ARBAP/42/2022
2023 Latest Caselaw 498 UK

        IN THE HIGH COURT OF UTTARAKHAND
                   AT NAINITAL
             HON'BLE THE CHIEF JUSTICE SRI VIPIN SANGHI

                             24TH FEBRUARY, 2023

        ARBITRATION APPLICATION No. 42 OF 2022

Between:

Ashoka Foam Multiplast Private Ltd.                                 ...Applicant

and

The New India Assurance Company Ltd.                             ...Respondent
Counsel for the applicant.         :   Mr. Dharmendra Barthwal, the learned
                                       counsel.

Counsel for the respondent.        :   Mr. V.K. Kohli, the learned Senior
                                       Counsel assisted by Mr. Kanti Ram, the
                                       learned counsel.

JUDGMENT :

I have heard the learned counsel for the applicant,

and the learned Senior Counsel for the respondent at length.

I proceed to dispose of the present Arbitration Application,

preferred by the applicant, under Section 11(6) of the

Arbitration and Conciliation Act, 1996 (the Act), to seek

appointment of a sole arbitrator.

2. The applicant is a company engaged in

manufacturing and sale of plastic molded furniture, aluminum

composite panel and mattresses. The applicant purchased a

Standard Fire and Special Perils Policy, having Policy No.

34080011180100000205, from the respondent-Insurance

Company, covering his factory assets. The total insured

value was Rs. 58,25,00,000/-. The said policy covered the period from 07.10.2018 to 06.10.2019. The applicant paid a

onetime premium of Rs. 6,71,978/- including GST. In Clause

13 of this Standard Fire and Special Perils Policy, there is an

arbitration clause, which provides that in case any dispute or

difference arises, as to the quantum to be paid under the said

policy, such difference shall, independently of all other

questions, be referred to the decision of the sole arbitrator to

be appointed in writing by the parties. In case they cannot

agree upon an arbitrator within 30 days, the same shall be

referred to a panel of three arbitrators. The said clause reads

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 indeperdently of all other questions be referred to the decision of a sole arbitrator to be appointed in writing by the parties to or if they cannot agree upon a single arbitrator within 30 days of any party invoking arbitration, the same shall be referred to a panel of three arbitrators, comprising of two arbitrators, one to be appointed by each of the parties to the dispute/difference and the third arbitrator to be appointed by such two arbitrators and arbitration shall be conducted under and in accordance with the provisions of the Arbitration and Conciliation Act, 1996.

It is clearly agreed and understood that no difference or dispute shall be referable to arbitration as hereinbefore provided, if the Company has disputed or not accepted liability under or in respect of this policy.

It is hereby expressly stipulated and declared that it shall be a condition precedent to any right of action or suit upon this policy that the award by such arbitrator/ arbitrators of the amount of the loss or damage shall be first obtained."

3. It appears that, unfortunately, on 30.09.2019 a fire

broke out at the petitioner's factory premises, leading to

large scale destruction. On the same day, the applicant put

the respondent to notice of the said fire, and the applicant

itself assessed its loss to the tune of Rs. 20-25 crores. The

respondent-Insurance company appointed M/s JSR Insurance

Surveyors & Loss Assessors (JSRSLA) as their surveyors to

survey and assess the loss suffered by the applicant. The

surveyor and assessor, appointed by the respondent, made

its report dated 13.09.2021. As against the applicant's claim

of Rs. 20.92 crores (revised), the net loss assessed on

reinstatement basis was 12.06 crores. The net liability

assessed for the Spring Mattress Division, which was not an

insured division, was Rs. 4.42 crores approximately. The net

liability for the ACP division, which was an insured divsion,

was assessed at Rs. 4.42 crores. On 28.02.2022, the

surveyor and assessor made an Addendum Report to the tune

of Rs. 3.51 crores approximately, which was stated to be

"quite just and reasonable".

