[Cites 12, Cited by 0]

Bombay High Court

The Oriental Insurance Co.Ltd vs Addon Retail Privat Limited on 18 March, 2026

2026:BHC-OS:6861

                                                         901-CARBP(L) NO-30675-2023.docx

    Swapnil          IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                            ORDINARY ORIGINAL CIVIL JURISDICTION

               COMMERCIAL ARBITRATION PETITION (L) NO. 30675 OF 2023

               Oriental Insurance Company Ltd.
               A Company incorporated & registered
               under the provisions of Companies Act
               1956 and having its address at MCBO 9,
               103/104, First Floor, Faizan Apartments,
               Above Syndicate Bank,
               Jogeshwari (West), Mumbai - 400102.
               having its Regional Office at Mumbai
               Regional Office 3, 601605, Town Centre-1,
               Andheri Kurla Road, Marol, Near Saki Naka,
               Andheri (E), Mumbai - 400059.                       ...Petitioner
                                                                   (Org. Resp.)
                       Vs.
               Add On Retail Pvt. Ltd.
               A Company registered under the
               Companies Act, 1956 and having its
               Registered Office (for all
               correspondences) at A-1402, Shikhar
               Kunj, Upper Goving Nagar, Malad-East,
               Mumbai-400097.                                      ...Respondent
                                                                   (Org. Claimant)
               Mr. D. S. Joshi for the Petitioner.
               Mr. Harsh L. Behany a/w. Ms. Saloni Manjrekar i/b. H. N.
               Legal for the respondent.


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                                                901-CARBP(L) NO-30675-2023.docx


                      CORAM : GAURI GODSE, J.
                      RESERVED ON: 28th NOVEMBER 2025
                      PRONOUNCED ON: 18th MARCH 2026
JUDGMENT:

1. This arbitration petition is filed under Section 34 of the

Arbitration and Conciliation Act, 1996 ("the Arbitration Act"),

praying to set aside the award dated 2 nd August 2023

directing the payment towards an insurance claim. The

award grants an amount of Rs. 3,04,87,713/- towards the

loss of stock of fabrics and 25% of Rs. 1,49,29,335/- towards

the loss of stock of accessories. The award grants interest at

the rate of 8% p.a. on the awarded amount from 27 th

December 2018 till the date of passing of the award, and

further interest at 12% p.a. till its realisation. The cost of

litigation is also granted in favour of the claimant.

2. The following facts would be relevant for considering

the rival submissions on behalf of the parties:-

(a) The respondent obtained the insurance policy to cover

the stock of textiles, garments, and other accessories stored

in the insured premises, as described in the policy. On 23 rd

February 2017, a fire took place at the insured premises, and

the entire stock in the godown was destroyed. On the same

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day, the respondent intimated the incident to the petitioner.

On 24th February 2017, the respondent intimated to the

petitioner that it had suffered a loss of approximately Rs. 15

Crores due to the fire. Accordingly, the petitioner appointed

an insurance surveyor to assess the loss. Various

correspondence between the parties is brought on record

regarding the inspection that took place and the steps taken

by the surveyor who assessed the actual loss.

(b) Between 6th May 2017 and 19th May 2017, the

respondent informed its bank that it had suffered a loss of

approximately Rs. 11.73 Crores due to the fire. The assessor

showed the respondent the summary of the final

assessment, which was on the lower side. There are various

emails on record from the respondent to raise objections to

the assessment.

head office because the claim was not settled. On 16 th

October 2018, the revised assessment of loss was

submitted, and the original loss assessed at Rs.

11,74,57,294.26 was reduced to Rs. 6,15,28,050/-. As per

the revised assessment, the reduced amount was offered to

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the respondent. On 2nd November 2018, the claimant signed

the discharge voucher under protest and accepted the

amount. Thereafter, the arbitration proceedings were initiated

as the respondent was not satisfied with the reduced

assessment.

3. The submissions made on behalf of the petitioner are

summarised as under :

(a) The acceptance of the amount as per the revised

assessment would amount to accord and satisfaction of the

claim. The respondent was facing a severe financial crisis;

hence, after accepting the amount, the respondent raised

objections to the assessment. The respondent's Bank had

initiated the proceedings under the Securitisation and

Reconstruction of Financial Assets and Enforcement of

Security Interest Act, 2002 (" the SARFAESI Act"), and the

respondent's Bank had taken over symbolic possession of

the property of the respondent. Hence, the respondent's

director, by email dated 9th July 2018, requested that the

insurance company to settle the claim. Accordingly, a survey

was carried out, and, as per the surveyor's assessment

report, the amount has been released to the respondent. The

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emails exchanged between the parties would show that the

amounts were settled as requested by the claimant, and

thus, in view of the principle of accord and satisfaction, the

respondent was precluded from demanding any higher

amount than the amount paid as per the surveyor's report.

