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2018 (8) TMI 1469 - SC - Indian LawsInsurance policy - Examination of Arbitration agreement - insertion of sub-section 6A in Section 11 of the Act - Arbitration and Conciliation Act, 1966 - Whether clause 7 of the subject Insurance Policy dated 5th September, 2007 posits unequivocal expression of the intention of arbitration or is hedged with a conditionality? Held that:- From the line of authorities, it is clear that the arbitration clause has to be interpreted strictly. The subject clause 7 which is in pari materia to clause 13 of the policy considered by a three-Judge Bench in Oriental Insurance Company Limited [2018 (5) TMI 327 - SUPREME COURT OF INDIA], is a conditional expression of intent. Such an arbitration clause will get activated or kindled only if the dispute between the parties is limited to the quantum to be paid under the policy. The liability should be unequivocally admitted by the insurer. That is the precondition and sine qua non for triggering the arbitration clause - an arbitration clause would enliven or invigorate only if the insurer admits or accepts its liability under or in respect of the concerned policy. Whether the communication sent on 21st April, 2011 falls in the excepted category of repudiation and denial of liability in toto or has the effect of acceptance of liability by the insurer under or in respect of the policy and limited to disputation of quantum? - Held that:- The High Court has made no effort to examine this aspect at all. It only reproduced clause 7 of the policy - the plea taken by the appellants is of denial of its liability to indemnify the loss as claimed by the JV, which falls in the excepted category, thereby making the arbitration clause ineffective and incapable of being enforced, if not non-existent. It is not actuated so as to make a reference to arbitration. In other words, the plea of the appellants is about falling in an excepted category and non-arbitrable matter within the meaning of the opening part of clause 7 and as re-stated in the second paragraph of the same clause. The dispute in question is non-arbitrable and respondent Nos.1 & 2 ought to have resorted to the remedy of a suit. The plea of respondent Nos.1 & 2 about the final repudiation expressed by the appellants vide communication dated 17th April, 2017 will be of no avail. Appeal allowed.
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