JUDGMENT
Kamlesh Sharma, J.
1. This revision petition under Section 115 of the Code of Civil Procedure is directed against the judgment dated 22-3-1993 passed by Additional District Judge (I), Kangra at Dharamshala whereby the appeal of the respondent Vinod Kumar Sharotria was accepted, the judgment dated 3-8-1992 by Senior Sub-Judge, Kangra at Dharamshala was set aside and his application under Section 20 of the Arbitration Act was accepted. The Additional District Judge issued the following directions :-
“The respondents are directed to refer the matter to an Arbitrator for determination of the dispute which has arisen regarding the quantum of compensation payable to the appellant in accordance with the terms of the policy within a period of one month from today. In case the respondents failed to do so then the same shall be done by the learned Senior Sub-Judge, Dharamshala on the motion of the appellant. The respondents may choose arbitrator for determination of the dispute with the consent of the appellant.”
2. There is no dispute that truck No. HPK 1832 belonging to respondent was insured with the petitioner-1 Insurance Company vide policy No. 4584300302 Ex. PW-1/B. The said truck met with an accident on 8-12-1986 at Gambar in district Bilaspur and the respondent lodged claim for total loss of the truck with petitioner-1 Insurance Company. According to the respondent, he was entitled to an amount of Rs. 1,80,000/- for which the truck was insured as its total loss. The petitioner-1 Insurance Company paid an amount of Rs. 1,39,000/- on 12-8-1987 against receipt Ex. PW-1/C. Thereafter, on 28-5-1988 the respondent filed application under Section 20 of the Arbitration Act with prayer that petitioner-1 Insurance Company be directed to produce the arbitration agreement and Arbitrator may be appointed to resolve the dispute between the parties in respect of quantum of compensation to be paid to the respondent under the policy. The case set up by respondent was that he was entitled to an amount of Rs. 1,80,000/- for
which the truck was insured as compensation for total loss of the truck, whereas, the petitioner-1 Insurance Company had paid to him only an amount of Rs. 1,39,000/-, as such, difference has arisen in respect of quantum to be paid under the Insurance Policy which is liable to be resolved by Arbitration as provided under Clause 8 of the Insurance Policy.
3. The petitioners resisted the application under Section 20 of the Arbitration Act and took preliminary objection that it was not maintainable as it did not disclose or specify the difference which has arisen between the parties and since the respondent had claimed a definite amount, he might file a suit for recovery thereof. On merits, the defence of the petitioners was that the market value of the truck on the date of accident was assessed at Rs. 1,39,000/- by an independent Surveyor, which the respondent had accepted as full and final settlement of his claim in respect of total loss of the truck and executed receipt Ex. PW-1/C. According to the petitioners, after the amount of Rs. 1,39,000/ – was accepted as full and final settlement of this claim, the liability of petitioner-1 Insurance Company stood discharged and there is no dispute with regard to quantum to be paid under the Insurance Policy to the respondent.
4. The trial court dismissed the application holding that after payment of the amount of Rs. 1,39,000/- against receipt Ex. PW-1/C as full and final settlement of the claim of the respondent on account of total loss of the truck, no dispute survived between the parties which is liable to be referred to Arbitration. The findings of the trial court were set aside by the Additional District Judge who has held that dispute has arisen in respect of the difference of the amount of compensation payable to the respondent which is to be resolved by arbitration as provided under Clause 8 of the Insurance Policy Ex. PW-1/D. Now, the petitioners have challenged the decision of the Additional District Judge by this revision petition.
5. This Court has heard the learned counsel for the parties and gone through the record. Shri R. C. Bakshi, learned counsel for
the petitioner, has vehemently urged that after receipt of an amount of Rs. 1,39,000/-by receipt Ex. PW-1 / C in full satisfaction and discharge of all claims present or future under Policy No. 4584300302 in respect of total loss, of vehicle No. HPK 1832, there did not survive any difference as to the quantum to. be paid under the Insurance Policy as envisaged under Clause 8 thereof. Sh. Bakshi further submits that the respondent has straightway filed application under Section 20 of the Arbitration Act and has not given any. demand notice to petitioner-1 Insurance Company raising a dispute. For a dispute it was necessary that the petitioner-1 Insurance Company had rejected the amount claimed by the respondent over and above the amount already paid to him. Another point raised by Sh. Bakshi is that as per last part of Clause 8 of the Insurance Policy the limitation for filing suit in respect of his claim by the respondent was twelve calendar months and the applicatipn under Section 20 of the Arbitration Act was time barred.
