Case: Sterling General Insurance Co. Ltd Vs. Planters Airways Pvt. Ltd

the delay is the owners fault."14. Therefore, we will have to take a liberal view of the meaning of the words "undue hardship". "Undue" must mean something which is not merited by the conduct of the claimant, or is very much disproportionate to it.15. Keeping in view these principles, it has to be seen whether in the facts and circumstances of this case, there was reasonable and sufficient ground for not preferring the claim to arbitration within the time specified in clause 12 of the policy and whether there would be "undue hardship" to the respondent if time is not extended.16. It may be recalled that it was on July 1, 1971 and September 21, 1971 that the respondent lodged its claim with the appellant to recover the loss Buffered. Thereafter, various letters passed between the parties. Ultimately, on February 16, 1973, the appellant wrote the letter to the respondent stating that the claim papers submitted in connection with the claim had been scrutinized by the appellant but that it was unable to accept liability for the loss. The respondent then wrote a letter to the appellant on 30-3-1973 complaining about the uncertain language used in the letter dated February 16. 1973 and calling upon the respondent to point out specifically under which clause of exclusion of liability in the policy did the appellant disclaim the liability. The appellant kept quiet for 2 months and then on May. 30, 1973, sent a letter stating that it had nothing further to add to what had been stated in its letter dates February 16, 1973.17. The respondent was having dealings with the appellant in the business of insurance from 1958 onwards and in no instance was the claim made by the respondent rejected by the appellant. The conduct of the respondent in enquiring of the appellant the grounds on which the claim was rejected was quite reasonable. It was only after the grounds of rejection were known that the respondent could have decided whether to resort to arbitration or not. If the grounds of rejection would come within the clause of exclusion of liability under the policy. it would serve no purpose to incur the expense and hardship involved in resorting to arbitration The appellant did not give the reason for disclaiming liability even in its letter dated 30-5-1973. We do not think that there was any lack of promptness on the part of the respondent in waiting for the reply to its letter dated 30-3-1973. And, in the first week of June 1973, the respondent made over the papers to the solicitors viz. M/s. Banerji and Co. for the purpose of taking necessary steps for referring the dispute to arbitration in terms of the arbitration clause in the policy. On or about June 15 1973, the respondent received the written opinion from the Solicitors wherein they stated that since the letter of the appellant disclaiming liability was vague and since the appellant gave no reason for rejection of the claim even in their letter dated 30-5-1973, the appellant might rely upon Clause 12 of the policy of insurance and contend that the reference to arbitration would be beyond time.The solicitors, however, advised that in view of the delay on the part of the appellant and its failure to specify any reason for the disclaimer, the respondent might take steps for nominating an arbitrator and proceed with the reference. When the written opinion was received from the solicitors, the respondent had some doubt, because the solicitors did not give a definite opinion. So, it instructed the solicitors to take the opinion of counsel. After preparing the necessary case for the opinion, the solicitors briefed counsel for opinion on June 28.1973. The opinion of counsel was to the effect that the respondent should apply for extension of time under Section 37 (4) of the Arbitration Act and that was received by the solicitors on 16-7-1973. The respondent was informed of the opinion of counsel end it received a copy thereof on 18-7-1973. After gathering the facts from the records mentioned in the opinion of the counsel the respondent instructed the solicitors to take steps for filing a petition for extension of time. It, however, took some time to gather the facts indicated in the opinion of counsel. On 25-7-1973 the respondents solicitors sent the brief to counsel to draft the petition and the petition was received by them on 30-7-1973. Thereafter it took sometime to prepare a statement from available records.18. In the facts and circumstances of this case, we think the High Court exercised its discretion properly in extending the time. The conduct of the respondent was reasonable. It took all steps it could when it knew about the alleged robbery to inform the police and the appellant. The fact that the Barasat police reported that the case was false does not necessarily mean that the respondent tried to practice any fraud upon the appellant. The respondent had filed a suit against the owner of the truck in question in July, 1972, for recovery of the amount of loss. The respondent also paid the claims arising out of the loss of goods which were transported through the truck. All these go to show the bona fides end reasonableness of the conduct of the respondent. Both the amount at stake and the reasons for delay are material in considering the question of undue hardship. We do not think that any material prejudice would be caused to the appellant by extending the time. There would be undue hardship if time is not extended. as the consequences of non-extension would in any event be excessive and out of proportion to the fault of the respondent, if any, in not being prompt. We do not say that the mere fact that a claim would be barred would be undue hardship. But considering the amount involved and the reasons for the delay, we think it would be undue hardship to the respondent if time is not extended.