Patna High Court
Bhajanka Cold Storage vs Oriental Fire And General Insurance Co. ... on 22 August, 1997
Equivalent citations: [1998]92COMPCAS144(PATNA)
JUDGMENT Gurusharan Sharma, J.
1. According to the plaintiff-appellant herein the stock of potato and potato seeds of Bhajanka Cold Storage, Pahari, Patna, during the period November 22, to November 28, 1974, stood insured under banking arrangements with the Central Bank of India, New Dak Bunglow Road, Patna, the respondent No. 2 herein with the Oriental Fire and General Insurance Company Limited, respondent No. 1 herein under various insurance policies against destruction or damage caused by the change of temperature resulting from total or partial destruction or disablement by fire of the refrigeration plant and any accident to the refrigerating apparatus in the two chambers of the cold storage.
2. There occurred an accident of machinery breakdown of the refrigerating apparatus in chamber No. 2 of the cold storage by sudden burst of the associated pipe resulting in leakage of refrigent ammonia gas with the result the potatoes stored therein were charred. The said loss and damage was assessed to the tune of Rs. 3,46,000.
3. An application under Section 20 of the Arbitration Act was made on behalf of the cold storage against the insurance company and the bank for filing the arbitration agreement for making a reference of the claim/ dispute aforesaid to the arbitrator in terms of the insurance policy. It was registered as Title Suit No. 37 of 1976 in the Court of the Fourth Subordinate Judge, Patna.
4. Notice to show cause was issued to the defendants. In its show cause, defendant No. 1, the insurance company contended, inter alia, that an application under Section 20 of the Act was not maintainable and arbitration Clause 18 of the insurance policies in respect of the claim/dispute in question could not have been invoked by the plaintiff.
5. It appears that in the present case, in reply to the lawyer's notice dated August. 9, 1975, sent by the plaintiff, the defendant insurance company clearly repudiated its liability under the insurance policies. The dispute raised by the plaintiff did not appertain to the arbitration Clause in question as the alleged claim was not covered under the policy.
6. In Vulcan Insurance Co. Ltd. v. Maharaj Singh [1976] 46 Comp Cas 110 ; AIR 1976 SC 287, while interpreting the said Clause 18 of the insurance policy in question, the apex court held that the difference which arose between the parties on the repudiation of the plaintiff's claim by the defendant insurance company was not one to which the arbitration Clause applied and hence the arbitration agreement could not be filed and no arbitrator could be appointed under Section 20 of the Act. The plaintiff was ill-advised to commence an action under Section 20 instead of instituting a suit within three months of the date of repudiation to establish the liability of the insurance company. The application filed under Section 20 of the Arbitration Act was, therefore, dismissed.
7. In the present case, I find that the disputes between the parties herein were not with respect to the quantum of the loss rather it was on the question whether the plaintiff was at all entitled to receive any compensation in terms of the insurance policies in question, Applying the ratio of Vulcan Insurance Co. Ltd. v. Maharaj Singh [1976] 46 Comp Cas 110 ; AIR 1976 SC 287, I find that arbitration Clause 18 of the insurance policies, in the facts and circumstances of the case, could not have been invoked and the application under Section 20 of the Arbitration Act filed by the plaintiff was, therefore, not maintainable.
8. I, therefore, do not find any reason to interfere with the impugned judgment/order of the trial court whereby the application under Section 20 of the Arbitration Act was dismissed.
9. In the result, the appeal fails and is dismissed with costs.