Vadodara, Apr 21 (UNI) Oil major Essar withdrew its Rs 1757 crore lawsuit against United India Insurance (UII), after the two companies agreed in a Vadodara Lok Adalat to settle the largest ever insurance claim through arbitration.
The truce was reached between Essar and UII in the Lok Adalat presided over by Vadodara Principal District Judge K K Bhatt here yesterday.
Essar had dragged the insurance company to the court in 2003, after the latter offered Essar Rs 269 crore as against its original claim of Rs 886 crore for the damages that its Jamnagar plant has suffered in the 1998 cyclone in Saurashtra.
While former Chief Justice of India A M Ahmadi was appointed as the arbitrator for Essar, United India Insurance company has opted for London-based lawyer Michael Blank as its arbitrator. A neutral arbitrator will be appointed by the court soon.
Allowing Essar to withdraw its civil suit against UII, the court ordered that the arbitrators will settle the dispute over insurance claim amount within a period of one year and their decision will be binding on both the parties.
Essar's Jamnagar project, which was supposed to be completed in 1999, had reportedly suffered extensive damage in the 1998 cyclone in the region. Advocate Nikhil Shah, who appeared for Essar, said the company which was insured with UII in 1996 for Rs 1,072 crores, made a claim of Rs 886 crore from UII towards loss of profit, third party liability and payment of compensation.
Following non-settlement of the insurance claim by UII for years, Essar later revised its claim to Rs 1,757 crore, including interest, and finally filed a civil suit against the insurance company in 2003, after it decided not to pay more than Rs 269 crore to settle the claim.
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