-service matter - Professors to the Department of Cardio Thoracic and Vascular Surgery (CTVS) at the All India Institute of Medical Sciences. - the grant of relief would unsettle the inter se seniority between the petitioners and the Fourth respondent well over twelve years since the recommendation of the Selection Committee for appointment as Additional Professors. For the above reasons, we have come to the conclusion that the grant of relief would unsettle the inter se seniority between the petitioners and the Fourth respondent well over twelve years since the recommendation of the Selection Committee for appointment as Additional Professors. Some expressions of opinion in favour of the First petitioner in the departmental processes may have engendered a sense of hope. But that cannot furnish a legal ground to unsettle something that has held the field for long years. We close the proceedings with the expectation that these distinguished doctors will pursue their avocations at AIIMS without rancour. Our decision on seniority is no reflection upon their distinguished service to a premier national institution.

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL ORIGINAL JURISDICTION
WRIT PETITION (CIVIL) NO. 1179 OF 2017
DR AKSHYA BISOI AND ANOTHER .... PETITIONERS
 VERSUS
ALL INDIA INSTITUTE OF MEDICAL ..... RESPONDENTS
SCIENCES & OTHERS
J U D G M E N T
Dr D Y CHANDRACHUD, J
1 The jurisdiction of this Court under Article 32 of the Constitution has been
invoked by two cardiac surgeons. They are attached as Professors to the
Department of Cardio Thoracic and Vascular Surgery (CTVS) at the All India
Institute of Medical Sciences. Each of them, as indeed the Fourth respondent
in relation to whom they raise a dispute, has an enviable record of service in
2
AIIMS. Disputes in service are not a rarity, even among doctors. The
distinguished service of the contesting doctors in the present case renders the
task of the adjudicator unenviable. That one of them will rank senior is no
reflection of the merit of the others. Life is not always equitable in assigning
accolades.
2 The relief which the petitioners seek is a writ in the nature of mandamus
directing the First respondent to determine their seniority in relation to the
Fourth respondent in terms of a binding policy of 1997. They seek a direction
that since their selection on 12 September 2005 as Additional Professors, they
would rank senior to the Fourth respondent. The petitioners challenge the
legality of the office memoranda dated 20 April 2010, 14 July 2017 and 24
August 2017 issued by the First respondent.
3 The first petitioner (Dr A K Bisoi), the second petitioner (Dr U K
Chowdhury) and the Fourth respondent (Dr Shiv K Choudhary) were appointed
by direct recruitment as Assistant Professors on 4 June 2003. On 1 July 2003,
they were promoted as Associate Professors. On 23 September 2005, they
were appointed by direct recruitment as Additional Professors. On 1 July 2010,
they were promoted as Professors, a position which they now occupy. The
seniormost will be designated as Head of Department of CTVS.
3
4 The Attorney General for India has placed on the record a tabular
statement, reflecting the comparative position in the merit list and seniority, in
each of the positions to which the petitioners and fourth respondent were
appointed or, as the case may be, promoted. For convenience of reference, the
statement is reproduced below:
The above statement would indicate that the Fourth respondent has
consistently been ranked senior to the petitioners as Assistant Professor,
Associate Professor, Additional Professor and Professor. The appointment of
all the three surgeons as Additional Professors was on 23 September 2005. For
well over twelve years, the Fourth respondent has been placed senior to the
Petitioners.
Names Direct recruitment
as Assistant
Professor on
4.6.2003
Promotion as
Associate
Professor on
1.7.2003
Direct Recruitment as
Additional Professor on
23.9.2005
Promotion as
Professor on 1.7.2010
Merit
List
Seniority Seniority Merit List Seniority Seniority
Dr Shiv K
Choudhary
(Respondent
No. 4)
First First First First First First
Dr U K
Chowdhury
(Petitioner
No. 2)
Second Second Second Second Second Second
Dr A K Bisoi
(Petitioner
No. 1)
Third Third Third Third Third Third
4
5 On 25 April 2005, four posts of Additional Professor were advertised in
the department of CTVS, which were to be filled up through open selection. The
shortlisted candidates were called for interview before a Selection Committee
on 12 September 2005. The Selection Committee recorded the minutes of its
decision in the following terms:
“ALL INDIA INSTITUTE OF MEDICAL SCIENCES
SELECTION COMMITTEE MEETING HELD ON 12th
SEPTEMBER 2005
Considering the performance of candidates and their records, and
also the opinion of the technical advisers, the Committee
recommends the following candidates for the post of Additional
Professor of CTVS in order of merit including the candidates on
the waiting list specified separately :-
1. Dr. Shiv Kumar Choudhary
2. Dr Ujjwal Kumar Chowdhury
3. Dr. Akshya Kumar Bisoi
WAITING LIST
1. Three extra increments recommended for each one of the above
candidates.”
The Selection Committee consisted of seven persons. Among them were two
experts drawn from outside. The grades which were allocated by each of the
members of the Selection Committee to the contesting parties in the present
case are tabulated below:
“Grades awarded by the Selection Committee for direct
recruitment to the Post of Additional Professor, CTVS
on 12.9.2005
5
Member
1
Member
2
Member
3
Member
4
Member
5
Expert/
Adviser
1
Expert/
Adviser
2
Dr Shiv K
Choudhary
(Respondent
No. 4)
A+ A+ A+ A+ A+ A+ A
Dr U K
Chowdhury
(Petitioner
No. 2)
A+ A+ A+ A+ A+ A+ A
Dr. Bisoi
(Petitioner
No.1
A+ A+ A+ A+ A+ A+ A+
The above chart would indicate that all the seven members of the Selection
Committee, assigned an A+ grading to the First petitioner. Six members of the
Selection Committee assigned an A+ grading to the Second petitioner and the
Fourth respondent. One of the two experts who had rated the first petitioner as
A+, rated the second petitioner and the Fourth respondent as A. It is on this
basis that the petitioners contend that the order of merit which was drawn up
was erroneous and that the First petitioner should have been placed at the top
of the order of merit instead and in place of the Fourth respondent.
6 According to the petitioners, in 1997, the First respondent decided that in
order to make the selection process transparent, it had been resolved that the
final selection of candidates would be made on the basis of the grading by the
members of the Selection Committee. The petitioners claim that if the policy of
1997 were followed the First petitioner would have ranked higher than the
Fourth respondent. Thus, the petitioners claim that the First petitioner should
6
rank senior to the Fourth respondent by virtue of the fact that in the grading
given to the rival candidates by the members of the Selection Committee in
2005, he was allotted a higher grade than the Fourth respondent by one of the
seven members, the other members having allotted the same grading. The
petitioners have sought to buttress this submission by placing reliance on a
decision communicated on 14 October 2014 by the Union Ministry of Health
and Family Welfare under Section 25 of the All India Institute of Medical
Sciences Act 1956 requiring the First respondent to examine the issue of
seniority, amongst the three professors in the CTVS department “based on the
recommendations of the Standing Selection Committee meeting held on 12
September 2005” and to fix the seniority “strictly” in accordance with the policy
decision of 1997.
7 Mr Vikas Singh, learned senior counsel urged that in terms of the policy
decision of 1997, it was necessary that the inter se seniority of selected
members of the faculty should be fixed purely on the basis of merit; merit being
determined in terms of the grades awarded by the members of the Selection
Committee including the experts. The submission is that the decision which was
communicated by the Union government in exercise of powers conferred by
Section 25 of the AIIMS Act was binding on the First respondent. Reliance was
placed on the provisions of Section 25 which read thus:
“25. Control by Central Government
7
The Institute shall carry out such directions as may be issued to it
from time to time by the Central Government for the efficient
administration of this Act.”
The petitioners also submit that the grade sheets pertaining to the 2005
selection in the department of CTVS were put up to the Governing Body on 16
January 2012 for scrutiny. The Governing Body observed thus:
“…. The representations were discussed at length and the GB
found merit in the claim of Dr. A.K. Bisoi as he was rated best
among three Additional Professors recruited to the post under
direct recruitment with him in the year 2005….”
The petitioners have also relied upon a communication of the then Director, Dr
R C Deka, to the President of AIIMS on 27 June 2012 inter alia stating thus:
“…. I am forwarding his submission to the President for his
consideration as I believe that he has a claim as per the records
produced by him and the available records at AIIMS also
suggested him as the senior most among the three Additional
Professors selected at that time, if the grades given to him are
considered on merit as per Institute Body decision dated
15.01.97……..”
The Head of the CTVS Department demitted service on 31 December 2017.
The senior most would assume charge as Head of Department.
8 In pursuance of the order of this Court dated 11 December 2017, issuing
notice, the learned Attorney General for India has appeared on behalf of the
First, Second and Third respondents with Mr R Balasubramaniam. Mr Mukul
Rohatgi and Mr P S Patwalia, learned senior counsel have appeared on behalf
of the Fourth respondent. A counter affidavit has been filed on behalf of the
8
First, Second and Fourth respondents in these proceedings. Pleadings have
been completed with a rejoinder as well.
9 A preliminary objection has been raised to the maintainability of the Writ
Petition on the ground that the petitioners have an efficacious alternate remedy
to raise a dispute of inter se seniority before the Central Administrative Tribunal.
Hence, it was urged that a petition under Article 32 of the Constitution should
not be entertained. This submission has been countered on behalf of the
petitioners by Shri Vikas Singh, learned senior counsel, who adverted to a
decision of a Division Bench of the Delhi High Court in Dr Dilip Kumar Parida
v All India Institute of Medical Sciences1
. Learned senior counsel urged that
the Delhi High Court has held that “the role of the experts co-opted in the
selection process is merely advisory” and that the members of the Standing
Selection Committee are not bound by the opinion of the experts. In view of this
statement of law, the correctness of which has been placed in issue, it has been
urged that the remedy of approaching the Tribunal is not efficacious, the
Tribunal being bound by the decision of the High Court. Hence, it was urged
that it would be appropriate for this Court to consider the position in law and to
exercise its jurisdiction under Article 32, especially having regard to the fact that
the First respondent is an institution of national importance. It was urged that a

1
LPA 360 of 2004, decided on 9 January 2012
9
dispute in regard to seniority ultimately affects the efficiency of personnel and
hence it is necessary for the court to resolve the question.
