The Premier Insurance Co. Ltd. vs V.R. Kannan and Another

S. Ramachandra Iyer, C.J.—This is a petition to revise the order of the Second Assistant Judge of the City Civil Court, Madras, refusing to

declare an arbitration agreement as having, become void and unenforceable. The petitioner is an insurance company carrying on business as

insurers of motor vehicles. The first respondent who owned a bus took a comprehensive policy of insurance for the vehicle to be in force from 29th

May 1961 to 28th May 196Z. On 4th. March 1962, the bus met with an accident resulting in injuries to its passengers. There was also damages to

the bus. The first respondent thereupon made a claim to me petitioner for the damage sustained by him which the latter would be liable to pay

under the terms of the insurance. The claim1 was repudiated by the petitioner on the ground that the policy of insurance had become void by

reason of the owner of the bus changing the original engine into a new one during the currency of the policy, it was said that it amounted to an

alteration of the motor vehicle itself. Relying upon the arbitration clause container in the policy of insurance, the first respondent nominate his

arbitrator. The petitioner then came toward with the application out of which this petition arises, purporting to do so u/s 33 of the Arbitration Act,

for a declaration that the arbitration agreement contained in the policy of insurance had become void and unerstorceable. The learned Assistant

City Civil Judge has dismissed this application and hence this revision1.

Mr. Sarvabhauman, appearing for the petitioner, contends that, as u/s 33 of the Arbitration Act, any party to an arbitration agreement can

challenge the validity, of it before a court, it was obligatory upon the lower. Court to investigate the matter whether the engine has been changed,

and, if so, to declare that there could be no valid reference to arbitration. The argument suffers under a double fallacy. A mere change of a part of

a motor vehicle cannot obviously amount to a change of the vehicle itself. It will be a question of fact in each case whether any change effected in

the motor vehicle would be such that it can be said that the vehicle itself has been, changed. Secondly, what Section 33 authorises the Court a

enquire is about the validity of the arbitration agreement. It is not the petitioner''s case that the arbitration agreement contained as it is in the

insurance policy was invalid ab initio. What, is said is that, by reason of the change of the engine, the policy had become ineffective and that

therefore the arbitration clause would not avail.

That is merely a defence to the claim made by the first respondent, which does not go to the root of the arbitration agreement itself. That conter on

will have to be raised before the arbitrators. Learned counsel for the petitioner next referred me to the decisions reported in Suwalal Jain Vs. Clive

Mills Co. Ltd., and C.M. Mathu Kutty Vs. Varee Kutty, . But those are cases where the validity of the agreement was challenged on the ground

that there was no valid agreement even, from the beginning or there were infirmities at the inception therefore. The present is not such a case. the

substance of the plea of the petitioner is only a discharge of his obligation, by reason of the alleged change of the engine of the vehicle, and that

cannot obviously affect the validity of the agreement itself. The civil revision petition fails and is dismissed with costs.