Partial payment of an insurance claim renders disputes over balance amounts "quantum" disputes, triggering arbitrability.

The Petitioner (Insurer) provided an "Industrial All Risk Policy" to the Respondent (Insured) for its power plant.

In September 2001, a Gas Turbine (GT) Engine suffered accidental damage to its 4B bearing

On the Insurer’s recommendation to ensure future reliability and underwriting, the Insured overhauled the entire engine at a GE facility in the USA.

The Insured raised a composite claim for material damage and business interruption

The Insurer sanctioned and paid ₹7,69,69,369/- but restricted payment to "incidental repairs," refusing the "overhaul" costs on the ground that overhauling was not covered by the policy

After a previous award was set aside, a Sole Arbitrator awarded the Insured the balance claim (₹41.98 crores plus interest and costs), treating the dispute as one of "quantum"

The Petitioner challenged this under Section 34 of the Arbitration Act, arguing the dispute was about "liability" and hence non-arbitrable under Clause 12 of the policy

1. Whether the dispute regarding the non-payment of the balance "overhaul" claim constitutes a dispute of "quantum" (arbitrable) or "liability" (non-arbitrable) under Clause 12 of the Policy?

2. Whether the accident on 16 September 2001 was the "proximate cause" for the complete overhauling of the Gas Turbine Engine?

Clause 12 of the Insurance Policy, which permits arbitration only for disputes regarding the "quantum to be paid (liability being otherwise admitted)" and excludes disputes where the "Company has disputed or not accepted liability"

The principle from SBI General Insurance Co. Ltd. v. Krish Spinning [2024 INSC 532], which holds that if part of a claim is paid, liability is admitted, rendering the balance a "quantum" dispute

The principle regarding the court's power to discern underlying reasons in an award as derived from OPG Power Generations Pvt. Ltd. v. Enexio Power Cooling [(2025) 2 SCC 417]

The narrow scope of judicial interference under Section 34 of the Arbitration Act as defined in Ssangyong Engineering & Construction Co. Ltd. v. NHAI [(2019) 15 SCC 131]

The Court found that the Insurer sought to "artificially bifurcate" a single claim arising from one incident into 'incident repairs' and 'overhaul'

Since the Insurer admitted liability for the incident and paid a portion of the material damage claim, the dispute over the remaining amount was fundamentally about "how much" was payable (quantum), not "whether" any amount was payable (liability)

The Court noted that the Insurer itself had strongly recommended the overhaul in December 2001 to mitigate its own future risks

Regarding proximate cause, the Court upheld the Arbitrator's factual finding that the engine exhibited excessive vibrations even after limited repairs, leading GE to conclude that the accident likely damaged other internal parts

The Court held that the Insurer failed to prove that "pre-existing conditions" (rust/corrosion) were the cause, especially as the engine was not due for scheduled overhaul

The Court answered Issue 2 by confirming the accident was the proximate cause for the overhaul

The petition under Section 34 was dismissed

The Court held that once a claim is sanctioned in part, non-sanction of the remainder is a quantum dispute unless the entire claim was repudiated in toto at the outset

The award of ₹41,98,12,970/- was upheld, and the deposited amount was ordered to be released to the Respondent after a six-week stay