Chattisgarh High Court
New India Assurance Co. Ltd. vs R.K. Industries on 25 January, 2005
Equivalent citations: 2005(3)ARBLR412(NULL)
ORDER V.K. Shrivastava, J.
1. Being aggrieved by order dated 8-9-1998 passed by the 2nd Additional Distt. Judge, Durg in Civil Suit No. 4-A/95 by which application filed by the petitioner under Section 33 of the Arbitration Act, 1940 read with Section 151 of the CPC, was dismissed, this revision has been filed by the non- applicant/petitioner.
2. Respondent took two fire policies from the petitioner, i.e., Policy No. 00343/90, dated 6-8-1990 covering risk of building worth Rs. 15 lacs plant machinery worth Rs. 10 lacs, material/goods worth Rs. 21 lacs and Policy No. 003067/90, dated 14-11-1990, covering risk of stock etc., worth Rs. 14,40,000/-, scraps etc. worth Rs. 1,40,000/-. In November, 1990 the factory was put into fire by some unknown persons in the intervening night of 20/21st November, 1990 which caused heavy loss to the respondent. Respondent lodged a claim to recover loss suffered by him on account of fire worth Rs. 58,34,970/-. Non-applicant paid Rs. 16,67,528/- and Rs. 33,865/- towards loss suffered by the respondent in full and final settlement of the claim. Respondent made a complaint before National Consumer Disputes Redressal Commission, New Delhi claiming remaining amount of loss and interest. National Commission allowed interest at the rate of 18%, but refused to grant any other reliefs as claimed. Being aggrieved by the judgment of National Commission respondent filed an appeal before Supreme Court of India which was registered as Civil Appeal No. 6620/1995 and the Supreme Court of India vide order dated 5-12-1995, after hearing both the parties, dismissed the appeal on merit.
3. Respondent loosing his case finally has filed an application under Section 20 of the Arbitration Act, 1940 in the Court of District Judge, Durg for settlement of dispute to loss caused to him by fire in the intervening night of 20/21st November, 1990 taking shelter of Arbitration Clause No. 13 of the Policy. The application was registered as Case No. 4-A/95. Petitioner challenging the application submitted an application under Section 33 of the Arbitration Act read with Section 151 of the CPC for dismissal of application and proceedings as prayed for by the respondent, stating that respondent has been paid all his claims after due investigation, who in full and final satisfaction has received the same. Apart from that, dispute raised by respondent has been finally adjudicated by the National Consumer Disputes Redressal Commission, New Delhi and has been affirmed by the Apex Court of India. Learned Trial Court vide impugned order holding that National Consumer Disputes Redressal Commission, New Delhi did not consider the issue regarding the quantum of claim, therefore, dismissed the application filed by the petitioner.
4. Only question requires to be decided in this revision is that whether after adjudication of claim on merit under Consumer Protection Act, can claimant again take the said dispute for fresh determination taking shelter of Arbitration Clause.
5. Respondent in his petition filed before National Consumer Dispute Redressal Commission, New Delhi claimed for an order to be made against the petitioner for payment of balance amount of Rs. 41,67,442/-, on the basis of various materials rendered by him before National Consumer Forum. National Consumer Forum registered the petition as Original Petition No. 343/99 and vide order dated 18-5-1995, decided the complaint. The operative portion of the order is reproduced below :--
"The complainant, is, therefore, entitled to payment of interest on the said amount for the period of delay in settling and payment of the claim. On a careful examination of the facts and circumstances, we find that this not a case where apart agreeing on the quantum at which the loss caused by the fire should be assessed. There was a payment to and receipt by the insured of the principal sum so arrived at in full and final discharge and settlement.
We, therefore, allow the complaint partly and grant interest at the rate of 18% per annum on the amount of Rs. 16,67,528/- from 21-5-1991 to 29-4-1993 and on the amount of Rs. 33,865/- from 21-5-1991 to 13th December, 1993. The complainant is also awarded costs which are assessed at Rs. 2000/-."
