Section 11(6) of the Arbitration and Conciliation Act, = prima facie no dispute subsisted after the discharge voucher being signed by the respondent without any demur or protest and claim being finally settled with accord and satisfaction and after 11 weeks of the settlement of claim a letter was sent on 27th July, 2016 for the first time raising a voice in the form of protest that the discharge voucher was signed under undue influence and coercion with no supportive prima facie evidence being placed on record in absence thereof, it must follow that the claim had been settled with accord and satisfaction leaving no arbitral dispute subsisting under the agreement to be referred to the Arbitrator for adjudication. 22. In our considered view, the High Court has committed a manifest error in passing the impugned order and adopting a mechanical process in appointing the Arbitrator without any supportive evidence on record to prima facie substantiate that an 19 arbitral dispute subsisted under the agreement which needed to be referred to the arbitrator for adjudication. 23. Consequently, the appeals are allowed and the order passed by the High Court is accordingly set aside. No costs.

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO(s). 3284 OF 2019
(Arising out of SLP(C ) No(s). 23956 of 2017)
UNITED INDIA INSURANCE CO. LTD. .…Appellant(s)
VERSUS
ANTIQUE ART EXPORTS PVT. LTD. .…Respondent(s)
WITH
CIVIL APPEAL NO(s). 3285 OF 2019
(Arising out of SLP(C ) No(s). 23963 of 2017)
J U D G M E N T
Rastogi, J.
Leave granted.

  1. These appeals have been filed by the Insurance Company
    assailing the order dated 30th May, 2017 passed by the High
    Court of Delhi appointing an Arbitrator in exercise of power
    under Section 11(6) of the Arbitration and Conciliation Act,
    1
    1996(hereinafter being referred to as “the Act”) to adjudicate the
    dispute between the parties.
  2. The facts in brief manifest from the record and relevant for
    the present purpose are that the respondent claimant was
    running its factory situated at 78, Kilo Mile Stone, Karhans
    Village, Main GT Road, Samalakha, Panipat and purchased two
    Standard Fire and Special Perils Policies dated 29th June, 2013
    and 10th October, 2013. On 25th September, 2013 and thereafter
    on 25th October, 2013, a fire took place in the factory on account
    of a short circuit as claimed by the respondent claimant. The
    appellant Company on receipt of the information appointed M/s.
    Protocol Surveyors & Engineers Pvt. Ltd. as surveyors and also
    appointed their investigator to submit the fact finding report.
    After the report was submitted by the authorised surveyor, the
    appellant Company sent an e­mail to the respondent with an
    intimation that it has approved its claim for an amount of Rs.
    2,81,44,413/­ on account of fire dated 25th October, 2013
    towards full and final settlement with complete details of the
    amount computed. The extract of the e­mail sent by the
    appellant Company to the respondent has been placed on record
    2
    at Annexure P­2 in Civil Appeal arising out of SLP(C ) No. 23956
    of 2017 and is reproduced as under:­
    “From: Jaiprakash1@uiic.co.in
    Sent: Thursday, May 05, 2016 1:23 PM
    To: Vimal Singh
    CC: sangeetagupta@uiic.co.in; vijaysharma@uiic.co.in;
    nareshchandolia@uiic.co.in
    Subject: Fire Claim dated 25.10.2013
    Sir/Madam,
    This is to inform you that the Competent Authority has
    approved your claim for an amount of Rs.
    2,81,44,413/­ (building Rs. 88,18,691 P & M Rs.
    7,32,382 FFF Rs. 3,61,049 Finished Goods, Rs.
    1,95,66,389 Fire Fighting Ex. Rs. 59,000 Cost of
    Debris Removal Rs. 88,187 Total Rs. 2,96,25,698)
    Less Excess 5% Rs. 14,81,285 = Rs. 2,81,44,413) of
    loss dated 25.10.2013 (Claim No.
    0407001113C101515001)
    In order to release the payment we require following
    from your end.
  3. Confirmation from the concerned bank “Indian
    Overseas Bank, Defence Colony Branch.
    Through mail that in which Account the payment has
    to be made through NEFT.
  4. Deposit Re­instatement premium of Rs.19100/­
  5. Fire Fighting expenses bills in original
  6. Debris Removal bills in original.
  7. Full and final settlement discharge voucher for Rs.
    2,81,44,413/­ duly endorsed by the bank also
    without any Subjectivity.
