pvr １ ap21-11 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION ARBITRATION PETITION NO.21 OF 2011 M/s.Bombay Crimpers Pvt.Ltd. ...Petitioner vs. M/s.New India Assurance Co.Ltd. ...Respondent --- Mr.Chetan Kapadia i/b. India Law, for Petitioner. Mr.S.R.Singh i/b. M/s.S.R.Singh & Co., for Respondent. --- CORAM: D.K.DESHMUKH, J. DATED: 9th December,2011. P.C.:- 1. This petition is filed under Section 11 of the Arbitration and Conciliation Act for appointment of Arbitrator. According to the petitioner, the petitioner which is a company incorporated under the Indian Companies Act insured its factory buildings, plant and machinery etc. with the respondent which is an pvr ２ ap21-11 Insurance Company, by entering into a contract with the Insurance Company. According to the petitioner, the total sum insured was Rs. 22,46,00,000/-. According to the petitioner, on 2.5.2009 a major fire broke out at their insured premises damaging the stocks and the property. According to the petitioner, the respondent was intimated about the incident of fire. The respondent appointed a surveyor for assessing the loss. The petitioner then filed a claim in the amount of Rs.5,82,98,563/-. The petitioner alleges that as the respondent did not make any payment for a period of more than one year the business of the petitioner was severely crippled. It is alleged that on 17.6.2010 the Surveyor, even before submitting the survey report, forcefully and under coercion obtained consent of the petitioner for receiving Rs.3,86,04,815/- as compensation. The Surveyor, according to the petitioner, submitted report dated 21.6.2010. The loss assessed by him was Rs.3,14,31,456/-. pvr ３ ap21-11 The petitioner claims that even after the submission of the report by the Surveyor, the respondent did not make payment. Ultimately, according to the petitioner, by letter dated 1.11.2010 the respondent made offer to the petitioner to settle their claim by paying to them an amount of Rs.3,14,31,456/-. According to the petitioner, the respondent sought final and unconditional discharge. According to the petitioner, as the petitioner was reeling under severe financial crisis arising out of the said loss, under duress and implicit coercion the petitioner was forced by the respondent and Surveyor to issue consent letter dated 3.11.2010 to receive Rs.3,14,31,456/- as full and final settlement of its claim. It is claimed that though the voucher was discharged on 5.11.2010, the admitted amount of Rs.3,14,31,456/- was released only on 3.12.2010. According to the petitioner, after receiving the amount, the petitioner by communication dated 10.12.2010 pvr ４ ap21-11 addressed to the respondent made it clear that it has received the aforesaid amount in part satisfaction of its claim and not as full and final settlement. The petitioner also claimed that the certificate that it has received amount in full and final settlement was taken from the petitioner under duress and force. According to the petitioner, there is an arbitration clause in the contract. That arbitration clause was invoked. The respondent, however, denied the claim of the petitioner and claimed that in view of receipt of the aforesaid amount by the petitioner as full and final settlement between the parties, no dispute which can be referred to arbitration exists between the parties. The petitioner, therefore, has filed the present petition. 2. A reply has been filed on behalf of respondent-Insurance Company claiming therein that as the petitioner has accepted the amount of pvr ５ ap21-11 Rs.3,14,31,456/- on 3.12.2010 towards full and final settlement of the claim, no arbitrable dispute arises between the parties. The respondent relies on the voucher dated 6.12.2010. 3. I have heard the learned Counsel appearing for both the sides. The principal submission of the learned Counsel appearing for petitioner is that as the petitioner has signed the voucher dated 6.12.2010 under financial duress and coercion, it cannot be relied upon by the respondent. The learned Counsel heavily relied on the judgment of the Supreme Court in the case National Insurance Co.Ltd. Vs. M/s.Boghara Polyfab Pvt.Ltd., AIR 2009 Supreme Court 170 . I have also heard the learned Counsel appearing for respondent. 4. There is no dispute between the parties that in the contract of insurance, there is an arbitration clause. The respondent, however, pvr ６ ap21-11 resisted reference to arbitration on the ground that the petitioner has issued full and final settlement discharge voucher, and the petitioner s contention is that the petitioner was constrained to issue it due to coercion and economic duress. The Supreme Court in its judgment in the case of National Insurance Co.Ltd. has held that when a respondent contends that the dispute is not arbitrable on account of discharge of contract because of discharge voucher and the claimant contends that the discharge voucher was obtained by fraud and coercion or under economic duress, the issue will have to be decided by the Judicial Authority while considering the application under Section 11 of the Arbitration and Conciliation Act. The Judicial Authority will have to decide the issue whether the petitioner proves that the discharge voucher was obtained by the insurance company by coercion or that it was given by the petitioner under duress. The Supreme Court has held that pvr ７ ap21-11 the consequence of a valid discharge voucher is that it discharges the contract. When the contract has been fully performed, there is discharge of contract by performance and the contract comes to an end. In regard to such a discharged contract, nothing remains neither any right to seek performance or any obligation to perform. When there cannot be any dispute, consequently there cannot be obviously any reference to arbitration of any dispute arising from a discharged contract. The Supreme Court has observed in the aforesaid judgment that the question  whether the contract has been discharged by performance or not is a mixed question of facts and law and if there is a dispute in regard to that question that is arbitrable. The Supreme Court has also held thus:- if the party who has executed the discharge agreement or discharge voucher, alleges that the execution of such discharge pvr ８ ap21-11 agreement or voucher was on account of fraud/coercion/undue influence practiced by the other party and is able to establish the same, then obviously the discharge of the contract by such agreement/voucher is rendered void and cannot be acted upon. Consequently, any dispute raised by such party would be arbitrable. The Supreme Court in paragraph 27 of the Judgment has held thus:- The Chief Justice/his designate exercising jurisdiction under section 11 of the Act will consider whether there was really accord and satisfaction or discharge