1. This application arises under Section 11(6) of the Arbitration & Conciliation Act, 1996. In pursuance of a proposal submitted by the Applicant for the issuance of a Standard Fire and Special Perils Policy, the Respondent issued a risk cover note on 14 February 2008. The cover note stated that the policy document was under preparation and would be submitted in due course. The Respondent by a letter dated 18 February 2008, informed the Applicant that the consideration received for covering the risk was lower than the offer & consequently the Respondent was not in a position to cover the risk. The case of the Applicant is that the letter dated 18 February 2008 is antedated since in the meantime on 22 February 2008, a surveyor appointed by the Respondent had adverted to the fact that the Respondent had issued instructions to the surveyor on 20 February 2008. The Applicant has invoked the provisions of Section 11(6) and relied upon the Arbitration Clause contained in what is described as a standard policy document.

2. Now admittedly, no policy document was executed. The risk cover note merely states that the policy document was under preparation and would be submitted in due course. Hence, in the absence of a specific arbitration agreement which binds the parties, the application under Section 11 would not be maintainable. That apart, even the alleged, Arbitration Clause which is contained in the standard policy as relied upon by the Applicant is to the following effect:-

“13. If any dispute or 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 a sole arbitrator to be appointed in writing by the parties to or if they cannot agree upon a single arbitrator within 30 days of any party invoking arbitration, the same shall be referred to a panel of three arbitrators, comprising of two arbitrators one to be appointed by each of the parties to the dispute/difference and the third arbitrator to be appointed by such two arbitrators and arbitration shall be conducted under and in accordance with the provisions of the Arbitration and Conciliation Act, 1996.

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

It is hereby expressly stipulated & declared that it shall be a condition precedent to any right of action or suit upon this Policy that the award by such arbitrator/arbitrators of the amount of the loss or damage shall be first obtained. ”

3. Evidently on a plain reading of the aforesaid clause, it is evident that it is only when the insurer has admitted its liability but there is a dispute or difference in respect of the quantum to be paid under the policy that the dispute would be arbitrable. In the present case, the insurer has not admitted its liability and on the contrary has repudiated any liability by its letter dated 18 February 2008. This aspect is covered by a Judgment of the Supreme Court in The Vulcan Insurance Co. Ltd. vs. Maharaj Singh and another (AIR 1976 Supreme Court 287) where the Supreme Court held thus:-

“12. ................But as soon as there is a rejection of the claim and not the raising of a dispute as to the amount of any loss or damage, the only remedy open to the claimant is to commence a legal proceeding, namely, a suit for establishment of the company's liability. It may well be that after the liability of the company is established in such a suit for determination of the quantum of the loss or damage reference to arbitration will have to be resorted to in accordance with Clause 18. But the arbitration clause, restricted as it is by the use of the words "if any difference arises as to the amount of any loss or damage", cannot take within its sweep a dispute as to the liability of the c