2001 PLP 15 (CLC)

3. It is contended by the learned counsel for the petitioners that claim of the respondents was fraudulent and was rightly rejected by the Insurance Companies on the basis of survey report: Relying on condition No. 13 of the Insurance Policy, it is contended that condition No. 18 was not attracted to the facts and the circumstances of the case and reference to arbitration it the matter was not warranted. Relies on The Eagle Star and British Deminions Insurance Company v. Dinanath and another‑AIR 1923 Bom. 249 and Chiranjiv Lal and others v. The Tropical Insurance Co. Ltd. AIR 1952 Pb. 63 to support his contentions.

4. The respondents are represented at the limine stage of this petition through their learned counsel who have been heard. It is contended by the learned counsel for the respondents that after joint survey had been conducted due to intervention of Controller of Insurance, a specific amount had been assessed by them, the rejection of claim by the petitioners was not warranted, therefore, resort to Condition No. 18 of the Policy of Insurance was the only remedy for resolving the dispute i.e. Arbitration.

5. Issuance of the policy is not denied. There was a reported incident of fire 4nd, as result thereof, the petitioners appointed surveyors. Feeling dissatisfied with the report of said Surveyors the respondents approached the Controller, who then appointed a survey team. Their joint report showed the loss of Rs.23,457,

152. As the petitioners had rejected the claim of the respondents, they proceeded to invoke condition No. 18 of the policy and appointed an Arbitrator in the matter. The plea of the petitioners that claim was fraudulent, therefore, condition No. 18 could not be invoked, which according to them is applicable only when "difference arises as to the amount of any loss or damage" cannot be entertained at this stage as it would amount to prejudging the matter as to whether the claim of the respondents was valid or fraudulent. It may, however, be observed that in the joint survey report loss had been assessed for which the respondents made a claim, which was rejected by the petitioners. It may be appropriate to mention that vide letter, dated 16‑11‑1999 the claim was rejected as not maintainable. A dispute thus, had arisen between the parties as to the amount of loss or damage.

6. Condition No. 18 seems to be a general condition appearing in Insurance Policies and had come up for consideration before the Courts. In The Great American Insurance Co. Ltd. v. Bodh Raj AIR 1953 Pb. 50, it was observed as follows:‑‑ "In the concluding sentence of the arbitration clause it is stated that it shall be a condition precedent to any right of action or suit upon the policy that the award by such arbitrator/arbitrators or umpire of the amount of the loss or damage if disputed shall be first obtained. In plain English the concluding sentence of the arbitration clause provides that no suit upon the policy shall be instituted unless the arbitrator has ascertained the amount of the loss or damage, if disputed. In case it is found that the arbitration clause only applies to a difference as to amount of loss or damage and, therefore, not to a claim which the company rejected altogether, whatever the loss might be, the condition stated in the concluding sentence of the arbitration clause will not be satisfied when the company decides to deny its liability under the policy. Clearly, this was not the result contemplated by the arbitration clause." In Great American Insurance Co. Ltd. v. Dina Nath AIR 1957 Pb. 152, again such a clause came to be considered and it was observed:‑‑

"The learned counsel for the Company has attempted to argue that the total repudiation of any liability on the part of the Company takes the dispute between the parties out of the scope ; of these words, which, as far as I could gather from him, will only come into play if the Company admits that some loss or damage has been caused and the dispute is only regarding the extent. I cannot see any force in this argument, since it does not seem to me to make any difference whether the Company says that no damage or loss at all has been caused, of whether it says that some damage has been caused, but not as much as is claimed by the insured. In either case it is quite obvious that there is a dispute between them as to the amount of loss or damage and it does not seem to me that any authority is necessary for holding that the present dispute between the parties falls within the scope of the arbitration clause in the policy." In General Insurance Co. v. Khyber Textile Mills Ltd. And others PLD 1976 Kar. 540, a similar contention as is being raised before me was repelled taking the view:‑‑ "In the instant case, the respondent had preferred a specific claim for Rs.8,96,333 which the applicant categorically declined to pay on certain grounds. Thus, there is a present arid actual dispute as to amount of loss or damage. In this connection, Mr. Ibrar Hassan for the respondent referred to Ismail Abdul Sattar & Brothers v. Eastern Federal Insurance Company Ltd. PLD 1959 (W.P.) Kar. 179 wherein it was held that the refusal by the Insurance Company to admit or deny a specific claim put forward by the assured was deemed to be a dispute, which fell within an. identically worded arbitration clause." In The National Security Insurance Company Ltd. v. Messrs Pak Oriental Tapis and others 1992 MLD 215 (Lahore), the stand of the Insured/ respondent was that‑since the factum of loss had been denied, the arbitration clause was not attracted. Relying on Ismail Abdul Sattar & Brothers v. Eastern Federal Union Insurance Company Ltd. PLD 1959 (W.P.) Kar. 179, it was held that despite the denial of the claim by the Insurance Company, the Arbitrators could determine, the amount of loss. Although the said case had arisen in somewhat different context as to whether the suit filed by the insured could proceed when an application under section 34 of the Arbitration Act had been filed by the Insurance Company, yet the principle involved and decipherable is fully attracted.

7. In the instant case on the basis of joint survey report, claim of specific amount had been made by the respondents in their letter, dated 10‑11‑1999, which was rejected by the petitioners/companies on 16‑11‑1999. The difference having arisen between the parties had to be resolved with reference to condition No. 18 of the policy. In view of the above precedents the applicability of condition No. 18 to the facts and circumstances of the case was beyond doubt.

8. The reliance of the learned counsel for the petitioners on the precedents referred to by him is not apt inasmuch as the said precedents were duly considered in. the case of The Great American Insurance Co. Ltd. (supra). The precedents so relied by the learned counsel for the petitioners thus, have no application due to the facts and circumstances of those ,cases being distinct:

9. Reliance on condition No. 13 of the Insurance Policy as compared to condition No. 18 is also not well‑founded inasmuch as the rejection of claim by the petitioners vide communication, dated 16‑11‑1999 did not make mention of any alleged "fraud".

10. For the above reasons, the order of learned trial Court dismissing the application filed by the petitioners under section 33 of the Arbitration Act, 1940 is unexceptional. This petition is accordingly dismissed. As far as possible, I have avoided to make mention or to deal with the allegations concerning merits of the respective claims of the parties and any such reference has been made only to the extent it was necessary for the disposal of this petition and will be construed in this context only and shall have no bearing on merits. Q.M.H./M.A.K./A‑128/L Petition dismissed