Case Note & Summary
The applicant, M/s. Mallak Specialities Pvt Ltd., an export company engaged in manufacturing specialty chemicals, held a Standard Fire and Special Perils insurance policy from The New India Assurance Co. Ltd. On 6 August 2019, heavy rains caused flooding at the applicant's factory in MIDC-Mahad, District Raigad, resulting in destruction of insured material. The applicant lodged a claim of Rs. 13,05,19,494/- with the respondent. The respondent appointed a surveyor who visited the site and demanded documents, which were provided. Despite reminders, the surveyor did not finalize the assessment or recommend payment. The applicant then filed an application under Section 11 of the Arbitration and Conciliation Act, 1996, seeking appointment of a sole arbitrator, relying on the arbitration clause in the policy. The respondent opposed the application, arguing that the claim was under investigation and that the arbitration clause could not be invoked until the surveyor's report was finalized. The court examined the arbitration clause and found that it covered disputes arising out of the policy. The court held that the existence of an arbitration agreement is clear and that the dispute must be referred to arbitration. The court appointed a retired judge of the Bombay High Court as the sole arbitrator to adjudicate the claim. The court rejected the respondent's argument that arbitration was premature, noting that the surveyor's inaction does not prevent invocation of the arbitration clause. The court directed the arbitrator to proceed with the matter and dispose of it expeditiously.
Headnote
A) Arbitration Law - Appointment of Arbitrator - Section 11 of the Arbitration and Conciliation Act, 1996 - Existence of Arbitration Agreement - The applicant sought appointment of a sole arbitrator under Section 11 of the Act, relying on the arbitration clause in the insurance policy. The court held that since the policy contained an arbitration clause and the dispute arose from the policy, the matter must be referred to arbitration. The court appointed a retired judge as sole arbitrator to adjudicate the claim. (Paras 1-19) B) Insurance Law - Surveyor's Inaction - Standard Fire and Special Perils Policy - The applicant claimed that despite providing documents and the surveyor visiting the site, no final survey report was submitted and the claim was not processed. The court noted that the surveyor's failure to finalize the claim does not bar arbitration, as the dispute is covered by the arbitration clause. (Paras 3-5, 19)
Issue of Consideration
Whether the applicant is entitled to appointment of a sole arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996, given the existence of an arbitration clause in the insurance policy and the failure of the surveyor to finalize the claim.
Final Decision
The court allowed the application and appointed a retired judge of the Bombay High Court as the sole arbitrator to adjudicate the dispute between the parties. The arbitrator was directed to proceed with the matter and dispose of it expeditiously.
Law Points
- Section 11 of the Arbitration and Conciliation Act
- 1996
- appointment of arbitrator
- existence of arbitration agreement
- insurance policy arbitration clause
- surveyor's inaction
- referral to arbitration
