2009 (8) TMI 1232 - HC - Indian Laws

Summary

Issues Involved:
1. Validity of the award dated 1st August 2007.
2. Applicability of Clause 6(b)(ii) of the insurance policy.
3. Allegation of economic coercion in the settlement agreement.
4. Legal position regarding the limitation period u/s 28 of the Contract Act.

Summary:

1. Validity of the Award:
The petitioner raised objections u/s 34 against the award dated 1st August 2007, which allowed the respondent's claim of Rs. 51.96 lakhs with 9% interest per annum and the cost of arbitration.

2. Applicability of Clause 6(b)(ii):
The main objection was that the award was contrary to the contract, specifically Clause 6(b)(ii) of the policy, which barred claims after 12 months from the date of payment of claims on merits. The Arbitrator did not address this clause in his award.

3. Allegation of Economic Coercion:
The respondent claimed that the settlement was signed under economic coercion. Initially, the respondent accepted the surveyor's assessment and received payments in September 2001 and January 2002. However, in April 2004, the respondent alleged coercion and raised a further claim of Rs. 51.96 lakhs, invoking the arbitration clause.

4. Legal Position Regarding Limitation Period u/s 28 of the Contract Act:
The respondent argued that the 12-month period in the policy was contrary to the law of limitation and void u/s 28 of the Contract Act. The Supreme Court in National Insurance Company Ltd. vs. Sujir Ganesh Nayak & Company AIR 1997 SC 2049 and Himachal Pradesh State Conference Company Ltd. vs. Union of India Insurance Company Ltd. (2009) 2 SCC 252 upheld that such clauses extinguishing the right itself if not exercised within a specified time are not hit by Section 28.

Conclusion:
In light of the Supreme Court's position, Clause 6(b)(ii) was binding. The respondent's claim raised after 12 months of the final settlement was not entertainable. The award of the Arbitrator was set aside on this ground.