra works or the change order works amounting to

Rs.4,43,073/-. This was received by the claimant purportedly without

any protest.

21. After receipt of the said amount, on 17.12.2013, the

claimant questioned the payment of Rs.70,72,575/- as against the

total demand made by the claimant to the tune of Rs.2,76,69,908/-.

Once again, a letter dated 11.3.2014 was issued by the claimant to the

CPCL by referring to the earlier letter dated 17.12.2013 with the very

same demand. Yet another letter dated 30.5.2016, which was the

letter invoking Section 21 of the Act, was issued, in which, a similar

claim was made.

22. The learned counsel appearing for the claimant submitted

that the final bill was raised on 14.10.2011 whereas the CPCL did not

choose to make any payment to the claimant, as a consequence of https://www.mhc.tn.gov.in/judis

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which, the claimant was pushed to desperation. Ultimately, a much

reduced amount was paid only on 13.12.2013. Immediately thereafter,

the claimant questioned the CPCL regarding the reduced amount paid

by the CPCL by virtue of three letters, which were mentioned supra

and which were marked as Ex.C.147, Ex.C.149 and Ex.C.160. It was

further contended that even if it could not be construed, in stricto

sensu, as coercion, it was abundantly made clear that the claimant

was pushed to desperation and that the ground of accord and

satisfaction and full and final settlement could not be put against the

claimant.

23. Per contra, the learned counsel appearing for the CPCL

submitted that the claimant issued the no due certificate on 12.9.2013

stating that except for the final bill and R.A.Bill No.21, no further

claims would be raised against the CPCL. Ultimately, a final bill for a

sum of Rs.74,69,993.29 Ps was raised by the claimant, out of which,

Rs.61.73 lakhs was paid, that prior to the issuance of the no due

certificate dated 12.9.2013 by the claimant, another no due certificate

had already been issued earlier on 26.8.2013 to the very same effect,

that but, it was not given in the prescribed format and that these no https://www.mhc.tn.gov.in/judis

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due certificates were neither withdrawn nor questioned on the ground

of coercion until the invocation of the arbitration clause by letter dated

30.5.2016 (Ex.C.160).

24. The only claim that was made by the claimant prior to the

invocation of the arbitration clause was towards the claim pertaining to

ESI/ PF and the TDS. The so-called RA Bill No.20 never saw the light of

the day as it was not filed either before the sole Arbitrator or before

this Court. Hence, what is relevant is only RA.Bill No.21 and final bill,

which was settled by the CPCL.

25. The sole Arbitrator went into this issue and rendered a

factual finding that the claimant, at no point of time, raised the ground

of coercion and duress and that the so-called communications namely

Ex.C.147 and Ex.C.149 were routine correspondences between the

parties. The sole Arbitrator also rendered a finding that the claimant

had received the amount from the CPCL without any demur and

therefore, the sole Arbitrator did not find any merits in the claim made

by the claimant towards the extra/additional works and accordingly, it

was rejected. https://www.mhc.tn.gov.in/judis

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26. At this juncture, it will be relevant to take note of the

judgments that were relied upon by the learned counsel on either side

and the scope and ambit of the term “accord and satisfaction”.

27. The learned counsel for the claimant relied upon the decision

of the Hon’ble Apex Court in NTPC Vs. Reshmi Constructions,

Builders & Contractors [reported in 2004 (2) SCC 663], in which,

a specific reliance was placed on paragraphs 27 and 28, which are

extracted as hereunder:

“27. Even when rights and obligations of the

parties are worked out, the contract does not come

to an end inter alia for the purpose of

determination of the disputes arising thereunder,

and, thus, the arbitration agreement can be

invoked. Although it may not be strictly in place but

we cannot shut our eyes to the ground reality that

in a case where a contractor has made huge

investment, he cannot afford not to take from the

employer the amount under the bills, for various

reasons which may include discharge of his liability

towards the banks, financial institutions and other

persons. In such a situation, the public sector

undertakings would have an upper hand. They

would not ordinarily release the money unless a https://www.mhc.tn.gov.in/judis

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“No-Demand Certificate” is signed. Each case,

therefore, is required to be considered on its own

facts.

28. Further, necessitas non habet legem is

an age-old maxim which means necessity knows no

law. A person may sometimes have to succumb to

the pressure of the other party to the bargain who

is in a stronger position.”

28. Reliance was also placed by the learned counsel for the

claimant on the judgments of the Hon’ble Apex Court in National

Insurance Co. Ltd. Vs. Boghara Polyfab (P) Ltd. [reported in

2009 (1) SCC 267] and R.L.Kalathia & Co. Vs. State of Gujarat

[reported in 2011 (2) SCC 400] for the very same proposition of

law.

