In Brief
An insurer denied an industrial damage claim arising from Cyclone Phailin, citing reasons such as alleged inventory shortage and damage caused by excluded perils. The insured invoked an arbitration clause in the fire policy and sought appointment of an arbitrator. The High Court appointed an arbitrator, finding the arbitration clause ambiguous. The Supreme Court held that the policy's Clause 13 unambiguously excludes arbitration when the insurer has 'disputed or not accepted liability.' Since the insurer repudiated the claim in toto by denying covered loss occurred, this constituted a dispute over liability (not merely quantum), falling outside the arbitration clause. The Court reversed the High Court's order and held the insured's only remedy is to institute a civil suit, not arbitration.
The lawyer headnote and full judgment text are available to registered users.