SUPERMINT EXPORTS PVT LTD v. NEW INDIA ASSURANCE CO LTD. & ORS.

Judgment

#1. The appellant manufactures and deals in mint and pine based essential oil. It was the beneficiary of an Insurance policy issued by the respondent New India Assurance Company Ltd., which has been impleaded at three addresses. The policy insured the appellant for a total sum of ₹ 32,25,00,000/- and covered fire and risks involving the Signature Not Verified Digitally Signed By:AJIT KUMAR Signing Date:16.03.2026 14:32:30 FAO(OS)(COMM) 286/2022 building, plants and machinery, stocks, furniture and fixtures and fittings of the appellant. The policy was to remain in force from 20 August 2012 to 19 August 2013.

#2. On 13 February 2013, a fire broke out in the appellant’s premises, resulting in loss of the building, plant and machinery and stocks.

#3. The appellant lodged a claim with the respondent for ₹ 27,08,30,874.13.

#4. The respondent appointed a spot surveyor who conducted an initial survey of the loss suffered by the appellant, followed by a final survey by M/s. J. Basheer and Associates. The Final Survey Report1 assessed the loss suffered by the appellant to be ₹ 12,18,21,908. This amount was paid to the appellant.

#5. Asserting its claim of ₹ 27,08,30,874.13, as originally claimed, the appellant sought arbitration of its entitlement for the balance amount invoking the arbitration clause contained in the insurance policy. A former Chief Justice of a High Court was appointed as the Arbitrator. The learned Arbitrator rendered his award on 28 December

#6. Before the learned Arbitrator, in its statement of defence, the respondent disputed the appellant’s entitlement on the ground, inter alia, that the appellant had executed two discharge vouchers dated 30 Signature Not Verified 1 ‘FSR’, hereinafter Digitally Signed By:AJIT KUMAR Signing Date:16.03.2026 14:32:30 FAO(OS)(COMM) 286/2022 March 2014 and 2 July 2014 in which the appellant had accepted an amount of ₹ 12,18,21,908/- towards full and final settlement of the claim due to it. Having thus executed and signed the said discharge vouchers, the respondent contended that the appellant was estopped from claiming any higher amount. The respondent further submitted the discharge vouchers had been executed by the appellant voluntarily and without any pressure, coercion, undue influence or duress. The claim of the appellant, therefore, stood discharged by accord and satisfaction and was not therefore any more open to arbitration.

#7. The appellant, before the learned Arbitrator, did not dispute the factum of execution of the afore-noted discharge vouchers dated 30 March 2014 and 2 July 2014. However, the appellant submitted that it had executed the discharge vouchers under compulsion, duress and financial distress as the respondent was not releasing the claim without the execution of the full and final discharge vouchers by the appellant. The appellant submitted that it was under tremendous pressure from creditors and that, consequent on the fire, there was severe depletion of its credit facilities resulting in considerable financial distress. It was also submitted that the appellant’s bankers had downgraded its accounts and started charging heavy penal interests, seriously hampering the appellant’s business operations and practically bringing its factory to the brink of closure. Under such straitened circumstances, it was submitted that the appellant had no option but to sign the discharge vouchers. They could not, therefore, be regarded as having been voluntarily executed. Signature Not Verified Digitally Signed By:AJIT KUMAR Signing Date:16.03.2026 14:32:30 FAO(OS)(COMM) 286/2022 B. The Arbitral Award

#8. The learned Arbitrator framed the following issues as arising for adjudication : “1. Whether the disputes forming the subject matter of the present arbitration are arbitrable and whether this tribunal has jurisdiction to adjudicate upon the said disputes in the light of the various factual and legal pleas raised by the respondent in its statement of defence as well in its Section 16 Application, that the claimant is guilty of violating certain policy conditions?

#2. Depending upon the finding on issue No. 1, is the claimant entitled to its claim or any part thereof? And if so, whether with interest, and if yes at what rate and for what period?

