THE ORIENTAL INSURANCE CO. LTD. vs. DICITEX FURNISHING LTD.

1 REPORTABLE   IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL No.   8550  OF 2019 (ARISING OUT OF SLP (C) NO. 34186 OF 2015) THE  ORIENTAL INSURANCE CO. LTD.  & ANR.   ...APPELLANTS VERSUS DICITEX FURNISHING LTD.                          ...RESPONDENT                                                                  J U D G M E N T S. RAVINDRA BHAT, J. 1. Leave granted. With the consent of counsel, the appeal was heard   finally.   The   Oriental   Insurance   Co.   Ltd   (hereafter   “the insurer” or “the appellant”) appeals the decision of a single judge of   the   Bombay   High   Court,   who   allowed   the   respondent’s Signature Not Verified application   under   Section   11(6)   of   the   Arbitration   and Digitally signed by NARENDRA PRASAD Date: 2019.11.13 17:50:41 IST Reason: Conciliation   Act,   1996   (hereafter   “the   Act”)   and   appointed   an 2 arbitrator. The insurer’s objection about maintainability of the application   on   the   ground   that   the   respondent   (hereafter “Dicitex”) had  signed the  discharge  voucher and  accepted the amount offered, thus, signifying accord and satisfaction, which in turn meant that there was no arbitrable dispute, was rejected. 2. The   relevant facts in this appeal are that on 17.09.2011, Dicitex obtained a Standard Fire and Special Peril Policy; it was issued by the appellant to cover the stocks of goods lying in its three separate godowns located at Thane, Maharashtra, by three separate endorsements. The total sum insured was @  13 crores. ₹ Clause   13   of   the   terms   and   conditions   of   the   said   policy contained an arbitration clause. On 25.05.2012, a fire broke out at night on the ground floor of the building occupied by RFCL, which fire spread to the first floor of the building and completely engulfed all of the appellant’s three godowns which had stored its goods. All the stocks in all the three godowns were completely destroyed. Dicitex informed the appellant on 26.05.2012, about the fire and the consequential loss. The appellant appointed M/s. C.P. Mehta & Co. as Surveyors and Assessors to survey the loss suffered by Dicitex and to report on the claim to be lodged upon 3 the insurer­appellant, by the said company. Dicitex lodged a total and final claim upon the appellant for a sum of  14,88,14,327/­ ₹ comprising   ₹ 13,52,85,752/­   towards   cost   of   the   materials ₹ destroyed and  1,35,28,575/­ as overheads. Dicitex claims also to   have   submitted   comprehensive   documentary   evidence   and detailed work sheets in support of the claim made to the insurer. On 14.08.2012, after visiting Dicitex’s factory and the godowns, and after scrutinizing the materials submitted by it in support of its claim, the Surveyor appointed by the insurer filed a Final Survey Report recommending that the claim be settled for an ₹ amount   of   12,93,26,704.98/­   and   that   after   deducting   an amount of 5% towards compulsory deduction for excess, a net amount of  12,28,60,369/­ be paid over to Dicitex. The latter ₹ alleged that a copy of this survey report was not supplied to it, by the insurer, or the surveyor. 3. On  20.09.2012, Dicitex addressed a letter to the appellant’s chairman,   informing   him  of   the  financial   distress  that  it  was facing, requesting for settlement of the claim on priority basis. Dicitex also informed him about a temporary loan obtained ­to the tune of  10 crores­ from Union Bank of India for 3 months at ₹ 4 a high rate of interest which was due for repayment in September 2012 and requested him that it would be a great financial help if its claim could be settled on priority basis which would mitigate their   hardship.   Again,   on   25.10.2012,   Dicitex   informed   the ₹ insurer that the sale value of the goods destroyed was above  19 crores and that it had not only lost its goods but also its profits. Dicitex   informed   that   it   had   already   submitted   all   the documentary   evidence   supporting   the   claim   to   the   Surveyor, M/s. C.P. Mehta & Co.,  yet another letter was addressed to the appellant’s chairman on 31.10.2012 placing on record that it had understood from the surveyor M/s. C.P. Mehta & Co. that the Head Office of the appellant asked for some more information in connection   with   the   claim.   Dicitex   stated   that   compiling, organizing   and   sending   various   documents   totalling   around 35,000 in number, entailed voluminous work. It was stated that the surveyor had already gone through those documents and had picked   up   at   random,   sample   of   various   concerned   records. Dicitex stated that it was arranging to compile the documents and agreed to send them to the surveyor as soon as possible. In other letters (dated 10.01.2012, 28.01.2013), again requests were 5 made   to   the   insurer   to   release   the   amounts.   Apparently,   the appellant appointed a Chartered Accountant (M/s Naveen Jhand & Associates) to carry out a resurvey of the claim made by it (Dicitex).   The   latter   had   already   furnished   37,700   documents physically, which showed the exact quantity of furnishing fabrics in meters. Dicitex brought to the notice of the Chairman­cum­ Managing Director that the new surveyors had asked for large number of documents again and such documents could not be supplied.   On   09.02.2013,   addressing   the   new   surveyor   M/s Naveen   Jhand,   Dicitex   submitted   37,700   documents   and submitted   further   documents   to   the   said   new   surveyor .   