Authority: High Court of Judicature at Madras

Order Date: September 2026

Case Overview

  • Parties: Petitioner – M/s V.V. Marine Products (export‑oriented seafood processing company), represented by Partner J. Muthu Rajan; Respondent – The New India Assurance Company Ltd, represented by its Chief Business Manager.
  • Policy Details: The petitioner insured its building, plant & machinery, furniture, fixtures, stock‑in‑process and finished stock under the New India Bharat Laghu Udyam Suraksha Policy (Policy No. 730700112243000000050) for the period 23‑Feb‑2023 to 22‑Feb‑2024, with a total sum insured of Rs 30.00 crore, enhanced by endorsement dated 1‑Aug‑2023. The risk was described as “Sea Food/Meat Processing”.
  • Loss Event: Heavy rains on 17‑Dec‑2023 and 18‑Dec‑2023 caused flooding in Thoothukudi district, inundating the petitioner’s premises. The flood damaged the building, electrical installations, plant & machinery, generators, stock‑in‑process and finished stock (prawns).
  • Claim History: The petitioner lodged a claim for Rs 27.50 crore. The respondent appointed M/s Associated Surveyor Private Limited (IRDAI‑licensed) to assess loss; the surveyor’s final report was submitted on 04‑Aug‑2024. The petitioner filed a final claim bill on 27‑Jul‑2025 for Rs 9,39,08,817. The respondent paid Rs 4,17,94,903 and disallowed Rs 4,76,51,575, primarily under the ‘finished goods’ head, citing Exclusion No. 4 (“change in temperature”) for 60 % of that loss.
  • Arbitration Clause: Clause 4 of the policy provides that any dispute over the amount of claim, where liability is admitted, shall be referred to a sole arbitrator mutually agreed within 30 days; failing agreement, a three‑member tribunal is to be formed, each party appointing one arbitrator and the two appointed arbitrators selecting the Presiding Arbitrator.
  • Procedural History: On 17‑Oct‑2025 the petitioner invoked arbitration and nominated Shri A. Jeganathan as sole arbitrator. The respondent, on 14‑Nov‑2025, declined the sole arbitrator and nominated Shri Vijay Srinivas (retired GM, United India Insurance Co.) as its arbitrator, requesting the petitioner to name its own. Both parties subsequently appointed their respective arbitrators but could not agree on the Presiding Arbitrator for over six months.
  • Legal Submissions: The respondent argued that the dispute pertains to liability, not merely quantum, and therefore falls outside the scope of Section 16 of the Arbitration Act; it also contended that the counter‑nomination does not constitute an admission of arbitrability. The petitioner counter‑argued that the dispute is purely about quantum, citing Supreme Court decisions in SBI General Insurance Co. Ltd. v. Krish Spinning and others, and that the temperature rise was a consequence of the flood, not an independent excluded peril.
  • Supreme Court Precedents Cited: Hyundai Engineering & Construction Co. Ltd., Narbheram Power & Steel Pvt. Ltd., and SBI General Insurance Co. Ltd. – all emphasizing that arbitration under an insurance policy is triggered only when liability is admitted and the dispute is limited to quantum.

Final Outcome

  • The Court held that a prima facie case for arbitration exists because the policy contains a valid arbitration clause, liability has been admitted (partial payment made), and the dispute is over quantum.
  • Accordingly, the Court appointed Mr. Srinath Sridevan, Senior Advocate (Mobile: 9841049950, Email: srinath@sridevan.com), residing at Access House, 2nd Floor, No. 24, Judge Jambulingam Street, Mylapore, Chennai‑600 004, as the Presiding Arbitrator.
  • The arbitration shall be seated and conducted at the Madras High Court Arbitration Centre in accordance with the Madras High Court Arbitration Proceedings Rules, 2017. The arbitral fee and administrative expenses shall be governed by the Madras High Court Arbitration Centre (Administrative Cost and Arbitrators' Fees) Rules, 2017.
  • The Registry is directed to forward a copy of this order, along with the memo of parties and the petition, to the appointed Presiding Arbitrator, who shall notify the two nominated arbitrators.
  • The arbitration original petition is allowed, sans costs.

Topics: Arbitration, Insurance Claim Dispute, Court Order