(b) Learned counsel for the petitioner submitted that the

Insurance Regulatory Authority ("IRDA") has formulated the

Insurance Surveyors and Loss Assessors (Licensing,

Professional Requirements and Code of Conduct)

Regulations, 2000, which regulate the licensing and the work

of surveyors. He relied upon the decision of the Apex Court

in the case of Sri Venkateswara Syndicate Vs. Oriental

Insurance Company Limited and Anr.1 to support his

submission that the Scheme of Section 64-UM of the

Insurance Act, particularly of sub-sections (2), (3) and (4),

would show that the insurer cannot appoint a second

surveyor just as a matter of course, and that if there are

inherent defects in the report, if it is found to be arbitrary,

excessive, exaggerated, etc. and that there is no prohibition

in the Insurance Act for appointment of second surveyor by

the insurance company.

(2009) 8 SCC 507

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commencing from 16th October 2018 to 2nd November 2018.

However, the respondent had given consent on 16 th October

2018, and thus, the claimant was not entitled to claim any

further amount. The discharge voucher signed by the

respondent would constitute full and final satisfaction of the

claim. Hence, the learned Arbitrator has erred in granting the

amount despite the claimant receiving the full amount based

on the revised assessment report submitted by the surveyor.

Hence, the impugned award suffers from patent illegality and

perversity on the ground of not taking into consideration the

principle of accord and satisfaction.

4. Learned counsel for the respondent supported the

impugned award on the following submissions:-

(a) All emails exchanged between the parties clearly

indicate that the claimant accepted the amount under protest.

The claimant had already suffered due to the delay in

reassessing the claim at the request of the insurance

company. The claimant was in need of financial help due to

the loss suffered in the fire. Hence, the claimant had no other

option but to accept the reduced amount under protest. The

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claimant, by its emails, repeatedly urged the insurance

company to settle the long-pending claim, as the respondent

was incurring substantial interest liability on payments

towards the proceedings initiated by its bank. As the claimant

was facing a severe cash crunch, the amount was accepted

under protest, as evident from the delivery voucher. The

learned arbitral tribunal has therefore correctly interpreted

the delivery voucher as an amount accepted under protest.

(b) The record shows that from the outset, the claimant

raised objections to the quantification prepared by the

assessor. Thus, it was not only at the time of final

disbursement that a protest was lodged by the claimant;

however, at all the relevant stages, the protest was recorded

by the claimant. Thus, at this stage, the issue of accord and

satisfaction cannot be considered in detail, as it has already

been decided by the learned arbitrator. Reconsideration of

the issue on accord and satisfaction would amount to

reappreciation of the evidence, which is not permissible

under Section 34 of the Arbitration Act.

circulars dated 24th September 2015 and 7th June 2016

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issued by the IRDA. The circulars make it clear that the

execution of a voucher would not amount to the foreclosure

of the policyholder's right to seek higher compensation

before any judicial authority. The circulars state that under no

circumstances should a discharge voucher collected under

duress, coercion, or compulsion be treated as accord and

satisfaction.

(d) To support his submissions, learned counsel for the

respondent relied upon the decision of the Apex Court in the

case of National Insurance Company Limited Vs. Boghra

Polyfab Private Limited2, R. L. Kalathia and Company Vs.

State of Gujarat3, Worldfa Exports Pvt. Ltd. Vs. United

India Insurance Co. Ltd.4

(e) It is submitted on behalf of the respondent that the

decisions relied upon by the learned counsel for the

petitioner would not apply to the facts of this case, as there

were two survey reports on record and thus, the insurance

company cannot keep on appointing surveyors till the

assessment report is submitted as desired by the insurance

company. The learned arbitrator has recorded clear findings

(2009) 1 SCC 267.

(2011) 2 SCC 400.

2015 SCC Online Del 13951

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in paragraph 53 of the award, holding that the discharge

voucher was signed under protest and that it would not

amount to acceptance of the claim towards a full and final

settlement.

