United India Insurance Co. Ltd. & Anr. v. Hyundai Engineering and Construction Co. Ltd. & Ors.

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The Tax Publishers 2018 TaxPub(CL) 0883 (SC) United India Insurance Co. Ltd. & Anr. v. Hyundai Engineering and Construction Co. Ltd. & Ors. ARBITRATION AND CONCILIATION ACT, 1996, --Appointment of arbitrators--Appeal against order of High Court regarding appointment of arbitrator Arbitration clause applied only to dispute pertaining to quantum, not in case of denial of liability --Liability to pay amount of loss repudiated by insurer--Where the arbitration clause of insurance policy was only applied to dispute pertaining to quantum, not in case of denial of liability and the insurer disputed its liability to pay any amount of loss as claimed by claimant and that there was no dispute pertaining to quantum, therefore, the order passed by the High Court was set aside, but the claimant had remedy to file a civil suit. --HECL entered into contractor's all risk policy with insurer. HECL suffered significant losses due to collapse of portion of bridge under construction, therefore, it claimed insurance money, but the insurer disputed liability in respect of the policy. HECL filed a petition under sections 11(4) and 11(6) for appointment of an arbitrator. Insurer raised objection that arbitration clause applied only for dispute pertaining to quantum, not in case of denial of the liability. High Court allowed the petition and appointed an arbitrator. Therefore, the insurer filed an appeal against the order. *Held:* Clause 7 of the policy was hedged with a pre-condition that no difference or dispute was to be referable to arbitration, if the insurer disputed its liability and repudiated the claim under or in respect of the policy. Further, the dispute raised was not one of quantum to be paid under the policy, but it was on the factum of loss not covered under the policy. Therefore, the dispute in question fell in an excepted category and non-arbitrable within the meaning of clause 7. Hence, the order passed by the High Court was set aside, but HECL, had remedy to file a civil suit. Arbitration and Conciliation Act, 1996, Section 11 *Relied:Duro Felguera, S.A. v. Gangavaram Port Limited, (2017) 9 SCC 729, Jumbo Bags Ltd. v. New India Assurance Co. Ltd. 2016 SCC OnLine Mad 9141 : (2016) and Oriental Insurance Company Limited v. Narbheram Power and Steel Private Limited, CTC 761 : (2016) 2 LW 769 : (2018) 6 SCC 534 : 2018 TaxPub(CL) 0564 (SC) REFERRED :* SUBSCRIBE FOR FULL CONTENT

The Tax Publishers 2018 TaxPub(CL) 0883 (SC)

United India Insurance Co. Ltd. & Anr. v. Hyundai Engineering and Construction Co. Ltd. & Ors.

ARBITRATION AND CONCILIATION ACT, 1996,

--Appointment of arbitrators--Appeal against order of High Court regarding appointment of arbitrator Arbitration clause applied only to dispute pertaining to quantum, not in case of denial of liability --Liability to pay amount of loss repudiated by insurer--Where the arbitration clause of insurance policy was only applied to dispute pertaining to quantum, not in case of denial of liability and the insurer disputed its liability to pay any amount of loss as claimed by claimant and that there was no dispute pertaining to quantum, therefore, the order passed by the High Court was set aside, but the claimant had remedy to file a civil suit. --HECL entered into contractor's all risk policy with insurer. HECL suffered significant losses due to collapse of portion of bridge under construction, therefore, it claimed insurance money, but the insurer disputed liability in respect of the policy. HECL filed a petition under sections 11(4) and 11(6) for appointment of an arbitrator. Insurer raised objection that arbitration clause applied only for dispute pertaining to quantum, not in case of denial of the liability. High Court allowed the petition and appointed an arbitrator. Therefore, the insurer filed an appeal against the order. Held: Clause 7 of the policy was hedged with a pre-condition that no difference or dispute was to be referable to arbitration, if the insurer disputed its liability and repudiated the claim under or in respect of the policy. Further, the dispute raised was not one of quantum to be paid under the policy, but it was on the factum of loss not covered under the policy. Therefore, the dispute in question fell in an excepted category and non-arbitrable within the meaning of clause 7. Hence, the order passed by the High Court was set aside, but HECL, had remedy to file a civil suit.

Arbitration and Conciliation Act, 1996, Section 11

Relied:Duro Felguera, S.A. v. Gangavaram Port Limited, (2017) 9 SCC 729, Jumbo Bags Ltd. v. New India Assurance Co. Ltd. 2016 SCC OnLine Mad 9141 : (2016) and Oriental Insurance Company Limited v. Narbheram Power and Steel Private Limited, CTC 761 : (2016) 2 LW 769 : (2018) 6 SCC 534 : 2018 TaxPub(CL) 0564 (SC)

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