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]6. Clause 1 of the policy states that notice of any accident, loss or damage affecting the insurance shall be given to the Company at the earliest possible date and not later than 30 days from the date of the accident, loss or damage. Clause 2 of the policy provides that in the event of any loss or damage covered by the insurance the insured shall produce and give to the Company all evidence as may be reasonably required by the Company. Clause 9 provides that if the insured shall make any claim knowing the same to be false or fraudulent as regards the amount or otherwise, the insurance shall become void and all claims thereunder shal1 be forfeited. Clause 11 states that all differences arising out of the contract shall be referred to the decision of an arbitrator to be appointed in writing by the parties or if they cannot agree upon a single arbitrator, to the decision of two arbitrators, one to be appointed in writing by each of the parties within one calendar month after having been required in writing so to do by either of the parties. It further provides that the making of an award by the arbitrator or arbitrators shall be a condition precedent to any right of action against theThere are no decisions of this Court or of the High Courts concerning the relevant considerations to be taken into account in exercising the jurisdiction for extending time under Section 37 (4) of the Act.Section 16 (6) of the English Arbitration Act, 1934 which is practically the same as Section 27 of the English Arbitration Act of l950 is in pari materia with Section 37 (4) of the Act. Therefore, the interpretation placed by English Courts upon Section 16 (6) and Section 27 of the respective Acts has great persuasive value.Keeping in view these principles, it has to be seen whether in the facts and circumstances of this case, there was reasonable and sufficient ground for not preferring the claim to arbitration within the time specified in clause 12 of the policy and whether there would be "undue hardship" to the respondent if time is not extended.16. It may be recalled that it was on July 1, 1971 and September 21, 1971 that the respondent lodged its claim with the appellant to recover the loss Buffered. Thereafter, various letters passed between the parties. Ultimately, on February 16, 1973, the appellant wrote the letter to the respondent stating that the claim papers submitted in connection with the claim had been scrutinized by the appellant but that it was unable to accept liability for the loss. The respondent then wrote a letter to the appellant on 30-3-1973 complaining about the uncertain language used in the letter dated February 16. 1973 and calling upon the respondent to point out specifically under which clause of exclusion of liability in the policy did the appellant disclaim the liability. The appellant kept quiet for 2 months and then on May. 30, 1973, sent a letter stating that it had nothing further to add to what had been stated in its letter dates February 16, 1973.17. The respondent was having dealings with the appellant in the business of insurance from 1958 onwards and in no instance was the claim made by the respondent rejected by the appellant. The conduct of the respondent in enquiring of the appellant the grounds on which the claim was rejected was quite reasonable. It was only after the grounds of rejection were known that the respondent could have decided whether to resort to arbitration or not. If the grounds of rejection would come within the clause of exclusion of liability under the policy. it would serve no purpose to incur the expense and hardship involved in resorting to arbitration The appellant did not give the reason for disclaiming liability even in its letter dated 30-5-1973. We do not think that there was any lack of promptness on the part of the respondent in waiting for the reply to its letter dated 30-3-1973. And, in the first week of June 1973, the respondent made over the papers to the solicitors viz. M/s. Banerji and Co. for the purpose of taking necessary steps for referring the dispute to arbitration in terms of the arbitration clause in the policy. On or about June 15 1973, the respondent received the written opinion from the Solicitors wherein they stated that since the letter of the appellant disclaiming liability was vague and since the appellant gave no reason for rejection of the claim even in their letter dated 30-5-1973, the appellant might rely upon Clause 12 of the policy of insurance and contend that the reference to arbitration would be beyond time.The solicitors, however, advised that in view of the delay on the part of the appellant and its failure to specify any reason for the disclaimer, the respondent might take steps for nominating an arbitrator and proceed with the reference. When the written opinion was received from the solicitors, the respondent had some doubt, because the solicitors did not give a definite opinion. So, it instructed the solicitors to take the opinion of counsel. After preparing the necessary case for the opinion, the solicitors briefed counsel for opinion on June 28.1973. The opinion of counsel was to the effect that the respondent should apply for extension of time under Section 37 (4) of the Arbitration Act and that was received by the solicitors on 16-7-1973. The respondent was informed of the opinion of counsel end it received a copy thereof on 18-7-1973. After gathering the facts from the records mentioned in the opinion of the counsel the respondent instructed the solicitors to take steps for filing a petition for extension of time. It, however, took some time to gather the facts indicated in the opinion of counsel. On 25-7-1973 the respondents solicitors sent the brief to counsel to draft the petition and the petition was received by them on 30-7-1973. Thereafter it took sometime to prepare a statement from available records.18. In the facts and circumstances of this case, we think the High Court exercised its discretion properly in extending the time. The conduct of the respondent was reasonable. It took all steps it could when it knew about the alleged robbery to inform the police and the appellant. The fact that the Barasat police reported that the case was false does not necessarily mean that the respondent tried to practice any fraud upon the appellant. The respondent had filed a suit against the owner of the truck in question in July, 1972, for recovery of the amount of loss. The respondent also paid the claims arising out of the loss of goods which were transported through the truck. All these go to show the bona fides end reasonableness of the conduct of the respondent. Both the amount at stake and the reasons for delay are material in considering the question of undue hardship. We do not think that any material prejudice would be caused to the appellant by extending the time. There would be undue hardship if time is not extended. as the consequences of non-extension would in any event be excessive and out of proportion to the fault of the respondent, if any, in not being prompt. We do not say that the mere fact that a claim would be barred would be undue hardship. But considering the amount involved and the reasons for the delay, we think it would be undue hardship to the respondent if time is not extended.