National Insurance Co Ltd v. Sharp Menthol Ltd

NAVIN CHAWLA, J JULY 17, 2018/vp

OMP (Comm.) No.129/2017 Page 1 * IN THE HIGH COURT OF DELHI AT NEW DELHI + O.M.P. (COMM.) 129/2017 Reserved on: 2nd April, 2018 Date of decision : 17th July, 2018 NATIONAL INSURANCE CO LTD ..... Petitioner Through: Mr.Sudhir Nandrajog, Sr. Adv. with Mr.Kishore Rawat and Mr.L.K.Tyagi, Advs. versus SHARP MENTHOL LTD ..... Respondent Through: Mr.Saurabh Kirpal, Mr.Nikhil Rohatgi, Mr.B.Dhawan Rohatgi, Mr.Shashank Khurana, Advs. CORAM: HON'BLE MR. JUSTICE NAVIN CHAWLA 1. This petition has been filed under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the 'Act') challenging the Arbitral Award dated 21st July 2011 (hereinafter referred to as the 'Impugned Award') passed by the Arbitral Tribunal comprising of three Arbitrators. The Impugned Award directs the petitioner herein to pay to the respondent an amount of Rs.3,70,46,874/- with pre-award as well as future interest. 2. The respondent company being a manufacturer of Menthol crystals, Menthol powder and other essential oils from Crude Mentha Oil (CMO), sought insurance of their factory for Fire and allied perils located OMP (Comm.) No.129/2017 Page 2 at C-15, SMA Co-operative industrial Estate, Delhi-110033. The said factory was insured for Fire and Allied perils vide two separate Fire Policies; (a) Fire Insurance Policy "C" No. 360800/11/330101/97 issued by the petitioner, which was co-insured with Oriental Insurance Co. Ltd, with the petitioner's share at 60%, (b) Fire Insurance Policy "C" Cover No. 471571 dated 22.1.1998 issued by Oriental Insurance Co. Ltd. with no co-insurers. The Impugned Award is passed in Arbitral Proceedings in which Fire Insurance Policy "C" No. 360800/11/330101/97 (herein after referred to as 'Fire Policy') forms the subject matter. 3. The aforesaid Fire Policy issued by the petitioner insured the respondent for an amount of Rs. 18,40,00,000/- for a period ranging from 13th October 1997 to 12th October 1998. The breakup of the Items insured is given below: Sr. No. Item Sum Insured Rs. 1. "On Building" 1,00,00,000 2. "On F.F. Fittings and electrical & Sanitary fittings electrical installation office equipments and machines" 30,00,000 3. "On Plant, Machinery & its accessories tools and Lab equipments etc" 1,00,00,000 4. "On Stock of raw material of various type, semi-finished and finished goods, goods in process and packing material etc." 16,00,00,000 5. "On D.G.Sets" 10,00,000 Total 18,40,00,000 OMP (Comm.) No.129/2017 Page 3 4. On the other hand the policy issued by Oriental Insurance Co. Ltd. insured the respondent for an amount of Rs.3,00,00,000/- for a period ranging from 22nd January 1998 to 22nd January 1999. The policy insures Stock of raw material of various types of semi finished and unfinished goods, goods in process, packing material used in manufacture of Menthol. Therefore, the respondent was insured for an Amount of Rs 19 crores with respect to 'Stocks' under both the policies in the ratio of 16:3. 5. It is the case of the respondent that on 16th June 1998 at about 3.45 p.m. when the factory was working normally, the workers in the distillation/filtration section of the plant noticed heavy smoke accompanied with flames coming out from the storage-cum-mixing tank. On noticing the fire, the workers raised an alarm and started fighting the fire with the help of fire extinguishers. Simultaneously, the fire room of the Fire Brigade was informed about the same and ultimately the fire was brought under control at 6.00 pm on the same day and was extinguished soon thereafter. This fire led to damage of the goods and stock of the respondent. 6. Since the stocks lying in the insured's factory premises were insured both by National Insurance Co. Ltd. and Oriental Insurance Co. Ltd. by separate policies, the above two insurers independently appointed the following two pairs of Surveyors to assess the loss on their behalf. The assessment of loss on stocks was carried out jointly by all 3 surveyors mentioned below: N