Falshaw, J. - (1.) THE facts giving rise to this Letters Patent appeal are as follows. The firm Kartar Singh Amrik Singh owned a quantity of cotton which was lying stored in the godowns of a Ginning Factory at Jandiala, this cotton being hypothecated to the Amritsar Branch of the Bharat Bank Limited. The cotton was insured for a sum of Rs. 50,000/ - against damage by fire by means of a policy taken with Ruby General Insurance Company Limited on 21 -12 -1947, the policy being renewed on 13 -02 -1948, for a further period of three months. On the night between 20 and 21 -03 -1948, a fire took place in the godowns of the Ginning Factory in which it is alleged that the whole stock of cotton was destroyed. The news of this fire was conveyed to the Insurance Company by the interested Bank by means of a letter dated 22 -03 -1948. Thereafter a difference arose between the parties regarding the amount payable by the Insurance Company for the damage to the cotton. Negotiations went on for some time and on 21 -01 -1949, the Insurance Company made an offer to pay Rs. 22,500/ - in full and final settlement of the loss. It was stated by Mr. Baij Nath Chopra, Manager of the Insurance Company, in his evidence that notice had been served on the Insurance Company of the intention of the claimants to refer the matter to arbitration, but apparently no arbitrator was appointed by the parties and on 18 -03 -1949, the firm which owned the cotton and the Bank jointly filed an application in Court under Section 20, Arbitration Act. The application was resisted by the Insurance Company on grounds which gave rise to the following issues: 1. Has Bharat Bank applicant 1 no 'locus standi' to bring the present application? 2.IS the present application within time? Is the agreement not binding on Respondent so far as arbitration reference is concerned.
(2.) The first 'and' the third of these points were decided in the Petitioners' favour and no longer arise. The objection of the Insurance Company which gave rise to the second issue was based on Clause 19 of the conditions contained in the Insurance policy, which reads: In no case whatever shall the company be liable for any loss or damage after the expiration of twelve months from the happening of the loss or damage unless the claim is the subject of pending action or arbitration. This issue was only dealt with briefly by the learned Subordinate Judge, who came to the conclusion that the parties could not by mutual agreement alter the ordinary laws of limitation, and that in any case the application under Section 20, Arbitration Act, being filed within 12 months of the date of the fire which gave rise to the loss or damage could be regarded as a pending action. He accordingly ordered that the arbitration agreement contained in Clause 18 in the policy should be filed in Court and fixed 'a date for the parties' statements regarding whether they could agree on any arbitrator. An appeal against this order was filed in this Court by the Insurance Company. The appeal was decided in the Company's favour by Kapur J. on 06 -07 -1950 on the following findings as summarised at the end of his judgment: 1. That a limitation placed by the terms of a policy during which a claim can be made or after which excepting in certain contingencies the liability of the insurer will cease is not a condition which is void either under the Contract Act or under the Limitation Act. 2. The use of the word 'action' in the terms and conditions of the policy is unfortunate as the word 'action' is not used in Indian Law. 3. That the proceedings under Section 20 are not a suit even if the word 'action' was equivalent to the word 'suit'. 4.THAT a pending suit is not an exception within the terms of Clause 19, and therefore, would be of no avail to the insured.
(3.) The present appeal has been filed against this order by the Bank and the Company which owned the cotton. The question on which the decision of the appeal turns is clearly divisible into two parts: 1. Whether the Clause 18 in the Insurance Policy which is intended to supersede the ordinary Laws of limitation is valid and enforceable; and 2. whether even if this clause is valid and enforceable, a petition under Section 20, Arbitration Act, filed in Court within 12 months of the date of the damage or loss is a "pending action. 4. It seems to me that this appeal can be decided without going into the first of these questions, on which the decision of the learned Single Judge appears to be based on good authority although 'prima facie' the proposition involved would appear to me to be highly debatable. We have, however, not heard full arguments on this point and only heard arguments on the second point.;