Discharge vouchers signed under duress

Insurance companies that demand discharge vouchers from policyholders when a claim is made often argue that the amount mentioned there has been paid and there should be no further claim. The insured person can still ask for a higher claim showing the actual losses. This rule was asserted by the Delhi High Court in its judgment in United India Insurance vs Shreedhar Milk Food. In this case, a fire destroyed milk powder kept in a godown. The milk firm gave a discharge voucher for the release of over ~8.8 crore towards the ‘final settlement’. Later the firm demanded more compensation. The insurance company relied upon the voucher to argue that the amount due has been paid and the firm received it “without any protest and demur, and thus was not entitled to any further amount”. The firm moved the arbitrator but he gave an award against it. The award did not touch upon the “pre-printed” discharge voucher which was a key issue as the firm had pleaded that it was given under duress. Therefore, the award was challenged in the high court. It set aside the award, citing a circular of the Insurance Regulatory and Development Authority which stated: “It should be clearly understood that execution of such vouchers does not foreclose the rights of the policyholder to seek higher compensation before any judicial forum”. The judgment pointed out that the arbitrator had ignored this vital evidence and, therefore, the court was entitled to interfere in the award as an exceptional case and set it aside.