{"id":165036,"date":"2007-10-29T00:00:00","date_gmt":"2007-10-28T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/the-oriental-fire-and-general-vs-l-s-marthandam-on-29-october-2007"},"modified":"2015-08-31T22:23:41","modified_gmt":"2015-08-31T16:53:41","slug":"the-oriental-fire-and-general-vs-l-s-marthandam-on-29-october-2007","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/the-oriental-fire-and-general-vs-l-s-marthandam-on-29-october-2007","title":{"rendered":"The Oriental Fire And General vs L.S.Marthandam on 29 October, 2007"},"content":{"rendered":"<div class=\"docsource_main\">Madras High Court<\/div>\n<div class=\"doc_title\">The Oriental Fire And General vs L.S.Marthandam on 29 October, 2007<\/div>\n<pre>       \n\n  \n\n  \n\n \n \n BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT\n\n\nDATED : 29\/10\/2007\n\n\nCORAM:\nTHE HONOURABLE MR.JUSTICE G.RAJASURIA\n\n\nC.M.A.(MD) No.2077 of 2000\nand\nC.M.P.No.20023 of 2000\n\n\nThe Oriental Fire and General\nInsurance Co., Ltd.,\nDivisional Office, Tuticorin.\t\t.. \tAppellant\n\n\nVs\n\n\n1.L.S.Marthandam\n2.Sivakumar Spinning Mills Pvt. Ltd.,\n  Sankar Nagar through its\n  M.D., D.Kandiah\t\t\t.. \tRespondents\n\n\nPrayer\n\n\nAppeal filed under Section 39 of the Arbitration Act, against the\nJudgement and Decree dated 11.08.2000 passed in Arbitration Original Petition\nNo.138 of 1985 by the learned the Principal Subordinate Judge, Tirunelveli.\n\n\n!For Appellant\t\t\t...\tMr.C.Ramachandran\n\n\n^For Respondent No.1\t\t...\tNo appearance\n\n\nFor Respondent No.2 \t\t...\tMr.R.Parthiban,No appearance\n\n\n:JUDGMENT\n<\/pre>\n<p>\tThis appeal is focussed as against the Judgement and Decree dated<br \/>\n11.08.2000 passed in Arbitration Original Petition No.138 of 1985 by the learned<br \/>\nthe Principal Subordinate Judge, Tirunelveli.\n<\/p>\n<p>\t2. Heard the learned counsel appearing for the appellant and there is no<br \/>\nrepresentation on behalf of the respondent No.1, despite service of notice.\n<\/p>\n<p>\t3. A re&#8217;sume&#8217; of facts absolutely necessary and germane for the disposal<br \/>\nof this appeal would run thus:\n<\/p>\n<p>\tThe appellant viz., the Oriental Fire and General Insurance Co. Ltd. and<br \/>\nthe respondent No.2 herein, viz., Sivakumar spinning Mills Pvt. Ltd. entered<br \/>\ninto a contract of fire insurance policy w.e.f. 30.01.1982 and it was renewed<br \/>\nupto the period ending 30.01.1983, under which the Insurance Company undertook<br \/>\nto indemnify the Spinning Mills in the event of fire.  It so happened that a<br \/>\nfire accident occurred in the Spinning Mills on 15.01.1983 at about 10.25 p.m<br \/>\nresulting in loss.  Thereupon, the Spinning Mills claimed amount from the<br \/>\nInsurance Company by filing claim form on 18.02.1983, demanding a sum of<br \/>\nRs.17,86,178.96 (Rupees seventeen lakh seventy eighty six thousand one hundred<br \/>\nseventy eight and paise ninety six only); however the appellant honoured the<br \/>\nclaim of the Spinning Mills only to the tune of Rs.3,590\/- (Rupees three<br \/>\nthousand five hundred and ninety only) vide letter dated 28.10.1983, whereas the<br \/>\nSpinning Mills sent a lawer&#8217;s notice dated 07.11.1983, seeking clarification for<br \/>\nrejection of the claim of the Spinning Mills in respect of the rest of the<br \/>\nclaim.  Whereupon the Insurance Company sent the letter dated 21.11.1983 that<br \/>\nonly stock in the godown was covered by the insurance policy concerned and not<br \/>\nin respect of goods elsewhere in the Mill premises.  However, the Spinning Mills<br \/>\ntook a different view.  Thereupon invoking Clause No.18 of the Insurance Policy<br \/>\nfor appointment of an arbitrator, the Mills sent notice to the Insurance Company<br \/>\nfor getting appointed an arbitrator, suggesting the respondent No.1, the<br \/>\ndeceased L.S.Marthandam as the arbitrator, vide its letter dated 29.10.2004.<br \/>\nHowever, the Insurance Company on 23.11.1984 sent their advocate notice<br \/>\nchallenging the right of the mills for getting appointed an arbitrator relating<br \/>\nto this matter and also on the ground that R1 was an interested person.<br \/>\nAccording to the appellant when the liability itself is disputed, there is no<br \/>\nquestion of appointing an arbitrator.\n<\/p>\n<p>\t4. Precisely, the contention of the Insurance Company was that if at all<br \/>\nR2 herein had any grievance it was not by way of getting appointed an arbitrator<br \/>\nbut by filing a suit.  There were exchange of notices and ultimately it appears,<br \/>\nthe Spinning Mills appointed the respondent No.1 L.S.Marthandam, as the<br \/>\narbitrator, who also sent notice to the Insurance Company fixing the date of<br \/>\nhearing.  