IMPORTANT POINT
When an insurer denies its liability and repudiates a claim in toto, there is no dispute for referring to arbitration. If however, the insurer disputes the quantum of the claim a dispute fit for arbitration arises.

JUDGMENT

A.M. Khanwilkar, J.

1. The conundrum in this appeal is whether clause 7 of the subject Insurance Policy dated 5th September, 2007 posits unequivocal expression of the intention of arbitration or is hedged with a conditionality? The learned Single Judge of the High Court of Judicature at Madras vide impugned judgment and order dated 30th November, 2017 in O.P. No.537/2017 had held that post amendment of the Arbitration and Conciliation Act, 1966 (for short, “the Act”), with effect from 23rd October, 2015 by insertion of sub-section 6A in Section 11 of the Act, the limited mandate of the Court is to examine the factum of existence of an arbitration agreement. No more and no less. The learned Single Judge placed reliance on the two-Judge Bench decision of this Court in Duro Felguera, S.A. Vs. Gangavaram Port Limited, (2017) 9 SCC 729 and another decision of its own High Court in Jumbo Bags Ltd. Vs. New India Assurance Co. Ltd., 2016 SCC OnLine Mad 9141 : (2016) 3 CTC 761 : (2016) 2 LW 769. The appellants, however, placed reliance on a three-Judge Bench decision of this Court in Oriental Insurance Company Limited Vs. Narbheram Power and Steel Private Limited, (2018) 6 SCC 534 where this Court had an occasion to construe a similar clause of an insurance policy as in the present case. Relying on this decision, it is urged that the impugned judgment cannot be countenanced and that the High Court ought to have dismissed the original petition filed by the respondents under Sections 11(4) & 11(6) of the Act read with Rule 2 of the Appointment of Arbitrators by the Chief Justice of Madras High Court Scheme, 1996, to declare the arbitrator nominated by the respondents herein as the sole arbitrator; or in addition, appoint one arbitrator on behalf of the appellants herein so as to adjudicate all the disputes inter se between the parties in terms of the Act.

2. Shorn of unnecessary facts, be it noted that the respondent Nos.1 and 2 constitute a Joint Venture (“JV”). Respondent No.3 awarded a contract on 29th September, 2006 for design, construction and maintenance of a bridge across the River Chambal, which was to be completed within a period of 40 months and was commenced on 5th December, 2007 by the JV after respondent No.3 handed over the site to it. After commencement of the work, a Contractor All Risk Insurance Policy (“CAR Policy”) dated 5th December, 2007 was obtained from the appellants covering the entire project, valued at Rs.2,13,58,76,000/-. The policy contained clause 7, which reads thus:

“7. If any difference shall arise as to the quantum to be paid under this Policy (liability being otherwise admitted) such difference shall independently of all other questions be referred to the decision of an arbitrator to be appointed in writing by the parties in difference, or if they cannot agree upon a single arbitrator to the decision of two disinterested persons as arbitrators of whom one shall be appointed in writing by each of the parties within two calendar months after having been required so to do in writing by the other party in accordance with the provisions of the Arbitration Act, 1940, as amended from time to time and for the time being in force in case either party shall refuse or fail to appoint arbitrator within two calendar months after receipt of notice in writing requiring an appointment the other party shall be at liberty to appoint sole arbitrator and in case of disagreement between the arbitrators, the difference shall be referred to the decision of an umpire who shall have been appointed by them in writing before entering on the reference and who shall sit with the arbitrators and preside at their meetings.

It is clearly agreed and understood that no difference or dispute shall be referable to arbitration as herein before provided, if the Company has disputed or not accepted liability under or in respect