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Assam Bengal Roadways Pvt. Ltd. Vs. the New India Assurance Company Ltd. and anr. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtKolkata High Court
Decided On
Case NumberSpecial No. 40 of 1973
Judge
Reported inAIR1975Cal322
ActsArbitration Act, 1940 - Section 20
AppellantAssam Bengal Roadways Pvt. Ltd.
RespondentThe New India Assurance Company Ltd. and anr.
DispositionApplication dismissed
Cases ReferredMaharaj Singh v. Vulcan Insurance Co. Ltd.
Excerpt:
- .....the goods suffered loss or damage due to cyclonic weather while in transit. the insurance policy covered loss by pilferage, theft and water damage. when the claim was made, the insurance company completely repudiated the liability contending that loss, if any, was not covered by the policy of insurance. the said policy of insurance contains the following clause : --'if any dispute arising out of this policy relates to the quantum of claim the same shall be referred to the decision of an arbitrator to be appointed in writing by the parties in difference or if they cannot agree upon a single arbitrator to the decision of two arbitrators one to be appointed in writing by each of the parties within one calendar month after having been required in writing so to do by either of the.....
Judgment:
ORDER

Sabyasachi Mukharji, J.

1. This is an application under Section 20 of the Arbitration Act, 1940. The pjaintiff claims reference to arbitration in respect of a marine policy for the loss suffered to the goods. According to the plaintiff the goods suffered loss or damage due to cyclonic weather while in transit. The insurance policy covered loss by pilferage, theft and water damage. When the claim was made, the insurance company completely repudiated the liability contending that loss, if any, was not covered by the policy of insurance. The said policy of insurance contains the following clause : --

'If any dispute arising out of this policy relates to the quantum of claim the same shall be referred to the decision of an arbitrator to be appointed in writing by the parties in difference or if they cannot agree upon a single arbitrator to the decision of two arbitrators one to be appointed in writing by each of the parties within one calendar month after having been required in writing so to do by either of the parties or in case the arbitrators do not agree, by an umpire appointed in writing by the arbitrators before entering upon the reference. The umpire shall sit with the arbitrators and preside at their meetings and the making of an award shall be a condition precedent to any right of action against the company. If the company shall disclaim liability to the insured for any claim hereunder and such claim shall not within twelve calendar months from the date of such disclaimer have been referred to arbitration under the provision herein contained, then the claim shall for all purposes be deemed to have been abandoned and shall not thereafter be recoverable hereunder. The venue of such arbitration shall be the place of issue of the policy.'

2. The question, is, whether in the circumstances of the case the plaintiff is entitled to have the arbitration agreement filed under Section 20 of the Arbitration Act and reference made. Clauses like the one noted above generally receive strict construction as was observed by S. B. Sinha, J. in the case of Ganapatrai Gupta v. Moody Bros. Ltd., (1950) 85 Cal LJ 136. The question, is, whether in the circumstances that have happened, i. e. when the insurance company is contending that loss, if any, was not covered by the policy risk undertaken by the insurance, the arbitration clause is wide enough to include such a dispute. I am of the opinion that it is clearly not covered. If the dispute is regarding quantum then and then only can there be a reference under the clause in the agreement as referred to hereinbefore. But if, as in this case, the dispute is whether loss is at all covered by the policy of insurance, then in my opinion, in view of the limited jurisdiction conferred upon the arbitrator by the clause referred to above, the clause cannot be attracted. Support for this view may be obtained from the decisions in the case of Jureidini v. National British and Irish Millers Insurance Co. Ltd., 1915 AC 499, decision of the Bombay High Court in the case of Eagle Star & British Dominions Insurance Co. v. Dinanath, AIR 1923 Bom 249 and the decision of this Court in the case of Nityananda Dutta v. Caledonian Insurance Co., (1968) 72 Cal WN 733. My attention was drawn by counsel for the respondent to the decision of the Delhi High Court in the case of Maharaj Singh v. Vulcan Insurance Co. Ltd., : AIR1972Delhi182 . There the clause 18 of the agreement was in the following terms: 'If any difference arises as to the amount of any loss or damage such difference shall independently of all other clauses be referred to the decision of an arbitrator.........'. The Court held that the contention that this clause would not apply when the insurance company had repudiated the claim in toto could not be accepted. There the court was concerned with the question whether there was any loss at all, the Court was not concerned with the dispute whether the loss was covered by the policy of insurance or not as in this case. Repudiation of claim can be on various grounds. Repudiation on the ground that no loss has been suffered or about the quantum of loss suffered can certainly be the subject-matter of adjudication in a clause of the present type. Where, however, the repudiation is on the ground that loss, if any, to the goods is not covered by the policy, then such a dispute in view of the terms of the arbitration clause cannot, in my opinion, be the subject-matter of reference to the arbitration. In any case, no dispute has yet arisen as to the quantum of loss.

3. In the aforesaid view of the matter, this application fails and is, accordingly, dismissed.

4. In the facts and circumstances of this case, however, I make no order as to cost.

5. The plaintiff is permitted to file a copy of Insurance Policy.


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