10 During the course of the hearing, affidavits have been filed on behalf of
the First, Second and Fourth respondents traversing the entire dispute on
merits. The learned Attorney General as well as the learned Senior Counsel
appearing for the contesting doctors have assisted this Court on the merits of
the matter. Since the issue has been argued on merits as well, we have in the
considered exercise of our judgment determined that it would be appropriate to
resolve the matter here rather than relegating the parties to a protracted
litigation before the Tribunal and the High Court. We have also borne in mind
the submission of the petitioners that in view of the judgment of the Delhi High
Court noted above, it would be necessary for this Court to set down the position.
11 While analysing the grievance of the petitioners, a striking aspect of the
matter which has emerged before the Court is that the fixation of the order of
seniority as between the petitioners and the Fourth respondent, pursuant to
their selection as Additional Professors on 23 September 2005 has been
examined on several occasions by the Governing Body of the First respondent.
They include the following:
(i) At the 147th meeting of the Governing Body on 14 April 2012, it was
resolved thus:
10
“The Governing Body considered the representation submitted by
Dr A K Bisoi and Dr U K Choudhary. It also considered the
judgment of the Delhi High Court of 9th February 2012 in the case
filed by Dr Dilip Kumar Parida. After examining all aspects
including the Institute Body’s Resolution dated 15.1.1997, the
advice of the Director, the representation submitted by Dr A K
Bisoi and Dr U K Choudhary, the Governing Body decided that
inter se seniority of Dr Shiv Kumar Choudhary, Dr U K Choudhary
and Dr A K Bisoi would be maintained as had been recommended
by the Standing Committee in the year 2005.;
(ii) The First petitioner continued to represent his grievance. On 22 October
2012, the Governing Body in its 148th meeting resolved that a Committee
consisting of (i) The Health Secretary; (ii) Director, AIIMS; and (iii) Dr S
P Agrawal would examine the facts/records and place its report before it.
Based on the report of the Committee, the Governing Body resolved at
its 149th meeting held on 19 July 2013 thus:
“It was accordingly decided not to make any changes nor to
redefine seniority of the 3 Professors which was decided by then
GB on the basis of the recommendations of SSC.”
(iii) On 12 May 2014, the Governing Body revisited the issue at its 151st
meeting and resolved thus:
“After discussion, the Governing Body reiterated its decision taken
in the 149th meeting of G.B. held on 19th July, 2013. It was
unanimously decided that, this matter need not be discussed
again,” ;
(iv) Subsequently, the Union Health Minister directed AIIMS administration
to once again bring the matter relating to the seniority of the first
petitioner before the ensuing meeting of the Governing Body. Following
this at the 153rd meeting of the General Body which was held on 22 June
11
2016, the earlier decisions were noted and the following decision was
taken:
“The Governing Body considered the issues involved in the
seniority among Professors in the Department of CTVS. The
Governing Body noted the earlier decisions. It was decided that
the matter may be explained through a communication by AIIMS
to the Ministry and be placed before HFM cum The President,
AIIMS for his consideration.”
Pursuant to the above decision, a communication was addressed to the
Ministry of Health and Family Welfare on 10 October 2016 stating thus:
“The Standing Selection Committee is the final arbitrator and
interpreter of the Institute Body guidelines in the matter of
selections. It implements the guidelines within the statutory
limitation taking into consideration not only the performance at the
time of interview but also overall assessment of the candidates
including the curriculum vitae submitted by the candidates in the
application form. The Standing Selection Committee, in this case,
has placed Prof. (Dr) Shiv Choudhary above Prof. (Dr.) A.K.
Bisoi.”
12 The above narration indicates that since April 2012, the consistent
position which has been maintained by the First respondent is in line with the
order of merit which was recommended by the Selection Committee by which
the Fourth respondent was placed above the petitioners when they were
selected for appointment as Additional Professors.
13 On 14 October 2014, a communication was addressed to the Director of
the First respondent by the Union Ministry of Health and Family Welfare, in
exercise of its powers under Section 25 of the AIIMS Act, 1956. The directive
was in the following terms:
12
“3.In view of above, the institute is directed under Section 25 of
AIIMS Act 1956 to examine the issue of fixation of seniority
amongst the three professors in the Department of CTVS, AIIMS,
New Delhi who were appointed as direct recruits to the post of
Additional Professors in CTVS, AIIMS, New Delhi based on the
recommendations of the Standing Selection Committee meeting
held on 12.9.2005 and fix the seniority strictly in accordance with
the policy decision of Institute Body in 1997 in correct order.”
The above directive under Section 25 required the First respondent to examine
the issue of seniority amongst the three professors in the department of CTVS.
The directive refers to the appointment of the three professors based on the
recommendations of the Standing Selection Committee of 12 September 2005.
Seniority was required to be determined “strictly” in accordance with the policy
decision of the institute of 1997.
14 In compliance with the directive, the First respondent informed the Union
government by a letter dated 18 February 2015 thus:
“This issue had been placed before the governing body first in its
meeting held on 16.1.2012 and as desired by the GB, the issue
was again placed before it on 14.4.201. It was decided by the GB
that the inter se seniority among Dr S K Choudhary, Dr U K
Chowdhury and Dr A K Bisoi would be examined as had been
recommended by the Standing Selection Committee in the year
2005.
Further, the Governing Body in its meeting held on 22.10.2012
while considering action taken report on the recommendation of
previous GB meeting took place note of representations of Dr A K
Bisoi and decided that a committee consisting of Health Secretary,
Director AIIMS and Dr S P Agarwal would examine the
facts/records and place their report before the Governing Body.
Accordingly, the committee under the chairmanship of Sh P K
Pradhan, then Secretary, Health examined the issue but express
their inability to comment on the recommendations on the
Standing Selection Committee, stating that the committee does
not have the mandate to review the decision of the Standing
Selection Committee as per the guidelines approved by the
13
Institute Body in its meeting held on 18.9.1997. The committee
however, observed that the issue of seniority becomes relevant
only for becoming Head of the Department and therefore, they
have stressed the need to implement the decision of the
Governing Body in its meeting held on 16.1.2012 regarding
rotation of headship. The issue of rotating headship requires wider
consideration.
The recommendation of the committee under the Health Secretary
was placed before the Governing Body in its meeting held on
22.10.2012 where in it was decided neither to make any changes
nor to re-define seniority of the three professors which was
decided by the G.B. on the basis of recommendation on Standing
Selection Committee.
In pursuance of the Section 25, of AIIMS Act, 1956 directives to
fix inter se seniority among Dr S K Choudhary, Dr Ujjwal Kumar
Choudhary and Dr A K Bisoi stands decided as per the decision
of the Governing Body dated 23.9.2005, 14.4.2012 and
22.10.2012.”
15 In response to a further query of the Ministry of Health and Family
Welfare dated 31 March 2015, the First respondent clarified the matter on 23
September 2015 in the following terms :
“The recommendations of the Selection Committee were
approved by the Governing Body in its meeting held on 23.9.2005
and thereafter these three faculties were appointed as Additional
Professor. The seniority of direct recruit faculty is determined in
the order of merit in which they are recommended by the Selection
Committee. As per the recommendations of the Selection
Committee as stated above, Dr S K Choudhary is senior to Dr U
K Chowdhury who is senior to Dr A K Bisoi...
Regarding the other two queries, it is informed that Dr S K
Choudhary, Dr U K Chowdhury and Dr A K Bisoi were initially
appointed as Assistant Professor at the Institute. All these were
promoted as Associate Professor under Assessment Promotion
Scheme before they were considered for the position of Additional
Professor under direct recruitment quota in 2005. The seniority
among these three faculties in the grades of Assistant Professor
and Associate Professor were in the same order as in the post of
Additional Professor i.e. Dr S K Choudhary is senior to Dr U K
Chowdhury who is senior to Dr A K Bisoi.”
14
16 The Union government had in terms of its directive dated 14 October
2014 required the First respondent to examine the issue of inter se seniority in
accordance with the policy decision of 1997. The directive did not mandate that
the First petitioner rank senior to the Fourth respondent. After due examination
of the matter, the Union government was informed that the order of selection
recommended by the Selection Committee in 2005 and approved by the
General Body was maintained.
17 The Court is confronted in the present case with a situation in which
recruitment to the post of Additional Professor was carried out in 2005. That
was well over 12 years ago. The petitioners have instituted these proceedings
under Article 32 in November 2017 to question the order of ranking made by
the Selection Committee on 12 September 2005. There is no cogent
explanation for this belated recourse to legal remedies. The petitioners cannot
legitimately explain the delay on their part merely by contending that they were
representing to the First respondent to remedy their grievances. The petitioners
may have believed in good faith that the AIIMS administration would pay heed
to their grievances. They had a sympathetic ear of the Union Ministry of Health
and Family Welfare. But twelve years is too long a period, by any means, to not
seek recourse to judicial remedies. As the narration of facts would indicate, the
Governing Body had on 14 April 2012 decided to maintain the order of merit in
terms of which the Fourth respondent was ranked first, above the two
petitioners. Even thereafter, a three member committee was constituted by the
15
Governing Body in October 2012 and a decision was once again taken on 19
July 2013 to maintain the order of seniority. This was reiterated on 12 May
2014 and 22 June 2016. The petitioners were thus aware of the consistent
position which was adopted by the First respondent. The delay on their part in
seeking recourse to their legal remedies must weigh against them. At this stage
it would be manifestly unfair to unsettle the inter se seniority between the three
Professors in the CTVS department by reopening the recommendation made
by the Selection Committee in 2005.
18 In holding that an unexpected delay on the part of the petitioners would
disentitle them to relief, we place reliance on a judgment of this Court in State
of Uttaranchal v Shiv Charan Singh Bhandari2
. The learned Chief Justice,
after adverting to the settled position of law in that regard, observed thus:
“27. We are absolutely conscious that in the case at hand the
seniority has not been disturbed in the promotional cadre and no
promotions may be unsettled..the respondents chose to sleep like
Rip Van Winkle and got up from their slumber at their own leisure,
for some reason which is fathomable to them only. But such
fathoming of reasons by oneself is not countenanced in law.
Anyone who sleeps over his right is bound to suffer.”
(Id at page 185)
“28. Remaining oblivious to the factum of delay and laches and
granting relief is contrary to all settled principles and even would
not remotely attract the concept of discretion. We may hasten to
add that the same may not be applicable in all circumstances
where certain categories of fundamental rights are infringed. But,
a stale claim of getting promotional benefits definitely should not
have been entertained by the Tribunal and accepted by the High
Court.” (Id at page 186)

2
(2013) 12 SCC 179
16
There has to be an element of repose and a stale claim cannot be resuscitated.
