Sterling General Insurance Co. Ltd. v. Planters Airways Pvt. Ltd.

Judgment

STERLING GENERAL INSURANCE CO. LTD. PLANTERS AIRWAYS PVT. LTD. December 19, 1974 [K. MA!HEW, P. N. BHAGWATI AND N. L. UNTWALTA, JJ.) Arbitratio11 Act, 1940, Section 37(4)-"Undue hardship", meaning of-· f:Jitensio11 of time for re/erring the dispuJe to arbltration-"Unduc hard.ihip'', ij co11ld. be giYen a liberal interpretation. The respondent, a common carrier of i:oods, had taken out three transit . Policies of insurance renewable every year from the appellant. The freight policy taken out in January 1969, wa5 against risk of Jos,, or damaie to any goods or merchandise during transit. In June 1971, the respondent declared tg the appellant that it had received for transit a consignment of 185 packages of general merchandise alleged to be of the total value of Rs. 1,10,000/- ( approx) for transportation from Otlcutta to various places in Assam and Tripura and paid the requisite premium on the value of goods and the goods stood insured under the said PQ!icy.

Ac.cording to the respondent on the evening of 29-6-71, the consi'gnment of 18~ packa!!fl was loaded in Trudi: No. WGH-8261, and the truck left Calcutta on the same day for Gauhati. It is alleged that th<e owner of the truck reached Barasat on the night of 29tli June, 1971, there was a robbery and neither the truck, nor the driver, nor the mercban. dise could be traced. On 1-7-1971, the responde:nt sent letters to the officer-incharge of Joraj)agan Poli.Ce Station. the Assistant Commissioner of Police, Inteli- 1;ence · Branch, tall Bazar. Calcutta and the Deputy Commissioner of Police Intelligence Branch intimating them that the truck, the driver, the assistant and· the mercl\andise could not be traced. A copy of the Jetter sent to the Assistant Commissioner of Police, Lall Bazar, Calcutta was sent to the appellant and it was received by· the appellant on 2-7 -1971.

On 1-7-1971 and , 21-9-1971; the respcindent lodged the claim for loss_ with the appellant on the· Uasit that the.loss was covered by the policy. On 3-7-1971, the appeJla.nt sent, <irletter to th¢ respondent calling. upon the respondent to furnish toe particu.' i.rs .. as regards the -.name and. addre!S of ·the owner of the vehicle, the name · anci.actdreM of the driver <Wd other.,partkulars. On 21-9-1971 the respondeilf iiifdr.llied the appellant by a· Jetter that the_ information and the record:1 asked . fi!f ~in 'the letter dated. 3-7-1971 were alreacty supplied to Mr. A. L. Chopra,' the Gg~bt of the appeJl,ant· on 5-7-1971 wheri re called upon the respondent: for tbat purw8e . ., On ,10-10-1971. the appellant wrote to. the .respon.clent in-, forming that until th<; report of the investigation by the police was produced; oy the respondent, it would not be possible for th'e appellant to _ pro• · ccetl further in the matter.

The appellant received a copy· of the investi,!!a- · ''!ton i'ep!Jrt' by the police at 'Barasat on 12-5-1972. The report wa, to the effect that the alleged ·episode of robbery wa' fai!C. On this basis, the: appel- . l;mt sent to tk ri:spondent. a letter dated 4-8-1972 stating llie contents of the investigation_ rcPQrt of the po)ice ·at Barasat asking for the. investigatior1 repcrt ·of Jarabagati Police· Lall Bazar Pglice. Thereafter the appellant intimated · 1he ,respondent by letter dated 16-2-1913 disclaiming its liability under the ,.f.reight· policy as regards the 1055 of the consignment of 185 packag1~s. On receipt of the: letter, the respondent wrote to the appellant on 30-3· 73 asking for tt,e ground on which the appellant disclaimed its liability. The appel- :-la.nJ -sent a letter after two month~ on May 30. 1973, stating that it had 11othing to add to what had been stated in its Jetter dated February 16, 1973.

Thereafter, the respondent took the advice of solicitors and coumel. On 17-8-1973, th<; tespondent filed the application before the High Court under s. 37(4) of tbe Act for extension of time for referring the dispute to arbitration till a date 15 days after the order of the High Court. Jn the application the respondent stated the reasons for the delay in filing the application in court after receivin1t the Jetter dated May 30, 1973. Jn answer to the application, the appellant contended that s. 37(4) of the Act had no application that the C0urt had no, jurisdictlon to e:<!end the time and that even if the court had j l I STERLING INSURANCB CO. V, PLAN1'BRS AIRWAYS jurisdiction, there wi:re no valid grounds for exteRSion. The \earned Judge of lhe. Hi¥b Co?rt. passed the order extending the time to r:for the di~ute to arbitration within a fortnight from 14-1-1974.

