Supreme Court bars fresh claims after final contra…
ISLAMABAD: The Supreme Court of Pakistan has ruled that contractors cannot pursue additional financial claims or seek arbitration after voluntarily accepting a final settlement, reinforcing the binding nature of contractual agreements. A three-member bench headed by Chief Justice Yahya Afridi, alongside Justice Irfan Saadat Khan and Justice Aqeel Ahmed Abbasi, dismissed a petition seeking permission to appeal against an earlier ruling of the Peshawar High Court. Justice Irfan Saadat Khan authored the judgment. The dispute originated from a construction contract awarded in December 1993 for the Hayatabad Medical Complex in Peshawar. During the project, the contractor sought additional payments, citing delays and funding shortages. According to the judgment, the company later accepted Rs88.555 million as final payment and signed a No Demand Certificate, formally giving up its right to pursue further financial claims under the contract. Despite the settlement, the contractor subsequently approached the courts seeking arbitration over additional demands. The trial court and the Peshawar High Court rejected the request, and the Supreme Court has now upheld those decisions. The apex court clarified that once a party willingly accepts final payment and signs a No Demand Certificate, it cannot reopen financial claims or invoke arbitration unless it can establish that the settlement was secured through fraud, coercion or undue influence. The court stressed that voluntarily concluded agreements must remain enforceable, particularly in public-sector development projects where contractual certainty is essential. It warned that allowing settled disputes to be reopened without evidence of wrongdoing could weaken confidence in contracts and create uncertainty in commercial dealings.