9911796707
TMI Blog2009 (10) TMI 959X X X X Extracts X X X X X X X X Extracts X X X X ..... red keeping in view the total overall value limit of the policy, although there would be changes in the value of stocks and sub-limits in different locations from time to time. The business of the respondent was, inter alia, of export of its goods (mostly rice) and as per the stand of the respondent, as orders were executed and procurements made the value of stocks in the different godowns in the country fluctuated frequently. According to the case of the respondent, it was difficult to keep track of these fluctuations and hence it could not take separate policies for each godown and, therefore, a single policy was required to meet its insurance requirement. 3. The insurance policy was given by the objector to the respondent initially for a sum of ₹ 20 crores under its cover note dated 7.8.1997. This figure of ₹ 20 crores was enhanced to ₹ 25 crores on the endorsement in the cover note dated 12.8.1997. The insurance policy in this regard was issued on 14.8.1997. This court is, therefore, concerned with this policy, and the endorsements. Further enhancements were made to the value of the policy. First one was by 8 crores on 24.11.1997 and the second one by ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se in question is wide enough to include therein the determination of the issue as to whether full and final settlement between the parties was arrived at. This finding was arrived at because the objector insurance company contended that the arbitrators under the subject arbitration Clause could only adjudicate upon the quantum of the claim and could not decide the issue with regard to whether or not there was full and final settlement under the voucher in question. (iii) The nomenclature of the policy whether the same is a Fire Declaration Policy or a Floaters Policy is immaterial because what has to be referred to are the terms of the contract between the parties, contemporaneous correspondence and the actions of the parties in furtherance of the contract so as to determine the meaning which the parties would ascribe to the terms of the contract. Accordingly, it is held that the sub-limits for each location will change as per monthly declarations submitted by the respondent. The arbitrators awarded the respondent company the amount with respect to the loss of its stocks on the ground that though the sub-limit of the stocks at Kandla Port as per the insurance policy was sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and objections raised needs to be examined and has been so examined by me. 7. The learned Counsel for the objector Mr. Neeraj Kishan Kaul, Senior Advocate has strenuously argued two points. The first point is that according to the objector the arbitration Clause in question has been wrongly interpreted by the Arbitrators to come to the decision as to that they were entitled to determine whether or not there was any full and final settlement between the parties on account of the respondent signing the full and final settlement dated 17.12.1998. He further argued that the judgment of the Supreme Court in National Insurance Co. Ltd. v. Boghara Polyfab Ltd. 2008(12) Scale 654 is distinguishable and what actually ought to have been applied is the ratio of the decision of the Supreme Court in the case of Nathani Steel Ltd. v. Associated Constructions : 1995 Supp. (3) SCC 324. The Counsel has also further contended that the Arbitrator can have no jurisdiction in case the arbitration Clause does not permit the Arbitrators to decide the issue of full and final settlement between the parties because that would amount to the Arbitrator exceeding his jurisdiction. For this purpose, the Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o do in writing by the other party in accordance with the provisions of the Arbitration Act, 1940, as amended from time to time and for the time being in force. In case either party shall refuse or fail to appoint an arbitrator within two calendar months after receipt of a notice in writing requiring an appointment, the other party shall be at liberty to appoint a sole arbitrator and in case of disagreement between the arbitrators, the difference shall be referred to the decision of an umpire who shall have been appointed by them in writing before entering on the reference and who shall sit with the arbitrators and preside at their meeting. The phrase, if any difference shall arise as to the quantum to be paid under this Policy is sufficiently wide to cover the claims in the present case. The Claimant's whole contention is that the quantum determined by the Respondent as being payable under the policy i.e. ₹ 4,30,91,103/- is not correct and that the quantum or the amount that the Claimant was entitled to be paid was ₹ 7,05,07,442.77 towards the actual loss suffered and ₹ 30,70,606/- towards expenses incurred in minimizing or mitigation of loss. Additionall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that whether any quantum as claimed by the insured is payable or not, then to determine such a question it is necessary to arrive at a decision whether there was an earlier full and final settlement. 13. At this stage, it is necessary to refer to the recent decision of National Insurance Co. Ltd. v. Boghara Polyfab Ltd. (supra) in which an absolutely identical Clause as the one in question in the present case was in issue. Para 12 of the judgment refers to that Clause and the issue in question. This para is reproduced below: 12. In this case existence of an arbitration Clause in the contract of insurance is not in dispute. It provides that if any dispute or difference shall arise as to the quantum to be paid under this policy (liability being otherwise admitted) such difference shall, independently to all other questions be referred to the decision of a sole Arbitrator. The rival contentions give rise to the following question for our consideration: In what circumstances a court will refuse to refer a dispute relating to quantum to arbitration, when the contract specifically provides for reference of disputes and differences relating to the quantum to arbitration? In pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d amount mentioned in the voucher is paid. The accord and satisfaction in such a case is not voluntary but under duress, compulsion and coercion. The coercion is subtle but very much real. The 'accord' is not by free consent. The arbitration agreement can thus be invoked to refer the disputes to arbitration. 15. In the present case, the Arbitrators have come to a categorical finding that the full and final settlement voucher was not signed by the respondent voluntarily and it was under duress. The Arbitrators in this regard have held as under: 10. 14 We hold that the evidence on record establishes that the Claimant did not voluntarily or unconditionally issue the discharge voucher dated 17 December 1998. We do not accept the Respondent's contention that any protest must only be in writing. A protest can be made orally or in writing or even be inferred from the conduct of the party. Even otherwise there is sufficient evidence in writing as to the state of affairs. 