In this appeal by specfal leave, it was contendw for appellant that there wu?ld be no . und.ue ~ardship to the respondent if the time for preferrina the claim to arbitration 1s not extended and, therdore the High C0urt ·went wrong in exercising its discretion by extending the 'time. Rejecting the contention and dismissing the appc;I, HELD : (i) Court has to ta];c a liberal view of lhe meanina of the words "undue hardship" occurring in section 37(4) of the Arbitration Act, 1940. 'Qudue' must mean something which is not merited by the conduct of the claimant, or is very mu:h disproportionate to it. (143E-P] Steamship Co. of 1912, ttc. Anglo-American Grain Co. etc. (1958] 2 Llyod's Rep, 341; Wamey, Comba, Raid & Co. v. E. M. Dower & Co. tic. [1956] 2 Lloyd's Rep. 129, 131; F. E. Hookway & Co. Ltd. v. H. W.H. Hopptr & Co. (1950) 1 All E.R 842; Stanhope Steam3hip Co. Ltd. v. Briti3h Phos· p/Jate Commissioneu [1956] 2 Lloyd's Rep. 325; and Librarian Shipping 1tc. v. A King & So113 [1967]

1 All E.R. 934. referred to (ii) The respondent was having dealings with the appellant in the bwincss 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 reasonabk. It was only after the grounds of rejection were known that the respondent could have decided whether t_o resort to arbitration or not. If the. grounds of rejection would come within the clause of exclusion of liability· under the policy, it woiild 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. 30-3-197~.

In the facts and circumstances of the case it. is . .clear. th:i"t the High . .Court exercised its discretion pro. perly in extending the ti111e.. The .conduct .,of tbe. reSpohdent was ttas<>nable. It took all steps it could when it knew about the alleged robbery to inform the police and t~ ,appeilill)t.: The fac~ that We Baras at police reporte~ that the case •.was false does· not necessanly mean that the respondent tned ·to practise a'ny fraud bn the appellant. The respondent had filed a suit a,pinst the owner of the truck in question ·in July 1972~for the recovery 6f the amount .of loss. It al~o paid the Claims arising out ·of the Io~. oFatlods F · which were transj'orted through the truck. All ·these go to show the bonafides, and· reasonableness of the conduct of the respondent. Both the . amount ;1t, stake and the reasons" for delay are material in considering the question of. undue hardship.

It cannot be said that any material prejudice would be· caused to i:he · appellant by extending the time. There would be. undue har~' ship if time is not extended, as the r,onsequence of non-extensIOn would m any event be exeessive and out of proportion to the fault of the respondent, if ariy, in not being prompt. It als.o cannot be said that. the mere fact that a claim would be barred would be undue hardship. [l44B-C; H; 145A·B] · · QvIL. APPELLATE JURISDICTION: Civil Appeal No .. 535 of 1974. Appeal by special leave from the Judgment and Order dated the 14th January, 1974 of the Caku_tta High Court in Award Case No. 181/1973. S. T. Desai, B; P. Maheshwari, Sharad Manohar and Suresh Sethi, for the appellant. Somnath Chatterjee, and P. K. Mukherjee, for the respondent. The Judgmer..t -of the Court was delivered by [1975j 3 S.C.R. MATHEW, J.-This appeal, by special leave, is dircctLd against an order of a learned judge of the Calcutta High Court allowing an application filed under s.

37 ( 4) of the Arbitration Act, 1940 (hereinafter called the Act) for extension of time to refer th-~ matter of arbitration. The facts arc these. The appellant: is a company doing bnsine,ss in general insurance. The respond·ent carries on busines as a common carrier of goods. The respondent had taken out three trnnsit policies of insurance renewable every year. The policy which is relevant for the purpose of the present appeal is freight policy No. CL/REP /257 taken by the respondent in January, 1969 from the appellant against risk of loss or damage to any goods or merchandise during transit. ·Jn Ju~ne 197L the respondent declared to the appdlant that it had n:ccived for transit a consignment of 185 packages of general merchan· dise alleged to be of the total value of Rs. 1,10,000 lapprox) for transportation from Calcutta to various plac.:cs in Assam and T ripura and paid the requisite premium on the value of goods and the goods stood insured under the said policy.

