The court established that the execution of discharge vouchers did not fully and finally settle the claim, and the petitioner's protest was justified. The court also highlighted the relevance of a circular issued by the Insurance Regulatory and Development Authority of India (IRDAI) regarding the misuse of discharge vouchers by insurance companies.

1. This petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the ‘Act’) has been filed by the petitioner M/s Lifelong Meditech (P) Ltd. challenging the Arbitral Award dated 16.09.2016 passed by the Sole Arbitrator in case reference No.DAC/935/04/15.

2. The dispute between the parties has arisen out of a Comprehensive Standard Fire & Special Perils Policy No.041100/11/12/11/00000021 for a sum of Rs. 40,61,03,196/- taken by the petitioner from the respondent. The policy was valid from 01.04.2012 to 31.03.2013. Another policy covering stocks i.e. Floater Policy No. 041100/11/12/13/00000018 valid from 01.04.2012 to 31.03.2013 for a total sum of Rs.13 crores was also taken by the petitioner from the respondent.

3. A fire took place in the factory premises of the petitioner on 27.05.2012. On intimation of the same to the respondent, the respondent appointed M/s Sandeep Bharti Insurance Surveyors and Mr. P.R. Ramanathan as Surveyors.

4. A claim of Rs.41,78,43,286/- was lodged by the petitioner with the surveyors. The surveyors submitted an interim survey report dated 03.11.2012 based on which the respondent released an “on account payment” of Rs.10 crores in favour of the petitioner on 15.11.2012. The surveyors submitted their final report on 17.08.2013. The respondent thereafter released further payment of Rs.20,41,60,835/- on 16.12.2013 and Rs.1,88,78,410/- on 09.05.2014.

5. The petitioner was dissatisfied with the above payment and therefore vide its letter dated 20.05.2014 called upon the respondent to pay a further sum of Rs.9,38,84,995/- along with interest. As the payment was not made by the respondent and the dispute persisted, this Court on a petition filed by the petitioner under Section 11(6) of the Act appointed a Sole Arbitrator who has passed the impugned Award dismissing the claim filed by the petitioner.

6. It is an admitted case that the claimant/petitioner herein had signed three discharge vouchers dated 15.11.2012, 16.12.2013 and 09.05.2014 while accepting the payment made by the respondent. The respondent had therefore contended that in view of the discharge vouchers, the claim of the petitioner could not be entertained. It is important to note here that these alleged discharge vouchers were not produced before Sole Arbitrator by either party. Learned Arbitrator, however held that even if the discharge vouchers are not produced, it would not, in any manner, effect the defence of the respondent that the claimant/petitioner is bound by the terms of the discharge vouchers under the Principle of Accord and Satisfaction. After relying on various judgments and commentaries, the Sole Arbitrator held that as the discharge vouchers were executed at different points of time between 15.11.2012 to 09.05.2014 and during this period no protest was made by the claimant and further as no evidence had been led by the claimant to prove any undue influence or coercion practiced by the respondent for execution of these vouchers and as the protest letter was filed only 11 days after the third discharge voucher was signed, the claimant had failed to prove that the discharge vouchers were obtained through exercise of undue influence or coercion by the respondent. The Sole Arbitrator also refused to rely upon Circular dated 24.09.2015 issued by Insurance Regulatory and Development Authority of India (hereinafter referred as IRDAI) on the ground that said circular can only apply prospectively. The finding of the Arbitrator on the effect of the discharge vouchers has been summarized by him in paragraph 37 of the Award, which is reproduced herein below:

“37. In view of the above, I have no hesitation to hold as under:

a. The discharge vouchers cannot be said to have been obtained fraud, coercion, duress or undue influence. The Claimant has failed to establish any fraud, coercion, duress or undue influence in the facts of the instant case.

b. The claimant has also failed to establish the alleg