Reference of Dispute by Insured to Arbitration after full and final discharge voucher

On 8.10.2004, the appellant took comprehensive Standard Fire and Special Perils Insurance Policy from the Respondent for insuring its processing, cold storage unit, building, plant, machinery, furniture, fixtures and fittings at Taloja Plant.

The appellant had also taken a Fire Declaration Policy insuring all its stock-in-trade and finished products stored in cold storage unit.

Both the policies provided arbitration clauses.

On 26.7.2005, in the heavy and unprecedented rainfall, the factory was completely flooded and submerged under water for several hours.

After considerably delay of 42 months, the appellant was given an undated and standardized voucher / advance receipt for Rs.88,14,146/- in December 2018.

Due to financial strain caused by the delay and pressure of bankers & creditors, the petitioner had no option but to sign the said undated receipt.

On 24.12.2008, the appellant invoked arbitration.

On 21.3.2019, the respondent had given copy of the surveyor’s report to the appellant.

The High Court rejected section 11 petition for appointment of arbitrator in view of full and final settlement of claim.

HELD that this Court upheld the concept of economic duress and held that notwithstanding signing of discharge voucher and accepting the offered amount, the dispute is still arbitrable.  Pleading in an application under Section 11(6) cannot be conclusive whether there is fraud, coercion or undue influence or otherwise. The question as to whether the appellant was compelled to sign on the standardized voucher / advance receipt out of economic duress and whether notwithstanding receipt of said amount as against the claim of the appellant, the claim to arbitration is sustainable or not are clearly within the domain of the arbitral tribunal.

Judgment dated 6.5.2025 of the Supreme Court of India in Civil Appeal Nos.6372-6373 of 2025 of Arabian Exports Private Limited   Vs.   National Insurance Company Ltd