D. S. R. VARMA, J. ( 1 ) HEARD both sides ( 2 ) THE unsuccessful defendant in the suit is the appellant herein and the respondent herein is the plaintiff. ( 3 ) THE plaintiff filed the suit for recovery of money from the defendant towards loss of tobacco stocks in the cyclone. ( 4 ) THE plaintiff was a dealer in tobacco business. He took a policy from the defendant for the stocks and buildings. The policy, undisputedly, was valid and in subsistence from 31-5-1989 to 30-5-1990. The total amount of policy proposed by the plaintiff was a sum of Rs. 3,95,000. 00. The stocks of the plaintiff were admittedly pledged to a nationalised bank. ( 5 ) BE that as it may, during the currency of the policy, on 8-11-1989, there was a cyclone and on 9-11-1989 there was a colossal loss of stocks of tobacco held by the plaintiff. The same was reported by the plaintiff to the insurer, the defendant, promptly and that the defendant had appointed a surveyor as contemplated under the Insurance Act to assess the loss/damage sustained by the plaintiff. ( 6 ) THE defendant, after receiving the report of assessment made by the surveyor, offered Rs. 35,000. 00 only as compensation to the plaintiff. Dissatisfied with the said offer, the plaintiff instituted the suit seeking recovery of the amounts covered by the policy. ( 7 ) IN its written statement, the defendant, while denying the plaint averments, except the factum of the correctness of the cyclone, took an objection that the dispute should and could have been referred to an Arbitrator and accordingly it was pleaded that the suit was not maintainable. ( 8 ) BASING on the respective pleadings of the parties, the court below framed as many as 21 issues for trial, which are as under: (1) Whether the defendant-company does not know when and where the plaintiff started his business? (2) Whether one such shed in the insured premises is with ACC sheets and not zink sheet? (3) Whether the defendant had no knowledge of the stocks purchased by the plaintiff during the year 1988- 89? (4) Whether there was cyclone on 8-11-1989 and whether the plaintiff godown and stocks suffered damage? (2) Whether one such shed in the insured premises is with ACC sheets and not zink sheet? (3) Whether the defendant had no knowledge of the stocks purchased by the plaintiff during the year 1988- 89? (4) Whether there was cyclone on 8-11-1989 and whether the plaintiff godown and stocks suffered damage? (5) Whether the said insurance policy covers the peril of cyclone and whether it covers tobacco stock only or the super structures and packing and grading materials also? (6) Whether the plaintiff gave intimation to the Syndicate Bank, Tangutur, and the M. R. O. , Jargumalli mandalam? (7) Whether the total weight of the tobacco stocks in the insured premises was only 32,520 Kgs. , or 41,672 Kgs. , at the time of visit of surveyor and Development Officer? (8) Whether only small quantity of tobacco was damaged and whether the same was segregated and whether salvage took place? (9) Whether the total stocks and the damaged stocks in each super structures were weighed separately and noted down by the Surveyor? (10) Whether the entire stock was only a scrap tobacco at the rate of Rs. 2. 50 paise per Kg. , and not of superior quality tobacco? (11) Whether the plaintiff did not give any break up value as to grades, conditions and value of the tobacco and whether the rate of Rs. 8. 80 paise per Kg. , claimed by the plaintiff is excessive and exhorbitant? (12) Whether the bank limit of rs. 45,000/- makes the plaintiff s claim unreal and baseless? (13) Whether the plaintiff failed to take precautionary measures to avoid the loss? (14) Whether there is breach of warranties and violation of conditions on the part of the plaintiff? (15) Whether the assessment of loss at rs. 34,590/- made by the Surveyor is true and correct and supported by reasons? (16) Whether the defendant sent loss vouchers through the bank and whether the plaintiff returned as refused? (17) Whether the suit is pre-mature and filed even before the claim vouchers were handed over to the bank and without reasons for acceptance? (18) Whether the suit is covered by the arbitration clauses of the policy and whether the suit is bad for not seeking arbitration? (19) Whether the plaintiff is entitled to the suit claim, if so to what extent? (18) Whether the suit is covered by the arbitration clauses of the policy and whether the suit is bad for not seeking arbitration? (19) Whether the plaintiff is entitled to the suit claim, if so to what extent? (20) Whether the plaintiff is entitled to the interest at the rate of 18% p. a. ,? (21) To what relief? ( 9 ) ISSUE Nos. 18 and 19 are more relevant for the purpose of deciding the present appeal Suit. In fact, these two issues cover the whole gamut of the other issues. Hence, the learned Standing Counsel for the defendant