Patna High Court
The Oriental Fire & General Insurance ... vs The Union Of India (Uoi) on 19 April, 1990
Equivalent citations: AIR1991PAT250, AIR 1991 PATNA 250
JUDGMENT Bhuvaneshwar Prasad, J.
1. The defendant No. 1 a General Insurance Company are the appellants. It is an appeal under Section 96 of the Civil P.C. (in short 'the Code'). It is directed against the judgment dated 14-12-1979 and the decree signed on 21-12-1979 by Sri Ram Kishore Singh, VIth Additional Subordinate Judge, Ranchi, in Money suit No. 63/5 of 1969/77, by which the learned Subordinate Judge had decreed the same on contest with cost against the appellants and ex parte without cost against plaintiffs respondent No. 2 (The Union of India). In the title of the plaint the respondents have been described as a Partnership Firm registered under the Partnership Act 1930 (in short 'the Act').
2. The case of the plaintiffs-respondents is that, they were the owners of an Ambassador Car bearing registration No. MPA 4333 valued at Rs. 19,500/-. The said car was insured with the appellants under Policy No. 615/P.C./627 for a period from 12-8-1966 to 11-8-1967 both days inclusive. As per terms of this Insurance Policy the appellants had promised to indemnify respondent No. 1 against loss or damage to the Motor-Car by any malicious act. On 16-3-1967 at about 12.15 a.m. this car was passing on Kanke Road in the town of Ranchi. It was attacked by some students who set fire to it. The car was completely destroyed beyond any repair and replacements. The persons who set fire to the car were maliciously disposed towards the partners of the plaintiffs firm particularly towards Shri Sheo Narain Jaiswal. The ground as stated in the plaint for this malicious disposal was that Sheo Narain Jaiswal happened to be a close associate and friend of Shri K. B. Sahay, the Ex-Chief Minister, Bihar. The students of Bihar and also of Ranchi were generally indisposed towards Shri K. B. Sahay. Shri Jaiswal was the active supporter of Shri K.B. Sahay in the last general election. The students were encouraged to launch agitations against the leadership of Shri Sahay. They also launched attacks against prominent members of the business community who were known to be the supporter to Shri Sahay. During the period of Chief ministership of Shri Sahay, Sheo Narain Jaiswal was granted a permit for the Public Bus service by way of undue favour shown to him.
3. On 16-3-1967 there was a quarrel between the conductor of the Bus belonging to the plaintiff and the students. The reason for this quarrel was that the conductor had demanded from the students the payment of legal fares which the students had refused, This fact annoyed them and they were waiting for the car of the partner of the plaintiffs' firm and at the sight of car they forced out Shri Jaiswal from it and set fire to it. Accordingly, the plaintiff's firm had put forward the claim to the appellants for payment of insured amount. This was deferred on one pretext or the other. The appellants also denied their liability on the pretext that since the car was burnt by a roitous mob of students, they were not liable to pay the insured amount as per the terms and conditions of the policy. Hence, this suit was brought for the realisation of Rs. 19,500 / - being the value of the car and the accessories together with the cost, pendentelite and future interests.
4. The Union of India which were subsequently impleaded as defendant No. 2 did not file any written statement. 1 he written statement, however, was filed on behalf the present appellants in which they contended that the suit was barred by limitation since the plaintiffs had failed to refer the dispute to an arbitrator as per the condition No. 7 of the policy within 12 calendar months from the date of this claim. It was further contended that the suit was hit by Section 69 of the Act. It was not maintainable due to non-observance of condition No. 8 of the policy. It was pointed out that an employee of the plaintiffs had reported that a few students had pushed the car from the road to a ditch and set it on fire. The appellants denied to have any knowledge about the relationship between Shri Sheo Narain Jaiswal and Shri K.B. Sahay, the then Chief Minister. The students had not hand in the alleged incident and, in any event, it cannot be said to be a malicious act. The occurrence complained against was a riotious act for which the appellants were not liable to compensate as will appear from the terms of the policy. The appellants are not aware of any querrel between the Conductor of the Bus and the students and they denied the same. They also denied the facts stated in paragraph Nos, 5(A) and 5(B) of the plaint. On these grounds the appellants contended that since the car was damaged by the riotous mob which came under the general exception clause of the policy they were not at all liable for the damage of the car.
