Arbitral Award – GT Engine Damage & Overhauling Claim
Judgment dated 22.4.2026 of the High Court of Bombay in Commercial Arbitration Petition (L) No.10809 of 2024 of United India Insurance Company Limited Vs. UPL Limited with connected matters
Interpretation of Insurance Policy and Arbitration Clause 12 of the Policy for overhauling charges consequent to the damage of Gas Turbo Engine lies squarely within domain of the Arbitrator.
The Arbitrator has correctly considered the exclusions, surveyor reports, technical evidence that overhauling of Gas Turbo Engine was necessitated by the insured GT Engine damage.
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Arbitral Award – GT Engine Damage & Overhauling Claim
Incident-Damage Claim & Overhauling Claim – GT Engine
GT Engine Damage – Bifurcation of cause of action in “Incident” & “Overhauling” Claim for Arbitrability
- If any difference shall arise as to the quantum to be paid under this policy (liability being otherwise admitted) such difference shall independently of all other questions be referred to the decision of an arbitrator
Respondent’s claim for overhauling cost of GT Engine is a dispute as to ‘quantum’ to be paid or whether the same relates to ‘liability’ which is disputed or not accepted by the Petitioner.
The petitioner contended that it has treated the incident claim and overhauling claim as separate, allowed incident claim and rejected another claim. Thus, there is rejection of liability and not “quantum” and therefore, it is not arbitrable under clause 12 of the policy.
There was oil leakage in the hot section area of the GT Engine and it was sent for repairs at the Air India Workshop. In June, 2001, it was reinstalled and commissioned. The insurance claim for such repairs was paid.
On 16.9.2001, the Sump-B was not in good order and 4B bearing cage was broken.
The petitioner’s joint surveyors conducted the borescope inspection. The GT Engine was sent to the manufacturer at Houston for inspection. On 19th and 22nd October, 2001 GE issued the reports for overhauling. The petitioner’s Surveyor in USA informed for complete overhaul.
The respondent informed the petitioner for complete overhauling. However, the petitioner clarified that overhauling is not covered by the policy and the liability is only for actual damage caused by the incident.
Petitioner filed application under Section 16 of the Arbitration Act contending that determination of issue of Petitioner’s liability to pay for overhauling costs was not arbitrable since the same did not concern quantum under Section 12 of the policy
Arbitrability of Exclusion Clause in the Policy
Segregation of Claim for Gas Turbo Engine Damage into “repairs” & “overhaul”
Whether mere payment of repair claim does not amount to acceptance of liability in respect of claim for overhaul, making it as non-arbitrable.
Whether the incident / accident is a proximate cause of overhauling of GT Engine. The Arbitral Tribunal held that the incident was the proximate cause for overhauling.