Thereupon, the Insurance Company appeared and raised its protest<br \/>\nstating that the appointment of arbitrator itself was not correct and that the<br \/>\narbitrator had no jurisdiction to decide on the insurance coverage itself.  As<br \/>\nper the appellant, if at all the coverage was accepted by the Insurance Company,<br \/>\nthe quantum could be assessed by the arbitrator.  However, the arbitrator<br \/>\ndisregarding the contention of the Insurance Company proceeded to decide the<br \/>\nmatter and assessed the quantum payable by the Insurance Company to the Mills at<br \/>\nRs.17,86,178.96 and filed the award before the learned Sub Judge, Tirunelveli.<br \/>\nBefore, the Court the Insurance Company raised the same grounds as set out<br \/>\nsupra, however, the Court rejected and confirmed the award of the arbitrator.\n<\/p>\n<p>\t5. Being aggrieved by and dissatisfied with such an order of the learned<br \/>\nSubordinate Judge, the present Civil Miscellaneous Appeal has filed by<br \/>\nreiterating the earlier stand of the Insurance Company.  It is also the<br \/>\nadditional ground of the Insurance Company that the arbitrator proceeded ex-<br \/>\nparte without giving due opportunity and that even though he proceeded ex-parte<br \/>\nhe never took evidence from the Spinning Mills so as to arrive at his<br \/>\nconclusion.\n<\/p>\n<p>\t6. The points for consideration are (i) whether the appointment of the<br \/>\narbitrator is just and proper in this case and (ii) whether the proceedings<br \/>\nconducted by the arbitrator were legal and consequently whether the order of the<br \/>\nlearned Subordinate Judge is valid?\n<\/p>\n<p>\t7. The learned counsel for the appellant during arguments highlighted<br \/>\nclause 18 of the Insurance policy, which would run thus:\n<\/p>\n<p>\t&#8220;If any difference shall arise as to the quantum to be paid under this<br \/>\npolicy, (liability being otherwise admitted) such difference shall independently<br \/>\nof all other questions be referred to the decision of an arbitrator, to be<br \/>\nappointed in writing by the parties in difference, or if they cannot agree upon<br \/>\na single arbitrator to the decision of two disinterested persons as arbitrators<br \/>\nof whom one shall be appointed in writing by each of the parties within two<br \/>\ncalendar months after having been required so to do in writing by the other<br \/>\nparty in accordance with the provisions of the Arbitration Act, 1940, as amended<br \/>\nfrom time to time and for the time being in force.  In case either party shall<br \/>\nrefuse or fail to appoint arbitrator within two calender months after receipt of<br \/>\nnotice in writing requiring an appointment, the other party shall be at liberty<br \/>\nto appoint sole arbitrator, and in case of disagreement between the arbitrators,<br \/>\nthe difference shall be referred to the decision of an umpire who shall have<br \/>\nbeen appointed by them in writing before entering on the reference and who shall<br \/>\nsit with the arbitrators and preside at their meetings&#8221;.\n<\/p>\n<p>\t8. The learned counsel for the appellant by placing reliance on the above<br \/>\nsaid extract would develop his arguments to the effect that the very clause<br \/>\nwould unambiguously and incontrovertibly demonstrate that the arbitrator could<br \/>\nbe appointed only for the purpose of getting adjudicated the quantum and not<br \/>\nrelating to the maintenability of the claim itself once it is disputed by the<br \/>\nInsurance Company.\n<\/p>\n<p>\t9. The learned counsel for the appellant would further submit that there<br \/>\ncannot be any unilateral appointment of an arbitrator.  Obviously and apparently<br \/>\nthe Insurance Company disagreed with the appointment of the respondent No.1<br \/>\nL.S.Marthandam as an arbitrator, in such an event, what the Insurance policy<br \/>\nenvisaged was that there should be appointment of one other arbitrator on the<br \/>\nside of the Insurance Company and still thereafter there should be an umpire<br \/>\nalso.  But such a procedure was not adhered to.  The learned counsel for the<br \/>\nappellant convincingly submitted that there was no opportunity given also for<br \/>\nresorting to such procedures because the arbitrator at the first hearing itself<br \/>\nconcluded the entire proceedings despite objection notice sent by the Insurance<br \/>\nCompany challenging and impugning the very appointment itself.  The learned<br \/>\ncounsel for the appellant also by placing reliance on the decision of Hon&#8217;ble<br \/>\nApex Court in <a href=\"\/doc\/421126\/\">Dharma Prathishthanam v. M\/s.Madhok Construction Private Limited<\/a><br \/>\nreported in (2005)1 M.L.J.70(SC).  The excerpts from it would run thus:<br \/>\n\t&#8220;If the arbitration clause does not name an arbitrator but provides for<br \/>\nthe manner in which the arbitrator is to be chosen and appointed, then the<br \/>\nparties are bound to act accordingly.  