A.M. Khanwilkar, J. - (1.) The conundrum in this appeal is 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' The learned Single Judge of the High Court of Judicature at Madras vide impugned judgment and order dated 30th November, 2017 in O.P. No.537/2017 had held that post amendment of the Arbitration and Conciliation Act, 1966 (for short, "the Act"), with effect from 23rd October, 2015 by insertion of sub-section 6A in Section 11 of the Act, the limited mandate of the Court is to examine the factum of existence of an arbitration agreement. No more and no less. The learned Single Judge placed reliance on the two-Judge Bench decision of this Court in Duro Felguera, S.A. Vs. Gangavaram Port Limited, 2017 9 SCC 729 and another decision of its own High Court in Jumbo Bags Ltd. Vs. New India Assurance Co. Ltd., 2016 3 CTC 769 The appellants, however, placed reliance on a three-Judge Bench decision of this Court in Oriental Insurance Company Limited Vs. Narbheram Power and Steel Private Limited, 2018 6 SCC 534 where this Court had an occasion to construe a similar clause of an insurance policy as in the present case. Relying on this decision, it is urged that the impugned judgment cannot be countenanced and that the High Court ought to have dismissed the original petition filed by the respondents under Sections 11(4) & 11(6) of the Act read with Rule 2 of the Appointment of Arbitrators by the Chief Justice of Madras High Court Scheme, 1996, to declare the arbitrator nominated by the respondents herein as the sole arbitrator; or in addition, appoint one arbitrator on behalf of the appellants herein so as to adjudicate all the disputes inter se between the parties in terms of the Act.
(2.) Shorn of unnecessary facts, be it noted that the respondent Nos.1 and 2 constitute a Joint Venture ("JV"). Respondent No.3 awarded a contract on 29th September, 2006 for design, construction and maintenance of a bridge across the River Chambal, which was to be completed within a period of 40 months and was commenced on 5th December, 2007 by the JV after respondent No.3 handed over the site to it. After commencement of the work, a Contractor All Risk Insurance Policy ("CAR Policy") dated 5th December, 2007 was obtained from the appellants covering the entire project, valued at Rs.2,13,58,76,000/-. The policy contained clause 7, which reads thus: "7. If any difference shall arise as to the quantum to be paid under this Policy (liability being otherwise admitted) such difference shall independently of all other questions be referred to the decision of an arbitrator to be appointed in writing by the parties in difference, or if they cannot agree upon a single arbitrator to the decision of two disinterested persons as arbitrators of whom one shall be appointed in writing by each of the parties within two calendar months after having been required so to do in writing by the other party in accordance with the provisions of the Arbitration Act, 1940, as amended from time to time and for the time being in force in case either party shall refuse or fail to appoint arbitrator within two calendar months after receipt of notice in writing requiring an appointment the other party shall be at liberty to appoint sole arbitrator and in case of disagreement between the arbitrators, the difference shall be referred to the decision of an umpire who shall have been appointed by them in writing before entering on the reference and who shall sit with the arbitrators and preside at their meetings. It is clearly agreed and understood that no difference or dispute shall be referable to arbitration as herein before provided, if the Company has disputed or not accepted liability under or in respect of this Policy. It is hereby expressly stipulated and declared that it shall be a condition precedent to any right of action or suit upon this policy that the award by such arbitrator, arbitrators or umpire of the amount of the loss or damage shall be first obtained. It is also hereby further expressly agreed and declared that if the Company shall disclaim liability to the insured for any claim hereunder and such claim shall not within 3 calendar months from the date of such disclaimer have been made the subject matter of a suit in a court of law, then the claim shall for all purpose be deemed to have been abandoned and shall not thereafter be recoverable hereunder."
(3.) During the construction of the bridge, on 24th December, 2009, an accident occurred causing significant loss to the contractor. A detailed claim for a sum of Rs.1,51,59,94,543/- was submitted by the JV to the appellants, in response to which the appellants appointed one Mr. S. Ananthapadmanabhan, Surveyor and Loss Adjuster, for assessing the loss caused to the contractor. A final report was submitted by the Surveyor on 28th February, 2011 assessing the loss as Rs.39,09,92,828/-, however, with the finding that the damage was on account of the faulty design and improper execution of the project and not payable under the policy. Besides the stated report, a Committee of Experts was set up by the Ministry of Road Transport and Highways, Government of India, to enquire into the accident which then submitted its report on 7th August, 2010.;