# Feb. 22. 19)2 Kashinatk Bhaskar Datar v. Bhaskar Vishweshwar Karve

- **Citation:** [1952] 1 S.C.R. 491
- **Court:** Supreme Court of India
- **Decided:** 1952
- **Case number:** Civil Appeal No. 140 of 1951
- **Bench:** SAIYID FAzL ALI, VMAN BosE
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/feb-22-19-2-kashinatk-bhaskar-datar-v-bhaskar-vishweshwar-karve-41
- **Pages:** 11

## Headnote

Indian Registration Act (XVI of 1908), s. 17(l)(b)-Subsequent
document varying terms of previous document-Limiting and extinguishing "interest" in immoveable property-Equitable doctrine of
part performancc-W hether applicable.
A suit to recover money based on two mortgages was resisted
by the defendant on the plea that the mortgages were satisfied
as the assignor of the mortgages to the plaintiff had executed an
agreement in favour of the defendant which proved satisfaction.
This agreement was not registered and the question for determination was whether it required registration and whether if it did,
it could not be
used for the collateral purpose
of proving full
payment of
the
mortgage amount.
The agreement contained,
inter alia, the following terms: "(i) I am settling and formulating
new terms and I am confirming some very
terms which were
declared before; (ii) Although the rate of interest mentioned in
the mortgage deeds is 14
annas still the
actual
rate
is to be
received at the rate of
8 annas and so it is settled between the
original parties; (iii) It was agreed that if you pay me Rs. 1,800
in a lump it will be understood that the transaction has been
wholly completed and paid up.
As you have no sufficiency of
funds ................ it is settled that you are to pay me Rs. 80
per month; (iv) As mentioned above no interest of any nature
whatever has remained claimable by me ..... . and in like manner
I understand whole of the principal has been fully paid; ( v) If you
so wish or if necessity may arise then at any time you may ask
for it I shall give you this agreement written out on stamp paper
and on being registered."
Held, that the agreement was not exempt from
registration
because the
document
itself limited and
extinguishecl an "interest"
in immoveable
property
in
the
present within
the
meaning of s. 17( 1 )(b) of the Indian Registration Act, and it was
not exempt under s. 17(2)(v).
Held, also that the document could not be used under the proviso to s. 49 of the Registration Act as the suit was not for specific performance and no question of part performance arose in the
case and also no question of using the document for a collateral
transaction arose because
the document
was to be used to prove
the very agreement which it created itself .
.,
U. Po Thin v. Official Assignee (A.I.R. 1938 Rang. 285) and
Tik_aram
v. Deputy Commissioner of Bara Banki (26 I.A. 97),
..,.
~
Mahim Chandra Dey v. Ram Dayal Dutta (A.I.R. 1926 Cal. 170),
2-6 S.C. India/71
1952
Feb. 22.
19)2
Kashinatk
Bhaskar
Datar
v.
Bhaskar
Vishweshwar
Karve.
492
SUPREME COURT REPORTS
[1952]
Ram Rar.f~n v .. fayantilal (A.LR. 1926 Cal. 906) and Collector of
Etan v. Kr.<hon Lal (A.I.R. 1930 All. 721) referred to.
C!V!L
APPELLATE
Ju&1so1CTI0N
: Civil
Appeal
No. 140 of 1951. Appeal from a Judgment and Decree
dated 22nd September, 1947, of the High Court of Judicature at Bombay (Sen and Bavdekar JJ.) in Appeal
No. 41 of 1943 arising out of decree dated 4th September, 1942, of the Court of the First Class Subordinate
Judge at Poona in Civil Suit No. 808 of 1941.
Roshan Lal and B. S. Shastri for the appellant.
Hardyal Hardy for the respondent.
1952. Februray 22. The Judgment of the Court was
delivered by
BosE J.-This is a defendant's appeal in a suit
Oil
two mortgages.
The first was executed on the 7th of
April, 1931, by the defendant and his father.
The
second was dated the 17th of December, 1935, and was
executed by the defendant alone. The first was for a
sum of Rs. 9,500, the second for Rs. 3,500. The same
property was mortgaged each time.
The claim on the
two deeds together was for Rs. 20,774-3-0.
These mortagages were in favour of one Narayan
Gopal Sathe. On the 28th of March, 1940, the mortgagee assigned them both to the plaintiff who now sues
on them.
The defence was that both mortgages were satisfied.
The main evidence on which the defendant relied to
prove satisfaction was an agreement dated the 17th of
October, 1937,
executed
by the mortgagee Narayan
Go

## Text

•
•
-
-
,..
