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2005 DIGILAW 347 (JK)

New India Assurance Co. Ltd. v. Gh. Mohi-ud-Din

2005-12-05

NIRMAL SINGH

body2005
1. The relevant facts for disposals of this appeal are: That the respondent had taken a policy No. 1574203206 for Rs. 12 lakhs which was subsequently increased to 15 lakhs on 25.4.1983. When the policy was enforced the goods insured got gutted in fire and the matter was referred to the respondent-Company. The fire loss was assessed by the surveyor of the appellant-company. The surveyor offered an amount of Rs. 10,49,880.79 to the respondent firm in full and final settlement and discharge of claim. The respondent agreed to accept the amount. The appellant-company on the basis of income tax assessment for the year 1984-85 raised the claim before the company and pleaded that surveyor has erroneously valued the salvage goods at Rs. 4,49,203/-. The respondent challenged the same before the Income Tax Officer. The Insurance Company not denied its liability with regard to the quantum but pleaded that the respondent has accepted in full and final settlement of the claim arisen out of the policy. The respondent put the claim before the Court under Section 20 of the Arbitration Act (hereinafter to be referred to as the Act) for the appointment of arbitrator for purposes of securing the enhanced amount of compensation. The objections were filed by the appellant-company. After hearing the parties, the learned trial court passed the impugned order and directed the parties to initiate the process of appointment of arbitrator according to the terms and conditions of the agreement and complete the same within a period of two months, aggrieved by which the present appeal has been preferred. 2. Notice was issued to the respondent. Despite service no one has caused appearance on behalf of the respondent. 3. I have heard learned counsel for the appellant. 4. Mr. Dar, learned counsel appearing for the appellant submitted that the learned trial court has erroneously allowed the application filed by the respondent under section 20 of the Act. He submitted that the matter to the arbitrator can only be referred if the Court finds that a dispute exists between the parties which is capable of being referred to the arbitrator. But in this case there is no dispute between the parties as the respondent accepted the payment in full and final settlement of the claim. He submitted that the matter to the arbitrator can only be referred if the Court finds that a dispute exists between the parties which is capable of being referred to the arbitrator. But in this case there is no dispute between the parties as the respondent accepted the payment in full and final settlement of the claim. He further submitted that the respondent has not accepted the claim even under protest, the learned trial court has overlooked this aspect of the case. He further contended that application filed by respondent for the appointment of arbitrator is bared by time. Full and final settlement was accepted on 29.6.1984 whereas application under section 20 of the Act has been filed on 5.8.1987. He submitted that for filing application under section 20 of the Act the limitation prescribed under the Limitation Act is three years, so the application filed by the respondent cannot be entertained. 5. I have given my thoughtful consideration to the submissions made by learned counsel for the appellant and perused the record. 6. As per pleadings of the respondents, the surveyor offered an amount of Rs. 10,49,880.79 in full and final settlement and discharge of the claim for the loss. The respondent has accepted the said amount without any protest. It is not the case of the respondent that they accepted the amount under undue influence or coercion. Even there was no delay in the settlement of the claim. If there would have been long delay in the settlement of the claim then it can be said that respondent has accepted the claim due to long delay. The delay has forced him to accept it. 7. When a party accepted the claim in full and final settlement, then the same party is estopped by his act and conduct to raise the issue that claim has not been settled. The delay has forced him to accept it. 7. When a party accepted the claim in full and final settlement, then the same party is estopped by his act and conduct to raise the issue that claim has not been settled. In case titled State of W.B. vs. Gopal Chander Paul, reported in 1995(3) SCC 324, their lordships while interpreting the full and final settlement of the agreement have held as under: "Even otherwise we feel that once the parties have arrived at a settlement in respect of any dispute or difference arising under a contract and that dispute or the difference is amicably settled by way of a final settlement by and between the parties, unless that settlement is set aside in proper proceedings, it cannot lie in the mouth of one of parties to the settlement to spurn it on the ground that it was mistake and proceed to invoke the Arbitration Clause. If this permitted the sanctity of a contract, the settlement also being a contract, would be wholly lost and it would be open to one party to take the benefit under the settlement and then to question the same on the ground of mistake without having the settlement set aside. In the circumstances, we think that in the instant case since the dispute or difference was finally settled and payments were made as per the settlement, it was not open to the respondent unilaterally to treat the settlement as non-est and proceed to invoke the Arbitration clause. We are therefore, of the opinion that the High Court was wrong in the view that it took." 8. In 1994 Supp. (3) SCC 126 case titled M/s P.K. Ramiah