JUDGMENT Kamlesh Sharma, J. - The New Indian Assurance Company Limited is appellant in this appeal. It is aggrieved by the judgment dated 11.5.1992 passed by the learned Single Judge of this Court in Civil Suit No. 63 of 1990 whereby the application under Section 20 of the Arbitration Act, 1940 (hereinafter referred to as the "Act") filed by the respondent was allowed and the parties were directed to appoint an Arbitrator strictly in terms of arbitration clause 10 to the insurance policy. 2. It is not in dispute that respondent got insured his building5 located at village Barthata, Tehsil Jubbai, District Shimla with the appellant-Insurance Company under the Misc. Accident Insurance Policy Scheme from 11.5.1988 to 10.5.1989 under insurance policy No. 4835140100370 for a sum of Rs.11,00,000/- and the house hold articles were insured for a sum of Rs.1,42,000/-, the total amount being Rs.12,42,000/-. 3. For the damage alleged to have been caused to a part of his building in the unprecedented rains/floods on 2.8.1988, the respondent preferred claim for Rs.1,89,125/- to the appellant-Insurance Company by sending a telegraph dated 10.8.1988 followed by letter dated 12.8.1988. When no action was taken, the respondent issued notice dated 8.3.1990 giving full details of the damage caused and requested for payment of compensation amount along with interest or to agree for the appointment of an Arbitrator under Clause 10 of the Insurance Policy. 4. It is admitted by the appellant-Insurance Company that on receipt of the intimation of the alleged damage to the property of the respondent one Kamlesh Gupta registered Surveyor was deputed, who visited the spot and thereafter reported the claim as false and vexatious. Thereafter on receipt of the notice from the Counsel, Flying Officer R.L. Sharma (Retired), who is also a registered Surveyor, was appointed to investigate into the matter, who also endorsed the report of Kamlesh Gupta. Both of the them recommended that the case be forwarded to the Anti Corruption and police department. Accordingly, in its reply to the application under Section 20 of the Act the appellant-Insurance Company has repudiated the entire claim of the respondent on the ground that it is false and has been treated as no claim. In view of repudiation of the claim of the respondent in toto there was nothing which could be referred to arbitration is the stand taken by the appellant-Insurance Company. 5. In view of repudiation of the claim of the respondent in toto there was nothing which could be referred to arbitration is the stand taken by the appellant-Insurance Company. 5. After framing issues and allowing the parties to adduce their evidence by filing affidavits, learned Single Judge has allowed the application rejecting the contentions raised by the appellant-Insurance Company that a result of total repudiation of the claim of the respondent by it the arbitration clause is not attracted which pertains to only difference arising as to the quantum to be paid under the policy. The learned Single Judge has interpreted the arbitration Clause as under :- "The expression "independently of all other questions" used in the arbitration case provides other types of disputes being also arbitrable. The type of dispute involved in the instant proceedings i.e. regarding the difference arising as to the quantum to be paid under this policy, is the additional question to that of all other questions regarding which difference arises in between the parties which are included in Clause 10 of the policy. Even otherwise, it does not seem to me to make any difference whether the defendant-Company says that any damage or loss at all has been caused or whether it says that some damage has been caused, but not as much as claimed by the insurer." We have heard learned Counsel for the parties and gone through the record. 6. In the insurance policy Clause 10 pertains to arbitration. It is:- "Arbitration : If any difference shall arise as to the quantum to be paid under this policy, (liability being otherwise admitted) 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 arbitration 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 accordance with the provisions of the Arbitration Act, 1940 as amended from time to time and for the time being in force. In case either party shall refuse or fail to appoint arbitrator within two calendar months after receipt of notice in writing requiring an appointment, the other party shall be at liberty to appoint 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. It is clearly agreed and understood that no difference or dispute shall be referable to arbitration as hereinbefore provided, if the Company has disputed or not accepted liability under or in respect of this Policy. It is hereby expressly stipulated and declared that it shall be a condition precedent to any right of action or suit upon this policy that the award by such arbitrator, arbitrators or umpire of the amount of the loss or damage shall be first obtained. It is also hereby further expressly agreed and declared that if the Company shall disclaim liability to be insured for any claim hereunder and such claim shall not, within 12 calendar months from the date of such disclaimer have been made the subject matter of a suit in a court of law, then the claim shall for all purpose be deemed to have been abandoned and shall not thereafter be recoverable hereunder." 7. Similar Clause had fallen for consideration before the Supreme Court in The Vulcan Insurance Co. Ltd. v. Maharaj Singh and another, 1976(1) SCC 943. The Clauses in the said case were :- "13. If the claim be in any respect fraudulent, or if any false declaration be made or used in support thereof, or if any fraudulent means or devices are used by the insured or anyone acting on his behalf to obtain any benefit under this Policy; or, if the loss or damage be occasioned by the wilful act, or with the connivance of the insured; or, if the claim be made and rejected and an action or suit be not commenced within three months after such rejection, or (in case of an arbitration taking place in pursuance of the 18th condition of this Policy) within three months after the Arbitrator or Arbitrators or Umpire shall have made their award, all benefit under this Policy shall be forfeited. 18. 