1997 Supreme(Del) 889

High Court Of Delhi
RAMSONS SOUTHEND - Appellant
Versus
DIVISIONAL MANAGER, NEW INDIA ASSURANCE COMPANY LIMITED: - Respondent
REGULAR FIRST APPEAL 289 of 1992
Decided On : 11/01/1997

Headnote:Contract Act, 1872 - Section 28 — Restraint on legal proceedings — Prescription of limitation by contract-Validity of — In the circumstances the clause barring suit after the period of 12 months deeming it to have been abandoned, held to be unenforceable.

       Held:

       Clause 9 was never intended to violate provisions of Section 28 of the Contract Act. If we treat Clause 9 simply as an arbitration clause, then Exception I to Section 28 of the Contract Act relating to saving of contract to refer to arbitration dispute that may arise would protect the said clause. In case we treat it as a contract extinguishing right to enforce any liability under the insurance cover, then again the provision under Clause 9 would not be hit by Section 28 of the Contract Act. It is evident that first part of Clause 9 refers to arbitration in case of difference as to quantum to be paid under the policy. Vie second part clearly provides that no difference or dispute shall be referable to arbitration if the Company has disputed and not accepted liability under or in respect of the said policy. Thus, the second part excludes possibility of reference if the Company has disputed or not accepted liability under or in respect of the policy. In part three, it expressly stipulates and declares that "it shall be condition precedent to any right of action or suit upon this policy that the award by such Arbitrator, Arbitrators or Umpire of the loss or damage shall be first obtained". Without fulfillling this condition in absence of any disclaimer no suit could be filed without seeking arbitration meaning thereby that the right to suit does not arise and cause of action does not exist (ill this condition is fulfillled. This is a condition precedent. In so far as the fourth part is concerned, if it is to be read as part and parcel of the entire Clause 9 and due emphasis is laid on the words "also", "further" "hereunder" "then" and the phrase "then the claim shall for all purposes be deemed to have been abandoned and shall not thereafter be recoverable hereunder". If due emphasis is given to words "also", "further" and "hereunder", it would have to be held that this part is confined to arbitration proceedings as part and parcel of Clause 9. Then, it would not be hit by Section 28 of the Contract Act. What militates against this kind of interpretation is that this part seeks that the insured must make his claim "the subject matter of a suit in a Court of law" and if it is not made, "then the claim shall for all purposes be deemed to have been abandoned and shall not thereafter be recoverable hereunder". In these conditions it is to be made a subject-matter of a suit in a Court of law, meaning thereby that the suit has to be filed. It has further to be read Along with part 2, which provides an exception to the arbitration clause in case of dispute or non-acceptance of liability under the policy. In the case of disclaimer of liability, the matter would not be referred to arbitration, and if there is not reference to arbitration in part 4 of Clause 9 if there is specific reference to make the claim subject-matter of a suit in Court of law, then it appears difficult to accept . the proposition that in part 4 the assertion of right to claim arbitration is only referred to and only that would be deemed to be abandoned. Moreover, if this part related to reference to arbitration then the term reference and phrase "shall not thereafter be referred to" or "referable to arbitration hereunder" would have been used and "not recoverable hereunder". Recovery could be of the amount of the claim alone and not of the claim in arbitration. Should it mean, thereforee, that part 4 is hit by Section 28 of the Contract Law.

       It may be mentioned that this pan 4 proceeds to provide that to keep the right alive the suit was also required to be filed within a period of one year. Thus, Clause 9 bars, in case of disclaimer of the liability under the insurance cover, firstly, the right to enforce arbitration; and secondly, prescribes period of filing the suit within a period of one year also.

       It is further notable that the abandonment itselfs based on the restriction of one years period provided by fourth part of Clause 9. Consequently, it intends to prescribe a period of limitation for filing the suit from the date of disclaimer in violation of Section 28 and accordingly it is hit by Section 28 of the Contract Act. Part 4 provides two kinds of consequences in case of disclaimer of liability and non filing of suit within 12 calendar months from the date of such disclaimer, (i) then the claim shall for all purposes be deemed to have been abandoned; (ii) the claim shall not thereafter be recoverable. No party would be forced to abandon his claim, without express consent or conduct, by a deeming provision to make His claim unenforceable.

       Evidence Act, 1872 - Section 114 — Presumption of delivery of post — Scope of — It cannot be presumed that registered letter dispatched from same city can be delivered on the same day.

       Under Section 114 of the Indian Evidence Act "The Court may presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, Human conduct and public and private business, with reference to the facts of the particular case". But, would we raise a presumption that a Regd. AD letter sent on 19.1.1984 was delivered on the same date? We feel that this has to be answered in an emphatic "No". Having due regard to common cause of natural events and postal business, in their relation to the facts of this case, it could not be expected that the registered letter would Have been delivered on the same day. In Delhi we may dream and aspire for such efficient service, but the fact remains that it cannot be delivered on the same day.

       General Clauses Act, 1897 - Section 9 — Commencement and termination of time — Computation of — The provision applies only to Central Acts and Regulations — It has no application on ordinary terms of contract — Ordinarily contract would not be interpreted with application of the Act though in appropriate case its principles can be extended.

       Limitation Act, 1963 - Article 44(b) — Claim of insurance — Denial by insurer — Suit filed within three years from the date of repudiation of claim is within limitation. It is evident that Article 44(b) of the Limitation Act, 1963 provides two kinds of cases. In the first case, date from which period of 3 years begins to run is the date of the occurrence of the loss. This clause would apply only to those cases where the claim under the policy is not denied. Second clause provides for period of time in cases where the claim is repudiated and in such cases the period starts running from the date of disclaimer or repudiation and expires after a period of 3 years from that date.

       Since incident causing loss to the appellant took place on 16th April, 1983 and the suit was filed on 18th January, 1985, it is within 3 years. Applying the second part of Article 44(b), since claim was denied, according to the defendant, on 19th January, 1984, it is within 3 years.