Section 11(6) of The Arbitration Act III

Dicitex was facing financial distress and economical duress. Oriental Insurance had insisted Dicitex to sign a clean discharge voucher and to withdraw the letter of protest addressed by it, failing which, Oriental Insurance would not release the amount that was reflected in the discharge voucher.

HC allowed an application under Section 11(6), preferred by Dicitex, and appointed an Arbitrator. The maintainability of the application had been objected to on the ground of signing of the discharge voucher and accepting the amount offered, thus, signifying accord and satisfaction!

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. 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 Arbitration Proceeding.

This Court has upheld the concept of economic duress [Associated Construction, (2008) 16 SCC 128; Boghara Polyfab, (2009) 1 SCC 26]. The Court, in more places than one, recognized that an aggrieved party can be the victim of economic coercion which results in its signing a document which discharges the other party of its obligations. Master Construction, (2011) 12 SCC 349 placed the matter in perspective, when the Court enunciated the principle. In Genus Power, (2015) 2 SCC 424 the Court cautioned that a ‘bald plea’ of coercion, without any supporting material is insufficient for a Court to hold that the accord/satisfaction was involuntarily given.

HC cannot be faulted.”

Hon’ble Justice S. Ravindra Bhat, The Oriental Insurance Company Ltd. v. Dicitex Furnishing, [Civil Appeal No. 8550 of 2019].