Bombay High Court directs Essar Steel and Insurance company to go to arbitrator

MUMBAI: In a relief to Essar Steel (India) Ltd (ESL), the Bombay High Court has directed the Ruia-controlled company and New India Assurance to appoint an arbitrator to settle the dispute in a case involving around Rs 890 crore insurance claims against ‘terrorist’ attack on the company’s pipelines.

The steel-making arm of the over $27-billion Essar Group had approached the court to appoint an arbitrator to settle its dispute with the country’s largest general insurance company.

Essar Steel in its arguments had claimed damages caused to its pipelines in Chitrakonda, Odisha, in Naxal attacks in 2010. The total property loss was Rs 9.79 crore and the business interruption loss was assessed at Rs 881 crore.

Justice Anoop Mohta, while granting relief to ESL, stated in the order, “I am inclined to observe that there exists arbitration clause between the parties, which is sufficient to consider the prayer of applicant to appoint the arbitrator/tribunal.”

In February 2013, ET had first reported Essar Steel’s move against New India Assurance.

When contacted, Tuli & Co, a law firm representing the New India Assurance, declined to comment on the issue. Essar Steel, which was being represented by Chandubhai Mehta and Faiza Dhanani of law firm Dhruve Liladhar & Co, argued that the insurer was aware of the threat possibilities at the time of issuing the policy.