4. The case of the applicant is that, even after

passage of more than 2 years & 3 months from the date of

the fire incidence, its claims were not settled by the

respondent. The applicant claims that the Director of the

applicant was called to Dehradun, and was presented with a

settlement agreement, wherein the applicant was offered a

sum of Rs. 2.10 crores approximately in full and final

settlement of all its claims under the aforesaid policy. The

applicant has averred in the present Arbitration Application as

follows :-

7. That the petitioner having been left with no choice and after financial slump from COVID-19 vide his letter dated 10-09-2021 then gave his consent for claim settlement for fire incident at Rs. 11.33 crores. The figure of Rs. 11.33 crores is the assessed loss (after depreciation and dead stock with GST) for the ACP Division and Spring Mattress Division. However the Surveyor assessed the net liability of the respondent company as Rs 8,82,49,289/- True copy of petitioner's consent letter dated 10-09-2021 is being filed herewith and marked as Annexure no. 4 to this petition.

8. That after several representations and reminders, the respondent then coerced the petitioner to sign a settlement agreement which was prepared by the respondent at Dehradun and asked the petitioner to come to Dehradun and sign the same. The copy of the alleged settlement agreement was never given or provided to the petitioner. The petitioner approach the respondent at Dehradun and could not go through the settlement agreement but due to the coercion and misrepresentation of the respondent in order to receive sum amount signed the same without knowing the complete purport of the said agreement while the respondent kept assuring the petitioner that he would get the desired compensation. It is pertinent to mention that the petitioner signed under financial duress, coercion and undue influence as the petitioner was under extreme financial difficulties and the Respondent company made it abundantly clear pre- requisite condition that before disbursement of any amount of claim, the petitioner will have to sign the documents. True copy of the settlement agreement dated 29-06-2022 is being filed herewith and marked as Annexure no.5 to this petition.

9. It is submitted that the petitioner actually suffered a loss of Rs. 11.33 crores in the said incident and against the loss of Rs 11.33 crores and net liability of the respondent company was worked out by the surveyor as Rs Rs 8,82,49,289/- and out of the said amount meagre amount of Rs. 2,10,75,850/- was disbursed on 05-07-2022 to the banker of Petitioner. The coercive action and undue pressure put on by the Respondent Company is apparent from this aspect alone that the Respondent company has failed to pay even the amount, as assessed by the surveyor. The said amount had been paid almost after two years of the loss. The respondent company only agreed to pay the partial/on account amount only in case the petitioner execute the agreement. The execution and

submission of the discharge voucher as per the language of the respondent company was precondition for the release of the said amount. Being at receiving end, the Petitioner firm was left with no other choice except to succumb to the unlawful pressure of the Respondent company, which was enjoying superior position in the subjected matter. It is all this reason the Petitioner immediately addressed the detailed letter highlighting the coercive action of the Respondent company. The Respondent company had not bothered to give any reply to the same thereby acknowledging the facts stated in the said letter of protest. Beside above till date no explanation has been given by the Respondent company, on which basis the amount had been deducted from the amount assessed by the surveyor. This is an explicit case of dispute of QUANTUM, as even the amount, as assessed by the surveyor has not been paid and the discharge voucher as obtained without free consent, does not qualify as valid discharge. The petitioner has filed only few documents to prove that the dispute arose between the petitioner and respondent. The petitioner reserves its rights to file all the relevant documents before Ld. Arbitrator appointed by this Hon'ble Court. The petitioner also deprecated the very unethical, unfair, unprofessional and indifferent attitude of the respondent Company. True copy of petitioner's protest letter dated 05-07-2022 is being filed herewith and marked as Annexure no.6 to this petition.