19 The issue of making selections “transparent and more participatory” at
AIIMS was entrusted to a sub-committee formed for that purpose in 1997. The
suggestions of the sub-committee, together with administrative comments,
were placed before a meeting of the Institute body as Agenda Item 5 on 15
January 1997. The agenda note inter alia contain the following proposal:
“In order to make the selections transparent and more
participatory, it is proposed that all the members of the Selection
Committee as well as the technical experts should be asked to
give confidentially gradings/markings of each candidate in the
following manner
1) A+
2) A
3) B+
4) B
5) C
The gradings given by all the members of the Selection
Committee and technical experts should be placed before the
Chairman of the Selection Committee and final selection of
the candidate will be made on the basis of gradings/markings
given by the members of the Selection Committee and the
technical experts as mentioned above. In case, there is a tie
in the gradings in respect of any candidate, the final decision
for the selection of the candidate, should rest with the
Chairman of the Selection Committee after discussion with
other members of the Selection Committee.
If the above method is applied for making the final selection of the
candidates, then there is no need for the technical experts to
continue to sit in the Selection till a final decision is mad. In this
way, the confidentiality of the selected candidate will be
maintained. The members of the Selection Committee and the
technical experts will specifically be asked to give the gradings in
respect of each and every candidate as mentioned above. The
same procedure should be applied in case of candidates who are
appearing under the Assessment Promotion Scheme.”
 (emphasis supplied)
The suggestions of the sub-committee and the administrative comments were
approved. Subsequently on 15 April 1997, it was found that there was a
17
disparity between the recommendations of the sub-committee and the
administrative comments. On 18 September 1997 a modified set of
administrative comments was brought before the Institute body. The modified
comments inter alia stated thus:
“(i) All the members of the Selection Committee as well as the
Technical Experts may be asked to give, confidentially,
gradings/markings to each candidate in the following manner :-
a) A+
b) A
c) B+
d) B
e) C
(ii) The gradings given by all the members of the
Selection Committee and the Technical Experts, may be
placed before the Chairman, Selection Committee and final
selection of the candidates may be made on the basis of the
gradings/markings given by the Members of the Selection
Committee and the Technical Experts as mentioned above. In
case, there is a ‘tie’ in the gradings in respect of any
candidate, the final decision for the selection in case of such
a candidate may rest with the Chairman of the Selection
Committee after discussions with other Members of the
Selection Committee.” (emphasis supplied)
The minutes of 18 September 1997 were approved in a meeting held on 17
June 1998.
20 The above extract indicates that the gradings allocated by the members
of the Selection Committee and the technical experts are to be placed before
the Chairman of the Selection Committee and the final selection of the
candidates “may be made” on the basis of the gradings/markings of the
members of the committee and the technical experts. The expression “may be
made” has been approved in place of “will be made” as recorded earlier.
18
21 The judgment of the Delhi High Court in Dr Dilip Kumar Parida v AIIMS
(supra) holds that the view of the experts who are co-opted in the selection
process is only advisory and that the members of the Standing Selection
Committee of AIIMS are not bound by their opinion:
“21. AIIMS besides being a statutory body is a specialized body
and having provided for a constitution of a Standing Selection
Committee, we are in agreement with the contentions on behalf of
the respondent No. 5 that the role of the experts co-opted in the
section process is merely advisory and the members of the
Standing Selection Committee are not bound by the opinion of the
experts and are entitled to evaluate the applicants for the various
posts independently of the same.
23. We may mention that the experts co-opted in the selection
process are intended to evaluate the academic aspects of the
candidates while on the other hand the Standing Selection
Committee is concerned not only with the academic aspect but
also with the other parameters viz. of suitability, demeanour,
adaptability etc.”
The above statement of position in the judgment of the Delhi High Court should
not be read to suggest that the experts who are co-opted as part of the Selection
Committee have no role and that the other members have to decide on the
selection, independently of their views. Experts are co-opted in order to ensure
that the Selection Committee is broad-based; that the selection is objective; and
that the experience and knowledge of experts drawn from outside provides a
valuable input in the ultimate decision. The policy adopted in 1997 indicates that
the final selection may be made on the basis of the grading/marking given by
the Members of the Selection Committee and the technical experts. Where
there is a tie, the decision rests with the Chairperson, after discussion with other
19
members of the Selection Committee. We cannot subscribe to the contention
of the petitioners that it is only a tie which can be resolved by the Chairperson
and in all other cases, the Committee is obliged to make its selection on a
mathematical summation of grades. The fact that selection ‘may be made’ (this
expression being in substitution of ‘will be made’) on the basis of the grading
given by the members of the Selection Committee and the technical experts
suggests that the determination of merit is not merely a mechanical totalling of
grades allotted. The Selection Committee has to act objectively. This
undoubtedly requires giving due credence to the view of the experts. But while
doing so, it must have due regard to all relevant aspects bearing on the interest
of the institution. The Selection Committee has to assess the credentials of the
candidates which would include the service profile of the candidate. It is in this
sense that the Delhi High Court has to be construed to mean that while the
views of the experts co-opted to the Selection Committee constitute a valuable
perspective and input, they cannot be regarded as binding. The members of
the Selection Committee would have to consider the views of the experts and
to evaluate them together with all other relevant circumstances.
22 In the present case, the record of the court indicates that while making
its recommendations for appointment to the post of Additional Professor, the
Selection Committee had borne in mind the performance of the candidates, their
records as well as the opinion of the technical experts. The minutes of the
meeting of 12 September 2005 indicate that the views of the technical experts
20
were considered. To re-evaluate what took place well over twelve years ago
would neither be feasible nor appropriate. The policy decision of 1997 indicates
that the gradings given by all the members of the Selection Committee and the
technical experts are to be placed before the Chairman of the Selection
Committee and the final selection “may be made” on the basis of the
gradings/markings given by the members of the Selection Committee and the
technical experts. The Selection Committee which was constituted in 2005
considered the issue of selection and inter se ranking of the selected
candidates. In making its final recommendation in regard to their order of merit,
upon appointment as Additional Professors, the Selection Committee had due
regard to relevant matters including the performance of the candidates, their
records and the opinion of the experts. Hence, the ranking which has been
assigned cannot be regarded as being in breach of the policy decision of 1997.
It would be iniquitous to unsettle the position of seniority, over twelve years after
the petitioners and the Fourth respondent were selected as Additional
Professors. Even thereafter, when each of them has been promoted as a
Professor, it is the Fourth respondent who has been ranked higher than the
petitioners.
23 For the above reasons, we have come to the conclusion that the grant of
relief would unsettle the inter se seniority between the petitioners and the
Fourth respondent well over twelve years since the recommendation of the
Selection Committee for appointment as Additional Professors. This cannot be
21
done. Some expressions of opinion in favour of the First petitioner in the
departmental processes may have engendered a sense of hope. But that
cannot furnish a legal ground to unsettle something that has held the field for
long years. We close the proceedings with the expectation that these
distinguished doctors will pursue their avocations at AIIMS without rancour. Our
decision on seniority is no reflection upon their distinguished service to a
premier national institution.
24 The Writ Petition shall accordingly stand dismissed. There shall be no
order as to costs.


….........................................CJI
 [DIPAK MISRA]


................................................J
 [A M KHANWILKAR]

................................................J
 [Dr D Y CHANDRACHUD]
New Delhi;
February 06, 2018 

insurance law - Accident claims - where the registered owner has purported to transfer the vehicle but continues to be reflected in the records of the registering authority as the owner of the vehicle, he would not stand absolved of liability = Where a motor vehicle is subject to an agreement of hire purchase, lease or hypothecation, the person in possession of the vehicle under that agreement is treated as the owner. = In the present case, the First respondent was the ‘owner’ of the vehicle involved in the accident within the meaning of Section 2(30). The liability to pay compensation stands fastened upon him. Admittedly, the vehicle was uninsured. - a failure to intimate the transfer will only result in a fine under Section 50(3) but will not invalidate the transfer of the vehicle. In Dr T V Jose, this Court observed that there can be transfer of title by payment of consideration and delivery of the car. But for the purposes of the Act, the person whose name is reflected in the records of the registering authority is the owner. The owner within the meaning of Section 2(30) is liable to compensate. The mandate of the law must be fulfilled -- in this case vehicle is not insured [if insured the liability can be fasten on the insurance company?] .

1

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO 1427 OF 2018
(Arising out of SLP (C) No.18943 of 2016)
NAVEEN KUMAR ..Appellant
VERSUS
VIJAY KUMAR AND ORS ..Respondents
J U D G M E N T
Dr D Y CHANDRACHUD, J.
1 An accident took place at about 7:30 pm on 27 May 2009 when Smt.
Jai Devi and her nephew Nitin were walking down a street in their
village. A motor vehicle driven by Rakesh in the reverse gear hit
them. Nitin was run over by the rear wheel of the car and died on
the spot. Smt. Jai Devi received multiple injuries. Two claim
petitions were filed before the Motor Accident Claims Tribunal (‘the
Tribunal’). One of them was by Smt. Jai Devi. The second was by
Somvir and Smt. Saroj, the parents of Nitin. The vehicle involved in
the accident (a Maruti-800 bearing Registration DL-3CC-3684) was
registered in the name of Vijay Kumar, the First respondent.
REPORTABLE
2
According to the First respondent, he had sold the vehicle to the
Second respondent on 12 July 2007 prior to the accident and had
handed over possession of the vehicle together with relevant
documents including the registration certificate, and forms 29 and 30
for transfer of the vehicle. The Second respondent stated before the
Tribunal that he sold the vehicle to the Third respondent on 18
September 2008. The Third respondent in turn claimed before the
Tribunal to have sold the vehicle to the petitioner. The petitioner, in
the course of his written statement claimed that he had sold the
vehicle to Meer Singh. The succession of transfers was put forth as
a defence to the claim.
2 By its award dated 6 October 2012, the Tribunal granted
compensation in the amount of Rs 10,000/- to Smt. Jai Devi and of
Rs.3,75,000/- on account of the death of Nitin, to his parents. The
Tribunal noted that the registration certificate of the offending vehicle
continued to be in the name of the First respondent. The Tribunal
held the First respondent jointly and severally liable together with the
driver of the vehicle. The vehicle was uninsured on the date of the
accident.
3 The award of the Tribunal was challenged by the First respondent in
appeal before the High Court of Punjab and Haryana. A learned
Single Judge of the High Court allowed the appeal on 25 January
3
2016 on the ground that there was no justification for the Tribunal to
pass an award against the registered owner when there was
evidence that he had transferred the vehicle and the last admitted
owner was the appellant herein. In the view of the High Court, the
Tribunal ought to have passed an award only against the appellant
as the owner. In coming to this conclusion the High Court relied upon
two decisions of this Court : HDFC Bank Limited v Reshma1
 and
Purnya Kala Devi v State of Assam2
.
