B.C.Misra, J. - (1.) -
(2.) THIS first appeal from order has been filed under section 39 of the Arbitration Act against the order of Commercial Subordinate Judge 1st Class, Delhi dated 30th May, 1966, by which the learned Judge has dismissed the application of the appellant herein filed under section 20 of the Arbitration Act for referring the matter in dispute between the parties to arbitration. The brief facts of the case are that the appellant herein filed a petition under section 20 of the Arbitration Act in the court below on the allegations that she was the owner of a fiat car which had been insured with the New India Insurance Company Limited, the first respondent, under a comprehensive insurance policy effective upto 18th August, 1964. On 14th April, 1964, the car met with a serious accident resulting in the death of Mr. Kulwant Rai Jain, who was driving the car with the permission of the owner and it also resulted in injuries to Kanshi Nath and Brahm Dutt Sharma respondents. The appellant claimed from the insurance company compensation on account of the death of the deceased. It was rejected. The record shows that the appellant claimed Rs. 8,75,000.00 on account of compensation for the death of the deceased. The respondent-company repudiated the claim and the appellant thereafter claimed that the matter in dispute be referred to the Arbitrator under clause 7 of the contract of insurance. It may be noticed that in the proceedings, the widow, the mother and the children being legal representatives of the deceased driver, besides two other persons, who had been injured had been impleaded, but they were deleted under orders of the Court are no longer parties in the appeal in this Court. The contesting respondent, the insurance company, contested the claim on the ground that the dispute between the parties cannot be covered by the arbitration agreement and the legal representatives of the deceased were not parties to the contract and the appellant petitioner did not have any insurable interest the deceased and the dispute, therefore, could not be referred to arbitration. On the pleadings of the parties, the following issues were framed by the Court below, namely : "1. Whether the disputes in question are covered by the arbitration clause in the policy in question ? 2. If issue No. 1 is proved whether the matter be not referred to the arbitration ? 3. What is the mode of settlement for the appointment of the Arbitrator and what action be taken by the Court for that purpose ? 4. Relief." The court below answered issue No. 1 against the appellant-petitioner and held that the dispute in question was not covered by the arbitration agreements. la view of the said finding, no answer was returned to issues 2 and 3 and the petition was finally dismissed. Aggrieved by the said order, the learned counsel for the appellant has contended that the dispute raised between the parties was obviously a dispute within the meaning of the arbitration agreement and ought to have been referred to the Arbitrator irrespective of the merits of the case as to whether the appellant-petitioner was or was not entitled to the award of compensation in her favour. I have heard the parties at considerable length. The insurance policy Exhibit A/I is on the record of the case. The arbitration agreement is contained in condition No. 7, the material portion of which reads as follows:- "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 calender month after having been required in writing so to do by either of the parties. X X X If the company shall disclaim liability to the insurance 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 them the claim shall for all purposes be deemed to have been abandoned and shall not thereafter be recoverable hereunder." There is no doubt about the ambit of the arbitration clause. It covers all differences arising out of the policy between the parties. The question, therefore, arising for consideration is whether the dispute between the parties arises out of the policy. On this point the relevant provisions are contained in section II of the contract of insurance. Clauses 1 and 3, which require construction in this case, are reproduced below. "Section II-Liability to Third parties. 1. The company will indemnify the insured in the event of accident caused by or arising out of the use of the motor car against all sums including claimant's costs and expanses which the insured shall become legally liable to pay in respect of (i) x x xx (ii) xxx X (iii) In terms of and subject to the limitations of the indemnity." On a construction of the aforesaid clauses, it is obvious that the insurance company has agreed to indemnify the insured in the event of an accident against all sums including claimant's costs and expenses which the insured shall become legally liable to pay. In accordance with clause 3, the company has agreed to indemnify the driver who is driving the car with the permission of the insured provided he observes and fulfils the terms, exceptions and conditions of the policy in so far as they can apply. Neither the deceased nor his legal representatives are parties to the contract of insurance and nobody who is not a party to the arbitration agreement or a contract containing it can enforce the same. See Des Raj Pahwa v. The Concord of India Insurance Company Limited.1 and Alice Marie Vandepitte v. The Preferred Accident Insurance Company of New York.2 The appellant does not claim any insurable interest in the deceased and she has not claimed that she is entitled to claim or retain any amount on account of the deceased herself. There is, therefore, as yet no dispute between the appellant and the respondent. All that has happened is that the legal representatives of the deceased have sent a notice to the appellant, but they have not taken any steps under the provisions of the Motor Vehicles Act to enforce the claim for compensation for loss or damage to third parties. The third parties, for whose benefit compulsory insurance is provided by section 94 of the Motor Vehicles Act, have been given a remedy to proceed under section 110 of the Act and obtain an award against the tort-feaser as well as the insurance company and then the same would be enforceable against the insurance company under section 110-E of the Act. Section 110-F of the Act excludes the jurisdiction on Civil Courts in respect of matters which can be agitated before