Oriental Insurance Co. LTD vs. Ace Footmark PVT LTD

Held

The Court held that the Arbitral Tribunal erred in not addressing the dispute regarding the Excess/Deductible clause (Claim No. 5). The Tribunal failed to consider the specific Excess Clause in the Policy issued by OICL, which provided a tabular statement of deductible amounts based on Sum Insured. Instead, the Tribunal relied on a general clause regarding exclusions under a Standard Fire and Special Perils Insurance Policy. The Court found that the Tribunal did not address whether AFPL could question the Clause in the Policy or whether the Clause as included was liable to be ignored. Consequently, the Arbitral Award was set aside to the extent it allowed AFPL's claim regarding the Excess/Deductible. The amount awarded to AFPL was to be recomputed. The Court did not explicitly address the other issues raised in the arbitration but focused on the procedural flaw in the Tribunal's decision on the excess/deductible.

Facts

M/s Oriental Insurance Co. Ltd. (OICL) filed a petition under Section 34 of the Arbitration and Conciliation Act, 1966, challenging an Arbitral Award dated 28.08.2020. The award arose from disputes concerning insurance claims made by M/s Ace Footmark Pvt. Ltd. (AFPL) under a Standard Fire and Special Perils Policy. A fire at AFPL's manufacturing plant on 09.12.2017 caused substantial loss. AFPL lodged a claim of ₹10,98,28,543.70. After a surveyor's report quantified the loss at ₹4,70,15,504.79 (excluding GST), OICL made an on-account payment of ₹2,00,00,000. Subsequently, OICL approved the claim for ₹4,70,15,505, subject to adjustment. AFPL submitted a discharge voucher, and OICL released the balance payment of ₹2,70,15,505. AFPL later sent a protest letter, stating the discharge voucher was executed under protest, and invoked arbitration.

Key Issues

1. Whether the Arbitral Tribunal erred in holding that the contract of insurance stood discharged by accord and satisfaction, despite AFPL executing a discharge voucher under protest? 2. Whether the Arbitral Tribunal erred in its calculation of the claim for loss to plant and machinery, specifically regarding the disallowance of depreciation and the deduction of salvage? 3. Whether the Arbitral Tribunal erred in its calculation of the claim for loss to stock, particularly concerning the exclusion of GST and the application of underinsurance? 4. Whether the Arbitral Tribunal erred in restricting the excess/deductible under the Policy to ₹60,000/- (Claim No. 5), when OICL had deducted ₹24,84,669/- towards excess? Petitioner's (OICL) arguments: OICL contended that AFPL's claims were not arbitrable and that the contract was discharged by accord and satisfaction due to the signed discharge voucher. OICL also argued that the Arbitral Tribunal failed to consider the Excess Clause in the Policy when determining the deductible amount. Respondent's (AFPL) arguments: AFPL argued that the discharge voucher was executed under compulsion and duress, and that they were entitled to dispute deductions as they were not provided with the Final Survey Report. AFPL contended that the excess deductible should be ₹10,000/- for perils other than Act of God, as per the Standard Fire and Special Perils Policy, and that OICL unilaterally deducted a larger sum contrary to the policy.