5. The learned Subordinate Judge framed a number of issues. Issue No. 3 ran as follows :--
"Is the suit bad and hit by Section 69 of the Partnership Act."
This issue was answered in negative and in favour of the plaintiffs. Issue No. 4 ran as follows: --
"Is the plaintiff entitled to a decree as claimed."
The learned subordinate Judge answered this issue in favour of the plaintiffs and held that the plaintiffs were entitled to be indemnified for the loss caused to them on account of the destruction of the car by fire on 16-3-1967. Accordingly, he decreed the suit on contest with cost against the present appellants and ex-parte without cost against respondent No. 2.
6. In this appeal the appellants have contended that their business and management was taken over by the Life Insurance Corporation of India by virtue of a central enactment, and as such they started functioning as a subsidiary to it. Subsequently, the management and affairs of the appellants were taken over by the General Insurance Corporation of India and at present the appellants are functioning as a subsidiary to it. In money suit No. 63 of 1969, the respondents' firm did not examine any witness. The judgment and the decree under appeal are based on erroneous consideration of law as well as facts. The same are perverse, inasmuch as, the learned Court below failed to consider that the onus of proving the claim of respondent No. 1 was on them. The judgment and decree of the learned Court below are based on surmises and conjectures. It should have held that the plaintiffs respondents had no cause of action. It should have also held that the suit as framed was not maintainable. The learned lower court failed to consider the import of condition No. 7 of the Insurance Policy which provided for referring the dispute to an arbitrator within 12 calendar months. Since the plaintiffs-respondents failed to prefer the claim in an arbitration within the stipulated time, the suit for recovery of the amount claimed was not maintainable at all. The plaintiffs-respondents had not produced any paper to show that they were a registered partnership firm. As such the suit was hit under the provisions of Section 69 of the Act. The learned lower court perversely held that in the year 1969 there was a general resentment of a section of the student community against Shri K.B. Sahay, the then Chief Minister, specially when no oral evidence to this effect was adduced. Similarly, the learned lower court wrongly held that Sheo Narain Jaiswal, a partner of the plaintiff's firm was the close friend of Shri K.B. Sahay, particularly when no oral evidence to this effect also was adduced. The learned lower court also failed to take into account the effect of the admissions made by the plaintiffs-respondents in the First Information Report (Exhibit-4), or the claim made by them (Exhibit-3) that the car in question was damaged by a riotous mob. So far as the question of malice is concerned, it is well settled that it has to be proved by the person who alleges it. Since, however, no evidence on this point was adduced, the plaintiffs-respondents had singularly failed to prove the allegation of malice. Since the act complained of was a riotous act, any claim of the plaintiffs-respondents was barred under the terms and conditions of the Policy. On these grounds, amongst others, it was contended that the impugned judgment and decree be set aside and the suit be dismissed.
7. Shri P. K. Banerjee, the learned counsel appearing on behalf of the appellants has seriously contended before me that the suit was hit by Section 69(2) of the Act, and as such on this ground alone it was liable to be dismissed. He has drawn my attention to the fact that though in the title of the plaint, the plaintiffs had described themselves as a partnership firm registered under the Act, in the body of the plaint there is no statement to show that the plaintiffs are a registered partnership firm. Also the learned Counsel has drawn my attention to paragraph 5 of the written statement which runs as follows :--
"That the, suit is bad and hit by Section 69 of the Partnership Act."
On this ground it was the contention of the learned counsel that the suit was liable to be dismissed as hit by Section 69 of the Act. Section 69 of the Act runs as follows :--
69. Effect of non-registration:--(1) No suit to enforce a right arising from a contract or conferred by this Act shall be instituted in any Court by or on behalf of any person suing as a partner in a firm against a firm or any person alleged to be or to have been a partner in the firm unless the firm is registered and the person suing is or has been shown in the Register of Firms as a partner in the firm.
(2) No suit to enforce a right exising from a contract shall be instituted in any Court by or on behalf of a firm against any third party unless the firm is registered and the persons suing are or have been shown in the Register of firms as partners in the firm.
8. It was the submission of the learned counsel for the appellants that since no documentary or oral evidence has been produced to show that the Plaintiff's firm is a registered firm, the suit is hit by Section 69 of the Act. In particular he has drawn my attention to the provision in Section 69(2) which clearly provides that no suit to enforce a right arising from a contract shall be instituted in any Court by or on behalf of a firm against any third party unless the firm is registered and the persons suing are or have been shown in the Register of Firms as partners in the firm. In view of this provision in Section 69(2) of the Act, it was the submission of the learned Counsel for the appellants that the suit itself was barred under this provision of law and on this ground alone it was liable to be dismissed.
