Skip to main content

Conditionality present in arbitration clause must be interpreted strictly

In United India Insurance Co. Ltd. vs Hyundai Engineering and Construction, the insurance policy in clause 7 stipulated arbitration in case of dispute but subject to acceptance of the liability by the insurer. When the claim was filed, the surveyor appointed by the insurer found the accident to be entirely due to the fault of the insured and under such circumstances the loss not being payable under the policy, the insurer by letter categorically repudiated the claim in its entirety.

Subsequently the insured went to the High Court for appointment of arbitrator claiming dispute which was resisted by the insurer that the matter cannot be arbitrated. The High Court agreeing with allowed the application while referring to judgments in Duro Felguera, S.A. Vs. Gangavaram Port Limited, and  Jumbo Bags Ltd. Vs. New India Assurance Co. Ltd.

On appeal the Supreme Court found that the judgements referred to by the High Court are 2 judge benches while the more relevant judgments being very similar to the present case is the 3 judges bench in Oriental Insurance Company Limited Vs. Narbheram Power and Steel Private Limited which in turn refers to another 3 judges bench in Vulcan Insurance Co. Ltd. Vs. Maharaj Singh and Anr. The Supreme Court held that it has been clearly decided through the said judgments that arbitration clause has to be interpreted strictly. Clause 7 has a clear conditionality. Th arbitration clause in Clause 7 will get activated or kindled only if the dispute between the parties is limited to the quantum to be paid under the policy. The liability should be unequivocally admitted by the insurer.  To put it differently, an arbitration clause would enliven or invigorate only if the insurer admits or accepts its liability under or in respect of the concerned policy.
As the appellants completely denied their liability and repudiated the claim of the JV (respondent Nos.1 & 2) for the reasons mentioned in the communication. The reasons are specific. No plea was raised by the respondents that the policy or the said clause 7 was void. It must be held that the dispute in question is non-arbitrable and respondent Nos.1 & 2 ought to have resorted to the remedy of a suit.

Comments

Post a Comment

Most viewed this month

The recovery of vehicles by the financier not an offence - SC

Special Leave Petition (Crl.) No. 8907  of 2009 Anup Sarmah (Petitioner) Vs Bhola Nath Sharma & Ors.(Respondents) The petitioner submitted that  respondents-financer had forcibly taken away the vehicle financed by them and  illegally deprived the petitioner from its lawful possession  and  thus,  committed  a crime. The complaint filed by the petitioner had been  entertained  by  the Judicial Magistrate (Ist Class), Gauhati (Assam) in Complaint Case  No.  608 of 2009, even directing the interim custody of the vehicle (Maruti  Zen)  be given to the petitioner vide order dated  17.3.2009.  The respondent on approaching the Guwahati High  Court against this order, the hon'ble court squashed the criminal  proceedings  pending   before  the  learned Magistrate. After hearing both sides, the Hon'ble Supreme Court decided on 30th...
7 comments
Read more

Owner of vehicle is not expected to verify the genuineness of the driving license before appointing a driver

Cause Title : Rishi Pal Singh Versus New India Assurance Co. Ltd & Ors., Civil Appeal No. 4919 Of 2022, The Supreme Court Of India Date of Judgment/Order : July 26, 2022 Corum : Hemant Gupta; J., Vikram Nath; J. Background the truck owned by the appellant met with an accident. The owner deposed before the court that before employing the driver, he had taken his driving test and that he was driving the vehicle satisfactorily and  that the driver was employed with him for 3 years before the date of the accident. He produced his driving license. This was reaffirmed by the driver who deposed that the driving license was obtained from the driver and it was issued from Nagaland, but no such license was produced on record. Both the Motor Accident Claims Tribunal and the High Court have held that the owner has alleged that the driver had a driving license from Nagaland but the same was not produced and therefore, the Insurance Company is entitled to recover the awarded amount...
Post a Comment
Read more

Person Being Prosecuted To Be Provided With All Relevant Documents

The Delhi High Court, in the case of Poonam Jain vs Union of India & Ors, noted that a person being prosecuted against has a right to be provided with all the material relied upon by the prosecuting agency to prosecute her/ him. In the instant case, a search was conducted at the residences of the petitioners and their statements were recorded and several documents were seized. They were issued show cause notices under Section 276 C(1) and Section 277 of the Income Tax Act, Section 181 of the Indian Penal Code and Sections 50 and 51 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act. They sought to be provided with a copy of their statements and the documents seised. However, the same was denied to them.
Post a Comment
Read more