Execution Of Discharge Voucher Not A Bar To Claim Higher Compensation If Provided For By IRDA Circular: Calcutta High Court

The Calcutta High Court bench of Justice Aniruddha Roy has held that once the liability or quantum of a claim under an insurance policy is established, the Insurance Company must not withhold the claim amount and must comply with Insurance Regulatory and Development Authority (IRDA) Circular which entitles the Insured to claim a higher amount. It further held that the Circular clearly provided that if an insured is dissatisfied with the quantum of compensation, they are entitled to approach judicial or statutory forums for higher compensation. Execution of a discharge voucher does not amount to estoppel, nor does it bar the insured from pursuing additional claims. Brief Facts: The claimant was insured with the Insurance Company under a valid policy that was lawfully enhanced from Rs. 22 crores to Rs. 32 crores. On September 2, 2014, a fire broke out at the claimant's Jute Mill, causing substantial loss of finished goods. The claimant duly notified the Insurance Company of the incident on September 3, 2014. On March 7, 2015, the final surveyor sent an email to the claimant urging acceptance of Rs. 12.4 crores as full and final settlement and included a consent letter from the claimant, which was also sent via email. More than a year after the fire, on September 19, 2015, the final surveyor filed a supplementary report with the Insurance Company without informing the claimant. On August 31, 2016 the claimant had signed a pre-formatted discharge voucher and sent it to the Insurance Company through E-mail. On September 7, 2016, the Insurance Company credited the bank account of the claimant to the extent of Rs. 11,17,81,171/-. On September 9, 2016 claimant by its letter written to the Insurance Company demanded the remaining amount of Rs. 4,43,88,000/-. On September 19, 2016 the claimant by its letter written to the respondent reiterated its demand to the said extent of Rs. 4,43,88,000/- and requested the Insurance Company to furnish the surveyors' reports submitted from time to time. October 27, 2016, the claimant invoked the arbitration clause. Since the Insurance Company did not accept the nomination of the claimant, an application was moved under Section 11 of the Arbitration Act and the Tribunal was constituted. The award was made and published by the Arbitral Tribunal on March 2, 2020 allowing the claim of the claimants for the balance sum with interest. Against this award, the present petition under section 34 has been filed. Contentions: The Petitioner submitted that When the claimant had accepted its claim as full and final settlement by executing the discharge voucher, the claimant could not have taken the plea that the discharge voucher was executed by it under coercion and undue influence practiced by the Insurance Company upon the claimant. It was further submitted that the claimant has voluntarily and wilfully executed the discharge vouchers and accepted the payment without protest with the clear understanding that it did not want to prolong the issue for settlement of its claim. Therefore, in the facts of the instant case the claimant not only executed the voucher but also accepted the payment without any protest. Per contra, the Respondent submitted that Execution of such discharge voucher does not 14 foreclose the rights of policy holder to seek Higher Compensation before any judicial fora or any other fora established by law. It was further submitted that in arbitral proceedings, evidence concerning the insured's financial health or other insurance policies is not vital. Once the compensation amount is disputed but legally proven and payable under the insurance contract, such evidence is unnecessary for passing the award. Observations: The court noted that as per the IRDA Circular the execution of discharge voucher would not amount to estoppel on the part of the Insured, if such an Insured is aggrieved with the quantum of compensation fixed by the Insurers/Insurance Company and approaches a judicial forum and execution of such discharge voucher also does not foreclose the rights of the Policy Holder/Insured to seek Higher Compensation in accordance with law. It further observed that once the insured proves their claim in accordance with law, it becomes the legal duty of the Insurance Company to pay. Unless otherwise agreed in the contract, the insured's financial health or existence of other insurance policies before or after the fire is irrelevant. The court held that “the claim which is under adjudication allegedly settled by and between the parties on the basis of any discharge voucher, as pleaded by the insurance company is wholly irrelevant and immaterial consideration, when the insured has claimed higher compensation.” It further said that therefore, the Insurance Company's claim that the matter was settled through negotiation with the Surveyor is legally...

Execution Of Discharge Voucher Not A Bar To Claim Higher Compensation If Provided For By IRDA Circular: Calcutta High Court

Mohd Malik Chauhan

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