The court ruled that where an insurer completely denies liability, there is no arbitrable dispute regarding insurance claims under the Arbitration and Conciliation Act, 1996.

ORDER :

K. LAKSHMAN, J.

Heard Mr. V. Yadu Krishna Sainath, learned counsel for the applicant and Mr. Krishna C.V. Grandhi, learned Senior Counsel representing Mr. M. Ramu, learned counsel or the respondent.

2. The present Arbitration Application is filed under Section - 11 (5) and (6) of the Arbitration and Conciliation Act, 1996 (hereinafter ‘the Act, 1996’) for appointment of an arbitrator to resolve the disputes between the parties.

3. CONTENTIONS OF THE APPLICANT

i) Applicant, a Public Limited Company engaged in Hydro Electric Power Generation, obtained an Industrial All Risk Insurance with respondent vide Policy No.61220011180600000003 covering the period of 17.05.2018 to 16.05.2019 for a sum insured Rs.1,75,85,00,000/-.

ii) The policy is an Industrial All Risks Insurance Policy and covers the properties pertaining to Hydro Electric Project properties of the applicant situated at Bundla Village, Palamur District, Himachal Pradesh State.

iii) The policy has two parts i.e., i) the material damage section (Section I) which provides against all risks; ii) Business Interruption Ssection II provides cover again Fire Loss of profits.

iv) The properties covered under the policy are civil works of Rs.1,08,00,000/-, plant and machinery and other accessories worth Rs.47,00,00,000/-, roads worth Rs.12,00,00,000/-, transmission lines worth Rs.8,00,00,000/-, stores and spares worth Rs.85,00,000/- making a total of Rs.1,75,85,00,000/-.

v) The applicant suffered damage due to flash floods/cloud burst on 23.09.2018. The said fact was intimated to the respondent and claim has been preferred for the loss suffered by the applicant. The respondent appointed M/s. Protocol Insurance Surveyors & Loss Assessors Private Limited, Delhi, for assessment of the loss suffered by the applicant.

vi) The Surveyors have assessed the loss and submitted their survey reports to the respondent under Section - I i.e., material damage as well as Section - II i.e., Business Interruption loss separately. The respondent arranged on Account payment of Rs.2.50 Crores under material damage claim. The respondent also settled the claim under Business Interruption Section of the Policy (Section II) for Rs.1,03,02,634/- on 01.10.2019.

vii) After completion of reinstatement of damaged property, the Surveyors submitted their final survey report to the respondent. Thereafter, the respondent released its settlement intimation for Rs.1,54,54,967/- which is the difference in the Net assessed loss amount of Rs.4,04,54,967/- less the amount of On Account payment of Rs.2.50 Crores already paid. The applicant wanted to know the details of assessment since the amount offered for settlement of the claim is much less than the amount incurred and claimed Rs.7,96,07,113/-. The respondent provided the details by giving copies of survey reports and correspondence exchanged between the Surveyor and the respondent. After perusing the same, the applicant came to know from the surveyor’s report that the Surveyors have assessed the land as Rs.5,49,93,116/- before deduction of excess as per the policy. The excess under the policy being 5% of the claim amount, the net claim amount payable by the Insurer would be Rs.5,22,43,460/- towards indemnity of the loss suffered by the applicant. It also appears that the respondent had asked the Surveyors to submit an addendum report reducing an amount of Rs.1,24,08,940/- (which is a portion of expenditure incurred by the applicant towards removal of debris) from the amount assessed by them vide their final survey report.

viii) The applicant addressed a letter dated 10.08.2022 to the respondent informing that the assessment revised is much lesser than the expenditure amount incurred