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1974 Supreme(Cal) 110
HIGH COURT OF CALCUTTA
SABYASACHI MUKHERJI
PUNAM CHAND JAIN - Appellant
Versus
GENERAL ASSURANCE SOCIETY LTD. - Respondent
Special 1 Of 1974
Decided On : APRIL 25, 1974
An arbitrator has jurisdiction to decide whether a claim has become time-barred, even if the arbitration agreement does not specifically provide for such a decision.
Headnote:
ARBITRATION ACT, 1940 - SECTION 20 - APPLICATION FOR FILING OF ARBITRATION AGREEMENT - INSURANCE POLICY - REPUDIATION OF CLAIM - REFERENCE TO ARBITRATION - JURISDICTION OF ARBITRATOR TO DECIDE LIMITATION - NOMINATION OF ARBITRATORS.
Fact of the Case:
An insurance company repudiated a claim for loss caused by burglary. The insured referred the matter to arbitration after three months. The insurance company objected to the application for filing of the arbitration agreement, arguing that the claim was barred by limitation and had been abandoned.
Finding of the Court:
The court held that the arbitrator had jurisdiction to decide whether the claim had become time-barred. The court also directed the insurance company to nominate its arbitrator within two months, failing which the arbitration would proceed in accordance with the arbitration agreement.
Issues: 1. Whether the arbitrator had jurisdiction to decide whether the claim had become time-barred. 2. Whether the State Bank of Bikaner, Jaipur was a necessary party to the arbitration.
Ratio Decidendi: 1. The arbitration clause in the insurance policy gave the arbitrator wide powers to decide all differences arising between the parties. This included the power to decide whether the claim had become time-barred. 2. The State Bank of Bikaner, Jaipur was not a necessary party to the arbitration because it was not a party to the insurance contract.
Final Decision: The court ordered the insurance company to nominate its arbitrator within two months, failing which the arbitration would proceed in accordance with the arbitration agreement. The court also directed that the costs of the application would be costs in the arbitration proceeding.
( 1 ) THIS is an application under Section 20 of the Arbitration Act, 1940 for filing of an arbitration agreement. It appears that there was a policy of Insurance dated the 7th April, 1972, covering loss caused by burglary and house-breaking. It is alleged that on the 19th March, 1973, a burglary took place and there was a loss to the goods in question covered by the Policy in this application. The defendant company on the 2nd May, 1973, repudiated the said claim. The said repudiation was reiterated by a letter dated the 14th July, 1973. On the 24th October, 1973, reference was made to arbitration under the clause. The said Policy contained, inter alia, the following:" (a) Clause-3. On the happening of any loss or damage the insured shall immediately after the same has come to his knowledge give notice thereof in writing to the Society detailing the circumstances of the case and shall within seven days thereafter at his own expense, deliver to the Society a claim in writing containing as particular an account as may be reasonably practicable of all the articles lost or damaged and the amount of the loss or damage in respect thereof respectively, having regard to their value at the time of loss or damage, and also of the damage (if any) to the premises. The insured shall also produce and give to the society when, where and to whom and in manner required by them, and at his own expense, all such books of account, vouchers, proofs and information as may be reasonably required, and he shall be bound to satisfy the society by such reasonable evidence as they may require that the loss or damage claimed for has actually arisen from one of the causes insured against, and the property in respect of which a claim is made is not merely mislaid or missing. (b) Clause-10: All differences arising between the Society and the insured or the Claimant hereunder shall be referred to the decision of an arbitrator to be appointed in writing by the parties in differences 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. Before entering upon the reference, the arbitrators shall appoint an Umpire and in case of disagreement between the arbitrators reference shall be made to the Umpire whose decision shall be final. The arbitration shall take place in Calcutta or in such other place as the Society shall at their discretion appoint. The obtaining of an award shall be a condition precedent to any liability or right of action against the society in respect of any such difference. If the Society shall disclaim liability to the insured for any claim hereunder and such claim shall not" within three 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 thereafter no right shall be enforceable and nothing shall be recoverable hereunder. (c) Jurisdiction Clause: It is hereby agreed that in case of any claim arising in respect of the property hereby insured the same shall be settled and paid in Calcutta and the entire cause of action shall also be deemed to arise in Calcutta and further that all arbitration or legal proceedings in respect of any such claim shall be held or be instituted in a competent Court in the City of Calcutta only. "
( 2 ) THE first point is that the General Assurance Society Ltd. has merged with the National Insurance, Company Ltd. Therefore, the application is not maintainable. It appears to me that this is a formal objection in the facts of this case. The National Insurance Co. Ltd. is really appearing before me and I accordingly direct that in place of the defendant No. 1 the name of National Insurance Co. Ltd, be substituted. The respondent has no objection to the same. The second point in opposition to this application was that the claim had become barred by limitation and as such th