5. The applicant has placed on record its protest letter

dated 05.07.2022, alleging that the settlement documents

have been drafted by the respondent as per its desire, with a

prejudiced, unfair and unreasonable frame of mind. The

applicant also claimed that it is a matter of fact that none of

the clauses in the said document were ever disclosed to it, or

brought to its knowledge. The applicant claims that the said

settlement was thrusted upon it to deprive it of fair and

reasonable amount against its bonafide claims, and that the

said exercise was absolutely unlawful pressure tactics used by

the respondent, misusing its superior position, to coerce and

harass the applicant to succumb to their dictates, whilst the

applicant was facing through a state of financial distress. The

applicant stated that it was a matter of record that

considerably inordinate and abnormal delay was caused by

the respondent in processing the claim, when the applicant

was in dire need of funds, consequent to the incidence of fire

loss on 30.09.2019. Keeping in view the peculiar financially

distressed situation, and being under duress and coercion,

the applicant was left with no option than to sign on the

documents prepared by the respondent, in order to get at

least some relief in the form of partial payment of its claim.

It is stated that after a lapse of more than 2 years & 3

months, today, i.e. 05.07.2022, the applicant could receive

payment of only Rs. 2,10,75,850/-, as partial payment

against the claim amount of Rs. 8,82,49,289/-, as assessed

by the surveyor. The applicant made accusation of the

respondent acting in an unethical, unfair, unprofessional and

indifferent manner. This letter was followed by another

protest letter dated 27.07.2022.

6. The respondent denied the allegations made

against it by the applicant in its communication dated

08.08.2022. The respondent stated that the settlement was

negotiated between the parties, and it was accepted by the

applicant after negotiations. The applicant had signed the

agreement through its Managing Director, and the allegations

of thrust, or coercion were denied. The applicant responded

to the said reply of the respondent on 22.08.2022, and

invoked the arbitration agreement, suggesting the name of a

retired District and Sessions Judge, Delhi, to act as the sole

arbitrator.

7. Since no Arbitral Tribunal was constituted by the

parties, this application has been preferred.

8. Upon service, the respondent has filed its

objection. The respondent has opposed the application

stating that there was accord and satisfaction, and there were

no outstanding arbitrable disputes between the parties under

the aforesaid policy. The respondent states that the applicant

had arrived at the said settlement out of its own free will,

without undue influence or coercion, and, in token thereof, it

signed the voucher for Rs. 2,10,76,627/-, whereafter the

payment was made in terms of this settlement agreement

signed between the parties.

9. When the matter was heard by this Court on

06.01.2023, and the settlement agreement was referred to,

this Court observed that it referred to an Addendum Report

dated 28.03.2022 prepared by the surveyor, which had not

been placed on record. Accordingly, the respondent was

directed to place the same on record, which has been filed

along with the supplementary affidavit of the respondent.

10. The submission of Mr. Barthwal, the learned

counsel for the applicant, is that, since the parties,

admittedly, entered into the aforesaid agreement, contained

in the Standard Fire and Special Perils Policy, which contains

an arbitration agreement for settlement of disputes relating

to claims of the applicant, and, since, the applicant has

invoked the arbitration agreement, the said disputes are

liable to be referred for arbitration. He submits that even the

issue of the settlement, being arrived at with undue influence

and coercion, is an arbitrable dispute, which should be

referred for determination of the Arbitral Tribunal.

11. On the other hand, the submission of Mr. Kohli, the

learned Senior Counsel for the respondent, is that, since

there is accord and satisfaction recorded between the parties,

with the execution of the settlement agreement, there is no

surviving dispute between the parties, which could be

referred to arbitration under Clause 13 of the Standard Fire

and Special Perils Policy.

12. Mr. Kohli has referred to the order dated

10.06.2022 passed by the Gujarat High Court in Balkrishna

Spintex Private Limited v. The New India Assurance

Company Limited, (R/PETN. under Arbitration Act No. 66 of

2020); the judgment of the Supreme Court in New India

Assurance Company Limited v. Genus Power

Infrastructure Limited, (2015) 2 SCC 424; and the

judgment of the Supreme Court in United India Assurance

Company Limited v. Antique Art Exports Private

Limited, (2019) 5 SCC 362.

13. Mr. Kohli submits that the Supreme Court has held

that the onus, to establish, prima facie, that the settlement

was arrived at under coercion, fell upon the applicant, which,

according to Mr. Kohli, the applicant has failed to establish.