9. Sri N. K. Prasad, the learned counsel appearing on behalf of the respondent No. 1 has challenged these contentions of the appellants. It was his submission that the provisions of Section 69(2) of the Act will be attracted only in those cases in which a suit to enforce a right arising out of a contract was instituted. In case the suit is not instituted to enforce, a right arising out of a contract, the provisions of Sub-section (2) of Section 69 will not be attracted. He has pointed out that though the insurance policy may be called to be a contract, through which certain rights and liabilities were created, still according to him, the Life Insurance Policy cannot be termed to be a contract simpliciter on the ground that the rights and liabilities of the parties arising out of the Insurance Policy had the sanction of law also as will appear from Section 46 of the Insurance Act, 1938. Hence, according to him any right or liability which arose out of the Life Insurance Policy merged with the rights and liabilities created by the statute, namely, the Insurance Act, 1938, and therefore, the liability of the present appellants did not arise out of the Insurance Policy simpliciter, but it arose as well out of the provisions of Section 46 of the Insurance Act. Thus , it was his submission that in a situation like this, the provisions of Sub-section (2) of Section 69 of the Act will not be attracted.
10. In this connection, I would like to refer to Section 46 of the Insurance Act, which runs as follows :--
46. Application of the law in force in India to policies issued in India : --"The holder of a policy of insurance issued by an 'insurer in respect of insurance business transected in India after the commencement of this Act shall have the right, notwithstanding anything to the contrary contained in the policy or in any agreement relating thereto to receive payment in India, of any sum secured thereby and to sue for any relief in respect of the policy in any Court or competent jurisdiction in India, and if the suit is brought in India any question of law arising in connection with any such policy shall be determined according to the law in force in India.
Provided that nothing in this section shall apply to a policy of marine insurance."
In Section 46 the expression "Insurer" has been used. Shri Prasad the learned Counsel has in this connection drawn my attention to Section 2(9) of the Insurance Act, which runs as follows :--
(9) "insurer" means--(a) any individual or unincorporated body of individuals or body corporate incorporated under the law of any country other than India, carrying on insurance business not being a person specified in Clause (i) of this clause which-
(i) carries on that business in India, or
(b) any body corporate not being a person specified in Sub-clause (i) of this clause carrying on the business of insurance, which is a body corporate incorporated under any law for the time being in force in India; or stands to any such body corporate in the relation of a subsidiary company within the meaning of the Indian Companies Act, 1913 (7 of 1913), as defined by Sub-section (2) of Section 2 of that Act'........."
Accordingly, it was the submission of Shri Prasad that since in the present case the policy of insurance was issued by an insurer within the meaning of Section 2(9) of the Act, by an application of Section 46 of the Act, the holder of any such Insurance Policy shall have right to receive payment of any sum secured thereby and to sue for any relief in respect of the policy in any court of competent jurisdiction in India, and if any such suit is brought in India, the same shall be determined according to the law in force in India. By referring to these provisions of the Insurance Act, 1938, the learned counsel for the respondents has tried to show that since liability arising out of the Insurance policy is not a liability arising out of a contract simpliciter, the provisions of Sub-section (2) of Section 69 of the Act shall not be attracted. It was his submission that this liablility also arose out of Section 46 of the Insurance Act, 1938, and therefore, it also arose out of a statute which provided for its enforcement. Hence, it cannot be said that this liability was created only by a contract simpliciter. On this ground he has tried to make a distinction that in a situation like this Section 69(2) of the Act will not operate as a bar to the institution of the suit by respondent No. 1. In support of his contention he has relied on the case of Satish Chandra v. P.N. Dass and company AIR 1938 Pat 231. The facts of the said case are, however, entirely different. In the said case a rule was directed against the order of the Additional Subordinate Judge confirming an order of the Munsif in an application under paras 20 and 21 of Schedule 2 of the Civil P.C. in other words, an application to file an award. It further appears that in the said case, the contesting parties had submitted a dispute arising out of certain contracts between them to the arbitration of certain persons. In due course, an award was made, and it was with