Delhi HC Upholds Rs.33 crores Arbitration Award in Valley Iron & Steel Flood Damage Insurance Claim

The respondent had taken Fire and Special Perils Policy on reinstatement basis at the factory.

On 26^th and 27 August, 2011, due to incessant rain and heavy floods, there was destruction and damage to the plant, machinery, equipment, stock and the building.

The Surveyor had assessed the loss both on market value basis at Rs.10,45,03,252/- and on reinstatement basis at Rs.19,84,08,960/-.

The respondent had given consent letter dated 18.1.2014 for surveyor assessment on market value basis as full and final settlement.

After 42 months of the consent letter and 34 months of receipt of final settlement amount, by the letter dated 21.6.2017, the respondent alleged that the consent was signed under coercion, financial stress and under threat of repudiation.

By the letter dated 11.8.2017, the respondent invoked arbitration.  The company claimed Rs.58 crores on reinstatement basis and Rs.44 crores on market value basis.

By the arbitral Award dated 28.7.2021, the appellant was directed to pay Rs.33,26,25,300/- with interest. This was confirmed by section 34 Court.

HELD that on the issue of arbitrability of dispute after execution letter by the insured company.

AT’s conclusion that an arbitral dispute existed since consent letter dated 18th January 2014 was obtained at a stage when neither the survey report had been finalized (on 29th January 2014) nor any decision taken by the appellant regarding admissibility of the claim, has found favour with the Single Judge as well.

Judgment dated 24.12.2025 of the High Court of Delhi in FAO (OS)(COMM) 165/2025 of United India Insurance Co. Ltd  Vs.  M/s. Valley Iron & Steel Co. Ltd with connected matters

Delhi HC Judgment in Section 37 AA appeal is a strong affirmation of arbitral autonomy and ruling that the Insurance Company cannot escape liability by challenging well-reasoned arbitral awards.