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24 May 2021 | Geo Chem Laboratories Private Ltd. v. United India Insurance Company Ltd. | Arb. P. No. 479 of 2020 | Sanjeev Narula J
The arbitration agreement under the insurance policy (professional indemnity) was typically tightly worded. Only a dispute on the quantum was arbitrable. No dispute could be referred to arbitration if the liability was disputed or not accepted.
But the facts were unique. United, the insurance company, was neither accepting liability nor denying it. When Geo Chem invoked the policy, instead of processing the claim, United cancelled it. A writ court set aside the cancellation and directed United to give Geo a fair hearing. Here, United took another path and appointed a surveyor for the assessment of loss. The surveyor’s final report lingered on despite the court’s direction to complete the process. Both sides blamed each other for the delay.
The court decided to hear the matter and ruled that the bar set out under the arbitration agreement was inapplicable, and the dispute had to be referred to an arbitrator. Also, it was for the arbitrator to decide—and not for the court to conduct a mini or roving trial—if the facts constituted deemed admission of liability by United.
Access the judgment here.