(f) The surveyor's assessment dated 11 th November 2017

clearly indicated the actual loss suffered by the claimant. The

learned arbitrator has accordingly independently assessed

the surveyor's report and recorded a finding based on the

two survey reports submitted by the surveyors appointed by

the insurance company. Hence, any interference in the

findings recorded by the learned arbitrator would amount to

reappreciating the evidence on record, which is not

permissible under Section 34 of the Arbitration Act.

(g) As per the terms and conditions of the insurance policy,

the total claim of Rs. 18 Crores was secured. However, the

respondent registered a claim only for Rs. 11 Crores

commensurate with the actual loss suffered. The findings

recorded by the learned arbitrator are based on the

surveyor's assessment appointed by the insurance company.

The contents of the final assessment report were not shown

to the claimant at the relevant time. Thus, the summary of

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the final assessment of the revised assessment was not

acceptable to the claimant. The assessor sought the

claimant's consent to the summary of the final assessment.

However, the claimant had refused to give any consent.

(h) The admissions given by the assessor in the cross-

examination support the claimant's contentions that the final

assessment report was objected to as it was on the lower

side. All this evidence brought on record is appreciated by

the learned arbitrator to arrive at the final figures as awarded.

None of the figures calculated by the learned arbitrator is

beyond the assessment reports prepared by the surveyors

appointed by the insurance company. The correspondence

on record shows that the insurance company delayed

settlement of the claim despite the assessment report

submitted on 10th March 2017. Only with the intention of

bringing down the surveyor's assessment was the payment

delayed as per the first assessment. Hence, the learned

arbitrator has correctly appreciated the evidence on record

and recorded the findings on the actual loss suffered by the

claimant. The entire claim is based on the actual loss

suffered and the quantification made in accordance with the

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records maintained by the claimant. Hence, interference with

the award would amount to taking a different view by

reappreciating the evidence, which is not permissible under

Section 34 of the Arbitration Act.

5. Learned counsel for the claimant relied upon the Apex

Court's decision in Ssangyong Engineering and

Construction Company Limited V/s National Highways

Authority of India5 to support his submissions that

interference with the award in an application under Section

34 of the Arbitration Act is narrow and unless patent illegality,

perversity or contravention of law is shown the award cannot

be interfered with. He submitted that the arbitration petition

under section 34 is a summary proceeding and not in the

nature of an appeal; hence, the court reviewing the arbitral

award does not sit in appeal over the award and if the view

taken by the arbitral tribunal is a possible view, no

interference under Section 34 of the Arbitration Act is called

for. Hence, none of the grounds contemplated under Section

34 of the Arbitration Act is made out by the petitioner to set

aside the award. Hence, the Arbitration Petition deserves to

be rejected.

(2019) 15 SCC 131

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Analysis and Conclusions:

6. I have carefully perused the papers. There is no

dispute that the revised assessment reduced the original

assessment of Rs. 11,74,57,294.26, as done on 11 th

November 2017, to Rs. 6,15,28,050/- on 16 th October 2018.

Learned Arbitrator has recorded that the claimant signed the

discharge voucher under protest and accepted the amount. I

have perused the discharge voucher. A plain reading of the

voucher reveals that the claimant had accepted the amount

under protest. However, it is sought to be argued on behalf of

the petitioner that the claimant, vide letter dated 16 th October

2018, consented to the assessment; hence, there was

accord and satisfaction, and the payment accepted by the

claimant was towards the full and final settlement of the

claim. The letter dated 16th October 2018, issued by the

claimant, consenting to the assessment, cannot be read in

isolation, ignoring the various emails issued by the claimant

objecting to the reduction in the assessment. It is a matter of

record that on 11th November 2017, the summary of the final

assessment was intimated to the claimant. However, the

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petitioner made no payment. It is also a matter of record that

the petitioner delayed the release of the claim amount.

7. The various emails produced on record by the claimant

show that repeated requests were made to the petitioner to

release the amount. It is brought on record by the respondent

that they were suffering a severe financial crunch due to the

fire incident, and that the respondent was required to make

payments to its bank, as SARFAESI proceedings had been

initiated by the respondent's bank. Hence, the respondent

repeatedly intimated to the petitioner that the claim amount

should be released. The record shows that, despite all

documents submitted by the claimant, the assessment report

was not finalised, and it was only after the claimant's

constant follow-up that the report dated 11 th November 2017

was released. However, the amount was not paid to the

claimant. It is only at the petitioner's behest that, despite the

final assessment of 11th November 2017, a fresh survey was

carried out, and the revised assessment was intimated after

11 months of the original assessment. Hence, the

respondent had no option but to consent to the assessment

made on 16th October 2018 and request the release of the

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payment. The consent letter dated 16th October 2018 was

issued along with an email dated 16 th October 2018, which

recorded that the respondent, with folded hands, requested

the release of the payment. Thus, considering all this

documentary evidence, together with the admissions made

by the petitioners' witnesses during cross-examination, the

learned arbitrator has recorded that the consent letter dated

16th October 2018 cannot be accepted as an accord and

satisfaction. Hence, the discharge voucher, clearly recording

acceptance of payment under protest, is not treated as the

acceptance of payment by way of full and final settlement.

