GATEWAY SPECIALITY PAPERS (P) LTD. vs Oriental Insurance Co. Ltd.

BRIEFLY the facts are that the complainant has a factory in Kondli, District Sonepat. They took from the opposite party an Insurance Policy, which covered various moveable and immoveable properties of the factory, for Rs. 1,12,20,000/- for a period from 25.4.90 to 24.4.91 against the risk of fire and allied perils including riot, strike, civil commotion. A serious fire broke out in the godown of the factory on 11.6.90, on account of which the stock worth Rs. 75/- lacs was destroyed and a extensive damage was done to the building. The information about the fire was given to the police. Two claims, one relating to the damage to the building and other to the damage to the stocks were submitted to the opposite party. The estimated cost of repair to the building as prepared by M/s. M.L. Agarwal & Associates, a qualified Civil Engineer and Architect, was Rs. 3,64,576/-. There were negotiation between the parties. However, nothing has been paid by the opposite party till date. Consequently, the complainant has filed a claim for Rs. 3,64,576/-. Besides the aforesaid claim they have also claimed Rs. 1,06,476/- as compensation and Rs. 10,000/- as cost of the complaint.

THE complaint has been contested by the respondent. THEy have filed a preliminary reply. It is inter-alia pleaded by them that there was arbitration clause in the Insurance Policy which provided that if there was anything or any difference regarding quantum of damages, the liability being otherwise admitted the difference shall be referred to an arbitrator to be appointed by them. In view of the said clause, it is averred that the matter should be referred to an arbitrator. The question that arises for determination is, whether in view of the arbitration clause the Commission has got the jurisdiction to entertain the complaint. It is admitted by the parties that the fire broke out in the premises of the complainant. The dispute in the present case is regarding the quantum of damages. The arbitration clause as given in the Insurance Policy reads as follows : - "13. If any difference shall arise as to the quantum to be paid under this policy, the 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."

According to the clause if the liability is admitted by the Insurance Act and there is dispute regarding the quantum, the matter should be referred by the parties to the arbitrator.

NOW it is to be seen whether Section 34 of the Arbitration Act is applicable to the proceedings pending before the Redressal Agencies constituted under the Consumer Protection Act. Section 34 provides that the proceedings before the Judicial authorities should be stayed if there is any Arbitration clause between the parties. National Commission in similar circumstances held in Union of India v. Nilesh Agarwal, I (1991) CPJ 203 (NC), Commercial Officer, Telecommunication, Patna v. Bihar State Warehousing Corporation, I (1991) CPJ 42 (NC) and District Manager, Telephones, Patna v. Dr. Tarun Bharthuar & Another, I (1992) CPJ 47 (NC), that if arbitration has been provided in a statute, the proceedings under the Consumer Protection Act should not be stayed by the Redressal Agencies. In all the 3 cases the dispute was between the Telecommunication Department and a consumer. In Indian Telegraph Act, 1885 Section 7-B provides arbitration in case disputes arise between Telegraph authorities and the person for whose benefit the apparatus has been provided. An arguments was raised in Nilesh Agarwal''s case on behalf of the department that the matter should have been referred to the arbitrator under Section 7-B and the remedies provided under the Consumer Protection Act could not be invoked. It was observed by the National Commission that having regards to the scope, object and purpose of the Act, which was a special statute, subsequently enacted by Parliament specifically for the creation of a machinery for granting cheap and speedy redressal to aggrieved consumers, there was no substance in the contention especially since the Redressal Forum constituted under the Act were not Civil Courts. The above view was followed by the National Commission in Bihar State Warehousing Corporation''s case (supra). It was observed by the learned Commission that the existence of a remedy by way of arbitration even assuming for purposes of discussion that Section 7-B covers this case, which is extremely doubtful, does not preclude an aggrieved consumer from seeking redressal before the forums constituted under the Consumer Protection Act, which was a special statute enacted by Parliament for the specific purpose of providing a speedy, cheap and efficacious remedy to the consumers.

IN Dr. Tarun Bharthuar''s case (supra) similar observations were made by the National Commission. The observations of the National Commission are binding on the other Redressal Forums. Consequently, we are of the view that the present proceedings in spite of arbitration clause in the insurance policy, are not liable to be stayed under Section 34 of the Arbitration Act For the aforesaid reasons we reject the objection of the respondent. They are directed to file written statement on merits within 2 weeks with advance copy to the Counsel for the Complainant To come up for rejoinder and affidavits by way of evidence of the complainant on 23.4.92. Complaint rejected.