Point of law: Court is unable to accept that the impugned award suffers from any patent illegality that strikes at the root of the said matter. It is also not contrary to the fundamental policy of India or opposed to the most basic notions of morality and justice.

JUDGMENT :

VIBHU BAKHRU, J

1. The petitioner has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereafter the ‘A&C Act’) impugning an arbitral award dated 03.11.2017 (hereafter the ‘impugned award’) passed by the Arbitral Tribunal comprising of three arbitrators.

2. The impugned award was rendered in the context of disputes that had arisen between the parties in respect of an insurance claim made by the respondent company in terms of the Standard Fire and Special Peril Policy issued by the petitioner.

3. The respondent is a company and is, inter alia, engaged in the business of manufacturing various types of footwear. It has two manufacturing units; one at A-9, Mayapuri Industrial Area, Phase-II, New Delhi and the other at village Moginand, Kala Amb, Nahan Road, District Sirmour, H.P.

4. The respondent had purchased a Standard Fire and Special Perils Policy bearing no. 215502/11/2008/293 (hereafter ‘the Policy’) from the petitioner, for an assured sum of Rs.24,25,00,000/-, which was increased to Rs.27,25,00,000/- with effect from 30.06.2008, in respect of its manufacturing unit at village Moginand, for the period from 20.03.2008 to 19.03.2009.

5. On 14.12.2008, a fire broke out at the respondent’s manufacturing unit located at village Moginand, Kala Amb. The same resulted in severe damage to the building, plant and machinery, stocks and furniture, fixtures, fittings, computers, peripherals and other movables. The respondent reported the occurrence of the said event to the petitioner by a letter dated 15.12.2008.

6. The petitioner appointed a Surveyor to assess the damage suffered. On 16.12.2008, the Surveyor visited the unit and submitted a preliminary survey report, estimating the loss at Rs.12,00,00,000/-.

7. On 10.01.2009, the respondent submitted a provisional claim in the prescribed format, claiming an aggregate loss of Rs.13,21,56,318/-. In March 2009, the petitioner released an interim payment of Rs.2,50,00,000/- to the respondent. Thereafter, on 10.08.2009, the respondent revised its claim to a sum of Rs.12,02,31,749/-.

8. The Surveyor submitted its final report on 18.03.2010, assessing the amount payable at Rs. 5,46,72,292/- and the respondent was asked to furnish a letter of consent for receiving the aforesaid amount in full and final settlement of its claim(s).

9. The respondent states that although the said amount was much less than its entitlement, the respondent was willing to accept the same as it was in dire need of funds. Accordingly, on 05.05.2010, the respondent submitted its letter of consent for receiving an amount of Rs. 5,46,72,292/- against its claim for Rs. 12,02,31,749/-. Despite furnishing the consent letter, the amount was not released. The petitioner sought a letter of consent/discharge voucher from the respondent on two occasions and the respondent complied with the same on both occasions.

10. In December 2010, the petitioner released the final amount of Rs.2,96,59,810/- after deducting the interim payment of Rs.2,50,00,000/- towards full and final settlement.

11. Thereafter, the respondent sent a letter dated 13.12.2010 registering its protest and claiming that it was coerced to accept the lower sum against its claims. And, its agreement to accept the amount offered was secured by undue influence. The respondent invoked the Arbitration Clause and sought reference of the disputes to arbitration. The petitioner did not agree to refer the disputes to arbitration, resultantly the respondent filed a petition under Section 11 of the A&C Act before this court and by an order dated 31.05. 2011 passed by this court, the Arbitral Tribunal was constituted. The arbitral proceedings have culminated in the impugned award.

12. By the impugned award, the Arbitral Tribunal had directed the petitioner to pay the respondent –

(i) a sum of Rs.2,08,76,700/- on account of loss of stock;

(ii) interest at the rate of 15% per annum on the sum of Rs.2,96,59,810/-, which was paid by the petitio