    Please furnish.
    3
    Jaiprakash
    Divisional Manager
    United India Insurance Company Limited
    10203, IIIrd Floor, Jamuna House,
    Padam Singh Road
    New Delhi­110005
    Mobile : 9910791508
    Phone : 28755967, 28755419
    jaiprakash@uiic.co.in”
  8. On the same date, i.e. 5th May, 2016, the respondent sent a
    reply accepting the computation and provided the desired details
    with final discharge voucher and details of the bank account in
    which the payment was to be credited. The extract of the e­mail
    and the discharge voucher sent by the respondent is reproduced
    hereunder:­
    “ANTIQUE ART
    Exports Pvt. Ltd.
    (A Govt. of India Recognized Export House)
    PANIPAT OFFICE: 78 K.M. Stone, G.T. Road, karhans Village, Tehsil
    Samalkha, Panipat­132103(INDIA)
    T:0091­180­3003300 (100 Lines), F: 0091­180­3003311
    E:Info@antiqueartexports.com, :www.antiqueartexports.com
    The Divisional Manager 05.05.2016
    United India Insurance Co. Ltd.
    10203, 3rd Floor, Jamuna House
    Padam Singh Road
    Karol Bagh, New Delhi.
    Kind Attn: Mr. Jaiprakash
    Subject : Fire Claim dated 25.10.2013
    Dear Sir,
    4
    We are in receipt of your email of today’s date,
    wherein you have asked to furnish certain
    documents/information for doing the needful at your
    end. Accordingly, we are submitting herewith desired
    information/documents for your necessary action.
  9. We have already requested our bank to confirm
    account details, in which payment has to be made
    through NEFT. Hopefully, you must have received the
    same directly from Bank on your email.
  10. Regarding re­instatement premium of Rs.19100/­, we
    request you to deduct the same from claim payment.
  11. Original Fire Fighting expenses bills are submitted
    herewith for doing the needful at your end.
  12. Regarding Debris Removal Bills in original, we are
    enclosing herewith separate letter and contents of the
    same are self­explanatory. This payment is to be
    released at later date as per our letter.
  13. Full and final settlement discharge voucher for
    Rs.2,81,44,413/­ duly endorsed by the bank is
    attached for doing the needful at your end.
    While hoping that you will find above information/
    documents in line of your requirement, we look
    forward to have the immediate transfer of payment of
    our claim to our bank.
    A line of confirmation in this regard will be highly
    appreciated.
    Thanking you
    Yours faithfully,
    For Antique Art Exports Pvt. Ltd.
    Ashok Jain
    Chairman”
    “ANTIQUE ART
    Exports Pvt. Ltd.
    (A Govt. of India Recognized Export House)
    PANIPAT OFFICE: 78 K.M. Stone, G.T. Road, karhans Village, Tehsil
    Samalkha, Panipat­132103(INDIA)
    T:0091­180­3003300 (100 Lines), F: 0091­180­3003311
    E:Info@antiqueartexports.com, :www.antiqueartexports.com
    05.05.2016
    5
    Full and Final Settlement Discharge Voucher
    We, Antique Art Exports Pvt. Ltd., 78 KM Stone,
    Karhans Village, Tehsil Samalkha, Panipat­132103,
    Haryana do hereby accept payment of
    Rs.2,81,44,413/­(Rupees Two Crore Eighty One Lacs
    Fourty Four Thousand and Four Hundred Thirteen
    only) as full and final settlement against our fire claim
    No.:0407001113 C101515001 of loss dated 25.10.2013
    without any subjectivity.
    For Antique Art Exports Pvt. Ltd.
    Sd/­
    Ashok Jain
    Chairman”
  14. Civil Appeal arising out of SLP(C ) No. 23963 of 2017 deals
    with the fire taken place on 25th September, 2013. It is not
    disputed between the parties that the facts are similar except
    that the claim was settled for Rs. 2,20,36,840/­.