#3. Relief and costs”

#9. The learned Arbitrator first took up the issue of whether the appellant’s claim stood discharged by accord and satisfaction in view of the discharge vouchers executed by it. For this purpose, the learned

Arbitrator first reproduced the said discharge vouchers as under: Discharge voucher dated 30-03-2014 “I/we registered owner/authorized signatory of M/s. Supermint Exports private limited Rampur having held under bank interest with bank of Baroda, Rampur hereby consciously give our consent for the full and final settlement of the claim for the sum of Rs. 12, is to be paid by the New India 19, 56, 766/which amount Assurance Company limited in respect of full and final satisfaction and settlement of losses/damages to the property/factory situated at 4th km…. I/we agree that the sum is paid to me/us with a denial of any legal liability or otherwise too as a result of above accident/loss at present or in future on the part of the insurers and the New India Assurance Company Limited is absolutely and finally free and discharged from all or any other claims of every nature and kind whatsoever in my/our behalf arising or given rise out of the said the above claim made by me/us for Signature Not Verified Digitally Signed By:AJIT KUMAR Signing Date:16.03.2026 14:32:30 FAO(OS)(COMM) 286/2022 occurrence" Discharge Voucher dated 02-07-2014 "I/we registered/authorised signatory of M/s. Supermint Exports Private Limited Rampur having held under bank interest with bank of Baroda, Rampur hereby consciously give our consent for the full and final settlement of the claim for the sum of Rs. 12, 18, 21, 908/after being deducted by you of Rs. 77249/in respect of reinstatement premium and applicable service tax of Rs. 8498 from the approved amount of Rs. 12,18,99,157/." This net amount of Rs. 12,18,21,908/is to be paid by the New India Assurance Company Limited to our Financer Bank, ie, bank of Baroda, Rampur in our loan account No.05850500000781..........." I/we agree that the sum of Rs. 12,18,21,908/ is paid to me/us with a denial of any legal liability or otherwise too as a result of above loss at present or in future on the part of the insurers and the New India Assurance Co Ltd is absolutely and finally free and discharge from all or any other claims of every nature and kind whatsoever " It was also noted that the first discharge voucher dated 30 March 2014 was signed by the appellant alone whereas the second discharge was signed by the appellant as well as by the Chief Manager of the Bank of Baroda2.

#10. In these circumstances, the learned Arbitrator identified the issue arising before him for consideration apropos the afore-noted discharge vouchers thus: “The fact of the aforesaid discharge vouchers being signed and executed by the claimant not having been denied or disputed by the claimant and the only defence being put up that the claimant was to execute these compelled and constrained by respondent discharge vouchers on account of the claimant's economic/financial distress which have been elaborately explained in the statement of claim and elsewhere, this tribunal has now to consider whether the Signature Not Verified 2 ‘the Bank’, hereinafter Digitally Signed By:AJIT KUMAR Signing Date:16.03.2026 14:32:30 FAO(OS)(COMM) 286/2022 execution of the aforesaid discharge vouchers was voluntary on the part of the claimant or whether it was involuntary. Undoubtedly if this tribunal comes to a conclusion that the aforesaid discharge vouchers had been executed by the claimant voluntarily, necessary consequences will follow but if the tribunal comes to the conclusion that indeed the claimant was forced and compelled as well as constrained either by the circumstances attributable to the Respondent or by the respondent to execute the aforesaid discharge vouchers, the consequences would be different”

