Rajasthan High Court
M/S Lila Emporium vs Senior Devisional Manager on 15 September, 2022
Bench: Pankaj Bhandari
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
S.B. Arbitration Application No. 157/2021
M/s Lila Emporium, 44-45, Chaura Rasta Jaipur (Rajasthan)
Through Its Partner Mr. Divay Lila.
----Petitioner
Versus
1. Senior Divisional Manager, National Insurance Company
Limited, Divisional Office II, Bhagwati Bhawan Mi Road
Jaipur 302001.
2. Chief Regional Manager, National Insurance Company
Limited, Jaipur Regional Office Plot No. 132-135 (Floor
3,4,5) NBCC Centre Jyoti Nagar Sahkar Marg Jaipur
302005.
----Respondents
For Applicant(s) : Mr. Dinesh Kumar Mishra
For Respondent(s) : Mr. Rizwan Ahmed
HON'BLE MR. JUSTICE PANKAJ BHANDARI
Order
RESERVED ON :: 08/09/2022
PRONOUNCED ON :: 15/09/2022
1. The applicant has filed this Arbitration Application seeking
appointment of an Arbitrator under Section 11(6) of the
Arbitration and Conciliation Act, 1996 (hereinafter referred to as
"the Arbitration Act").
2. It is pleaded in the Arbitration Application that the applicant
has obtained a Standard Fire and Special Peril Policy (Material
Damage) by paying premium effective from 15.11.2019 to
14.11.2020. The insurance policy covers damages caused by flood
and inundation. Due to heavy rain in Jaipur, a situation of flood
was created and the entire insured stock of the policy holder got
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damaged. The claimant raised a claim of Rs.43,65,328/- out of
which a sum of Rs.14,47,645/- was paid by the respondent -
Insurance Company. It is also pleaded that the respondent has
arbitrarily made deduction reducing the claim of the applicant,
which gave rise to a dispute between the parties. The applicant
gave a notice to the respondent for referring the matter to the
Arbitrator and appointed Shri N.P. Upadhyay (Retired District &
Sessions Judge) as a Sole Arbitrator. The respondent challenged
the order of appointment of the Arbitrator and the application filed
by the respondent under Section 14 of the Arbitration Act was
allowed and the appointment of Shri N.P. Upadhyay as the Sole
Arbitrator was terminated.
3. It is pleaded by the counsel for the applicant that there is an
arbitration clause. The notice for appointing the Arbitrator was
issued by the applicant, however, the Sole Arbitrator appointed by
the applicant was challenged by the non-applicant-respondent
before the Commercial Court and the Commercial Court has
terminated the mandate of the Sole Arbitrator appointed by the
applicant. It is prayed by the counsel for the applicant that since
there is an arbitration clause and the mandate of the Arbitrator
appointed by the applicant, has been terminated, the Court should
appoint an Arbitrator under Section 11(6) of the Arbitration Act.
Counsel for the applicant has placed reliance on Vidya Drolia &
Ors. Versus Durga Trading Corporation & Ors.: (2021) 2 SCC 1
and The Oriental Insurance Co. Ltd. & Ors. Versus Dicitex
Furnishing Ltd.: (2020) 4 SCC 621.
4. Counsel for the non-applicant has opposed the Arbitration
Application for appointment of an Arbitrator. It is contended that
there is no notice under Section 21 of the Arbitration Act and the
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notice dated 11.02.2021 whereby the Sole Arbitrator was
appointed by the applicant has been questioned before the
Commercial Court and the Commercial Court has terminated the
mandate of Shri N.P. Upadhyay (Retired District & Sessions Judge)
appointed by the applicant. It is also contended that the applicant
has given a discharge voucher and as such, no dispute for
adjudication by the Arbitrator remains and therefore, the
Arbitration Application deserves to be dismissed. Counsel for the
respondent-non-applicant has placed reliance on New India
Assurance Company Ltd. Versus Genus Power Infrastructure Ltd.:
(2015) 2 SCC 424. Reliance has also been placed on Union of
India Versus Master Construction Company: (2011) 12 SCC 349.
5. I have considered the contentions and have carefully perused
the record.
6. It is evident that initially the Surveyor assessed the loss at
Rs.19,30,194/- and the applicant was paid 75% of the assessed
loss. Admittedly, there is Clause-13, which is an arbitration clause.
It is also an admitted position that a notice for appointment of an
Arbitrator was given by the applicant and the name was also
suggested as a Sole Arbitrator by him, however, mandate of that
Arbitrator has been terminated by the Commercial Court. The
objection that no notice has been given before appointment of an
Arbitrator, thus cannot be entertained for the very reason that
after giving notice, an Arbitrator was appointed and the mandate
of that Arbitrator has been terminated by the Commercial Court.
7. The next objection of the non-applicant that the applicant
has signed the discharge voucher and had accepted the payment.
It is evident that the claim was made for loss caused by the
flooding of water in the shop of the applicant, which resulted into
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damage of the clothings. The Surveyor assessed the loss
approximately at Rs.19,30,194/- and 75% of the said amount was
paid to the applicant and thereafter, after assessing the value of
Salvage, a further amount of around Rs.2 lakhs was also paid to
the applicant. Be that as it may, the question is that the applicant
has challenged the assessment and has accepted the amount as
he had suffered heavy loss due to flooding of water in his shop.
Acceptance of the part of money cannot be said to be a complete
discharge, more particularly when there is no clause in the
Agreement that if a discharge voucher is signed, the party could
not challenge the same before an Arbitral Tribunal.
8. It is pertinent to note that the e-mail, which was written by
the claimant to the respondent, was to the effect that the
measurement work has not been taken up by the Surveyor
besides re-verification of Talley and since it may take sometime, it
was requested that on account payment of 75% of the assessed
amount be released. The document signed by the claimant when
he accepted the sum of Rs.14,47,654/- cannot thus be considered
to be for full and final satisfaction and discharge by the claimant.
The judgment cited by the counsel for the non-claimant-
respondent thus do not apply to the facts of the present case. I,
therefore, deem it proper to allow the Arbitration Application and
appoint Mr. Justice Guman Singh (Retired), C-254, Hans Marg,
Malviya Nagar, Jaipur, as the sole arbitrator to decide the dispute.
9. The appointment of the sole arbitrator is subject to the
declarations being made under Section 12 of the Arbitration and
Conciliation Act, 1996 with respect to the independence and
impartiality, and the ability to devote sufficient time to complete
the arbitration within prescribed period.
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10. Accordingly, arbitration application stands allowed. The
arbitrator shall be entitled to lay down fees as provided under
Manual of Procedure for Alternative Disputes Resolution, 2009 as
amended from time to time.
11. Registry is directed to intimate Mr. Justice Guman Singh
(Retired) and obtain his formal consent.
12. The observations made herein-above are only for the
purpose of deciding the present application and the same will not
disentitle the parties to raise all valid objections before the learned
Arbitrator and the Arbitrator will be free to dispose the said
objection without being influenced by the observations made by
this Court.
(PANKAJ BHANDARI),J
SUNIL SOLANKI /PS
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