  15. Indisputedly, both the claims were accepted by the
    respondent without any demur or protest, and after full and final
    settlement and discharge of claim in reference to both the claims
    of the incident dated 25th September, 2013 and 25th October,
    2013, the respondent later through e­mail dt. 11th July, 2016
    desired certain details and reports with a break up of
    computation including copy of the preliminary survey report etc.
    and there was no whisper that any coercion or undue influence,
    6
    etc. was used by the appellant company. The e­mail was replied
    by the appellant on 20th July, 2016 giving all details as desired by
    the respondent. Thereafter on 27th July, 2016 for the first time
    nearly almost after 11 weeks of the receipt of claim and full and
    final discharge, respondent claimed that fraud, coercion and
    undue influence was exercised and he was forced to sign on the
    dotted lines without furnishing any prima facie evidence in
    support thereof. In furtherance, application came to be filed
    before the High Court on 11th January, 2017 under Section 11(6)
    of the Arbitration and Conciliation Act, 1996(hereinafter being
    referred to as “the Act”) inter alia that the insurer coerced and
    forced the respondent to sign on dotted lines on a pre­signed
    discharge voucher and claimed for appointment of an Arbitrator.
  16. The appellant Insurance Company in their reply refuted
    such allegations and further stated that the respondent had
    signed a letter of subrogation in accepting the payment in full
    and final settlement of its claim. Discharge Voucher was sent
    without any demur or protest and nothing further survives and
    no arbitral dispute subsists for adjudication and so far as the
    allegation levelled that the insurer has coerced and put undue
    7
    force upon the respondent to sign on dotted lines on a pre­signed
    standard discharged paper is concerned, there is no prima facie
    documentary evidence placed on record except the letter dated
    27th July, 2016 which was sent for the first time after almost
    more than 11 weeks of the claim being settled and the
    application for appointment of Arbitrator is ill founded and
    deserves to be rejected.
  17. The High Court taking note of the rival contentions of the
    parties and of sub­section (6A) of Section 11 of the Act which has
    been introduced by virtue of Amendment Act, 2015 observed that
    once there is existence of arbitration agreement, acceptance of
    the payment disbursed by the appellant company, whether it was
    under coercion or undue influence, is a matter to be examined by
    the Arbitrator and accordingly proceeded to appoint the sole
    arbitrator to adjudicate the dispute between the parties.
  18. Shri Vineet Malhotra, learned counsel for the appellant
    submits that once the claim was settled and the claimant
    received compensation and issued a discharge voucher in full
    and final settlement of its claim, there was a discharge of the
    8
    contract by accord and satisfaction. As a result, neither any
    contract nor any claim survived. It was also contended that
    having received the payment under the said discharge voucher
    without any demur or protest, it was not open for the respondent
    after 11 weeks of the receipt of the claim and full and final
    discharge, to raise a voice that the discharge was obtained under
    coercion and undue influence without furnishing any prima facie
    evidence in support thereof and placed reliance of the judgment
    of this Court in New India Assurance Company Limited Vs.
    Genus Power Infrastructure Limited 2015(2) SCC 424 which
    according to him is almost on the same set of facts and
    circumstances.
  19. Learned counsel for the appellant further submits that subsection (6A) of Section 11 of the Act has been introduced by
    Amendment Act, 2015 with a limited purpose for expediting the
    arbitral disputes in a time bound manner provided there is a
    prima facie arbitral claim/dispute subsist under the arbitral
    agreement for adjudication by the Arbitrator. In the instant case,
    as there was no arbitral dispute subsisting after the claim being
    finally settled with consent of the parties with due accord and
    9
    satisfaction, Section 11(6) was not available to be invoked by the
    respondent in raising a dispute after more than 11 weeks of the
    settlement of the claim to the satisfaction of the parties.
  20. Per Contra, Shri Dhruv Mehta, learned senior counsel for
    the respondent submitted that he is not disputing as far as the
    settlement of the claims are concerned but his objection is that
    the respondent was not in a bargaining position and being in
    financial stress, he had no option but to accept the claim on the
    dotted lines settled by the appellant in an arbitrary manner
    leaving no choice and mere acceptance in the given
    circumstances will not take away the right of the respondent to
    establish that it was not voluntary but under undue influence
    and coercion and since there is a clause of arbitration in the
    agreement, it will be for the Arbitrator to examine as to whether
    the acceptance of the claim by the respondent has been voluntary
    or under undue influence or coercion and in the given
    circumstances, no error has been committed by appointing the
    Arbitrator under the impugned judgment.