#11. The findings of the learned Arbitrator on the afore-noted aspects were as under: “First and foremost, I have no hesitation in holding, on an the evidence on record and based upon the appreciation of pleadings of the parties and various other documents filed by the parties before this tribunal that there is no material on record at all to suggest, point out or establish that the respondent in any manner by any conscious act on its part either compelled the claimant to sign the discharge vouchers or created a situation where the claimant had no option but to sign these discharge vouchers. Nothing has been pointed out to this tribunal by the claimant whereby this tribunal can take a view or form an opinion that the respondent had done any act of omission or commission resulting in the claimant being compelled or constrained to sign the discharge vouchers. This having been found by the tribunal thus that for the signing of the discharge vouchers by the claimant, as far as the respondent is concerned it did not do any act, consciously or otherwise, purposely or deliberately or otherwise, the tribunal has now to look for the other important angle of whether the signing of the discharge vouchers by the claimant was a voluntary act on the part of the claimant and whether before or at the time of the discharge vouchers circumstances did exist the signing of which conclusively pointed out that the claimant had in fact either agreed for accepting the lower approved claim or that the claimant at no stage, at no point of time either disputed such lower amount of claim or represented or pleaded with the respondent that the claim amount being lower, the claimant should be paid higher claim amount. A very important aspect emanating therefrom is whether at any point before signing the discharge vouchers, had the claimant to claim an enhanced compensation after receiving the amount covered by the discharge vouchers or the claimant represented to the respondent that it was receiving the amount in question without prejudice to its rights and contentions for any future action that the claimant may bring against the respondent for claiming the enhanced compensation reserved to itself the right Signature Not Verified Digitally Signed By:AJIT KUMAR Signing Date:16.03.2026 14:32:30 FAO(OS)(COMM) 286/2022 amount. Let us look at the facts. On 05/03/2014, the claimant wrote a letter to the surveyor in which it clearly conveyed to him that the assessed compensation of ₹ 10,05,68,218/- towards the loss on stock was acceptable to the claimant. This was conveyed to the surveyor by the claimant through Mr Sanjay Chaturvedi, claimant. Mr Chaturvedi appeared as a witness also in this case and in the course of his cross-examination by the respondent he admitted to have written the aforesaid letter to the surveyor (refer question Nos. 8 and 9 in cross-examination). Interestingly, this letter was not filed by the claimant in these proceedings but was produced by the respondent. The respondent has rightly accused the claimant of suppressing this letter and thereby causing material concealment of a relevant fact before this tribunal. the general manager of After the final survey report was submitted by the surveyor, the claimant submitted a new bill for an amount of ₹ 13.78 lac and the respondent rather than getting this new bill processed, considered and examined by the surveyor itself increased the claim amount based on this new bill for an additional amount of ₹ 8.25 lac. It is the admitted case of the claimant that it received a copy of the final survey report from the surveyor and despite being in possession of the copy of the final survey report in which the recommended claim amount was clearly mentioned, the claimant at no point of time either objected to this assessment on the part of the surveyor or represented to the respondent that the compensation amount being assessed was on the lower side and that it should be increased substantially or by any other extent. A very important fact which conclusively would establish that the claimant at no point of time objected to the assessment being on the lower side or that it being deficient as compared to the actual claim of the claimant is this. On 27/05/2014, after the claimant had signed the 1st discharge voucher but before it signed the 2nd discharge voucher, claimant sent an email communication to the Chairman-cum- Managing Director (CMD) of the respondent company requesting the claim and for arranging the only for early settlement of payment of noteworthy to mention that in this communication and in various repeatedly clamouring for the settlement of the claim case and for payment of the claim amount very very expeditiously because, according to the claimant, the claimant was in dire financial crisis and it was imperative that the claim amount be paid to the claimant immediately so as to enable it to tide over its financial difficulties. In this representation to the CMD of the respondent company which was sent more than 2 months after the claimant had in its possession the copy of the final survey report, the claimant did not the claim amount very very expeditiously. representations, claimant It Signature Not Verified Digitally Signed By:AJIT KUMAR Signing Date:16.03.2026 14:32:30 FAO(OS)(COMM) 286/2022 make any misgiving of the assessed claim amount being on the lower side or that the claimant was deprived of its legitimate dues linked with the loss caused. An important as well as equally interesting aspect of the matter is that a meeting of the Board of Directors of the claimant company was held on 20/03/2014 in which the Board noticed that the respondent had proposed to pay only a sum of ₹ 12,19,56,766/- towards full and final settlement of the claimant's actual claim of ₹ 27,08,30,874.13. The claimant company recorded the minutes of the aforesaid Board meeting, the following portion whereof being important is reproduced herein below: "Keeping in view above crucial financial condition of the company, board of directors of the company is of the view that at present this amount should be taken from the insurance company and for this purpose it is decided to the consent cum legal discharged loss payment submit voucher for the time being and persue for the balance amount with the insurance company after receiving of Rs. 12, 19, 56, 766.00 and necessary action including legal assistants be taken and the following resolution was passed; "resolved that Mr Sanjay Gupta, one of the directors of the company be and is hereby authorised to issue the discharge voucher to the insurance company to avoid the distress proceedings. SEPL may