regard to this award that the application was made to the munsif for a decree in terms of the award. Both the trial court and the lower appellate court had occasion to question whether Section 69(1) of the Partnership Act applied to the case or not. Both the Munsif and the Additional Subordinate Judge had held that M/s. Dass and Company was a Partnership Firm and that it was not registered. It further appears that the Munsif had in the said case presented to him an award and it was quite clear that according to the provisions of para 20 of Schedule 2 of the Civil P.C., the matter had been referred to an arbitration, an award had been made thereon and the Munsif was dealing with the application to file that award and as a condition precedent he had jurisdiction of the subject matter of the award. It was argued before that Court on behalf of the petitioner in the said case that the Munsif had no jurisdiction over the subject matter of the award on the ground that the Firm in question on whose behalf a petition was filed was not a registered firm. It was held that the learned counsel for the petitioner was confusing the provisions relating to the prohibition as regards a suit or other proceeding under Section 69 of the Act with the subject matter of the award under para 20. The subject matter of the award was the contract for timber and always provided that the amount claimed by one party or the other was not beyond the peculiar jurisdiction of the Munsif. There could be no doubt that Munsif had jurisdiction over the subject matter of the award. It was held that there was nothing illegal on the face of the award within para 14 (C) of the Schedule 2 of the Civil P.C. and it was only by reference to Section 69 of the Partnership Act and by reference to the facts of the case that it could possibly be held that the firm of the opposite party (P. N. Dass and Company) was not entitled to enforce the award. It was thus, concluded in this decision;
"There is nothing on the face of the award which is illegal and it is only by reference to section 69 and by reference to the facts of the case, we could possibly hold (Emphasis sup-plied) that the applicants Dass & Co. in this case were not entitled to enforce the award which' they had obtained."
From this observation, it appears that the award was not found to be illegal and there is no definite finding with respect to Section 69 of the Act. It was observed that it was only by reference to this section and the facts of the case that their Lordships could possibly hold that the applicants (Dass and Company) in this case were not entitled to enforce the award which they had obtained. It was urged on behalf of the appellants that with respect to the application of Section 69, no definite finding has been given in this decision.
11. The learned counsel for the respondents has also placed reliance on the case of M/s. Barbigha Cold Storage Company v. The National Insurance Company, AIR 1981 Pat 21. This was a case under Section 46 of the Insurance Act, 1938. A suit was brought by the Policy Holder. The Insurance Policy prescribed a particular court as a forum. It was held that a policy holder can file an application against the Insurance Company having its head-office at Calcutta also in the Court of Patna, being the Court of competent jurisdiction, for the purpose of submission of dispute arising out of the Insurance Contract, it could not be said that the Court in which the suit was filed had no jurisdiction because as per the agreement between the parties embodied in the Insurance Contract, forum had been restricted only to the Civil Court at Calcutta. In the said case a Bench of this Court had occasion to consider the effect of Section 46 of the Insurance Act. 1938. It was held that no doubt as per the Insurance Policy only the Civil Court at Calcutta got jurisdiction over the disputes between the parties. However, this clause in the Insurance Policy was subject to Section 46 of the Insurance Act which provided that "notwithstanding anything to the contrary contained in the policy or in an agreement relating thereto" occurring in Section 46 of the Act it will lead to irresistible conclusion that the intention was that the benevolent provision of Section 46 of the Act was to prevail over the terms of the contract, terms of the policy and the agreement, if any, to the contrary. Hence, from this decision it would appear that the terms of the contract as embodied in the Insurance Policy were subject to the Insurance Act, 1938. This will, however, not mean that the terms of the contract aforesaid will be completely effaced in view of Section 46 of the Insurance Act. It was only to the extent of any repugnancy that the provisions of Section 46 of the Act will prevail. From this also it would appear that in the instant case there was a contract between the parties as per the terms of the Insurance Policy which cannot be said to have been completely obliterated in view of Section 46 of the Insurance Act and the bar as imposed by Section 69(2) of the Act will operate even under the facts and circumstances of this case.
