R.N.PYNE, J. - (1.) ONTHE 6th of December 1963 the appellant Oriental Fire and General Insurance Co. Ltd., issued a Policy of Insurance in favour of the respondent Murlidhar Gopikisen Private Ltd. against loss of cash or bank-notes (otherwise than by the infidelity) of the employees of the respondent. The said policy provided, inter alia, as follows: "It is hereby agreed that during the continuance of this policy or any renewal thereof the company shall subject to the provisos and conditions hereinafter stated pay or make good to the insured the amount of any cash or bank-notes belonging to the insured lost otherwise than by the infidelity, fraud or dishonesty of the insured's employees by theft or robbery with or without violence or from any other cause whatsoever while in transit within the limits set forth in the Schedule hereto and in the custody or charge of the insured or his duly authorised representative for the purpose of such transmission but only to the extent set forth in the said Schedule during any one transit". The particulars of transit are mentioned in the Schedule and it is stated that the maximum amount of cash or bank-notes in transit at any one time was agreed to be Rs. 40,000/- and estimated amount of cash or bank-note in transit in any one year is stated to be Rs. 30,00,000/-. An arbitration clause is contained in cl.7 of the conditions of the policy. The said clause is in the following terms : "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 making 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 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 the claim shall for all purposes be deemed to have been abandoned and shall not thereafter be recoverable." On the 6th of March, 1964 the respondent wrote a letter to the appellant informing that respondent's Zamadar while proceeding with cash to Balasore at about 1-15 P.M. at Howrah Station lost Rs. 20,000/- and the matter was reported to the Howrah Police. Thereafter, the respondent on 12th March, 1964 filed claim before the appellant. The appellant repudiated the claim on 12th November, 1965. On the 29th March, 1966 the respondent's solicitor wrote a letter to the appellant reiterating the claim and on 25th May, 1966 the appellant again repudiated the claim on various grounds. Thereafter, on 11th September, 1966 the respondent wrote a letter to the appellant intimating that as the appellant had failed to settle and pay the claim the respondent desired to refer the matter and suggested the name of Shri Ajoy Kumar Mitra, Barrister-at-Law as arbitrator. The appellant's solicitor replied to the said letter stating that the appellant was not willing to agree to the appointment of Shri Ajoy Kumar Mitra and the appellant appointed Shri Nihar Ranjan Majumdar as arbitrator in terms of the arbitration clause. Thereafter, the respondent on the 27th October, 1966 wrote a letter to the appellant's solicitor M/s. M. L. Khemka and Co. stating that the respondent appointed Shri Ajoy Kumar Mitra as its arbitrator and requested that the appellant's arbitrator should contact Shri Mitra and proceed with the reference. On the 9th December, 1966 the arbitrators intimated that they had appointed Mr. Amal Chandra Sarkar, Barrister-at-Law as the umpire and intimated the time and place of the next sitting. It is stated that on the 14th December, 1966 a meeting was held and directions were given for filing of the statements and on the 23rd January, 1967 the respondent filed the statement of case. The appellant filed its counter statement on 24th January, 1967. On the 1st September, 1967 the appellant filed an application for amendment of its counter statement of facts. This was kept on the file by the arbitrators to be considered later. The arbitration meetings were held between September and August 19, 1969 and the witnesses were examined. The matter was heard for about 57 days before the joint arbitrators and the umpire presided over the arbitration proceedings in terms of the arbitration clause. In the meetings before the joint arbitrators presided over by the umpire various witnesses of both parties were examined and cross-examined. Arguments in great detail were made on behalf of both the parties. The appellant on 20th August 1969 received a copy of the letter dated 19th August, 1969 written by the joint arbitrators to the umpire in which they informed that they could not agree and requested the umpire to proceed to make the award. On 21st August, 1969 the umpire wrote letters to the attorneys for the parties giving notice that he had published his award. The appellant made an application challenging the propriety and validity of the award made by the umpire and for setting aside of the same. Subsequently, the award was filed in this court and the appellant made an application for setting aside of the award in the court of the first instance out of which this appeal has arisen. In the petition various points were taken challenging the award.
