Citations : 2025 INSC 630
Court : Supreme Court of India
Bench: Abhay S. Oka, Ujjal Bhuyan, JJ.
Date of Judgment: May 06, 2025
Case Number: Civil Appeal Nos. 6372-6373 of 2025 (Arising out of SLP (Civil) Nos. 16907-16908 of 2012)
Arbitration – Discharge Voucher – Arbitrability of Dispute – Economic Duress – Section 11 of Arbitration and Conciliation Act, 1996.
Appellant, insured under two fire insurance policies, suffered losses due to flooding and claimed Rs. 5,71,69,554. Respondent insurer paid Rs. 1,88,14,146, which appellant accepted by signing a discharge voucher under alleged financial duress caused by delay and creditor pressure. High Court dismissed appellant’s Section 11 applications, holding that acceptance of payment constituted full and final settlement, barring arbitration.
Supreme Court allowed the appeals, setting aside the High Court’s order, holding:
(1) At Section 11 stage, courts must only examine the existence of an arbitration agreement, not delve into the merits of the dispute;
(2) Disputes regarding the validity of a discharge voucher, especially on grounds of economic duress or coercion, are arbitrable and fall within the arbitral tribunal’s jurisdiction under the Kompetenz-Kompetenz principle;
(3) Execution of a discharge voucher does not ipso facto preclude arbitration if challenged on grounds of fraud, coercion, or undue influence, as clarified in precedents like Boghara Polyfab and Oriental Insurance;
(4) Nathani Steels distinguished as applicable to voluntary, negotiated settlements, not applicable here due to alleged duress;
(5) Arbitration agreement survives even after alleged ‘accord and satisfaction’ unless expressly terminated. Court appointed a retired Bombay High Court Judge as sole arbitrator. Appeals allowed, no order as to costs.
Cases Referred:
- National Insurance Co. Ltd. v. Boghara Polyfab Pvt. Ltd., (2009) 1 SCC 267;
- Nathani Steels Ltd. v. Associated Constructions, 1995 Supp (3) SCC 324;
- Duro Felguera, S.A. v. Gangavaram Port Ltd., (2017) 9 SCC 729;
- Vidya Drolia v. Durga Trading Corporation, (2021) 2 SCC 1;
- Oriental Insurance Co. Ltd. v. Dicitex Furnishing Ltd., (2020) 4 SCC 621;
- SBI General Insurance Co. Ltd. v. Krish Spinning, 2024 SCC OnLine SC 1754;
- Aslam Ismail Khan Deshmukh v. Asap Fluids Pvt. Ltd., (2025) 1 SCC 502.