It submitted   that   since   the   previous   9   months,   it   had   been providing   different   documents/information   to   different   people and submitted whatever was requested by the new surveyor in broader form and requested them to submit their report at the earliest. 4. I n accordance with the format sent by the insurer and after ₹ obtaining   Dicitex’s   signature,   a   cheque   for   3.5   crores   was handed   over   to   it.   Dicitex   signed   the   discharge   voucher   on 04.03.2013, when the insurer paid the said sum of  3.5 crores to ₹ 6 Dicitex as 'on account payment' in the matter of its claim. Union Bank of India endorsed the said discharge voucher. According to Dicitex, all data that was requisitioned by the new surveyor, was provided   by   it.   Several   meetings   took   place   between   the representatives of the new surveyor, the appellant and Dicitex. Dicitex,   mentioned   several   letters   to   the   appellant,   and   the surveyor, in 2013 regarding the release of the amounts. Dicitex had also stated that it felt strongly that the new surveyor was just not satisfied with whatever was provided by it though all the data it submitted had proved its genuine claim and the intention of the new surveyor was to somehow reduce the claim. In other letters (such as the one dated 21.02.2014), Dicitex informed the appellant that the surveyor was refusing to commit to any fixed date within which they would be submitting their report and also the appellant’s  officials   had  no   answers   to  its  questions   with regard to when its claim would be settled. Dicitex requested the General Manager to set a deadline to settle their claim at the earliest. It wrote several letters to the appellant’s officers about the huge financial losses suffered by it due to delay in settlement 7 of the claim. Dicitex informed the General Manager to settle the claim within 15 days. th   5. On   27 May,   2014,   Dicitex   received   an   email   from   the appellant   stating   that   a   discharge   voucher   for   the   balance amount of the claim payable as described was being enclosed. It was   requested   to   execute   the   voucher   along   with   the   bank's discharge on the space earmarked on the left side  and send the scanned   copy   back.   By   the   email   dated   28.05.2014,   Dicitex replied to the email of 27.05.2014 and referred to the discharge voucher sent by the appellant to it for signature. Dicitex placed ₹ on record that its total claim was approximately  15 crores and ₹ the surveyor had assessed the same at approximately  12.93 crores. Dicitex stated that the basis for arriving at the figure of ₹ 7.16 crores was not explained (by the appellant). It requested the   Regional   Manager   of   the   appellant   to   provide   the   claim assessment working for their understanding to enable Dicitex to take   up   the   matter   with   their   Board   of   Directors   for consideration. The appellant, by email dated 29.05.2014, alleged that M/s. C. P. Mehta & Co. had initially assessed the loss at ₹ 12,28,60,369/­. However, it had certain issues on the costing; 8 it, therefore, appointed M/s. Naveen Jhand and Associates to have another look at the costing aspect and reconfirm/verify the costing for loss assessment purpose. According to the said report submitted by M/s. Naveen Jhand and Associates, the assessment ₹ worked   to   7,16,30,148/­   and   accordingly,   the   competent authority   had   granted   the   claim.   The   appellant   enclosed   the working of the claim and requested Dicitex to go through it and send an unconditional discharge voucher duly signed by it and the bankers. Dicitex, the insured did not do so and informed the appellant that it had noticed that what was given was just a statement   of   calculation,   without   explanation/basis,   that adjustments had resultant deductions in Dicitex’s claim by more than   50%   as   assessed   by   the   surveyor   appointed   by   the appellant. Dicitex stated that since the appellant had taken 2 years to offer the final settlement of the claim, it (Dicitex) was suffering from a huge financial constraint and had to pay bank interest and installments, salaries and wages, hence, it was left with   no   alternative   but   to   accept   the   offer   of   the   appellant reluctantly   and   was   accordingly   sending   the   voucher   duly discharged by Dicitex and their bankers for doing the needful. 9 Dicitex   alleged   that   since   the   appellant   did   not   relent,   and insisted that any further payment would be made only if the discharge voucher was executed exactly at the time and in the form and manner as required by it as well as the letter dated 31.05.2014   was   withdrawn.   Dicitex   stated   that   as   it   was   in urgent   need   of   funds   to   meet   its   mounting   liabilities,   it   was coerced into withdrawing its earlier letter of 31.05.2014 and in executing   the   discharge   voucher   exactly   as   dictated   by   the respondents. By the letter dated 06.06.2014, addressed to the Regional Manager, Dicitex withdrew the letter dated 31.05.2014 submitted along with the discharge voucher for a full and final settlement of their claim. It requested the appellant to remit the claim amount immediately. The discharge voucher was on the letter head of the appellant, duly endorsed by Dicitex’s bankers. In the discharge voucher, it was recorded that it accepted a sum of  3,66,30,148/­ in full and final settlement of its claim. It was ₹ also recorded that Dicitex voluntarily gave discharge receipt in full and final settlement of their claim, present or future, arising directly/indirectly   in   respect   of   the   said   loss/accident   and subrogated all their rights and remedies to appellant in respect of 10 the   loss/damages.   