Insurance policy wording on "action" extended to a Section 20 arbitration application, defeating the time-bar objection.

The construction of the word "action" in an insurance policy was central: it was not confined to the narrower term "suit" and was given its ordinary legal meaning as a proceeding in a court of justice. Applying that meaning, an application under Section 20 of the Arbitration Act, 1940 for filing the arbitration agreement was treated as an "action" within the policy. The court therefore held that such proceedings constituted a pending action within the stipulated period and could preserve the claim against the policy time-bar. The objection under Clause 19 accordingly failed.

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Issues: Whether an application under Section 20 of the Arbitration Act, 1940, filed within twelve months of the loss, was a "pending action" or otherwise fell within the meaning of "action" in the insurance policy so as to save the claim from the policy time-bar.

Analysis: The decisive question was the construction of the word "action" in the policy. The term was not treated as synonymous with the narrower expression "suit" in every clause of the policy, and its ordinary legal meaning was taken from English law as a proceeding by which a right is pursued in a court of justice. On that basis, and having regard to the policy language and the scheme of the Arbitration Act, 1940, an application to court under Section 20 for filing the arbitration agreement was held to fall within the wider meaning of "action". The court therefore held that such proceedings could satisfy the policy requirement of a pending action within the stipulated period.

Conclusion: The application under Section 20 of the Arbitration Act, 1940, was covered by the word "action" in the policy and was within time. The objection based on Clause 19 failed.

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