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Once discharge voucher is received against payment received, no debt exists

Cause Title : Balkrishna Spintex Private Limited Vs The New India Assurance Company Limited, R/petn. Under Arbitration Act No. 66 Of 2020, The Supreme Court of India

Date of Judgment/Order : 10/06/2022

Corum : Honourable The Chief Justice Mr. Justice Aravind Kumar

Citied: United India Insurance Company versus Antique Art Exports Private Limited reported in (2019) 5 SCC 362, Supreme Court

Background

A claim was raised against by the Petitioner on account of a fire accident which broke out on at the go-down of petitioner factory premises which was insured with respondent, resulting in stock of cotton and the building being gutted in fire and same got destroyed. A sum of Rs. 6,02,74,557/- was paid to petitioner by respondent against the claim. After having received said amount, it was made known to respondent by petitioner that it had received under protest or in other words it is contended that on account of the financial circumstances in which the petitioner was placed, he was perforced to receive the said amount with no other option. It is contended that respondent ought to have paid entire amount claimed and on account of non-payment, dispute has arisen and as such, petitioner has sought for appointment of an Arbitrator.

The Respondent replied that there is no arbitrable dispute and petitioner after having received the money, has in discharge of full and final settlement, executed discharge voucher and was also given a consent letter on 13.03.2019 stating thereunder that consent of payment of Rs. 06,06,16,122/- is being given and as such it is stated that there is no amount due and payable and there are no arbitrable dispute existing between the parties. Hence, they have sought for dismissal of the petition.

Judgment

The Hon'ble court took the considered view that respondent is correct in contending that petitioner is not entitled to invoke the arbitration clause or in other words no dispute subsisted after the discharge voucher being signed by the respondents that too without any protest or demur. Merely because after receipt of amount, petitioner has contended within 15 days thereafter that said amount was received under duress, would not be a tenable ground to entertain the plea for referring the dispute to be arbitrated by a Sole Arbitrator. The court referred to the judgment of the Supreme Court in United India Insurance Company versus Antique Art Exports Private Limited reported in (2019) 5 SCC 362, wherein  has been observed that :-

“Where the dispute raised by the claimant with regard to validity of the discharge voucher or no claim certificate or settlement agreement, prima facie, appears to be lacking in credibility, there may not be a necessity to refer the dispute for arbitration at all.”

In the said case, the SC had also held that the Hon’ble Apex Court held that mere plea of fraud, coercion or undue influence by itself is not enough and the party who alleges is under obligation to prima facie establish the same by placing satisfactory material on record before the Chief justice or his designate to exercise the power under Section 11(6) of the Act and the Petitioner has not done so. On the other hand, the respondent with eyes wide open has affixed the signature to the discharge voucher. Hence, it would be too late in the day for the petitioner to turn around to contend that under the circumstances prevailing, he was perforced to receive said amount with no other option, can only be said as an after-thought.

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