(Prayer: Petition under Sections 34(2)(a)(iii), 34(2)(a)(iv), 34(2)(b)(i), 34(2) (b)(ii) and 34(2A) of the Arbitration and Conciliation Act, 1996 praying to set aside the award dated 27.10.2025 passed by the learned Arbitrator Hon’ble Mrs.Justice Chitra Venktraman (Retd.,) between the petitioner and the respondent and consequently modify the impugned award to hold that the Claim for Business Interruption claimed by the Respondent is outside the purview of arbitration as mentioned in Clause 12 of the General conditions of the Industrial All Risk Policy No.1814001119P103131495 dated 27.05.2019 and to direct the respondent to pay the cost of the present proceedings.)

1.The petitioner has filed the petition under Section 34 of the Arbitration and Conciliation Act, 1996 [for brevity hereinafter referred to as 'the Act'] against the order passed by the Sole Arbitrator on 27.10.2025 in an application filed under Section 16 of the Act.

2.The Registry raised an objection on 21.11.2025 to the effect that the petition filed under Section 34 of the Act, as against an order passed under Section 16 of the Act is not maintainable. For the above objection raised by the Registry, the learned counsel for the petitioner gave an explanation stating that the order passed by the Arbitral Tribunal is in the nature of an interim award as per Section 31(6) r/w Section 2(c) of the Act and therefore the petition filed under Section 34 is maintainable.

3.Since the Registry was not convinced with the explanation given by the learned counsel for petitioner, the case file was placed before me and I directed the Registry to list the petition under the caption “For Maintainability”.

4.When the matter was listed on 10.12.2025, the respondent was also represented by a counsel who had engaged Mr.Vijay Narayan, learned Senior Counsel. Therefore, this Court thought it fit to first hear both sides on the question of maintainability of the petition filed under Section 34 of the Act, as against an order passed under Section 16 of the Act. Accordingly, the matter was heard at length today and the orders were reserved only on the question of maintainability of this petition.

5.The brief facts, shorn of unnecessary details, are that the respondent had taken an Industrial All Risk Insurance Policy from the petitioner, which covers two kinds of losses viz., Material Damage [MD] and Business Interruption [BI]. There was a fire accident on 07.04.2020 and as a result, the respondent sustained losses and consequently made claims both under MD and BI. Insofar as MD claim is concerned, the surveyor submitted a report and accepted the claim to an extent of nearly Rs.33 Crores even though the respondent had made a higher claim. With respect to the BI claim, the surveyor through a report dated 05.08.2023, rejected the entire claim. Based on this report, the petitioner issued a letter of repudiation dated 03.05.2024.

6.The respondent invoked arbitration through a notice dated 23.05.2024 and made a claim with respect to the quantum under MD claim and the complete rejection of the BI claim which resulted in the repudiation of the claim.

7.The respondent approached this Court and filed Arb.OP(Com.Div).No.319 of 2024 for appointment of a Sole Arbitrator. The petitioner opposed this petition mainly on the ground that repudiation of the claim made by the petitioner cannot be a subject matter of arbitration as per condition 12 of the policy. The said objection was dealt with at length by the learned Single Judge and by an order dated 06.12.2024, the objection was overruled and a Sole Arbitrator was appointed.

8.After the commencement of the Arbitral proceedings, the respondent submitted a statement of claim by making a claim of Rs.14.23 Crores towards MD and Rs.218.61 Crores towards BI.

9.The petitioner filed an application under Section 16 of the Act on the ground that the Arbitration Clause under the policy only empowers the Arbitral Tribunal to hear the disputes on quantum and issue of repudiation cannot be considered by the Arbitral Tribunal.

10.The Arbitral Tribunal vide order dated 27.10.2025, rejected the application. Aggrieved by the same, the present petition has been filed under Section 34 of the Act, mainly on the ground that the order passed by the Arbitral Tribunal is in the nature of an interim award.