If the parties do not agree then arises<br \/>\nthe complication which has to be resolved by reference to the provisions of the<br \/>\nAct.  One party cannot usurp the jurisdiction of the Court and proceed to act<br \/>\nunilaterally.  A unilateral appointment and a unilateral reference-both will be<br \/>\nillegal.\n<\/p>\n<p>\t&#8220;A reference to a few decided cases would be apposite.\n<\/p>\n<p>\tIn Thawardas Perumal v. Union of India, (1955)2 S.C.J. (S.C.)23: (1955) 2<br \/>\nS.C.R.48: A.I.R.1955 S.C.468: 1955 S.C.J.445, a question arose in the context<br \/>\nthat no specific question of law was referred to, either by agreement or by<br \/>\ncompulsion, for decision of the Arbitrator and yet the same was decided of the<br \/>\nArbitrator and yet the same was decided howsoever assuming it to be within his<br \/>\njurisdiction and essentially for him to decide the same incidentally.  It was<br \/>\nheld that-\n<\/p>\n<p>\t&#8220;A reference requires the assent of both sides.  If one side is not<br \/>\nprepared to submit a given matter to arbitration when there is an agreement<br \/>\nbetween them that it should be referred, then recourse must be had to Court<br \/>\nunder Sec.20 of the Act and the recalcitrant party can then be compelled to<br \/>\nsubmit that matter under Sub-sec.(4).  In the absence of either, agreement by<br \/>\nboth sides about the terms of reference, or an order of the Court under<br \/>\nSec.20(4) compelling a reference, the arbitrator is not vested with the<br \/>\nnecessary exclusive jurisdiction&#8221;.\n<\/p>\n<p>\tA Constitution Bench held in <a href=\"\/doc\/74498\/\">Waverly Jute Mills Company Limited v. Raymond<br \/>\nand Company (India) Private Limited,<\/a> (1963)3 S.C.R.203, that-<br \/>\n\t&#8220;An agreement for arbitration is the very foundation on which the<br \/>\njurisdiction of arbitrators to act rests, and where that is not in existence, at<br \/>\nthe time when they enter on their duties, the proceedings must be held to be<br \/>\nwholly without jurisdiction.  And this defect is not cured by the appearance of<br \/>\nthe parties in those proceedings, even if that is without protest, because it is<br \/>\nwell settled that consent cannot confer jurisdiction&#8221;.\n<\/p>\n<p>\t\t10. The cited precedent of the Hon&#8217;ble Apex Court posits the<br \/>\nproposition that there cannot be any unilateral appointment of an arbitrator.<br \/>\nOnce, the Insurance Company disagreed for such appointment of arbitrator and<br \/>\nmore specifically for the appointment of R1 L.S.Marthandam as the arbitrator on<br \/>\nthe ground that he is an interested person, the Insurance Company ought to have<br \/>\napproached the Court for getting appointed an arbitrator, but R2 had not done<br \/>\nso.  As such, this Court holds the entire proceedings got vitiated.  The<br \/>\nchallenge relating to the jurisdiction of the arbitrator to decide on the<br \/>\napplicability of arbitration clause 18, relating to this matter, in my opinion,<br \/>\nis not appears to be a controversial one, where of more than one view is<br \/>\npossible.  However, in commensurate and inconsonance with the decision of the<br \/>\nHon&#8217;ble Apex Court relating to unilateral appointment of arbitrator, I quash the<br \/>\nentire proceedings after setting aside the Judgment and Decree of the learned<br \/>\nPrincipal Sub Judge, Tirunelveli, dated 11.08.2000 in Arbitration Original<br \/>\nPetition No.138 of 1985.\n<\/p>\n<p>\t11. Accordingly this Civil Miscellaneous Appeal is allowed.  No costs.<br \/>\nConsequently, connected Miscellaneous petition is closed.\n<\/p>\n<p>To<\/p>\n<p>The Principal Sub Judge,<br \/>\nTirunelveli<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Madras High Court The Oriental Fire And General vs L.S.Marthandam on 29 October, 2007 BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED : 29\/10\/2007 CORAM: THE HONOURABLE MR.JUSTICE G.RAJASURIA C.M.A.(MD) No.2077 of 2000 and C.M.P.No.20023 of 2000 The Oriental Fire and General Insurance Co., Ltd., Divisional Office, Tuticorin. .. Appellant Vs 1.L.S.Marthandam 2.Sivakumar Spinning [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[8,13],"tags":[],"class_list":["post-165036","post","type-post","status-publish","format-standard","hentry","category-high-court","category-madras-high-court"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>The Oriental Fire And General vs L.S.Marthandam on 29 October, 2007 - Free Judgements of Supreme Court &amp; High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/the-oriental-fire-and-general-vs-l-s-marthandam-on-29-october-2007\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Oriental Fire And General vs L.S.Marthandam on 29 October, 2007 - Free Judgements of Supreme Court &amp; 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