take up the matter for recovery of balance claim amount with New India Assurance Company limited after receiving the amount". All this happened in the internal meeting of the Board of Directors of the claimant company. It is the undisputed case of the parties before this tribunal that at no point of time did the claimant ever inform the respondent that it was, being in any dire economic and financial distress as well as duress was accepting the aforesaid amount under compulsion, keeping all its options open to take recourse to legal proceedings at a later point of time for the recovery of the balance claim amount. This decision of the Board of Directors of the claimant company clearly manifests the fact that the claimant company despite its reservations about the approved claim amount being lower than its expectations as well as lower than what had been claimed, decided to accept this amount. This Board resolution also clearly indicates that the respondent had offered this amount to the claimant and the claimant decided to accept the said offer of the respondent. What however is strange as well as interesting is that the claimant did not convey any reservation about this amount being accepted by it subject to any conditions or even subject to the rights and contentions of the claimant with respect to the claimant subsequently raising the Signature Not Verified Digitally Signed By:AJIT KUMAR Signing Date:16.03.2026 14:32:30 FAO(OS)(COMM) 286/2022 dispute about the inadequacy of the claim amount, the same not being based on the loss suffered by the claimant. As has been mentioned hereinabove, the claimant signed two discharge vouchers. The 1st voucher was signed by the claimant alone but the 2nd voucher was signed by the claimant as well as the claimant's banker. The need of the claimant banker to sign the 2nd voucher arose because the claimant's banker had intimated to the respondent that as and when the claim is sanctioned and the claim amount was to be dispersed, the same should be remitted to the account of the bank and that it should not be paid to the claimant. It is in this background that the claimant's banker signed the 2nd voucher. This is a peculiar case where an insured on the verge of receiving the claim had to sign two discharge vouchers. (In ordinary course, only one discharge voucher is required to be signed). And there was a gap of more than 3 months between the date of the signing of the 1st voucher and the signing of the 2nd voucher. If indeed the claimant had any reservations about it receiving unduly lower amount of claim contrary to its expectations, even after signing the 1st voucher it had those 3 months in which it could rethink about the matter if indeed the respondent was creating a situation where it was compelling the claimant to accept the lower amount under economic or financial duress or hardship. The fact is that even after a gap of 3 months the claimant readily signed the 2nd discharge voucher and not only claimant signed it, the claimant's banker also signed the same and after signing the discharge voucher, the claimant received the amount. Even at this stage of receiving the amount the claimant could have placed on record its objection or its reservation about having to receive the amount either in protest or without prejudice to the rights of the claimant to be agitated in an action to be brought by the claimant in due course subsequently. Whether the claimant was suffering financial hardship owing to the fire incident in its plant and based on such financial hardship whether the claimant was indeed under financial and economic duress either owing to the actions of its banker or its creditors or other persons, the fact remains that none of it was caused or occasioned by any action of the respondent. Yes, one can say that perhaps respondent delayed in the processing and approval of the claim but this today also cannot squarely be put upon the respondent because the surveyor consumed longer time than was permissible in processing the claim and the surveyor also has justified longer time being taken by it on the ground that on a number of occasions the claimant had to furnish additional information and additional documents to the surveyor to complete Signature Not Verified Digitally Signed By:AJIT KUMAR Signing Date:16.03.2026 14:32:30 FAO(OS)(COMM) 286/2022 the survey and assessment. Taking a little longer time than usually prescribed in approving and sanctioning the claim or in actually dispersing the claim amount cannot be equated with the respondent being responsible for causing economic or financial duress to the claimant. This is not a case of two contracting parties in a normal, bilateral contract where because of the actions of one contracting party, such as a construction contract or a contract for supply of goods or a contract for rendering services or a consultancy contract, the other contracting party is going through economic or financial distress because of the acts of omission or commission of the other contracting party, usually in a dominating position. In such situations the dominant contracting party, by its acts of omission or commission can be accused of creating a situation where the other contracting party comes to grief and suffers economic or financial duress and because of such duress, it, not being in any position of independence succumbs to the pressures of the dominating party and accepts a lower amount of compensation. Compared to all this, in a contract of insurance where the insurer has to indemnify the insured for the loss suffered by the insured, the insurer cannot be at all accused of creating a situation of the insured suffering financial or economic duress at the hands of the insurer unless there is evidence to the contrary. In such a situation the insurer merely asking for the execution of a discharge voucher for the sake of its record, for audit purposes and in compliance with statutory regulations cannot be held guilty of causing financial distress to the insured or by its mere asking for the signing of the discharge voucher, it cannot be said to have constrained or compelled the insured in accepting the lower amount of compensation under duress. If the claimant considered that it was being compelled and constrained to execute the discharge voucher against its will and in a situation of involuntary nature, it was open to the claimant to refuse to do so and instead represent against the insistence of the respondent for the same before an appropriate forum and there were plenty of fora available to the claimant for ventilating its grievances in that regard.” (Emphasis supplied)

