[2] Whether SMIPs insurance claim is arbitrable

It is humbly submitted that SMIPs insurance claim is not arbitrable in view of the fact that [2.1]
Claimant can initiate arbitration only for the dispute on quantum and not on denial of liability;
[2.2] Waiver of the time limit by the claimant defeats the quantum insurance claim.

[2.1] Claimant can initiate arbitration only for the dispute on quantum and not on denial
of liability

The insurance claim is not maintainable since there is an existence of a dispute from the
company which cannot be referred to the arbitration. This is as per the arbitration clause in the
insurance policy obtained by the Respondent from the Appellant which reads the following:

"If any dispute or difference shall arise as to the quantum to be paid under this policy
(liability being otherwise admitted) such difference shall independently of all questions
be referred to the decision of a sole arbitrator to be appointed in writing by the parties.It
is clearly agreed and understood that no difference or dispute shall be referable to
arbitration as hereinbefore provided, if the Company has disputed or not accepted
liability under or in respect of this policy."1

The interpretation of the above clause stipulates that an insured has the right to initiate
arbitration proceedings only pertaining to a dispute on quantum2and not on denial of
liability.3Respondents contend that the present case is not arbitrable because [2.1.1] There is
no existence of an arbitrable dispute between the parties.

[2.1.1] There is no existence of an arbitrable dispute between the parties.

There can be no arbitration in cases where the insurance company repudiates the liability under
or in acclaim of the policy as that is the sine qua non for invoking the arbitration clause in the
agreement.4 When the accountability of the Insurance company is conceded only then arises a
dispute with regard to the quantum that the Arbitration Clause can be invoked.5In the present
case, it is evident that the Respondents have renounced its liability through its conduct,
subsequently the invoking of arbitration clause itself does not arise.

In the Vulcan Insurance Co. Ltd case,6 The examination of rejection of a claim and its
arbitrability in the conditions independently were scrutinized.It was observed that the dispute

1 Moot Proposition, p. 18 ¶ 15.

2 Oriental Insurance Company Limited v. Narbheram Power and Steel Pvt Ltd (2018) 6 SCC 534.
3 Vulcan Insurance Co. Ltd., vs. Maharaj Singh And Another (1976-1 SCC 943)
4 United India Insurance Co. Limited v Hyundai Engineering and Construction Co Ltd & Ors
(Civil Appeal no 8146 of 2018)
5 Jumbo Bags Ltd. Vs. New India Assurance Co. Ltd., 2016 SCC OnLine Mad 9141
6 Vulcan Insurance Co. Ltd., vs. Maharaj Singh And Another (1976-1 SCC 943)
which is not attributable to arbitration, being not a part of the clause, cannot be over the
significance of arbitration. In Oriental Insurance Co. Ltd., vs. Sony Cheriyan,7It was held:

"...The insured cannot claim anything more than what is covered by the insurance policy. That
being so, the insured has also to act strictly in accordance with the statutory limitations or terms
of the policy expressly set out therein.''8

Additionally, Interpreting the contract to make any part of it otiose cannot be acknowledged, as
a connotation must be given to the words used in the contract.9The Court must always strive to
explicate the words in which the contract is communicated by the parties.10While Interpreting the
terms in the policy the Court is not expected to advance into extra mindedness that can have an
effect on restyling the contract or exchanging the terms which were not planned by the
parties.11In the present case, if the appeal made by the claimant is established then the
expression,''liability be otherwise admitted''12Would become redundant which has been already
entrenched by the parties.

In Aarti Industries Ltd case,13the claimant directed many communications to respondents to

which there was no response and the claimant assumed that the liability has been
acknowledged by the Respondents. However it was concluded that this assumption is not valid
and the application was dismissed.In the present case no response to the communication of l4th
August,2020 and 10th September, 2021 falls in the excepted category of repudiation and denial
of liability. In the present case the respondent denies the liability itself thus the arbitration clause
does not spring into action. It was held: "...If such is the agreement providing for the very
appointment of an arbitrator the question of appointing an arbitrator either by the volition or by
the intervention of the court does not arise at all…"14

[2.2] Waiver of the time limit by the claimant defeats the quantum insurance claim.

The insurance claim is not maintainable in light of the fact that SMIP has delayed in intimating
the loss event. Clause 7.1.1 of the Insurance policy states:

7Oriental Insurance Co. Ltd., vs. Sony Cheriyan(1999 (6) SCC 451).
8Id. Paragraph 17 ( citation needed)
9Vikram Greentech India Ltd, vs. New India Assurance Company Ltd (2009(5) SCC 599).
10 Moot Proposition, p. 18 ¶ 15.
11 General Assurance Society Ltd. Vs. Chandumull Jain and another (AIR 1966 SC 1644)
12 United India Insurance Co. Ltd. Vs. Harchand Rai Chandan Lal (2004)8 SCC 644).
13 Aarti Industries Ltd vs National Insurance Co. Ltd
14 Building Systems (I) Pvt. Ltd., Bangalore vs. Regional Manager, Tata AIG General Insurance
Company Ltd., Bangalore 2006(3) Kar. L.J. 317