10.15. The Claimant has proved that it received the letter dated 11 December 1998 on 14 December 1998 when Mr. Vaishnavi, Mr. Phukela and Mr. Dua of the Respondent, came to the office of Mr. Anil Chana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted received by the Respondent on 18 December 1998 which was, no doubt, after the money was released. However, the letter was posted on 16 December and is evidence of the prior protest and involuntarily signature appended to the discharge voucher dated 17 December 1998. Along with the letter is enclosed a receipt on the Claimant's letterhead acknowledging release of payment but with the right to press for the balance due. This also shows that Mr. Anil Chanana's statement in para 24 of his affidavit is true. 10.18. The evidence of Mr. A.P. Singh and Mr. Anil Chanana also shows that before handing over the discharge voucher once again an attempt was made to reserve the right in writing also, but that was also not accepted by the Respondent leading to the 17 December 1998 receipt being issued in the printed format. This is stated in paras 9 to 11 of Mr. A.P.Singh's affidavit and he was also not cross examined on it. 10.19. Immediately afterwards also on 18 December 1998, the Claimant sent a letter which was admittedly received by the Respondent reiterating the contents of the letter dated 16 December 1998 and stating that the 17 December 1998 discharge voucher was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. It was also specifically contended by referring to the tariff regulations that in respect of declaration policies containing more than one specific location, the insurer should stipulate separate sums insured and separate declarations in respect of each separate location and beyond which insurance claim cannot be made. 19. I find that the arbitrators have in this behalf validly held that the nomenclature of the policy is not a relevant factor but what is to be seen are relevant terms and the contemporaneous correspondence which reflected the agreed terms and conditions between the parties. The learned arbitrators have also further relied upon the conduct of the parties and specially of the respondent in respect of giving necessary declarations each month which in fact shows that the fixed sublimit originally specified in the insurance policy was for each month after the issue of the policy declared to be different then as specified in the sub-limits of the policy and right up to May, 1998 when the last declaration was given on 5.6.1998 viz just before the insured event occurred on 9.6.1998. In this regard, I would do no better than refer to the following paragraphs from the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must be construed or looked at. This submission is too broadly stated. No doubt, if there is any irreconcilable conflict between a Policy issued and the Cover Note issued prior to the Policy, the terms of the Policy must prevail. However, if there is no such irreconcilable conflict then the Policy and Cover Note must be read consistently and it would be permissible to refer to the terms of the Cover Note to construe the policy. 20. The finding of the arbitrators on this issue is fully justified because it has been held by the Supreme Court judgment in Godhara Electricity Co. Ltd. v. The State of Gujrat and Anr. 1975 SC 32 that conduct of a party subsequent to entering into contract is very much relevant for the understanding and interpretation of the terms of the contract between the parties. Para 11 of the judgment is opposite and is reproduced below. In the process of interpretation of the terms of a contract, the court can frequently get great assistance from the interpreting statements made by the parties themselves or from their conduct in rendering or in receiving performance under it. Parties can, by mutual agreement make their own contracts; they can also by mutual a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rbitration on the basis that the policy under consideration is a fire declaration policy and not a policy of the description asserted by the Claimant and therefore, the Respondent says, it did not question the value of the stocks as declared in the declaration dated 5 June 1998. Its seems to us that if the Respondent did not do so, the Respondent took its chance in not meeting the case of the Claimant on the basis that the policy was of the particular nature asserted by the Claimant. Towards the very end of this case, a point was sought to be made by learned Counsel for the Respondent that if the policy is regarded as one of the nature described by the Claimant the basis of determining the liability would be different from that on which the surveyor had proceeded and therefore, it is urged, the matter should be referred to the surveyor afresh. We see no reason why a second chance should be given to the Respondent in the matter, considering that a full opportunity was available to it from the outset to meet the case of the Claimant in all its several aspects. There is therefore no justification for accepting the Respondent's prayer that the matter should be referred to the su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yor is called for. There was no attempt to discharge that burden. Our attention has been drawn to Section 64-UM(2) of the Insurance Act, 1938, which requires that no claim in respect of a loss shall be admitted for payment unless a report has been obtained from an approved surveyor or loss assessor on the loss that has occurred. In our opinion the loss suffered at Kandla has already been assessed by the surveyor in a preliminary report followed by a final report. It is not the case of either party that loss was also suffered at any other place. So far as that condition in Section 64-UM is concerned, it appears that it stands satisfied in the present case. Accordingly, if the objector company was of the opinion that it was a floaters policy, I also do feel that, it was well open to the objector insurance company right from the beginning to duly inform its surveyor when the survey report was made that in fact there is a correspondence dated 2.8.1997 and the contents of which should be considered by the surveyor at the time of preparation of is survey report. If this was not done by the objector insurance company, it must necessarily bear the consequences. In any case, the learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to depart therefrom as per Sikka Papers Ltd. v. National Insurance Co. Ltd. 2009 (7) SCC 777 because as pointed out by me in para 21 above that no good reasons were given to the arbitrators on behalf of the objector why the value stated in the declaration dated 5.6.98 be not accepted and therefore such declaration was accepted and consequently it is not necessary in view of New India Assurance Case to remit the matter for preparing a fresh survey report. 24. That takes me to the issue with regard to the interest which has been awarded by the arbitrators. In the recent catena of decisions, the Supreme Court has said on account of the liberalisation of the interest regime and the change of the economic scenario there is a drastic reduction in the rates of interest and the courts must in arbitration proceedings and the awards passed subsequently must necessarily reduce the rate of interest keeping in view this subsequent scenario. This issue was considered by a Division Bench of this Court in MMTC v. Al Bamar Co. Ltd. 2009 (159) DLT 513 referring to the aforesaid Supreme Court judgments. I have also had an occasion to consider this issue of interest in different judgments and two ..... X X X X Extracts X X X X X X X X Extracts X X X X
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