8. The fire incident took place on 23 rd February 2017. The

claimant immediately informed the petitioner about the

incident. The claimant informed that it had suffered a loss of

approximately Rs.15,00,00,000/- due to the fire. The

assessor appointed by the petitioner visited the site on 24 th

February 2017. As requested by the assessor on 28 th

February 2017, the claimant submitted all the documents on

10th March 2017, and the claim form for an amount of

Rs.11,74,56,576/-. After rigorous follow-up, the petitioner

released the final assessment report only on 11 th November

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2017. The amount was not released, and a second surveyor

was appointed who submitted the revised assessment after

eleven months on 16th October 2018 at a lower side.

However, the petitioner has shown nothing to indicate that

the second surveyor was appointed for any valid reason.

9. In the decision of the Hon'ble Apex Court in Sri

Venkateswara Syndicate relied upon by the learned

counsel for the petitioner, it is held that the scheme of

Section 64-UM of the Insurance Act, particularly of sub-

sections (2), (3) and (4) would show that the insurer cannot

appoint a second surveyor just as a matter of course and it

must specify cogent reasons, without which it is not free to

appoint the second surveyor or surveyors till it gets a report

which would satisfy its interest. It is further held that the

option to accept or decline the report lies with the insurer;

however, if the rejection of the report is arbitrary and based

on no acceptable reasons, the courts or other forums can

definitely step in and correct the error committed by the

insurer while repudiating the claim of the insured. The

Hon'ble Apex thus held that if the reports are prepared in

good faith, with due application of mind and in the absence of

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any error or ill motive, the insurance company is not

expected to reject the report of the surveyors.

10. In the present case, the learned Arbitrator has

examined the surveyor's reports and the evidence led by

both parties and held that, in the revised assessment, the

surveyor has not considered the value of the goods in

respect of the fabrics. After exhaustively examining the entire

record, the learned Arbitrator held that the surveyor admitted,

during cross-examination, that the value of the stock was Rs.

10,17,82,021, but he granted only Rs. 6,76,33,561/-. Thus,

the learned Arbitrator has rightly stepped in and corrected

the errors committed by the insurer. Therefore, the learned

Arbitrator, after appreciating the evidence, has rightly granted

the claim. The figures of the claim amount arrived at by the

learned Arbitrator are based on the record and the surveyor's

reports.

11. The circulars dated 24th September 2015 and 7th June

2016 issued by the IRDA support the claimant's contentions

that the voucher signed by the claimant under protest would

not foreclose the right to seek higher compensation before

the arbitral tribunal. The Apex Court in the case of National

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Insurance Company Limited has explained the applicability

of the principle of accord and satisfaction as under:

"27. While discharge of contract by performance refers to

fulfilment of the contract by performance of all the obligations

in terms of the original contract, discharge by "accord and

satisfaction" refers to the contract being discharged by

reason of performance of certain substituted obligations. The

agreement by which the original obligation is discharged is

the accord, and the discharge of the substituted obligation is

the satisfaction. A contract can be discharged by the same

process which created it, that is, by mutual agreement. A

contract may be discharged by the parties to the original

contract either by entering into a new contract in substitution

of the original contract; or by acceptance of performance of

modified obligations in lieu of the obligations stipulated in the

contract."

12. In R.L. Kalathia, the Hon'ble Apex Court held that

even after execution of full and final discharge

voucher/receipt by one of the parties, if the said party is able

to establish that he is entitled to further amount for which he

is having adequate materials, he is not barred from claiming

901-CARBP(L) NO-30675-2023.docx

such amount merely because of acceptance of the final bill

by mentioning "without prejudice" or by issuing "no-dues

certificate".

