Insurance arbitration clause limited to admitted liability; complete repudiation of claim falls outside arbitration and requires civil suit.

An insurance policy arbitration clause limited to disputes over quantum, once liability was admitted, did not cover a complete repudiation of the claim. The SC held that where the insurer denied liability in toto, the clause was inapplicable because it was expressly conditional on admitted liability and excluded disputes where liability was not accepted under the policy. The insurer's communication amounting to full repudiation therefore took the matter outside the arbitration agreement, leaving the insured to pursue a civil suit. The petition for appointment of an arbitrator ought to have been rejected.

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Issues: Whether the dispute arising from repudiation of the insurance claim in toto was referable to arbitration under clause 7 of the policy, or whether arbitration was confined only to disputes as to quantum after liability was admitted.

Analysis: Clause 7 was held to be a strictly construed and conditional arbitration clause. Its operation depended on the insurer's liability being otherwise admitted, and it expressly excluded reference to arbitration where the company disputed or did not accept liability under or in respect of the policy. The communication dated 21 April 2011 was found to be a complete repudiation of the claim and a denial of liability in toto, not a mere dispute as to the quantum payable. The Court relied on the settled principle that where the insurer rejects liability altogether, the matter falls outside the arbitration clause and the insured's remedy is a civil suit.

Conclusion: The dispute was non-arbitrable and could not be referred to arbitration; the petition for appointment of arbitrator ought to have been rejected.

Ratio Decidendi: An arbitration clause in an insurance policy that is triggered only when liability is admitted does not extend to a dispute where the insurer repudiates liability altogether; in such a case, the dispute falls outside the arbitration agreement and must be pursued in a civil suit.

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