The issue of coercion and undue influence in the execution of a settlement agreement is an arbitrable dispute that should be referred to arbitration.

JUDGMENT :

I have heard the learned counsel for the applicant, and the learned Senior Counsel for the respondent at length. I proceed to dispose of the present Arbitration Application, preferred by the applicant, under Section 11(6) of the Arbitration and Conciliation Act, 1996 (the Act), to seek appointment of a sole arbitrator.

2. The applicant is a company engaged in manufacturing and sale of plastic molded furniture, aluminum composite panel and mattresses. The applicant purchased a Standard Fire and Special Perils Policy, having Policy No. 34080011180100000205, from the respondent-Insurance Company, covering his factory assets. The total insured value was Rs.58,25,00,000/-. The said policy covered the period from 07.10.2018 to 06.10.2019. The applicant paid a onetime premium of Rs.6,71,978/- including GST. In Clause 13 of this Standard Fire and Special Perils Policy, there is an arbitration clause, which provides that in case any dispute or difference arises, as to the quantum to be paid under the said policy, such difference shall, independently of all other questions, be referred to the decision of the sole arbitrator to be appointed in writing by the parties. In case they cannot agree upon an arbitrator within 30 days, the same shall be referred to a panel of three arbitrators. The said clause reads as follows :-

“13. If any dispute or difference shall arise as to the quantum to be paid under this policy (liability being otherwise admitted) such difference shall indeperdently of all other questions be referred to the decision of a sole arbitrator to be appointed in writing by the parties to or if they cannot agree upon a single arbitrator within 30 days of any party invoking arbitration, the same shall be referred to a panel of three arbitrators, comprising of two arbitrators, one to be appointed by each of the parties to the dispute/difference and the third arbitrator to be appointed by such two arbitrators and arbitration shall be conducted under and in accordance with the provisions of the Arbitration and Conciliation Act, 1996.

It is clearly agreed and understood that no difference or dispute shall be referable to arbitration as hereinbefore provided, if the Company has disputed or not accepted liability under or in respect of this policy.

It is hereby expressly stipulated and declared that it shall be a condition precedent to any right of action or suit upon this policy that the award by such arbitrator/ arbitrators of the amount of the loss or damage shall be first obtained.”

3. It appears that, unfortunately, on 30.09.2019 a fire broke out at the petitioner’s factory premises, leading to large scale destruction. On the same day, the applicant put the respondent to notice of the said fire, and the applicant itself assessed its loss to the tune of Rs. 20-25 crores. The respondent-Insurance company appointed M/s JSR Insurance Surveyors & Loss Assessors (JSRSLA) as their surveyors to survey and assess the loss suffered by the applicant. The surveyor and assessor, appointed by the respondent, made its report dated 13.09.2021. As against the applicant’s claim of Rs. 20.92 crores (revised), the net loss - assessed on reinstatement basis, was 12.06 crores. The net liability assessed for the Spring Mattress Division, which was not an insured division, was Rs. 4.42 crores approximately. The net liability for the ACP division, which was an insured division, was assessed at Rs. 4.42 crores. On 28.02.2022, the surveyor and assessor made an Addendum Report, assessing the loss in respect of the insured division, to the tune of Rs. 3.51 crores approximately, which was stated to be “quite just and reasonable”.

4. The case of the applicant is that, even after passage of more than 2 years & 3 months from the date of the fire incidence, its claims were not settled by the respondent, putting the applicant in a financially precarious si