1974 Supreme(Cal) 12

HIGH COURT OF CALCUTTA
SALIL KUMAR ROY CHOWDHURY
PLANTERS AIRWAYS PVT. LTD. - Appellant
Versus
STERLING GENERAL INSURANCE CO. LTD. - Respondent
Award Case 181  Of  1973
Decided On : JANUARY 14, 1974

Headnote:

ARBITRATION - Extension of time - Section 37(4) of the Arbitration Act, 1940 - Whether the petitioner is entitled to extension of time to refer the matter to arbitration - Whether the petitioner is guilty of fraud in making a false case and the respondent is entitled to avoid the contract under Clause 9 of the said policy of Insurance - Whether undue hardship would be caused to the petitioner unless the time for appointment of the arbitrator is not extended as prayed for in this application.

Fact of the Case:

The petitioner, a common carrier of goods, took out various Freight Policies of insurance with the respondent. In or about June, 1971, the petitioner alleged to have received from its various customers consignment of 185 package of general merchandise alleged to be of the total value of Rs. 1,10,000/- (approximately) for transportation of the same from Calcutta to different places in Assam and Tripura. It is alleged that the petitioner informed the respondent of the said consignment of goods and declared the value thereof in terms of the Freight Policy. The petitioner alleged to have also paid premium on the value of the said consignment of goods. The petitioner further allege that the said consignment of 185 packages for transportation from Calcutta to Gauhati was carried by Truck No. WGH 8251 on June, 1971. It is alleged by the petitioner that the next day the petitioner was informed by the owner of the said Motor Truck that after the said truck had reached Barasat on the night of 29th of June, 1971 there was a robbery and neither the said vehicle nor the cargo on board could be traced out. On the 1st of July, 1971 and 21st of September, 1971 the petitioner lodged a claim with the respondent in respect of the said loss covered by the Freight Policy referred to above. It is alleged that thereafter various correspondence were exchanged between the petitioner on the one hand and the respondent on the other regarding co-operation of the petitioner in the matter. It is alleged that ultimately on the 16th of February, 1973, the respondent finally rejected the claim of the petitioner and refused to accept any liability for the alleged loss. Thereafter on the 30th of March, 1973, the petitioner wrote a letter to the respondent asking for clarification of the letter dated the 16th of February, 1973 and to know under what conditions or terms of the contract the petitioner's claim has not been admitted. On or about 30th May, 1973 the respondent informed the petitioner that there was nothing further to add to its letter dated the 16th of February, 1973. Thereafter, it is alleged that the petitioner handed over the papers to their Solicitor in the first week of June, 1973 for taking necessary action for reference of the disputes to arbitration in terms of the arbitration clause and thereafter the Solicitor of the petitioner considered the position and gave a written opinion on or about 15th of June, 1973 and was advised to take Counsel's opinion on the question. A copy of the said opinion of the Counsel was obtained on the 18th of July, 1973 as alleged by the petitioner and thereafter after making all diligent efforts the notice of motion of this application was taken out on the 17th of August, 1973.

Finding of the Court:

The court held that the petitioner is entitled to extension of time to refer the matter to arbitration. The court further held that the petitioner is not guilty of fraud in making a false case and the respondent is not entitled to avoid the contract under Clause 9 of the said policy of Insurance. The court also held that undue hardship would be caused to the petitioner unless the time for appointment of the arbitrator is not extended as prayed for in this application.

Issues: Whether the petitioner is entitled to extension of time to refer the matter to arbitration.

Ratio Decidendi: The court held that the petitioner is entitled to extension of time to refer the matter to arbitration as the petitioner had taken diligent steps by handing over the papers to the Solicitor and counsel for preparing the necessary petition for this application and there is only about three months' delay from the date of expiry on the face of the petition but that has been clearly and satisfactorily explained in the petition and also in the affidavit-in-reply filed by the petitioner. The principle as laid down in the English decision which the court cited before seems to also apply in the facts of this case, where the court is bound to hold that the petitioner is not guilty of any deliberate delay in not preferring the claim before the arbitrator in terms of the said clause 12 of the Insurance Policy. Moreover, a large sum had already been paid by the petitioner to the claimant of the goods which were lost in the alleged theft and robbery which occurred on the 29th June, 1971 of which due notice was given to the respondent. Once, again, the court held that it is fully satisfied that the delay in making this application has been caused beyond the control of the petitioner and has been satisfactorily explained in the affidavits filed in this application.

Final Decision: The court allowed the application and extended the time for referring the disputes of the parties to arbitration in terms of the arbitration clause in the contract.