1985 Supreme(Cal) 70

High Court Of Calcutta
R. N. PYNE, PRABIR KUMAR MAJUMDAR
ORIENTAL F.AND G.INSURANCE CO.LTD. - Appellant
Versus
MURLIDHAR GOPIKISSEN PVT.LTD. - Respondent
Appeal 249  Of  1974
Decided On : 02/22/1985

Headnote:

INSURANCE - FIRE AND GENERAL - LOSS OF CASH - ARBITRATION - UMPIRE - ENTERING ON REFERENCE - NOTICE TO PARTIES - HEARING - MISCONDUCT - AWARD - VALIDITY - LIMITATION - JURISDICTION.

Fact of the Case:

The respondent, a private limited company, took out an insurance policy with the appellant, an insurance company, against loss of cash or bank-notes (otherwise than by infidelity) of its employees. The policy provided that any difference arising out of the policy 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 of 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 making 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 provisions herein contained then the claim shall for all purposes be deemed to have been abandoned and shall not thereafter be recoverable. On 6th March, 1964, the respondent wrote to the appellant informing that respondent's Zamadar while proceeding with cash to Balasore at about 1-15 P. M. at Howrah Station lost Rs. 20,000/- and the matter was reported to the Howrah Police. Thereafter, the respondent on 12th March, 1964 filed claim before the appellant. The appellant repudiated the claim on 12th November, 1965. On the 29th March, 1966 the respondent's solicitor wrote a letter to the appellant reiterating the claim and on 25th May, 1966 the appellant again repudiated the claim on various grounds. Thereafter, on 11th September, 1966 the respondent wrote a letter to the appellant intimating that as the appellant had failed to settle and pay the claim the respondent desired to refer the matter and suggested the name of Shri Ajoy Kumar Mitra, Barrister-at-Law as arbitrator. The appellant's solicitor replied to the said letter stating that the appellant was not willing to agree to the appointment of Shri Ajoy Kumar Mitra and the appellant appointed Shri Nihar Ranjan Majumdar as arbitrator in terms of the arbitration clause. Thereafter, the respondent on the 27th October, 1966 wrote a letter to the appellant's solicitor m/s. M. L. Khemka and Co. stating that the respondent appointed Shri Ajoy Kumar Mitra as its arbitrator and requested that the appellant's arbitrator should contact Shri Mitra and proceed with the reference. On the 9th December, 1966 the arbitrators intimated that they had appointed Mr. Amal Chandra Sarkar, Barrister-at-Law as the umpire and intimated the time and place of the next sitting. It is stated that on the 14th December, 1966 a meeting was held and directions were given for filing of the statements and on the 23rd January, 1967 the respondent filed the statement of case. The appellant filed its counter statement on 24th January, 1967. On the 1st September, 1967 the appellant filed an application for amendment of its counter statement of facts. This was kept on the file by the arbitrators to be considered later. The arbitration meetings were held between September and August 19, 1969 and the witnesses were examined. The matter was heard for about 57 days before the joint arbitrators and the umpire presided over the arbitration proceedings in terms of the arbitration clause. In the meetings before the joint arbitrators presided over by the umpire various witnesses of both parties were examined and cross-examined. Arguments in great detail were made on behalf of both the parties. The appellant on 20th August 1969 received a copy of the letter dated 19th August, 1969 written by the joint arbitrators to the umpire in which they informed that they could not agree and requested the umpire to proceed to make the award. On 21st August, 1969 the umpire wrote letters to the attorneys for the parties giving notice that he had published his award. The appellant made an application challenging the propriety and validity of the award made by the umpire and for setting aside of the same. Subsequently, the award was filed in this court and the appellant made an application for setting aside of the award in the court of the first instance out of which this appeal has arisen.

Finding of the Court:

The Court found that the umpire had entered on the reference before making the award, that the umpire did not misconduct the proceeding which had the effect of vitiating his award, that the claim of the respondent was not barred by limitation, that the questions regarding limitation and jurisdiction as taken by the appellant (the petitioner in the court of the first instance) were well within the jurisdiction of the arbitrators and umpire to decide and that the decision of the arbitrators and umpire on the question of limitation or whether it was barred by limitation would not, in the opinion of the Court, vest the Court with the authority to set aside the decision unless it can be shown that the arbitrators or the umpire had proceeded either on an erroneous principle of law or on a basis which was perverse or unsustainable or could not be sustained by any reasonable man.

Issues: 1. Whether the umpire entered on the reference before making the award? 2. Whether the umpire misconducted the proceeding which had the effect of vitiating his award? 3. Whether the claim of the respondent was barred by limitation? 4. Whether the questions regarding limitation and jurisdiction as taken by the appellant (the petitioner in the court of the first instance) were well within the jurisdiction of the arbitrators and umpire to decide?

Ratio Decidendi: 1. The umpire enters on the reference when he first applies his mind to the dispute or controversy before him depending on the facts and circumstances of the case. 2. The umpire did not misconduct the proceeding which had the effect of vitiating his award. 3. The claim of the respondent was not barred by limitation. 4. The questions regarding limitation and jurisdiction as taken by the appellant (the petitioner in the court of the first instance) were well within the jurisdiction of the arbitrators and umpire to decide.

Final Decision: Appeal dismissed.