ORDER :

By this petition filed under Section 34 of the Arbitration and Conciliation Act, 1996, the petitioner has challenged award dated 22.01.2020, passed by an arbitral tribunal consisting of three arbitrators. By the said award, the arbitral tribunal granted an amount of Rs.5,49,41,082/-, to the respondent towards settlement of its insurance claim against the petitioner. The specific grounds pressed on behalf of the petitioner pertain to alleged contravention of fundamental policy of Indian law under Section 34(2)(b)(ii) and the award being patently illegal under Section 34(2-A) of the said Act.

2. Relevant facts for considering the contentions raised on behalf of the rival parties are that the respondent (original claimant) is a company engaged in the business of manufacturing garments through its factories.

On 29.06.2015, the respondent took an insurance policy from the petitioner, which is a joint venture of three insurance companies. The insurance policy was for the period from 20.06.2015 to 19.06.2016. One of the locations covered under the insurance policy was a garment factory of the respondent located in Dasanapura, Bangalore.

3. On 07.5.2016 at about 6:30 p.m., fire broke out at a central godown in Block B of the said factory, due to short circuit in the embroidery section. As a result of the fire, the central godown and the embroidery section collapsed and it was reduced to debris. Raw materials, finished garments, plant and machinery, furniture and fixtures, electrical installations and office equipment and even stocks were destroyed and damaged beyond repair. The firefighters took about three days to completely extinguish the fire. In the light of the aforesaid incident, the petitioner insurance company appointed surveyor to assess the losses suffered by the respondent. On 03.06.2017, the surveyor submitted his final report and assessed the loss at Rs.8,26,03,792/-.

4. The petitioner made on-account payment of Rs.3,00,00,000/- to the respondent. The respondent did not accept the offer made by the petitioner towards full and final settlement of the claim, as recommended by the surveyor and in that backdrop, the arbitration clause was invoked, leading to appointment of the arbitral tribunal. During the arbitral proceedings, one of the arbitrators unfortunately passed away and he was replaced by another arbitrator.

5. The respondent filed an application under Section 17 of the said Act, seeking payment of Rs.5,26,03,792/- from the petitioner, being the difference between the amount of Rs.3,00,00,000/- paid on account and the admitted amount as offered by the petitioner. Record shows that the petitioner did not object to the said application and accordingly, the aforesaid amount was also released in favour of the respondent.

6. The petitioner claimed that with release of the said amount offered to the respondent, the entire liability stood discharged and that therefore, there was nothing remaining for settling the claim of the respondent. However, during the arbitration proceedings, the respondent claimed an additional amount of Rs.9,91,91,330/- under various heads, including 'building', 'plant and machinery', 'electrical installations' and 'furniture and fixtures'. The respondent filed its statement of claim while the petitioner filed its statement of defence and evidence of witnesses of the rival parties was recorded before the arbitral tribunal. The petitioner examined the surveyor, who had submitted the final survey report and also the Director of a private company, who had prepared the technical reports in relation to the improvement factor pertaining to the machinery. The respondent led evidence of its chief executive officer and the chief executive officer of an architect consultant firm, as also the managing director of a private company. The final arguments were heard by the reconstituted arbitral tribunal in September 2019 and the impugned award was pronounced on 22.01.2020.

7. Mr. Vineet Naik, learned senior coun