Further   correspondence   ensued   whereby Dicitex   informed   the   appellant   that   since   there   was   a   huge difference between the total amount claimed by it, and the final claim settlement amount by the appellant, the same was required to   be   discussed   and   resolved,   failing   which   Dicitex   would   be required to invoke the arbitration, as per clause 13 of the terms and conditions attached to the policy. The appellant, by the letter dated   17.07.2014   addressed   to   Dicitex,   informed   that   it   was surprised by the proposal to invoke arbitration after the clean discharge voucher was signed for the sum of  7,16,30,148/­ in ₹ full and final settlement of the said loss. The respondents denied that there existed any dispute of quantum in respect of the said claim and contended that the amount due to Dicitex arising out of   indemnity,   arising   from   the   policy   was   duly   verified   and assessed   based   on   the   documents   submitted   by   Dicitex.   The appellant did not agree to Dicitex’s request for any differential amount or request for proceeding for arbitration under the policy. On 24.07.2014, by a letter addressed to the appellant, Dicitex denied that  the amount  received  by it  was a  clean discharge voucher in full and final settlement of their claim and reiterated 11 that it suffered a major loss of  14,16,94,329/­. The surveyor, ₹ M/s. C.P. Mehta & Co. had submitted their report assessing the loss   at   ₹ 12.93   crores.   Dicitex   also   placed   on   record   that   as ₹ against approximately the claim of   14.70 crores, the appellant ₹ released only  3.50 crores on 04.03.2013 i.e. almost 10 months after the loss had occurred, and after a lapse of 27 months, the appellant made "a take it or leave it" offer of  7.16 crores towards ₹ full   and   final   settlement   of   their   claim,   the   discharge   was accepted reluctantly by it. Dicitex alleged that upon meeting the appellant’s officers, it was instructed to withdraw the letter of protest and accept the claim settlement unconditionally which was a proof of coercion.  6. The position taken by the appellant was that Dicitex was paid   ₹ 7,16,30,148/­   in   a   clean   discharge   and   full   and   final settlement of their claim and there existed no dispute with regard to the quantum of claim and refused to appoint any arbitrator. In these circumstances, Dicitex approached the Bombay High Court under Section 11(6) of the Act, for appointment of an arbitrator. Dicitex relied on the assessment of M/s C.P. Mehta & Co., which had assessed the loss at  12.93 crores. It contended that the ₹ 12 appellant released only   3.50 crores on 4.03.2013 i.e. almost 10 ₹ months after the loss suffered by Dicitex due to fire, and only after a lapse of 27 months made "a take it or leave it" offer of ₹ 7.16  crores   towards   full   and   final   settlement   of   their   claim. Dicitex stated that it had taken a loan of a substantial amount and had to bear the extra burden of high interest and found itself defaulting on timely loan repayments. It was further submitted that Dicitex was unable to pay income tax on time, as a result of which, it had to pay a sum of  23.90 lacs in the year 2012­2013 ₹ and   a   sum   of   ₹ 11.10   lakhs   in   the   year   2013­2014   towards interest   for   the   delayed   payments   of   income   tax.   It   was   also argued, on behalf of Dicitex, that it was subjected to economic duress   and   coercion   which   resulted   in   the   signing   of   the discharge voucher, which could not preclude its invocation of the arbitration agreement. 7. The   appellant   resisted   the   application,   contending   that Dicitex   had   not   demonstrated   whether   the   second   discharge voucher signed by it was under economical or financial duress under the arbitration agreement. It was urged that since Dicitex had   signed   the   discharge   voucher   and   accepted   the   payment 13 made by the respondents unconditionally and confirmed that the said payment was received in full and final settlement of their claim, present or future, arising directly/indirectly in respect of the   said   loss/accident   and   subrogated   all   their   rights   and remedies to the appellant in respect of the loss/damages, there exists no dispute between the parties which can be referred to arbitration.   It   was   argued   that   Dicitex   having   signed   the discharge voucher for  7,16,30,148/­ in full and final settlement ₹ due to alleged loss suffered by Dicitex, the arbitration application was not maintainable. It was submitted that the appellant had replied to the letter dated 21.06.2014 stating that Dicitex had withdrawn   only   discharge   voucher   dated   31.05.2014.   The appellant   also   stated   that   in   the   arbitration   agreement   itself, Dicitex had to explain the exact correctness of the allegation of coercion and duress with details and particulars about signing the discharge voucher. It was further contended that though the payment was received by Dicitex on 09.06.2014, it raised protest only on 21.06.2014. Even in the letter dated 21st June 2014, Dicitex referred to the discharge voucher dated 31.05.2014 which was not admittedly acted upon by the insurer. Dicitex did not 14 resile from the discharge voucher dated 31.05.2014, and thus on that ground also, this arbitration application is not maintainable. 