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TMI Blog2025 (5) TMI 474X X X X Extracts X X X X X X X X Extracts X X X X ..... me at its factory premises at Taloja in the State of Maharashtra. 8. On 08.10.2004, appellant took a comprehensive Standard Fire and Special Perils Policy bearing No. 260301/11/04/3100585 from the respondent towards insuring the meat processing and cold storage unit as also the building, plant and machinery, furniture, fixtures and fittings in the Taloja plant for an amount of Rs.3,28,55,000.00 which was for the period from 09.10.2004 to 03.10.2005. 9. Appellant also took a Fire Declaration Policy bearing No. 260301/11/04/3301441 insuring all its stock-in-trade and finished products stored in the cold storage facility at its factory premises at Taloja. This policy was for an amount of Rs.5,76,85,000.00 and covered the period from 15.03.2005 to 15.03.2006. 10. It is stated that appellant had paid the insurance premium towards both the insurance policies. 11. On 26.07.2005, there was very heavy and unprecedented rainfall in several parts of Maharashtra including at Taloja. Because of such unprecedented and very heavy rainfall, the factory premises at Taloja was completely flooded and got submerged under water for several hours. It is stated that all communication lines had broken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 08.00 being the difference between the claim lodged by the appellant and the amount paid by the respondent. Appellant also sought for a copy of the surveyor's report. 19. By letter dated 21.03.2009, respondent provided the appellant with a copy of the surveyor's report giving details of the respondent's assessment of the appellant's claim. 20. Though the appellant made repeated attempts to resolve the matter but the respondent did not cooperate. Consequently, appellant addressed letter dated 17.04.2009 to the respondent invoking the arbitration clause contained in the insurance policy and at the same time nominated Mr. Ramakant W. Gudal, a retired Joint Commissioner and Controlling Authority, Food and Drugs Administration, Maharashtra as the sole arbitrator. It is stated that this letter was hand delivered to the respondent on 20.04.2009. 21. Respondent issued letter dated 18.05.2009 to the appellant through its lawyer denying its liability and refusing to accept arbitration and failed to nominate an arbitrator in terms of Clause 30 of the insurance policy. Respondent vide further letter dated 12.10.2009 stated that it was not agreeable to refer the matter to arbitration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... early establishes the complete non application of mind and disregard by your company to our repeated representations and the nature of our loss. Looking to the financial strain cast on us by virtue of the willful delay on the part of your organization in settlement at our claims coupled with the pressure exerted by our bankers and creditors, we were left with no option but to sign and submit to you the said undated and standardized voucher on December 12th 2008, for the grossly inadequate amount of Rs. 1,88,14,146.00. 24.2. Learned senior counsel submits that the case of the appellant is squarely covered by the decision of this Court in National Insurance Company Limited Vs. Boghara Polyfab Private Limited (2009) 1 SCC 267. He has also distinguished the decision of this Court in Nathani Steels Ltd. Vs. Associated Constructions (1995) Supp (3) SCC 324 relied upon by the respondent. He submits that in Nathani Steels (supra), there were negotiations between the parties culminating in a voluntary negotiated settlement of all pending disputes. Contract was thus discharged by 'accord and satisfaction'. This is not so in the present case. He further submits that issue in question is cov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioned about the policies but did not contain any statement to the effect that the settlement was only for one policy. Respondent had processed the claim of the appellant on the basis of the report of the surveyor. The figure of Rs. 1.88 crores was not an imaginary or illusory figure but based on the assessment of the surveyor. 25.4. Dr. Singhvi also argued an alternative prayer. If the Court is of the opinion that the High Court had not considered the aspect of duress and coercion, then the matter may be referred back to the High Court. In that event the High Court would consider the aspect of duress and coercion. Otherwise, no case for arbitration is made out. Therefore, he seeks dismissal of the appeals. 26. Submissions made by learned counsel for the parties have received the due consideration of the Court. 27. The two insurance policies contain an identically worded arbitration clause which read 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 independently of all other questions be referred to the decision of sole arbitrator to be appointed in writing by the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Controlling Authority, Food & Drugs Administration, Maharashtra as the Sole Arbitrator. Respondent was called upon to concur with the said nomination or alternatively to nominate its own arbitrator in which event the two nominated arbitrators would appoint a presiding arbitrator. 