Oriental Insurance Company Limited v. April USA Assistance Inc. | OMP (Comm.) 14 of 2020 | Vibhu Bakhru J | Delhi High Court | 2021 SCC OnLine Del 4843

The respondent was the Overseas Service Provider for policies issued by the petitioner. They had executed three agreements. In return for its services, the respondent was entitled to receive fees and bonuses calculated on the ‘annual audited premium’ received by the petitioner from the policy holders. This term was not defined in the agreement.

The dispute arose with respect to a group policy the petitioner issued but on discounted premium. Was the discount required to be deducted from the premiums when calculating the fees/bonus of the respondents?

The tribunal found in the respondent’s favour. It decided that, broadly, because the agreements did not contemplate any group insurance policies, the expression ‘annual audited premiums’ would denote standard premiums.

In the set-aside application several grounds were raised and at the sur-rejoinder stage of arguments the point that the claims were limitation barred was also made.

Examining if a limitation-barred claim violates the most basic notions of morality or justice, Bakhru J concluded that since statute of limitations cuts off the remedy but does not extinguish a debt or a cause, entertaining a limitation-barred claim does not offend any basic notion of morality or justice.

Then he examined if, on the limitation issue, the award contravened the fundamental policy of Indian law. He found that the tribunal had said the transactions were on a running account basis and the claims were all along kept alive before they came to be disputed, but seen from that date the claims were in limitation. This was a finding of fact after examination of evidence that, as per the court, warranted no interference. Even if it is accepted that the law of limitation embodies a fundamental policy of Indian law, an arbitral award cannot be set aside by re-examining and re-evaluating the evidence and reviewing the decision on a disputed question of fact, which may be involved in addressing the controversy whether a dispute is barred by limitation.

The other argument examined by the court was if the tribunal’s interpretation of ‘annual audited premium’ was perverse. He ruled that the contention that the expression ‘annual audited premiums’ must necessarily mean net premiums (premiums less discounts) as accounted in the books and the decision of the tribunal to not accept so, falls foul of the fundamental policy of Indian law is plainly, unmerited.

Read the judgment here.