IMPORTANT POINT
Disputes regarding the quantum of insurance claims are arbitrable, and repudiation after invoking arbitration does not negate the reference.

JUDGMENT :

(Sabyasachi Bhattacharyya, J.) :

1. The present application under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as, “the 1996 Act”) arises out of an insurance contract between the parties. The petitioner purchased a crane, regarding which an insurance policy was issued by the respondent company on July 30, 2019.

2. On August 16, 2019, the said vehicle/crane was destroyed completely by fire. The petitioner filed an insurance claim on November 7, 2019.

3. On December 31, 2019, the surveyor appointed by the insurance company issued a final report, coming to a conclusion that the loss suffered was to the tune of Rs. 42,71,000/-. On December 30, 2022, an addendum report was authored by the insurance surveyor, observing that the loss suffered amounted to Rs. 61,10,750/-.

4. On January 30, 2021, the respondent/insurance company allegedly admitted in a written communication the claim of the petitioner partially, upon which the petitioner invoked the arbitration clause in the agreement between the parties regarding the dispute in respect of the quantum payable by the insurer, by issuance of a notice under Section 21 of the 1996 Act on November 8, 2022, suggesting names of two alternative arbitrators. Subsequently another letter was issued on December 19, 2022 by the petitioner, altering one of the names of the proposed arbitrators, who had not agreed to the nomination.

5. On February 15, 2023, the claim of the petitioner was repudiated in its entirety by the respondent.

6. The learned counsel for the petitioner claims that although repudiation of the entire claim is otherwise not amenable to arbitration under the relevant clause, in the present case, there were repeated reports by the surveyor appointed by the insurance company itself, admitting partially the claim of the petitioner. The respondent had even communicated such partial admission by its letter dated January 30, 2021. The liability to pay was never denied by the insurance company-respondent at any point of time and the bone of contention was restricted only to the quantum of claim payable.

7. After the arbitration clause was invoked under Section 21 on November 8, 2022 and several correspondence having occurred thereafter, the respondent, merely to dislodge the reference to arbitration, repudiated the entire claim. It is argued that such post facto repudiation would not deter the matter from being referred to arbitration.

8. Learned counsel submits that as per the Insurance Regulatory and Development Authority of India (Protection of Policyholders’ Interests) Regulations, 2017, notified on June 22, 2017, the insurer has to reject a claim under the policy within a period of 30 days from the receipt of the final survey report and/or additional information/documents of the additional survey report, as the case may be. In the present case, the repudiation came much thereafter. The final survey report was published on December 13, 2019 with an addendum dated December 30, 2020 whereas the purported repudiation came on February 15, 2023, only in response to the notice under Section 21.

9. It is argued that, upon receipt of the Section 21 notice by the respondent on November 11, 2022, the arbitral proceeding had already commenced. Hence, once a notice was received, the arbitration is deemed to have commenced and cannot be resiled from. In support of such contention, learned counsel appearing for the petitioner cites Milkfood Ltd Vs. GMC Ice Cream (P) Ltd reported at (2004) 7 SCC 288.

10. The decisions cited by the respondent, it is argued, are on the issue of non-arbitrability of total repudiation of claim. In the present case, however, the respondent had admitted partially the claim of the petitioner. Learned counsel contends that in the case of Vidya Drolia and Others Vs. Durga Trading Corporation reported at (2021) 2 SCC 1, the Supreme Court held that where the matter requires examination of oral and documentary evidence, it has to