12. This view finds support from the case of Jagdish Chandra v. Kaiaria Traders (India Ltd.) AIR 1964 SC 1882, on which the learned Counsel for the plaintiffs has placed reliance. In the said case, there was an agreement between the appellant Jagdish Chandra Gupta, being the sole proprietor of the Firm Foreign Import and Export Association and Anr. v. Kajaria Traders (India) Ltd. One of the clauses of this agreement provided as follows 'That in case of dispute the matter will be referred for arbitration in accordance with the Arbitration Act.' Since the allegation against Jagdish Chandra was that he failed to carry out his part of the partnership agreement, Kajaria Traders appointed one Mr. Kolah as the Arbitrator and asked Jagdish Chandra either to appoint an arbitrator or to agree to the nomination of Sri Kolah as the sole arbitrator. Jagdish Chandra disputed this and Kajaria Traders filed an application under Section 8 (2) of the Arbitration Act, 1940 for the appointment of Mr. Kolah or any other person as an Arbitrator. Jagdish Chandia appeared and objected, inter alia, to the filing of this application under Section 8(2) of the Arbitration Act, on the ground that Section 69(3) of the Act will operate as a bar to the petition because the partnership was not registered. The Supreme Court in this case has taken into consideration (he various provisions of Section 69 and has observed that this section, speaking generally, bars certain suits and proceedings as a consequence of non-registration of firms. Sub-section (1) prohibits the institution of a suit between partners inter se or between partners and the firm for the purpose of enforcing a right arising from a contract or conferred by the Partnership Act unless the firm is registered and the person suing is or has been shown in the Register of Firms as a partner in the firm. Sub-section (2) similarly prohibits a suit by or on behalf of the firm against a third party for the purpose of enforcing rights arising from a contract unless the firm is registered and the person suing is or has been shown in the Register of Firms as a partner in the firm. It was also noticed that this section thinks in terms of (a) suits and (b) a claim of set-off, which are in a sense of the nature of the suits and (c) of other proceedings. The section provides for the exclusions of a suits in Sub-sections (1) and (2). Next it excludes the ban in respect of right to sue (a) for the dissolution of the firm, (b) for accounts of a dissolved firm and (c) for the realisation of the property of a dissolved firm. Then follows general exclusion of the section. The 4th Sub-section says that the section as a holder is not to apply to a firm or to a partners of the firm who have no place of their business in India and also to suits or claims of set-off not exceeding Rs. 100/- in value. It was further observed that it was possible that the draftsman wishing to make exception of different kinds in respect of suits, claims of set-off and other proceedings, grouped suits in Sub-sections (1) and (2), set-off and other proceeding in Sub-section (3) made some special exceptions in respect of them in Sub-section (3) in respect of dissolved firms and them viewed them all together in Sub-section (4) providing for a complete exclusion of the section in respect of suits of particular classes. It was accordingly held that the application filed under Section 8(2) of the Arbitration Act before the High Court was not competent and the same stood dismissed with costs throughout.
13. The learned counsel for the petitioners has submitted that in the said case also there was a clause that in case of dispute, the matter will be referred for arbitration in terms of Arbitration Act, 1940. Accordingly, the application was filed under Section 8(2) of this Act. As such it was the submission of the learned counsel Sri P. K. Banerjee, appearing on behalf of the appellants that the operation of Arbitration Act which was invoked in the circumstances of the said case will not obliterate that clause in the contract which enabled one of the parties to refer the matter to the arbitration. In other words, it was his submission that both the provisions of the Arbitration Act, as also the clause in the agreement for referring the dispute to the arbitration could co-exist and merely because the Arbitration Act was brought into operation, the arbitration clause in the contract could not be effaced. Drawing a parallel, it was his submission that similarly where the provisions of Section 46 of the Insurance Act are attracted, it will not automatically result in obliterating the relevant clauses in the agreement with respect to its enforcement and other terms. I find force in this contention of the learned counsel for the appellants. In the case of Jagdish Chandra (supra) also one of the clauses of the agreement provided that, 'in case of dispute the matter will be referred to an arbitration in accordance with the Arbitration Act. Section 46 of the Arbitration (Insurance) Act provided that, notwithstanding, anything to the contrary contained in the policy or in agreement relating thereto, the holder of a policy of an Insurance issued by a insurer shall have the right to receive payment. Thus, as per this section the right to receive payment has been saved, notwithstanding, anything to the contrary contained in policy. From this it would appear that the right to receive payment can as well be claimed in terms of the contract as contained in the policy or in agreement relating thereto. If, however, there was no such clause in the contract as contained in the policy, Section 46 will come into play and will authorise the holder of a policy to receive payment, notwithstanding, anything to the contrary contained in the policy. As such I find force in this contention of the learned counsel for the appellants.