8. The appellant relied on some decisions of this court ( New (2015) Indian Assurance Co. Ltd v Genus Power Infrastructure Ltd.  2 SCC 424.      National Insurance Co. Ltd v Boghara Polyfab Pvt Ltd   (2009) 1 SCC 267;   Union of India (UOI) and Ors. v Master Construction Co.  ( 2011) 12 SCC 349 etc.   9. In the impugned judgment, while allowing the application, the single judge analysed the decisions of this court, including Boghara   Polyfab   (supra).   It   was   noted   that   a   perusal   of   the correspondence     indicated   that   the   first   surveyor prima   facie appointed by the insurer had recommended the payment of more than   ₹ 12   crores   in   favour   of   Dicitex.   For   some   reasons,   the appellant did not accept the said report submitted by their own surveyor   and   instead   appointed   M/s   Naveen   Jhand   and Associates   to   re­compute   the   costings.   It   was   also   held   that Dicitex   had   furnished   more   than   37,700   documents   to   the surveyor for their appraisal for submitting the report. Dicitex had placed on record from time to time, documents to show that it had taken loans from the banks who were pressurising it for 15 repayment of those loans and interest. The account of Dicitex with   those   banks   had   drawn   the   excess   amount.   The   final amount was sanctioned by the respondents only after 27 months of   the   fire   having   taken   place,   which   caused   loss   to   Dicitex. Dicitex had produced about 11 letters addressed by the banks to Dicitex, calling upon Dicitex to regularize their bank accounts and showing the excess amount drawn by it in various accounts. Dicitex had also placed on record, the conduct of the second surveyor,   who   was,   according   to   it,   demanding   several   other documents which were unwarranted and/or already submitted by it. The learned judge noticed that   prima facie,   Dicitex was facing financial distress and economical duress and in view of its various urgent business liabilities, it apparently signed the said discharge   voucher   reluctantly.   It   is   not   in   dispute   that   the appellant refused to accept such discharge voucher signed by Dicitex   with   letter   of   protest.   Therefore,   a   few   days   later,   a discharge   voucher   was   signed   by   Dicitex.   It   was,   however, Dicitex’s case that the appellant had insisted upon it to sign a clean discharge voucher and to withdraw the letter of protest addressed by it, failing which, the insurer would not release the 16 amount, even that was reflected in the discharge voucher. Dicitex thereafter   withdrew   the   letter   dated   31.05.2014,   and   signed another   discharge   voucher.   After   signing   another   discharge voucher, Dicitex placed on record their objection that the same was signed due to pressure of the respondents. 10. In view of the analysis made, the single judge allowed the application, observing as follows: “57.   On   perusal   of   the   large   number   of correspondence   exchanged   between   Dicitex   and the respondents which were not disputed by the respondents, in my prima facie view, it indicates that   Dicitex   was   facing   the   financial   constraint and economical and financial duress on the part of the respondents in not sanctioning and paying the final claim for 27 months from the date of fire. Dicitex having faced pressure from their bankers and   suffering   from   other   business   liabilities including the demand of income tax department, Dicitex was under the economical and financial duress and the said discharge voucher thus, in my prima facie view, cannot be considered as an unconditional   discharge   voucher   thereby   Dicitex giving up their claim in future arising out of the said discharge voucher. 58. In my view, if Dicitex would not have signed such   discharge   voucher   acknowledging   the payment   of   the   lesser   amount   than   what   was alleged to be due to Dicitex after 27 months of the loss   suffered,   the   respondents   would   not   have released even the said amount mentioned in the discharge voucher. In my view, if according to the 17 respondents, Dicitex was not entitled to recover the amount as claimed by Dicitex, but the lesser amount, the respondents could have released the amount as payable according to the respondents, but   could   not   have   insisted   for   execution   of   a discharge   voucher   as   a   pre­condition   before releasing such payment. 59. Learned counsel for the respondents could not refer to any provision in the insurance policy or any other provision of law in support of their claim that  the  respondents  were  entitled  to  insist  for execution   of   such   discharge   voucher   before releasing any payment in favour of Dicitex with a confirmation   not   to   make   any   claim   in   future arising out of the said claim. The Supreme Court has already deprecated the practice followed by the   government   departments,   statutory corporations   and   government   companies   for obtaining such undated discharge voucher as the condition   for   releasing   lesser   amount   and   has held that the said procedure is unfair, irregular and   illegal.   Though   the   Chief   Justice   or   his designate is empowered to decide the  issue as to whether the parties had concluded the contract by recording satisfaction of their mutual rights and obligations   thereby   receiving   the   final   payment without objection based on the affidavits and the pleadings   or   can   leave   the   said   issue   to   be decided by the arbitral tribunal, in my view, it would be appropriate if the issue raised by the respondents   that   Dicitex   had   signed   such discharge voucher unconditionally and the issue raised by Dicitex that the same was under duress and   coercion   is   conclusively   decided   by   the arbitral tribunal and if necessary, by leading oral evidence.   The   learned   designate   of   the   Chief Justice in case of M/s.Yasho Industries Pvt. Ltd. Vs. The New India Assurance Company Limited in 18

