Allowed

V.S.Prabhakara Gupta, Secbad v. M/S Tata Aig Gneral Insurance Co. Limited, Mumbai and 2 Others

Telangana HC1 Apr 2022ARBAPPL/122/2016

Case brief

AI extract

What is this about?

Application for appointment of a sole arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996. Court accepted a broad consensus by parties and appointed Justice Abhay Manohar Sapre as sole arbitrator to determine disputes arising from specific insurance policy involving Satyam Computer Services.

What did the court decide?

Appointed Justice Abhay Manohar Sapre, Former Judge of the Supreme Court of India, as the sole arbitrator.

V.S.Prabhakara Gupta, Secbad Vs M/S Tata Aig Gneral Insurance… — Arbitration | Telangana HC (2022)

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IN THE HIGH^{COURT FOR THE STATEOF TELANGANA} AT HYDERABAD

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FRIDAY, THE^{FIRST DAY OF APRIL} TWO THOUSAND^{AND TWENTY TWO}

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PRESENT

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THE HONOURABLE^{SRIJUSTICEUJJAL BHUYAN}

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ARBITR ATION^{APPLICATION NO122} F 2016

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Between:

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V.S.PRABHAKARA^{GUPTA,S/o Late Sri V.L...SuryanenalavanaSresty, aged61} years, Plot No.8,^{I\iladhuparr''e"nij'iE'-eo;;npltrvSeicunoerabad500009rpLlcANT}

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AND

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M/s TATA^{AIG GNERAL INSURANCE CO UMITED grh Floor'Piramal} rowers.^peninsuta d;';i#;rk;-c;rp"i^{ffiKadam MargLower Parel,}

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, Y#,til-i"ta?:uor.rrrn."^{co. Ltd,centratizedctaims servicingoffice,Sth} - ii;;;, -Sr.v; Towers, sp noao, 5s6g6is12[3i $Q0003 3. tclcl^{Lombard Gene,il'l;;;;;;;c;;punvr-ta',' lclclLombard House' 414'} Veer Savarkar^{rtrrr.g, frt'i6'iittlv]n"vkf"mple'Prabhadevi'Mumbai 400} 025 ...RESpONDENTS

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Application^{under Section11 (5 & 6) of the ATbitrationand Conciliation Act'} 1996 and Scheme^{of Appointmentof Arbitrator praying that in the circumstances} stated in the^{affidavit filed therewith, the High Court may be pleasedto appoint a} sole Arbitrator^{under Section 11 (5) & (6) of the Arbitration and Conciliation Act'} 1 996 read^{with the " The Schemefor appointmentof an Arbitrator'1996' as} framedbytheHighCourtofJudicatureatHyderabad'forthe..foradjudicationof the disputes^{/ differences that arose betweenthe Applicant and the Respondents} in respect of^{Policy No. 2300001198issued by the RespondentNo'1 andthe} second layer^{and third layer/underlying & co insurance Policies' bearing} 6122ool36to8l82looooo211^{issued by the RespondentNo.2, and the |nsurance} Policy No.^{402510000624]01issuedby the Respondent No 3 respectively}

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The application^{coming on for hearing' upon perusing the Applicationand} affidavit filed^{in supportthereof and upon hearingthe argumentsof Sri P Rajender} Reddy, Advocate^{for the Applicant and of Sri S'Niranjan Reddy' SeniorCounsel} for Respondents.

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The Court made the^{following:ORDER}

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THE HON'BLE SRI JUSTICE UJJAL BHUYAN ARBITRATION APPLICATION No.122 OF 2016

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ORDER:

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Heard Mr. P. Rajender Reddy, learned counsel for^the applicant and Mr. S. Niranjan Reddy, learned senior^counselfor the respondents.

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This application has been filed under Section¹ 1⁽⁶⁾ of^the Arbitration and Conciliation Act, 1996^(briefly "the^Act" hereinafter) for appointment of arbitrator.

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In view of the broad understanding reached between^the parties, it may not be necessary to.refer to the facts in detail. Briefly stated, applicant was earlier employed with^M / s.^Satyam Computer Services Limited as a senior vice-president.^{Because of} criminal prosecution against M/ s. Satyam Computer Services Limited, applicant was arrested by the Central Bureau ol Investigation (C.B.l.) on 21.1 1.2OO9 whereafter applicant has been subjected to a series of litigation and prosecution.