14. Learned counsel for the respondents has drawn my attention to paragraphs 5(A) and 5(E) of the plaint and paragraph-I2 of the written statement to show that since the facts stated in paragraph Nos. 5(A) and 5(B) of the plaint have not been specifically denied in paragraph No. 12 of the written statement, this will amount to an admission in the eyes of law.
15. In paragraph 5(A) of the plaint, it has been alleged that Sri Sheo Narain Jaiswal has been a close associate and friend of Sri K.B. Sahay, the Ex-chief Minister of Bihar, and the students at Ranchi and else where within the State were generally indispossed towards Sri K.B. Sahay. A section of the students community had launched attacks and agitations against such business men who were said to be the supporters of Sri Sahay, in paragraph 5(6) it has further been observed that a few members of the students community on 16-3-1967 picked up a quarrel with the contractor of a bus belonging to the plaintiffs, the permit for which had been obtained during the Chief ministership of Shri K.B. Sahay. The quarrel was with respect to the demand for payment of legal fare from the students who boarded the same. It was on the basis of these allegations that in the plaint it was contended that the persons who set fire to the car were maliciously disposed of towards the firm and particularly towards one of the partners of the firm, namely, Sri Sheo Narain Jaiswal.
16. Paragraph No. 12 of the written statement relates to paragraph No. 5 of the plaint in which in the very opening sentence it has been stated that the allegations made in this para are not correct and denied. Further in the written statement, it was observed that the defendants did not know about the relationship with the plaintiffs' partner Sri Sheo Narain Jaiswal with the then Chief Minister of Bihar Shri K.B. Sahay. It was, however, specifically denied in this paragraph that the students had nothing to do with the alleged relationship between them and, therefore, even if the students had some hand in the burning of the car, it cannot be said to be a-malicious act. In view of these submissions made in paragraph No. 12 of the written statement, it cannot be said that the facts stated in paragraph 5 A and 5 B of the plaint have not been properly denied.
17. In this connection a reference may be made to an Order VIII Rule 5(l), which runs as follows:--
"Every allegation of fact in the plaint, if not denied specifically or by necessary implication or stated, be not admitted in the pleading of the defendant shall be taken to be admitted except as against a person under disability;
Provided that the Code may in its discretion require the facts so admitted to be proved otherwise than by such admission."
From a perusal of the relevant paras of the plaint and the written statement, it cannot be said that there is no denial by the defendants to the facts stated in paragraph Nos. 5 A and 5B of the plaint. In the very opening sentence of paragraph No. 12 of the written statement it has been specifically stated that the facts stated in paragraph No. 5 are not correct and are denied. So, this denial appears to be specific and cannot be said to be implied. Hence, under this circumstance, the facts stated in paragraph No. 5 A and 5 B of the plaint cannot be said to be admitted. No doubt in paragraph No. 12 of the written statement, it has been stated that the defendant does not know about the relationship between Shri Jaiswal, one of the partners of the Firm and Shri K. B. Sahay. It has been submitted that since this was a matter of relationship between two persons it may not be possible that others may have positive knowledge about the same to enable them to make statement on oath about it. However, in paragraph No. 12 of the written statement it has been specifically denied that the students had nothing to do with the alleged relationship between Shri Jaiswal and Shri K.B. Sahay, and therefore, the burning down of the car cannot be said to be a malicious act. In view of these specifical statements, I do not think that there is any force in the contention of the learned counsel for the respondents.
18. In support of his contention, the learned Counsel for the respondents has placed reliance on the case of Jahuri Sah v. D. P. Jhunjhunbala' AIR 1967 SC 109. In the said case the question to be decided was, whether Shankar Lal was given in adoption to Shrilal. The High Court had pointed out that the plaintiffs had clearly s ated in paragraph No. I of the plaint that Shanker Lall had been given in adoption to Shrilal. However, it observed that in neither of the two written statements filed on behalf of the defendants has this assertion made by the plaintiffs, specifically denied. All that was stated in the two written statements, was that the defendants had no knowledge of the allegations made in paragraph No. 1 of the plaint. It was under this circumstance that applying the provisions of Order VIII Rule 5, it was held that since this fact was not denied specifically or by necessary implication or stated to be not admitted in the written statement of the defendants, the same shall be taken to be admitted. In the said case, no specific issue on the question of adoption was framed.
