TMI Blog2019 (3) TMI 2022X X X X Extracts X X X X X X X X Extracts X X X X ..... mb and each case has to be looked into on its own facts and circumstances, taking note of the broad principles, it was observed by this Court in UNION OF INDIA (UOI) AND ORS. VERSUS MASTER CONSTRUCTION CO. [ 2011 (4) TMI 1471 - SUPREME COURT] where it was held that Where the dispute raised by the claimant with regard to validity of the discharge voucher or no-claim certificate or settlement agreement, prima facie, appears to be lacking in credibility, there may not be a necessity to refer the dispute for arbitration at all. From the proposition which has been laid down by this Court, what reveals is that a mere plea of fraud, coercion or undue influence in itself is not enough and the party who alleged is under obligation to prima facie establish the same by placing satisfactory material on record before the Chief Justice or his Designate to exercise power Under Section 11(6) of the Act - It is true that there cannot be a Rule of its kind that mere allegation of discharge voucher or no claim certificate being obtained by fraud/coercion/undue influence practised by other party in itself is sufficient for appointment of the arbitrator unless the claimant who alleges that execut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany assailing the order dated 30th May, 2017 passed by the High Court of Delhi appointing an Arbitrator in exercise of power Under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter being referred to as the Act ) to adjudicate the dispute between the parties. 3. The facts in brief manifest from the record and relevant for the present purpose are that the Respondent claimant was running its factory situated at 78, Kilo Mile Stone, Karhans Village, Main GT Road, Samalakha, Panipat and purchased two Standard Fire and Special Perils Policies dated 29th June, 2013 and 10th October, 2013. On 25th September, 2013 and thereafter on 25th October, 2013, a fire took place in the factory on account of a short circuit as claimed by the Respondent claimant. The Appellant Company on receipt of the information appointed M/s. Protocol Surveyors Engineers Pvt. Ltd. as surveyors and also appointed their investigator to submit the fact finding report. After the report was submitted by the authorised surveyor, the Appellant Company sent an e-mail to the Respondent with an intimation that it has approved its claim for an amount of Rs. 2,81,44,413/- on account of fire dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3, 3rd Floor, Jamuna House Padam Singh Road Karol Bagh, New Delhi. Kind Attn: Mr. Jaiprakash Subject: Fire Claim dated 25.10.2013 Dear Sir, We are in receipt of your email of today's date, wherein you have asked to furnish certain documents/information for doing the needful at your end. Accordingly, we are submitting herewith desired information/documents for your necessary action. 1. We have already requested our bank to confirm account details, in which payment has to be made through NEFT. Hopefully, you must have received the same directly from Bank on your email. 2. Regarding re-instatement premium of Rs. 19100/-, we request you to deduct the same from claim payment. 3. Original Fire Fighting expenses bills are submitted herewith for doing the needful at your end. 4. Regarding Debris Removal Bills in original, we are enclosing herewith separate letter and contents of the same are self-explanatory. This payment is to be released at later date as per our letter. 5. Full and final settlement discharge voucher for Rs. 2,81,44,413/- duly endorsed by the bank is attached for doing the needful at your end. While hoping that you will find above info ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter being referred to as the Act ) inter alia that the insurer coerced and forced the Respondent to sign on dotted lines on a pre-signed discharge voucher and claimed for appointment of an Arbitrator. 7. The Appellant Insurance Company in their reply refuted such allegations and further stated that the Respondent had signed a letter of subrogation in accepting the payment in full and final settlement of its claim. Discharge Voucher was sent without any demur or protest and nothing further survives and no arbitral dispute subsists for adjudication and so far as the allegation levelled that the insurer has coerced and put undue force upon the Respondent to sign on dotted lines on a pre-signed standard discharged paper is concerned, there is no prima facie documentary evidence placed on record except the letter dated 27th July, 2016 which was sent for the first time after almost more than 11 weeks of the claim being settled and the application for appointment of Arbitrator is ill founded and deserves to be rejected. 