Arbitration | Mechanical Reliance On No Claim Certificate Is Non-Adjudication: Calcutta High Court
The Calcutta High Court has recently held that mechanical reliance on a 'No Claim Certificate,' without examining whether the claims raised were covered by such document, amounts to non-adjudication.
A Single Bench of Justice Gaurang Kanth in an order dated January 9 explained that the mechanical reliance on such certificates, without examining the surrounding facts and evidence, amounts to non-adjudication and renders the award vulnerable to challenge. The Court observed:
“Even execution of a full and final discharge voucher does not bar a contractor from claiming further amounts, provided entitlement is established on the basis of adequate material. Mechanical reliance on a No Claim Certificate, without such examination, amounts to non-adjudication.”
The dispute arose out of a contract awarded to Chaitanya Kumar Dey on February 3, 2003 by Eastern Railway for track renewal works between specified kilometer points. The formal agreement was executed on April 23, 2003. During execution, the contractor was granted multiple extensions of time and carried out additional works due to site conditions, including lifting of submerged tracks and allied works, which were recorded in the extra work register of the railways.
After completion, the contractor signed the final bill and variation statement in October 2007 but subsequently communicated on January 16, 2008, that the documents were signed under protest, seeking release of outstanding dues. While payment was released after deducting liquidated damages, disputes persisted, which led to arbitration.
The arbitrator on June 13, 2016, rejected all claims solely on the ground that a No Claim Certificate had been signed, relying on a clause of the general conditions of contract.
The court found that the arbitral award contained no claim-wise analysis and failed to examine whether the claims related to additional works were covered by the No Claim Certificate or whether the certificate had been issued under compulsion.
Relying on settled precedents, the court reiterated that arbitrators are duty-bound to examine the circumstances surrounding execution of discharge vouchers and cannot treat them as an absolute bar to genuine claims.
Holding that such blanket rejection of arguments reflected a complete absence of adjudication and amounted to patent illegality, the court set aside the arbitral award and left the parties at liberty to appoint a fresh arbitrator in accordance with law.
Case Title: Chaitanya Kumar Dey v. Union of India
Case Citation: 2026 LLBiz HC (CAL) 7
Case Number: AP-777 of 2016
For Petitioner: Advocates Sarajit Sen and Tapas Singha
For Respondent: Advocate Aparna Banerjee