11.Heard Mr.Anirudh Krishnan, learned counsel for the petitioner and Mr.Vijay Narayan, learned Senior Counsel for the respondent.

12.The main ground that was urged by the learned counsel for the petitioner is that the order passed by the Sole Arbitrator has virtually sealed the petitioner from relying upon the repudiation letter and the survey report as a defence and such determination of the right of the petitioner, certainly is an interim award in line with Section 31(6) r/w Section 2(c) of the Act. By virtue of such determination of the right of the petitioner, if the same is not put to challenge within the time frame fixed under Section 34(3) of the Act, the petitioner will be foreclosed to raise the challenge in future. It was submitted that if the Arbitral Tribunal, while dealing with the application filed under Section 16 of the Act, had merely rendered a finding on its jurisdiction without going into the merits of the case and rendering a finding on fact, such an order can be challenged only along with the final award. However, since the Arbitral Tribunal has rendered specific findings on merits on the validity of the repudiation letter and the survey report which was the primary defence on the side of the petitioner, it clearly comes within the ambit of an interim award which has to be necessarily put to challenge. To substantiate this submission, the learned counsel for the petitioner relied upon various judgments.

13.The learned Senior Counsel appearing for the respondent submitted that the preliminary objection raised by the petitioner was considered in detail when this Court passed an order under Section 11 of the Act and the same was rejected. Thereafter, the very same preliminary objection was raised before the Arbitral Tribunal and the Arbitral Tribunal has incidentally touched upon the merits of the case, since a finding could not have been reached otherwise. Such an order passed by the Arbitral Tribunal only deals with the issue of arbitrability and it does not assume the character of an interim award. Consequently, the petitioner will have to necessarily await for the final award and challenge the order passed by the Arbitral Tribunal along with the final award. It was submitted that if every other order passed under Section 16 of the Act is put to challenge, it goes against the very objective of the Arbitration Act, which contemplates minimal judicial intervention. To support his submissions, learned Senior Counsel relied upon various judgments.

14.This Court need not enter into the merits of the case and the only issue that has to be considered at the stage of maintainability is as to whether the order passed by the Arbitral Tribunal on 27.10.2025, in an application filed under Section 16 of the Act, is an interim award under Section 31(6) r/w Section 2(c) of the Act. If the order satisfies this requirement, a petition under Section 34 of the Act is maintainable. If not, this petition is liable to be rejected on the ground of maintainability and the petitioner can challenge the order along with the final award, if they are aggrieved.

15.This Court must consider as to what order will constitute an interim award.

16.The Arbitration Act does not define an interim award and an Arbitral Award is defined under Section 2(1)(c) of the Act, to include an interim award. Section 31(6) of the Act enables an Arbitral Tribunal to pronounce an interim Arbitral Award on any matter with respect to which the Arbitral Tribunal may make a final Arbitral Award.

17.The Hon’ble Mr Justice Senthilkumar Ramamoorthy dealt with this issue in detail in Arb.OP(Com.Div).No.289 of 2021 while passing an order on 13.9.2022 and the relevant portions are extracted hereunder:

                   18. This leads to the question as to what types of order qualify as interim arbitral awards. In IFFCO, the Hon'ble Supreme Court concluded that an order deciding the question of limitation qualifies as an interim arbitral award because the said question was determined finally. Learned counsel for the respondents contended with considerable vim and vigour that the expression interim arbitral award should be construed narrowly and that procedural orders should be excluded from its ambit. In principle, I agree. An arbitral tribunal may pass procedural orders relating to the filing of and amendment of pleadings, recording of evidence, framing of issues, submission of written and oral arguments and the like. If such procedural orders are subject to challenge under Section 34 of the Arbitration Act, it would undoubtedly lead to the filing of a large number of proceedings at the pre-final award stage and thereby derail the continued conduct of arbitral proceedings. There is no doubt that such an approach would defeat the object and purpose of the Arbitration Act and contravene Section 5 thereof.

