Page 57 - Insurance Times April 2023

HC: Tyre burst not act of God, insurer court that the arbitration tribunal’s order directing it to pay
HCL Rs. 2.24 crore, arbitration fees and other charges was
must pay
incorrect.
Bombay High Court has ruled that a tyre burst is not an
In a 2016 tender floated by Oriental Insurance for an ‘en-
Act of God, but an act of human negligence and hence,
terprise content management’ solution, HCL was the suc-
directed an insurance company to pay compensation to a
cessful bidder, quoting Rs. 15.98 crore. Oriental Insurance
petitioner. The verdict comes in a case of a car accident in
withheld 10 per cent for ‘liquidated damages’ over a delay
which a man lost his life after the tyre of the car he was
in service.
travelling in burst, resulting in the car toppling.
The arbitration tribunal ordered Oriental Insurance to pay
The insurer, New India Assurance Co Ltd refused to pay
HCL the withheld amount with 18 per cent interest, apart
compensation, saying that the accident was an 'Act of God'.
from the arbitrator’s fee of Rs. 10.87 lakh.
Justice S G Dige passed the order on an appeal by the com-
Oriental Insurance approached Delhi High Court, arguing
pany against the June 7, 2016 order of the Motor Accident
that it was the injured party and that the 18 per cent in-
Claims Tribunal, Pune, that directed it to pay almost Rs 1.25
terest was unconscionably high.
crore with a 9% interest to the family of the deceased,
Makarand Patwardhan. However, Justice Chandra Dhari Singh disagreed and dis-
missed Oriental Insurance’s petition.
On October 25, 2010, Patwardhan (38) was travelling from
Pune to Mumbai with two colleagues when the tyre of the Indian Oil Corporation has won an insolvency case filed
vehicle burst they were travelling in, causing the vehicle to against it by Satec Envir Engineering (India) Pvt Ltd, an
spin out of control and crash into a ditch. The vehicle was operational creditor, which claimed that IOC owed it Rs.
reportedly being driven by Patwardhan's colleague in a rash 5.82 crore.
and negligent manner.
Delivering their verdict, Kishore Vemulapali (judicial mem-
The insurer had claimed that the Tribunal awarded an exor- ber) and Prabhat Kumar (technical) of the National Com-
bitant compensation, but Justice Dige noted that an Act of pany Law Tribunal, Mumbai Bench, underscored a key as-
God is an instance of uncontrollable natural forces in opera- pect of the Insolvency and Bankruptcy Code (IBC), namely
tion, where no human is responsible. He said that the burst- insolvency proceedings can only be triggered by the exist-
ing of a tyre cannot be termed as an Act of God, and it is ence of debt and not if the debt itself is in dispute. Nor does
indeed, an act of human negligence. Justice Dige added that an insolvency court get into the adjudication of the dispute.
the reasons for tyre bursts include underinflation, over-infla-
The judges said, “We consider that there exists a dispute
tion, second-hand tyres, tyre temperature and high-speeds.
requiring adjudication thereof and we cannot go into adju-
dication of dispute, whatsoever it may be, under the code.”
Insurer not injured party
Dismissing Satec Envir’s petition filed under Section 9 of IBC,
Public sector insurer Oriental Insurance Company lost to HCL the tribunal said: “We cannot hold that there is default by
Infosystems at Delhi High Court after failing to convince the the corporate debtor in payment of debt amount as exist-

The Insurance Times April 2023 49