13. In Worldfa Exports, the Delhi High Court held that

insurance companies cannot withhold payment of the

admitted claim amount to the insured unless the insured

provides a complete discharge. It is held that insurance

companies are not expected to withhold the admitted claim

amount until the insured produces the receipt for full and final

settlement. However, in the present case, there is no

admitted claim, and the controversy concerns the application

of the principle of accord and satisfaction in light of the

claimant's letter dated 16th October 2018 and the discharge

voucher signed under protest. I have already recorded

reasons that the said letter and the discharge voucher cannot

be accepted as a full and final settlement of the claim.

Hence, in view of the well-established legal principles as

discussed in the above paragraphs, the said letter and the

discharge voucher cannot be accepted as accord and

satisfaction of the claim.

901-CARBP(L) NO-30675-2023.docx

14. There is substance in the submissions made by the

learned counsel for the claimant that any interference in the

findings recorded by the learned arbitrator would amount to

reappreciating the evidence on record, which is not

permissible under Section 34 of the Arbitration Act.

15. The Apex Court in Ssangyong Engineering and

Construction Company Ltd, summarised and clarified the

law regarding the permissibility of interference on the

grounds of judicial approach, patent illegality, breach of

principles of natural justice, contravention of law and

perversity. This court, in a recent decision in ECGC Ltd Vs.

Baco Metallic Industries6, held that it is now trite law that

the Section 34 Court must not lightly interfere with arbitral

awards, and that the scope of review is set out in multiple

decisions of the Apex Court. To summarise the scope of

interference under Section 34, this court reproduced the

relevant paragraphs of the Apex Court's decisions in

paragraphs 22 and 23 as under;

"22. It is now trite law that the Section 34 Court must not lightly interfere with arbitral awards. The scope of review by the Section 34 Court is also well covered in multiple judgments of the Supreme Court including Dyna

2025 SCC Online Bom 3959

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Technologies1, Associate Builders2, Ssyangyong3, Konkan Railway4 and OPG Power5. Even implied reasons, if discernible, may be inferred to support a just and fair outcome arrived at in arbitral awards. To avoid prolixity, I am not reproducing copiously from these judgments. Suffice it to say (to extract from just one of the foregoing), in Dyna Technologies, the Supreme Court held thus:

"24. There is no dispute that Section 34 of the Arbitration Act limits a challenge to an award only on the grounds provided therein or as interpreted by various courts. We need to be cognizant of the fact that arbitral awards should not be interfered with in a casual and cavalier manner, unless the court comes to a conclusion that the perversity of the award goes to the root of the matter without there being a possibility of alternative interpretation which may sustain the arbitral award. Section 34 is different in its approach and cannot be equated with a normal appellate jurisdiction. The mandate under Section 34 is to respect the finality of the arbitral award and the party autonomy to get their dispute adjudicated by an alternative forum as provided under the law. If the courts were to interfere with the arbitral award in the usual course on factual aspects, then the commercial wisdom behind opting for alternate dispute resolution would stand frustrated.

25. Moreover, umpteen number of judgments of this Court have categorically held that the courts should not

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interfere with an award merely because an alternative view on facts and interpretation of contract exists.The courts need to be cautious and should defer to the view taken by the Arbitral Tribunal even if the reasoning provided in the award is implied unless such award portrays perversity unpardonable under Section 34 of the Arbitration Act."

[Emphasis Supplied]

23. In OPG Power, the Supreme Court explained the scope of interference with interpretation and construction of a contract accorded in an arbitral award in the following words:--

"72. An arbitral tribunal must decide in accordance with the terms of the contract. In a case where an arbitral tribunal passes an award against the terms of the contract, the award would be patently illegal. However, an arbitral tribunal has jurisdiction to interpret a contract having regard to terms and conditions of the contract, conduct of the parties including correspondences exchanged, circumstances of the case and pleadings of the parties. If the conclusion of the arbitrator is based on a possible view of the matter, the Court should not interfere. But where, on a full reading of the contract, the view of the arbitral tribunal on the terms of a contract is not a possible view, the award would be considered perverse and as such amenable to interference."

[Emphasis Supplied] "

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16. In the present case, the arguments raised on behalf of

the petitioner would amount to a reappreciation of the

evidence. As discussed in the aforesaid paragraphs, the

learned Arbitrator has considered the entire evidence and

recorded reasons to grant the claim. None of the grounds

raised by the petitioner would be covered under the scope of

interference under Section 34. Hence, in my view, by

applying the standards as set out in the various decisions as

discussed above, the arbitral award cannot be interfered with

under Section 34 of the Arbitration Act.