6. On the other hand, Shri K. D. Sood, learned counsel for the respondent has submitted that dispute had arisen from the very beginning which continues to exist as the respondent’s claim was of an amount of Rs. 1,80,000/- for total loss of the truck whereas, petitioner-1 Insurance Company got it assessed for Rs. 1,39,000/- and paid it towards full and final settlement of the claim of the respondent. According to him, the receipt Ex. PW-l/C stating that the respondent had accepted the amount “in full satisfaction and discharge of all claims present or future under Policy No. 458300302 in respect of total loss of Vehicle No. HPK-1832,” is of no effect as the respondent had already stated in his affidavit dated 3-8-1987, Mark ‘A’ that he had accepted this amount “subject to just exceptions and under protest” and had filed application under Section 20 of the Arbitration Act within the period of limitation of three years. Sh. Sood has pointed out that limitation for application under Section 20 of the Arbitration Act is governed under Article 137 of the Limitation Act, which prescribes three years period of limitation.
7. Before this Court deals with the respec
tive contentions of the parties, it will refer to
Clause 8 of the Insurance Policy, which
contains arbitration agreement :–
8. If any difference shall arise as to the quantum to be paid under this policy (liability being otherwise admitted) such difference shall independently of all other questions be referred to the decision of an arbitrator to be appointed in writing by the parties in difference, or if they cannot agree upon a single arbitrator to the decision of two disinterested persons as arbitrators of whom one shall be appointed in writing by each of the parties within two calendar months after having been required so to do in writing by the other party in accordance with the provisions of the Arbitration Act 1940, as amended from time to time and for the time being in force. In case either party shall refuse or fail to appoint arbitrator within two calendar months after receipt of notice in writing requiring an appointment, the other party shall be at liberty to appoint sole arbitrator for, and in case of disagreement between the arbitrators the difference shall be referred to the decision of an umpire who shall have been appointed by them in writing before entering on the reference and who shall sit with the arbitrators and preside at their meetings.
It is hereby expressly stipulated and declare that it shall be a condition precedent to any right of action or suit upon this policy that the award by such arbitrators or umpire of the amount of the loss or damage shall be first obtained.
It is also hereby further expressly agreed and declare that Company shall disclaim liability to the Insured for any claim here-under and such claim shall not within twelve calendar months from the date of such disclaimer have made the subject matter of a suit in a Court of law, the claim shall for all purposes be deemed to have been abandoned and shall not thereafter be recoverable here-under.”
8. There is no dispute that every arbitration agreement has to be construed with reference to the language used therein and
what kind of difference/dispute is referable to arbitration and also what will be the constitution of the abitration, depends upon the construction of the agreement clause. The agreement clause in the present case is in very wide terms because it provides that, if liability is accepted by the Insurance Company and any difference arises 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. The petitioner-1 Insurance Company admits its liability for payment of compensation for total loss of the truck but according to it, it was an amount of Rs. 1,39,000/- as assessed by the Surveyor. Therefore, the dispute existed from the very beginning in respect of the quantum to be paid under the policy but whether with the acceptance of an amount of Rs. 1, 39,000/- by the respondent vide receipt Ex. PW-1/C this dispute ended as alleged by petitioner-1 Insurance Company or not as claimed by the respondent is the point to be decided by this Court.
9. It is correct that in the receipt Ex. PW-1/C it is mentioned that the respondent has accepted the amount “in full satisfaction and discharge of all claims present or future” under the Insurance Policy but he has explained in his statement in the Court that he was not permitted to write “under protest” on the receipt and he had singed it because otherwise the petitioners were not paying this amount to him. The respondent has not given receipt with his free will, is also indicated from his affidavit dated 3-8-1986, wherein the end of para 1, the respondent has added words, “Subject to just exceptions and under protest”. In the earlier part of this affidavit it is stated that in full and final settlement of his claim the respondent had transferred his truck in the name of petitioner-1 Insurance Company. Assuming the respondent had, accepted this amount as full and final settle-ment pf his claim, still he could raise the dispute in respect of quantum to be paid to him under Insurance Policy, within the period of limitation. By making the allegations that he was compelled to sign the receipt Ex. PW-1/C and he had not foregone his claim for
remaining amount of Rs. 41,000/-, the respondent has again raised dispute in respect of quantum to be paid under the Policy, by way of filing the application under Section 20 of the Arbitration Act on 28-5-1988, within a period of about nine months from the date of execution of the receipt, but it was within a period of limitation of three years from the date when dispute arose for the first time. In the present case the dispute had arisen when the respondent filed claim of Rs. 1,80,000/- and he was paid an amount of Rs. 1,39,000/- on 12-8-1987 and also when he has filed application under Section 20 of the Arbitration Act on 28-5-1988, which is also within a period of three years from the date of accident.