According to the respondent, on the evening of 29-6-71, the consignment of 185 packages was loaded in Truck No. WGH-8261, and the truck left Calcutta on the ~amc day for Gauhati. It is alleged that the owner of the truck infor:1 edl the respondent that after the truck reacb.:::d Barasat on the night of 29th June, 1971, there was a robbery and neither the truck, nor the driver, nor the merchandise could be traced. On 1-7-1971, the respondent sent letters to the officer-inch?rge of Jarabagan Police Statir •n, the Assistant Commissioner of Police, Intelligence Branch, Lall Bazar Calcutta and the Deputy Commissioner of Police, Intelligence Branch intimating them that the truck which left Calcutta on 29th June 11971 had not reached Beniagram at the scheduled time and that the truck, the driver, the assistant and the merchandise could not be traced.

A copy of the letter sent to the Assistant Commissioner of Police, Lall Bazar, Calcutta was sent to. the appellant and it was received by Lle appellant on 2-7-1971. On 1-7-1971 and 21-9-1971, the respondent lodged! the claim for loss with the appellant on the basis that the loss was covered by the policy. On 3-7-1971, the appellant sent a letter to their respondent calling upon the respondent to furnish the particulars as regards the name and address of the owner of the vehicle, the name and address · of the driver and other particulars. On 21-9-1971, the responden'l informed the appellant by a Jetter. that the information and the records asked for in the letter dated 3-7-1971 were already supplied to Mr. A. L. Chopra, the agent of the appellant on 5-7-1971, when he ci~led upon the: respondcni for that purpose.

On 10-10-1971, the appellant wrote to the respondent informing that until the report of the investigation by the police was produced by the respondent, it would not be possible for the appellant to proceed further in the matter. The appellant received a copy of the investigation report by the police at Barasat on 12-5-1972. The report was to the effect that the alleged episode of robbery was false. On this basis, the appdlant sent to the respondent a Jetter dated 4•8-1972 stating the contents of the investigation report of the police at Barasat asking for the investigation report of Jarabagan .STERblNG INSURANCE CO. V. PLANTERS AIRWAYS (Mathew, /.) 13 ~ Police Lall Bazar Police. Thereafter the appellant intimated the respondent by letter dated 16-2-1973 disclaiming its liability under the freight policy as regards the loss of the consignment of 185 packages.

On receipt of the letter, the respondent wrote to the appellant -on 30-3-1973 asking for the grounds on which the appellant disclaimed. its liability. The appellant sent a letter after two months on May 30, 1973, stating that it had nothing to add to what had been stated in its letter dated F cbruary 16, 19?3. Thereafter, the respondent took the advice of solicitors· and counsel. On 17-8-1973, e~e respondent filed the application before the High Court under s. 3 7 ( 4) _of the Act for extension of time for referring the dispute to arbitration till a date 15 days after the order of the High Court. In the application, the n~spondcnt stated the reasons for the _delay in _filing the application in court aft.~r receiving the letter dated May 30, 1973. In answer to the application, the appellant contended thats. 37(4) of the Act had no application, that the court had no jurisdiction to extend the time and that even ii' the court had jurisdiction. there were no valid grounds for extension.

Th-:: application came up for hearing before a learned Judge and he passed the order extenciing the time to refer the dispute to arbi· tnition within a fortnight from 14-1-1974. The question that arises for consideration is whether the High Court had power to ext~nd the time and if it had power, whether it exercised its power properly in extending the_ time for preferring ~be claim to arbitration. That will depend upon a correct interpretation of the relevant clauses of the policy and of s. 37(4) of the Act. Clause I 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 shall produce and give to the Company <>11 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 regardsthe amount or otherwise the insurance shall become void a11d all claims thereunder shall be forfeited. Clause 11 states that all differences arising out of the contract shall be refem:d to the decision of an arbitrator to be appointed in writing by the parties or if they cannot agree 11pon a single arbitrator, to the decision of two arbitrators, one to be appointed in Wl'iting 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 maki11g of an award by the arbitrator or arbitrators shall be a condition precedent to any right of action against the Company. Clause 12 which is the material clause for the purpose of this case reads :

