Omkar Textiles Mills Pvt Ltd vs New India Assurance Company ...
2022 Latest Caselaw 9117 Guj

      C/ARBI.P/111/2021                          ORDER DATED: 14/10/2022




      IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

      R/PETN. UNDER ARBITRATION ACT NO. 111 of 2021
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                OMKAR TEXTILES MILLS PVT LTD
                             Versus
            NEW INDIA ASSURANCE COMPANY LIMITED
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Appearance:
MR RATILAL V SAKARIA(6613) for the Petitioner(s) No. 1
MR C P CHANIYARA(6836) for the Petitioner(s) No. 1
MS SHABANA N ANSARI(9648) for the Petitioner(s) No. 1
MR RITURAJ M MEENA(3224) for the Respondent(s) No. 1
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     CORAM:HONOURABLE THE CHIEF JUSTICE MR. JUSTICE ARAVIND
           KUMAR

                             Date : 14/10/2022
                              ORAL ORDER

1. Heard Shri Ratilal Sakaria, learned counsel

appearing for petitioner and Shri Rituraj Meena, learned

counsel appearing for the respondent. Perused the

records.

2. This petition is filed under Section 11(6) of the

Arbitration and Conciliation Act, 1996, for appointment of

a sole arbitrator.

3. Brief facts which have led to the filing of this

petition are as under :

3.1 Petitioner had obtained a fire policy from the

respondent by ensuring for a sum of Rs.30 Crores and the

C/ARBI.P/111/2021 ORDER DATED: 14/10/2022

subject matter covered under the policy was stock and

stock in process as described in the policy for the period

24.04.2018 to 23.04.2019.

3.2 On account of there being an incident of fire

that occurred at the petitioner's factory premises on

18.10.2018 at 05.05 p.m. due to alleged short circuit, it

resulted in stock located in the factory premises burnt out

and damaged. Loss was reported to the respondent on the

same day and respondent insurer deputed the Surveyor

who visited the factory premises on 19.10.2019. It is the

grievance of petitioner that the Surveyor so appointed by

the insurer had not inspected the whole area which was

affected by fire and he had hurriedly formed his opinion

for assessment of loss. It is also stated that petitioner had

sent the relevant documents necessary for assessment of

loss. It is further stated that petitioner had given the

stock statement indicating the extent of goods damaged

in the fire as required by the Surveyor. Petitioner claims

that it had initially submitted a claim bill for Rs.70 Lakhs

which was subsequently reduced to Rs.35,24,035/- and

C/ARBI.P/111/2021 ORDER DATED: 14/10/2022

was paid only Rs.13,39,639/- by the respondent by

remitting the said amount to the petitioner's bank

account on 07.10.2019. Petitioner has contended that on

10.10.2019, it informed the respondent insurer of

accepting the said amount under protest. Hence,

contending that the respondent is liable to pay deficit

amount of Rs.21,84,396/-, a legal notice dated 26.03.2020

was issued expressing its intention to resolve the dispute

by arbitration as agreed under the policy and suggested

the name of the sole arbitrator and called upon the

respondent to accord its consent. The respondent by

reply notice dated 02.07.2020 denied the averments

made in the notice including the name of the proposed

sole arbitrator. Hence, this petition.

4. It is the contention of Mr.Ratilal Sakaria,

learned counsel appearing for the petitioner that the

insurance policy provides for resolution of the dispute

between the parties through arbitration and Clause 13 or

Condition No.13 forming part of the terms and conditions

C/ARBI.P/111/2021 ORDER DATED: 14/10/2022

of the policy would indicate that all disputes and

differences arising as to the quantum to be paid under

the policy shall be referred to the decision of a sole

arbitrator. Hence, it is contended that demand notice was

issued, which has been evasively replied by the

respondent and as such, he has prayed for appointment of

a sole Arbitrator.

