NEW INDIA ASSURANCE CO LTD Vs. KAMTA SINGH

JUDGEMENT

(1.) THIS application is directed against an order of the Small Cause Court Judge of Arrah, rejecting certain objections of the defendants who are petitioners in the case. Petitioner No. 1 is an Insurance Company whose head office is in Bombay and branches in Calcutta and Patna. Petitioners Nos. 2 and 3 are those branches. The opposite party insured his car with the said Insurance Company against loss, damage or accident for the period from the 29th June, 1962 to 28th June 1963. The ear met an accident at Arrah on the 6th November, 1962, and was damaged. It was sent tor repairs to Messrs Lawly Sen and Co., who estimated the cost of repairs at Rs. 325/-. Messrs Lawly Sen and Co., repaired the car and gave the plaintiff a bill for Rs. 296.63 nP. after giving a discount of 10 per cent., to which the Insurance Companies are generally entitled, and the opposite party paid the said amount to the repairing Company under a Cash Memo dated the 15th November 1962. There was some difference between the opposite party and the Insurance Company regarding the amount of the cost of repair. The opposite party, therefore, instituted a Small Cause Court suit at Arrah for recovery of the said amount. The petitioners-defendants appeared in the suit and filed a petition slating that the plaintiff could not proceed with the suit without referring the alleged dispute to arbitration in accordance with the terms of the policy of insurance. After some time, the Company also filed another petition contending that a Small Cause Court was not competent to take cognizance of such a suit. Both the petitioners were rejected by the learned Small Cause Court Judge; hence this application in revision.

(2.) IN support of the first objection, Mr. Gujadhar who appeared for the petitioners relied on Section 34 of the Arbitration Act, 1940, which reads as follows:

(3.) IT was then argued on behalf of the opposite party that the Insurance Company had waived its right of getting the dispute referred to an arbitration under Section 34 of the Arbitration Act inasmuch as the Company had also filed a petition questioning the jurisdiction of the Small Cause Court. In Anderson Wright Ltd. v. Moran and Co., AIR 1955 SC 53 it was held that, in order that a stay may be granted under Section 34, it is necessary that the following conditions should be fulfilled; (1) the proceeding must have been commenced by a party to an arbitration agreement against any other party to the agreement; (2) the legal proceeding which is sought to be stayed must be in respect of a matter agreed to be referred; (3) the applicant for stay must be a party to the legal proceeding and he must have taken no step in the proceeding after appearance and that he should satisfy the court not only that he is but also was at the commencement of the proceedings ready and willing to do every thing necessary for the proper conduct of the arbitration; and (4) the Court must be satisfied that there is no sufficient reason why the matter should not be referred to an arbitration in accordance with the arbitration agreement. IT appears that the Insurance Company entered appearance in the suit on the 5th April 1963; and on the same date filed a petition raising an objection on the basis of Section 34. In paragraph 8 of that petition, the Company said that at all material times it was, and still was, ready to do everything necessary for the proper conduct of the arbitration that might be held in accordance with the terms and conditions of the insurance. In this petition, it has referred specifically to the arbitration clause contained in condition No. 7 of Clause MV. The Insurance Company had not taken any other step in that proceeding so far. On the 28th July 1963 however, the Insurance Company filed the second petition questioning the jurisdiction of the Smallj Cause Court. The filing of this petition more than: three months after the first petition under Section 34 of the Arbitration Act cannot, in my opinion, deprive the Insurance Company of the advantage that it wants to take of Section 34 of the Arbitration Act. Hence there was no waiver on the part of the Insurance Company. The learned Advocate referred in this connection also to two other decisions, viz, Middle East Trading Co., Bombay v The New National Mills Ltd., Ahmedabad, AIR 1960 Bom 292 and Deluxe Film Distributors Ltd. v. Sukumar Kumar, AIR 1960 Cal 208 but they arc of no assistance except in regard to the principles. In view of the foregoing discussions, I am unable to agree with the learned Small Cause Court Judge that the plaintiff was entitled in the instant case to claim less than Rs. 300/- without any recourse to arbitration; and the petitioners are entitled to stay and it is a fit ease where the Court must stay the proceedings in the suit so long as the difference is not referred to arbitration in accordance with the arbitration agreement contained in condition No. 7 of Clause MV.