(2.) ON behalf of the appellant (who was the petitioner in the court of the first instance) various contentions were made in the court of the first instance in support of the application. Learned trial Judge negatived those contentions and by his judgment and order dated 6th June, 1963 dismissed the appellant's application. The instant appeal has been preferred by the appellant against the said judgment and order dated 6th June, 1963. It has been contended on behalf of the appellant that under the Insurance policy maximum amount of cash and /or bank-notes of Rs. 40,000/- in transit at any one time is insured. In the statement of case filed by the respondent before the arbitrators it was alleged that Rs. 50,000/- was taken at one time in cash and Rs. 20,000/- was stolen and became missing from the said sum. It has been submitted on behalf of the appellant that the risk covered by the policy is maximum amount of cash and/or bank-notes in transit at any one time is Rs. 40,000/- and estimated amount of cash and/or bank-notes in transit during any year is Rs. 30,00,000/-. It was stated the risk covered in one single transaction was risk only of Rs. 40,000/- but it is stated by the respondent that its employee carried Rs. 50,000/- in one single transaction. Hence the risk was not covered by the policy. Therefore, the umpire's award is perverse and vitiated. It was submitted on behalf of the respondent that the relevant clause of the policy did not mean that in one single transaction nobody would be permitted to carry more than Rs. 40,000/- but the liability of the insurer would be limited to Rs. 40,000/-in case of loss in one transaction and would be limited to Rs. 30,00,000/- in a whole year. It was further submitted that the Magistrate Howrah declared the case filed before him by the respondent to be false and discharged the accused. The above fact was not denied by the respondent in the said case. The above facts were however before the joint arbitrators and the umpire. As these allegations relate to the merit of the case before the joint arbitrators and the umpire and they after adjudicating upon the same in the arbitration proceeding made the award it was not open to the court to go into these questions which relate to the merit of the case in the application for setting aside the award. The arbitrators and umpire were fully entitled to decide these questions. Further, under the policy maximum sum insured was Rs. 40,000/-. That does mean that money more than Rs. 40,000/- could not be carried at a time. The insurer's liability under the policy was limited to Rs. 40,000/- only. Further, the rival contentions of the parties were before the arbitrators and the umpire and because one contention was accepted by the umpire it cannot be said that there was misconduct on the part of the umpire or that he committed an error of law. It is also to be noted that if two conclusions are possible and one contention is accepted by the arbitrator or the umpire which does not appeal to Court that does not mean that the award is perverse in the sense that no reasonable man would have taken that view. Hence we are unable to accept the above contentions of the appellant.
(3.) IT was further submitted on behalf of the appellant that the umpire did not properly enter upon the reference and as such the award is vitiated. Further, the umpire did not inform the parties about his entering upon the reference after the arbitrators disagreed. According to counsel, under the arbitration clause, that is, clause 7 of the agreement, the umpire was to act if the arbitrators did not agree. According to counsel, in the instant case there was no reference to the umpire. Until the arbitrators disagreed the umpire could not enter upon the reference. The umpire's sitting with the arbitrators and presiding over the arbitrators' meeting cannot be construed to mean reference to both the arbitrators and the umpire at the same time. Such reference is contrary to the express provision of the aforesaid arbitration clause. The object of the umpire's sitting and presiding over at the arbitrators' meeting was to enable him to know the matter and proceed expeditiously in case he was required to enter upon the reference upon the arbitrators' disagreement. That did not amount to the umpire's entering upon the reference. Referring to S.3 and Cls.4 and 5 of the First Schedule to the Arbitration Act, 1940 it was submitted that the umpire was to enter upon the reference if the arbitrators disagreed or their time to make the award expired unless the agreement contains express provision to the contrary. In the instant case there is no such express provision. IT was further submitted that the umpire could not be deemed to have entered on the reference along with the arbitrators because that would mean if the arbitrators allowed their time to expire the umpire's time would also expire and he would not be able to enter upon the reference, hear the parties and make the award. In the instant case although the arbitrators' time to make the award was extended by the parties and by the Court's order but the umpire's time was never extended.;