S.K.Chakravarti, J. - (1.) THIS case raises a very important and interesting point as to the right of the party to a contract of insurance to file a suit where under the contract it is provided for that all differences arising out of the policy are to be referred to arbitration and that the making of an award shall be a condition precedent to any right of action against the company.
(2.) THE broad facts of this case are admitted. THE opposite party's motor car was insured with the petitioner company and it was involved in an accident on the 8th of March, 1963. THE opposite party sent the claim form duly filled in and signed, together with detailed estimate of repairs done by Barman and Company in respect of the damage to whom it had paid a sum of Rs. 1113.35 on this account. THE petitioner company by its letter dated the 24th August, 1964 (Exhibit 2) contended that the opposite party had taken away the motor car from the garage and did not give any opportunity to the surveyor appointed by the petitioner company to inspect the car, and as such, the petitioner company repudiated the claim. THEreafter the opposite party filed the instant suit in the court of the Small Causes, at Calcutta for recovery of the sum of Rs. 1113.35 paise. Before the learned trial Judge the petitioner raised only one point and it was to the effect that in view of clause 7 of the Contract of Insurance the dispute in question was to be referred to arbitration, and the making of an award was a condition precedent to the institution of the suit, and as arbitration had not been resorted to, the suit was a premature one and should be dismissed. THE learned trial Judge did not accept this contention and decreed the suit. THE petitioner filed an application under Section 38 of the Presidency Small Cause Courts Act before the Full Bench of the small causes Court at Calcutta and that Full Bench also upheld the decision of the trial Court. Hence this application. Mr. Gupta, learned counsel appearing on behalf of the petitioner submits that the Courts below have taken an erroneous view of the law. He submits that where, in the contract, there is only a provision for reference to arbitration, then a suit may still lie, and the remedy of the other party would be to apply for stay under Section 34 of the Arbitration Act. He further urges that if, however, in addition there is a clause to the effect that the making of an award shall be a condition precedent to any right of action, that clause is a legal and valid one, and will have to be given effect to, and as in the present case there is such a clause, the suit should have been dismissed, as admittedly there had been no reference to arbitration. It would be convenient at this stage to quote Clause 7 of the contract of insurance. Clause 7:-- "All differences arising out of this party 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 meeting and the making of 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 here-under 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 then the claim shall for all purposes be deemed to have been abandoned and shall not thereafter be recoverable here-under."
(3.) MR. Gupta has referred to a number of decisions and also to different parts of Halsbury's Laws of England. I will refer to the same as and when it would be convenient.;