mainly laid stress only on these two issues. Therefore, I will proceed to deal with these two issues only. ( 10 ) THE point that arises for consideration before this court is as to whether the suit is maintainable and whether the plaintiff is entitled to the suit claim, and if so, to what relief? ( 11 ) FOR convenience, first I will deal with the aspect of the maintainability of the suit. ( 12 ) IN this context, it is to be seen that ex. A-1 is the fire policy in lieu of cover note no. 19883 and Ex. A-2 is the fire policy in lieu of cover note No. 19882 and Ex. A-31 is the fire policy. ( 13 ) CLAUSE-13 of Ex. A-2 is relevant and it is extracted for ready reference, which is as under:"if any differences shall arise as to the quantum to be paid under this policy (liability being otherwise admited) such difference shall indep ndently 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 accordance with the provision of the Arbitration Act 1940, as mended 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 meeting. It is clearly agreed and understood that no difference or dispute shall he referable to arbitration as herein before 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 loss or damage shall be first obtained. " ( 14 ) FROM the above, it is clear that there was an express stipulation in the terms and conditions of the policy that the dispute has to be referred to the arbitrator in the manner prescribed in the said clause as formulated under Arbitration Act, 1940 (for short "the act" ). ( 15 ) THEREFORE, now, it is necessary to fall back upon the relevant provisions of the arbitration Act, 1940. ( 16 ) SECTION 34 of the Act, for ready reference, is extracted, which is as under:"power to stay legal proceedings where there is an arbitration agreement: Where any party to an arbitration agreement or any person claiming under him commences any legal proceedings against any other party to the agreement or any person claiming under him in respect of any matter agreed to be referred, any party to such legal proceedings may, at any time before filing a written statement or taking any other steps in the proceedings, apply to the judicial authority before which the proceedings are pending to stay the proceedings; and if satisfied that there is no sufficient reason why the matter should not be referred to in accordance with the arbitration agreement and that the applicant was, at the time when the proceedings were commenced and still remains, ready and willing to do all things necessary to the proper conduct of the arbitration, such authority may make an order staying the proceedings. " ( 17 ) THE above section specifically postulates that any aggrieved party to a legal proceedings, at any time, before filing the written statement or taking any other steps in the proceedings, may apply to the judicial authority before which the proceedings are pending, to stay the proceedings. In other words, as and when a suit has been instituted, the contesting defendant shall take such necessary steps, by way of making an application in the suit seeking stay of all further proceedings of the suit pending adjudication on the question as to whether it is a fit case for reference of the dispute to an arbitrator or not. Obviously, this condition of making an application by the party concerned is mandatory in nature, that is to say, that it is a condition precedent while participating in the suit proceedings. Of course, an objection had also been taken by the defendant in the written statement, which implies that as and when such a step is taken i. e. , by filing an application to stay the suit proceedings, the court has to necessarily deal with that aspect and decide the same as a preliminary objection as regards the maintainability of the suit before proceeding any further. ( 18 ) IN the instant case, no such step i. e. , no application had been made by the defendant to stay all further proceedings of the suit, particularly when the defendant is specifically relying on the invocation of the arbitration clause incorporated in the policy. However, inasmuch as an objection had been taken in the written statement, the trial court had formulated an issue and gave a specific finding, holding that the suit is maintainable. While arriving at such a conclusion, the trial court had relied on the judgment of the Madras High Court in air 1980 Mad. 86 and also the judgments of various other High Courts and the Supreme court. ( 19 ) THE legal principle deducible from all the Judgments, referred to by the trial Court, is that making of an application by the defendant or the plaintiff, as the case may be, who pleads that the dispute is arbitrable, seeking stay of suit proceedings before participating in further proceedings, is mandatory. ( 19 ) THE legal principle deducible from all the Judgments, referred to by the trial Court, is that