Repudiation of Insurance Liability & Maintainability of Arbitration

Judgment dated 14.8.2026 of the High Court of Bombay in Arbitration Application (L) No.12810 of 2026 of Samraj Gold Exports Private Limited   Vs.  The New India Assurance Co. Ltd.

The appellant had taken Jewellery Block Insurance Policy for 2019 to 2020 for various risks including loss arising from fidelity or dishonest acts of ersons to whom the jewellery or gold was entrusted.

The policy had arbitration clause.

In 2020, the claim of the appellant was repudiated.  However, reference to another policy number was given in the said letter.  The appellant filed consumer complaint.

The Consumer Forum found manipulation of the policy and liberty was given for arbitration for quantification of loss.

Few thoughts on the crux of the judgment. To my mind, the question was of maintainability of arbitration and not arbitrability of dispute.

In fact, Anup Kumar Mathur has raised important question of law on the maintainability of arbitration in view of clause 12 of IAR Policy.

clause 12 of IAR Policy that “It is clearly agreed and understood that no difference or dispute shall be referable to arbitration as hereinbefore provided, if the Company has disputed or not accepted liability under or in respect of this policy.”

The Insurer had repudiated the claim and had not accepted the liability.

The High Court has accepted the contention of the Insurer that if the insurer repudiates the claim and disputes its liability under the policy, it will be outside the scope of a restricted arbitration clause.

However, the High Court opined that the question whether Clause 12 operates as an exclusion in the particular facts of the present case requires examination and same cannot be done in section 11 petition.

So maintainability of arbitration is still open.