SBI General Insurance Co. Ltd. Vs Krish Spinning (Supreme Court of India)
Summary: The Supreme Court considered whether an insured could invoke arbitration after signing a consent letter and an advance discharge voucher recording full and final settlement of an insurance claim, and what the referral court may examine under Section 11 of the Arbitration and Conciliation Act, 1996 when “accord and satisfaction” is pleaded.
SBI General Insurance Co. Ltd. had issued a standard fire and special perils (material damage) policy to M/s Krish Spinning for Rs 7,20,00,000/- for the period 31.03.2018 to 30.03.2019. Two fires occurred at the respondent’s factory. The present appeals concerned only the first fire of 28.05.2018. The respondent claimed Rs 1,76,19,967/-. A surveyor appointed under Section 64UM of the Insurance Act, 1938 assessed the loss at Rs 84,19,579/-. On 24.12.2018, the respondent gave a consent letter accepting that assessment and, on 04.01.2019, signed an advance discharge voucher recording receipt of Rs 84,19,579/- as full and final settlement. The appellant subsequently released the claim settlement amount, stated in paragraph 13 of the judgment as Rs 84,08,957/-, on 31.01.2019.
After the second fire claim was paid in instalments, the respondent on 25.10.2019 sought the survey report and stated that it had signed the voucher while badly in need of money. The appellant returned the hand-delivered letter but later, by its letter dated 07.11.2019, supplied the survey report and disputed the allegations. On 02.03.2020, the respondent issued a legal notice seeking the balance of the first claim and alleging that the consent letter and discharge voucher had been signed under coercion, undue influence and without free will. The notice also invoked arbitration in the event of non-payment. The appellant denied the allegations. The respondent thereafter filed a petition under Section 11(6) of the 1996 Act on 25.10.2021.