14. In Genus Power Infrastructure Limited (supra),

the Supreme Court observed in paragraph nos. 9 and 10 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. Viewed thus, the relevant averments in the petition filed by the respondent need to be considered, which were to the following effect:

"(g) That the said surveyor, in connivance with the respondent Company, in order to make the respondent Company escape its full liability of compensating the petitioner of such huge loss, acted in a biased manner, adopted coercion, undue influence and duress methods of assessing the loss and forced the petitioner to sign certain documents including the claim form. The respondent Company also denied the just claim of the petitioner by their acts of omission and commission and by exercising coercion and undue influence and made the petitioner Company sign certain documents, including a pre-prepared discharge voucher for the said amount in advance, which the petitioner Company were forced to do so in the period of extreme financial difficulty which prevailed during the said

period. As stated aforesaid, the petitioner Company was forced to sign several documents including a letter accepting the loss amounting to Rs 6,09,55,406 and settle the claim of Rs 5,96,08,179 as against the actual loss amount of Rs 28,79,08,116 against the interest of the petitioner Company. The said letter and the aforesaid pre-prepared discharge voucher stated that the petitioner had accepted the claim amount in full and final settlement and thus, forced the petitioner Company to unilateral acceptance of the same. The petitioner Company was forced to sign the said document under duress and coercion by the respondent Company. The respondent Company further threatened the petitioner Company to accept the said amount in full and final or the respondent Company will not pay any amount towards the fire policy. It was under such compelling circumstances that the petitioner Company was forced and under duress was made to sign the acceptance letter."

10. In our considered view, the plea raised by the respondent is bereft of any details and particulars, and cannot be anything but a bald assertion. Given the fact that there was no protest or demur raised around the time or soon after the letter of subrogation was signed, that the notice dated 31-3-2011 itself was nearly after three weeks and that the financial condition of the respondent was not so precarious that it was left with no alternative but to accept the terms as suggested, we are of the firm view that the discharge in the present case and signing of letter of subrogation were not because of exercise of any undue influence. Such discharge and signing of letter of subrogation was voluntary and free from any coercion or undue influence. In the circumstances, we hold that upon execution of the letter of subrogation, there was full and final settlement of the claim. Since our answer to the question, whether there was really accord and satisfaction, is in the affirmative, in our view no arbitrable dispute existed so as to exercise power under Section 11 of the Act. The High Court was not therefore justified in exercising power under Section 11 of the Act."

15. In Antique Art Exports Private Limited (supra),

the Supreme Court relied upon, inter alia, on its judgment in

Genus Power Infrastructure Limited (supra). The

Supreme Court, in Antique Art Exports Private Limited

(supra), observed as follows :-

"15. 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, which has been considered by this Court in New India Assurance Co. Ltd. case [New India Assurance Co. Ltd. v. Genus Power Infrastructure Ltd., (2015) 2 SCC 424 : (2015) 2 SCC (Civ) 130] as follows : (SCC p. 429, para 9)

"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."

20. The submission of the learned counsel for the respondent that after insertion of sub-section (6-A) to Section 11 of the 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 Ltd. [Duro Felguera, S.A. v. Gangavaram Port Ltd., (2017) 9 SCC 729 : (2017) 4 SCC (Civ) 764] The exposition in this decision is a general observation about the effect of the amended provisions which came to be examined under reference to six arbitrable agreements (five agreements for works and one corporate guarantee) and each agreement contains a provision for arbitration and there was serious dispute between the parties in reference to constitution of Arbitral Tribunal whether there has to be Arbitral Tribunal pertaining to each agreement. In the facts and circumstances, this Court took note of sub-section (6-A) introduced by the Amendment Act, 2015 to Section 11 of the Act and in that context observed that the preliminary disputes are to be examined by the arbitrator and are not for the Court to be examined within the limited scope available for appointment of arbitrator under Section 11(6) of the Act. Suffice it to say that appointment of an arbitrator is a judicial power and is not a mere administrative function leaving some degree of judicial intervention; when it comes to the question to examine the existence of a prima facie arbitration agreement, it is always necessary to ensure that the dispute resolution process does not become unnecessarily protracted."

