IN THE MATTER OF

NATIONAL SPOT EXCHANGE LIMITED ….COMPLAINANT

VS.
NEW INDIA ASSURANCE COMPANY LIMITED …OPPOSITE PARTY

Argument Notes

1. The First (I) para of the Order dated 24 th May 2024 (See Page 74) may be referred to
vide which the Government of India has fixed the Minimum Support Price.
2. Reference may also be made to Page 126 of the paper book which contains the letter
of the New India Assurance Company dated 7 th December 2011. In the said letter
they are talking about returning voucher duly signed by the complainant to enable
them to release the amount.
3. The discharge voucher is at Page 125 of the document which is incidentally dated 2 nd
December, 2011. It predates the letter at Page 126 and it is on the letter head of the
New India Assurance Company Ltd. It only Shows that due to economic coercion,
the Complainant was made to sign the discharge voucher well before the issuance of
the letter dated 7th December, 2011 which is at Page 126.
4. This shows not only the dominant position of the Insurance company but also the
complete helplessness of the complainant to get the claim settled. He had to sign on
the dotted line much before the actual letter setting the claim was sent to him.
5. The present situation of economic coercion and duress has been taken into account
by the Hon’ble Apex Court in National Insurance Company Ltd vs Polyfab Company
Private Ltd., (2009) 1 SCC 267. The relevant paragraph of the judgement has been
produced herein:

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:
.
.
.

(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.

6. The Hon’ble Supreme Court in Chairman and MD, NTPC Ltd. vs Reshmi
Constructions (2004) 2 SCC 663 stated that claims based on coercion or economic
duress remain arbitrable despite a discharge voucher. The relevant paragraph of the
judgement has been produced herein:

27. Even when rights and obligations of the parties are worked out, the contract does
not come to an end inter alia for the purpose of determination of the disputes arising
thereunder, and, thus, the arbitration agreement can be invoked. Although it may not
be strictly in place but we cannot shut our eyes to the ground reality that in a case
where a contractor has made huge investment, he cannot afford not to take from the
employer the amount under the bills, for various reasons which may include
discharge of his liability towards the banks, financial institutions and other persons.
In such a situation, the public sector undertakings would have an upper hand. They
would not ordinarily release the money unless a “No-Demand Certificate” is signed.
Each case, therefore, is required to be considered on its own facts.

28. Further, necessitas non habet legem is an age-old maxim which means necessity
knows no law. A person may sometimes have to succumb to the pressure of the other
party to the bargain who is in a stronger position.

7. The Hon’ble Apex Court in United India Insurance Co. Ltd vs Ajmer Singh Cotton
and General Mills (1999) 6 SCC 400 and National Insurance Co Ltd vs Sehtia Shoes
(2008) 5 SCC 400, held that the mere execution of a discharge voucher would not
deprive the consumer from preferring a claim with respect to deficiency in service or
consequential benefits. At the cost of repetition the Complainant reiterates that the
disbursed amount was received by the Complainant under duress and coercion. The
relevant paragraph of the judgement has been produced herein:

In United India Insurance v. Ajmer Singh Cotton & General Mills [(1999) 6 SCC 400] it
was, inter alia, observed as follows : (SCC pp. 402-03, paras 4-5)
“4. We have heard learned counsel for the parties and perused the record. It is true that the
award of interest is not specifically authorised under the Consumer Protection Act, 1986
(hereinafter called ‘the Act’) but in view of our judgment in Sovintorg (India)
Ltd. v. SBI [(1999) 6 SCC 406] we are of the opinion that in appropriate cases the forum
and the commissions under the Act are authorised to grant reasonable interest under the
facts and circumstances of each case. The mere execution of the discharge voucher would
not always deprive the consumer from preferring claim with respect to the deficiency in
service or consequential benefits arising out of the amount paid in default of the service
rendered. Despite execution of the discharge voucher, the consumer may be in a position to
satisfy the Tribunal or the Commission under the Act that such discharge voucher or receipt
had been obtained from him under the circumstances which can be termed as fraudulent or
 exercise of undue influence or by misrepresentation or the like. If in a given case the
consumer satisfies the authority under the Act that the discharge voucher was obtained by
fraud, misrepresentation, undue influence or the like, coercive bargaining compelled by
circumstances, the authority before whom the complaint is made would be justified in
granting appropriate relief. However (sic so), where such discharge voucher is proved to
have been obtained under any of the suspicious circumstances noted hereinabove, the
Tribunal or the commission would be justified in granting the appropriate relief under the
circumstances of each case. The mere execution of the discharge voucher and acceptance of
the insurance claim would not estop the insured from making further claim from the insurer
but only under the circumstances as noticed earlier. The Consumer Disputes Redressal
Forums and Commissions constituted under the Act shall also have the power to fasten
liability against the insurance companies notwithstanding the issuance of the discharge
voucher. Such a claim cannot be termed to be fastening the liability against the insurance
companies over and above the liabilities payable under the contract of insurance envisaged
in the policy of insurance. The claim preferred regarding the deficiency of service shall be
deemed to be based upon the insurance policy, being covered by the provisions of Section 14
of the Act.
5. In the instant cases the discharge vouchers were admittedly executed voluntarily and the
complainants had not alleged their execution under fraud, undue influence,
misrepresentation or the like. In the absence of pleadings and evidence the State Commission
was justified in dismissing their complaints. The National Commission however granted
relief solely on the ground of delay in the settlement of claim under the policies. The mere
delay of a couple of months would not have authorised the National Commission to grant
relief particularly when the insurer had not complained of such a delay at the time of
acceptance of the insurance amount under the policy. We are not satisfied with the reasoning
of the National Commission and are of the view that the State Commission was justified in
dismissing the complaints though on different reasonings. The observations of the State
Commission in Jivajeerao Cotton Mills Ltd. v. New India Assurance Co. Ltd. [ OP No. 52 of
1991 decided on 28-11-1991] shall always be construed in the light of our findings in this
judgment and the mere receipt of the amount without any protest would not always debar the
claimant from filing the complaint.”