19

20 amounted   to   economic   coercion.   Therefore,   the   learned single judge very properly analysed all these materials and held that  prima facie,  there was no full and final settlement or discharge. Analysis & Conclusions 13. The main theme of the appellant’s argument in this case is that Dicitex could not have invoked the arbitration clause, since it had fully and finally accepted the amount offered (i.e..) and withdrawn its protests and reservations, by the letter dated 06.06.2014. It cites the decisions in Boghara   Polyfab,   Master   Construction   and   Genus   Power (supra) in this regard.  14. The   issue   of   the   court’s   jurisdiction   to   examine whether   a   dispute   is   arbitrable,   in   the   context   of   no objection certificates or discharge vouchers, was examined in   Boghara Polyfab   for the  first time. This  court  in  the context of an application under Section 11(6) dealt with the issue, holding that if there was accord and satisfaction due to a no dues certificate, a reference under Section 11 was not maintainable. It held, inter alia, that: 21 "51. Let us consider what a civil court would have done in a case where the defendant puts forth the defence of accord and satisfaction on the basis of a full and final discharge voucher issued by the plaintiff,   and   the   plaintiff   alleges   that   it   was obtained by fraud/coercion/undue influence and therefore not valid. It would consider the evidence as to whether there was any fraud, coercion or undue influence. If it found that there was none, it will accept the voucher as being in discharge of the   contract   and   reject   the   claim   without examining the claim on merits. On the other hand, if it found that the discharge voucher had been obtained   by   fraud/undue   influence/coercion,   it will   ignore   the   same,   examine   whether   the plaintiff had made out the claim on merits and decide the matter accordingly. The position will be the   same   even   when   there   is   a   provision   for arbitration. 52. Some illustrations (not exhaustive) as to when claims   are   arbitrable   and   when   they   are   not, when   discharge   of   contract   by   accord   and satisfaction   are   disputed,   to   round   up   the discussion on this subject: (i) A claim is referred to a conciliation or a pre­ litigation Lok Adalat. The parties negotiate and arrive at a settlement. The terms of settlement are drawn  up and  signed  by both  the  parties  and attested by the Conciliator or the members of the Lok Adalat. After settlement by way of accord and satisfaction,   there   can   be   no   reference   to arbitration. (ii) A claimant makes several claims. The admitted or   undisputed   claims   are   paid.   Thereafter negotiations   are   held   for   settlement   of   the disputed   claims   resulting   in   an   agreement   in writing   settling   all   the   pending   claims   and disputes. On such settlement, the amount agreed 22 is paid and the contractor also issues a discharge voucher/no claim certificate/full and final receipt. After the contract is discharged by such accord and   satisfaction,   neither   the   contract   nor   any dispute survives for consideration. There cannot be   any   reference   of   any   dispute   to   arbitration thereafter. (iii)   A   contractor   executes   the   work   and   claims payment   of   say   Rupees   Ten   Lakhs   as   due   in terms of the contract. The employer admits the claim only for Rupees six lakhs and informs the contractor either in writing or orally that unless the contractor gives a discharge voucher in the prescribed   format   acknowledging   receipt   of Rupees Six Lakhs in full and final satisfaction of the contract, payment of the admitted amount will not   be   released.   The   contractor   who   is   hard pressed for funds and keen to get the admitted amount released, signs on the dotted line either in a   printed   form   or   otherwise,   stating   that   the amount is received in full and final settlement. In such   a   case,   the   discharge   is   under   economic duress on account of coercion employed by the employer.   Obviously,   the   discharge   voucher cannot be considered to be voluntary or as having resulted  in  discharge  of  the  contract  by accord and satisfaction. It will not be a bar to arbitration. (iv) An insured makes a claim for loss suffered. The claim is neither admitted nor rejected. But the insured   is   informed   during   discussions   that unless the claimant gives a full and final voucher for a specified amount (far lesser than the amount claimed by the insured), the entire claim will be rejected.   Being   in   financial   difficulties,   the claimant   agrees   to   the   demand   and   issues   an undated   discharge   voucher   in   full   and   final settlement.   Only   a   few   days   thereafter,   the admitted   amount   mentioned   in   the   voucher   is paid. The accord and satisfaction in such a case 23 is not voluntary but under duress, compulsion and coercion. The coercion is subtle, but very much real.   