4 On behalf of the appellant, it has been submitted that the High Court
has proceeded on a manifestly erroneous construction of the legal
position. It has been urged that Section 2(30) of the Motor Vehicles
Act, 1988 indicates that the person in whose name a motor vehicle is
registered is the owner and the only two exceptions to that principle
are where such a person is a minor or where the subject vehicle is
under a hire purchase agreement. The decision of this Court in
Purnya Kala Devi (supra), it has been submitted, related to a
situation where the offending vehicle had been requisitioned by a
state government. Similarly, the decision in Reshma (supra) dealt
with a situation where the vehicle had been financed against a
hypothecation agreement. It was in this background that this Court
held that the person in possession of the vehicle under a
hypothecation agreement was to be treated as the owner. Having
1 (2015) 3 SCC 679
2 (2014) 14 SCC 142
4
regard to the definition contained in Section 2(30), it was urged that
the High Court was in error in foisting the liability on the appellant
who is not the registered owner of the vehicle. Learned counsel
appearing on behalf of the appellant submitted that in Pushpa alias
Leela v Shakuntala3
, the position has been clarified by holding that
where notwithstanding the sale of a vehicle, neither the transferor
nor the transferee have taken any step for change in the name of
owner in the certificate of registration, the person in whose name the
registration stands must be deemed to continue as the owner of the
vehicle for the purposes of the Act.
5 On the other hand, learned counsel appearing on behalf of the First
respondent supported the judgment of the Tribunal by submitting
that the appellant as the person in physical possession and control
of the vehicle was liable. Learned counsel appearing on behalf of the
First respondent also relied on the decisions of this Court in Purnya
Kala Devi and Reshma. Learned counsel submits:
(i) “The sale of a vehicle also results in a presumable change of
physical possession and control of the vehicle from the vendor to the
vehicle. The registered owner at the best can be regarded as an
ostensible owner of the vehicle but not the real owner after the sale
of the vehicle, even if his name is there on the Registration
Certificate of the vehicle;
(ii) The definition of owner in the Section 2(30) of the Act, is not a
complete code and the exceptions contained therein are not
exhaustive;
(iii) The Court/Tribunal should apply the test whether the registered
owner has, through legitimate means, fully relinquished his
possession and control over the vehicle or not. If the answer is in the
3 (2011) 2 SCC 240
5
affirmative, he cannot be made liable and the person who is in
physical possession and control of the vehicle should be made liable;
and
(iv) Section 50 casts the onus of changing the name in the registration
certificate, on both the transferor as well as the transferee, and
hence the transferor (the registered owner) cannot be made liable,
and the transferee who has control over the use of vehicle should be
made liable.”
6 The expression ‘owner’ is defined in Section 2(30) of the Act, 1988,
thus:
“2(30) “owner” means a person in whose name a motor vehicle
stands registered, and where such person is a minor, the
guardian of such minor, and in relation to a motor vehicle which
is the subject of a hire-purchase agreement, or an agreement of
lease or an agreement of hypothecation, the person in
possession of the vehicle under that agreement.”
The person in whose name a motor vehicle stands registered is the owner of
the vehicle for the purposes of the Act. The use of the expression ‘means’ is a
clear indication of the position that it is the registered owner who Parliament
has regarded as the owner of the vehicle. In the earlier Act of 1939, the
expression ‘owner’ was defined in Section 2(19) as follows:
“11…2. (19) ‘owner’ means, where the person in possession of
a motor vehicle is a minor, the guardian of such minor, and in
relation to a motor vehicle which is the subject of a hire-purchase
agreement, the person in possession of the vehicle under that
agreement.”
Evidently, Parliament while enacting the Motor Vehicles Act, 1988 made a
specific change by recasting the earlier definition. Section 2(19) of the earlier
Act stipulated that where a person in possession of a motor vehicle is a minor
the guardian of the minor would be the owner and where the motor vehicle
was subject to a hire purchase agreement, the person in possession of the
vehicle under the agreement would be the owner. The Act of 1988 has
provided in the first part of Section 2(30) that the owner would be the person
6
in whose name the motor vehicle stands registered. Where such a person is
a minor the guardian of the minor would be the owner. In relation to a motor
vehicle which is the subject of an agreement of hire purchase, lease or
hypothecation, the person in possession of the vehicle under that agreement
would be the owner. The latter part of the definition is in the nature of an
exception which applies where the motor vehicle is the subject of a hire
purchase agreement or of an agreement of lease or hypothecation.
Otherwise the definition stipulates that for the purposes of the Act, the person
in whose name the motor vehicle stands registered is treated as the owner.
7 Section 50 deals with the procedure for transfer of ownership, and
provides as follows:
“50. Transfer of ownership.—(1) Where the ownership of any
motor vehicle registered under this Chapter is transferred
,— (a) the transferor shall,—
(i) in the case of a vehicle registered within the same State,
within fourteen days of the transfer, report the fact of
transfer, in such form with such documents and in such
manner, as may be prescribed by the Central
Government to the registering authority within whose
jurisdiction the transfer is to be effected and shall
simultaneously send a copy of the said report to the
transferee; and
(ii) in the case of a vehicle registered outside the State,
within forty-five days of the transfer, forward to the
registering authority referred to in sub-clause (i)—
(A) the no objection certificate obtained under section
48; or
(B) in a case where no such certificate has been
obtained,—
(I) the receipt obtained under sub-section (2) of section
48; or
(II) the postal acknowledgement received by the
transferred if he has sent an application in this behalf by
registered post acknowledgement due to the registering
authority referred to in section 48,
together with a declaration that he has not received any
communication from such authority refusing to grant
such certificate or requiring him to comply with any
direction subject to which such certificate may be
granted;
7
(b) the transferee shall, within thirty days of the transfer,
report the transfer to the registering authority within
whose jurisdiction he has the residence or place of
business where the vehicle is normally kept, as the case
may be, and shall forward the certificate of registration to
that registering authority together with the prescribed fee
and a copy of the report received by him from the
transferor in order that particulars of the transfer of
ownership may be entered in the certificate of
registration.
(2) Where—
(a) the person in whose name a motor vehicle stands
registered dies, or
(b) a motor vehicle has been purchased or acquired at a
public auction conducted by, or on behalf of,
Government,
the person succeeding to the possession of the vehicle
or, as the case may be, who has purchased or acquired
the motor vehicle, shall make an application for the
purpose of transferring the ownership of the vehicle in
his name, to the registering authority in whose
jurisdiction he has the residence or place of business
where the vehicle is normally kept, as the case may be,
in such manner, accompanied with such fee, and within
such period as may be prescribed by the Central
Government.
(3) If the transferor or the transferee fails to report to the
registering authority the fact of transfer within the period
specified in clause (a) or clause (b) of sub-section (1), as
the case may be, or if the person who is required to
make an application under sub-section (2) (hereafter in
this section referred to as the other person) fails to make
such application within the period prescribed, the
registering authority may, having regard to the
circumstances of the case, require the transferor or the
transferee, or the other person, as the case may be, to
pay, in lieu of any action that may be taken against him
under section 177 such amount not exceeding one
hundred rupees as may be prescribed under sub-section
(5):
Provided that action under section 177 shall be taken
against the transferor or the transferee or the other
person, as the case may be, where he fails to pay the
said amount.
(4) Where a person has paid the amount under
sub-section (3), no action shall be taken against him
under section 177.
8
(5) For the purposes of sub-section (3), a State
Government may prescribe different amounts having
regard to the period of delay on the part of the transferor
or the transferee in reporting the fact of transfer of
ownership of the motor vehicle or of the other person in
making the application under sub-section (2). 32
(6) On receipt of a report under sub-section (1), or an
application under sub-section (2), the registering
authority may cause the transfer of ownership to be
entered in the certificate of registration.
(7) A registering authority making any such entry shall
communicate the transfer of ownership to the transferor
and to the original registering authority, if it is not the
original registering authority.”
8 The decision of the Bench of two judges of this Court in Pushpa alias
Leela (supra) was in a case where the offending vehicle was registered in the
name of J who had sold it to S on 2 February 1993 and had given possession
to the transferee. On the date of the transfer the truck was covered by a valid
policy of insurance. Despite the sale of the vehicle the change of ownership
was not reflected in the certificate of registration. The policy of insurance
expired on 24 February 1993. Subsequently S took out an insurance policy in
the name of the registered owner and it was valid and subsisting when the
accident took place on 7 May 1994. The Tribunal held that no liability to pay
compensation attached to J since he had ceased to be the owner of the
vehicle after its sale on 2 February 1993. S alone was held to be liable for the
payment of compensation to the claimants. On these facts the Bench of two
judges of this Court held as follows:
“11. It is undeniable that notwithstanding the sale of the vehicle
neither the transferor Jitender Gupta nor the transferee Salig
Ram took any step for the change of the name of the owner in
the certificate of registration of the vehicle. In view of this
omission Jitender Gupta must be deemed to continue as the
owner of the vehicle for the purposes of the Act, even though
under the civil law he ceased to be its owner after its sale on
2-2-1993.” (Id at page 244)
9
In the course of its decision, the two judge Bench referred to the earlier
decision in Dr T V Jose v Chacko P M4
, which had arisen under the Motor
Vehicles Act 1939. In that context, this Court had held thus:
“12…There can be transfer of title by payment of consideration
and delivery of the car. The evidence on record shows that
ownership of the car had been transferred. However, the
appellant still continued to remain liable to third parties as his
name continued in the records of RTO as the owner. The
appellant could not escape that liability by merely joining Mr Roy
Thomas in these appeals.” (Id at page 244)
The decision in Dr T V Jose was followed in P P Mohammed v K Rajappan5
.
Noticing that the decision in Dr T V Jose was rendered under the Motor
Vehicles Act, 1939, the Court in Pushpa held that the ratio of the decision
“shall apply with equal force to the facts of the cases arising under the 1988
Act” in view of the provisions of Section 2(30) and Section 50. Consequently,
the view of this Court was that the person whose name continues in the
record of the registering authority as the owner of the vehicle is equally liable
together with the insurer.