19. The facts of the present case are, however, entirely different. As stated above in paragraph No. 12 of the written statement the allegations made in paragraph No. 5 of the plaint have been denied. It has further been denied that the students have nothing to do with the alleged relationship between Shri Jaiswal and Shri K.B. Sahay and that the burning down of the Car cannot be said to be the malicious act. Hence, this decision is of no avail to the respondents.
20. The question whether the act complained was a malicious act or a riotious act, assumes special significance in view of the fact that as per Section 1 of the Insurance Policy it has been observed that the Company will indemnify the insurer against loss or damage to the motor car by a malicious act. However, in the general exception in section 3 of this policy, it has been provided that the comp shall not be liable in respect of any loss or damage which was caused by a riot or civil commotion. It was the contention of the learned Counsel appearing on behalf of the appellants that since the act complained of was a riotious act and not a malicious act, therefore, it would not be liable for the payment of the amount claimed. In this connection, a reference may be made to paragraph No. 5 of the plaint, in which it has specifically been stated on behalf of the respondents that the persons who sat fire were maliciously disposed of towards the Partners of the plaintiffs firm specially against one of the partners, namely, Shri Sheo Narayan Jaiswal, since he happended to be a close associate of Shri K.B. Sahay and students at Ranchi and else where were generally indisposed towars Shri K.B. Sahay. On this ground, it has been contended that the act complained of, was malicious act, and therefore, the appellants were liable to compensate for the damage caused to the Car. As against it, in paragraph No. 12 of the written statement, it has been stated that the act complained cannot be said to be a malicious act, on the other hand, it was a riotious act. In the same paragraph, it has been stated that the students had nothing to do with the alleged relationship between Shri Jaiswal and Shri K. B. Sahay. It has further denied about the allegation that there was any quarrel between the conductor of the Bus and the students on the same day, namely, on 16-3-1967 on which the car is said to have been set on fire.
21. In the plaint, the plaintiffs-respondents had tried to show that the act complained of was a malicious act. However, the statement of this point made in paragraph No. 5 of the plaint is vague in nature,. It has been stated that the students at Ranchi and else where within the State were generally indisposed of towards shri K.B. Sahay. It was on this account that they set fire to the car of the Plaintiffs since one of the partners of the firm, namely, Shri Jaiswal who was a close friend and supporter of Shri K.B. Sahay. It is clear that this type of allegations made in paragraph No. 5 of the plaint are extremely vague. Even if, it be presumed for a moment that some of the members of the students community may be having some grievance against Shri K.B. Sahay in the year 1967, it cannot be said that the entire students community at Ranchi or elsewhere within the State of Bihar was inimically disposed of towards Shri Sahay. Even in paragraph No. 5A of the plaint, the expression used is "generally". This itself shows that this statement is vague. Since the plaintiffs had wanted the court to believe that the act complained of was a malicious act, the onus was on them to prove this fact. By making such vaue allegation which has been specifically denied in paragraph No. 12 of the written statement they cannot be said that they have been able to discharge this onus. Only making a vague allegation in this regard, cannot be of any help to the plaintiffs to show that the act complained of a was a malicious act. In this connection a reference may be made to Ext. 4 which is the certified copy of the F.I.R. lodged with respect to this occurrence on 16-3-1967 by one Baidnath Prasad. In this F.I.R. no mention has been made that the act complained of was on account of a malicious act by the students as sought to be made out in paragraph No. 5 of the plaint. On the other hand, a perusal of Exhibit 4 will show that the act complained of was a riotious act. In this connection a reference may be made to Exhibits 2 and 3. Ext. 3 is the claim put forward before the Insurance Company for the loss of the Car. From the facts stated in Ext. 3 also it becomes clear that the act complained of, was a riotious act and not a malicious act, though, it has been observed in it in one of the columns that being a case of malicious act, some persons deliberately destroyed vehicle, however, from the facts stated in Ext. 3 it does not appear how this act has been described as a malicious act. So far as Ext. 2, which is a letter from the appellant to the respondent is concerned, it would appear that the car in question was burnt down by a furious mob consisting of students and for this the police had already registered a case under Section 147 of the Penal Code for rioting, unlawful assembly and committing riot. On these grounds also it has been contended that clearly the act complained of, was a riotious act and not a malicious act.