The   `accord'   is   not   by   free   consent.   The arbitration agreement can thus be invoked to refer the disputes to arbitration. (v) A claimant makes a claim for a huge sum, by way   of   damages.   The   respondent   disputes   the claim.   The   claimant   who   is   keen   to   have   a settlement   and   avoid   litigation,   voluntarily reduces the claim and requests for settlement. The respondent   agrees   and   settles   the   claim   and obtains a full and final discharge voucher. Here even   if   the   claimant   might   have agreed   for settlement   due   to   financial   compulsions   and commercial   pressure   or   economic   duress,   the decision was his free choice. There was no threat, coercion   or   compulsion   by   the   respondent. Therefore, the accord and satisfaction is binding and valid and there cannot be any subsequent claim or reference to arbitration. 52. Let us now examine the receipt that has been taken in this case. It is undated and is in a pro forma   furnished   by   the   appellant   containing irrelevant and inappropriate statements. It states: "I/we hereby assign to the company, my/our right to the affected property stolen which shall, in the event   of   their   recovery,   be   the   property   of   the company". The claim was not in regard to theft of any property nor was the claim being settled in respect of a theft claim. We are referring to this aspect only to show how claimants are required to sign on the dotted line, and how such vouchers are   insisted   and   taken   mechanically   without application of mind." 15. In  Master Construction (supra) , this Court held that: 24 "20. The Bench in Boghara Polyfab Private Limited in paragraphs 42 and 43, with reference to the cases cited before it, inter alia, noted that there were   two   categories   of   the   cited   cases;   (one) where the Court after considering the facts found that there was a full and final settlement resulting in   accord   and   satisfaction,   and   there   was   no substance   in   the   allegations   of   coercion/undue influence   and,   consequently,   it   was   held   that there   could   be   no   reference   of   any   dispute   to arbitration and (two) where the court found some substance in the contention of the claimants that `no   dues/claim   certificates'   or   `full   and   final settlement discharge vouchers' were insisted and taken (either in printed format or otherwise) as a condition   precedent   for   release   of   the   admitted dues   and   thereby   giving   rise   to   an   arbitrable dispute. 21.   In   Boghara   Polyfab   Private   Limited,   the consequences of discharge of the contract were also considered. In para 25 (page 284), it was explained   that   when   a   contract   has   been   fully performed,   then   there   is   a   discharge   of   the contract by performance and the contract comes to an   end   and   in   regard   to   such   a   discharged contract, nothing remains and there cannot be any dispute   and,   consequently,   there   cannot   be reference to arbitration of any dispute arising from a   discharged   contract.   It   was   held   that   the question   whether   the   contract   has   been discharged   by   performance   or   not   is   a   mixed question of fact and law, and if there is a dispute in   regard   to   that   question,   such   question   is arbitrable. The Court, however, noted an exception to this proposition. The exception noticed is that where both the parties to a contract confirm in writing that the contract has been fully and finally discharged by performance of all obligations and there   are   no   outstanding   claims   or   disputes, 25 courts   will   not   refer   any   subsequent   claim   or dispute to arbitration. Yet another exception noted therein is with regard to those cases where one of the parties to the contract issues a full and final discharge voucher (or no­dues certificate, as the case may be) confirming that he has received the payment in full and final satisfaction of all claims, and he has no outstanding claim. It was observed that issuance of full and final discharge voucher or   no­dues   certificate   of   that   kind   amounts   to discharge   of   the   contract   by   acceptance   or performance and the party issuing the discharge voucher/certificate   cannot   thereafter   make   any fresh claim or revive any settled claim nor can it seek   reference   to   arbitration   in   respect   of   any claim. 22. In paragraph 26 (pages 284­285), this Court in Boghara   Polyfab   Private   Limited   held   that   if   a party   which   has   executed   the   discharge agreement or discharge voucher, alleges that the execution of such  document was  on account of fraud/coercion/undue influence practiced by the other   party,   and   if   that   party   establishes   the same, then such discharge voucher or agreement is rendered void and cannot be acted upon and consequently, any dispute raised by such party would be arbitrable. 23.   In   paragraph   24   (page   284)   in   Boghara Polyfab   Private   Limited,   this   Court   held   that   a claim for arbitration cannot be rejected merely or solely on the ground that a settlement agreement or discharge voucher has been executed by the claimant. The Court stated that such dispute will have   to   be   decided   by   the   Chief   Justice/his designate in the proceedings under Section 11 of the 1996 Act or by the Arbitral Tribunal. 