9 The decision of a three judge Bench of this court in Purnya Kala Devi
(supra) involved a situation where the registered owner of a vehicle involved
in an accident denied his liability to compensate the legal heirs of the
deceased victim on the ground that the state government had requisitioned
the vehicle. On the date of the accident, the vehicle stood requisitioned under
the Assam Requisition and Control of Vehicles Act, 1968. The state failed to
establish that the vehicle was released from requisition after service of a
4 (2001) 8 SCC 748
5 (2008) 17 SCC 624
10
notice in writing to the owner, to take delivery, as required by Section 5(1) of
the state Act. Under the Assam Act, it was only upon the service of a notice to
that effect that no lability for compensation would lie with the requisitioning
authority. The High Court absolved the state government on the basis of the
definition of the expression ‘owner’ in Section 2(30) of the Motor Vehicles Act,
1988. Reversing the judgment, this Court held thus :
“16..the High Court, without adverting to Section 5 of the Assam
Act, merely on the basis of the definition of “owner” as contained
in Section 2(30) of the 1988 Act, mulcted the award payable by
the owner of the vehicle. The High Court failed to appreciate that
at the relevant time the offending vehicle was under the
requisition of Respondent 1 State of Assam under the provisions
of the Assam Act. Therefore, Respondent 1 was squarely
covered under the definition of “owner” as contained in Section
2(30) of the 1988 Act. The High Court failed to appreciate the
underlying legislative intention in including in the definition of
“owner” a person in possession of a vehicle either under an
agreement of lease or agreement of hypothecation or under a
hire-purchase agreement to the effect that a person in control
and possession of the vehicle should be construed as the
“owner” and not alone the registered owner. The High Court
further failed to appreciate the legislative intention that the
registered owner of the vehicle should not be held liable if the
vehicle was not in his possession and control. The High Court
also failed to appreciate that Section 146 of the 1988 Act
requires that no person shall use or cause or allow any other
person to use a motor vehicle in a public place without an
insurance policy meeting the requirements of Chapter XI of the
1988 Act and the State Government has violated the statutory
provisions of the 1988 Act. The Tribunal also erred in accepting
the allegation of Respondent 2 that the vehicle was released on
the date of the accident at 10.30 a.m. and the accident occurred
at 10.30 a.m. without any evidence even though in the claim
petition, it was stated that the accident had occurred at 10.15
a.m.” (Id at page 147)
10 The above observations would indicate that a combination of
circumstances cumulatively weighed with this Court. Significantly, for the
purposes of the present discussion, what emerges from the above judgment is
the circumstance that the motor vehicle was on the date of the accident
11
requisitioned by the state government. Requisitioning by its very nature is
involuntary insofar as the person whose property is requisitioned is
concerned. This Court observed that it is the person in control and possession
of a vehicle which is under an agreement of lease, hypothecation or hire
purchase who is construed as the owner and not the registered owner. The
same analogy was drawn to hold that where the vehicle had been
requisitioned, it was the state and not the registered owner who had
possession and control and would hence be held liable to compensate.
Purnya Kala Devi does not hold that a person who transfers the vehicle to
another but continues to be the registered owner under Section 2(30) in the
records of the registering authority is absolved of liability. The situation which
arose before the court in that case must be borne in mind because it was in
the context of a compulsory act of requisitioning by the state that this Court
held, by analogy of reasoning, that the registered owner was not liable.
11 The subsequent decision of a Bench of three judges of this Court in
HDFC Bank Limited v Reshma (supra) involved an agreement of
hypothecation. The Tribunal held the financier of the vehicle to jointly and
severally liable together with the owner on the ground that it was under an
obligation to ensure that the borrower had not neglected to get the vehicle
insured. The High Court had dismissed the appeal filed by the Bank against
the order of the Tribunal holding it liable together with the owner. In the appeal
before this Court, Justice Dipak Misra (as the learned Chief Justice then was)
12
adverted during the course of the judgment to the principles laid down by this
Court in several earlier decisions, including of this Court6
.
Noticing that the case before the court involved a hypothecation agreement,
this Court held:
“22. In the present case, as the facts have been unfurled, the
appellant Bank had financed the owner for purchase of the
vehicle and the owner had entered into a hypothecation
agreement with the Bank. The borrower had the initial obligation
to insure the vehicle, but without insurance he plied the vehicle
on the road and the accident took place. Had the vehicle been
insured, the insurance company would have been liable and not
the owner. There is no cavil over the fact that the vehicle was the
subject of an agreement of hypothecation and was in possession
and control of Respondent 2.”(id at page 693)
Since the Second respondent was in control and possession of the vehicle
this Court held that the High Court was in error in fastening the liability on the
financier. The failure of the Second respondent to effect full payment for
obtaining an insurance cover was neither known to the financier nor was there
any collusion on its part. Consequently, the High Court was held to be in error
in fastening liability on the financier.
12 The consistent thread of reasoning which emerges from the above
decisions is that in view of the definition of the expression ‘owner’ in Section
2(30), it is the person in whose name the motor vehicle stands registered who,
6 Mohan Benefit (P) Ltd. v. Kachraji Raymalji, (1997) 9 SCC 103 : 1997 SCC (Cri) 610; Rajasthan
SRTC v. Kailash Nath Kothari, (1997) 7 SCC 481 ; National Insurance Co. Ltd. v. Deepa Devi, (2008) 1 SCC
414 : (2008) 1 SCC (Civ) 270 : (2008) 1 SCC (Cri) 209; Mukesh K. Tripathi v. LIC : (2004) 8 SCC 387 : 2004
SCC (L&S) 1128, Ramesh Mehta v. Sanwal Chand Singhvi (2004) 5 SCC 409, State of Maharashtra v. Indian
Medical Assn. (2002) 1 SCC 589 : 5 SCEC 217, Pandey & Co. Builders (P) Ltd. v. State of Bihar (2007) 1 SCC
467 and placed reliance on Kailash Nath Kothari [Rajasthan SRTC v. Kailash Nath Kothari, (1997) 7 SCC
481, National Insurance Co. Ltd. v. Durdadahya Kumar Samal : (1988) 1 ACC 204 : (1988) 2 TAC 25 (Ori)
and Bhavnagar Municipality v. Bachubhai Arjanbhai : 1995 SCC OnLine Guj 167 : AIR 1996 Guj 51; Godavari
Finance Co. v. Degala Satyanarayanamma, (2008) 5 SCC 107 : (2008) 2 SCC (Cri) 531; Pushpa v. Shakuntala,
(2011) 2 SCC 240 : (2011) 1 SCC (Civ) 399 : (2011) 1 SCC (Cri) 682; T.V. Jose [(2001) 8 SCC 748 : 2002 SCC
(Cri) 94] , SCC p. 51, para 10; U.P. SRTC v. Kulsum, (2011) 8 SCC 142 : (2011) 4 SCC (Civ) 66 : (2011) 3 SCC
(Cri) 376; Purnya Kala Devi v. State of Assam, (2014) 14 SCC 142 : (2015) 1 SCC (Cri) 304 : (2015) 1 SCC
(Civ) 251.”
13
for the purposes of the Act, would be treated as the ‘owner’. However, where
a person is a minor, the guardian of the minor would be treated as the owner.
Where a motor vehicle is subject to an agreement of hire purchase, lease or
hypothecation, the person in possession of the vehicle under that agreement
is treated as the owner. In a situation such as the present where the
registered owner has purported to transfer the vehicle but continues to be
reflected in the records of the registering authority as the owner of the vehicle,
he would not stand absolved of liability. Parliament has consciously introduced
the definition of the expression ‘owner’ in Section 2(30), making a departure
from the provisions of Section 2(19) in the earlier Act of 1939. The principle
underlying the provisions of Section 2(30) is that the victim of a motor accident
or, in the case of a death, the legal heirs of the deceased victim should not be
left in a state of uncertainty. A claimant for compensation ought not to be
burdened with following a trail of successive transfers, which are not
registered with the registering authority. To hold otherwise would be to defeat
the salutary object and purpose of the Act. Hence, the interpretation to be
placed must facilitate the fulfilment of the object of the law. In the present
case, the First respondent was the ‘owner’ of the vehicle involved in the
accident within the meaning of Section 2(30). The liability to pay
compensation stands fastened upon him. Admittedly, the vehicle was
uninsured. The High Court has proceeded upon a misconstruction of the
judgments of this Court in Reshma and Purnya Kala Devi.
14
13 The submission of the Petitioner is that a failure to intimate the transfer
will only result in a fine under Section 50(3) but will not invalidate the transfer
of the vehicle. In Dr T V Jose, this Court observed that there can be transfer
of title by payment of consideration and delivery of the car. But for the
purposes of the Act, the person whose name is reflected in the records of the
registering authority is the owner. The owner within the meaning of Section
2(30) is liable to compensate. The mandate of the law must be fulfilled.
14 For the above reasons we allow the appeal and direct that the liability to
compensate the claimants in terms of the judgment of the Tribunal will stand
fastened upon the First respondent. The judgment of the High Court is set
aside. In the circumstances of the case, there shall be no order as to costs.
.............................................CJI
 [DIPAK MISRA]
 ...............................................J
 [A M KHANWILKAR]
 …............................................J
 [Dr D Y CHANDRACHUD]
New Delhi;
February 06, 2018 

corporate law - sec.11 Arbitration and conciliation Act - for appointment of an arbitrator for resolution of the dispute between the appellant-Company and respondent No. 1-Company. - no arbitrable dispute existed so as to exercise power under Section 11 of the Act. as there was full and final settlement of the claim = When the contractee accepted the final payment in full and final satisfaction of all its claims, there is no point in raising the claim for losses incurred during the execution of the Contract at a belated stage which creates an iota of doubt as to why such claim was not settled at the time of submitting Final Bills that too in the absence of exercising duress or coercion on the Contractee by the appellant-Contractor. In our considered view, the plea raised by the contractee-Company is bereft of any details and particulars, and cannot be anything but a bald assertion. In the circumstances, there was full and final settlement of the claim and there was really accord and satisfaction and in our view no arbitrable dispute existed so as to exercise power under Section 11 of the Act. The High Court was not, therefore, justified in exercising power under Section 11 of the Act.

1
 REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 1659 OF 2018
(Arising out of Special Leave Petition (C) NO. 12939 OF 2015)
M/s ONGC Mangalore Petrochemicals Ltd. .... Appellant(s)
Versus
M/s ANS Constructions Ltd. & Anr. .... Respondent(s)
J U D G M E N T
R.K. Agrawal, J.
1) Leave granted.