29. The judgments that were relied upon by the learned counsel

for the claimant make it clear that each case must be considered on its

own facts and that the Court must take into consideration the ground

realities. Broadly, two categories of cases were considered. The first

category is where the Court finds that there are bilateral negotiated https://www.mhc.tn.gov.in/judis

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settlement of pending disputes, which were agreed to by both parties

and payments were made regarding full and final settlement. The

other category is where such no due certificates or full and final

settlement certificates were insisted as a condition precedent for the

release of the admitted dues. In such cases, the Hon’ble Apex Court

held that the paying party had an upper hand and in those cases, one

party is forced to succumb to the pressure of the other party, who is in

a stronger position, to the bargain. In that event, such full and final

settlement and final satisfaction cannot take away the rights of the

claimant.

30. The learned counsel appearing for the CPCL relied upon the

judgments of the Hon’ble Apex Court in Boghara Polyfab (P) Ltd.

and ONGC Mangalore Petrochemicals Ltd. Vs. ANS Constructions

Ltd. [reported in 2018 (3) SCC 373] .

31. In the judgment in ONGC Mangalore Petrochemicals

Ltd., the Hon’ble Apex Court had put against the claimant a delay of

12 days and it was held that the story about duress was an https://www.mhc.tn.gov.in/judis

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afterthought. It was also held that the no claim certificate was given

voluntarily; that the amount was accepted voluntarily; and that the

contract was also discharged voluntarily.

32. In the case in hand, the claimant, at no point of time, raised

any objection or withdrew the no due certificates. The claimant

accepted the payment without any protest in the year 2013 and

almost after 3 years, the claimant raised a protest on the ground of

coercion and duress as an afterthought. As rightly found by the sole

Arbitrator, the subsequent communications marked as Ex.C.147 and

Ex.C.149 did not even mention that such no due certificate was

received under duress or compulsion nor that immediately after the

receipt of the amount, the claimant withdrew the no due certificate as

being vitiated due to coercion.

33. The sequence of events would clearly show that by the time

R.A.Bill No.21 was settled in favour of the claimant, at least two

meetings were held between the parties for finalisation of the amount

due and payable to the claimant and two no due certificates were https://www.mhc.tn.gov.in/judis

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issued by the claimant. In the given circumstances, it will be too far-

fetched to hold that the claimant received the amount from the CPCL

under duress or coercion or desperation and came up with this ground

nearly after three years. The findings of the sole Arbitrator on the

issue of accord and satisfaction, which was dealt with as issue (iii) and

the issue of full and final settlement, which was dealt with as issue (iv)

are definitely possible views on appreciation of evidence available on

record and this Court cannot sit on appeal against such a view taken

by the sole Arbitrator under Section 34 of the Act just because an

alternative view may also be possible on the given facts and

circumstances and the materials placed before this Court. Thus, this

Court holds that the findings of the sole Arbitrator on the issue of

accord and satisfaction and full and final settlement are upheld.

34. In the light of the above finding, the other issues to be

considered pertain to the withheld amounts towards ESI/PF; the

reimbursement of TDS amount; the additional charges incurred by the

claimant towards extension of the bank guarantees; and the LDs to

the tune of Rs.4,43,073/-, which was directed to be paid by the CPCL https://www.mhc.tn.gov.in/judis

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to the claimant and which was deducted from change order No.1 apart

from the interest component awarded in favour of the claimant

towards those claims that were allowed by the sole Arbitrator.

35. In so far as the refund of the TDS charges is concerned, on

18.3.2013, the claimant wrote to the CPCL enclosing Form 16A seeking

for an amount of Rs.3,51,945/- that is set to have been remitted on

16.7.2010. The very remittance of the TDS amount was disputed by

the CPCL. Apart from that, as per the relevant Income Tax Rules, Form

16A must be provided within one month from remittance. Admittedly,

for the first time, Form 16A was sent to the CPCL only in the year

2013. Unfortunately, the claimant had not filed even a shred of

evidence to establish the remittance of TDS. In view of the same, even

on merits, the claim made was not supported by any evidence, by

which, it could have been easily proved by the claimant.

36. Apart from that, the sole Arbitrator found that the claimant

had remitted the tax amounting to Rs.3,51,945/- for the period 2009-

10. Admittedly, the invocation of arbitration clause took place only on https://www.mhc.tn.gov.in/judis

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30.5.2016, which was beyond the period of three years if the period is

reckoned from 16.7.2010, on which date, the claimant asserts to have

remitted the TDS.

37. The sole Arbitrator took into consideration these factual

aspects and rendered a finding that both on merits as well as on the

issue of limitation, the claim is liable to be rejected. In the considered

view of this Court, the said finding of the sole Arbitrator does not

suffer from any perversity or patent illegality warranting the

interference of this Court.

38. The next issue pertains to the refund of the LDs deducted

from change order No.1 to the tune of Rs.4,43,073/-.

39. The stand taken by the CPCL is that a conjoint reading of

Clause 7.4.1 of the GCC and Clause 51.2.1 of the SCC makes it clear

that the additional works would also fall within the definition of the

word ‘works’ under the contract. That apart, Clause 51.2.3 of the SCC

states that any amendment to the contract would only result in the

amendment to the construction schedule. In the present case, the https://www.mhc.tn.gov.in/judis

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construction schedule has not been amended pursuant to change order

No.1 and therefore, the same schedule would continue to apply to

change order No.1 as well.

