The existence of an arbitration agreement obligates parties to settle disputes through arbitration, despite claims of non-acceptance of liability.

Order

26/07/2024

1. In both the arbitration applications, nature of dispute raised by the applicants-claimants, is identical and the defence put forth by the respondent-Insurance Company is common, therefore, with the consent of counsel for both the parties, both the arbitration applications have been heard together and are being decided by this common order.

2. These arbitration applications have been filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘A&C Act’) seeking appointment of Arbitration Tribunal of Sole Arbitrator, in view of arbitration clause contained in Para No.3.11 of the Insurance Policy, which is being extracted hereunder:-

“3.11 Arbitration -

If any dispute or difference shall arise as to the quantum to be paid under the policy (liability being otherwise admitted) such difference shall independently of all other questions be referred to decision of a sole arbitrator to be appointed in writing by the parties to or if they cannot agree upon a single arbitrator to be appointed in writing by the parties to or if they cannot agree upon a single arbitrator within 30 days of any party invoking arbitration the same shall be referred to a panel of three arbitrators, comprising of two arbitrators, one to be appointed by each of the parties to the dispute/difference and the third arbitrator to be appointed by such two arbitrators and arbitration shall be conducted under and in accordance with the provisions of the Arbitration and Conciliation Act, 1996.

It is clearly agreed and understood that no difference or dispute shall be referable to arbitration as herein before provided, if the Company has disputed or not accepted liability under or in respect of this policy.

It is hereby expressly stipulated and declared that it shall be a condition precedent to any right of action or suit upon this policy that award by such arbitrator/arbitrators of the amount of the loss or damage shall be first obtained.”

3. In the arbitration applications, the applicants have pleaded that they are running their showrooms in the name and style of “M/s. Kothari Vastra Bhandar” and “M/s. Gangaur Saree” respectively in the New Cloth Market, Jnalawar and they obtained two independent insurance policy (Multi Perils) from respondent-Insurance Company, which covers the damages to the properties including building, stocks, furniture, fixtures and fittings. The details of insurance policy have been mentioned in Para 2 of the arbitration applications.

4. The case of the applicants is that the fire broke out on 25.07.2022 wherein huge loss occurred to the building as well as to the stock, fittings and fixtures, therefore, claim of damages was put forth before the Insurance Company. The Insurance Company appointed Surveyor, but he did not prepare the surveyor report as per provisions of IRDAI Surveyor’s Regulation and finally no damages to loss to building have been paid and a lesser amount of damages, then claimed by the applicant for loss of stock, fittings, fixtures by the Insurance Company was paid and thus, a dispute in respect of claiming the damage to the building and balance amount of damage to the stock, fittings, furniture and fixtures etc. have arisen.

5. It has been stated that the applicants initially send Email demanding due claim of damages and then legal notice was sent, invoking the arbitration clause to appoint sole Arbitrator to settle such dispute, but the respondent-Insurance Company has not agreed, therefore, these arbitration applications, seeking appointment of an impartial and neutral Arbitrator, have been filed.

6. On behalf of the respondent-Insurance Company separate reply of both the arbitration applications has been filed and common defence has been taken by Insurance Company that for the claim related to loss to building, the Insurance Company has not admitted or accepted any liability, therefore, the dispute in respect of loss to building is not arbitrable, since same falls in exempte