16. Mr. Kohli submits that, even when Section 11(6A)

of the Act was in force, the Supreme Court rejected the

submission that the Court would not examine the issue,

whether the accord and satisfaction was, prima facie, vitiated

by coercion, or undue influence. He submits that now Sub-

Section 6A of Section 11 of the Act stands deleted and,

therefore, it is for this Court to examine the said issue of

coercion, before referring the parties to arbitration. He has

also referred to the recitals of the settlement agreement

entered into between the parties. The recitals, on which he

has relied upon, are as follows :-

"e) Considering the nature of issues involved, both parties engaged in mutual, transparent free and fair negotiations on various aspects of the claim including questions of liability and quantum of loss, and it has been finally & mutually agrees that the Insurer would pay and the Insured would accept a sum of Rs. 2,10,76,627 in full and final settlement of the Claim as under on Non Standard basis:-

                Sr.                 Items damaged.                         Amount
                No.                                                        agreed

                1&                                                     Rs. 2,10,76,627
                2&
                3&    Building, Plant & Machinery, Furniture Fixture
                4     and Fittings and Stocks


          f)     Insured has conveyed unequivocal acceptance of the

above amounts towards all items of the claim in full and final settlement.

g) Both parties have agreed that on payment of the above amount by Insurer the Claim shall stand fully and finally settled and the Insurer shall stand discharged from any further liability in respect of the same;

h) The parties consider it necessary to record the aforesaid final agreement on the Claim, in the light of various previous discussions and exchange of correspondence to avoid any disputes, differences or litigation whatsoever at a later date."

17. Mr. Kohli has also placed reliance on Clauses 5, 6

and 7 of the settlement agreement, which reads as follows :-

"5. This Agreement or payment by the Insurer shall not entitle the Insured to raise any further claim or dispute at a later date on any pretext or for any one or more of the individual items comprised under the Claim.

6. That this Agreement shall constitute and may be used as evidence of full and final settlement of the Claim and as an accord and satisfaction thereof, after mutual discussions, negotiations and resolution of all disputes and differences that had arisen in the previous stages of the claim.

7. No dispute or difference shall survive in respect of the Claim (individually and/or collectively) after the execution of this Agreement and payment by the Insurer of the amount of Rs. 2,10,76,627/- stated above."

18. On the other hand, Mr. Barthwal submits that,

recently, in a similar situation, the Delhi High Court has

appointed the sole arbitrator to adjudicate the disputes

between the parties before it, arising out of a similar policy,

to arbitration, and the issue of accord and satisfaction has

been left for determination by the learned Arbitral Tribunal.

He has placed before me the order dated 09.01.2023 passed

in M/s Shree Ram Polymer v. The New India Assurance

Co. Ltd., (Arbitration Petition No. 841 of 2022), by a learned

Single Judge of the Delhi High Court, wherein Mr. Justice S.P.

Garg (Retd.) has been appointed as the sole arbitrator. The

respondent in the said case was also the New India Assurance

Co. Ltd., which is the respondent in the present application as

well.

19. I have perused the pleadings, and the documents

filed by the parties, and I have also considered their rival

submissions, and the decisions relied upon by them.

20. First and foremost, there is no dispute about the

fact that the parties entered into the agreement styled as

"Standard Fire and Special Perils Policy", which contains an

arbitration clause in Clause 13 for settlement of disputes with

regard to the quantum of claim to be paid under the said

policy.

21. The defense set up by the respondent is that of

accord and satisfaction, by virtue of the settlement

agreement executed between the parties on 29.06.2022. The

applicant has claimed that the same is vitiated by coercion.

22. In the light of the aforesaid judgments of the

Supreme Court, I have to, prima facie, satisfy myself,

whether the plea of coercion raised by the applicant is an

acceptable plea, which would require further examination, or

it is a plea, which cannot be accepted in the light of the facts

and circumstances of the case. At this stage, I may also refer

to the judgment of the Supreme Court in Oriental

Insurance Company Limited and Another v. Dicitex

Furnishing Limited, (2020) 4 SCC 621, relied upon by Mr.

