9911796707
TMI Blog2018 (8) TMI 1469X X X X Extracts X X X X X X X X Extracts X X X X ..... invigorate only if the insurer admits or accepts its liability under or in respect of the concerned policy. Whether the communication sent on 21st April, 2011 falls in the excepted category of repudiation and denial of liability in toto or has the effect of acceptance of liability by the insurer under or in respect of the policy and limited to disputation of quantum? - Held that:- The High Court has made no effort to examine this aspect at all. It only reproduced clause 7 of the policy - the plea taken by the appellants is of denial of its liability to indemnify the loss as claimed by the JV, which falls in the excepted category, thereby making the arbitration clause ineffective and incapable of being enforced, if not non-existent. It is not actuated so as to make a reference to arbitration. In other words, the plea of the appellants is about falling in an excepted category and non-arbitrable matter within the meaning of the opening part of clause 7 and as re-stated in the second paragraph of the same clause. The dispute in question is non-arbitrable and respondent Nos.1 2 ought to have resorted to the remedy of a suit. The plea of respondent Nos.1 2 about the final repud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts herein as the sole arbitrator; or in addition, appoint one arbitrator on behalf of the appellants herein so as to adjudicate all the disputes inter se between the parties in terms of the Act. 2. Shorn of unnecessary facts, be it noted that the respondent Nos.1 and 2 constitute a Joint Venture ( JV ). Respondent No.3 awarded a contract on 29th September, 2006 for design, construction and maintenance of a bridge across the River Chambal, which was to be completed within a period of 40 months and was commenced on 5th December, 2007 by the JV after respondent No.3 handed over the site to it. After commencement of the work, a Contractor All Risk Insurance Policy ( CAR Policy ) dated 5th December, 2007 was obtained from the appellants covering the entire project, valued at ₹ 2,13,58,76,000/-. The policy contained clause 7, which reads thus: 7. If any difference shall arise as to the quantum to be paid under this Policy (liability being otherwise admitted) such difference shall independently of all other questions be referred to the decision of an arbitrator to be appointed in writing by the parties in difference, or if they cannot agree upon a single arbitrator to the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated report, a Committee of Experts was set up by the Ministry of Road Transport and Highways, Government of India, to enquire into the accident which then submitted its report on 7th August, 2010. 4. The appellants took into account both these reports and vide communication dated 21st April, 2011, intimated the respondents that the claim put forth by the JV, was found to be not payable, and accordingly, stood repudiated. The said communication reads thus: UNITED INDIA INSURANCE COMPANY LIMITED Divisional Office:010700 Ist Floor, Silingi Building 134, Greams Road Chennai-600 006 Post Box No.4528 Gram UNDIVSEVEN Phone:28290845/846 Telefax:044-28290844 Ref.:010700/CAR Claim/2011 21st April, 2011 REGISTERED POST WITH ACKNOWLEDGE DUE M/s National Highways of Authority of India 1-C-10 SFS Colony Talwandi, Kota Rajasthan-324 005 Dear Sirs Kind Attn: Mr. Anoop Kulshreshtha, Project Director Re: Claim under Contractor‟s All Risk Policy No.011900/44/07/03/60000001- Our Claim No.010703/44/09/03/90000007-Collapse of Cable Stayed Bridge at Kota, Rajasthan. We refer to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g. Construction Co. Whereas it was found to have been carried out by Gatnmon India. There had also been change in the sequence of operations in construction to make up for lost time, which adversely affected the stability of the P4 joint. The summary of the findings of the Enquiry committee is that the collapse was caused, inter alia, by 1) absence of stability devices during construction, 2) shortfall in design and 3) deficient workmanship. The Enquiry Committee have more particularly observed that a) the contractors are responsible for all during the structure to reach a vulnerable stage, without taking adequate precautions with respect to stability and robustness of the partially completed structure and shortfall in the design. b) Since they have been shortfalls at the design responsibility also lies with. The available records and documents clearly reveal that the loss has occurred due to faulty design and defective workmanship. We find that national Highways Authority of India have in fact initiated action by issue of show cause notice against the Contractors. The Kota Police had lodged FIR against various employees of the Contractors/Sub contractors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CC: