LexNATIONAL INSURANCE CO. LTD. versus M/S. BOGHARA POLYFAB PVT. LTD.
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A B [2008] 13 S.C.R. 638 NATIONAL INSURANCE CO. L TO. v M/S. BOGHARA POLYFAB PVT. LTD. (Civil Appeal No. 5733 of 2008) SEPTEMBER 18, 2008 [R.V. RAVEENDRAN AND LOKESHWAR SINGH PANTA, JJ.] Contract - Insurance contract - Reference to arbitration c - After issuance of final discharge voucher by the insured - Propriety of - Insured alleging coersion for issuance of dis- charge voucher - Held: A claim for arbitration cannot be re- ;ected merely/solely on the ground that final discharge voucher had been executed by the claimant, if its validity is disputed 0 by the claimant - If the claimant is able to prove that the dis- charge voucher was executed on account of fraud/coersion/ undue influence, such voucher would be rendered void - Dis- charge of contract on account of performance, or accord and satisfaction or mutual agreement which is reduced to writing E cannot be referred to arbitration - In the instant case, prima facie it appears that voucher was not issued on account of accord and satisfaction - Hence reference to arbitration - General practice by Government Departments and Corporate sectors of obtaining undated receipts of final settlement vouch- ers/No dues in advance for a sum which is smaller than the F claim in full and final settlement of all claims, as a condition precedent for releasing even the admitted dues, is unfair, ir- regular and illegal and hence deprecated - Arbitration and Conciliation Act, 1996 - s. 11. G The question for consideration in the present appeal was whether a dispute raised by an insured, after giving full and final discharge voucher to the insurer, could be referred to arbitration. Contention of the insured was that it had given the discharge voucher under coercion and H 638 NATIONAL INSURANCE CO. LTD. v. M/S. BOGHARA 639 POLYFAB PVT. LTD. pressure of the insurer in as much the insurer wanted A that unless and until the insurer would sign an undated discharge voucher in advance, it would not release even the admitted claim amount. Dismissing the appeal, the Court B HELD: 1.1 Where the intervention of the court is sought for appointment of an Arbitral Tribunal under sec- tion 11 of Arbitration and Conciliation Act, 1996, the pre- liminary issues that may arise for consideration in such application falls into three categories, that is (i) issues c which the Chief Justice or his Designate is bound to de- cide; viz. (a) whether the party making the application has approached the appropriate High Court; (b) whether there is an arbitration agreement and whether the party who . ~· has applied u/s. 11 is a party to such an agreement. (ii) D issues which he can also decide, that is issues which he .may choose to decide; viz. (a) whether the claim is a dead (long barred) claim or a live claim (b) whether the parties have concluded the contract/transaction by recording satisfaction of their mutual rights and obligation~~or by E receiving the final payment without objection; and (iii) is- sues which should be left to the Arbitral Tribunal to de- cide. viz. (a) whether a claim made fails within the arbitra- tion clause (as for example, a matter which is reserved . i for final decision of a departmental authority and excepted F or excluded from arbitration); (b) merits or any claim in- volved in the arbitration. [Para 17] [656-H; 657-A-G] 1.2 With regard to issues which the Chief Justice or his Designate may choose to decide if raised in any ap- plication under Section 11 of the Act, the chief Justice/his G designate may decide them, if necessary by taking evi- dence or may leave those issues open with a direction to the Arbitral Tribunal to decide the same. If the Chief Jus- tice or his Designate chooses to examine the issue and decide it, the Arbitral Tribunal cannot re-examine the same H 640 SUPREME COURT REPORTS [2008] 13 S.C.R. A issue. Where allegations of forgery/fabrication are made in regard to the document recording discharge of con- tract by full and final settlement, it would be appropriate if the Chief Justice/his Designate decides the issue. [Para 17] (657-H; 658-A-C] B 1.3. A claim for arbitration cannot be rejected merely or solely on the ground that a settlement agreement or discharge voucher had been executed by the claimant, if its validity is disputed by the claimant. When it is con- tended that the dispute is not arbitrable on account of C discharge of the contract under a settlement agreement or disch
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