The main legal point established in the judgment is the interpretation and applicability of the insurance policy conditions, particularly in determining the liability of the respondent Company as a bailee of the motor-car.

1. N. R. Srinivasa Iyer hereinafter called 'the ptaintiff'-sued the respondent Company in the Court of the Subordinate Judge, Trichur, for a decree for Rs. 7,000/- being the value of his motor-car which was destroyed by fire on July 10, 1953, when it was in the possession of the agent of the respondent company. The Trial Court decreed the plaintiff's suit. In appeal to the High Court of Kerala the decree was reversed, and the plaintiff's suit was dismissed. With special leave the plaintiff has appealed to this Court.

2. The respondent Company which carries on the business of fire and general insurance insured the plaintiff's motor-car No. T. C. Q-1 against loss or damage under "a comprehensive policy" for the period March 1, 1952 to February 28, 1953. The relevant conditions of the policy were conditions Nos. 3, 7 & 8:

3 "The Company may at its own option repair, reinstate or replace the motor-car of part thereof and/or its accessories or may pay in cash the amount of the loss or damage

xx

7 "All differences arising out of this 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 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 provisions herein contained then the claim shall for all purposes be deemed to have been abandoned and shall not thereafter be recoverable here

under.

8. "The due observance and fulfilment of the terms, conditions and endorsements of this policy insofar as they relate to anything to be done or complied with by the Insured and the truth of the statements and answers in the said proposal shall be conditions precedent to any liability of the Company to make any payment under this policy".

The motor-car of the plaintiff was damaged in a road accident on December 21, 1952, and the plaintiff claimed that since the damage was covered by the terms of the policy, the respondent Company was bound either to repair, reinstate or replace the motor-car or the parts thereof or pay in cash the amount of the loss of damage. It was the plaintiff's case that the respondent Company, acting under the terms of the policy and in exercise of the option under Condition No. 3, undertook to get the car repaired in the workshop of Messrs, P. S. N. Motors Ltd., Trichur to which workshop the motor-car was removed after the accident. Thereafter the motor-car was in the custody of Messrs P. S. N. Motors Ltd. as an agent of the respondent Company for effecting the necessary repairs at the cost of the respon-dent Company and on July 10, 1963, in a fire which occurred in the workshop of Messrs Psn. Motors Ltd., the motor-car was destroyed.

3. According to the plaintiff the motor-car was in the possession and custody of Messrs. P. S. N. Motors Ltd. on behalf of the respondent Company and was being repaired at the sole responsibility of the respondent company under its instructions and since the respondent Company had entrusted the motor-car for repairs to a workshop in which several automobiles with inflammable materials like oil, petrol, tyres, etc., were lying without ascertaining whether the workshop was insured against fire and other risks, the respondent Company was liable to make good the loss. The plaintiff therefore claimed the value of the motor-car on the footing that the resp