30. However, respondent informed the appellant vide letter dated 12.10.2009 that it was not agreeable to refer the matter to arbitration as the appellant had accepted the amount offered in full and final settlement which amounted to 'accord and settlement'. 31. It was thereafter that appellant approached the High Court by filing applications under Section 11 of the 1996 Act. The relevant pleadings have already been extracted and noted. 32. Learned Single Judge vide the impugned order observed that the amount offered by the respondent was accepted by the appellant in full and final settlement of the claim. The acceptance was not without prejudice to the rights and contentions of the appellant or reserving the right to challenge the amount that was being paid. The payment was made on 19.12.2008. It was accepted without any demur and after encashing the cheque the dispute was raised on 24.12.2008. Lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of the admitted dues. In the latter group of cases, the disputes are arbitrable. Mere execution of a full and final settlement receipt or a discharge voucher cannot be a bar to arbitration even when validity thereof is challenged by the claimant on the ground of fraud, coercion or undue influence. The Bench further distinguished Nathani Steels (supra) by clarifying that the observations made that unless the settlement is set aside in proper proceedings, it would not be open to a party to the settlement to invoke arbitration was with reference to a plea of 'mistake' taken by the claimant and not with reference to allegations of fraud, undue influence or coercion. Further, the said decision was rendered in the context of the provisions of the Arbitration Act, 1940. The perspective of the 1996 Act is different from the Arbitration Act, 1940. 35. In Duro Felguera, S.A. Vs. Gangavaram Port Ltd. (2017) 9 SCC 729, a two-Judge Bench of this Court examined Section 11(6) of the 1996 Act as well as Section 11(6A) inserted in the 1996 Act by way of the Arbitration and Conciliation (Amendment) Act 2015 and concluded that courts should look into only one aspect: existence of an arbitration a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a facie convinced about the genuineness or credibility of the plea of coercion; it cannot be too particular about the nature of the plea, which necessarily has to be made and established in the substantive (read : arbitration) proceeding. If the court were to take a contrary approach and minutely examine the plea and judge its credibility or reasonableness, there would be a danger of its denying a forum to the applicant altogether, because rejection of the application would render the finding (about the finality of the discharge and its effect as satisfaction) final, thus, precluding the applicant of its right even to approach a civil court. There are decisions of this Court (Associated Construction v. Pawanhans Helicopters Ltd. and Boghara Polyfab) which upheld the concept of economic duress. Having regard to the facts and circumstances, this Court is of the opinion that the reasoning in the impugned judgment cannot be faulted. 37.1. Thus, this Court held that at the stage of Section 11(6) of the 1996 Act, court is required to ensure that an arbitrable dispute exist; it has to be prima facie convinced about the genuineness or credibility of the plea of coercion; it cannot be too ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dispute arising out of or in relation to or under the substantive contract, would not be precluded from reference to arbitration as the arbitration agreement contained in the original contract continues to be in existence even after the parties have discharged the original contract by "accord and satisfaction". 39. Again, in the case of Aslam Ismail Khan Deshmukh Vs. Asap Fluids Pvt. Ltd. (2025) 1 SCC 502, a three-Judge Bench of this Court reiterated the above proposition and held as under: 51. It is now well-settled law that, at the stage of Section 11 application, the referral courts need only to examine whether the arbitration agreement exists - nothing more, nothing less. This approach upholds the intention of the parties, at the time of entering into the agreement, to refer all disputes arising between themselves to arbitration. However, some parties might take undue advantage of such a limited scope of judicial interference of the referral courts and force other parties to the agreement into participating in a time-consuming and costly arbitration process. This is especially possible in instances, including but not limited to, where the claimant canvasses either ex facie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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