.•
S.C.R.
SUPREME COURT REPORTS
491
KASHINATH BHASKAR DATAR
ti.
BHASKAR VISHWESHW AR KARVE
[SAIYID FAzL ALI and VMAN BosE JJ.]
Indian Registration Act (XVI of 1908), s. 17(l)(b)-Subsequent
document varying terms of previous document-Limiting and extinguishing "interest" in immoveable property-Equitable doctrine of
part performancc-W hether applicable.
A suit to recover money based on two mortgages was resisted
by the defendant on the plea that the mortgages were satisfied
as the assignor of the mortgages to the plaintiff had executed an
agreement in favour of the defendant which proved satisfaction.
This agreement was not registered and the question for determination was whether it required registration and whether if it did,
it could not be
used for the collateral purpose
of proving full
payment of
the
mortgage amount.
The agreement contained,
inter alia, the following terms: "(i) I am settling and formulating
new terms and I am confirming some very
terms which were
declared before; (ii) Although the rate of interest mentioned in
the mortgage deeds is 14
annas still the
actual
rate
is to be
received at the rate of
8 annas and so it is settled between the
original parties; (iii) It was agreed that if you pay me Rs. 1,800
in a lump it will be understood that the transaction has been
wholly completed and paid up.
As you have no sufficiency of
funds ................ it is settled that you are to pay me Rs. 80
per month; (iv) As mentioned above no interest of any nature
whatever has remained claimable by me ..... . and in like manner
I understand whole of the principal has been fully paid; ( v) If you
so wish or if necessity may arise then at any time you may ask
for it I shall give you this agreement written out on stamp paper
and on being registered."
Held, that the agreement was not exempt from
registration
because the
document
itself limited and
extinguishecl an "interest"
in immoveable
property
in
the
present within
the
meaning of s. 17( 1 )(b) of the Indian Registration Act, and it was
not exempt under s. 17(2)(v).
Held, also that the document could not be used under the proviso to s. 49 of the Registration Act as the suit was not for specific performance and no question of part performance arose in the
case and also no question of using the document for a collateral
transaction arose because
the document
was to be used to prove
the very agreement which it created itself .
.,
U. Po Thin v. Official Assignee (A.I.R. 1938 Rang. 285) and
Tik_aram
v. Deputy Commissioner of Bara Banki (26 I.A. 97),
..,.
~
Mahim Chandra Dey v. Ram Dayal Dutta (A.I.R. 1926 Cal. 170),
2-6 S.C. India/71
1952
Feb. 22.
19)2
Kashinatk
Bhaskar
Datar
v.
Bhaskar
Vishweshwar
Karve.
492
SUPREME COURT REPORTS
[1952]
Ram Rar.f~n v .. fayantilal (A.LR. 1926 Cal. 906) and Collector of
Etan v. Kr.<hon Lal (A.I.R. 1930 All. 721) referred to.
C!V!L
APPELLATE
Ju&1so1CTI0N
: Civil
Appeal
No. 140 of 1951. Appeal from a Judgment and Decree
dated 22nd September, 1947, of the High Court of Judicature at Bombay (Sen and Bavdekar JJ.) in Appeal
No. 41 of 1943 arising out of decree dated 4th September, 1942, of the Court of the First Class Subordinate
Judge at Poona in Civil Suit No. 808 of 1941.
Roshan Lal and B. S. Shastri for the appellant.
Hardyal Hardy for the respondent.
1952. Februray 22. The Judgment of the Court was
delivered by
BosE J.-This is a defendant's appeal in a suit
Oil
two mortgages.
The first was executed on the 7th of
April, 1931, by the defendant and his father.
The
second was dated the 17th of December, 1935, and was
executed by the defendant alone. The first was for a
sum of Rs. 9,500, the second for Rs. 3,500. The same
property was mortgaged each time.
The claim on the
two deeds together was for Rs. 20,774-3-0.
These mortagages were in favour of one Narayan
Gopal Sathe. On the 28th of March, 1940, the mortgagee assigned them both to the plaintiff who now sues
on them.
The defence was that both mortgages were satisfied.
The main evidence on which the defendant relied to
prove satisfaction was an agreement dated the 17th of
October, 1937,
executed
by the mortgagee Narayan
Gopal Sathe in favour of the defendant. The document
has been excluded from evidence by the trial Court as
well as by the High Court on appeal on the ground
that it required
registration.