40. The sole Arbitrator came to the conclusion that in so far as

the extra works were concerned, there was no time schedule for

completion of the same and hence, there was no justification for

recovery of the LDs. Under such circumstances, the sole Arbitrator

concluded that the amount of Rs.4.43,073/-, which was deducted

towards the LDs on change order No.1, must be refunded. It is also

seen from the records that while the parties held meetings to finalise

RA.Bill No.21 and final bill, there was no indication of any deduction

towards the LDs on change order No.1. All of a sudden, this amount

was deducted when the final payment was made to the claimant. In

view of the same, this Court does not find any perversity or manifest

illegality in the findings rendered by the sole Arbitrator warranting the

interference of this Court.

41. In so far as the claim pertaining to provident fund is

concerned, the sole Arbitrator took into consideration the report of the https://www.mhc.tn.gov.in/judis

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Provident Fund Authority dated 28.3.2014, the challan submitted by

the claimant and also the two no objection certificates dated

26.8.2013 and 12.9.2013. The sole Arbitrator also took into

consideration Clauses 15.2 and 15.6.3 of the SCC. The sole Arbitrator

found that the action of the CPCL in withholding the amount of

Rs.35,90,147/- from the claim towards EPF contribution on the

contract employees was not tenable. This finding rendered by the sole

Arbitrator is a possible view and it does not warrant the interference of

this Court.

42. The next issue pertains to the additional charges towards

extension of the bank guarantees.

43. The sole Arbitrator came to the conclusion that the said

claim made by the claimant was barred by limitation.

44. According to the claimant, they incurred an expenditure to

the tune of Rs.9,93,061/- towards extended bank guarantee on

10.9.2011 when the validity of the bank guarantee was extended upto

30.10.2012. https://www.mhc.tn.gov.in/judis

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45. However, this claim was made for the first time when the

claim statement was filed on 10.12.2016 before the sole Arbitrator.

Hence, the sole Arbitrator came to the conclusion that such claim was

barred by limitation.

46. Apart from the above, as per Clause 8.5.1 of the GCC, the

defect liability period is 12 months from the date of issuance of the

completion certificate. Six extensions were granted to the claimant and

hence, the bank guarantees were provided with validity until

30.10.2012. The claimant, at no point of time, objected to the

extension of the bank guarantees nor raised any claims in any of the

RA bills. Such bank guarantees were extended as per the contract

terms. Hence, there is no question of making a claim towards

additional charges incurred by the claimant towards extension of the

bank guarantees. In view of the same, the finding rendered by the sole

Arbitrator certainly does not suffer from any perversity or manifest

illegality warranting the interference of this Court.

47. The learned counsel on either side made detailed

submissions on the issue of LDs, which were deducted from the https://www.mhc.tn.gov.in/judis

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original bills.

48. But, the claim towards refund of the LDs in so far as the

original scope of work was concerned need not be gone into since this

Court has already upheld the finding rendered by the sole Arbitrator on

the issue of accord and satisfaction and full and final settlement.

49. The last issue pertains to the interest that was granted in

favour of the claimant for those claims that were allowed in favour of

the claimant.

50. According to the CPCL, as per Clause 9.3.5 of the GCC, no

interest should be payable on the disputed claims. That apart, as per

Clause 58 of the SCC, the interest, if awarded, should be at the rate

not exceeding the cash credit rates prevailing as on the date of the

award. However, the sole Arbitrator awarded interest at the rate of

12.35% from 14.6.2013 and 13.12.2013 respectively till the date of

the award and further interest at the rate of 14.35% from the date of

the award till the date of payment. https://www.mhc.tn.gov.in/judis

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51. According to the claimant, the CPCL had withheld the

payments against the terms of the contract and that therefore, the

claimant would be entitled to interest on payments that were delayed

by the CPCL.

52. The sole Arbitrator, while dealing with the issue of payment

of interest, which was dealt with as issue (v), took into consideration

the relevant clauses both in the GCC as well as in the SCC and also the

relevant rate of interest that was charged by the banks based on the

letter dated 04.5.2019 issued by the Union Bank of India. The sole

Arbitrator also took into consideration the scope of Section 31(7) of

the Act. Thereafter, the sole Arbitrator fixed the interest payable by the

CPCL to the claimant for those claims that were awarded in favour of

the claimant. In the considered view of this Court, the sole Arbitrator

provided sufficient reasons, which do not suffer from any perversity or

manifest illegality warranting the interference of this Court under

Section 34 of the Act.

53. In the light of the above discussions, this Court does not find

any grounds made out under Section 34 of the Act to interfere with the https://www.mhc.tn.gov.in/judis

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award passed by the sole Arbitrator on 01.7.2019.

54. Accordingly, both the original petitions stand dismissed.

Consequently, the connected application is also dismissed. No costs.

02.1.2026

Index : Yes

Neutral Citation: Yes

RS https://www.mhc.tn.gov.in/judis

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N.ANAND VENKATESH,J

RS

O.P.Nos.810 of 2019 & 110 of 2021

& A.No.399 of 2021

02.1.2026 https://www.mhc.tn.gov.in/judis