Case Note & Summary
The applicant, MIRC Electronics Ltd., filed an application under Section 11 of the Arbitration and Conciliation Act, 1996, seeking appointment of a sole arbitrator to resolve a dispute with the respondent, The Oriental Insurance Company Ltd., arising out of two Standard Fire and Special Perils Policies. The policies covered stock and assets at the applicant's factory in Roorkee, Uttarakhand. A fire broke out on 8th February 2012, and the applicant lodged a claim for Rs. 55 crores, later revised to Rs. 49.75 crores. The respondent appointed a surveyor, who submitted an interim report. The respondent paid Rs. 39.78 crores to the applicant, who signed a discharge voucher. The applicant contended that the payment was not in full satisfaction and that the dispute as to quantum should be referred to arbitration as per Clause 13 of the policies. The respondent opposed the application, arguing that the discharge voucher constituted a full and final settlement, barring arbitration. The court examined the arbitration clause, which provided for reference of disputes as to quantum to a sole arbitrator. The court noted that the applicant had signed the discharge voucher but disputed the quantum, and the arbitration clause survived the settlement. The court held that the dispute was arbitrable and appointed a sole arbitrator to adjudicate the matter. The court did not delve into the merits of the dispute, leaving it to the arbitrator to decide all issues, including the validity of the discharge voucher.
Headnote
A) Arbitration Law - Appointment of Arbitrator - Section 11 Arbitration and Conciliation Act, 1996 - Discharge Voucher - The applicant sought appointment of a sole arbitrator under Section 11 of the Act for disputes arising out of a fire insurance policy. The respondent opposed on the ground that the applicant had signed a discharge voucher accepting Rs. 39.78 crores in full and final settlement. The court held that the arbitration clause in the policy survives even after payment and discharge, and the dispute as to quantum remains arbitrable. The court appointed a sole arbitrator to decide the dispute. (Paras 1-3) B) Insurance Law - Fire Insurance - Standard Fire and Special Perils Policy - Arbitration Clause - The insurance policy contained an arbitration clause for disputes as to quantum. The court found that the applicant's claim for Rs. 49.75 crores was settled for Rs. 39.78 crores, and the applicant disputed the adequacy. The court held that the dispute falls within the arbitration clause and referred the matter to arbitration. (Paras 3.1-3.3)
Issue of Consideration
Whether the existence of a discharge voucher signed by the applicant in full and final settlement of the insurance claim bars the appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996, when the applicant disputes the quantum of the claim.
Final Decision
The court allowed the application and appointed a sole arbitrator to adjudicate the dispute between the parties, leaving all issues open for the arbitrator to decide.
Law Points
- Arbitration clause survives full and final settlement if dispute as to quantum exists
- Discharge voucher does not bar arbitration if signed under protest or coercion
- Section 11 application maintainable despite payment of claim