Barthwal. This case also relates to a Standard Fire and

Special Peril Policy obtained by the respondent-Dicitex

Furnishing Limited. In this case, the first surveyor had

assessed the loss at Rs. 12,28,60,369/-, and the second

surveyor had made an assessment of the loss at Rs.

7,16,30,148/-. Dicitex Furnishing Limited was paid an

amount of RS. 7,16,30,148/-, which the appellant-Insurance

Company claimed was the clean discharge, and full and final

settlement of the claim of Dicitex Furnishing Limited. The

appellant-company claimed that there was accord and

satisfaction, which was disputed by the claimant-Dicitex

Furnishing Limited, with the plea of coercion. The conclusion

drawn by the Supreme Court is in paragraph no. 26 of the

judgment, which reads as follows :-

"26. An overall reading of Dicitex's application [under Section 11(6)] clearly shows that its grievance with respect to the involuntary nature of the discharge voucher was articulated. It cannot be disputed that several letters -- spanning over two years--stating that it was facing financial crisis on account of the delay in settling the claim, were addressed to the appellant. This Court is conscious of the fact that an application under Section 11(6) is in the form of a pleading which merely seeks an order of the court, for appointment of an arbitrator. It cannot be conclusive of the pleas or contentions that the claimant or the party concerned can take in the arbitral proceedings. At this stage, therefore, the court which is required to ensure that an arbitrable dispute exists, has to be prima 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 event to approach a civil court. There are decisions of this Court (Associated Construction v. Pawanhans Helicopters Ltd. [Associated Construction v. Pawanhans Helicopters Ltd., (2008) 16 SCC 128] and Boghara Polyfab [National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd., (2009) 1 SCC 267 : (2009) 1 SCC (Civ) 117] 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 [Dicitex Furnishing Ltd. v. Oriental Insurance Co. Ltd., 2015 SCC OnLine Bom 5055] cannot be faulted."

23. As noticed hereinabove, the incidence of fire in the

applicant's factory took place on 30.09.2019. The said

incidence of fire was communicated by the applicant to the

respondent on the very same day. The respondent appointed

a surveyor, who first made its report on 13.09.2021. The net

loss assessed was to the tune of Rs. 12,60,25,881/- (Rs. 12.6

crores). The net liability assessed for the ACP Division was

Rs. 4,42,39,403.00 (4.42 crores). The loss in the Spring

Mattress Division, to the tune of Rs. 4.42 crores, was

excluded, since that was not insured. The respondent, then,

got an addendum report prepared after nearly six months of

the initial report given by the surveyor and assessor. The

addendum report is dated 28.03.2022. Even in the

addendum report, which is stated to be "Final Assessment

Against ACP Division On Market Value Basis (Without GST)",

the surveyor and assessor assessed the loss at Rs.

35,127,711.00, which was stated to be "quite just and

reasonable".

24. The applicant has averred that, even after making

of the said addendum report, the respondent failed to make

payment of the amount due to the applicant. The relevant

averments made in this application have been set out

hereinabove. The applicant has, inter alia, stated, firstly, that

the Survey Report itself was biased, and in ignorance of the

regulations of the IRDA. The applicant further states that the

applicant gave its consent for settlement of its claims at

Rs.11.33 crores on 10.09.2021, which was the loss assessed

after depreciation and dead stock with GST for the ACP

Division, and the Spring Mattress Division. However, the

surveyor had assessed the net liability of the respondent-

company at Rs. 8,82,49,289/-. The applicant has further

stated that, after several representations and reminders, the

respondent coerced the applicant to sign the settlement

agreement prepared by the respondent at Dehradun, after

asking the applicant to come to Dehradun to sign the same.

The applicant further states that its actual loss is to the tune

of Rs. 11.33 crores, in reply whereof the net liability worked

out by the respondent was to the tune of Rs. 8,82,49,289/-.