If this
document is
excluded, then there is a concurrent finding of fact by
both the Courts that the rest of the evidence is not
good enough to prove satisfaction.
They have disbelieved it and decreed the plaintiff's claim in full.
The
-0nly questions before us are ( 1) whether this document
:required registration and (2) whether, if it did,. it
-
-
-
-
S.C.R.
SUPREME COURT REPORTS
493
cannot still be used for what the defendant claims is a
collateral purpose, namely proving full payment of
1952
Kflshinath
the mortgage amount.
Bhaskar
Dat/JI'
The agreement came about in this fashion.
The -
v.
mortgagee, Narayan Sathe, was appointed Receiver of
Bhaskar
h
h
Vishweshwar
two Cinemas in Poona.
T e Court appointing
im
Kt1rt1e.
required
him to produce a surety in
the
sum of
Rs.
10,000.
The defendant agreed
to undertake t~
responsibility
and
as
a consideration for
that the
mortgagee executed the agreement in question.
The
portions
of
docu·ment relevant
for
the
present
purpose are as follows.
The mortgages are there described as the "transactions of give and take".
"(3) It is extremely necessary to explain beforehand
the
transaction of give and take outstanding
~etween both of us ...
(4) Whereas two transactions
have
been
done
between you and me ...... Therefore you have agreed to
stand surety ... And only for that reason I am executing this agreement and giving it to you in writing and
thereunder
I am
settling and formulating some new
terms and I am confirming some very terms which
were declared before.
(5) Although in the matter of the transaction
relating to the aforesaid mortgage
deed~ the rate of
interest mentioned in the documents purporting to be
the mortgage deeds is 14 annas per mensem per centum,
still the actual interest is to he received only at the rate
of 8 annas per mensem per centum; so it if settled
between you and me and I have also agreed to the
same.
And even at that rate I have also been receiving the interest and I shall also receive hereafter ....
( 6)
As regards the transaction of the
second
mortgage deed .... if as agreed at tltat time between you
and me you pay me Rs. 1,800 in the lump then it will
be understood that the transaction of give and take
s11bsisting between you and me has been wholly completed rand fully paid up.
As you have no sufficiency
of funds to make up and pay :in full the above sum at
once it is settled that you are to pay to me Rt. 80 per
Bose /.
1952
Ka1hina1h
Bhaskar
Datar
v.
Bha1k_ar
Vuhweshwar
Karve.
Bose /.
494
SUPREME COURT REPORTS
[19521
month and thus you are to make payment in full .... ln
accordance with the agreement arrived at between us
both subsequent to the document purporting to be the
second mortgage deed the said documents and papers
. ... and the written receipts in respect of interest given
to you by me relating to the payment in full made by
you in respect of interest and principal on account of
the first transaction dated 7-4-31 have been kept with
me ...
•
•
•
(8) As mentioned above (vide paras 5 and 6 ) no
interest of any nature whatever has remained claimable by me from you in accordance with the agreement
arrived at between us both from the date of your
suretyship onward and prior to it and in like manner
I understand that the whole of the principal has been
fully paid.
·
•
•
•
(10) If you so wish or if necessity may arise then
at any time you may ask for it and I shall give you
this agreement on being written out on stamped paper
and on being registere.d."
In our opinion, this is a document which limits and
extinguishes interests in
immovable pi{operty , fo the
present within the meaning of section 17(1) (b) of the
Indian Registration
Act.
Clause ( 4)
of the agreement
expressly says so.
Referring to the two mortgages it
says-
"! am settling and formulating some new terms."
This speaks from the
present. It does not say that
this was some past agreement, and that fact is underlined in the next sentence which reads-
"and I am confirming some very terms which
were declared before."
Among the new terms is the following. The rate of
interest agreed upon in the two mortgage deeds was 14
annas per cent per month. Clause ( 5) reduces
this to
8 annas.
It is true that according to clause (5) only 8
annas had· actuallv been paid all along b11t that hardly
-
-
S.C.R.
SUPREME COURT REPORTS
495
matters because the question is not what was paid but
what was due and what the mortgagee
could have
enforced under his bond. It is evident from clause ( 4)
that it was the agreement embodied in the document
which effected the change
and therefore it was the
document itself which brought the altered terms
into
being.
The next question is whether this limits an interest
in immovable property.
We are of opinion it does.
We agree . with the learned Rangoon Judges in U. Po
Thin v. Official
Assignee(1)
that one
part of the
"intere~t" which a mortgagee has in mortgaged property is the right to receive interest at a certain rate
when the document provides for interest.
