Simulation – I

Mr Ranjit leased a five storied building at General Bazar, Secunderabad, to run a shopping mall. He insured his shopping mall (material and infrastructure) for

20 crores, with Oriental Inurance Company.

According to the terms and conditions of the Insurance agreement, if the building is constructed with all necessary permissions from the respective government departments like Fire safety etc., then only they can claim the insurance.

But at the time of signing the agreement insurer (Oriental Insurance Company) did not ask to submit relevant permission documents, and the insured(Mr. Ranjith) also ignored it.

The owner of the building /builder did not take necessary permissions at the time of constructing the building and later he applied for Building Regularisation Scheme, and government sanctioned it.

Unfortunately because of short circuit, major fire broke out, the shopping mall, entire material including building gutted in the fire accident. The experts advised to demolish the building.

Now the insured applied for claim. But the insurer is rejecting the claim by showing the non-submission of necessary and proper permissions from the government departments, as per the terms and conditions of insurance agreement.

Matter referred to Arbitration as per Arbitration clause in the agreement. Write the Arbitration Award.

In this case, the insurance company is rejecting the claim made by Mr. Ranjit because of non-submission of necessary permissions from government departments, as per the terms and conditions of the insurance agreement. However, at the time of signing the agreement, the insurer did not ask Mr. Ranjit to submit relevant permission documents, and Mr. Ranjit also ignored it. Additionally, the owner/builder of the building did not take necessary permissions at the time of constructing the building but later applied for Building Regularisation Scheme, which was sanctioned by the government.

Since the matter has been referred to arbitration, the arbitrator will examine the terms and conditions of the insurance agreement, the conduct of the parties, and relevant laws and regulations. The arbitrator will have to determine whether the insurance company's rejection of the claim is justified, given the circumstances of the case.

In this case, it seems that there are several factors that may affect the arbitrator's decision. For example, the insurer did not ask for permission documents at the time of signing the agreement, and the owner/builder of the building obtained permission through the Building Regularisation Scheme. On the other hand, the insurance agreement clearly stated that the insured must have all necessary permissions to claim the insurance.

Ultimately, the arbitrator will have to weigh these factors and come to a decision based on the relevant laws and regulations. They may also consider other factors such as the conduct of the parties and the public interest.


OR 

Step 1: Review the Insurance Agreement The first step in the arbitration process is to review the insurance agreement to understand the terms and conditions that both parties agreed to at the time of signing. In this case, it is important to review the specific language used to outline the requirements for claiming insurance, including the submission of necessary and proper permissions from government departments.

Step 2: Gather Evidence The next step is to gather evidence related to the claim. This may include documents related to the building's construction, government approvals, and the circumstances of the fire. The insured (Mr. Ranjit) should also provide evidence to demonstrate that the insurer (Oriental Insurance Company) did not request the submission of necessary permissions at the time of signing the agreement.

Step 3: Present the Case to the Arbitrator Both parties will present their case to the arbitrator. Mr. Ranjit will need to demonstrate that he followed the terms and conditions of the insurance agreement to the best of his knowledge and that the insurer did not request the submission of necessary permissions at the time of signing the agreement. The insurer will need to demonstrate that the insured did not follow the terms and conditions of the agreement by not submitting the necessary permissions from the government.

Step 4: Arbitrator's Decision After hearing both parties' arguments, the arbitrator will make a decision on whether or not the insured is entitled to the claim. The arbitrator's decision is final and binding.

In this case, since the insurer did not request the submission of necessary permissions at the time of signing the agreement and the insured applied for Building Regularisation Scheme later and got the government's approval, there is a possibility that the arbitrator might rule in favor of the insured.