In 2003, Essar had made an insurance claim of Rs 886 crore, which the insurance company rejected, prompting the former to file a civil suit. Later, the two parties agreed for an early disposal of the suit and moved the Lok Adalat.

On Sunday, the court directed three arbitrators to come to a conclusion about the amount to be paid within a period of 12 months. The arbitrators include former Chief Justice of India A M Ahmedi for Essar, and a London-based advocate, Michael Blake for United Insurance, while a third arbitrator is yet to be appointed.

Those presiding over the Lok Adalat included Vadodara Principal District Judge K K Bhatt, senior Vadodara judges and Baroda Bar Association (BBA) president Narendra Tiwari.

Bhatt directed the three arbitrators to go over the case minutely over the next 12 months and then come to a conclusion about the amount that the insurance company has to pay to Essar. Both parties were reportedly amenable to the decision.

Representing Essar, advocate Nikhil Shah said: “In 1998, an Essar plant in Jamnagar was completely destroyed in a cyclone. However, the insurance policy covered this and Essar made a claim of Rs 886 crore, but the insurance company agreed to pay only Rs 269 crore.”

Advocate Anand Mazumdar, also representing Essar, said the insurance policy covered lost recovery, third party liability and advance loss of profit.

“Though the insurance policy covered everything, they rejected the claim. The civil suit was for Rs 866 crore, the principal amount as well as interest. The total came to Rs 1,757.83 crore,” Mazumdar said.

Reacting to the decision, Tiwari said: “This is no small amount. It is a good thing that the two parties agreed to go to the Lok Adalat for an early disposal even though the stakes were so high.”