2023 (9) TMI 1572 - HC - Indian Laws

Seeking to appoint an arbitrator - section 11 of the Arbitration and Conciliation Act, 1996 - HELD THAT - On one hand, the company has taken a stand that the petitioner is paid the amounts due and payable under the policy and that there is no need to refer the disputes to the arbitration under clause 13 of the policy, on the other hand, the petitioner disputes such case on various grounds. It was stated that amout of Rs. 92,00,388/-is wrongfully deducted while making payment of Rs. 84,19,579/- inasmuch as total claim lodged was Rs. 1,76,19,967/-. The above aspects indeed travels to the adjudicatory realm, which is the function to be discharged by the arbitrator. When the claim is disputed, it is the arbitrator who may competently decide the claim. Arbitrability of the dispute is also to be decided by the arbitrator. While exercising the powers under section 8 of the Arbitration and Conciliation Act, 1996, such questions cannot be gone into by this Court and when there is an arbitration clause, the aspects are to be decided by the arbitrator for such purpose. In the proceedings under section 8 of the Arbitration Act, it is not the function of the Court to examine in detail, the extant and nature of dispute, if dispute exist is referable to the arbitration clause occurring in the agreement between the parties, the appointment of arbitrator has to follow - It is observed that this Court has not expressed any opinion on merits of the dispute and arbitrability thereof. The Registry is directed to list the same before the appropriate Bench in accordance with roster for the purpose of passing the order regarding appointment of arbitrator.

Summary

Issues Involved:

1. Whether the dispute between the petitioner and the respondent insurance company is arbitrable under the arbitration clause of the insurance policy.
2. Whether the petitioner accepted the settlement amount as full and final settlement of the claim.
3. Whether the petitioner was coerced into accepting the settlement amount and signing the consent letter.
4. Whether the petitioner's claim was fully satisfied by the respondent insurance company.
5. Whether the appointment of an arbitrator is warranted under Section 11 of the Arbitration and Conciliation Act, 1996.

Detailed Analysis:

1. Arbitrability of the Dispute:

The core issue revolves around whether the dispute between the petitioner and the respondent insurance company is arbitrable under the arbitration clause of the insurance policy. The petitioner argued that there exists a quantum dispute that needs resolution under clause 13 of the terms and conditions of the fire policy. The clause stipulates that any dispute regarding the quantum to be paid under the policy should be referred to arbitration, provided the company has not disputed or denied liability under the policy. The respondent contended that the dispute was not arbitrable as the petitioner had accepted the settlement amount, implying no further dispute existed. However, the court noted that the determination of arbitrability is a function for the arbitrator and not the court, as per the Arbitration and Conciliation Act, 1996.

2. Acceptance of Settlement Amount:

The respondent insurance company argued that the petitioner had accepted Rs. 84,19,579/- as full and final settlement, as evidenced by a consent letter and an advance discharge voucher. The consent letter, addressed to the insurance surveyor, indicated acceptance of the net loss assessed by the surveyor. The respondent maintained that this acceptance precluded any further claims or disputes. The petitioner, however, disputed this claim, arguing that the acceptance was not voluntary and that the settlement did not fully indemnify the loss suffered.

3. Coercion in Accepting the Settlement:

The petitioner contended that the acceptance of the settlement amount and the signing of the consent letter were not done freely but under undue influence and coercion. The petitioner argued that there was an apprehension that not signing the consent letter would prejudice another pending claim. The legal notice issued by the petitioner further emphasized that the consent was not given willingly, and the settlement voucher was signed under duress. The court noted that the genuineness of the plea of coercion is a matter to be determined in the arbitration proceedings, not at this stage.

4. Satisfaction of the Claim:

The petitioner claimed that the total damage amounted to Rs. 1,76,19,967/-, whereas the respondent only paid Rs. 84,19,579/-, leaving an unpaid balance of Rs. 92,00,388/-. The petitioner argued that this balance was wrongfully deducted and that the claim was not fully satisfied. The respondent, on the other hand, argued that the petitioner had agreed to the assessed loss and that the settlement was final. The court highlighted that the issue of whether the claim was fully satisfied is a substantive matter to be resolved by the arbitrator.

5. Appointment of an Arbitrator:

The petitioner sought the appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996, to resolve the dispute. The court, citing the Supreme Court's observations, stated that the power to appoint an arbitrator is a judicial power, and the existence of an arbitrable dispute must be prima facie established. The court emphasized that it is not the function of the court to delve into the merits of the dispute at this stage. The court directed the Registry to list the matter before the appropriate Bench for appointing an arbitrator, thereby allowing the arbitration process to proceed.

In conclusion, the court recognized the existence of a dispute requiring arbitration and directed the matter to be listed for appointing an arbitrator, without expressing any opinion on the merits of the dispute or its arbitrability.