    10
  21. The existence of an arbitration clause in the contract of
    insurance is not in dispute. The question does arise whether the
    discharge in the present case upon acceptance of the
    compensation and signing of the discharge letter was voluntary
    or under coercion or undue influence and the respondent was
    justified in invoking Section 11(6) of the Act. It is true that
    execution of full and final agreement, receipt or a discharge
    voucher in itself cannot be a bar to arbitration and it has been
    observed by this Court in National Insurance Company
    Limited Vs. Boghara Polyfab Private Limited 2009(1) SCC 267
    at para 44 as under:­
    “44. None of the three cases relied on by the
    appellant lay down a proposition that mere execution
    of a full and final settlement receipt or a Discharge
    Voucher is a bar to arbitration, even when the validity
    thereof is challenged by the claimant on the ground of
    fraud, coercion or undue influence. Nor do they lay
    down a proposition that even if the discharge of
    contract is not genuine or legal, the claims cannot be
    referred to arbitration. In all the three cases, the Court
    examined the facts and satisfied itself that there was
    accord and satisfaction or complete discharge of the
    contract and that there was no evidence to support the
    allegation of coercion/undue influence.”
  22. It further laid down the illustrations as to when claims are
    arbitrable and when they are not. This may be illustrative (not
    11
    exhaustive) but beneficial for the authorities in taking a decision
    as to whether in a given situation where no claim/discharge
    voucher has been furnished what will be its legal effect and still
    there is any arbitral dispute subsists to be examined by the
    arbitrator in the given facts and circumstances and held in para
    52 of National Insurance Co. Ltd. Vs. Boghara Polyfab
    Private Limited (supra) as follows:­
    “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
    are:
    (i) A claim is referred to a conciliation or a pre­litigation
    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
    is paid and the contractor also issues a discharge
    voucher/no­claim 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
    12
    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 hard­pressed 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 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.”
    13
  23. It is true that there cannot be a rule of thumb and each
    case has to be looked into on its own facts and circumstances,
    taking note of the broad principles, it was observed by this Court
    in Union of India and Others Vs. Master Construction Co.
    2011(12) SCC 349 at para 18 as under:­
    “18. In our opinion, there is no rule of the absolute
    kind. In a case where the claimant contends that 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 a necessity to refer the
    dispute for arbitration at all.”
  24. From the proposition which has been laid down by this
    Court, what reveals is that a mere plea of fraud, coercion or
    undue influence in itself is not enough and the party who alleged
    is under obligation to prima facie establish the same by placing
    satisfactory material on record before the Chief Justice or his
    Designate to exercise power under Section 11(6) of the Act, which
    has been considered by this Court in New India Assurance
    Company Ltd. case (supra) as follows:­
    14
    “9. 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 prima
    facie establish the same by placing material before
    the Chief Justice/his designate…..”
  25. In the instant case averment was made for the first time
    after 11 weeks of the settlement of claim & release of discharge
    voucher in the petition filed by the respondent seeking
    appointment of Arbitrator of undue influence/coercion being
    used by the appellant in signing the papers on dotted lines is
    reproduced as under:­
    “xiii. It is stated that the Respondent occupying a
    bargaining position as an Insurer coerced and forced
    the Petitioner to sign on dotted lines on a Pre­signed
    Standard Discharge Voucher. The petitioner facing
    severe financial distress gave in to the pressure tactics
    of the Respondent and was made to sign a purported
    Discharge Voucher dated 24.06.2016 for an amount of
    Rs. 2,20,36,840/­(Rupees Two Crore Twenty Lakhs
    Thirty Six Thousand, Eight Hundred Forty Only) as
    against the Claim of Rs. 5,12,49,241/­ (Rupees Five
    Crore Twelve Lakhs Forty Nine Thousand Two Hundred
    Forty One Only) as a pre­condition for release of
    money.
    xvii. It is stated that Petitioner vide its Letter dated
    27.07.2016 rescinded the purported Discharge
    Voucher as illegal and void as it was forced on coerced
    into signing the same in the face of extreme financial
    duress. The petitioner vide the said letter dated
    27.07.2016 called upon the Respondent to pay the
    balance amount of Rs. 2,92,12,401/­ (Rupees Two
    Crore Ninety Two Lakhs Twelve Thousand Four
    Hundred and One Only) on account of loss suffered by
    the petitioner as result of fire. The petitioner also
    claimed an interest @ 18% per annum from the date of
    incident as well as on the paid amount till date of
    payment i.e. up to 06.07.2016.”