2) This appeal is directed against the final judgment and order
dated 12.01.2015 passed by the High Court of Karnataka at
Bengaluru in C.M.P. No. 35 of 2014 whereby learned single
Judge of the High Court allowed the petition filed by the
respondent No. 1- Company for appointment of an arbitrator
for resolution of the dispute between the appellant-Company
and respondent No. 1-Company. 
2
3) Brief facts:
(a) Respondent No. 1-the Contractee Company was awarded
a Contract for “Site Grading, Construction of Roads, Water
Drains and Compound Wall for Aromatic Complex at
Mangalore” in Mangalore SEZ by the appellant-Contractor on
17.03.2008. The total contract value as per the Letter of
Acceptance (LOA) was Rs. 163,25,68,576/- which was
subsequently revised to Rs. 195,68,24,399.02/- vide letter
dated 20.09.2010 and the completion period was also
extended upto 30.11.2010.
(b) On 21.09.2012, the Contractee Company submitted a No
Dues/No Claim Certificate certifying the payment of all the
bills and in total settlement of all the claims whatsoever
against the Contract. Thereafter, on 10.10.2012, the appellant
herein-the Contractor Company made a payment of the final
bill of Rs. 20.34 crores to the Contractee Company.
(c) Subsequently, on 24.10.2012, the Contractee Company
withdrew letter dated 21.09.2012 for “No Dues/No Claim
Certificate” stating that it was a pre-requisite condition for
3
release of their long due legitimate payment against the works
executed under the Contract and the same was furnished by
the Contractee Company under duress and coercion of the
appellant-Contractor.
(d) The Contractee-Company, vide letter dated 12.01.2013 to
the appellant-Contractor, submitted a claim of Rs.
96,88,48,642.00 for the losses incurred during execution of
the contract at Mangalore. On 19.06.2013, the
appellant-Contractor issued a Completion Certificate stating
that the works awarded under the Contract have been
executed and completed in all respects and no claim certificate
has also been submitted by the Contractee-Company. After
several communication in writing, the appellant-Contractor,
vide letter dated 25.07.2013, denied the claim of the
contractee-Company.
(e) Vide letter dated 14.09.2013, the contractee-Company
sent a notice to the appellant-Contractor for resolving the
dispute between the parties through Arbitration as envisaged
under Article 9.0.2.0 to the Contract and appointed Mr. K.
Mohandas, Former General Manager (Law)- SBI as its
4
Arbitrator. The appellant-Contractor, vide letter dated
18.10.2013 denied the request of the contractee-Company as
not tenable in law.
(f) Being aggrieved by the decision of the
appellant-Contractor in not referring the dispute to
Arbitration, the contractee-Company preferred a C.M.P. No. 35
of 2014 before the High Court of Karnataka at Bangalore.
(g) Learned single Judge of the High Court, vide judgment
and order dated 12.01.2015, allowed the petition filed by the
contractee-Company.
(h) Being aggrieved by the order dated 12.01.2015, the
appellant-Contactor has filed this appeal by way of special
leave before this Court.
4) Heard Mr. P.S. Narasimha, learned senior counsel for the
appellant-Company and Mr. P. Vinay Kumar for the
Respondents.
Point for consideration:
5) The only point for consideration before this Court is
whether the respondent-Contractee Company has made out a
case for referring the dispute to Arbitration?
5
Rival Submissions:
6) Learned senior counsel for the Contractor-the appellant
Company strenuously contended that the High Court erred in
holding that the contractee-Company established a case to
show that there was a genuine and serious dispute regarding
the claim and that the claim that No Dues Certificate/No
Claim Certificate was issued under duress/coercion is
erroneous and unsustainable. Learned senior counsel further
contended that there was no withholding of payment and the
extension was granted subject to the contractee-Company’s
request and the contract does not provide for escalation of
costs.
7) Learned senior counsel further contended that the delay
in payment does not arise at all because as per Clause 6.4.0.0,
there was no obligation cast upon the Contractor to pay the
RA Bills in full but it was to be done merely on the assessment
of the Engineer-in charge. The High Court erred in referring to
few letters exchanged much prior to the Final Bill. In fact, the
alleged claims were never brought up at the time of issuance
6
of Final Bill or No Dues Certificate on 21.09.2012 and now at
this stage it is not open for the contractee-Company to raise
the issue of losses incurred during the execution of the
Contract.
8) Learned senior counsel finally contended that when both
the parties to a contract confirm in writing that the contract
has been fully and finally discharged by performance of all
obligations and there are no outstanding claims or disputes,
court will not refer the subsequent claim or dispute to
arbitration. There was complete accord and satisfaction of the
contract between the parties and nothing further was left to be
done by either parties. The High Court was not right in
allowing the petition filed by the contractee-Company and no
case is made out for referring the dispute to Arbitration and
also for the payment of the alleged amount to the
contractee-Company.
9) Per contra, learned counsel for the contractee-Respondent
No. 1 herein submitted that during the execution of Contract,
the contractee Company raised Running Account Bills (RA
Bills) to the Contractor-Company for the expenses incurred
7
towards carrying out the construction work but the same were
cleared with inordinate delay and even the final bill to the tune
of Rs. 20.34 crores was released by the appellant- Contractor
only when the contractee Company furnished “No Dues/No
Claim Certificate” dated 21.09.2012. Upon submitting the
above Certificate, the appellant-Contractor issued a
Completion Certificate approving the work carried out by the
contractee under the Contract.
10) Learned counsel for the contractee-Company further
submitted that since the appellant-Contractor was not clearing
the legitimate and genuine dues payable under the RA Bills
and was always at the mercy of the appellant-Contractor for
the release of payment from the very beginning of the
Contract, the last payment of Rs. 20.34 crores and the release
of performance bank guarantee was deliberately withheld by
the appellant-Contractor. The work got completed on
30.06.2011 and it was only after the submission of No-Dues
Certificate on 21.09.2012, the final payment was released.
Due to non-payment of RA Bills on time, the
contractee-Company was under severe financial crunch and
8
could not have refused to issue the “No Dues Certificate”
which was issued under duress and has no meaning in the
eyes of law.
11) Learned counsel further submitted that it is prima facie
evident that there is a genuine and serious dispute between
the parties which requires the appointment of an Arbitrator
under the clauses of the Contract to adjudicate upon the
claims made by the contractee and it will cause grave injustice
to the party if the claims are not adjudicated in terms of the
Contract. Learned counsel further submitted that under these
circumstances, the withdrawal of No Dues/No Claim
Certificate, which was given under duress, is not an
afterthought and in a number of decisions of this Court it has
been held that if a party who has executed the discharge
agreement or discharge voucher alleges that execution of such
document was on account of fraud/coercion/undue influence
practiced by the other party then such discharge of the
contract by such agreement would be rendered void and
cannot be acted upon.
9
12) Learned counsel further submitted that the
contractee-Company could not continue with the work due to
various reasons like pooja, shifting of idols, non-availability of
free encumbrance of site, obstruction in the blasting work,
stoppage of hard rock blasting, issues with respect to work to
be given to local contractors, non-vacation of project displaced
families, permission for forest clearance, permission for
shifting of wooden logs etc. and the huge expenditure as
disclosed in the claim was incurred by the
contractee-Company due to the factors attributable to the
appellant-Contractor.
13) Learned counsel finally contended that the “No Dues
Certificate” was filed by the contractee-Company under duress
owing to their huge payment pending towards the
appellant-Contractor which was rightly withdrawn for the
losses incurred due to the appellant-Contractor. Further,
when there is an Arbitration clause in the agreement, the
contractee Company has the right to invoke the same. The
High Court was right in allowing the petition filed by the
10
contractee-Company and no interference is sought for by this
Court in this regard.
Discussion:
14) The appellant Contractor-ONGC Mangalore
Petrochemicals Ltd. invited tender for “Award of Work for Site
Grading, Construction of Roads, Storm Water Drains &
Compound Wall for Aromatic Complex at Mangalore”. The bid
document was issued by M/s Toyo Engineering India Limited
(TEIL)-Respondent No. 2 herein on behalf of the OMPL (the
contractor) being their Project Management Consultant. M/s
ANS Constructions Limited-Respondent No. 1 herein
submitted its bid on 15.11.2007. Respondent No. 1 herein
was awarded the Contract vide Letter of Acceptance (LOA)
dated 17.03.2008. The total Contract Value was estimated at
Rs. 163,25,68,576/- which was later on revised to Rs.
195,68,24,399.02, pursuant thereto, the completion period
was also extended upto 30.11.2010.
15) During the subsistence of the contract, the
contractee-Company raised RA Bills for the expenses incurred
11
towards carrying out the construction work. It is evident on
record that the contractee-Company made several requests to
the appellant-Contractor to clear their legitimate and genuine
dues payable under the Bills which was paid to them after
inordinate delay. It is also the claim of the
contractee-Company that the contractee was compelled to file
No Dues Certificate/No Claim Certificate dated 21.09.2012 in
order to get the release of the Final Bill under the Contract.
On 10.10.2012, the contractor-Company made the payment of
the final bill of Rs. 20.34 crores to the contractee-Company.
After the release of the Final Bill, the contractee-Company
withdrew the “No Dues/No Claim Certificate” stating that the
letter dated 21.09.2012 was pre-requisite condition for release
of their long due legitimate payment against the works
executed under the Contract and the same was furnished
under duress and coercion of the appellant-Contractor.
Further, on 12.01.2013, the contractee-Company submitted a
claim for Rs. 96,88,48,642.00 for the losses incurred during
execution of the contract at Mangalore.
12
16) The appellant-Contractor, vide letter dated 25.07.2013,
rejected the claim of the contractee-Company on the ground
that the Contractee has submitted No Dues/No Claim
Certificate and withdrawal of the same on the ground that it
was obtained under duress and coercion is wrong, incorrect
and not tenable in law. Being aggrieved by the rejection of
their claim, the contractee-Company invoked the Arbitration
clause under the Contract and appointed its Arbitrator. The
appellant-Contractor, vide letter dated 18.10.2013, declined to
nominate its Arbitrator. The contractee-Company filed a Civil
Miscellaneous Petition under Section 11 of the Arbitration and
Conciliation Act, 1996 (in short ‘the Act’) for the appointment
of an Arbitrator in lieu of the nominee arbitrator of the
appellant-Contractor so that the said arbitrator along with the
nominee arbitrator already appointed by the
contractee-Company agree upon the appointment of the
third/presiding arbitrator for constitution of a three member
Arbitral Tribunal as per the agreed terms of the Contract for
adjudicating upon the dispute arising out of execution of the
Contract.