"If the Company shall disclaim liability lo the Insured for any claim hereunder and such claim shall not within three calendar months from the date of such disclaimer have been preferred to Arbitration under the provisions · herein conrained, then the c':i;n~ s'ic!I fnr :"I purpc-ses be deemed to have been' abandoned and sli::!l net thereafter be recoverable hereunder .. ,"

Section 37 (,4) of the Act reads as follows : ''Whether the terms of an agreement to refer future differences to arbitration provide that any claims to which the agreement. applies shall be barred unless notice to appoint an arbitrafor is given or an arbitrator is appointed or some other step' to commence arbitration proceedings is taken within a time fixed by the agreement and a difference arises to which tl.1e agreement applies, the Court, if it is of opinion that in the' circumstances of the case undue hardships would otherwise be caused, and notwithstanding that the time so fixed has expired, may on such terms, if any, as the justice of the case may require, extend the time for such period as it thinks pl~oper." _ It was not :)eriously. contended that s. 37( 4) of the Act was not applicable to the agreement embodied in the policy in question <md thr High Court had no jurisdiction to extend the time.

The only contention rressed on behalf of the appellant was that in the circumstances ot the c~se, there would be no undue hardship to the respondent if the time for preferring the claim to arbitration is not extended a1Jd, therefore, the High Court went wrong in exercising the discretiion by extending the time. There are no decisions of this Court or of the High Courts concerning the relevan~ consideration to be taken into account in exercising the jurisdiction for exten(!ing time under S. 37 ( 4) of the Act. Seetion 16( 6) of the English Arbitration Act, 1934 whi~t. is pra1:tically'. the same as s. 27 of the English Arbitration Act of 1950 i$ in pari materia witl\ s. 37 ( 4) of the Act. Therefore, the interpretation placed by English Courts upon s. 16(6) ;md s. 27 of the respective Acts has great persuasive value. The EneJish courts .originally took a very strict and narrow vkw ofthe words "undue hardship", Jn Steamship Co. of 1912 etc. Anglo-American Grain Co. etc.(1)

Lord Parkar, CJ. said: "It has b.een said, over and over again by this Court, that there must l~e very special circumstancr£ for extending the time. Of course, if a valid claim is barred, there is hardshio, but that is not what is provided for by the clause, and before this Court can extend the time they must be satisfied that the hardship ampunts in the particular case to undue hardship ......... " In Watney,.Comba, Raid & Co. v. E. M. Dower & Co. Ltd.(~) Goddard, C.J. said : "I desire. to say in the clearest possible terms that the mere. fact tha',t the claimant is barred cannot be held to be an l. (I 9SS) 2 Lloyd·'~ Rep. 341. 2. (1956) 2 Lloyd's Rep. 129, 131. STERLING INSURANCE co. v. PLANTERS AIRWAYS (Mathew, J.) 10 undue hadship, which is what the section requires to be found by the court before it extends the time. The section does not mean that this Court can take out of the contract the provision which will bar the claim if it is not pursued in time.

They have no power to do that. The only thing th·ey have power to do is to extend the time if undue hardship is caused. One can visualise certain cases of undue hardship.". In F. E. Hookway & Co. Ltd. v. H. W. H. Hopper & Co.( 1) where the buyers made an application for extension of time under s. 16 ( 6) of t11e English Act of 1"934, Denning, L.J. observed lhat the extent o.f delay in a relevant circumstances to be considered, that if the delay is not on account of the fault of the buyer, it would no doubt, be an undue hardship on him to hold the clause against him but, if the delay is his own fault, the hardship may not be undue as it may be a hardship which it is due and proper that he should bear.

He further said that another relevant circumstance was whether there was evidence of ariy loss on any sub-contracts and claims by sul>-huycrs O£ any wmplaints by them and if there was evidence of such1oss lir daimi, then the court would take a lenient view of the delay and hold that, notwithstanding it, there was undue hardship oh the buyer. In Stanhope Steamship Co. Ltd. v. British Phosphate Commissioners(2), Sin&).eton, J .. in delivering the judgment said : "What, then, is the meaning of "undue hardship" ? "Undue", it is said by Mr. McCrindle, means something which is not merited by the conduct of the claimant. That may be right. If the result of claimant's being perhaps a day late is so oppressive, so burdensome, as to be altogether out of proportion to the fault, I am inclined to think that one may well sav that there is undue hardship. Both the amount at stake and the reasons for the delay are material considerations." Jn Librarian ShipvinR etc. v. A KinR &:

Sons( 8), the facts werethese. A vessel was let on a voyage charter party in Centrocon from containing an arbitration clause under which any claim had to he _ made in writing and the claimant's arbitrator had to be appointed within three months of final discharge. A fire occurred on board the vessel duri•,1g lo·ading. Both the owners and the charterers had claims against each other. The time limit was to expire on June 26, 1966. The parties were negotiating and. after considerable correspondence. a meeting between both parties was arranged for June 27, 1966 with a view to settlement. The meeting did not re:;ult in a settlemerit.' The charterers first realised that time had expired whe',1 the owners soui!ht an extension of it by consent, nine days after the expiry. · The ch~r­ terers had not contributed to the delay on the part of the owners in relation to the arbitration clause. The charterers did not consent to the time being extel.1ded. The owners applied under s.

27 of the Arbitration Act, 1950 for an extensioo of time on the ground th'at "undue hardship" would otherwise be caused to them. Their claim !. [1950] 2 All E.R. 842. 2. (1956) 2 Lloyd's Rep. 3~5. 3. [1967] l All E.R. 934 amounted to about £ 33,000. The master granted an extension of time, but on appeal the judge refused it. 'On further appeal the court by a majority said that if tbc time were not extended, u1,1duc hardship would be caused to the owners since they would be deprived o( what might be a valid claim for £33,000 by a delay of only a few days due to excusable inadvertence, that the charterers would not in any way be prejudiced by time being extended and so the court would exercise the discretion conferred by s. 27 of the Arbitration Act, 1950, and would exte.id the time. In the course of his judgment Lord Denning, M. R. observed that in the past the courts had been incline'd to emphasize the word "undue" and to say that if a man does not read the contract and is a day or two late, it is a "hardship": but it is not an ·'undue hardship", because, it is his own faul~ but that the i!lterpretation was narrow.

He said that these time-limit clauses used to 0pcrate most unjustly on claimants for, they found their claim b«rred by some oversight and it was to avoid that injustice the legislature intervened so as to enable the courts to extend the tirne whenever "in the circumstances of the case undue hardship would otherwise be caused". He also said that the word "undue" in the context simply means excessive hardship greater than the circumstances warrant a:Jd that even if a claimant has been at fault himself, it is an undue on him if the consequences are put of proportion to his fault. He further stated that even if a claimant makes a mistake which is excusable, and is ju conscaucnce a few days out of time, then if there is no prejudice to tile other side, it would be altogether too harsh to deprive him of all chance for ever of coming and making his claim and that is all the more so, if the mistake is contributed or shared by the other sitle. He then observed :

"It was said that this was a matter for the Judge's discretion. True enough. We have, however, said time and again that we wiU interfere with a Judge's discretion if satisfied that the discretion was wrongly exercised. fa any· case the judge was not exercising an unfettered discretion. He felt himself fettered by the trend of the authorities to give the words "undue hardship" a narrow meaning. I · think that we should reverse that trend and give the words their ordinary meaning, as Parliament intended. It would be ''undue ha:ttlship" on the owners to hold them barred by the clause.''' In the same case, Salmon, L.J. said that the arbitration clause put 1t out of the power of the court to grant any relief to a claimant who had allowed a few days to run beyond the period specified in the clause even although the delay could have caused no conceivable harm to the otherside.

He said that it would be hard and unjust if a man with a perfectly good claim for thousands of pounds worth of damage for bre-ach of contract inadvertently allowed a day or two to go by was deprived of the right to be compensated for the loss which he had suffered, even though the other party had not been in any way affected by the delay and might perhaps have been guilty of a delibi!rate breach of ccmtract and that it was to remedy this hardship and injustice that th<~ legislature interve.ied to alter the Law. He furtih.er said:- 1) '1LRLl~G INSURANCE co. I'. PLANTERS AIRWAYS (Mwhell', J.) "This c1mctmcnt was a lm1cficcnt reform. libcralisirn!, the law in an admittedly •,1arrow sector of the commercial fidd. l have heard it said that when people have spent their lives in chains and the shackles arc eventually struck off. they cannot believe that their claims arc no ionger there. They still feel bound by the shackles to which they have so Jong been accustomed.

To my mind, that factor may explain the court's approach in some of the cases to the probkm r.-;:h which we arc now faced. He then summed up his conclusion as follows : . "In considering this question the court must take all the relevant circumstances of the case into account; the degree of blameworthiness of the claimants in failing to appoint an m·bitrator within the time; the amount at stake, the length of the delay; whether the claimants have been misled, whether through some circumstances beyond their control it was nnpossible for them to appoint an arbitrator in time. In the last two circumstances which J have mentioned, which do not arise here, it is obvious that normally the power would be exercised; but those arc not the only circumstances a 111d they arc not, to my mind, necessary circumstances for the exercise of the power to extend time.