                   19. While providing for light-touch regulation and considerable party autonomy, the Arbitration Act provides for judicial intervention in specified circumstances and for specified purposes. In the context of Section 34, a challenge is permissible provided the order is an interim or final arbitral award because both types of award fall within the scope of Section 2(1)(c). The self-evident follow-up question is: on what criteria does one identify an interim arbitral award? This is best understood by illustrations. The Arbitral Tribunal may frame issues or points for determination and choose to decide one or more such issues as preliminary issues. For instance, the issue relating to limitation or the admissibility of claims may be decided as a preliminary issue. Similarly, it is conceivable that an arbitral tribunal may choose to decide one or more claims or one or more counter claims before deciding the other claims or counter claims, as the case may be. As long as the decision of the arbitral tribunal in respect of any issue framed by the said tribunal or any claim or counter claim presented before such tribunal is a final and not interim decision, in my view, it qualifies as an interim arbitral award which may be challenged by way of a petition under Section 34. What about a decision by which permission to lodge a claim or counter claim is rejected? Because such decision has the effect of rejecting the claim or counter claim at the threshold, in my view, the decision would qualify as an interim arbitral award. In the converse situation, however, where one party is permitted to raise the claim or counter claim, there is no finality inasmuch as the said claim or counter claim may be opposed and contested by the counter party, including by challenging the final award. Therefore, such decision of the arbitral tribunal would not qualify as an interim award. In drawing this conclusion, I draw inspiration from the judgment of the Supreme Court in Chintels India Limited v. Bhayana Builders Private Limited (2021) 4 SCC 602, where it was held that an order rejecting an application to condone delay in filing a Section 34 petition, in contrast to an order by which delay is condoned, qualifies as an order rejecting an arbitral award because it shuts out the petitioner at the threshold and has the effect of disabling a challenge to the award. Section 16 of the Arbitration Act also illustrates this principle by providing for an appeal if the jurisdictional challenge is successful, in view of the consequent conclusion of proceedings, but not providing for such appeal if such challenge is rejected.

                   20. What about the rejection of a request for amendment of pleadings so as to introduce new pleadings or enlarge or modify a claim or counter claim? This is a hard question because the rejection of such request also shuts the door on the party seeking the amendment and the only recourse is by way of challenging the award. The Arbitration Act deals with such situation by providing for a liberal approach to a request for amendment in Section 23(3), albeit subject to the discretion to reject for delay. While the legislative mechanism is not fool proof; on balance, the opt-out justifies non-intervention in this situation except where the amendment relates to the enlargement or modification of a claim or counter claim. In my view, the limited carve-out for amendments relating to claims or counter claims is justified by their centrality in the adjudication process. Would an order refusing to frame an issue or refusing to admit specific oral or documentary evidence qualify as an interim arbitral award? Subject to party autonomy, the arbitral tribunal is conferred with considerable discretion in the conduct of proceedings, as evidenced by provisions such as Section 19. The legislative mechanism to deal with grievances, in such situations, is that a successful challenge may be mounted under Section 34 against the final award, if the aggrieved party can establish that such decisions incapacitated it or rendered such party unable to present its case or resulted in vital evidence not being considered. Undoubtedly, this could lead to parties being driven to de novo arbitration in the odd case and cause prejudice. Given the legislative mandate of limited judicial intervention in arbitral proceedings, in my view, on balance, notwithstanding the likelihood of prejudice in a small proportion of cases, such decisions do not qualify as interim awards but may be challenged in course of challenging the final arbitral award on applicable grounds under Section 34. The above principles should be applied to this case.