13
17) Learned senior counsel for the appellant-Contractor, after
taking us through the material on record, submitted that the
contract has come to an end and the obligations therein have
been discharged and there is no point of raising a belated
claim in the form of losses incurred during the execution of
the Contract that too after submitting the Final Bills as well as
the No Dues Certificate. In support of his claim, learned
senior counsel relied upon a decision of this Court in Union of
India and Others vs. Master Construction Co. (2011) 12
SCC 349 wherein it was held as under:-
“18. In our opinion, there is no rule of the absolute kind. In
a case where the claimant contends that a discharge voucher or
no-claim certificate has been obtained by fraud, coercion,
duress or undue influence and the other side contests the
correctness thereof, the Chief Justice/his designate must look
into this aspect to find out at least, prima facie, whether or not
the dispute is bona fide and genuine. Where the dispute raised
by the claimant with regard to validity of the discharge voucher
or no-claim certificate or settlement agreement, prima facie,
appears to be lacking in credibility, there may not be a
necessity to refer the dispute for arbitration at all.
19. It cannot be overlooked that the cost of arbitration is
quite huge—most of the time, it runs into six and seven figures.
It may not be proper to burden a party, who contends that the
dispute is not arbitrable on account of discharge of contract,
with huge cost of arbitration merely because plea of fraud,
coercion, duress or undue influence has been taken by the
claimant. A bald plea of fraud, coercion, duress or undue
influence is not enough and the party who sets up such a plea
must prima facie establish the same by placing material before
the Chief Justice/his designate. If the Chief Justice/his
designate finds some merit in the allegation of fraud, coercion,
14
duress or undue influence, he may decide the same or leave it
to be decided by the Arbitral Tribunal. On the other hand, if
such plea is found to be an afterthought, make-believe or
lacking in credibility, the matter must be set at rest then and
there.”
18) Further, learned senior counsel relied upon a judgment
of this Court in New India Assurance Co. Ltd. vs. Genus
Power Infrastructure Ltd. (2015) 2 SCC 424 wherein this
Court has held as under:-
7. The question that arises is whether the discharge in the
present case upon acceptance of compensation and signing of
subrogation letter was not voluntary and whether the claimant
was subjected to compulsion or coercion and as such could
validly invoke the jurisdiction under Section 11 of the Act. The
law on the point is clear from following decisions of this Court.
In National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd in paras
26 and 51 it was stated as under:
“26. When we refer to a discharge of contract by an
agreement signed by both the parties or by execution of a
full and final discharge voucher/receipt by one of the
parties, we refer to an agreement or discharge voucher which
is validly and voluntarily executed. If the party which has
executed the discharge agreement or discharge voucher,
alleges that the execution of such discharge agreement or
voucher was on account of fraud/coercion/undue influence
practised by the other party and is able to establish the
same, then obviously the discharge of the contract by such
agreement/voucher is rendered void and cannot be acted
upon. Consequently, any dispute raised by such party would
be arbitrable.
* * *
51. The Chief Justice/his designate exercising
jurisdiction under Section 11 of the Act will consider
whether there was really accord and satisfaction or
discharge of contract by performance. If the answer is in the
affirmative, he will refuse to refer the dispute to arbitration.
On the other hand, if the Chief Justice/his designate comes
15
to the conclusion that the full and final settlement receipt or
discharge voucher was the result of any
fraud/coercion/undue influence, he will have to hold that
there was no discharge of the contract and consequently,
refer the dispute to arbitration. Alternatively, where the Chief
Justice/his designate is satisfied prima facie that the
discharge voucher was not issued voluntarily and the
claimant was under some compulsion or coercion, and that
the matter deserved detailed consideration, he may instead
of deciding the issue himself, refer the matter to the Arbitral
Tribunal with a specific direction that the said question
should be decided in the first instance.”
8. In the decision rendered in Union of India v. Master
Construction Co this Court observed as under:
“18. In our opinion, there is no rule of the absolute kind.
In a case where the claimant contends that a discharge
voucher or no-claim certificate has been obtained by
fraud, coercion, duress or undue influence and the other
side contests the correctness thereof, the Chief
Justice/his designate must look into this aspect to find
out at least, prima facie, whether or not the dispute is
bona fide and genuine. Where the dispute raised by the
claimant with regard to validity of the discharge voucher
or no-claim certificate or settlement agreement, prima
facie, appears to be lacking in credibility, there may not
be a necessity to refer the dispute for arbitration at all.
19. It cannot be overlooked that the cost of arbitration is
quite huge—most of the time, it runs into six and seven
figures. It may not be proper to burden a party, who
contends that the dispute is not arbitrable on account of
discharge of contract, with huge cost of arbitration merely
because plea of fraud, coercion, duress or undue
influence has been taken by the claimant. A bald plea of
fraud, coercion, duress or undue influence is not enough
and the party who sets up such a plea must prima facie
establish the same by placing material before the Chief
Justice/his designate. If the Chief Justice/his designate
finds some merit in the allegation of fraud, coercion,
duress or undue influence, he may decide the same or
leave it to be decided by the Arbitral Tribunal. On the
other hand, if such plea is found to be an afterthought,
make-believe or lacking in credibility, the matter must be
set at rest then and there.
* * *
16
22. The above certificates leave no manner of doubt that
upon receipt of the payment, there has been full and final
settlement of the contractor’s claim under the contract.
That the payment of final bill was made to the contractor
on 19-6-2000 is not in dispute. After receipt of the
payment on 19-6-2000, no grievance was raised or lodged
by the contractor immediately. The authority concerned,
thereafter, released the bank guarantee in the sum of Rs
21,00,000 on 12-7-2000. It was then that on that day
itself, the contractor lodged further claims.”
9. It is therefore clear that a bald plea of fraud, coercion,
duress or undue influence is not enough and the party who
sets up a plea, must prima facie establish the same by
placing material before the Chief Justice/his designate.
Viewed thus, the relevant averments in the petition filed by
the respondent need to be considered, which were to the
following effect:
“(g) That the said surveyor, in connivance with the
respondent Company, in order to make the respondent
Company escape its full liability of compensating the
petitioner of such huge loss, acted in a biased manner,
adopted coercion, undue influence and duress methods
of assessing the loss and forced the petitioner to sign
certain documents including the claim form. The
respondent Company also denied the just claim of the
petitioner by their acts of omission and commission and
by exercising coercion and undue influence and made
the petitioner Company sign certain documents,
including a pre-prepared discharge voucher for the said
amount in advance, which the petitioner Company were
forced to do so in the period of extreme financial
difficulty which prevailed during the said period. As
stated aforesaid, the petitioner Company was forced to
sign several documents including a letter accepting the
loss amounting to Rs 6,09,55,406 and settle the claim of
Rs 5,96,08,179 as against the actual loss amount of Rs
28,79,08,116 against the interest of the petitioner
Company. The said letter and the aforesaid pre-prepared
discharge voucher stated that the petitioner had
accepted the claim amount in full and final settlement
and thus, forced the petitioner Company to unilateral
acceptance of the same. The petitioner Company was
forced to sign the said document under duress and
coercion by the respondent Company. The respondent
17
Company further threatened the petitioner Company to
accept the said amount in full and final or the
respondent Company will not pay any amount towards
the fire policy. It was under such compelling
circumstances that the petitioner Company was forced
and under duress was made to sign the acceptance
letter.”
10. In our considered view, the plea raised by the
respondent is bereft of any details and particulars, and cannot
be anything but a bald assertion. Given the fact that there was
no protest or demur raised around the time or soon after the
letter of subrogation was signed, that the notice dated
31-3-2011 itself was nearly after three weeks and that the
financial condition of the respondent was not so precarious that
it was left with no alternative but to accept the terms as
suggested, we are of the firm view that the discharge in the
present case and signing of letter of subrogation were not
because of exercise of any undue influence. Such discharge and
signing of letter of subrogation was voluntary and free from any
coercion or undue influence. In the circumstances, we hold that
upon execution of the letter of subrogation, there was full and
final settlement of the claim. Since our answer to the question,
whether there was really accord and satisfaction, is in the
affirmative, in our view no arbitrable dispute existed so as to
exercise power under Section 11 of the Act. The High Court was
not therefore justified in exercising power under Section 11 of
the Act.”
19) When we refer to discharge of a contract by an agreement
signed by both the parties or by execution of a full and final
discharge voucher/receipt by one of the parties, we refer to an
agreement or discharge voucher which is validly and
voluntarily executed. If the party which has executed the
discharge agreement or discharge voucher, alleges that the
execution of such discharge agreement or voucher was on
account of fraud/coercion/undue influence practised by the
18
other party and is able to establish the same, then obviously
the discharge of the contract by such agreement/voucher is
rendered void and cannot be acted upon. Consequently, any
dispute raised by such party would be arbitrable. But in case
the party is not able to establish such a claim or appears to be
lacking in credibility, then it is not open to the courts to refer
the dispute to arbitration at all.
20) In support of the claim of duress and coercion while
issuing the said Certificate, learned counsel for the
contractee-Company has taken us through a decision of this
Court in National Insurance Company Limited vs. Boghara
Polyfab Private Limited (2009) 1 SCC 267 wherein it was
held as under:-
“24. What is however clear is when a respondent contends
that the dispute is not arbitrable on account of discharge of the
contract under a settlement agreement or discharge voucher or
no-claim certificate, and the claimant contends that it was
obtained by fraud, coercion or undue influence, the issue will
have to be decided either by the Chief Justice/his designate in
the proceedings under Section 11 of the Act or by the Arbitral
Tribunal as directed by the order under Section 11 of the Act. A
claim for arbitration cannot be rejected merely or solely on the
ground that a settlement agreement or discharge voucher had
been executed by the claimant, if its validity is disputed by the
claimant.
50. Let us consider what a civil court would have done in a
case where the defendant puts forth the defence of accord and
satisfaction on the basis of a full and final discharge voucher
19
issued by the plaintiff, and the plaintiff alleges that it was
obtained by fraud/coercion/undue influence and therefore not
valid. It would consider the evidence as to whether there was
any fraud, coercion or undue influence. If it found that there
was none, it will accept the voucher as being in discharge of the
contract and reject the claim without examining the claim on
merits. On the other hand, if it found that the discharge
voucher had been obtained by fraud/undue influence/coercion,
it will ignore the same, examine whether the plaintiff had made
out the claim on merits and decide the matter accordingly. The
position will be the same even when there is a provision for
arbitration.
