Lack of Contractual Stipulation or Bilateral Agreement Precludes Full and Final Settlement Defense in Arbitration

The Petitioner challenged a portion of an Arbitral Award dated 30.04.2025.

The dispute arose from service contracts for the Kharif 2022 season in Maharashtra.

The Petitioner rejected 4,94,282 Individual Loss Assessment (ILA) survey forms submitted by the Respondent solely because they were submitted after a deadline of 30.04.2023.

The Petitioner contended that an email dated 07.08.2023, along with the Respondent’s acceptance of partial payments without immediate protest, constituted a "full and final settlement," thereby extinguishing any arbitrable dispute.

1. Whether the unilateral imposition of a submission deadline (30.04.2023) by the Petitioner, not found in the original contract, justified the rejection of survey forms.

2. Whether the Respondent's communication dated 07.08.2023 and acceptance of partial payments amounted to a "full and final settlement" or created an estoppel against further claims.

3. Whether the Arbitral Award suffered from patent illegality or perversity warranting interference under Section 34 of the Arbitration and Conciliation Act, 1996.

Section 34 of the Arbitration and Conciliation Act, 1996, which limits judicial interference to grounds of patent illegality or conflict with public policy.

The Court relied on OPG Power Generation Pvt. Ltd. v. Enexio Power Cooling Solutions regarding the restricted scope of "perversity" and "patent illegality" post-2015 Amendment.

Regarding settlement, it distinguished Nathani Steels Ltd. v. Associated Constructions, holding that a "full and final settlement" requires a clear, conscious, bilateral agreement and meeting of minds.

The principle from Delhi Transco Limited v. Hindustan Urban Infrastructure Limited that an arbitrator is not required to advert to every single document if the material issues are addressed.

The Court found that the Petitioner introduced the 30.04.2023 deadline only on 27.04.2023, giving the Respondent only three days to submit over 600,000 forms.

Since this deadline was absent from the Tender and Agreement, the Arbitrator's finding that the rejection was arbitrary was deemed a "plausible view".

Addressing the 07.08.2023 email, the Court noted that the Arbitrator had indeed considered it but correctly determined it lacked the essential elements of a binding settlement.

The Court reasoned that mere silence or lack of emphatic protest while receiving partial payment does not equate to an unequivocal waiver of rights or a bilateral accord and satisfaction in the absence of a clear agreement to that effect.

The Court dismissed the Petition and the Arbitral Award was upheld in its entirety.