Even   out    of   this   amount,      a    meager     amount     of

Rs.2,10,75,850/-    was    disbursed       to   the   applicant   on

05.07.2022. The applicant had no choice, but to succumb to

the unlawful pressure of the respondent-company, who was

enjoying a superior position. However, as soon as the

applicant received the amount of Rs. 2,10,75,850/-, the

applicant lodged its protest letter on the same day, as taken

note of hereinabove.

25. The fact that the claim of the applicant was

surveyed and assessed nearly two years after the incidence

of fire; and was further surveyed and assessed and reduced

vide the addendum report dated 28.03.2022, i.e. after nearly

two and a half years of the incidence of fire; the fact that

even this reduced amount of Rs. 35,127,711/-, which the

surveyor and assessor found to be "quite just and

reasonable", was not paid till the applicant signed the

settlement agreement at Dehradun on 29.06.2022; the fact

that the applicant immediately, on receipt of the settlement

amount of Rs. 2,10,75,850/-, lodged its protest, vide its

detailed communication dated 05.07.2022, all go to show,

prima facie, that the issue of coercion, in the execution of the

settlement agreement, is an issue, which would require

adjudication, and it cannot be said at this stage that the

present is a clear case of "accord and satisfaction" with the

execution of the settlement agreement, and receipt of the

amount thereunder by the applicant.

26. The facts, which were present before the Supreme

Court in the aforesaid decisions in Genus Power

Infrastructure Limited (supra) and Antique Art Exports

Private Limited (supra), were materially different on the

facts in the present case. In Genus Power Infrastructure

Limited (supra), in paragraph no. 10, the Supreme Court

took note of the fact that there was no protest or demur

raised around the time or soon after the letter of subrogation

was signed. The notice was issued by the claimant on

31.03.2011, which was nearly three weeks after the

execution of the letter of subrogation.

27. As noticed hereinabove, in the present case, the

applicant issued the protest letter on the very same day, on

which day the amount of Rs. 2,10,75,850/- was received, i.e.

05.07.2022. Prima facie, it appears that a business

enterprise, which has suffered a huge fire in its factory,

leading to losses, as assessed by the surveyor and assessor

of the respondent-company, to the tune of Rs. 11-12 crores,

which have not been settled for two and a half years, would

be in a state of financial stringency.

28. Similarly, in Antique Art Exports Private

Limited (supra), the incidence of fire took place on

25.09.2013 and 25.10.2013. The protest was lodged by the

claimant after three years of the full and final settlement, and

discharge of claim on 11.07.2016. It was in these

circumstances that the Supreme Court found that the plea of

coercion was, prima facie, not established.

29. In the light of the judgment of the Supreme Court

in Dicitex Furnishing Limited (supra), I am of the view

that it is not for me, at this stage, to return a finding, as to

whether, or not, the settlement agreement is vitiated by

coercion, as alleged by the applicant. All that I have to see is

whether the said plea of coercion is completely unacceptable

in the facts and circumstances of this case. I do not find that

the said plea of coercion is completely unacceptable, and

should be rejected outrightly in the facts of this case.

Accordingly, I reject the objection of the respondent, and

allow the present Arbitration Application.

30. Since a similar claim is already pending

adjudication before Mr. Justice S.P. Garg, Retd. Judge, Delhi

High Court, I appoint Mr. Justice S.P. Garg, Retd. Judge,

Delhi High Court, having Mobile No. - 9910384627, to act as

the sole Arbitrator in the present case as well.

31. It goes without saying that the observations made

hereinabove have been made only for the purpose of

examining the submissions of the parties, and no final finding

of fact has been returned by me in these proceedings. It

shall be open to the parties to raise their pleas before the

sole arbitrator, which shall be examined on their own merits,

in accordance with law.

32. The present Arbitration Application stands disposed

of in the aforesaid terms.

33. Consequently, pending applications, if any, also

stand disposed of.

________________ VIPIN SANGHI, C.J.

Dt: 24th February, 2023 Rahul