22. Before me, reliance has been placed on the case of Damodar Dess v. Ruby General Insurance Company, AIR 1965 Madhya Pradesh 32. This is a Bench decision of Madhya Pradesh High Court. In the said case, the insured car met with an accident causing the death of boy. The mob collected there and burnt down the car. It was held that the loss was caused by riot and civil commotion. It has further been held in that case that the word "riot" will have the same meaning as mentioned under Section 146 of the Indian Penal Code. In the present case as mentioned above for the same incident a case under Section 147 of the Penal Code has already been instituted treating the alleged offence to be offence of rioting. Under these circumstances, 1 think that the decision of this case will apply to the facts of the present case also. In the impugned judgment the learned Court below has tried to distinguish this case from the present case on the ground that the facts were entirely different. No doubt, the facts are different, but the result in both the cases would be that the alleged occurrence took place on account of the riot as in the present case also the plaintiffs have not been able to show that the act complained of was a malicious act. As observed earlier, it will be too vague an allegation to imagine that all the students in the State of Bihar were against Shri K.B. Sahay, and that since Shri Jaiswal was a close friend and supporter of Shri K.B. Sahay all the students of the State were also against him. Hence, it is clear that the act complained of, was a riotious, act, and therefore, it will come under the exception of Section 3 of the Insurance Policy.
23. It has lastly been contended that there was an arbitration clause in the Insurance Policy and since the same has not been invoked, the suit would not lie. In this connection, my attention has been drawn to condition No. 7 in the Policy which provides that :--
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 an 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 hereunder."
In ground No. VIII of the grounds of appeal, it was contended that the learned lower Court has perversely failed to consider the import and effect of Condition No. 7 of the insurance Policy. Also in paragraph 3 of the written statement it was contended that the suit is barred by limitation as the plaintiff failed to refer the differences or dispute within 12 calendar months from the date of disclaimer of the claim as enjoined under Condition No. 7 of the Policy. In paragraph 10 of the judgment the learned Court below has taken up this point into consideration. Referring to the cases of Mahabir Singh v. Vulean Insurance Co. Ltd. 1972 ACJ 130 : (AIR 1972 Delhi 182) and (sic) he held that these decisions are not applicable to the facts of the present case on the ground that here plaintiffs claim was flatly rejected by the defendant and there was no sign that 'it could be settled through arbitration. Hence, he held that the plaintiff was not bound to refer the matter to arbitration. According to him it was open to the plaintiff to move the law Court where the defendant could invoke condition No. 7 and ask the Court to refer the dispute to arbitration. Since, in the present case, the defendant filed the written statement and contested the suit, on merit, it was held by the learned Court below, that since, under this circumstance, the defendant had himself waived the right, the claim of the plaintiff could not be attacked on the ground that it should have been referred to the arbitration within 12 calendar months.
The findings of the learned Subordinate Judge on this point as to do not appear to be correct. In the case of Maharaj Singh (supra) in clause 18 of the Insurance Policy it was provided that if any dispute arose between parties with respect to the amount of loss, it must be referred to arbitration. In the said case the Insurance Company repudiated the claim in toto and disputed the liability. The question arose whether the total repudiation of liability envolved a dispute about the amount of loss. It was held by the single Bench decision of Delhi Court that it did envolve the dispute about the amount of loss. In the present case also, as will appear from Ext. 2 the present appellant had denied the claim of the respondents in toto on the ground that since the car was destroyed by a riotious act they were no longer liable for the same. Hence, under this circumstance also condition No. 7 of the Policy will be applicable and since admittedly no step has been taken in terms of this condition, the claim of the plaintiff was bad.
24. Similar question arose in the case of (sic) (supra) also where clause No. 19 provided that the Insurance Company would not be liable for any loss after the expiry of the 12 months unless the claim was subject of a pending action or arbitration. It was further held that the failure to commence arbitration proceedings within the aforesaid period will bar the suit. In the present case the second pad of condition No. 7 runs as follows :--
"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 hereunder."
25. It is thus clear that there is force in the contention on this point of the learned Councel of the appellants and on this ground also the claim of the respondents cannot be allowed.
26. For the reasons stated above, I find that this appeal is fit to be allowed.
27. In the result, this appeal is allowed and the judgment of the learned Court below is set aside. The suit is dismissed on contest with cost throughout. Pleader's fee Rs. 150/-.