5. Per contra, Mr.Rituraj Meena, learned counsel

appearing for the respondent has raised two contentions

by way of defense to stave off the claim of the petitioner

namely (i) that the notice dated 26.03.2020 issued for

appointment of arbitrator namely is by a person who has

not been duly authorized by the insured; and (ii) the

amount has been received without any demur and there

being no foundational fact for receiving the amount

without protest, petitioner cannot turn around and

contend that despite receiving the amount, he would be

entitled to prosecute his prayer for appointment of

arbitrator or has any claim against the respondent. In

support of his submission, he has placed reliance upon

C/ARBI.P/111/2021 ORDER DATED: 14/10/2022

the judgment of the Madras High Court in the case of

Schmenger GMBH and Company Leder, through its

Liason Concern represented by its Liaison Officer

Mr.Mukhtar Parvez vs. Saddler Shoes Private

Limited, represented by its Managing Director

Mr.M. Jamal, reported in 2010 SCC Online Madras

6539.

6. Shri Ratilal Sakaria, learned counsel appearing

for the petitioner in reply would submit that on

01.08.2019 that is much prior to receipt of the amount

and when there was discussion held between petitioner

and the Surveyor of the insurance company, petitioner

had informed that it was not accepting the proposal made

by the Surveyor for the reasons indicated in the said

communication and as such, there being no discharge

certificate issued by petitioner, after making a show of

payment, the insurer cannot be absolved of its liability to

indemnify the claim under the insurance policy and as

such, he prays for rejecting the said contention and seeks

for appointment of arbitrator.

C/ARBI.P/111/2021 ORDER DATED: 14/10/2022

7. Having heard the learned counsel appearing for

petitioner and on perusal of notice dated 26.03.2020

issued for appointment of arbitrator which is at

Annexure-E, it would clearly go to show that said notice

has been got issued by the petitioner company through its

advocate and for issuance of a legal notice the

authorization to the learned counsel would not be

required inasmuch as the notice is issued for and on

behalf of company. The provisions of Order 29 is a

complete answer to the same. The authorization would

step in only at the stage of filing of the suit and

verification of the pleadings by the authorized officer or

Secretary or the Director or other principal officer of the

company which would be suing. The judgment of the

Madras High Court which is relied upon relates to

defense set up by a company who had signed the

pleadings without there being authorization from the

company. It is in this background the principles of law

enunciated therein to which proposition there cannot be

any dispute, would not come to the rescue of Mr.Rituraj

C/ARBI.P/111/2021 ORDER DATED: 14/10/2022

Meena, learned counsel appearing for the respondent.

Hence, the first contention raised stands rejected. Insofar

as the second contention with regard to amount having

been received by petitioner is concerned, when examined

in the background of the pleadings of the parties, it would

clearly indicate that the petitioner at the first instance

itself had made a claim for Rs.35,24,035/- by submitting

its claim and on Surveyor being appointed by the insurer

which resulted in the Surveyor also visitng the factory

premises where the fire broke out, culminated in

discussions being held in that regard. There were also

exchange of mails from the Surveyor and petitioner and

vice-versa. One such communication dated 01.08.2019

which is not in dispute and which is also admitted by the

respondent in its reply notice dated 02.07.2020 vide

paragraph-7 would clearly indicate that petitioner had

disagreed with the view of the Surveyor and protested. It

would be apt and appropriate to extract the very words

found in the said communication dated 01.08.2019 from

petitioner to the Surveyor of the insurer. It reads thus :

C/ARBI.P/111/2021 ORDER DATED: 14/10/2022

"Date : 01.08.2019

To, Paresh Shah & Associates Surveyor Ahmedabad.

Dear Sir,

Subject: Our fire claim under Policy no. 212300180300000016 date of loss 18/10/2018.

This is with reference to your mail dated 22 nd July, 2019 on above subject.

Asking for consent on net loss assessments within 7 days, in absence of which you'll issue the report to insurer.

This is pressure tactic to impose assessment without giving justification to rule out or accept our view points.

In response of our detailed representations you had requested us to visit your office for discussion.

Accordingly we had visited your office for discussions on the issues raised by us.