#12. The learned Arbitrator, thereafter referred to the decision of the Supreme Court in National Insurance Co. Ltd. v Boghara Polyfab Pvt. Ltd.3 as well as two decisions of this Court and proceeded to conclude thus: “In conclusion, I have no hesitation in holding that because of the signing of the discharge vouchers by the Claimant under the Signature Not Verified 3 (2009) 1 SCC 267 Digitally Signed By:AJIT KUMAR Signing Date:16.03.2026 14:32:30 FAO(OS)(COMM) 286/2022 circumstances mentioned herein above and the claimant having received the payment, also under the said circumstances, without any objection as well as without any prejudice to its rights or contentions, the claims preferred by the Claimant in the present arbitration are not maintainable and accordingly the disputes raised herein are also not arbitrable. Issue no 1 accordingly is decided in favour of the Respondent, leading to the passing of nil award by this Tribunal in this case, leaving the parties to bear their own costs. This award is passed at New Delhi on this the 28th day of December, 2019.” C. The Impugned Judgment

#13. Aggrieved by the aforesaid award, the appellant approached this Court by way of OMP (Comm) 356/2021.

#14. By judgment dated 7 December 2021, a learned Single Judge of this Court has dismissed the OMP.

#15. The findings of the learned Single Judge, to the extent, they are relevant for our purpose may be reproduced thus: “19. A plain reading of the impugned award indicates that the Arbitral Tribunal had found that the Surveyor's assessment of loss was acceptable to the petitioner. The Tribunal noted that on 05.03.2014, the petitioner had sent a letter to the Surveyors confirming that the compensation of ₹10,05,68,214/- on account of loss of stocks was acceptable to it. The Arbitral Tribunal found that the Final Survey Report 20. had been furnished to the petitioner and it had, at no point of time, raised any objection with regard to the assessment of loss. The Tribunal noted that the petitioner had furnished two Discharge Vouchers. The first was issued on 30.03.2014 whereby it conveyed its acceptance to a sum of 12,19,56,766/- as full and final settlement of its claim. The petitioner had also executed another Discharge Voucher dated 02.07.2014, which had been counter signed by its Banker accepting the payment of ₹12,18,21,908/- as full and final settlement of its claims. Signature Not Verified Digitally Signed By:AJIT KUMAR Signing Date:16.03.2026 14:32:30 FAO(OS)(COMM) 286/2022

