Decided on October 06,1999



- (1.) The facts of the case briefly stated are as under :-The claimant is a private company known as "M/s Gulmarg Hotel" and it used to carry hotel business on Bluevard road of the City of Srinagar. The business of the Hotel was insured against fire Insurance policy with respondents No. 1 covering a risk of Rs. 77,00,000/- (rupees seventy seven lackhs). The allegations are that in the month of Sept. 1987, the premises were wholly gutted in fire. Preliminary Surveying was done by Mr. Pajnoo surveyor who reported total loss. The respondents deputed second surveyor who assessed the loss to the tune of rupees sixty nine lakhs. This report was partly accepted and initially an amount of rupees fourty lakhs was released. Meanwhile, verification of the loss was got done from the third surveyor namely, Mr. Bakshi who recommended the loss to the tune of Rs. 61,45,652/-. This report was received on 9-6-1991 and the remaining amount of Rs. 21,45,652/- was released. After its acceptance, the petitioner claimant executed the discharge voucher.
(2.) The petitioner filed application No. 280/91 under the Arbitration Act wherein claim in the amount of rupees sixty nine lakhs on different heads was claimed from respondent No. 1. This Court appointed Mr. Abdul Rehman Bhat (the then Addl. District Judge, Srinagar) as an arbitrator who dismissed all the claims of the petitioner but granted 6% interest on the second instalment of the fire claim (Rs. 21,45,652/- from the date of its receipt). The award of the arbitrator was challenged on the allegation of misconduct. On 8-9-1994, this Court up-held the award but gave a direction to the arbitrator to re-consider the rate of interest keeping in view the prevalent rate of interest in the market from the date of the award till it is made rule of the Court. This order was challenged in L.P.A. No. 02/1994 which was decided on 24/10/1997. It was held that petitioner claimant could maintain the claim for an action more than covered by the discharge voucher. The order passed by the Division Bench was challenged before the Apex Court (SLP No. CC-3143/98) which on 6-4-1998 was dismissed in limine. The matter again went in reference No. 10/97 to the learned Single Judge who on 6-2-1998 appointed Mr. Mohmmad Yaqoob Mir (Ist : Addl. District Judge, Srinagar) as an arbitrator with a direction to pass the award within the statutory period of four months. The arbitrator passed the Award on 17-2-1999 which was filed in the Court on 23-2-1999. Notice of filing of the award was given to the parties. The arbitrator had held that an amount of Rs. 21,45,652/- was withheld by respondent-objector No. 1 without any reason from January, 1998 to June 9, 1999 so interest was payable at the rate of 15% per annum till the payment was made.
(3.) Respondent-objector filed objections to the award and pleaded that claimant-company had executed discharge voucher after getting the full and final payment wherein it was specifically stated that no further claim could be set up before the Arbitrator who had no jurisdiction to arbitrate in the matter. This contention had the support from the decision of apex Court given in the case of "Nathani Steels Ltd. v. Associated Constructions 1995 Supp. (3) SCC 324. In this case it was held that once dispute is amicably settled between the parties finally arbitration clause cannot be invoked by a party to resolve the same on the ground of mistake in settlement unless the settlement is first set aside in proper proceedings. It was also pleaded that the arbitrator could not award interest for pre-reference period. The lawyer who represented the respondents-objectors before the Division Bench (in LPA No. 02/1994) could not properly project the case.;

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