IMPORTANT POINT
When payment is accepted in full and final settlement of claim and letter of subrogation and discharge is signed, plea of pressure, coercion etc., that too without any details, cannot be raised later on for invoking arbitration clause.

Headnote:Arbitration and Conciliation Act, 1996 – Section 11 – Party signing discharge certificate alleging coercion, undue influence, fraud etc. – Mere bald plea not enough – The allegation must be established prima facie before the Chief Justice/his designate – Respondent raising the plea after three months of subrogation – Allegation not supported by any details – By letter of discharge and subrogation claim getting fully and finally settled – No dispute surviving to be adjudicated – Appointment of arbitrator by High Court not justified. (Para 9)
       Facts of the case:
       The respondent has a manufacturing unit for which it had purchased a Standard Fire and Special Perils Policy from the appellant on 17.04.2009 for a period of one year and the total sum assured was Rs.91 crores and 10 lacs only.
       On 29.10.2009 there was a fire explosion in the adjoining Indian Oil Corporation Terminal causing extensive damage to the manufacturing unit of the respondent. In the assessment of the respondent and as per the claim lodged by it, the loss caused to its plant and machinery, buildings fixtures and furnitures and stocks was to the tune of Rs.28.79 crores. However, the Surveyor assessed the loss at Rs.6,09,77,406/-.
       On 11.03.2011 the respondent signed a detailed letter of subrogation accepting Rs.5,96,08,179/-in full and final settlement of its claim under the policy
       After nearly three weeks i.e on 31.03.2011 the respondent issued a notice to the appellant stating that the discharge voucher was signed under extreme duress, coercion and undue influence exercised by the appellant who took undue advantage of the extreme financial difficulties of the respondent. The respondent further sought to appoint its nominee arbitrator.
       In the meantime on 05.04.2011 the respondent had filed a petition under section 11 of the Arbitration and Conciliation Act, 1996 before the High Court of Delhi alleging that it had accepted the payment as stated above because of extreme financial difficulty, duress and coercion.
       The High Court proceeded to appoint a sole arbitrator to adjudicate the disputes between the parties.
       Finding of the Court:
       High Court was not justified in exercising power u/s 11 of the Arbitration and Conciliation Act, 1996.
       Result: Appeal dismissed.

JUDGMENT

Uday U. Lalit, J.

1. Leave granted. This appeal challenges the order dated 30.05.2013 passed by the High Court of Delhi in Arbitration Petition No.212 of 2011 appointing an arbitrator to adjudicate the disputes between the present parties.

2. The respondent has a manufacturing unit for which it had purchased a Standard Fire and Special Perils Policy (‘policy’ for short) from the appellant on 17.04.2009, which policy was for a period of one year and the total sum assured was Rs.91 crores and 10 lacs only. On 29.10.2009 there was a fire explosion in the adjoining Indian Oil Corporation Terminal causing extensive damage to the manufacturing unit of the respondent. On being notified, the appellant appointed a category “A” Licensed Surveyor and Loss Assessor in compliance of Section 64 UM of the Insurance Act, 1938 to assess the damage. In the assessment of the respondent and as per the claim lodged by it, the loss caused to its plant and machinery, buildings fixtures and furnitures and stocks was to the tune of Rs.28.79 crores. It appears that the Surveyor submitted his final report on 27.07.2010 and assessed the loss at Rs.6,09,77,406/-. It is contended by the appellant but denied by the respondent that the final survey report was duly communicated to the respondent on 01.11.2010.

3. On 11.03.2011 the respondent signed a detailed letter of subrogation which was on a stamp paper, accepting Rs.5,96,08,179/-in full and final settlement of its claim under the policy and the relevant portion of said letter dated 11.03.2011 was to the following effect:

To,

New India Assurance Co. Ltd.

Regional Office

Nehru Place, Tonk Road,

Jaipur

Dear Sir,

That in consideration of claim amount of Rs.5,96,08,179 (Rupees Five Crores Nintey Six Lakhs Eight Thousand One Hundred Seventy Nine only) (herein after referred as “Claim amount”) as full and final settlement amount of our claim No.330203/11/10/01/00100001 arising under policy No.330203/11/09/11/00000018 (herein after referred as “Policy”) covering fire loss of my/our factory situated on Plot No.SPL 3, Sitapura, -Industrial area Jaipur (herein after referred as “Factory Premises”) due to fire that took place in IOC Terminal on 29-10-2009, we hereby subrogate our rights on behalf of M/S Genus Power Infrastructures Limited Jaipur (herein after referred as “Insured”) in favour of New India Assurance Co. Ltd. (herein after referred as “Insurer”) as under:-

1) That we the Insured hereby subrogate all the rights and remedies (to the extent provided by aforesaid contract of Insurance and under the General law and further any other Law enforceable consequence to the above loss) against the RIICO, Indian Oil Corporation, Govt. of Rajasthan, other insurance company or any other agency/authority of Govt. of Rajasthan, semi Govt. etc. whom so ever is liable in respect whereof in favour of the Insurer regarding Fire accident taken place on 29-10-2009 in IOC terminal in Sitapura Industrial Area, Jaipur and claim arises under “Policy” covering fire loss of Insured factory in “Factory Premises” in favour of the “Insurer”.

2) That we the Insured further assign and transfer all rights to Insurer to recover the claim amount or any part thereof from RIICO, Indian Oil Corporation, Govt. of Rajasthan, other insurance company or any other agency/authority of Govt. of Rajasthan, semi Govt. etc. who so ever is liable.

3) That we the Insured further assign and transfer all rights to agitate the Claim before the RIICO, Indian Oil Corporation, Govt. of Rajasthan, other insurance company or any other agency/authority of Govt. of Rajasthan, semi Govt. etc. who so ever is liable to pay the compensation/claim. The Insurer will be entitled to file complaint/claim before any court of law, tribunal or any other adjudicatory authority and plead the same on behalf of ourselves and in getting success in adjudication therein will be entitled to retain the amount paid…….

……………………………………………………………..

………………………………………………………………

In witness where

Click Here to Read the rest of this document

2014 Supreme(SC) 863

SUPREME COURT OF INDIAAnil R. Dave, Uday Umesh Lalit, JJ.NEW INDIA ASSURANCE COMPANY LTD – AppellantVersusGENUS POWER INFRASTRUCTURE LTD. – RespondentCIVIL APPEAL NO. 10784 OF 2014 @ SPECIAL LEAVE PETITION (CIVIL) NO.24652 OF 2013Decided On: 04-12-2014

IMPORTANT POINTWhen payment is accepted in full and final settlement of claim and letter of subrogation and discharge is signed, plea of pressure, coercion etc., that too without any details, cannot be raised later on for invoking arbitration clause.

SUPREME COURT OF INDIA
Anil R. Dave, Uday Umesh Lalit, JJ.
NEW INDIA ASSURANCE COMPANY LTD – Appellant
Versus
GENUS POWER INFRASTRUCTURE LTD. – Respondent
CIVIL APPEAL NO. 10784 OF 2014 @ SPECIAL LEAVE PETITION (CIVIL) NO.24652 OF 2013
Decided On: 04-12-2014

IMPORTANT POINT
When payment is accepted in full and final settlement of claim and letter of subrogation and discharge is signed, plea of pressure, coercion etc., that too without any details, cannot be raised later on for invoking arbitration clause.