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Rajasthan High Court · body

2022 DIGILAW 2448 (RAJ)

Lila Emporium v. Senior Divisional Manager

2022-09-15

PANKAJ BHANDARI

body2022
JUDGMENT 1. The applicant has filed this Arbitration Application seeking appointment of an Arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the Arbitration Act"). 2. It is pleaded in the Arbitration Application that the applicant has obtained a Standard Fire and Special Peril Policy (Material Damage) by paying premium effective from 15.11.2019 to 14.11.2020. The insurance policy covers damages caused by flood and inundation. Due to heavy rain in Jaipur, a situation of flood was created and the entire insured stock of the policy holder got damaged. The claimant raised a claim of Rs.43,65,328/- out of which a sum of Rs.14,47,645/- was paid by the respondent - Insurance Company. It is also pleaded that the respondent has arbitrarily made deduction reducing the claim of the applicant, which gave rise to a dispute between the parties. The applicant gave a notice to the respondent for referring the matter to the Arbitrator and appointed Shri N.P. Upadhyay (Retired District & Sessions Judge) as a Sole Arbitrator. The respondent challenged the order of appointment of the Arbitrator and the application filed by the respondent under Section 14 of the Arbitration Act was allowed and the appointment of Shri N.P. Upadhyay as the Sole Arbitrator was terminated. 3. It is pleaded by the counsel for the applicant that there is an arbitration clause. The notice for appointing the Arbitrator was issued by the applicant, however, the Sole Arbitrator appointed by the applicant was challenged by the non-applicant-respondent before the Commercial Court and the Commercial Court has terminated the mandate of the Sole Arbitrator appointed by the applicant. It is prayed by the counsel for the applicant that since there is an arbitration clause and the mandate of the Arbitrator appointed by the applicant, has been terminated, the Court should appoint an Arbitrator under Section 11(6) of the Arbitration Act. Counsel for the applicant has placed reliance on Vidya Drolia & Ors. Versus Durga Trading Corporation & Ors.: (2021) 2 SCC 1 and The Oriental Insurance Co. Ltd. & Ors. Versus Dicitex Furnishing Ltd.: (2020) 4 SCC 621 . 4. Counsel for the non-applicant has opposed the Arbitration Application for appointment of an Arbitrator. Counsel for the applicant has placed reliance on Vidya Drolia & Ors. Versus Durga Trading Corporation & Ors.: (2021) 2 SCC 1 and The Oriental Insurance Co. Ltd. & Ors. Versus Dicitex Furnishing Ltd.: (2020) 4 SCC 621 . 4. Counsel for the non-applicant has opposed the Arbitration Application for appointment of an Arbitrator. It is contended that there is no notice under Section 21 of the Arbitration Act and the notice dated 11.02.2021 whereby the Sole Arbitrator was appointed by the applicant has been questioned before the Commercial Court and the Commercial Court has terminated the mandate of Shri N.P. Upadhyay (Retired District & Sessions Judge) appointed by the applicant. It is also contended that the applicant has given a discharge voucher and as such, no dispute for adjudication by the Arbitrator remains and therefore, the Arbitration Application deserves to be dismissed. Counsel for the respondent-non-applicant has placed reliance on New India Assurance Company Ltd. Versus Genus Power Infrastructure Ltd.: (2015) 2 SCC 424 . Reliance has also been placed on Union of India Versus Master Construction Company: (2011) 12 SCC 349 . 5. I have considered the contentions and have carefully perused the record. 6. It is evident that initially the Surveyor assessed the loss at Rs.19,30,194/- and the applicant was paid 75% of the assessed loss. Admittedly, there is Clause-13, which is an arbitration clause. It is also an admitted position that a notice for appointment of an Arbitrator was given by the applicant and the name was also suggested as a Sole Arbitrator by him, however, mandate of that Arbitrator has been terminated by the Commercial Court. The objection that no notice has been given before appointment of an Arbitrator, thus cannot be entertained for the very reason that after giving notice, an Arbitrator was appointed and the mandate of that Arbitrator has been terminated by the Commercial Court. 7. The next objection of the non-applicant that the applicant has signed the discharge voucher and had accepted the payment. It is evident that the claim was made for loss caused by the flooding of water in the shop of the applicant, which resulted into damage of the clothings. 7. The next objection of the non-applicant that the applicant has signed the discharge voucher and had accepted the payment. It is evident that the claim was made for loss caused by the flooding of water in the shop of the applicant, which resulted into damage of the clothings. The Surveyor assessed the loss approximately at Rs.19,30,194/- and 75% of the said amount was paid to the applicant and thereafter, after assessing the value of Salvage, a further amount of around Rs.2 lakhs was also paid to the applicant. Be that as it may, the question is that the applicant has challenged the assessment and has accepted the amount as he had suffered heavy loss due to flooding of water in his shop. Acceptance of the part of money cannot be said to be a complete discharge, more particularly when there is no clause in the Agreement that if a discharge voucher is signed, the party could not challenge the same before an Arbitral Tribunal. 8. It is pertinent to note that the e-mail, which was written by the claimant to the respondent, was to the effect that the measurement work has not been taken up by the Surveyor besides re-verification of Talley and since it may take sometime, it was requested that on account payment of 75% of the assessed amount be released. The document signed by the claimant when he accepted the sum of Rs.14,47,654/- cannot thus be considered to be for full and final satisfaction and discharge by the claimant. The judgment cited by the counsel for the non-claimant- respondent thus do not apply to the facts of the present case. I, therefore, deem it proper to allow the Arbitration Application and appoint Mr. Justice Guman Singh (Retired), C-254, Hans Marg, Malviya Nagar, Jaipur, as the sole arbitrator to decide the dispute. 9. The appointment of the sole arbitrator is subject to the declarations being made under Section 12 of the Arbitration and Conciliation Act, 1996 with respect to the independence and impartiality, and the ability to devote sufficient time to complete the arbitration within prescribed period. 10. Accordingly, arbitration application stands allowed. The arbitrator shall be entitled to lay down fees as provided under Manual of Procedure for Alternative Disputes Resolution, 2009 as amended from time to time. 11. Registry is directed to intimate Mr. Justice Guman Singh (Retired) and obtain his formal consent. 12. 10. Accordingly, arbitration application stands allowed. The arbitrator shall be entitled to lay down fees as provided under Manual of Procedure for Alternative Disputes Resolution, 2009 as amended from time to time. 11. Registry is directed to intimate Mr. Justice Guman Singh (Retired) and obtain his formal consent. 12. The observations made herein-above are only for the purpose of deciding the present application and the same will not disentitle the parties to raise all valid objections before the learned Arbitrator and the Arbitrator will be free to dispose the said objection without being influenced by the observations made by this Court.