If that rate
is varied, whether to his advantage or otherwise, then,
in our judgment,
his "interest"
in the
property is
affected.
If the subsequent agreement substitutes
a
higher rate, then to the extent of the difference it
"creates" a fresh
"interest"
which
was
not there
before.
If the rate is lowered,
then his original
"interest" is limited.
The question of a higher rate was considered by
their Lordships of the Privy Council in Tika Ram v.
Deputy Commissioner of Bara Banki(2).
There, the
mortgagors gave the mortgagees an unregistered rukka
or written promise simultaneously with the registered
mortgage stipulating that they would pay an extra 6
per cent per annum over
and
above the 15 per cent
entered in the mortgage.
Their Lordships held that
these rukkas could not be used to fetter the equity of
redemption.
They did not decide whether the personal
covenant in the rukkas could be enforced because that
point had not been raised in the plaint and pleadings,
nor did they refer to the Registration Act, but we think
the words.
"an unregistered
instrument
which the staute
declares is not to affect the mortgaged property"
can only have reference to that Act.
(I) (1938) R.L.R. 293 : A.LR. 1938 R. 285.
(2) (1899) 26 I.A. 97 at 100.
1952
Kashinath
Bhaskar
Datar
v.
Bhaskar
Vishweshwlll'
Karve.
Bose f.
195'!
K6ShiHth
lJhuk.Rr
D1tlilr
...
1ihasfr,11r
Vishweshwu
x..,.u~.
.. ,. /.
496
SUPREME COURT REPORTS
[19521
It was argued, on the strength of M ahim Chandra
Dey v. Ram Dayal Dutttt,(1)
Ram Ranian v. Jayanti
lal(') and Collector of Etah v. Kishori Lal("), that it is
always open to a mortgagee to release or remit a part
of the debt, aod when he doe.s so he does not limit or
extinguish
an
interest
in
immovable
property any
more than when he passes a receipt acknowledging
payment of the whole or part of the money. The effect
of the payment, or of the release, may be to extinguish
the mortgage but in themselves they do not limit
the
interest.
Extending this, the learned counsel for the
defendant contended that when a mortgagee agrees to
accept a lower rate of interest he docs no more than
release that part of the debt which would be covered
by the difference in rate.
We do not agree. There is a difference between a
receipt and a remission or a release.
A receipt is aot
the payment, nor does the document in such a case
serve to extinguish the mortgage or limit the liability.
It is the payment of the money which does that and
the receipt does no more than evidence the fact. Not
ro a release.
The
extinguishment or
diminution of
liability is in that event
effected by the
agreement
itself and not by
something
external
to it. If the
agreement is oral, it is hit by proviso 4 to section 92 of
the Evidence Act, for it "rescinds"
or "modifies"
the contract o~ mortgage. If it is in writing, it is hit
by section 17(1) (b) of the Registration Act, for in that
case the writing itself "limits"
or
"extinguishes" the
liability under the mortgage.
It is to be observed that when the mortgagor pays
money due on the mortgage, in whole or in part, he is
carrying out the terms of the bond and is not making
any alteration in it, and even though the fact of payment may limit or extinguish the mortgagee's interest
that is only because the bond is working itself out by
the force of its own terms and not by reason of some
new agreement
which seekls to modify it or limit or
extinguish the interest which it creates.
A simple test
(1) A.I.R. 1926 Cal. 170.
(3) A.LR. 1930 All. 721 at 725 F.B.
(2) A.I.R. 1926 Cal. 91J6.
...
-
-
-
S.c.R.
SUPREME COURT REPORTS
497
is this : see whether the mortgagee can, in the face of
the subsequent agreement, enforce the terms of his
bond.
If he cannot, then it is plain that the subsequent undertaking has effected a
modification, and
if that has the effect of limiting or extinguishing the
mortgagee's interest, it is at once hit either by section
17 (1) (b) or section 92 proviso 4.
But when there is
a mere payment of money, that is done under the terms
of the bond, for the contract of mortgage postulat'Es
that the mortgagor should repay the money borrowed
and that when he does so the mortgagee's interest in
the property shall be "limited" to the extent of the
repayment or, when all is repaid, be wholly extinguished ; nor, of course, does a payment !?.ave to be made
by a written or registered instrument, or even evidenced
by one.
Clause (xi) to section 17 (2) of the Registration
Act is based on this principal.
It draws a distinction
between a document which, by the force of its terms,
effects the extinguishment, or . purports to do so, and
one which merely evidences an external fact
which
brings about that result.
