The main legal point established is that disputes regarding the quantum to be paid under an insurance policy, including claims for business interruption, are arbitrable under the Arbitration and Conciliation Act, 1996.

JUDGMENT :

1. This application has been filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act, 1996) seeking direction for appointment of sole Arbitrator so as to make reference of the dispute arisen between the parties for its adjudication.

2. The brief facts of the case, as has been enumerated in the instant arbitration application, read as under :

The petitioner/applicant, namely, Shah Sponge & Power Limited having its office at 7-Grant Lane Ganapati Chambers, Room no. 310, Cabin no. 5, Kolkata-700012 (West Bengal), and Administrative office at Holding no. 18, 2nd Floor, Padmalaya Building, Ram Mandir Shop Area, P.O. & P.S. Bistupur, Jamshedpur-831001 (Jharkhand), made a proposal/request for premium quote in respect of IAR and Marine Open Policy to the opposite party-Insurance Company.

It further appears from the pleadings made in the arbitration application that after receiving the policy the applicant/petitioner found that the sum assured against MLOP was Rs.5,10,00,000/- as against the proposal for Rs.15,10,00,000/-, as such, the applicant/petitioner immediately made an application on 26.07.2017 requesting therein to provide endorsement with the actual proposed amount at the earliest. But, the opposite party did not respond to the applicant/petitioner’s application and also no action has been taken.

The applicant/petitioner since suffered machinery breakdown loss of Rs.1,66,65,264/- and business interruption loss of Rs.4,38,95,731/-. The applicant/petitioner in consequence of such loss, made claim of Rs.6,05,60,995/- as per the terms and conditions of the policy on 24.12.2019.

It is the case of the applicant/petitioner that the opposite party had settled the machinery breakdown loss for an amount of Rs.1,09,65,000/- but, the claim for business interruption was rejected stating that the claim is falling under deductibles. The applicant/petitioner has disputed the aforesaid stand of the opposite party on the ground that the sum insured was wrongly captured in the policy and the loss assessment was not done as per the terms and conditions of the policy. The applicant/petitioner has also raised objection vide letter dated 22.02.2021 requesting therein to send break-up of admissible claim to understand the settlement amount.

As such, request has again been made vide letter dated 09.04.2021 wherein the report of the surveyor has also been asked for. According to the applicant/petitioner, Clause 12 of the policy contains the arbitration clause, as such, he has made a request by giving an application as contained in letter dated 20.05.2021 in terms of Section 21 of the Act, 1996. The applicant/petitioner, in the backdrop of the aforesaid fact has filed the instant arbitration application invoking the jurisdiction of this Court conferred under Section 11(6) of the Act, 1996.

3. This Court has heard the learned counsel for the applicant/petitioner and issued notice upon the opposite party as would appear from order dated 27.06.2022. In pursuance thereof, the opposite party has put its appearance through its counsel, namely, Mr. Manish Kumar. Counter affidavit has been filed in objection to the averment made in the application dated 05.09.2022 and 18.10.2022. The stand inter alia has been taken in both the affidavits that the claim which is the subject matter of the dispute is inconsistent with the admissibility of claim since the cause of loss and the extent of damage is covered by the policy issued by operating office. The internal accidental damage resulting in breakdown of Turbo Generator (TG Set) Make Toyao Denki Power Systems with capacity 1875 KVA (15MW) is the cause of loss due to which the Stator and Rotor of the Generator was found to have suffered major damage. The admissibility of the claim has been confirmed by the surveyor. It has further been stated that the sum insured under the policy is subject to underinsurance as detailed in the survey report.

The opposite party has t