and Company vs. Chairman and Managing Director National Thermal Power Corpn., the Apex Court has held as under: "8. On those facts, this court held that although there was alleged payment as final satisfaction of the contract, yet as the respondent did not give any receipt accepting the settlement of the claim, the payment was unilateral, so the dispute still subsisted and therefore it was arbitable dispute and the reference was valid. In Bhan Preakash Case also there was no full and final settlement and payment was not received under a receipt. In L.K. Ahuja and Co. In Bhan Preakash Case also there was no full and final settlement and payment was not received under a receipt. In L.K. Ahuja and Co. case this court while laying the general law held that if the bill was prepared by the department, the claim gets weakened. That was not a case for accord and satisfaction but one of pleading bar of limitation without prayer rejection of the claim. Therefore, the ratio therein is of little assistance. The Calcutta High Court merely followed the settlement of law laid in Ahuja and Co, case. It is not shown to us that the Chief Construction Manager was competent to acknowledge the liability or an authority to refer the dispute for arbitration. So neither his letter binds the respondent nor operates as estoppel. Admittedly the full and final satisfaction was acknowledged by a receipt in writing and the amount was received unconditionally. Thus there is accord and satisfaction by final satisfaction of the claims. The subsequent allegation of coercion is an after thought and a devise to get over the settlement of the dispute, acceptance of the payment and receipt voluntarily given. In Russel on Arbitration, 19th Edn. P. 396 it is stated that an accord and satisfaction may be pleaded in an action on award and will constitute a good defence. Accordingly we held that the appellant having acknowledged the settlement and also accepted measurements and having received the amounts in full and final settlement of the claim, there is accord and satisfaction." 9. In case titled M/s T.G. Gupta vs. National Hydro electric Power Corpn. Reported in 2002 SLJ Vol. (1) 228 this Court held as under:- "Where a receipt of the amount towards full and final settlement of the claim has been executed by the claimant, the inference is that the contracting party has discharged its liability. In absence of there being any express provision in the receipt that the amount is accepted by way of protest, this presumption gets strengthened. However, where the claimant executed an undertaking that the amount was received by way of full and final settlement and the other claims were surrendered and forfeited, this undertaking assumes the shape of an agreement between the parties. The courts while deciding the existence or otherwise of a dispute will have to be take that agreement into consideration. The court in terms of Sec. 20 of Arb. The courts while deciding the existence or otherwise of a dispute will have to be take that agreement into consideration. The court in terms of Sec. 20 of Arb. Act has only to see as to whether a dispute between the parties has arisen and the same is covered by the agreement. The court while proceedings in terms of Sec. 20 does not seem to have any power of adjudging the legality and correctness of the subsequent agreement. I think, it has to treat the undertaking to be a part of the agreement, unless the same is declared to be null and void. It is true that if the undertaking is brought into existence by coercion, under influence, fraud or misrepresentation, then the same may not conform to the standard of a valid contract in terms of the Contract Act. But unless the undertaking, like any other agreement is challenged by way of an independent proceedings before a Civil Court and declared to be null, and void, same cannot be brushed aside, while dealing with proceedings under section 20 Arb. Act. This is in fact but was hinted at by their Lordships of the Supreme Court, though not in so many words, in Nathani Steels Ltd. (1995 (3) SCC 324) supra." 10. The respondent has accepted the amount by way of full and final settlement of the insurance claim under the policy and thereby releasing the Insurance Company of its obligation to meet any further claim. Learned trial court has relied upon case titled Damodar Valley Corporation vs. K.K. Kar reported in AIR 1974 SC 158. The ratio of the said case is not relevant in the present case. In that case the respondent repudiated the contract unilaterally. There was a coercion and undue influence used by Damodar Valley Corporation. Under these circumstances their lordships held that claim which has arisen between the contractor and the appellant-Corporation upon or it relation to or in connection with the contract. AIR 1982 SC 625, case titled M/s Bharat Heavy Electrical Ltd. vs. M/s Amar Nath Bhan Prakash is also not relevant to the facts of the present case. In the said case it was not proved whether there was a discharge of the contract by accord in full and final settlement. 11. AIR 1982 SC 625, case titled M/s Bharat Heavy Electrical Ltd. vs. M/s Amar Nath Bhan Prakash is also not relevant to the facts of the present case. In the said case it was not proved whether there was a discharge of the contract by accord in full and final settlement. 11. In the case in hand from the facts and circumstances of the case it has been proved on record that the respondent has accepted the claim in its full and final settlement of the insurance claim and thereby releasing the insurance company of its obligation to meet any other further claim. 12. For the reasons mentioned above, this appeal is accepted and the impugned judgment is set aside. No order as to costs.