Now apply the test just given to the present
case.
Under the mortgages the
mortgagee
.is entitled to
. interest at 14 annas per cent. per month but the mortgagor says he cannot claim that.
Why?
Because,
according to him, the
subsequent
agreement altered
the terms of the bond and reduced his liability to only
8 annas. It hardly matters what the agreement is
called, whether a release or a
remission,
nor is it
germane to the question that the mortgagee is entitled
to remit or release the whole or a part of the debt; the
fact remains that his agreement to do so effects an
alteration in the original contract and by the force of
its terms or extinguishes his interest.
Assume that the
mortgagor repaid the whole of the interest at the altered rate and the whole of the principal, would those repayments by themselves effect an extinguishment
ef
the mortgage?
Clearly not, because unless the subsequent agreement is called in aid, more would be due
under the terms of the bond on account of the higher
rate of interest.
It is evident then that
it
is the
Kwliinatli
Bhaskar
DilltW
Y,
Bliasl(llr
VishUJesllwtw
Kar11e.
1951
Kasliinatlt
Bllask_ar
Datar
v.
Bliask_ar
Visliwesliwar
K«rve.
Bose f.
498
SUPREME COURT REPORTS
[1952]
agreement which limits the mortgagee's interest
and
serves to extinguish the mortgage and not mere payment at the reduced rate.
Similar observations apply to clause ( 6) of tbe agreem.ent.
It begins by reciting a past agreement in which
the mortgagor had promised to pay Rs. 1,800 in a
lump sum.
We are left to infer that this was to extinguish the mortgage. If it was, then it would be hit
by either section 92, proviso 4, of the Evidence Act or
section 17 (1) (b) of the Registration Act, but that does
not matter because the present document varies
even
that agreement and substitutes a third agreement
in
its place; namely that payment of Rs. 1,800 by instalments at the rate of Rs. 80 a month will effect "payment in full", that is to say, will extinguish the mortgage.
This speaks from the date of the document, for
it says, referring to this agreement, that "it is settled"
etc.
Next we come to clause(8). That refers us back to
clauses (5) and (6) and says that
"as mentioned
there no interest of any nature
whatever has remained claimable by me"
and speaking of the principal says
"and in like manner I understand the whole of the
principal has been fully paid".
We have already dealt
with clauses (5) and (6). Clause (8) carries us no further
and merely states that because of clauses (5) and (6)
neither interests nor prjncipal is now claimable; and of
course if neither interest nor principal is claimable that
extinguishes the mortgage, and in this case the extinguishment is brought about, not by mere payment
in accordance with the terms of the bond, but because
of the. fresh agreement.
Clause ( 10) remains for consideration. It was argued
that this brings the matter within section 17(2) (v) of.
the Registration Act because it gives
the defendant
the right to obtain another document which will effect
the extinguishment.
We do not agree because clause
(v) of sub-section (2) of section 17 of the Act postulates
that the document shall not
of itself create, declare,
...
-
-
"S. C.R.
SUPREME COURT REPORTS
assign, limit,
extinguish any right etc.,
and that it
shall merely create a right to obtain another document
etc.
(The stress
is on the words
"itself"
and
~·merely".)
We agree with Sir Dinsha Mulla at page 86 of the
5th edition of his Indian Registration Act that
"If the document itself
creates
an
interest
in
immoveable property, the fact that it contemplates the
execution of another document will not exempt it from
registration under this clause."
As we have seen, this document of· itself limits or
-extinguishes certain interests in the mortgaged property.
The operative
words
are reasonably clear.
Consequently, the document is not one which merely
confers a right to obtain another document. It confers
the right only in certain contingencies, namely,
"if
you so wish" or "if necessity may arise". Its purport
is to effect an immediate alteration in the terms of the
two bonds and because of that alteration to effect an
immediate extinguishment and limitation. Clause
(10)
merely confers an additional right, namely the right to
obtain
anot~r
document "if you so wish" or "if
necessity
may
arise".
Therefore, the document in
question is not one which merely creates
a right to
obtain another.
An agreement to sell, or an agreement to transfer at
some future date, is to be distinguished because that
sort of document does not 0£ itself purport to effect the
-transfer. It merely embodies a present agreement to
execute another document in the future which will,
when executed, have that effect.
The document in
hand is not of that type.
It does not
postpone the
·effect of extinguishment or limitation of the mortgages
t.o a future
date. It does not say that the agreement
it embodies shall take effect in the future.
