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Allahbad High Court
V.G.OAK,D.D.SETH
General Assurance Society Ltd. - Appellant
Versus
Salim - Respondent
Decided On : 12/02/1964
FIRE INSURANCE - POLICY - REPUDIATION - ARBITRATION CLAUSE - WHETHER REPUDIATION OF POLICY BARS ARBITRATION CLAUSE - WHETHER COURT CAN DECIDE THE TWO ISSUES INVOLVED IN THE SUIT BUT CANNOT DETERMINE THE EXTENT OF THE LOSS - WHETHER THE CONTINGENCY CONTEMPLATED BY CONDITION NO. 18 DID NOT ARISE AT ALL IN THE INSTANT CASE - WHETHER THE SOCIETY AVOIDED THE QUESTION OF ASSESSMENT OF LOSS AND DECIDED TO REPUDIATE THE POLICY - WHETHER THE DISPUTE BETWEEN THE PARTIES AS REGARDS THE QUANTUM OF LOSS CANNOT NOW BE REFERRED TO ARBITRATION - WHETHER THE DEFENDANT'S REMEDY, IF IT WANTED TO RELY ON CONDITION NO. 18 IN THE INSTANT CASE, WAS TO PROCEED UNDER S. 34 OF THE ARBITRATION ACT AND TO ASK FOR STAY OF THE SUIT - WHETHER SECTION 34 OF THE ARBITRATION ACT IS, THEREFORE, A COMPLETE BAR FOR THE DEFENDANT TO PLEAD CONDITION NO. 18 AFTER THE INSTITUTION OF THE SUIT.
Fact of the Case:
The plaintiff, a general merchandise merchant, insured his stock with the defendant insurance company against loss or damage by fire. On 5th March 1950, a fire broke out in the plaintiff's shop and the entire stock was destroyed. The plaintiff lodged a claim with the defendant, but the defendant repudiated the claim on the ground that there was a misdescription of the insured premises in the proposal form. The plaintiff filed a suit for recovery of the insurance money. The trial court decreed the suit, holding that there was no misdescription of the insured premises and that the defendant was liable to pay the insurance money. The defendant appealed to the High Court.
Finding of the Court:
The High Court held that there was no misdescription of the insured premises and that the defendant was liable to pay the insurance money. The court also held that the arbitration clause in the policy was not a bar to the plaintiff's suit, as the defendant had repudiated the policy in its entirety and had not raised the question of arbitration before the institution of the suit.
Issues: 1. Whether there was a misdescription of the insured premises in the proposal form? 2. Whether the defendant was liable to pay the insurance money? 3. Whether the arbitration clause in the policy was a bar to the plaintiff's suit?
Ratio Decidendi: 1. The court held that there was no misdescription of the insured premises in the proposal form, as the description of the premises was substantially accurate and the misdescriptions were not material. 2. The court held that the defendant was liable to pay the insurance money, as the plaintiff had proved that the entire stock was destroyed in the fire and that the defendant had repudiated the policy without any justification. 3. The court held that the arbitration clause in the policy was not a bar to the plaintiff's suit, as the defendant had repudiated the policy in its entirety and had not raised the question of arbitration before the institution of the suit.
Final Decision: The appeal was dismissed and the decree of the trial court was upheld.
SETH, J. - This is a defendant's appeal arising out of a suit filed by the plaintiff respondent against the defendant appellant (Suit No. 10 of 1951) in the Court of the Civil Judge, Moradabad for recovery of Rs. 20,900/- on a policy of fire insurance on general merchandise goods belonging to the plaintiff.
2. The case of the plaintiff, according to the plaint allegations, was that the plaintiff had been carrying on business of general merchandise on a large scale for a long time and had acquired good reputation as a first class local stockist covering every variety of goods and commodities to meet the requirements of the public. The plaintiff was in occupation of a rented shop in Bazarganj, Moradabad. This shop contained the plaintiff's stocks of general merchandise insured or held by him on trust or commission. The plaintiff wanted to get the building of the shop which contained his stocks insured against loss or damage by fire or lightning. An agent of the General Assurance Society (hereinafter called the society), which did fire insurance business approached the plaintiff and requested him to enter into a contract with the society. On 3rd September 1949 the plaintiff made a proposal to the society and gave full information on the prescribed proposal form. The society accepted the plaintiff's proposal and issued a policy No. 27108 to the plaintiff on 22nd October 1949. All the terms of the contract between the parties were embodied in the policy. The plaintiff paid the annual premium of Rs. 188-11 to the society. This premium included a risk of loss or damage to the property insured directly caused by persons taking part in riots or civil commotion and a reference to the annexed printed "Riot and Civil Commotions clause 'B' " was specifically made in the policy. The policy was to be effective from 6th October 1949 to 6th October 1950 both days inclusive. It was agreed between the parties that if the plaintiff's goods or any part thereof shall be destroyed or damaged by fire during the stipulated period, the society will make good all that loss or damage and would pay the amount of Rs. 20,000/- to the plaintiff. The entire stock in trade and goods with the plaintiff were worth more than Rs. 70.000/- but in order to pay a lesser premium the plaintiff obtained insurance only for Rs. 20,000. The plaintiff paid huge amounts as sales tax in the year 1948-49 and income-tax on the income assessed in the year 1948-49 which showed the flourishing condition of the plaintiff's business. It is stated in paragraph 9 of the plaint that on 5th March 1950 at about 8-30 p.m. when curfew order was in force in Moradabad, on account of communal riots and disturbances, some miscreants put the plaintiff's shop to fire and the entire stock of merchandise with all the furniture in the shop were burnt and reduced to ashes on account of which the plaintiff suffered irreparable loss. The plaintiff lodged a report at police station Kotwali, Moradabad. The fire continued to burn for a few days as it was not possible to extinguish it earlier. The plaintiff informed the society about the fire promptly after the accident and later on filed a regular claim. The plaintiff's claim was enquired into by the society through its surveyors for a long time but the society avoided to reply to the claim or come to a decision on the pretext that it had not received a report about the fire from the Superintendent of Police Moradabad. The plaintiff went on pressing the defendant for a final decision of the claim preferred by him and ultimately the defendant, on a very flimsy excuse, repudiated its liability under the policy and rejected the plaintiff's claim. The plaintiff contended that it was wrong to suggest that the fire originated in a double-storeyed building adjoining the insured shop on the back. Side. According to the plaintiff there was no door in the shop communicating with any double-storeyed building and there was no mis-description or omission on h
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