Calcutta High Court
Pallarbund Tea Limited vs National Insurance Company on 12 May, 2010
Author: Sanjib Banerjee
Bench: Sanjib Banerjee
ORDER SHEET
A.P.No.19 of 2009
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
ORIGINAL SIDE
PALLARBUND TEA LIMITED.
-Versus-
NATIONAL INSURANCE COMPANY
LIMITED.
Appearance:
Mr. Ratnanko Banerji, Adv.
Ms. Sucharita Biswas, Adv.
...For the petitioner.
Mr. Abjihit Gangopadhyay, Adv.
Mr. K. K. Bandopadhyay, Adv.
Ms. Supriya Dube, Adv.
...For the respondent.
Before:
The Hon'ble Justice SANJIB BANERJEE Date: May 12, 2010.
The Court: The request under Section 11 of the Arbitration and Conciliation Act, 1996 has been opposed on the ground that there is no live claim to go to arbitration. The respondent insurance company suggests that by a writing executed on November 18, 2004, the petitioner had discharged the insurance company of its further obligation to make payment in respect of the 2 claim that had been lodged following a devastating cyclone that afflicted the petitioner's tea garden.
It is not in dispute that the primary discharge was issued by a bank since the settlement amount under the insurance policy was to directly go to the petitioner's bankers. At paragraph 2 of a supplementary affidavit used by the insurance company there is a categorical assertion to the effect that the discharge voucher had been signed on behalf of the tea estate owned by the petitioner company on November 18, 2004. A copy of the discharge voucher appears at page 9 of the supplementary affidavit. There is a signature of an employee and the rubber stamp of Punjab National Bank with the date of November 18, 2004. The discharge voucher also appears to have been signed by some manager of the tea garden of the petitioner company.
On May 9, 2005 the petitioner complained to the insurance company that the amount at which the claim had been settled was unjust and the petitioner lodged a strong protest with the insurance company. The insurance company's reply was prompt. On May 17, 2005 the insurance company wrote to the petitioner saying that the insurance company was astonished that the petitioner could make the assertion as contained in its letter of 3 May 9, 2005 since the petitioner company had given a complete and valid discharge of the insurance company's further obligations in respect of the claim. In the letter dated August 23, 2006 that followed from the petitioner, such aspect of the insurance company's claim that the petitioner had discharged the insurance company of any further obligation was completely overlooked. The contents of the insurance company's relevant letter were glossed over with the mere statement that such contents were denied. A subsequent letter was issued on October 24, 2005 by the petitioner, repeating that the insurance company had acted unjustly and arbitrarily in not settling the claim at a much higher figure. In the same vein a further letter ensued from the petitioner on December 2, 2005.
On September 9, 2006 Advocate representing the petitioner demanded that the insurance company pay up the rest of the petitioner's claim after taking into account the amount that had already been settled. Into the third page of such letter, it was stated on behalf of the petitioner that "you took recourse to various means of fraud, concealment of material facts and falsehood to justify your wrongful failure to pay the balance ..."4
The request for arbitration was issued on November 9, 2007. The letter was first addressed to a division of the insurance company which was not concerned with the matter and it was subsequently redirected to the division which was relevant for the purpose. The letter for request detailed the basis of the petitioner's grievance.
In the petition, there is a repetition of the basis of the petitioner's claim which was first expressed in the petitioner's letter of May 9, 2005 and was developed over course of time, including in the letter requesting a reference issued on February 9, 2007. There is no assertion in the petition that the petitioner had been constrained to issue the discharge voucher under coercion or undue influence or financial duress or the like. In fact, the petition has completely glossed over the matter though the copy of the insurance company's letter of May 17, 2005, where discharge was first cited, has been appended to the petition and appears at page 38 thereto.
On behalf of the respondent it is submitted that if the petitioner did not complain of coercion or undue influence immediately upon execution of the discharge voucher or if the petitioner did not complain of such conduct within a reasonable 5 time thereafter, it must be seen to be a case of accord and satisfaction or waiver or discharge, by whatever name called.