making of an application by the defendant or the plaintiff, as the case may be, who pleads that the dispute is arbitrable, seeking stay of suit proceedings before participating in further proceedings, is mandatory. When it is the specific contention of the defendant, in the instant case, that arbitration clause has to be invoked, and the suit is not maintainable, it is imperative and mandatory on the part of the defendant to make an application seeking stay of all further proceedings in the suit pending decision on the question as to whether it was a fit case for arbitration or not. In such a case, when such an application has not been made, it implies that the defendant had waived its right to contest the suit on the question of maintainability . ( 20 ) HOWEVER, in the instant case, since the said objection had been raised by the defendant in the written statement, it has to be dealt with by the court in ordinary course. Precisely, for that reason, the trial court after framing an issue had given a finding regarding the maintainability and held that the suit was maintainable. ( 21 ) IT was further pointed out by the trial court that when the arbitration agreement does not specifically bar or oust the jurisdiction of the civil court, and if the aggrieved party does not ask for stay of all further proceedings in the suit, even as a matter of general principle, the civil court can proceed with the suit. ( 22 ) IT is the contention of the learned standing Counsel for the defendant that when the defendant offered a sum of rs. 35,000/- to the plaintiff towards compensation, it is for the plaintiff to invoke the arbitration clause, instead of resorting to judicial proceedings, and it is not incumbent upon the defendant to seek arbitration. ( 23 ) IT is to be further noticed that when the defendant did not ask the court to stay all further proceedings of the suit, the said act not only amounts to waiving of the right of the defendant to question the maintainabhity of the suit but also amounts to admitting the jurisdiction of the Civil Court. ( 23 ) IT is to be further noticed that when the defendant did not ask the court to stay all further proceedings of the suit, the said act not only amounts to waiving of the right of the defendant to question the maintainabhity of the suit but also amounts to admitting the jurisdiction of the Civil Court. ( 24 ) AS already pointed out, there is no express bar to the civil court s jurisdiction nor is there any express bar for filing the suit under the Code of Civil Procedure. Therefore, the court below, by framing an appropriate issue and considering the same in its correct perspective, rightly concluded that the suit is maintainable. Therefore, for the aforementioned reasons, I do not find any good and weighty reason to interfere with the finding of the court below as regards the maintainability of the suit. ( 25 ) IN State of U. P. v. Janki Saran, it was observed by the Supreme Court that "discretion with regard to stay under Sec. 34 of the Arbitration Act is to be exercised only when an application under that section is otherwise competent. . . . . . . . . . . . . . . . . . . . . . ". ( 26 ) IT is apposite to notice the conclusion arrived at by Their Lordships of the Supreme court at para-10 of the said judgment, which runs thus:"keeping in view the long delay after the institution of the suit and the fact that the suit is for a very heavy amount by way of damages for breach of contract, it will, in our opinion, be more satisfactory on the whole to have the suit tried in a competent court of law in the normal course rather than by a lay arbitrator who is not bound either by the law of evidence or by the law of procedure. This course can certainly in no way be considered unjust or prejudicial to the appellant as to require interference by this court. " ( 27 ) NOW, reverting back to the merits of the case, it is to be seen from the record that clause-6 (ii) of the policy condition postulates that the plaintiff cannot dispose of the tobacco stocks without permission from the defendant, as per the claim form under ex. B-2. " ( 27 ) NOW, reverting back to the merits of the case, it is to be seen from the record that clause-6 (ii) of the policy condition postulates that the plaintiff cannot dispose of the tobacco stocks without permission from the defendant, as per the claim form under ex. B-2. It was noticed by the court below that the defendant did not state as to how the stocks were disposed of even on the date of impugned judgment. It was further specifically noticed by the court below that there was neither actual sale nor correct assessment of realizable value or resale value of the stock of tobacco in question. ( 28 ) THEREFORE, as per the terms of the contract, the plaintiff was prohibited from selling of the stocks unless the same is permitted by the defendant. Hence, the