the Claims Tribunal. If such proceedings are instituted, the insurance company has a right to contest it and under condition not 2 of the insurance policy exhibit A/I, the parties are prohibited from making any admission, offer or promise of payment or indemnity without the written consent of the company. It is obvious that the legal representatives of the deceased victim have not taken any steps to move under the provisions of the Motor Vehicles Act, nor have they instituted any civil suit, assuming it was open to them to do so. They are not parties to the contract of insurance and so they can obviously not have the dispute referred to arbitration. Since they are not parties to the arbitration agreement or to the arbitration proceedings, it follows that they would also not be bound by the award if any that may be made between the parties to this appeal; See Chaudhari Hira Singh v. Chaudhari Ganga Sahai.3 Moreover, as noticed above, they were struck off the array of the parties in the Court below and have not been impleaded in the appeal in this Court. So they are, in any event, not bound by the decision of the court below or the decision of the present appeal whether it be in favour of or against the present appellant. The learned counsel for the appellant has very strongly contended that the reference to the driver in clause 3 of section 11 of the insurance policy would be wholly redundant if the appellant were unable to enforce the contract by reference to arbitration. It is true that this term contains a reference to indemnity in respect of the driver subject to the conditions specified in the clause. This clause has been inserted to extend the scope of the insurance to the case of the death or injury of the driver. Ordinarily, if a driver receives an injury in an accident which has resulted on account of his own rash and negligent act, he may himself be liable to pay damages to third parties which be suffered as a result of the accident, but he himself would hardly be entitled to claim compensation for his own wrong except as provided by the provisions of law like the Workmen's Compensation Act. The indemnity for the driver in the insurance policy in dispute is conditioned by his fulfilment of two conditions, namely to abide by the terms and conditions of the policy and he is not entitled to indemnity under any other policy. If the driver complies with these conditions and is entitled to compensation, the insurance policy would cover his case, but this does not militate against the status of a driver as being a stranger to the contract of insurance. He would as well be entitled to pursue his claim under section 110 of the Motor Vehicles Act and then the insurance company may be saddled with the liability arising out of the contract of indemnity evidenced by the insurance policy exhibit A/1, but this does not entitle the driver to become a party to the contract and to enforce it in precise either by reference to arbitration or by instituting a suit for enforcement or breach of the contract. Clause 3 really agrees with the insured to indemnify her for death or injury to the driver and this would pre-suppose the loss on the part of the insured which. he can claim from the insurance company to inde Counsel has strongly contended that in view of the rule of law laid down by the Supreme Court in Ruby General Insurance Company Ltd. v. Pearey Lal Kumar and another. the Court is concerned with the existence of the arbitration agreement and of the dispute and then it is bound to refer the dispute to the Arbitrator to decide it, irrespective of the strength or weakness of the claim of the parties. There is no doubt that in applications under section 20 of the Arbitration Act, the Court is mainly concerned with the existence of the arbitration agreement and the existence of the dispute referable to arbitration, but the provisions of sub- section (4) of section 20 of the Act leave sufficient scope for exercise of judicial discretion in the matter and there are circumstances when the Court may decline to refer the dispute to arbitration. See AbdulKadar v. Mahadav Prabhakar, and Union of India v. S.N. Dass and Brothers. In the circumstances of the case, it appears that the appellant is not preferring any claim of her own. Had she done so, she would have been entitled to reference to arbitration irrespective of its merits. What I find is that there is no subsisting dispute between the parties referable to arbitration under the agreement contained in the insurance policy and the appellant is not entitled to have adjudication of the claim of strangers to the contract. On my asking to state clearly Mr. P.D. Jain, counsel and husband of the plaintiff-appellant categorically stated that she did not want the amount claimed for herself, but she wanted the insurance company to settle and pay the claim of the legal representatives of the deceased driver. This is certainly not the kind of dispute which can be referred to arbitration in pursuance of the arbitration agreement contained in exhibit A/I to which the legal representative were not parties while the plantiffmnity. The receipt of a mere letter from the legal representatives of the deceased does not and cannot constitute any loss which the insured can claim from the insurance company to indemnify appellant does not have any insurable interest in the deceased driver or his legal representatives. In Union of India v. Messrs. Chiman Lal Loona,1 the Court observed that in an application under section 20 of the Arbitration Act the only point for decision was if there was an arbitration agreement and the question of liability was one for the Arbitrator and not for the Court to decide, ordinarily that would be so, but when it was pointed out that Union of India as such was admittedly not a party to the arbitration agreement and could not be dragged thereto arbitration proceedings on the strength of an agreement to which it was not a party, unless by operation of law, it was deemed to be a party to the agreement.
(3.) AS a result I have no hesitation in endorsing the finding of the Court below that the dispute raised by the plaintiff appellant is not covered by the arbitration clause contained in the insurance policy and so the petition under section 20 of the Arbitration Act filled by the plaintiff- appellant must fail. Consequently the appeal is dismissed, leaving the parties to bear their respective costs.;