I do not intend to catalogue the circumstances to be taken into account, but one very important circumstance is whether there is a1ay possibility of the other >idc having been prejudiced by the delay. Of course, if there is such a possibility, it might be said that it is no undue hardship on the owners to refuse an extension of time because, if the hardship is lifted 'from their shoulders, some hardship will fall on the shoulders of the charterers,. and, after all, the delay is the owners' fault." Therefurc, we will have to take a liberal view of the meaning of the words "undue hardship." ''Undue" must mea'a something which is not merited by the conduct of the claimant, or is very much disproportionate to it.

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 prcferri'ag the claim to arbitration within the time specified in clause 12 of the policy and w hethcr there would be ''undue hardship" to the respo1,1dcnt if time not extended. 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 suffered. Thereafter, various letters passed between the parties. Ultimately, on February 16, 1973, the appellant wrote the letter to the respQi,1dent 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 foe 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 a11d calling upon the respondent to point out specifically under which clause of exclusion) of liability in the policy and the appellant disclaim the liability. The appellant kept quiet for 2 months and then on May [1975] 3 S .. C.R. 30, 1973, se.ilt a letter stating that it had nothing further to add to what had been stated in its letter dated February 16, 1973. 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 respondel.ilt 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 grouuds of rejection would come within the clause of exclusion of liability undtr 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 eveJa in its letter dated 30-5-1973. We do not think that there was any lack of promptness on the part of the respond~nt in waiting for the reply to its letter dated 30.3 .1973. And, in the first wee~ of June, 1973, the respondent made over the papers to the solicitors viz., M/s. Banerji & 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 reasoo for rejection of the claim even in their letter dated 30-5-1973, t:pe appellant mig\lt rely upon clause 12 of the policy of insurance and contend that the refcreence to arbitration would be beyond time. The solicitors, however, advised that in view of the delay on the part of the appellaut and its failure to specify any reason for the disclaimer, the respondent mi,ght take steps for nominating an arbitrator nnd proceed with the reference. When the written opinion was received from the solicitors, the respondent had some doubt, because the solicitors did 1uot give a defit:1ite opinion. So, it instructed the solicitors to take the opinion of coum:el. After preparing the necessary case for the opinion, the. solicitors briefed counsel for opinion, on June 28, 1973:

The opinidil of counsel was to the effect that the respondent should apply for extension of time under s. 37 ( 4) of the Arbitration Act and that was received by the solicitors on 16-7-1973. The respondent flas informed of the opinio•n of counsel and 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 instructec' the solicitors to take steps for fili'.ng apetition for extension of time. It, however took some tinie to gather the facts indicated in the opinion of counsel. On 25-7-1973 the respondent's solicitors sent the brief to counsel to draft the petition and the petitio!J. was received by them on 30-7-1973. Thereafter i{ took .sometime to prepare a statement from available records. In the factsand circumstances of this case, we think the High Court exercised its discretiOn properly in extenuing the time. Tbe · conduct of the respondent was reasonable.

It took all steps it could when it knew about the alleged robbery inform the pol.ice and the appellant. The fact that the Barasat police reportal that the cas:e was false does not necessarily mean that the respondent tried to prac:- STERLING INSURANCE co. V. PLANTERS AIRWAYS (Mathew, J.) 14 5 tisc any fraud upon the appellant. The respondent had filed a suit a~ainst the owner of the truck in question in July 1972 for recovery ot the amouilt of loss. The respondent also paid a suit against the owner of the truck in question in July 1972 for recovery of the amvunt 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 bonafides and reasonablene&s of the conduct of the respon~ dent. 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 exten<ling 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 p'roportion to the fault of the respondent, if any, in 11ot 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 reasol.1s for the delay, we think it would be undue hardship to the respondent if time is not extended. We dismiss the appeal but in the circumstances, it is necessary that further time should be given to the appellant to nominate an arbitrator. We, therefore, extend the time ~ile month from the date of this judgment to enable the appellant to nominate its arbitrator. We also think that this is a fit case in which the parties should suffer their own costs of the application in the High Court and of the appeal here. VJvLK A ppcal dismissed. ! l-L379SupCl/75