Page 49 - Insurance Times March 2022

LEGAL

Arbitration award can be set aside only The high court allowed the said appeal by entering into the
merits of the claim and has quashed and set aside the
if it is against prevailing laws, says SC award passed by the arbitrator as well as the order passed
An arbitration award can be set aside only if the award is by Additional District Judge, Chandigarh.
against the public policy of India, the Supreme Court has The apex court said the high court has exercised the juris-
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,
found to be contrary to the fundamental policy of Indian the present appeal succeeds. The impugned judgment and
Law, interest of country, justice or morality or if it is pa- order passed by the High Court is hereby quashed and set
tently illegal.
aside. The award passed by the arbitrator and the order
The top court was hearing an appeal filed by Haryana Tour- passed by the Additional District Judge under Section 34 of
ism Ltd against an order of the Punjab and Haryana High the Arbitration Act overruling the objections are hereby
Court which set aside a 2005 award passed by the arbitra- restored," the bench said in January 11 order.
tor as well as the order passed by the Additional District
Judge, Chandigarh. Insurer can't change policy terms unilat-
Haryana Tourism Limited (HTL) had invited tenders/quota- erally
tions for the supply of Aerated Cold Drinks at its Tourist
Complexes and the tender submitted by Kandhari Bever- Roxy Color Lab had taken two standard fire and special in-
surance policies from National Insurance to cover its digi-
ages was accepted.
tal colour laboratory, including plant and machinery, office
HTL later terminated the contract after dispute arose be- equipment, raw materials, and goods held in trust and
tween the parties and the matter was referred to the sole trade. The tenures of the two policies overlapped: one was
arbitrator. from July 8, 2008 to July 7, 2009, and the other from Janu-
The arbitrator directed Kandhari Beverages to pay Rs 9.5 ary 6, 2009 to January 5, 2010. The total risk covered un-
lakh while the counter claim lodged by it claiming Rs 13.92 der the two policies was Rs 96 lakh.
lakh was dismissed by the arbitrator. The two policies were issued by two separate offices of the
Kandhari Beverages thereafter filed objection petition Ad- same insurer. Later, they were shifted to the same divisional
ditional District Judge, Chandigarh under Section 34 of the office, but without taking a fresh proposal. Moreover, while
Arbitration Act against the award passed by the arbitra- shifting the policy, the insurer unilaterally changed the terms
tor. of loss assessment from the earlier "reinstatement basis"
The Additional District Judge dismissed the appeal/objec- to "market value basis", without the insured's knowledge
or approval.
tion petition after which it filed further appeal before the
high court under Section 37 of the Arbitration Act. A major fire broke out on April 9, 2009. The insurer ap-
pointed Cunningham Lindsey to assess the loss. The insured
The Insurance Times, March 2022 49