8. The argument of the insurance company is that they are not privy to any agreement
between the Complainant and NAFED entered into on 30 th December, 2008. It is
necessary to refer to Page 69 of the paper book, where the description of goods
covered under the stock policy is : ‘Raw Material’ which is further described as
‘procured seed cotton from farmers’. Exactly the same expression appears at Page 73,
where again the description of the goods discovered is ‘Raw Material- procured
cotton from farmers.’
9. The First and foremost thing that is to be noted is that procurement can be done only
from farmers and not from any other party in the chain in the market. Secondly, the
policy reflects the use of the expression ’kj’ it is not purchased. The Insurance
company is fully aware that what is procured by the complainant is ‘seed cotton’
from farmers and that is not purchased. In fact, the word procurement has a definite
connotation in India, implying minimum support prices for agricultural produces. In
addition, nobody can plead the ignorance of law. There is a government order which
is at Page 74 of the paper book, which determines the value to be given for the
procured cotton. Given the expression which it has used in the policy, the contention
advanced by the Insurance company that it had no knowledge of the government
 orders on procurement of this category of agricultural produce cannot be accepted.
Reference may also be made to the order dated 24th September, 2008 at Page 74 &
76. Please refer to Page 77 as well which is a letter dated 18 th March, 2009 from
Special Grade Secretary.
10. It is stated that the insurance contract is a contract of good faith. This is an obligation
on both the parties. Not only is the insured required to act in good faith, but also the
insurer. In the present case, no plausible explanation is given as to why the MSP
should not be compensated. At Page 117, at clause 11.4, a vague averment or
suggestion is made, which is neither here nor there and does not give any explanation
or any details whatsoever by the Surveyor.
11. On the question of delay of sending the protest letter , it is necessary to point out that
that Complainant was under great economic duress on account of the long and
deliberate delays made by the Insurance Company in settling the claim. The
following documents highlight the economic hardship the complainant was subjected
to:

i) At Page 80 where in the second paragraph of the letter, there is a clear

statement of the pressure the complainant faced . It is to be noted that the
complainant had already paid the farmers and was the under pressure to pay
ginner, transporters, labourers etc. towards their outstanding bills. So there
was a desperate request to the Insurance company to release at least 75% of
the claim amount as early as possible.
ii) Refer to Page 81, which deals with the reply of the insurance company. The
insurance company tries to co-relate an order to assign the methodology of
losses assessment. The insurance company has clearly attempted to show to
the complainant that it is not just one claim which is at stake, but there are
two claims which is completely in the hands of the insurer.
iii) At Page 82, the Complainant again desperately requests to finalise the claim
as early as possible and release the claim money.
iv) At Page 83, is the letter addressed by the complainant to the surveyor which
again highlights the long and deliberate delays made in settling the claim. The
Complainant states that there was five months of long silence and thereafter
the very basic questions are again asked regarding the claim when the
Complainant had already furnished every information requested for by the
surveyor.
v) Reference may be made to Page 106, which has the letter dated 1 st April, 2010
of the New India Assurance Company, which again details how the insurance
company is trying to correlate both the claims. What is at stake in the hands
of the complainant are two policy claims and there is no way that the
complainant could risk antagonising the insurance company in any manner.
12. It is also important to note the protest letter dated 7 th February, 2012 Page 129 which
specifically refers to the claim payment cheque which was handed over on 7 th
December, 2011. The amount was credited to the accounts of the Insurance Company
on 15th December, 2011. Further, the Cheque in respect of the other (previous) claim
was handed over to the Complainant as late as on 12 th January, 2012. Not until the
 amount under the other claim was duly received by the Complainant have protested
against the settlement amount.
13. It is also necessary to point out that the insurance company is under a contract of
good faith. They have been carefully and in a calibrated manner taking into
consideration both the claims in order to put pressure on the complainant to accept a
lesser settlement amount by the way of discharge voucher dated 9 th March, 2009 at
Page 125. It is easy to say that the complainant could have simply refused to accept
it. No commercial establishment, especially in a situation of this nature where there is
a compulsion by a government order to pay the procurement price in accordance to
the government policy which has already been paid and there are other creditors lined
up to make or the complainant to file a protest immediately or refuse to sign the
discharge voucher. The very fact that the second cheque was handed over on 12 th
January, 2012 in respect of the other claim is good enough reason to show the
economic coercion which the complainant was put to.