    15
  26. It is true that there cannot be a rule of its kind that mere
    allegation of discharge voucher or no claim certificate being
    obtained by fraud/coercion/undue influence practised by other
    party in itself is sufficient for appointment of the arbitrator
    unless the claimant who alleges that execution of the discharge
    agreement or no claim certificate was obtained on account of
    fraud/coercion/undue influence practised by the other party is
    able to produce prima facie evidence to substantiate the same,
    the correctness thereof may be open for the Chief Justice/his
    Designate to look into this aspect to find out at least prima facie
    whether the dispute is bonafide and genuine in taking a decision
    to invoke Section 11(6) of the Act.
  27. In the instant case, the facts are not in dispute that for the
    two incidents of fire on 25th September, 2013 and 25th October,
    2013, the appellant Company based on the Surveyor’s report sent
    e­mails on 5th May, 2016 & 24th June, 2016 for settlement of the
    claims for both the fires dated 25th September, 2013 and 25th
    October, 2013 which was responded by the respondent through
    e­mail on the same date itself providing all the necessary
    16
    information to the Regional Office of the Company and also
    issued the discharge voucher in full & final settlement with
    accord and satisfaction. Thereafter, on 12th July, 2016, the
    respondent desired certain information with details that too was
    furnished and for the first time on 27th July, 2016, it took a Uturn and raised a voice of undue influence/coercion being used
    by the appellant stating that being in financial distress left with
    no option than to proceed to sign on the dotted lines. As
    observed, the phrase in itself is not sufficient unless there is a
    prima facie evidence to establish the allegation of coercion/undue
    influence, which is completely missing in the instant case.
  28. In the given facts and circumstances, we are satisfied that
    the discharge and signing the letter of subrogation was not
    because of any undue influence or coercion as being claimed by
    the respondent and we find no difficulty to hold that upon
    execution of the letter of subrogation, the claim was settled with
    due accord and satisfaction leaving no arbitral dispute to be
    examined by an Arbitrator to be appointed under Section 11(6) of
    the Act.
    17
  29. The submission of the learned counsel for the respondent
    that after insertion of sub­section (6A) to Section 11 of
    Amendment Act, 2015 the jurisdiction of this Court is denuded
    and the limited mandate of the Court is to examine the factum of
    existence of an arbitration and relied on the judgment in Duro
    Felguera S.A. Vs. Gangavaram Port Limited 2017(9) SCC 729.
    The exposition in this decision is a general observation about the
    effect of the amended provisions which came to be examined
    under reference to six arbitrable agreements (five agreements for
    works and one corporate guarantee) and each agreement
    contains a provision for arbitration and there was serious dispute
    between the parties in reference to constitution of Arbitral
    Tribunal whether there has to be Arbitral Tribunal pertaining to
    each agreement. In the facts and circumstances, this Court took
    note of sub­section (6A) introduced by Amendment Act, 2015 to
    Section 11 of the Act and in that context observed that the
    preliminary disputes are to be examined by the arbitrator and are
    not for the Court to be examined within the limited scope
    available for appointment of arbitrator under Section 11(6) of the
    Act. Suffice it to say that appointment of an arbitrator is a
    judicial power and is not a mere administrative function leaving
    18
    some degree of judicial intervention when it comes to the
    question to examine the existence of a prima facie arbitration
    agreement, it is always necessary to ensure that the dispute
    resolution process does not become unnecessarily protracted.
  30. In the instant case, prima facie no dispute subsisted after
    the discharge voucher being signed by the respondent without
    any demur or protest and claim being finally settled with accord
    and satisfaction and after 11 weeks of the settlement of claim a
    letter was sent on 27th July, 2016 for the first time raising a voice
    in the form of protest that the discharge voucher was signed
    under undue influence and coercion with no supportive prima
    facie evidence being placed on record in absence thereof, it must
    follow that the claim had been settled with accord and
    satisfaction leaving no arbitral dispute subsisting under the
    agreement to be referred to the Arbitrator for adjudication.
  31. In our considered view, the High Court has committed a
    manifest error in passing the impugned order and adopting a
    mechanical process in appointing the Arbitrator without any
    supportive evidence on record to prima facie substantiate that an
    19
    arbitral dispute subsisted under the agreement which needed to
    be referred to the arbitrator for adjudication.
  32. Consequently, the appeals are allowed and the order passed
    by the High Court is accordingly set aside. No costs.
  33. Pending application(s), if any, also stand disposed of.
    …………………………J.
    (A.M. KHANWILKAR)
    …………………………J.
    (AJAY RASTOGI)
    NEW DELHI
    March 28, 2019
    20