8. The High Court taking note of the rival contentions of the parties and of Sub-section (6A) of Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rary manner leaving no choice and mere acceptance in the given circumstances will not take away the right of the Respondent to establish that it was not voluntary but under undue influence and coercion and since there is a Clause of arbitration in the agreement, it will be for the Arbitrator to examine as to whether the acceptance of the claim by the Respondent has been voluntary or under undue influence or coercion and in the given circumstances, no error has been committed by appointing the Arbitrator under the impugned judgment. 12. The existence of an arbitration Clause in the contract of insurance is not in dispute. The question does arise whether the discharge in the present case upon acceptance of the compensation and signing of the discharge letter was voluntary or under coercion or undue influence and the Respondent was justified in invoking Section 11(6) of the Act. It is true that execution of full and final agreement, receipt or a discharge voucher in itself cannot be a bar to arbitration and it has been observed by this Court in National Insurance Co. Limited v. Boghara Polyfab Private Limited 2009(1) SCC 267 at para 44 as under: 44. None of the three cases relie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of say rupees ten lakhs as due in terms of the contract. The employer admits the claim only for rupees six lakhs and informs the contractor either in writing or orally that unless the contractor gives a discharge voucher in the prescribed format acknowledging receipt of rupees six lakhs in full and final satisfaction of the contract, payment of the admitted amount will not be released. The contractor who is hard-pressed for funds and keen to get the admitted amount released, signs on the dotted line either in a printed form or otherwise, stating that the amount is received in full and final settlement. In such a case, the discharge is under economic duress on account of coercion employed by the employer. Obviously, the discharge voucher cannot be considered to be voluntary or as having resulted in discharge of the contract by accord and satisfaction. It will not be a bar to arbitration. (iv) An insured makes a claim for loss suffered. The claim is neither admitted nor rejected. But the insured is informed during discussions that unless the claimant gives a full and final voucher for a specified amount (far lesser than the amount claimed by the insured), the entire claim will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isfactory material on record before the Chief Justice or his Designate to exercise power Under Section 11(6) of the Act, which has been considered by this Court in New India Assurance Company Ltd. case (supra) as follows: 9. It is therefore clear that a bald plea of fraud, coercion, duress or undue influence is not enough and the party who sets up a plea, must prima facie establish the same by placing material before the Chief Justice/his designate..... 16. In the instant case averment was made for the first time after 11 weeks of the settlement of claim release of discharge voucher in the petition filed by the Respondent seeking appointment of Arbitrator of undue influence/coercion being used by the Appellant in signing the papers on dotted lines is reproduced as under: xiii. It is stated that the Respondent occupying a bargaining position as an Insurer coerced and forced the Petitioner to sign on dotted lines on a Pre-signed Standard Discharge Voucher. The Petitioner facing severe financial distress gave in to the pressure tactics of the Respondent and was made to sign a purported Discharge Voucher dated 24.06.2016 for an amount of Rs. 2,20,36,840/- (Rupees Two Crore T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e influence/coercion being used by the Appellant stating that being in financial distress left with no option than to proceed to sign on the dotted lines. As observed, the phrase in itself is not sufficient unless there is a prima facie evidence to establish the allegation of coercion/undue influence, which is completely missing in the instant case. 19. In the given facts and circumstances, we are satisfied that the discharge and signing the letter of subrogation was not because of any undue influence or coercion as being claimed by the Respondent and we find no difficulty to hold that upon execution of the letter of subrogation, the claim was settled with due accord and satisfaction leaving no arbitral dispute to be examined by an Arbitrator to be appointed Under Section 11(6) of the Act. 20. The submission of the learned Counsel for the Respondent that after insertion of Sub-section (6A) to Section 11 of Amendment Act, 2015 the jurisdiction of this Court is denuded and the limited mandate of the Court is to examine the factum of existence of an arbitration and relied on the judgment in Duro Felguera S.A. v. Gangavaram Port Limited 2017(9) SCC 729. The exposition in this dec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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