Case title:
Balkrishna Spintex Private Limited Versus The New India Assurance Company Limited
Date of Order:
10/06/2022
Bench:
Chief Justice Arvind Kumar
Parties:
Balkrishna Spintex Pvt Ltd. – Petitioner
The New India Assurance Company – Respondent
Subject
When the insurer has signed the discharge voucher, they cannot file a claim for referring the matter to arbitration as no dispute can be ascertained.
Facts
- The petitioner, Balakrishna Spintex Pvt Ltd entered into an insurance agreement with the insurance firm New India Assurance Company Ltd. for the insurance against damages to a factory run by the petitioner.
- Insurance claim was raised by the petitioner on 13/04/2018 due to damages caused to the factory and the stock of cotton stored in the warehouse by a fire accident. A claim for Rs. 8,41,02,065/- was filed.
- On 06/06/2019, a renumeration of Rs. 6,02,74,557/- was provided to the petitioner who had previously accepted the amount in a communication dated 13/03/2019 which functioned as an initial consent letter and had even issued a notice of discharge when the amount was received.
- But the petitioner went on to file a petition under Section 11 of the Arbitration and Conciliation Act, 1996 in front of the high court, pleading for referral of the matter to an arbitrator.
Arguments Forwarded by the Petitioner
- It was contended by the learned counsel for the petitioner that the sum of Rs. 6,02,74,557/- was disproportionate to the time passed between the claim first being filed and the date of reimbursement.
- The respondent also submitted that the amount was accepted by the petitioner owing to a lack of financial choices and them being in a bad position financially.
- Hence the petitioner states that the complete amount should have been paid by the respondent, and on account of their default a dispute has arisen which needs to be referred to an arbitrator.
Arguments Forwarded by Respondent
- The counsel for the respondent filed that there are no grounds for referral to an arbitrator as the petitioner had already received the money and even issued a discharge notice in light of the full and final settlement.
- And on a communication dated 13/03/2019 the plaintiff conveyed their acceptance of the reimbursed amount even before the payment was made which was acknowledged by the respondent in a communication dated 20/03/2019.
Judgment
- The court took notice of the petitioner consenting to the reimbursed amount in a previous communication dated 13/03/2019 and their issuance of discharge notice without any protest or dissent and validated the respondent’s argument that there were no grounds for dispute as the discharge notice was issued by the petitioner without contesting anything.
- It further clarified that claims of acceptance of amount under duress which are made 15 days after the actual acceptance do not form tenable grounds for registering an appeal for the settlement of the conflict through an arbitrator.
- In the case of United India Insurance Company versus Antique Art Exports Private Limited the Apex court held that merely citing fraud, coercion, or undue influence isn’t enough effort on the part of the alleging party, they are required to bolster their claims by providing sufficient and satisfactory proof in front of the court.
- But in the present case, the petitioner does not claim any undue influence, coercion, or fraud, while the respondent adduces the discharge notice issued by the plaintiff to prove that there was no need for arbitration.
- The fact that the petitioner also had access to the surveyor from the insurance company who was supposed to access the damage and determine the amount of insurance, the surveyor had also explained the structure of the reimbursed amount in detail to the plaintiff, was also taken into consideration by the court.
- And after signing the consent letter in addition to the discharge notice, the court deemed it too late for the petitioner to claim that they were perforced to accept the money.
Conclusion
Thus, the court held that there weren’t enough grounds for the petitioner to invoke the clause of a sole arbitrator, the court also added that having filed for a reference to an arbitrator within 15 days of receiving the payment does not convey sufficient grounds for the success of the petition.
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