18. If any difference arises as to the amount of any loss or damage 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..... ****** And it is hereby expressly stipulated and declared that it shall be a condition precedent to any right of action or suit upon this policy that the award by such Arbitrator, Arbitrators or Umpire of the amount of the loss or damage if disputed shall be first obtained. 19. In no case whatever shall the company be liable for any loss or damage after the expiration of twelve months from the happening of the loss or damage unless the claim is the subject of pending action or arbitration." 8. The context in which the learned Judges of Supreme Court interpreted these Clauses was that at one time the surveyors had assessed the damages at Rs. 4,620/- in their letter dated April 26, 1963. But the assessment was, in express terms, without commitment of any liability on the part of the Insurance Company. The Company, however, completely repudiated the liability under Clause 13. 9. In this background the learned Judges held in paragraphs 11 and 12 : "Although the surveyors in their letter dated April 26, 1963 had raised a dispute as to the amount of any loss or damage alleged to have suffered by respondent No. 1, the appellant at no point of time raised any such dispute. The appellant company in its letter dated July 5 and 29, 1963 repudiated the claim altogether. Under Clause 13 the Company was not required to mention any reason or rejection of the claim nor did it mention any. But the repudiation of the claim could not amount to the raising of a dispute as to the amount of any loss or damage alleged to have been suffered by respondent No. 1. Under Clause 13 the Company was not required to mention any reason or rejection of the claim nor did it mention any. But the repudiation of the claim could not amount to the raising of a dispute as to the amount of any loss or damage alleged to have been suffered by respondent No. 1. If the rejection of the claim made by the insured be on the ground that he had suffered no loss as a result of the fire or the amount of loss was not to the extent claimed by him, then and then only, a difference could have arisen as to the amount of any loss or damage within the meaning of Clause 18. In this case, however, the Company repudiated its liability to pay any amount of loss or damage as claimed by respondent No. 1. In other words, the dispute raised by the Company appertained to its liability to pay any amount of damage whatsoever. In our opinion, therefore, the dispute raised by the appellant Company was not covered by the arbitration clause. As per Clause 13 on rejection of the claim by the Company an action or suit, meaning thereby a legal proceeding which almost invariably in India will be in the nature of a suit, has got to be commenced within three months from the date of such rejection; otherwise, all benefits under the policy stand forfeited. The rejection of the claim may be for the reasons indicated in the first part of Clauses 13, such as, false declaration, fraud or wilful neglect of the claimant or on any other ground disclosed or undisclosed. 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 Companys 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 will have to be resorted to in accordance with Clause 18. 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 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." (Emphasis supplied) 10. The argument of learned Counsel appearing for the insured that in view of the last part of Clause 18 which makes the award of an arbitration a condition precedent to any right of action or suit, the matter has to go to the arbitration first even when there is a repudiation of liability was rejected. It was observed in paragraph 14:- ".......When an arbitration clause is not operative on the dispute raised, as in this case, then it is wholly unreasonable, almost impossible, to hold that still the parties have to obtain an award before starting any legal proceedings. What dispute will be referred to arbitration? The dispute raised is not within the purview of arbitration. Reading Clauses 13 and 18 together it must be held that on the rejection or repudiation of the claim by the insurer, the insured is under an obligation to start a legal proceeding within three months of such rejection, and hence obtaining of an award in such a case cannot be a condition precedent. It is not possible to go to arbitration for determination of the said dispute....." (Emphasis supplied) 11. After considering the various contentions raised by the learned Counsel for the insured the learned Judges concluded that the differences which arose between the parties on the Companys repudiation of the claim made by the insured was not one to which the arbitration clause applied, therefore, the arbitration agreement could not be filed and no arbitrator could be appointed under Section 20 of the Act. According to the learned Judges, the insured was ill-advised to commence an action under Section 20 instead of instituting a suit within three months of the date of repudiation to establish the Companys liability. 12. According to the learned Judges, the insured was ill-advised to commence an action under Section 20 instead of instituting a suit within three months of the date of repudiation to establish the Companys liability. 12. So far the case in hand is concerned the Surveyors of the appellant-Insurance Company had not assessed the damages at all and reported that the claim of the respondent was false and vexatious and the Insurance Company had completely repudiated its liability. 13. Therefore, in view of the interpretation of arbitration Clause 10 which is almost similar to Clause 18 before the Supreme Court in The Vulcan Insurance Companys case (supra), we have no hesitation to hold that whenever the Insurance Company disclaims liability or repudiates the claim for whatever reason the dispute to the quantum of compensation to be paid under the policy, cannot be referred to arbitration and it is only when the Insurance Company admits its liability such a dispute of the quantum of compensation due and payable to the insured can be referred to arbitration. The contrary interpretation of arbitration Clause 10 given by the learned Single Judge is set aside. 14. In the result the appeal is accepted and the impugned judgment is set aside and the application under Section 20 of the Act filed by the respondent is dismissed. There is no order as to costs.