ORIENTAL INSURANCE CO LTD Vs. GLOBE ENTERPRISES

JUDGEMENT

(1.) The present appeal is directed against the order dated September 22, 1990, passed by the Subordinate Judge I, Bhagalpur, in Miscellaneous Case No. 2 of 1990 by which the award of the arbitrators in question has been made the rule of the court except in relation to grant of interest.

(2.) The foundational facts are not in controversy. The respondent carried on agency business of Hindustan Lever Ltd. at Bhagalpur. It had insured its stock-in-trade valued up to Rs. 4,15,000 with the appellant insurance company under Insurance Policy No. 31619/4/F/301/87. The period of coverage was October 7, 1987, to October 6, 1988. On December 7, 1987, a fire broke out in the godown of the respondent causing losses. The information regarding fire was sent to the divisional manager of the company at Bhagalpur. The company appointed two surveyors, who after inspection, assessed the damages to the extent of Rs. 2,500 only. But, according to the respondent, the loss caused was to the extent of Rs. 3,45,679.93. Keeping in view the report of the surveyors the appellant company refused to entertain the claim on the ground that it was exaggerated as is evident from its letter dated March 17, 1988 (exhibit A-5). Keeping in view the dispute on quantum of loss as provided under Clause 13 of the policy, the insurer and the insured both appointed their independent arbitrator and the said arbitrators in their turn appointed an umpire. The arbitrators, by their award dated March 15, 1990, assessed the compensation at Rs. 3,45,679.93 with interest thereon with effect from December 7, 1987, till the date of payment at the rate chargeable by the bank. Though the court below by the impugned judgment, has affirmed the quantum of compensation it has modified the award to the extent that the respondent insured is not entitled to any interest till the date of award, i.e., March 15, 1990. But, in the last paragraph of the decree, it has been ordered that the interest at the rate of 16.5% will be payable for the period December 7, 1987, to March 19, 1989, as well. No cross-objection has been filed on behalf of the respondents.

(3.) Learned counsel for the appellant has assailed the impugned judgment and decree on two grounds, namely, (i) since the appellant had repudiated its claim under the policy, therefore, the arbitration proceedings, the award and the consequent judgment and decree as impugned are without jurisdiction and are fit to be set aside, and (ii) even otherwise the grant of interest under the decree for the period December 7, 1987, to March 19, 1989, is bad being contrary to the directions contained in the impugned judgment in this regard.