Page 49 - Insurance Times February 2022

LEGAL

Arbitration can be set aside only if award merits of the claim and has quashed and set aside the
award passed by the arbitrator as well as the order passed
against public policy: SC by Additional District Judge, Chandigarh.
An arbitration award can be set aside only if the award is The apex court said the high court has exercised the juris-
against the public policy of India, the Supreme Court has said.
diction not vested in it under Section 37 of the Arbitration
A bench of Justices M R Shah and B V Nagarathna said the Act.
award can be set aside under the Arbitration Act, if it is
In view of the above and for the reasons stated above, the
found to be contrary to the fundamental policy of Indian
present appeal succeeds.
Law, interest of country, justice or morality or if it is pa-
tently illegal. The impugned judgment and order passed by the High Court
is hereby quashed and set aside. The award passed by the
The top court was hearing an appeal filed by Haryana Tour-
arbitrator and the order passed by the Additional District
ism Ltd against an order of the Punjab and Haryana High Judge under Section 34 of the Arbitration Act overruling the
Court which set aside a 2005 award passed by the arbitra-
objections are hereby restored, the bench said in January
tor as well as the order passed by the Additional District
11 order.
Judge, Chandigarh.
Haryana Tourism Limited (HTL) had invited tenders/quota- SC: Insurer can't refuse med claim citing
tions for the supply of Aerated Cold Drinks at its Tourist existing condition
Complexes and the tender submitted by Kandhari Bever-
ages was accepted. An insurer cannot repudiate a claim by citing an existing
medical condition that was disclosed by the insured in the
HTL later terminated the contract after dispute arose be- proposal form, once the policy has been issued, the Supreme
tween the parties and the matter was referred to the sole Court has said.
arbitrator.
A bench of justices D Y Chandrachud and B V Nagarathna
The arbitrator directed Kandhari Beverages to pay Rs 9.5 also said a proposer is under a duty to disclose to the in-
lakh while the counter claim lodged by it claiming Rs 13.92 surer all material facts within his knowledge. The proposer
lakh was dismissed by the arbitrator. is presumed to know all the facts and circumstances con-

Kandhari Beverages thereafter filed objection petition Ad- cerning the proposed insurance, it added.
ditional District Judge, Chandigarh under Section 34 of the While the proposer can only disclose what is known to him,
Arbitration Act against the award passed by the arbitra- the proposer's duty of disclosure is not confined to his ac-
tor. tual knowledge, it also extends to those material facts
The Additional District Judge dismissed the appeal/objec- which, in the ordinary course of business, he ought to know,
tion petition after which it filed further appeal before the the court said.
high court under Section 37 of the Arbitration Act. "Once the policy has been issued after assessing the medi-
The high court allowed the said appeal by entering into the cal condition of the insured, the insurer cannot repudiate

The Insurance Times, February 2022 49