IMPORTANT POINT
The court emphasized the limited role of the courts in deciding applications under Section 11, focusing on the prima facie ascertainment of the existence of a legal and binding arbitration agreement and whether the subject matter is arbitrable.

JUDGMENT :

Shekhar B. Saraf, J.

1. The petitioner, Jhajjar K. T. Transco Private Limited, in the instant application [being A.P. 449/2021] under Section 11 of the Arbitration and Conciliation Act, 1996 [hereinafter referred to as ‘the Act’] is a company incorporated under the provisions of the Companies Act, 1956 and is an ‘existing company’ within the meaning of the Companies Act, 2013.

2. The respondent, Oriental National Insurance Company Limited, is a nationalised insurance company within the meaning of the Companies Act, 2013 and having its office at CBU, 7, Red Cross Place, Kolkata 700001. The respondent is governed by the Insurance Act, 1938 and the Insurance (Amendment) Act, 2002 and the Rules framed thereunder.

3. The instant application has been filed under Section 11 of the Act for appointment of an arbitrator for adjudication of disputes that have arisen between the parties.

Relevant Facts

4. The petitioner obtained an Insurance Policy, being Industrial All Risk Policy bearing No. 311800/11/2015/410 from the Respondent for (1) 400/220kv, 2*315MVA & 220/132kv, 2*100MVA substation at Kabulpur, Rohtak, Haryana (hereinafter referred to as ‘the substation’). The tenure of the policy was from March 20, 2015 Midnight to March 19, 2016 Midnight.

5. On February 18, 2016, a gang of villagers entered the substation and caused damage to the facility. The same was reported to the respondent and requests were made to appoint the surveyor of the respondent for assessment of loss suffered by the petitioner vide emails dated February 20, 2016, February 29, 2016 and March 4, 2016. Pursuant to such requests, the respondent appointed a surveyor, namely, M/S. Rohit Kumar & Company.

6. The surveyor filed a report dated July 4, 2018, wherein the loss suffered by the petitioner was assessed at Rs. 1,59,60,206/-.

7. The petitioner executed an indemnity bond dated February 3, 2018 in favour of the respondent for a sum of Rs. 1,49,63,531/-. The petitioner further also issued a letter of subrogation in favour of the respondent.

8. The petitioner duly executed two discharge vouchers dated December 20, 2018 and February 25, 2019 in favour of the respondent clarifying that full and final settlement has been discharged in favour of the petitioner. Furthermore, the financiers of the petitioner, being State Bank of India, issued a no-objection certificate in favour of the respondents stating that it had no objection if the amounts were directly paid to the petitioner.

9. The petitioner, vide two letters, both dated June 7, 2019 requested the respondent for review of the said claim and raised protests against the quantification of the assessment reported by the surveyor as well as determined by the respondent. The petitioner also expressed that they received an even lesser amount than what the surveyor had assessed. The petitioner further sent an email dated June 18, 2019 requesting the respondent to look into the matter urgently.

10. The respondent replied vide email dated June 26, 2019 and stated that they were working on the same and would revert shortly. However, since no such response was received, the petitioner invoked the arbitration clause vide letter dated August 7, 2019.

11. The respondent replied vide letter dated August 13, 2019 and requested the petitioner to reconsider their reference to arbitration. They further annexed the survey report (dated July 4, 2018) and supplementary survey reports (dated November 9, 2018 and November 28, 2018) whereby the net liability stood at Rs. 1,59,60,206/-.

12. The respondent further, vide letter September 5, 2019 indicated that they disagreed with the petitioner since full and final settlement had been reached after the amount was paid with some deductions (being Rs. 1,49,63,531).

13. The petitioner also attempted reconciliation vide letters dated August 2, 2021 and September 27, 2021 wherein they requested payment of Rs. 89,03,148/-as a means to end the dispute. Failure to make such payments by the r