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M/s. Satyam Computer Services Limited had availed the Corporate Guard Directors and Officers Liability Insurance Policy bearing Policy No.23OOO01l98 from a consortium of insurers^led by respondent No.1. Respondents No.2 and 3 are the underlying irsurance companies. The policy covered the period from

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15.10.2008 to^{i5.10.2009 (both days inclusive)'It is stated that} the insurance^{policiescovered the officers for expenses incurredin} legal proceedings,^{investigation, prosecution'defence etc'}

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Despite requests^{made torespondentNo' 1 toprovide} assistance^{to the petitioner by way of reimbursementof legal} expenses in^{termsof the insurance policy' no such assistance was} forthcoming.

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At that stage^{applicant instituteda civil suitbeing} O.S.No.i55^{of 2013 on the file of IAdditional Chief Judge'} Secunderabad^{for recoveryof Rs' 19'25'000'00with interestetc''} on account^{of expensesincurred tili'thenin differentproceedings'} the details^{of which have been mentionedin the application '} Respond'ents^{hereinwere' defendants in the suit'The suit was} disposed^of by^{the learned court below by orderdated 26'10'2015} holding that in^{view of the arbitrationclause in the insurance} policy, parties^{would haveto refer their disputesto the arbitrator} appointed^{bY themseives'}

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7 . Notwithstanding^{the aboveorderof the civil court' no such} arbitrator^{was appointed by the respondents' Ultimately applicant} issued a^{legal noticedated 26'O5'2016calling upon the} respondents^{to reimburse ail the expenses incurred by him with} interest failing^{which to treat the said letter as a notice of} s'

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arbitration in terms of clause 15.6 of policy No.230000 1198. As a matter of fact, the applicant had proposed the name of the sole arbitrator

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Responding to the legal notice dated 26.O5.2O16 respondent issued three separate replies, all dated 24.06.2016, nominating one arbitrator each in respect of the three insurance policies of the three respondents.

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It is the contention of the applicant that respondent No.1 is the primary/first insurance company u,ith regard to the policy availed of by the policy holder M/s. Satyam Computer Services Limited, now kno'"r,n as M/s. Tech Mahindra Limited Respondents No.2 and 3 are the second and third underiying coinsurance companies. According to the applicant respondents No.2 and 3 being so placed, only one arbitral tribunal manned by a sole arbitrator would suffice to arbitrate the dispute between the parties. Stand taken by the respondents that there should be three different arbitral tribunals in respect of the three insurance policies would result in prohibitive expenses which would be unaffordable to the applicant.

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'lO. All the three respondents have filed separate affidavitd. I Common stand taken in the three affidavits is that there are three separate insurance companies i.e., the three respondents each

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offering separate^insurance Policies'^{Therefore'there shouldbe} three arbitral tribunals.^{In so far policy No'2300001 198 of} respondent No.l^{is concerned,the limit of liabilityis kept at} Rs.96,0O,OO,0OO-OO.^{Poiicy bearingNo'612200/361081821} O0OOO2¹ 1 of^{respondent No.2 would come into effect only if the} liability exceeds^{Rs.96,OO,OO,O0O/- coveredby insurance policyof} the first respondent.^{The limit of liability of the second} over and above respondent is Rs. 8,OO,0O,O0O/^- Rs.96,O0,OO,OOO/-.^{The third policy of respondent No'3 i'e'' policy} bearing No.^4025/0000624 lOl^{would come into play only if the} combined liability^{coveredby the insurance policies of first and} second respondents^{are exhausted'}

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1 1 . Though in^{the hearing several submissions and contra} submissions^{were made relying on different iaws, ultimately a} broad consensus^{has emerged that there should be asole} arbitrator and that^{the arbitration should be limitedtothe} insurance^{policy bearingNo. 2300001 198 of the first respondent'}

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72, That being the^{position, we may advertto Clause No'XII of} the said policy which^{deals with arbitrationand reads as under:}

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"XII. ARBITRATION

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(a) Ang and all disputes^{or differenceswhich may} anse unier, out^of, in^{connecttontttith or in relation to this} policy, or to its "iirt.n"",^{ualid'ity or termination, or to the}

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t I

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determination of the amount or anA amounts payabte under this policy, shall be referred to a sole arbitraior to be appointed by the parties to the dispute uithin 3O dags of anA partA giuing notice of arbitration to tlte other(s).

