Case: New India Ass. Co. Ltd Vs. Genus Power Inf. Ltd

respondent has a manufacturing unit for which it had purchased a Standard Fire and Special Perils Policy (policy for short) from the appellant on 17.04.2009, which policy was for a period of one year and the total sum assured was Rs.91 crores and 10 lacs only. On 29.10.2009 there was a fire explosion in the adjoining Indian Oil Corporation Terminal causing extensive damage to the manufacturing unit of the respondent. On being notified, the appellant appointed a category "A" Licensed Surveyor and Loss Assessor in compliance of Section 64 UM of the Insurance Act, 1938 to assess the damage. In the assessment of the respondent and as per the claim lodged by it, the loss caused to its plant and machinery, buildings fixtures and furnitures and stocks was to the tune of Rs.28.79 crores. It appears that the Surveyor submitted his final report on 27.07.2010 and assessed the loss at Rs.6,09,77,406/-. It is contended by the appellant but denied by the respondent that the final survey report was duly communicated to the respondent on 01.11.2010New India Assurance Co. LtdThat in consideration of claim amount of Rs.5,96,08,179 (Rupees Five Crores Nintey Six Lakhs Eight Thousand One Hundred Seventy Nine only) (herein after referred as "Claim amount") as full and final settlement amount of our claim No.330203/11/10/01/00100001 arising under policy No.330203/11/09/11/00000018 (herein after referred as "Policy") covering fire loss of my/our factory situated on Plot No.SPL 3, Sitapura, - Industrial area Jaipur (herein after referred as "Factory Premises") due to fire that took place in IOC Terminal on 29-10-2009, we hereby subrogate our rights on behalf of M/S Genus Power Infrastructures Limited Jaipur (herein after referred as "Insured") in favour ofNew India Assurance Co.Ltd.(herein after referred as "Insurer") as under:-That we the Insured hereby subrogate all the rights and remedies (to the extent provided by aforesaid contract of Insurance and under the General law and further any other Law enforceable consequence to the above loss) against the RIICO, Indian Oil Corporation, Govt. of Rajasthan, other insurance company or any other agency/authority of Govt. of Rajasthan, semi Govt. etc. whom so ever is liable in respect whereof in favour of the Insurer regarding Fire accident taken place on 29-10-2009 in IOC terminal in Sitapura Industrial Area, Jaipur and claim arises under "Policy" covering fire loss of Insured factory in "Factory Premises" in favour of the "Insurer"That we the Insured further assign and transfer all rights to Insurer to recover the claim amount or any part thereof from RIICO, Indian Oil Corporation, Govt. of Rajasthan, other insurance company or any other agency/authority of Govt. of Rajasthan, semi Govt. etc. who so ever is liableThat we the Insured further assign and transfer all rights to agitate the Claim before the RIICO, Indian Oil Corporation, Govt. of Rajasthan, other insurance company or any other agency/authority of Govt. of Rajasthan, semi Govt. etc. who so ever is liable to pay the compensation/claim. The Insurer will be entitled to file complaint/claim before any court of law, tribunal or any other adjudicatory authority and plead the same on behalf of ourselves and in getting success in adjudication therein will be entitled to retain the amount paid....... .......................................................................In witness whereof we get our hands on this Subrogation letter on the 11th day of March 2011For Genus Power Infrastructure ltd4. After nearly three weeks i.e on 31.03.2011 the respondent issued a notice to the appellant stating that the discharge voucher was signed under extreme duress, coercion and undue influence exercised by the appellant who took undue advantage of the extreme financial difficulties of the respondent. The respondent further sought to appoint its nominee arbitrator. On 21.04.2011 the appellant replied that there was no arbitrable dispute which existed between the parties inasmuch as the respondent had voluntary signed the letter of subrogation and had accepted payment in full and final settlement of its claim. In the meantime on 05.04.2011 the respondent had filed a petition under section 11 of the Arbitration and Conciliation Act, 1996 (The Act for short) before the High Court of Delhi alleging that it had accepted the payment as stated above because of extreme financial difficulty, duress and coercion. On 10.05.2013 the High Court after recording rival submissions of the parties adjourned the matter which was then taken up on 30.05.2013 when the High Court observed;"Vide order dated 10th May, 2013, this Court has already observed that there is a valid arbitration agreement between the parties and there are disputes which are covered under the arbitration agreement. The learned counsel for the respondent submits that the disputes are not arbitrable. The respondent can raise this objection before the learned arbitrator."In that view of the matter the High Court proceeded to appoint a sole arbitrator to adjudicate the disputes between the parties5. The aforesaid order dated 30.05.2013 is the subject matter of challenge in the present appeal.

Court's reasoning:
9. 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 31.03.2011 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.