stocks were deemed to be in the possession of the plaintiff. ( 29 ) NOW, the question would be that what are the stocks that were available with the plaintiff as on the date of cyclone and what was the actual damage that had ensued to the buildings in which the stocks of tobacco are stored? ( 30 ) THE report of the Surveyor was also taken into consideration by the court below in arriving at the conclusion on the above aspects. It appears that the total quantity claimed is 41,672 Kgs. The Surveyor observed that 37 bags of raw tobacco of 32 Kgs. , each were available in thatched shed and that the weight of the said tobacco comes to 1184 Kgs. Hence, there was no other option left to the court below except to accept the contention of the plaintiff at least to the extent of the quantity of stocks available. The court below further found that if the total quantity was divided into finished product, and raw product, which comes to 40,488 Kgs. , and 1184 Kgs. , respectively, and the same if multiplied by Rs. 8. 00 and rs. 7/- respectively, the compensation that can be arrived at would be of Rs. 3,23,904. 00 and Rs. 8,288. 00 respectively, and accordingly the total compensation arrived at was Rs. 3,32,192. 00. I do not find any unreasonableness in arriving at the extent of the damage to the stocks and the loss caused thereof and the resultant quantification. 00 and rs. 7/- respectively, the compensation that can be arrived at would be of Rs. 3,23,904. 00 and Rs. 8,288. 00 respectively, and accordingly the total compensation arrived at was Rs. 3,32,192. 00. I do not find any unreasonableness in arriving at the extent of the damage to the stocks and the loss caused thereof and the resultant quantification. ( 31 ) THE court below further assessed the damages in respect of the buildings also. I could not see any unreasonableness in such an assessment made by the court below inasmuch as the report of the Surveyor was also taken into consideration. In fact, it was noticed by the court below that the plaintiff valued at Rs. 100. 00 with regard to a particular item, but the Surveyor fixed the same at rs. 1,500/ -. Therefore, I have no hesitation to hold that the assessment of the court below, after due consideration of the report of the surveyor, is quite reasonable and no palpable irrationality could be seen. ( 32 ) FOR the foregoing reasons, the point is answered in favour of the plaintiff and against the defendant. ( 33 ) THE appeal fails and is liable to be dismissed. ( 34 ) AT this stage, the learned counsel for the defendant submits that the court below quantified the decretal amount at rs. 3,28,180/- with interest at 18 per cent per annum from the date of presentation of plaint till the date of decree and at 12 per cent per annum from the date of decree till the date of realisation with yearly rests. ( 35 ) IN this regard, it is to be seen that it was already established by the plaintiff that he took loans from the bank with interest at 18 percent per annum and he has to repay the same to the bank at the same rate. However, having regard to the settled principle, this court can exercise its discretionary jurisdiction to interfere with the quantification of subsequent interest from the date of decree till the date of realisation. ( 36 ) IT is brought to the notice of this court by both the parties that half of the decretal amount along with interest had been deposited by the defendant and the same had already been withdrawn by the plaintiff. ( 36 ) IT is brought to the notice of this court by both the parties that half of the decretal amount along with interest had been deposited by the defendant and the same had already been withdrawn by the plaintiff. ( 37 ) THEREFORE, having regard to the facts and circumstances and in the interest of justice, I feel it appropriate to reduce the rate of interest from 12 per cent to 6 per cent from the date of decree till the date of realisation and confirm the impugned judgment and decree of the court below in all other aspects. ( 38 ) FOR the foregoing reasons, the impugned judgment and decree of the court below are modified to the extent that the defendant shall pay an amount of rs. 3,28,180/- with interest at 18 per cent per annum from 6-1-1990 till the date of decree i. e. , 9-4-1996 and with interest at 6 percent per annum from the date of decree till the date of realisation. ( 39 ) WITH the above modification, only insofar as the rate of interest from the date of decree is concerned, the Appeal Suit is allowed and insofar as the other part of the impugned judgment and decree are concerned, the Appeal Suit is dismissed. However, there shall be no order as to costs. ( 40 ) IT is clarified that while paying the balance of amount, as indicated above, the amount said to have been deposited by the defendant and already withdrawn by the plaintiff, has to be given credit to.