The dispute arose when there was a serious accident during the construction of a bridge over the Chambal River. The insurer repudiated the claim of the contracting company based on two enquiry reports and the communications between the parties. The contractor moved the high court for arbitration.
The high court examined the communications and the terms of the “all risk insurance policy” and referred the dispute to arbitration. However, on appeal, the Supreme Court ruled that the case involved was within the non-arbitrable exception provided in the agreement. According to the agreement, if the insurer repudiates the claim, the dispute cannot be referred to arbitration. Hyundai was thus allowed to take recourse to a civil suit.