But surprisingly you had not discussed any points on our representation except informed us that insurance company has agreed with your assessment. This is not acceptable to us due to following reasons:

1. We have given detailed costing of reprocessing charges of Rs.8/-Per meter as against you are only allowing Rs.6/- Per meter without any justification. If you believe this number then why don't you arrange reprocessing @Rs.6/- Per meter?

C/ARBI.P/111/2021 ORDER DATED: 14/10/2022

It's not fair to allow very low cost without any Justification.

2. You had arrived affected quantities 25% more of burnt fabric ashes randomly without any basis by arguing that fire affected stocks were shifted prior to your visit.

Do you mean that we should allow the good stock to burn? In facts our for loss minimization should be appreciated which is as per policy agreement. We had acted as prudent insured and minimize loss at great extent so we should not be penalized by putting invalid arguments.

We have given sufficient documents of books of account/volumetric and other surroundings proof to establish our claim while you are relying only on salvage parameters which is against natural justice and not acceptable.

At this stage we wish to inform you that we are maintaining proper records system for processing of cloth, at any point of time if any one require details of process stock the same is always available. Hence we are able to provide details of affected stock during your first visit.

We are excepting natural justices from independent surveyor's like you for fair assessment without any bias.

Please revisit our representation and consider our request before releasing report to avoid future complication.

Thanking you Yours faithfully,

For, Omkar Textile Mills Pvt. Ltd.

Director"

C/ARBI.P/111/2021 ORDER DATED: 14/10/2022

8. A plain reading of the above communication or

in other words the tenor of the letter would clearly

indicate that petitioner has clearly and in categorical

terms stated that it is not accepting the proposal made by

the insurer. On the other hand, it has sought to justify its

claim put-forth with the insurer for two reasons indicated

in the said letter which is extracted hereinabove namely it

has stated the costing of reprocessing charge was Rs.8/-

per meter as against the quantification of Rs.6/- per

meter made by the insurer being without any justification.

With regard to the quantity of stock that was burnt in the

fire accident was also disputed by the petitioner and

justification was offered to the insurer through the

Surveyor. It is in this background the insurer has paid the

amount of Rs.13,39,639/- directly remitting the said

amount to the account of the petitioner as against the net

claim amount of Rs.35,24,035/-. On coming to know of the

said amount having been remitted on 07.10.2019,

petitioner has immediately on 10.10.2019 intimated the

respondent insurer that the said amount is accepted by

C/ARBI.P/111/2021 ORDER DATED: 14/10/2022

them under protest and reserving its right to take

suitable action as per the provisions of the policy

conditions and insurance law. Hence, the contention of

Mr.Rituraj Meena, learned counsel appearing for the

respondent that petitioner had received the amount of

Rs.13,39,639/- without any demur cannot be accepted

and it stands rejected.

9. In light of above discussion, the only other

question which would arise now for consideration would

be as to whether an arbitrator is to be appointed. Clause

13 of the policy condition clearly stipulates that if any

dispute or difference were to arise as to the quantum to

be paid under the policy, such difference shall

independently of all other questions be referred to the

decision of an arbitrator has been agreed upon under the

said Clause 13 by the parties and as such, the irresistible

conclusion which will have to drawn is that the sole

Arbitrator requires to be appointed.

C/ARBI.P/111/2021 ORDER DATED: 14/10/2022

10. Hence, I proceed to pass the following

ORDER

(i) Petition is allowed.

(ii) Shri Bharatkumar Suryakant Upadhyay, Retired District Judge, residing at: G-801, Shilalekh Apartment, Opp. Police Stadium, Shahibaug, Ahmedabad, having phone number 9879142279 and Email ID:

[email protected], is hereby nominated as the sole Arbitrator to resolve the dispute between the parties in accordance with the Arbitration Centre (Domestic and International), High Court of Gujarat Rules, 2021. Both Parties would also be bound by said Rules.

(iii) Registry to communicate this order to the sole Arbitrator forthwith by Speed Post.

(iv) Consequently, all pending connected application/s, if any, stands disposed of.

(ARAVIND KUMAR, CJ) GAURAV J THAKER