( 1 ) ). Whether the dispute about the existence of arbitration clause contained in Insurance Policy would cease to exist on account of passing of receipt of full and final settlement and whether such a dispute is arbitrable or not is the only question, which is in focus for our consideration, determination and adjudication in this reference.

( 2 ) THE Larger Bench came to be constituted pursuant to the view taken by the learned single Judge of this Court in Special Civil Application No. 10359 of 2000, decided on 6. 10. 2000, observing that the petition raises important questions which are likely to arise in number of cases and hence, it will be in the fitness of things if the petition is decided by a Larger Bench. Thereafter, learned Chief Justice passed order constituting Larger Bench and that is how this reference came to us.

( 3 ) THE petitioner, New India Assurance Company Limited has questioned the legality and validity of the order recorded by the learned Chief Justice under section 11 of the Arbitration and Conciliation Act, 1996 (the Act for short) by invocation of the provisions of Article 226 of the Constitution of India, inter alia, contending that the arbitration clause contained in the insurance policy does not survive and exist as the respondent insured company has passed two receipts of full and final settlement of the claim made by it.

( 4 ) A short resume of facts, giving rise to this petition needs narration for the purpose of examining, appreciating and adjudicating the main controversy between the parties involved in this petition. The petitioning Insurance Company had issued three insurance policies to the respondent Company,viz : (I) Fire policy No. 11/1003/6050 for a sum of Rs. 11,21,10,000 (Rupees Eleven Crores Twenty one lacs and ten thousand only) covering cotton yarn and the said policy was endorsed in favour of GIIC. (II) Policy No. 11/220401/00001 for a sum of Rs. 6,57,00,000 (Rupees six crores and fifty seven lacs only) covering the stock which was endorsed in favour of SBI and Memon Cooperative Bank. (III) Third Policy was issued for a sum of Rs. 32,00,000 (Rupees thirtytwo lacs) covering the office/dwelling of the respondent.

( 5 ) THE respondent Company lodged claims with the petitioner Insurance Company for the loss sustained by it on account of fire which broke out on 1. 4. 98 in the premises of the Company, for an amount aggregating to Rs. 1. 37 crores. Upon the claim being lodged, it was assessed by the Surveyor at Rs. 96,45,282. 00 and the market value was assessed at Rs. 95,34,410. 00. Obviously the report of the Surveyor was subject to the terms and conditions of the policy.

( 6 ) IT is the case of the petitioner Insurance Company that despite breach of the terms of the policy clause 7-B and 7-C, the Company treated the claim of the respondent Company on non-standard basis and offered an amount of Rs. 71,50,808. 00 instead of rejecting the claim of the company on the ground of breach of the terms and conditions of the insurance policies. The aforesaid amount offered by the petitioner Company was accepted by the respondent Company. Therefore, there was a settlement and full satisfaction of the claims. The respondent Company had accepted two cheques aggregating to tune of Rs. 71,50,808. 00 and had passed two vouchers-cum-receipts, which specifically articulated that the amount had been received in full and final settlement of the claim of the respondent Company.

( 7 ) THERE is no dispute about the fact that arbitration clause has been contained in the insurance policy. The petitioner Insurance Company contended that on account of full and final settlement of the claims, the insurance policy which contained the arbitration clause did not exist and fresh contract of insurance was also made whereas the respondent Company raised dispute by letter dated January 5, 2000, invoking the arbitration clause contained in the insurance policy and claimed the amount as assessed by the Su