6. Being dissatisfied by the judgment passed by the National Consumer Disputes Redressal Commission, New Delhi, appellant filed an appeal before the Supreme Court of India stating all the facts and grounds. His contention is that the National Commission erred in granting the compensation claimed by the insured, i.e., appellant. Hon'ble Supreme Court of India vide order dated 5-12-1995 passed in Civil Appeal No. 6620/1995 dismissed the appeal. The order passed by the Supreme Court of India is reproduced below :--
"We have heard the learned Counsel for the. parties, we find no ground to interfere with the impugned judgment of the National Commission. We agree with the reasoning and the conclusions reached therein, the appeal is dismissed. No costs."
7. From the dispute raised by the respondent before the National Consumer Disputes Redressal Commission, New Delhi and also in appeal before Hon'ble the Supreme Court of India, it is clear that whatever dispute he wanted to refer to arbitrator, he has already raised all those disputes before the Forum and thereafter before the Hon'ble Supreme Court of India and obtained final adjudication therefrom on those disputes.
8. It is contended on behalf of the respondent that the petitioner has no right to file an application under Section 33 of the Arbitration Act, 1940 till the award is passed. Section 33 of the Arbitration Act, 1940 reads as below :--
"33. Arbitration agreement or award to be decided by application.-- Any party to an arbitration agreement or any person claiming under him desiring to challenge the existence or validity of an arbitration agreement or an award or to have the effect of either determined shall supply to the Court and the Court shall decide the question on affidavits :
Provided that where the Court deems it just and expedient, it may set down the application for hearing on other evidence also and it may pass such orders for discovery and particulars as it may do in a suit."
9. From the bare perusal of Section 33 of the Arbitration Act, it appears that any party to an arbitration agreement can challenge the existence or validity of the said agreement.
10. Hon'ble the High Court of M.P. in Hindusthan Steel Ltd., Bhilai v. Kaushal Construction Co., reported in 1966 MPLJ Short Note 12, has decided that application under Section 33 of the Arbitration Act can be made even during pendency of the proceeding before the arbitrators. It is clear from the said decision as well as from the section itself that party to the arbitration agreement is not required to wait for passing of the award, but if they want to challenge the existence of agreement they can challenge the same at any stage. Therefore, the contention raised by the respondent is repelled.
11. Respondent further contended that the consumer forum has no power to award damages or compensation because it is a matter of evidence, therefore, rightly partly allowed the claim to the extent of deficiency in service only. Since arbitration clause can not be enforced by the consumer forum, therefore, dismissal of claim without deciding merit does not restrict the jurisdiction of Civil Court. Contentions raised by him are misconceived. National Commission has been empowered under Section 21 of the Consumer Protection Act, 1986, to entertain complaints where value of goods or service and compensation, if any claimed, exceeds Rs. 20 lacs, now after amendment by Amendment Act No. 62 of 2002, Rs. 20 lacs have been increased by Rs. 1 crore.
Service has been defined in the said Act, 1986 which includes facilities in connection with, banking, financing, insurance, transport, processing, supply of electrical or other energy, board or lodging or both entertainment, amusement or the purveying of news or other information. Deficiency, according to Act, means any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service. Consumer dispute, according to the Act, means a dispute where the person against whom a complaint has been made, denies or disputes the allegations contained in the complaint.
12. From aforesaid definitions and the jurisdiction of National Commission, it is clear that respondent knowing it well stating deficiency in service claimed compensation of Rs. 41,67,442/- and the National Commission having jurisdiction to decide the same, decided the dispute on its merit.
13. Further, respondent is estopped from challenging the jurisdiction of National Commission as he himself has surrendered all his claims of damages or compensation before the National Forum and the National Forum having empowered under the Consumer Protection Act, 1986, has decided the same on its merit.