10. Shri Bakshi has relied upon the judgement of Delhi Court in Bansal Construction Co. v. I.O.C. Ltd., AIR 1993 Delhi 76 in support of his contention that the arbitration clause stood discharged when the respondent accepted an amount of Rupees. 1,39,000/- in full and final settlement of his claim. The ratio of this judgment does not apply to the present case as in the case before the learned Judge of Delhi High Court, there was a specific “Clause 6.7.2.0. of the contract which clearly stipulates that the acceptance by the contractor of any amount paid in respect of the notified claims of the contractor included in the final bill would amount to full and final satisfaction of all claims of the contractor notwithstanding any qualifying remarks, protest or condition imposed or purported to be imposed by the contractor relative to the acceptance of such payment and with the intent that upon acceptance by the contractor of any payment made as aforesaid, the contract (including the arbitration clause) shall stand discharged and extinguished in so far as it relates to and/or concerns the claims of the contractor.”
11. Moreover, the learned Judge of Delhi High Court did not refer to a judgment of Supreme Court in Union of India v. M/ s. L.K. Ahuja and Co., AIR 1988 Supreme Court
1172 wherein it was held that :–
“In view of the well settled principles we are of the view that it will be entirely wrong to
mix-up the two aspects, namely, for whether there as any valid claim for reference under Section 20 of the Act, and secondly, whether the claim to be adjudicated by the arbitrator, was barred by lapse of time. The second is a matter which the arbitrator would decide unless, however, if on admitted facts a claim is found at the time of making an Order under Section 20 of the Arbitration Act, to be barred by limitation. In order to be entitled to ask for a reference under Section 20 of the Act, there must be an entitlement to money and a difference or dispute in respect of the same. It is true that on completion of the work right to get payment would normally arise and it is also true that on settlement of the final bill, the right to get further payment gets weakened but the claim subsists and whether it does subsist is a matter which is arbitrable.”
(Also see : Damodar Valley Corporation v. K. K. Kar, AIR 1974 SC 158 and Bharat Heavy Electricals Ltd., Ranipur v. Amar Nath Bhan Prakash, (1982) 1 SCC 625).
12. The ratio of judgment of the Supreme Court in Union of India v. L.K. Ahuja and C. (AIR 1988 SC 1172) (supra) is that it is also a matter to be decided by the arbitrator whether after the settlement of final bill the claim subsists or not. Applying this ratio to the present case, whether the respondent had accepted the amount of Rs. l,39,000/- in full and final settlement of his claim and whether his claim for remaining amount of Rupees. 41,000/- still subsists, is also laible to be decided by arbitration. It has also been held in Union of India v. L.K. Ahuja and Co. (AIR 1988 SC 1172) (supra) that for a valid claim for reference under Section 20 of the Arbitration Act, firstly, there should be arbitration agreement, secondly, difference must arise to which the agreement in question applies and thirdly, that must be within time as stipulated under Section 20 of the Arbitration Act. All these conditions are satisfied in the present case. As already discussed above, arbitration agreement under Clause 8 of the Insurance Policy, refers to any difference which may arise at any point of time in respect of quantum to be paid under the Insurance Policy.
The dispute had arisen when the respondent made claim of Rs. 1,80,000/- for which the truck was insured, whereas the petitioner-1 Insurance Company got it assessed to Rs. 1,39,000/- and paid it. The dispute continued even after the receipt of Rs. 1,39,000/ -as according to respondent he had accepted the amount under protest, whereas, according to petitioner-1 Insurance Company, it was accepted as full and final settlement of his claim.
13. The limitation for application under Section 20 of the Arbitration Act is governed by Article 137 of the Limitation Act. (Please refer to Major (Retd.) Inder Singh Rekhi v. Delhi Development Authority, AIR 1988 SC 1007 and S. Rajan v. State of Kerala, AIR 1992 SC 1918). Therefore, there is no substance in the other submission made by Shri Bakshi that as per later part of Clause 8 of the Insurance Policy the limitation for filing suit in respect of his claim by the respondent, was twelve calender months and the application under Section 20 of the Arbitration Act was time barred. Moreover, the later part of Clause 8 of the Insurance Policy pertains to a case in which the company disclaims liability to the insured and it does not apply in the present case.
14. The result of above discussion is that there is no merit in this revision petition and it is dismissed. No costs.