of contract by performance. If the answer is in the affirmative, he will refuse to refer the dispute to arbitration. On the other hand, if the Chief Justice/his designate comes to the conclusion that the full and pvr ９ ap21-11 final settlement receipt or discharge voucher was the result of any fraud/coercion/undue influence, he will have to hold that there was no discharge of the contract and consequently refer the dispute to arbitration. Alternatively, where the Chief Justice/his designate is satisfied prima facie that the discharge voucher was not issued voluntarily and the claimant was under some compulsion or coercion, and that the matter deserved detailed consideration, he may instead instead of deciding the issue himself, refer the matter to the arbitral tribunal with a specific direction that the said question should be decided in the first instance. Thus, in view of the law laid down by the Supreme Court in the present case, I have to examine the question whether the petitioner proves that the pvr １０ ap21-11 discharge voucher was signed by it under coercion or economic duress. So far as the allegations of economic duress is concerned, the petitioner has claimed in the petition that the loss that it suffered because of fire crippled their business operations and the petitioner was under severe financial crisis. The financial position of the petition is a fact within the special knowledge of the petitioner. Therefore, the entire burden is on the petitioner to plead and prove what was its financial position at the relevant time. In so far as this aspect is concerned, the only pleading to be found in the petition is that because of fire the petitioner suffered loss and its business was severely crippled. There is no document produced on record by the the petitioner to show as to what was its financial position at the relevant time. There is also no document produced like balance-sheet, profit and loss account etc. to show as to what was the financial position of the petitioner before the fire, pvr １１ ap21-11 immediately after the fire and at the time when the payment was received by the petitioner from the respondent. There is no material produced to prove that it was under severe financial crisis because of the loss. Merely because there was a fire in the petitioner s factory and part of the factory was damaged, an inference of severe financial crisis cannot be drawn. It depends on the facts of a particular case. In case a party has several factories, damage to one factory may not result in severe financial crisis. If a concern is already in loss or a company which has stopped manufacturing even before the fire, may not be in a position to say that because of fire its business was crippled. Therefore, whether the petitioner was facing severe financial crises at the relevant time will have to be proved by the petitioner by leading evidence. The petitioner, however, has not produced any evidence on record. The petitioner claims in the petition that the Surveyor and the respondent forced the petitioner pvr １２ ap21-11 to sign the discharge voucher. The respondent is a body corporate, the petitioner is also a body corporate. No individual has been named in the petition as to who exercised force on behalf of the respondent. So far as the Surveyor is concerned, he appears to an individual independent of the respondent and the petitioner. There are no reasons give what was his interest in exercising force. It is also not explained as to how he was in a position to exercise force on the petitioner. Thus, as the record stands the allegations of severe financial crisis are not substantiated by any documentary or oral evidence and the allegation of force cannot be believed. It is further pertinent to be noted that it is an admitted position that the petitioner received the amount on 3.12.2010 and the discharge voucher was signed on 6.12.2010. It is not the case of the petitioner that when the petitioner signed the discharge voucher, it was undated and that the date has been subsequently put in. The pvr １３ ap21-11 petitioner admits in the rejoinder that is filed by the petitioner that the discharge voucher on which the respondent relied was signed by the petitioner on 6.12.2010. In paragraph 4 of the rejoinder, the petitioner states thus:- I say that pursuant to the said letter the Respondents have released the admitted sum of Rs. 3,14,10,396/- along with full and final settlement intimation voucher which was signed and returned by the Petitioners to the Respondents on 6.12.2010. In paragraphs 6 and 9 of the petition, the petitioner admits that payment was released on 3.12.2010. The petitioner has nowhere explained in the entire petition as to why when the payment on 3.12.2010 was already released, it signed the discharge voucher on 6.12.2010 if it was not the intention of the petitioner to receive the amount in full and final settlement of its claim. As the petitioner had already received the payment on 3.12.2010, there is no question of there being pvr １４ ap21-11 any force, pressure or coercion on 6.12.2010 for signing the discharge voucher. It, thus, appears that the case put up by the petitioner of there being any coercion on the part of the respondent for forcing the petitioner to sign the discharge voucher is incapable of being believed. 5. So far as the judgment of the Supreme Court in the case National Insurance Co.Ltd. is concerned, in that case the discharge voucher that the Supreme Court was considering was an undated discharge voucher. In that case, the payment was released by the Insurance Company only after the discharge voucher was signed. In that situation after examining the facts and circumstances of that case the Supreme Court has recorded prima facie finding in relation to discharge voucher which is relevant only for that case. In so far as the present case is concerned, I find that the stand of the petitioner that it signed the discharge voucher under coercion or pvr １５ ap21-11 financial duress cannot be accepted, and therefore, the Arbitrator cannot be appointed. The petition is, therefore, rejected. 6. When I heard the matter, after hearing the learned Counsel appearing for petitioner for some time, I pointed out to him that in view of signing of discharge voucher on 6.12.2010 after receiving payment on 3.12.2010 the petitioner cannot say that the discharge voucher was signed under any duress or coercion. But the learned Counsel did not pay any heed and continued to argue the matter endlessly and thus consumed considerable time of the Court. In my opinion, therefore, in this situation it will be appropriate to impose cost on the petitioner for wasting Court s time. The petitioner is, therefore, directed to pay to the respondent as and by way of cost of this petition Rs.25,000/-. (D.K.DESHMUKH, J.)