24. In our opinion, there is no rule of the absolute kind. In a case where the claimant contends that 26 a   discharge   voucher   or   no­claim   certificate   has been obtained by fraud, coercion, duress or undue influence   and   the   other   side   contests   the correctness   thereof,   the   Chief   Justice/his designate must look into this aspect to find out at least, prima facie, whether or not the dispute is bona fide and genuine. Where the dispute raised by   the   claimant   with   regard   to   validity   of   the discharge   voucher   or   no­claim   certificate   or settlement agreement, prima facie, appears to be lacking in credibility, there may not be necessity to refer the dispute for arbitration at all. It cannot be overlooked that the cost of arbitration is quite huge ­ most of the time, it runs in six and seven figures. It may not be proper to burden a party, who contends that the dispute is not arbitrable on account of discharge of contract, with huge cost of arbitration merely because plea of fraud, coercion, duress or undue influence has been taken by the claimant. A bald plea of fraud, coercion, duress or undue influence is not enough and the party who sets up such plea must prima facie establish the same   by   placing   material   before   the   Chief Justice/his   designate.   If   the   Chief   Justice/his designate  finds   some  merit  in   the  allegation   of fraud,   coercion,   duress   or   undue   influence,   he may decide the same or leave it to be decided by the Arbitral Tribunal. On the other hand, if such plea is found to be an after­thought, make­believe or lacking in credibility, the matter must be set at rest then and there." 16. In  Genus Power   (supra), the relevant observations of this court are as follows: "8. It is therefore clear that a bald plea of fraud, coercion, duress or undue influence is not enough and the party who sets up a plea, must prime facie   establish   the   same   by   placing   material 27 before   the   Chief   Justice/his   designate.   Viewed thus, the relevant averments in the petition filed by the Respondent need to be considered, which were to the following effect:                            * (g) That the said surveyor, in connivance with the Respondent   Company,   in   order   to   make   the Respondent Company escape its full liability of compensating   the   Petitioner   of   such   huge   loss, acted   in   a   biased   manner,   adopted   coercion undue influence and duress methods of assessing the loss and forced the Petitioner to sign certain documents   including   the   Claim   Form.   The Respondent Company also denied the just claim of   the   Petitioner   by   their   acts   of   omission   and commission and by exercising coercion and undue influence and made the Petitioner Company sign certain   documents,   including   a   pre­prepared discharge   voucher   for   the   said   amount   in advance,   which   the   Petitioner   Company   were forced to do so in the period of extreme financial difficulty which prevailed during the said period. As stated aforesaid, the Petitioner Company was forced to sign several documents including a letter accepting the loss amounting to Rs. 6,09,55,406/­ and   settle   the   claim   of   Rs.   5,96,08,179/­   as against   the   actual   loss   amount   of   Rs. 28,79,08,116/­   against   the   interest   of   the Petitioner   company.   The   said   letter   and   the aforesaid pre­prepared discharge voucher stated that the Petitioner had accepted the claim amount in full and final settlement and thus, forced the Petitioner   company   to   unilateral   acceptance   the same. The Petitioner company was forced to sign the said document under duress and coercion by the   Respondent   Company.   The   Respondent Company   further   threatened   the   Petitioner Company to accept the said amount in full and final or the Respondent Company will not pay any 28 amount toward the fire policy. It was under such compelling   circumstances   that   the   Petitioner company was forced and under duress was made to sign the acceptance letter. 9. In our considered view, the plea raised by the Respondent   is   bereft   of   any   details   and particulars, and cannot be anything but a bald assertion. Given the fact that there was no protest or demur raised around the time or soon after the letter of subrogation was signed, that the notice dated   31.03.2011   itself   was   nearly   after   three weeks   and   that   the   financial   condition   of   the Respondent was not so precarious that it was left with   no   alternative   but   to   accept   the   terms   as suggested,   we   are   of   the   firm   view   that   the discharge in the present case and signing of letter of subrogation were not because of exercise of any undue influence. Such discharge and signing of letter of subrogation was voluntary and free from any   coercion   or   undue   influence.   In   the circumstances, we hold that upon execution of the letter   of   subrogation,   there   was   full   and   final settlement of the claim. Since our answer to the question,   whether   there   was   really   accord   and satisfaction, is in the affirmative, in our view no arbitrable dispute existed so as to exercise power Under Section 11 of the Act. The High Court was not therefore justified in exercising power Under Section 11 of the Act." 17. In  Velugubanti Hari Babu v. Parvathini Narasimha Rao & Anr. (2016) 14 SCC 126 , the line of judgments in  Boghara Polyfab   (supra)   was   followed .   