1992 PLP 1269 (CLC)

EA. Nomani for Defendant

1. New Hampshire Insurance Company, the defendant herein had issued a policy of insurance in favour of Burjorjee Cowasjee & Company. the plaintiff herein in respect of money in transit and cash in safe. The plaintiff having lodged a claim under the policy and dispute between the parties having arisen it was referred to arbitration in terms of clause 9 of the policy. Alongwith the claim, the plaintiff made an application under section 27 of the Arbitration Act, 1940, for interim award for Rs.17,03,097 on the ground that the defendant had admitted its liability to that extent. The arbitrators allowed the application and made an interim award, dated the 30th August, 1990, for Rs.17,03,097 in favour of the plaintiff. After the signing of the award, one of the arbitrators died and the award was filed in Court by the surviving arbitrator.

2. The defendant ~ has made an application under section 33 read with section 30 of the Arbitration Act to set aside the award.

3. Mr. EA. Nomani, the learned counsel for the defendant, objects to the award being made rule of the Court, firstly, on the ground that the arbitrators were guilty of legal misconduct in so far as they misconstrued the provisions of section 173 of the Criminal Procedure Code and shifted the burden of obtaining the final investigation report, from the police, from the plaintiff to the defendant. The arbitrators came to the conclusion that since the claim of the plaintiff, to the extent of Rs. 17,03,097, had been admitted by the defendant, no further document was required under clause 5 (e) of the policy for verification of the claim to that extent. They further held under section 173, Cr.P.C. it was not in the power of the plaintiff to obtain final investigation report from the police; and that, in any case, the plaintiff had tried to obtain the final investigation report but to no avail. Assuming, for the sake of argument, that the findings of the arbitrators are erroneous, I asked Mr. Nomani; whether there was any precedent to the effect that merely arriving at erroneous conclusions of law or fact would amount to legal misconduct on the part of the arbitrators. He was not able to cite any such precedent. I have, therefore, not been pursuaded to accept Mr. Nomani's contention that there was any legal misconduct on the part of the arbitrators in holding that the defendant was not entitled to insist upon production of final investigation report before making payment of the admitted part of the claim.

4. Mr. EA. Nomani then contends that the interim award is not valid because in terms of clause 9 of the Insurance Policy the arbitrators were not entitled to make an interim award. The argument is that the use of the expression "an award" in clause 9 implies that the arbitrators will make only one award and, therefore, amounts to "different intention" within the meaning of section 27 (1) of the Act. Clause 9 of the policy, after providing that all any right of .action against the defendant. It is, therefore, clear that the' expression an award" in the clause occurs in the context of the defendant's liability and the plaintiffs right of action and cannot be construed to mean that the arbitrators were debarred from making an interim award. The contention, thus, has no merit.

5. In addition to the above objections, which are set out in the application under sections 33 and 30 of the Arbitration Act, 1940, Mr. Nomani submits that the findings m the interim award are only tentative and are subject to the final award. He, therefore, submits that this award is unenforceable and not valid. Mr. Qazi Faez Isa, the learned counsel for the plaintiff, went through the entire award for the purpose of showing that as far as the claim of the plaintiff to the extent of Rs.17,03,097 is concerned, it was based on the admission of the defendant and that there was no issue regarding the liability of the defendant to pay that amount to the plaintiff. According to Mr. Isa the only issue at this stage was whether or not the plaintiff was liable to produce, and the defendant was entitled to insist upon, production of the final investigation report and that the word "findings" in the last sentence of the interim award does not affect the award of the amount in the claim. It appears that the contention of Mr. Isa has substance, particularly, in view of the language of the last paragraph of the award which reads as follows:‑ "In view of this we do hereby make an interim award for the sum of Rs.17,03,097 in favour of the claimant to be paid forthwith by the respondent on furnishing loss voucher, subrogation receipt subject to award and Special Power of Attorney to collect Final Report if asked by the respondent. The above findings are only tentative and are subject to final award." It is an admitted position that. the defendant had admitted liability to pay the plaintiff's claim to the extent of Rs.17,03,097 and it was, therefore, not necessary for the arbitrators to arrive at any finding in respect of the amount payable by the defendant. Indeed, as stated in the award itself, the only question for determination was whether under clause 5 (e) of the policy it was necessary for the plaintiff to produce final investigation report for verification of the claim to the extent of the amount of the admitted liability; and the findings of the arbitrators are, obviously, in that context. In so far as the interim award directs payment of Rs.17,03,097, there is nothing tentative about it and the payment is directed to be made "forthwith", subject only to furnishing of certain documents by the plaintiff. Mr. Isa submits that if there is any vagueness in the last sentence of the award, it has to be construed so as to give effect to the award and relies on lshfaq Ali Qureshi v. Municipal Committee, Multan (1985 SCMR 597 at 602). 1n the circumstances, the application of the defendant is dismissed and the interim award is made rule of the Court. H.B.T./B‑208/K Award made rule of the Court.