The respondent says that despite the discharge voucher having been executed in mid-November, 2004 there was no contemporaneous complaint that it had been obtained from the petitioner or the petitioner's representative in an unfair or unjust manner. The respondent reiterates that notwithstanding the assertion at the earliest opportunity by the respondent in its letter of May 17, 2005 that the insurance company stood discharged of its obligation to make any further payment under the claim, there was no denial of such assertion in any meaningful manner. The respondent asserts that right up to the stage of the petition being filed there was no whisper of the discharge voucher having been unfairly obtained either from the petitioner or from the petitioner's bankers.
In support of such contention the respondent relies on a judgment reported at 2009(1) SCC 267 (National Insurance Company -Vs.- Boghrara Polyfab Pvt. Ltd.) . It is the respondent's submission that since the petitioner had no right to claim after having released the insurance company of any further obligation in respect of the insurance claim, there was no question of the present 6 request under Section 11 of the Arbitration and Conciliation Act, 1996 being carried to Court.
The petitioner has relied on a judgment reported in 1999(6) SCC 400 (United India Insurance -Vs.- Ajmer Singh Cotton & General Mills & Ors.) . The petitioner says that though the magic words like "coercion" and "undue influence" have not been used in the correspondence that emanated from the petitioner, the sense of coercion and undue influence was conveyed in the letters of protest that began in May, 2005.
Coercion or undue influence is a matter of fact. As to whether a party felt that it had been coerced into a situation or undue influence had been exerted on it to obtain a concession from it is a matter of understanding of such party which has to be expressed. If the petitioner viewed its execution of the discharge voucher to be an act of coercion or undue influence, the assertion should have been made within a reasonable time, stating that unless the petitioner had issued such discharge voucher, the petitioner would not have been paid the pittance that the insurance company offered by way of final settlement. It was not the petitioner's understanding either immediately after executing the discharge certificate or until the stage of filing the petition, that 7 unless the petitioner had executed the discharge certificate the insurance company would not have paid the token sum that it had offered.
On the contrary, upon the ground being taken in the affidavit-in-opposition the petitioner has sought to explain in its subsequent affidavit filed in Court that the insurance company had, in fact, exercised undue influence. Implicit in the change of tack is the recognition by the petitioner that the case on facts as to coercion and undue influence had to be made out and that such case had probably not been made out in the letters issued by the petitioner to the respondent or in the petition that had been carried to Court.
The words in the letter of September 9, 2006 issued on behalf of the petitioner to the insurance company and quoted above, do not directly refer to the discharge voucher. The language has to be understood not in layman's terms but as used by Advocate representing the petitioner. The sentence implies that the denial of the petitioner's claim was fraudulent and that it was based on concealment and on falsehood. Such sentence or the use of the relevant words therein cannot be understood to have referred to the act of execution of the discharge voucher on November 18, 2004. 8
In a situation of the present kind where accord and satisfaction or discharge is set up by way of a defence to deny a request under Section 11 of the 1996 Act, the Chief Justice of his delegate has two courses of action open: a prima facie view may be taken and the matter may be required to be conclusively adjudicated in the reference; or, if it is apparent that there is no live dispute, the parties should not be unnecessarily pushed into a reference. In the present case, there was no grievance expressed by the petitioner since its execution of the discharge certificate on November 18, 2004 and till the time after the petition was filed that the execution of the discharge certificate was by coercion or undue influence or on like grounds. Since it was never the petitioner's understanding, prior to the defence being indicated in the affidavit- in-opposition, that unless the petitioner had executed the discharge voucher the petitioner would not have been made the payment that the insurance company offered, it does not appear that there was ever any live claim that could have been canvassed by the petitioner in respect of the relevant insurance policy after it received the payment.
It is an entirely different matter that on a reading of the arbitration clause it may even appear that a dispute as to accord 9 and satisfaction would not be capable of being embraced within the fold of the arbitration agreement. However, since the view taken here is that there was a complete discharge by the petitioner upon the execution of the discharge voucher on November 18, 2004, without any contemporaneous compliant on record, it is not necessary to consider the second aspect that the arbitration clause is not be wide enough to accommodate a dispute as to discharge of the claim.
A.P.No.19 of 2009 fails.
There will be no order as to costs.
Urgent certified photocopies of this order, if applied for, be given to the parties subject to compliance with all requisite formalities.
(Sanjib Banerjee , J.) A/s.