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TMI Blog1952 (2) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... a sum of ₹ 7,000 for the loss of the car. On the 10th April, 1948, Mr. Kapur received a letter from the Branch Manager of the Company's office at Amritsar asking for information regarding certain matters stated in the letter. This information appears to have been supplied on the 30th April, 1948. On the 26th May, 1948, the company's Branch Manager at Amritsar wrote to the first respondent repudiating the liability of the company for the loss of the car on the ground that the loss was due to communal riots which were going on in the whole of Punjab and was not covered by the agreement of insurance. A similar letter was written again by the Branch Manager on the 3rd July, 1948, to the first respondent, and another letter was written by one Mr. Rattan Lal Chawla representing himself to be counsel for the company, to Mr. A.R. Kapur, on the 1st August, 1948. On the 21st November, 1949, the first respondent wrote a letter to the Branch Secretary of the Company's office at Calcutta, stating that his claim was valid and nominating Mr. T.C. Chopra, Assistant Manager, Lakshmi Insurance Company Ltd., Delhi, as arbitrator on his behalf and requesting the company to appoint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commenced the proceedings and took the statement of the plaintiff and the documents that he had produced. He made a further note at the end of the award to this effect :-- As after the giving of the award a notice was served upon me not to give the award, I have not sent any formal letter to the parties informing them of the award and its costs. On the 24th March, 1950, the Subordinate Judge passed an order on the company's application under section 33, dismissing it and holding that the terms of clause 7 of the agreement were comprehensive enough to include the points of disputes between the parties now and as such are triable by the arbitrator and not by the court. The Subordinate Judge concluded his order by observing: I, therefore, hold that the reference to the arbitration of the differences is perfectly valid and the points raised by the parties to this application with regard to the abandonment of claim and its becoming irrecoverable are to be decided by the arbitrator. The judgment of the Subordinate Judge was upheld in revision by the Punjab High Court and the company has now preferred an appeal to this court by special leave. The points that wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ward by the first respondent must be deemed to have been abandoned and he cannot recover anything from the company. On the other hand. the case of the first respondent, which is set out in. his affidavit dated the 17th February, 1950, is that there was never any valid disclaimer by the company of its liability. The position that he took up was that the Branch Manager of the company had no authority to disclaim the liability, and it could have been disclaimed only by a resolution of the company. Now these being the respective contentions of the parties, the question is whether the point in dispute fell to be decided by the arbitrator or by the court under section 33 of the Arbitration Act. Section 33 is to the following effect:-- Any party to an arbitration agreement or any person claiming under him desiring to challenge the existence or validity of an arbitration agreement or an award or to have the effect of either determined shall apply to the Court and the Court shall decide the question on affidavits: Provided that where the Court deems it just and expedient, it may set down the application for hearing on other evidence also. and it may pass such orders for discovery and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Ltd. ([1941] 1 A.E.R.337,343) the law on the subject has been very clearly stated in the following passage :- An arbitration clause is a written submission, agreed to by the parties to the contract, and, like other written submissions to arbitration, must be construed according to its language and in the light of the circumstances in which it is made. If the dispute is as to whether the contract which contains the clause has ever been entered into at all, that issue cannot go to arbitration under the clause, for the party who denies that he has ever entered into the contract is thereby denying that he has ever joined in the submission. Similarly, if one party to the alleged contract is contending that it is void ab initio (because, for example, the making of such a contract is illegal the arbitration clause cannot operate, for on this view the clause' itself is also void. If. however, the parties are at one in asserting that they entered into a binding contract, but a difference has arisen between them as to whether there has been a breach by one side or the other, or as to whether circumstances have arisen which have discharged one or both parties from further perform ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. In holding that the arbitrator had jurisdiction to decide the matter, Viscount Reading C.J. observed as follows:- If the company were seeking to avoid the contract in the true sense they would have to rely upon some matter outside the contract, such as a misrepresentation of some material fact inducing the contract, of which the force and effect are not declared by the contract itself. In that case the materiality of the fact and its effect in inducing the contract would have to be tried. In the present case the company are claiming the benefit of a clause in the contract when they say that the parties have agreed that the statements in question are material and that they induced the contract. If they succeed in escaping liability that is by reason of one of the clauses in the policy. In resisting the claim they are not avoiding the policy but relying on its terms. In my opinion, therefore, the question whether or not the statement is true is a question arising out of the policy. The main contention put forward on behalf of the appellant is that the points in dispute fall outside the jurisdiction of the arbitrator, firstly because the existence of the arbitration agreem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hould be stated that as early as the 24th March, 1950, the Subordinate Judge in dismissing the appellant's petition under section 33, made the following observations :-- During the pendency of the arbitration proceedings the arbitrator pronounced the award..... The award has now been filed in the court of S. Mohinder Singh, Sub Judge, 1st class, Delhi. Any objection against the award can be filed there. In this application in which there is no prayer for setting aside the award, which exists, I do not think it proper to decide the question of the validity of the award. In our opinion, the Subordinate Judge correctly indicated the course which it was open to the appellant in law to adopt for the purpose of questioning the validity of the award, but not having taken that course and not having made any application in the courts below for amending the petition under section 33, the company cannot ask this court to go into the validity of the award by widening the scope of the original petition. This court is always in favour of shortening litigation, but it would be a very unusual step to allow the petition under section 33 to be amended now and to decide a question involvi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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