14. Petitioner's contention is that once the claim has been raised and adjudicated on merits under Consumer Protection Act, there is no door open for the claimant to take recourse of Arbitration Clause. To support the contention petitioner relied on the judgment passed by Hon'ble M.P. High Court in Basant Kumar v. United India Insurance Company Ltd., reported in 2003(2) M.P.H.T. 5 = 2003 (2) MPLJ 257, in which it has been held that :--
"Section 24 of the Consumer Protection Act, 1986 attaches finality to the orders of District Forum, State Commission or the National Commission if no appeal has been preferred against such an order under the provisions of the Act. Considering the scheme of the Consumer Protection Act, petitioner can not now avail the benefit of arbitration proceedings though initially it was open for him to choose the remedy before the arbitrator. Once the matter has been entertained and decided by the District Forum; award has been passed, it is not open for the petitioner to claim further amount by having recourse to the arbitration clause in the agreement. The order passed under Consumer Protection Act is final. Once claim has been adjudicated on merit, it is not open to challenge that order by having recourse before arbitrator. Though remedy of arbitration was available initially; that ought to have been availed without approaching Consumer Forum if petitioner so desired but after award has been passed on merits, an arbitrator can not sit over the order passed by the District Consumer Forum and State Consumer Redressal Commission."
15. Arbitration Clause Nos. 13 and 14 as agreed between the parties is reproduced below :--
"If any difference shall arise as to the quantum to be paid under this policy (liability being otherwise admitted) such difference shall independently of all other questions be referred to the decision of a arbitrator to be appointed in writing by the parties in difference, of if they can not agree upon a single arbitrator to the decision of two disinterested persons as arbitrators of whom one shall be appointed in writing by each of the parties within two calendar months after having been required so to do in writing by the other party in accordance with the provisions of the Arbitration Act, 1940, as amended from time to time and for the time being in force. In case either party shall refuse or fail to appoint arbitrator within two calendar months after receipt of notice in writing requiring an appointment, the other party shall be at liberty to appoint sole arbitrator and in case of disagreement between the arbitrators, the difference shall be referred to the decision of an umpire who shall have been appointed by them in writing before entering on the reference and who shall sit with the arbitrators and preside at their meetings.
It is clearly agreed and understood that no difference or dispute shall be referable to arbitration as hereinbefore provided, if the company has disputed or not accepted liability under or in respect of this policy.
It is hereby expressly stipulated and declared that it shall be a condition precedent to any right of action or suit upon this policy that the award by such arbitrator, arbitrators or umpire of the amount of the loss or damage shall be first obtained.
14. Every notice and other communication to the Company required by these conditions must be written or printed."
16. From the arbitration clause itself it is manifest that for invoking the jurisdiction of other Forum, it is necessary to take the dispute before arbitrator for adjudication and if any party to agreement prefers other Forum without taking recourse of arbitration clause it means, he himself has willfully given up his right, and whatever right was available to him for taking the dispute before the arbitrator, extinguished.
17. I am of the opinion that once the claimant has given up his right of adjudication by arbitrator in accordance with arbitration agreement and without taking recourse of the clause took the dispute before the National Consumer Forum who on merit decided the dispute and thereafter again by way of an appeal, the respondent took the dispute before the Apex Court, who also affirming the adjudication of National Consumer Disputes Redressal Commission, New Delhi, dismissed the appeal is now debarred from reverting back to take recourse of arbitration clause. Nowhere it has been provided that arbitrator can pass any award despite the fact that the dispute has already been adjudicated by the highest forum of India. Once the matter has been decided finally by the National Forum and thereafter by the Hon'ble Supreme Court of India, neither an arbitrator can be allowed to sit over or adjudicate the dispute a fresh nor he is empowered under the law to re-appreciate the matter by reopening the dispute diminishing the value of judicial system. No party can be allowed to drag other in litigation once the matter has been resolved by the highest forum else no dispute ever can reach to its finality. Accordingly, it is held that although the respondent has remedy available initially, but as soon as he availed the jurisdiction of other forum and obtained an award on merits his right to approach the arbitrator extinguished.
18. Learned Lower Court without minutely examining the contentions and material, has passed the impugned order and dismissed the application filed by the petitioner under Section 33 of the Arbitration Act, 1940 read with Section 151 of the CPC, has acted in the exercise of its jurisdiction not only illegally but also with material irregularity.
19. Accordingly, the revision is allowed and the impugned order passed by the Lower Court is set aside and the application filed by the petitioner under Section 33 of the Arbitration Act, 1940 read with Section 151 of the CPC is allowed and as a result thereof appointment of arbitrator and arbitration proceeding, if any, stands dismissed.
20. Taking into consideration all the facts parties shall bear their own costs.