51. The Chief Justice/his designate exercising jurisdiction
under Section 11 of the Act will consider whether there was
really accord and satisfaction or discharge of contract by
performance. If the answer is in the affirmative, he will refuse to
refer the dispute to arbitration. On the other hand, if the Chief
Justice/his designate comes to the conclusion that the full and
final settlement receipt or discharge voucher was the result of
any fraud/coercion/undue influence, he will have to hold that
there was no discharge of the contract and consequently, refer
the dispute to arbitration. Alternatively, where the Chief
Justice/his designate is satisfied prima facie that the discharge
voucher was not issued voluntarily and the claimant was under
some compulsion or coercion, and that the matter deserved
detailed consideration, he may instead of deciding the issue
himself, refer the matter to the Arbitral Tribunal with a specific
direction that the said question should be decided in the first
instance.
52. Some illustrations (not exhaustive) as to when claims are
arbitrable and when they are not, when discharge of contract by
accord and satisfaction are disputed, to round up the
discussion on this subject are:
(i) A claim is referred to a conciliation or a pre-litigation
Lok Adalat. The parties negotiate and arrive at a settlement.
The terms of settlement are drawn up and signed by both
the parties and attested by the conciliator or the members of
the Lok Adalat. After settlement by way of accord and
satisfaction, there can be no reference to arbitration.
(ii) A claimant makes several claims. The admitted or
undisputed claims are paid. Thereafter negotiations are held
for settlement of the disputed claims resulting in an
agreement in writing settling all the pending claims and
disputes. On such settlement, the amount agreed is paid
and the contractor also issues a discharge voucher/no-claim
20
certificate/full and final receipt. After the contract is
discharged by such accord and satisfaction, neither the
contract nor any dispute survives for consideration. There
cannot be any reference of any dispute to arbitration
thereafter.
(iii) A contractor executes the work and claims payment of
say rupees ten lakhs as due in terms of the contract. The
employer admits the claim only for rupees six lakhs and
informs the contractor either in writing or orally that unless
the contractor gives a discharge voucher in the prescribed
format acknowledging receipt of rupees six lakhs in full and
final satisfaction of the contract, payment of the admitted
amount will not be released. The contractor who is
hard-pressed for funds and keen to get the admitted amount
released, signs on the dotted line either in a printed form or
otherwise, stating that the amount is received in full and
final settlement. In such a case, the discharge is under
economic duress on account of coercion employed by the
employer. Obviously, the discharge voucher cannot be
considered to be voluntary or as having resulted in discharge
of the contract by accord and satisfaction. It will not be a bar
to arbitration.
(iv) An insured makes a claim for loss suffered. The claim
is neither admitted nor rejected. But the insured is informed
during discussions that unless the claimant gives a full and
final voucher for a specified amount (far lesser than the
amount claimed by the insured), the entire claim will be
rejected. Being in financial difficulties, the claimant agrees to
the demand and issues an undated discharge voucher in full
and final settlement. Only a few days thereafter, the
admitted amount mentioned in the voucher is paid. The
accord and satisfaction in such a case is not voluntary but
under duress, compulsion and coercion. The coercion is
subtle, but very much real. The “accord” is not by free
consent. The arbitration agreement can thus be invoked to
refer the disputes to arbitration.
(v) A claimant makes a claim for a huge sum, by way of
damages. The respondent disputes the claim. The claimant
who is keen to have a settlement and avoid litigation,
voluntarily reduces the claim and requests for settlement.
The respondent agrees and settles the claim and obtains a
full and final discharge voucher. Here even if the claimant
might have agreed for settlement due to financial
compulsions and commercial pressure or economic duress,
the decision was his free choice. There was no threat,
21
coercion or compulsion by the respondent. Therefore, the
accord and satisfaction is binding and valid and there
cannot be any subsequent claim or reference to arbitration.”
21) Learned counsel further relied upon a decision of this
Court in R.L. Kalathia & Co. vs. State of Gujarat (2011) 2
SCC 400 wherein it was held as under:-
“10. Before going into the factual matrix on this aspect, it is
useful to refer the decisions of this Court relied on by Mr Altaf
Ahmed. In NTPC Ltd. v. Reshmi Constructions, Builders &
Contractors1 which relates to termination of a contract, one of
the questions that arose for consideration was:
“(i) Whether after the contract comes to an end by
completion of the contract work and acceptance of the final
bill in full and final satisfaction and after issuing a
‘no-demand certificate’ by the contractor, can any party to
the contract raise any dispute for reference to arbitration?”
While answering the said issue this Court held:
“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 ‘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.”
22
22) In the case at hand, the High Court allowed the appeal
filed by the contractee on the assertion that the No Dues
Certificate was given on account of coercion/undue influence
practiced by the appellant-Contractor. The contractee, while
basing its claim, relied upon the letters issued to the
appellant-Contractor for releasing the payment of RA Bills.
Whether there has been duress and coercion exerted against
the contractee-Company by the appellant-Contractor has to be
examined keeping in mind the background in which the said
letters have been exchanged between the parties. Learned
counsel for the contractee-Company categorically submitted
the relevant dates for our perusal to show that RA Bills were
raised on various dates for making payments to suppliers and
others but were advertently delayed causing grave financial
crisis to the contractee-Company to carry out the works and
losses on account of delay in settling the claims of the
contractee-Company periodically. However, it is contended
from the side of the appellant-Contractor that the High Court
was not right in considering it a genuine and serious dispute
regarding the claim made and the conduct of the parties as
23
reflected in the correspondence exchanged between the parties
disclosing that the contractee-Company encountered several
financial constraints.
23) Pursuant to taking a false claim of duress and coercion
while filing the No Dues Certificate, the contractee-Company,
vide letter dated 12.01.2013 to the appellant-Contractor,
submitted a claim for Rs. 96,88,48,642.00 for the losses
incurred during execution of the contract at Mangalore. It has
been claimed that the contractee-Company could not continue
with the work due to various reasons like pooja, shifting of
Idols, non-availability of free encumbrance of site, obstruction
in the blasting work, stoppage of hard rock blasting, issues
with respect to work to be given to local contractors,
non-vacation of project displaced families, permission for
forest clearance, permission for shifting of wooden logs etc.
and the huge expenditure as disclosed in the claim was
incurred by the contractee-Company due to the factors
attributable to the appellant-Contractor. Clause 6.6.0 of the
General Conditions of Contract deals with “Claims by the
Contractor” (contractee in the case at hand). Clause 6.6.1.0.
24
of the Contract states that in case of a claim of extra
compensation or remuneration, the Contractee shall give
notice in writing of its claim within 10 days from the date of
issue of orders or instructions related to any works for which
the Contractee claims such additional payment. The notice
shall give full particulars of the nature of such claim, grounds
on which it is based and the amount claimed. Unless and
until notice is given, the Contractor shall not be liable to pay
extra compensation to the Contractee. Clause 6.6.3.0 states
that any claim of the Contractee in accordance with Clause
6.6.1.0 shall be separately included in the Final Bill prepared
by it in the form of Statement of Claims, giving particulars of
the nature of claims, ground on which it is based and the
amount claimed and shall be supported by a copy of the notice
and the Contractor shall not be liable in respect of any notified
claim not specifically reflected in the Final Bill in accordance
with the provisions of Clause 6.6.3.0 which shall be deemed to
have been waived by the Contractee.
24) From the materials on record, we find that the
contractee-Company had issued the “No Dues/No Claim
25
Certificate” on 21.09.2012, it had received the full amount of
the final bill being Rs. 20.34 crores on 10.10.2012 and after
12 days thereafter, i.e., only on 24.10.2012, the
contractee-Company withdrew letter dated 21.09.2012 issuing
“No Dues/No Claim Certificate”. Apart from it, we also find
that the Final Bill has been mutually signed by both the
parties to the Contract accepting the quantum of work done,
conducting final measurements as per the Contract, arriving
at final value of work, the payments made and the final
payment that was required to be made. The
contractee-Company accepted the final payment in full and
final satisfaction of all its claims. We are of the considered
opinion that in the presents facts and circumstances, the
raising of the Final Bill and mutual agreement of the parties in
that regard, all claims, rights and obligation of the parties
merge with the Final Bill and nothing further remains to be
done. Further, the appellant-Contractor issued the Completion
Certificate dated 19.06.2013 pursuant to which the
appellant-Contractor has been discharged of all the liabilities.
With regard to the issue that the “No-Dues Certificate” had
26
been given under duress and coercion, we are of the opinion
that there is nothing on record to prove that the said
Certificate had been given under duress or coercion and as the
Certificate itself provided a clearance of no dues, the
contractee could not now turn around and say that any
further payment was still due on account of the losses
incurred during the execution of the Contract. The story
about duress was an afterthought in the background that the
losses incurred during the execution of the Contract were not
visualised earlier by the contractee. As to financial duress or
coercion, nothing of this kind is established prima facie. Mere
allegation that no-claim certificates have been obtained under
financial duress and coercion, without there being anything
more to suggest that, does not lead to an arbitrable dispute.
The conduct of the contractee clearly shows that “no-claim
certificate” was given by it voluntarily; the contractee accepted
the amount voluntarily and the contract was discharged
voluntarily.
Conclusion:
27
25) Admittedly, No-Dues Certificate was submitted by the
contractee-Company on 21.09.2012 and on their request
Completion Certificate was issued by the appellantContractor.
The contractee, after a gap of one month, that is,
on 24.10.2012, withdrew the No Dues Certificate on the
grounds of coercion and duress and the claim for losses
incurred during execution of the Contract site was made vide
letter dated 12.01.2013, i.e., after a gap of 3 ½ (three and a
half) months whereas the Final Bill was settled on 10.10.2012.
When the contractee accepted the final payment in full and
final satisfaction of all its claims, there is no point in raising
the claim for losses incurred during the execution of the
Contract at a belated stage which creates an iota of doubt as
to why such claim was not settled at the time of submitting
Final Bills that too in the absence of exercising duress or
coercion on the Contractee by the appellant-Contractor. In
our considered view, the plea raised by the
contractee-Company is bereft of any details and particulars,
and cannot be anything but a bald assertion. In the
circumstances, there was full and final settlement of the claim
28
and there was really accord and satisfaction and in our view
no arbitrable dispute existed so as to exercise power under
Section 11 of the Act. The High Court was not, therefore,
justified in exercising power under Section 11 of the Act.
26) In view of the foregoing discussion, we set aside the
judgment and order dated 12.01.2015 passed by the High
Court. The appeal is allowed.
...…………….………………………J.
 (R.K. AGRAWAL)
.…....…………………………………J.
 (AMITAVA ROY)
NEW DELHI;
FEBRUARY 7, 2018.