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(b) In the euent that the parties are unable to agree upo-n the identitg of a sole arbitrator, the d.isputei or dfurences shall be referred. to the d.ecision of 3 arbitrators of uhom one shall be appointed in utiting Lg each of the parties within a period of 3O days aftir ihe failuie to appoint a sole arbitrator and the third" (who shall serue as Chairman) shall be appointed- by the nominated arbitrators. In case either party shall refuse or fail to appoint any arbitrator witltin the aforesaid 30 d.ays after receipt of notice in turiting requiring an appointmlnt, the other partg shall be at libertg to appoint i sole arbitrator who shall thereafter be empotuered to conduct the arbitration and determine the disputes or d-i,fference s referred to him as if he had been appointed as sole arbitrator utith the consent of both parties.

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( c ) The parties shall share the expenses of the arbitrator or arbitral tibunal equa g and_ such "*p"i""r, aLong with the reasonable costs or the parties in the arbitration, shall be awarded" bg the arbitrator or arbitral tribunal. in fauour of the successfuL party in the arbitrator or, where, no partA can be said to haue been wholly success/u/, to the partg who has substantiallg succeed,ed_.

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(d) The place of arbitration shaLl be Ind,ia, the language of the arbitration shall be Engtish, the Lau_t applicable to and in the arbitration shall be ind"iqn latu and the arbttration process will be in accordance with the prouisions of the Arbitration and Conciliation Act 1996, as amended from time lo time.

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(e) It is a condition preced.ent to anA ight of action or suit upon this policg that the atuard. Uy sucn arbitrator or arbitrators shalt be first obtained.

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(fl In the euent that these arbitration prouisions shall be held to be inualid then all such disputes shalL be referred to the exclusiue juisd.iction of the Ind.ian courts.,

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1 3. As already^{noticed above} '^{applicanthad filed civil suit} O.S.No.155^{of 2013 agalnst the respondents for recoveryof legal} expenses^{incurred by him'In the said civil suit each of the} respondents^{filed interlocutory applications being I'A'Nos'122 of} 2014, L25^{of 2014 atd L27 of 2014contendingthat the dispute} should be^{referred to arbitration' Learned court below by a} common^{order dated 26'lO'2015 disposed of the I'As by directing} the parties^{to initiateproceedingsof arbitration'in pursuanceof} rhe arbitration^{clause inthe respective insurancepolicies'} Though^{the arguments in the hearing centreda-round as to} whether there^{should be one arbitral tribunal or three arbitral} tribunals, ultimately,^{it has been agreed that the partiesshould} be referred^{to a single arbitration of a sole arbitrator in terms of} policy No.23OOOOl^{l98 of respondent No'1' the arbitration ciause} of which^{has been extractedabove' Learnedsenior counselfor} the respondents^{suggested the name of Justice Abhay Manohar} Sapre, a^{formerjudge of the SupremeCourt of India as the sole} arbitrator^{to arbitrate on the dispute between the parties which} has been^{readily accepted by learned counselfor the applicant'}

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I I t+ That^{beingthe position'this CourtappointsJusticeAbhay} Manohar^{Sapre, Former Judgeof SupremeCourt of India as the} sole arbitrator^{to arbitrate on the disputebetween the parties' '-'l}

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Parties to report before the iearned arbitrator on or.06.2022 at

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I 1:00 AM with prior intimation to the learned arbitrator.

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15 This disposes of the arbitration application. No order as to

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costs.

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Miscellaneous petitions if any, pending in this arbitration

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application shall stand closed

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,TRUE COPY'

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Sd/.B.S.CHIRANJEEVI JOINT REGISTRAR ( -r!a'

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SECTION OFFICER

The Hon'ble Sri^{Justice Abhay Manohar Sapre, FormerJudge of Supreme} Court of lndia,^{704, Tower No.tO,7'h Floor, CommonWealth Games Village} Complex, Near^{Akshardham Temple, New DelhL}

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The Hon'ble Sri^{JusticeAbhay Manohar Saprd; FormerJudge of Supreme} Courtoflndia,lS56,WrightTown,JABALPUR-4B0002MadhyaPradesh (By Speed Post)^{(along with a copy of the arbitration application'} iffiaavit and material^{papers filed with A'A')}

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