#21. The said amount was disbursed to the petitioner. The same was in conformity with the loss assessed by the Surveyor. Considering that the petitioner had not contested the assessment and had further, signed the discharge voucher; the Arbitral Tribunal did not accept that the Discharge Voucher had been signed under coercion or economic duress. The conclusion of the Arbitral Tribunal is supported by the reasons as articulated in the impugned award. The question whether the petitioner had furnished the Discharge Vouchers under duress or coercion is a question of fact and the decision of the Arbitral Tribunal in this respect would not warrant any interference in these proceedings, unless the Court finds that the finding is wholly perverse and vitiates the award. The Arbitral Tribunal's view in this case is a plausible view. 22. It is certainly, a possible view. The same would warrant no interference in these proceedings. The decision in the case of M/s Shreedhar Milk Food Ltd. v. M/s United India Insurance Co. Ltd.4 and United India Insurance Co. Ltd. v. M/s Shreedhar Malik Foods Ltd5 are of little assistance to the petitioner. In that case, the Court found that the arbitral tribunal had not returned any finding that the discharge voucher was executed by the petitioner on its free will. The arbitral tribunal had also not returned any finding as to its effect on the claim of the petitioner. In the present case, the Arbitral Tribunal has returned a 23. definite finding that the petitioner had accepted the payments without any reservation. The Arbitral Tribunal has rejected the contention that the respondent had done anything to coerce the petitioner to execute the Discharge Vouchers. *****

#25. As stated above, in the present case, the view expressed by the Arbitral Tribunal is a plausible view and this Court is unable to accept that the impugned award warrants any interference in these proceedings.”

#16. The appellant is in appeal before us. D. Rival Submissions Signature Not Verified 4 2018 SCC OnLine Del 8714 5 2019 SCC OnLine Del 10516 Digitally Signed By:AJIT KUMAR Signing Date:16.03.2026 14:32:30 FAO(OS)(COMM) 286/2022

#17. We have heard Mr. Sudhir Nandrajog, learned Senior Counsel for the appellant and Mr. Saurav Agrawal, learned counsel for the respondents, at some length. I. Submissions of Mr. Sudhir Nandrajog

#18. Mr. Nandrajog submits that the learned Arbitrator proceeded on the basis of a fundamentally wrong test, which vitiates the award in its entirety. He submits that the very fact of the appellant being in financial distress at the time of executing the discharge vouchers would vitiate the vouchers in their entirety, and that the aspect of whether the distress was attributable to the respondent, or otherwise, is extraneous to the issue. The learned Arbitrator, according to Mr. Nandrajog, has seriously erred in proceeding on the premise that, if the financial distress faced by the appellant was not attributable to the respondent, the discharge vouchers would be binding on the appellant. Economic distress would, by itself, render the execution of the discharge vouchers involuntary, thereby rendering them inadmissible as the basis for rejecting the appellant’s claim. In such a case, it could not be said that the appellant’s claim stood discharged by accord and satisfaction. Mr. Nandrajog relies, in this context on paras 27 and 28 of the judgment of the Supreme Court in Chairman and MD, NTPC Limited v. Reshmi Constructions, Builders and Contractors6 and para 89 of the decision in Central Inland Water Transport Corporation Ltd v. Brojo Nath Ganguly7, both of which were approvingly cited and relied upon, by the Supreme Court, in Boghara Signature Not Verified