' This is an application under section 8 of the Arbitration Act, whereby appointment of arbitrator is sought. The applicants are the owners of an establishment dealing in distribution of medicines at Rawalpindi wherein an incident of burglary took place in the premisses of the applicant during the night of 4/5th February, 1994. Such risk was covered by the insurance policy issued by the respondent. The applicant preferred a claim before the respondent after having assessed their losses. By letter dated 5-10-1995, the applicant claim was rejected by the respondent in the following terms:- ' "We wish to inform you that according to the terms and conditions of the Fire Insurance Policy involved the insured is required to have a Chowkidar to guard the insured property at night. The claim papers submitted by you show that you had no such arrangement for the premises at the time of burglary. This is a violation on your part and therefore we regret that your claim is not admissible under the terms and conditions of the policy."
2. A legal notice from the applicant issued remained unresponded whereupon this application was filed.
' Mr. Riazul Hassan, learned counsel for the respondent has contested this application on the sole ground that only a dispute as to the quantum of loss and not one arise out of the repudiation of liability is arbitrable in terms of Arbitration Clause contained in the insurance policy. The aforesaid clause reads as follow:-- "18. If any difference arises as to the amount of any loss or damages such difference shall independently of all other questions be referred to the decision of an Arbitrator, to be appointed in writing by the parties in difference or if they cannot agree upon a single Arbitrator, to the decision of two disinterested persons as Arbitrators, of whom one shall be appointed in writing by each of the parties within two calendar months after having been required so to do in writing by the other party. In case either party shall refuse or fail to appoint an Arbitrator within two calendar month after receipt of notice in writing requiring an appointment, the other party shall be at liberty to appoint a sole Arbitrator and in case of disagreement between the Arbitrators, the difference shall be referred to the decision of an umpire who shall have been appointed by them in writing before entering on the reference and who shall sit with the Arbitrators and preside at their meetings. The death of any party shall not revoke or effect the authority or powers of the Arbitrator, Arbitrators or Umpire respectively; and in the event of the death of an Arbitrator or Umpire, another shall in each case be appointed in his stead by the party or arbitrators (as the case may be) by whom the Arbitrator or Umpire so dying was appointed. The costs of the reference and or the award shall be in the discretion of the Arbitrator, Arbitrators or Umpire making the Award. And it is hereby expressly stipulated and declared that it shall be a condition precedent to any' right of action or suit upon the policy that the award by such Arbitrator Arbitrators or Umpire of the amount of the loss or damages if disputed shall be first obtained."
4. Mr. Riazul Hassan. Learned counsel for the respondent contends that respondents have not disputed the quantum of loss sustained by the applicant but have only disputed their liability to pay on account of breach of the terms of contract of the insurance on the part of the applicant. He has relied upon inter alia a judgment of the Hon'ble Supreme Court of India in the case of The Vulcan Insurance Co. Ltd. v. Maharaj Singh and another (1976) I Supreme Court Cases 943, wherein while interpreting an identical arbitration clause in insurance policy. Untwalia, J. Observed as follows:--- ' "But as soon as there is a rejection of the claim and not the raising of a dispute as to the amount of any loss or damage, the only remedy open to the claimant is to commence a legal proceeding.
Namely, a suit, for establishment of the company's liability. It may well be that after the liability of the company is established in such a suit, for determination of the quantum of the loss or damage reference to arbitration on will have to be resorted to in accordance with clause (18). But the arbitration clause, restricted as it is by the use of the words 'If any difference arises as to'the amount of any loss or damage', cannot take within its sweep a dispute as to the liability of the company when it refuses to pay any damage at all."
5. The contention indeed appears to be correct. Mr. Riazul Hassan has also very fairly conceded that having taken the aforesaid objection and having not disputed the quantum of loss allegedly sustained by the applicant, the respondents have waived their rights to do so.According to him, the only question on which parties are at issue appears to be whether the respondents are liable to underwrite the loss said to have been sustained by the applicant? And as such the question can be resolved by the Civil Court and not the Arbitrator on account of restricted jurisdiction of the latter.
' For the foregoing reasons I am constrained to dismiss this application. The parties are left to adopt any other mode of redress that may be found to be permissible under the law. There shall be no order as to costs.