KA: Mr. Haeng Kwon Kang The Chief Project Manager Hyundai Engineering Construction Co. Ltd. Chambal Bridge Project, Behind Tilam Sangh Rawat Bhata Road, Kota Rajasthan-324 010 (emphasis supplied) 6. As a sequel, the JV vide its letter dated 29th May, 2017 informed the appellants that disputes had arisen between the appellants and the JV and in view thereof it was invoking the arbitration clause No.7 contained in the Insurance Policy and had nominated Dr. V.K. Agrawal as its Arbitrator. The appellants were also called upon to either accept the name of the sole arbitrator or nominate its own arbitrator within 30 days from the date of receipt of the communication. Eventually, respondent Nos.1 2 filed a petition under Sections 11(4) 11(6) of the Act before the High Court of Judicature at Madras being O.P. No.537/2017. 7. The said petition was resisted by the appellants. It was urged that the subject clause 7 of the policy was hedged with a pre-condition expressly predicating that no difference or dispute shall be referable to arbitration, if the appellants disputed or did not accept its liability under or in respect of the policy. In other words, in case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lause 13 categorically lays the postulate that if the insurer has disputed or not accepted the liability, no difference or dispute shall be referred to arbitration .. (emphasis supplied) While adverting to the observation in paragraphs 28 and 32 of the Jumbo Bags Ltd. (supra), the Court observed thus: 19. We may presently refer to the decision of the Madras High Court in Jumbo Bags Ltd. In the said case, the learned Chief Justice was interpreting clause 13 of the policy conditions. Referring to Vulcan Insurance Co. Ltd., he has held thus: (Jumbo Bags Ltd. case, SCC OnLine Mad para 28) 28. The dispute which is not referable to arbitration, being not covered by the clause cannot be over the subject-matter of arbitration, and the remedy of the insured in this case is only to institute a suit. And again : (SCC OnLine Mad para 32) 32. I am of the view that the remedy of arbitration is not available to the petitioner herein in view of the arbitration clause specifically excluding the mode of adjudication of disputes by arbitration, where a claim is repudiated in toto. The remedy would thus only be of a civil suit in accordance with law. We concur with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g which almost invariably in India will be in the nature of a suit, has got to be commenced within three months from the date of such rejection; otherwise, all benefits under the policy stand forfeited. The rejection of the claim may be for the reasons indicated in the first part of clause 13, such as, false declaration, fraud or wilful neglect of the claimant or on any other ground disclosed or undisclosed. But as soon as there is a rejection of the claim and not the raising of a dispute as to the amount of any loss or damage, the only remedy open to the claimant is to commence a legal proceeding, namely, a suit, for establishment of the company‟s liability. It may well be that after the liability of the company is established in such a suit, for determination of the quantum of the loss or damage reference to arbitration will have to be resorted to in accordance with clause 18. But the arbitration clause, restricted as it is by the use of the words if any difference arises as to the amount of any loss or damage , cannot take within its sweep a dispute as to the liability of the company when it refuses to pay any damage at all. (emphasis supplied) Again in paragraph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of quantum. The High Court has made no effort to examine this aspect at all. It only reproduced clause 7 of the policy and in reference to the dictum in Duro Felguera (supra) held that no other enquiry can be made by the Court in that regard. This is misreading of the said decision and the amended provision and, in particular, misapplication of the three-Judge Bench decisions of this Court in Vulcan Insurance Co. Ltd. (supra) and in Oriental Insurance Company Ltd. (supra). 14. Reverting to the communication dated 21st April, 2011, we have no hesitation in taking the view that the appellants completely denied their liability and repudiated the claim of the JV (respondent Nos.1 2) for the reasons mentioned in the communication. The reasons are specific. No plea was raised by the respondents that the policy or the said clause 7 was void. The appellants repudiated the claim of the JV and denied their liability in toto under or in respect of the subject policy. It was not a plea to dispute the quantum to be paid under the policy, which alone could be referred to arbitration in terms of clause 7. Thus, the plea taken by the appellants is of denial of its liability to indemnify the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
