2009 (10) TMI 959 - HC - Indian Laws

Summary

Issues Involved:
1. Validity of the full and final settlement voucher.
2. Interpretation of the arbitration clause.
3. Nature and terms of the insurance policy.
4. Request for fresh survey report.
5. Award of interest and costs.

Detailed Analysis:

1. Validity of the Full and Final Settlement Voucher:
The arbitrators held that the full and final settlement voucher was not signed voluntarily by the respondent but under duress. The respondent had written a letter on 18.12.1998, immediately after signing the voucher, stating that it was signed under economic duress. The arbitrators found sufficient evidence that the respondent did not voluntarily issue the discharge voucher dated 17 December 1998. The evidence included testimonies and letters indicating that the respondent was coerced into signing the voucher to receive the admitted amount. The court upheld this finding, noting that the objector's counsel conceded that payment would not have been released without the discharge voucher.

2. Interpretation of the Arbitration Clause:
The arbitration clause was interpreted to include the determination of whether there was a full and final settlement. The clause stated, "If any difference shall arise as to the quantum to be paid under this policy (liability being otherwise admitted) such difference shall independently of all other questions be referred to the decision of an arbitrator." The court found this interpretation valid, referencing the Supreme Court's decision in National Insurance Co. Ltd. v. Boghara Polyfab Ltd., which supported the arbitrators' jurisdiction to determine the issue of full and final settlement.

3. Nature and Terms of the Insurance Policy:
The policy in question was a Fire Declaration Policy, but the arbitrators held that the nomenclature was immaterial. They considered the terms of the contract, contemporaneous correspondence, and the parties' actions. The respondent had made monthly declarations of the value of stocks at different locations, which were accepted by the objector without objection. The arbitrators found that the sub-limits for each location changed as per these monthly declarations. The court upheld this finding, noting that the conduct of the parties and the contemporaneous correspondence supported the arbitrators' interpretation.

4. Request for Fresh Survey Report:
The objector's request to refer the matter back to the surveyors for fresh valuation was refused. The arbitrators found that the objector had sufficient opportunity to address the valuation issue from the outset. The court agreed, noting that the objector failed to provide specific grounds for doubting the value of the stocks declared by the respondent. The court cited the Supreme Court's decision in New India Assurance Co. Ltd. v. Pradeep Kumar, which held that a surveyor's report is not conclusive and can be departed from.

5. Award of Interest and Costs:
The arbitrators awarded interest at 15% per annum from 11.12.1998 till the date of the award and 12% per annum from the date of the award till payment. The court reduced the interest rate to 9%, citing the Supreme Court's guidance on the liberalization of interest rates. Regarding costs, the court directed the respondent to file an affidavit detailing the legal costs incurred. The court emphasized that actual costs should be awarded, considering the financial capacity of the parties and the value of the claims involved.

Conclusion:
The objection petition was dismissed, with the court upholding the arbitrators' findings on the validity of the settlement voucher, the interpretation of the arbitration clause, the terms of the insurance policy, and the refusal to refer the matter for a fresh survey report. The interest rate was reduced to 9%, and the respondent was directed to file an affidavit for the award of actual costs.