Later,   in   ONGC   Mangalore 29 Petrochemicals Ltd. v ANS Constructions Ltd. and Anr. (2018) 3 SCC 373 , the court held as follows: "24. From the materials on record, we find that the contractee­ Company had issued the "No Dues/No Claim Certificate" on 21.09.2012, it had received the full amount of the final bill being Rs. 20.34 crores   on   10.10.2012   and   after   12   days thereafter,   i.e.,   only   on   24.10.2012,   the contractee­Company   withdrew   letter   dated 21.09.2012   issuing   "No   Dues/No   Claim Certificate". Apart from it, we also find that the Final Bill has been mutually signed by both the parties to the Contract accepting the quantum of work done, conducting final measurements as per the Contract, arriving at final value of work, the payments made and the final payment that was required   to   be   made.   The   contractee­Company accepted   the   final   payment   in   full   and   final satisfaction   of   all   its   claims.   We   are   of   the considered opinion that in the presents facts and circumstances, the raising of the Final Bill and mutual agreement of the parties in that regard, all claims, rights and obligation of the parties merge with the Final Bill and nothing further remains to be done. Further, the Appellant­Contractor issued the   Completion   Certificate   dated   19.06.2013 pursuant to which  the Appellant­Contractor has been discharged of all the liabilities. With regard to   the   issue   that   the   "No­Dues   Certificate"   had been given under duress and coercion, we are of the opinion that there is nothing on record to prove that   the   said   Certificate   had   been   given   under duress   or   coercion   and   as   the   Certificate   itself provided a clearance of no dues, the contractee could   not   now   turn   around   and   say   that   any further payment was still due on account of the losses   incurred   during   the   execution   of   the 30 Contract.   The   story   about   duress   was   an afterthought   in   the   background   that   the   losses incurred during the execution of the Contract were not   visualised   earlier   by   the   contractee.   As   to financial duress or coercion, nothing of this kind is established prima facie. Mere allegation that no­ claim   certificates   have   been   obtained   under financial duress and coercion, without there being anything more to suggest that, does not lead to an arbitrable dispute. The conduct of the contractee clearly shows that "no­claim certificate" was given by   it   voluntarily;   the   contractee   accepted   the amount   voluntarily   and   the   contract   was discharged voluntarily. Conclusion: 25.   Admittedly,   No­Dues   Certificate   was submitted   by   the   contractee­Company   on 21.09.2012   and   on   their   request   Completion Certificate   was   issued   by   the   Appellant­ Contractor.   The   contractee,   after   a   gap   of   one month, that is, on 24.10.2012, withdrew the No Dues Certificate on the grounds of coercion and duress and the claim for losses incurred during execution of the Contract site was made vide letter dated 12.01.2013, i.e., after a gap of 3 1/2 (three and a half) months whereas the Final Bill was settled   on   10.10.2012.   When   the   contractee accepted   the   final   payment   in   full   and   final satisfaction of all its claims, there is no point in raising the claim for losses incurred during the execution of the Contract at a belated stage which creates an iota of doubt as to why such claim was not settled at the time of submitting Final Bills that too in the absence of exercising duress or coercion   on   the   Contractee   by   the   Appellant­ Contractor. In our considered view, the plea raised by the contractee­Company is bereft of any details and  particulars, and  cannot be anything but a bald assertion. In the circumstances, there was 31 full and final settlement of the claim and there was   really   accord   and   satisfaction   and   in   our view   no   arbitrable   dispute   existed   so   as   to exercise power Under Section 11 of the Act. The High   Court   was   not,   therefore,   justified   in exercising power Under Section 11 of the Act."

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35 Petitioner was invoking arbitration proceedings under Clause 13 of the said Policy to recover the differential amount.”  21. An   overall   reading   of   Dicitex’s   application   (under Section 11(6)) clearly shows that its grievance with respect to the involuntary nature of the discharge voucher was articulated. It cannot   be   disputed,   that   several   letters   –   spanning   over   two years­ stating that it was facing financial crisis on account of the delay in settling the claim, were addressed to the appellant. This court is conscious of the fact that an application under Section 11(6) is in the form of a pleading which merely seeks an order of the   court,   for   appointment   of   an   arbitrator.   It   cannot   be conclusive of the pleas or contentions that the claimant or the concerned party can take, in the arbitral proceedings. At this stage, therefore, the court­ which is required to ensure that an arbitrable dispute   exists, has to be   prima facie   convinced about the genuineness or credibility of the plea of coercion; it cannot be too particular about the nature of the plea, which necessarily has to be made and established in the substantive (read: arbitration) proceeding. If the court were to take a contrary approach and minutely   examine   the   plea   and   judge   its   credibility   or 36

........................................J.                                              [ARUN MISHRA]  ........................................J.                                             [S. RAVINDRA BHAT]