18.In the above judgment, the learned Single Judge took note of the judgment of the Apex Court in Indian Farmers Fertilizer Cooperative Limited v. Bhadra Products reported in (2018) 2 SCC 534. This judgment of the Apex Court is an authority to determine as to when an order can be construed as an interim award. The Apex Court after considering all the earlier judgments came to a conclusion that if the order is intended to finally determine the rights of the parties, it will have the force of a complete award and will have effect even after a final award is delivered. Thus, the Court must see if the Arbitral Tribunal has merely decided the arbitrability of the issue or has delved deep into the merits of the claim and rendered a determinative finding. In the former, the same cannot be considered as an interim award and it can only be challenged along with the final award. In the later, it assumes the character of an interim award and hence has to be challenged then and there since the time starts ticking under Section 34(3) of the Act. The Apex Court, infact requested the Parliament to consider amending Section 34 of the Act so as to consolidate all interim orders together with the final Arbitral Award, so that one challenge under Section 34 can be made after the delivery of the final Arbitral Award instead of making piecemeal challenges. Like always, it has fallen into deaf ears.

19.It is not necessary for this Court to deal with all the judgments that were relied upon by both sides, since the crux of the issue has been captured in the above discussion. Hence, what is left is to see if the order passed by the Arbitral Tribunal satisfies the requirement of an interim award.

20.The petitioner filed an application under Section 16 of the Act on the ground that the Arbitration Clause in the policy only empowers the Arbitral Tribunal to hear disputes on quantum and the issue of repudiation cannot be considered and accordingly, the claim made by the respondent under BI is not arbitrable.

21.The Arbitral Tribunal while dealing with the above preliminary objection had various options. The Arbitral Tribunal could have taken a decision to deal with this preliminary objection at the end after recording the evidence, while passing the award. The other option that was available to the Arbitral Tribunal was to merely render a finding on considering the materials that the issue is arbitrable and that the relevant Clause does not come in the way of the Arbitral Tribunal considering the BI claim made by the respondent. If the Arbitral Tribunal had resorted to any of these options certainly the same could not have been questioned under Section 34 of the Act, since such an order does not satisfy the requirement of an interim award. In other words, if the order had merely touched upon the jurisdiction simpliciter, it could not have been challenged and such order could have been challenged only at the time of challenging the final award. In the case in hand, the Arbitral Tribunal while dealing with the preliminary objections raised by the petitioner went deep into various materials and appreciated those materials and rendered a finding on merits to the effect that the stand taken by the petitioner that the dispute on BI claim relatable to the liability aspect under the policy, stands rejected.

22.A close reading of the findings starting from paragraphs 29 and which runs upto paragraph 58, has not only touched upon the issue of arbitrability but it has virtually knocked off the defence taken by the petitioner relying upon the survey report for the repudiation of the BI claim. If the very defence of the petitioner is completely taken away and the petitioner can no longer rely upon the survey report dated 05.08.2023, rejecting the BI claim and which resulted in the letter of repudiation dated 03.05.2024, due to the findings rendered on merits, obviously the order passed by the Arbitral Tribunal will assume the character of an interim award.

23.To understand the issue in simple terms, if the Arbitral Tribunal had held that the relevant Clause in the policy does not stand in the way of the Arbitral Tribunal to consider the BI claim, atleast the petitioner would have justified as to why the claim was repudiated by relying upon the report of the surveyor. In such a scenario, the defence that is available to the petitioner could have remained intact. However, the Arbitral Tribunal by rendering findings on merits has taken away such defence and what will be left is only the quantification of the amount without considering as to whether the respondent will be entitled for the BI claim on the various grounds raised by the petitioner while repudiating the claim. If this order which amounts to an interim award is not put to challenge, it will attain finality and the petitioner will face a situation where the petitioner cannot challenge the order at a later point of time, if ultimately the award goes against the petitioner. This Court is also taking into consideration the judgment of the Apex Court in Mc Dermott International Inc. v. Burn Standard Co. Ltd., reported in (2006) 11 SCC 181. [Refer paragraphs 68 to 70].

24.In the light of the above discussion, this Court holds that the order passed by the Arbitral Tribunal dated 27.10.2025 in the application filed under Section 16 of the Act, has assumed the character of an interim award and hence the present petition filed under Section 34 of the Act is maintainable.

25.The Registry is directed to number the petition and post it for admission, if it is otherwise in order.