It purports
to limit and extinguish the liabilities on the two
mortgages at once by virtue of the document itself and
merely adds that "if it is necessary or should you
·r.vant another document, I will repeat the present
1952
Kashinath
Bhaskar Datar
v.
Bhaskilr
VishweshwlZI
Ktm1e.
Bose f.
1952
K.shinuh
lJh•,k•r
Datar
v.
Bh•Jk#!'
ViJhW46htVtlr
KM~e.
lJoJe /.
500
SUPREME COURT REPORTS
[1952}
agreement in a registered agreement".
By implication
it means that if it is not necessary, or if the mortgagor
does not want a registered instrument, the document
itself will have effect. Incidentally, one effect of hold--
ing that this document does
not limit or extinguiili
the mortgagor's liability would be that there is noagreement to that effect yet in force.
This may or may
not give the mortgagor a right to obtain specific performance of his right to obtain such an agreement but
until he does that there would be no bar to the mortgagee's claim in this suit.
However, it Is not necessary
to go as far as that because we are of opinion that thio
document is not
exempt
from
registration
under
section 17(2)(v), and we so hold.
The next question is whether the document can beused in evidence under the proviso to section 49 of the
Registration Act. We are clear it cannot.
This is not
a suit for specific performance nor does any question of
part performance under section 53A of the Transfer of
Property Act arise.
It remains then to be seen whether
the use now sought ro be made of the document is to
evidence a collateral transaction not required to be
evidenced by a registered instrument.
But what is thetransaction sought to be proved but the very :igre<-
ment which the document not merely
evidence~
but~
by reason of its own force, creates? That is not
a-.
collateral transaction and even if it were a transactionof that type, it would require a registered instrument_
for the reasons we have already given.
Section 53A of the Transfer of Property
Act wa.
referred to but it has no application, for the agreement
•
we are concerned with is not a transfer. There are no
-
words of conveyance in it; also the mortgagor is not
continuing in possession in part performance of thecontract.
Both mortgages were simple and the right
to possession never resided in the mortgagee. He might·
in due course have acquired it by process of law if heobtained a decree and purchased at the sale; on theother hand, a stranger might have purchased and the
,
right to possession would in that event have passed:_
elsewhere.
But he had no right to possession at the:
"' "'
-
-
S.C.R.
SUPREME COURT REPORTS
501
date of the agreement and having none he could not
have transferred it.
The mortgagor's possession was
consequently not referable to the agreement.
The · appeal fails and is dismissed with costs.
Appeal dismissed.
Agent for the appellant : Ganpat Rai.
Agent for the respondent: A. C. Dave.
RUBY GENERAL INSURANCE CO. LTD.
ti.
PEAREY LAL KUMAR AND ANOTHER.
[ SAIYID F AZL Au and VIVIAN BosE JJ.]
lt1Jian Arbitration Act (X of 1940), s. 33-Arbitration clause-·
Wht'ther" disputt' "arises out of agrt't'ment"-Tests-Plea that agree•
1flt'11t is not applicable and does not subsist-No dispute about the·
existence or validity or meaning-Jurisdiction of arbitrator-Appli;
cation under s. 33-Maintainability.
The appellant company insured a car belonging to respondent'
No. 1 and issued a policy which contained, inter alia, the following_
tcrms:-"All differences arising out of this policy shall be referred
to the decision of an arbitrator to be appointed by the parties •
. . . . . . If the company
shall disclaim
liability to the insured for
any claim
hereunder and
such claim shall
not within twelve
calendar months from the date
of such
disclaimer
have been
referred to arbitration
then the claim
shall have been deemed
to have been abandoned and shall not be recoverable."
The car
was lost, and the
company
through its
Branch
Manager disclaimed liability on· three different dates.
The insured did not
take any action in regard to the appointment of an arbitrator until more than twelve months after the last disclaimer by the company.
The case of the company was that the insured must be
deemed to have abandoned his claim by virtue of the contract
ef insurance policy while the respondent averred that there was
never any valid disclaimer by the company of its liability as the
Branch Manager had
no authority to
disclaim the liability and
it could have been disclaimed only by the resolution of the company. The
company
presented
the present
application under
sec. 33 of the Indian Arbitration Act praying for a declaration
that the reference to arbitration was illegal and the award if made
by the arbitrator would not bind the company.
It was contended on its
behalf that
the arbitration
clause
had ceased to be
1952
Kashinath
Bhaslr..ar
Datar
v.
Bhaslr,,ar
VishweshwM'
Karve.
1952
Fe/J. 25,