The court emphasized the application of estoppel by conduct in the context of amending the insurance policy and upheld the Umpire's award based on the analysis of evidence.

JUDGMENT :

ROHINTON FALI NARIMAN, J.

1. The present appeal arises from the judgment of a Division Bench of the Allahabad High Court dated 22.01.2004, upholding the judgment of the learned Civil Judge dated 22.04.1997, by which a learned Umpire's Award was set aside.

2. The facts of this case are that the appellant kept jute stock in the premises of Haryana Oil Mills situated at Lucknow, which was mortgaged in favour of the Bank of Baroda. The original period for which this stock was insured was from 13.10.1984 to 13.10.1985. It is not in dispute that as on 27.10.1984, the amount for which the jute was insured was raised from Rs.10 lakhs to Rs.20 lakhs. The entire stock pledged to the Bank was insured. By a letter dated 01.07.1985, it appears that the appellant purchased more stock of jute and asked for an increase in the value of the insurance policy limited to Rs.25 lakhs and odd. This, according to the Insurance Company, was not accepted and is one bone of contention between the parties. Another bone of contention between the parties is whether the insured stock should be valued as on the date of the fire or as on the date of purchase.

3. The appellant before us produced evidence in the form of purchase receipts of the value of stock of jute which amounted to Rs.703.21/-per quintal. However, this was not accepted in the survey that was done at the behest of the Insurance Company. By their report dated 07.10.1985, the Surveyors valued stock @ Rs.404/-per quintal on the basis that no authentic rate quotations were available in the Lucknow/Kanpur jute market. The Surveyors, therefore, adopted the spot rate quoted in the Calcutta market for W-5 quality jute, which was adjusted to the qualities the insured had in stock, (which was W-4 and TD 5 quality jute), and after adding expenses incurred, an average rate of Rs.404/-per quintal for both qualities was worked out. The ultimate amount, therefore, that was offered by the Insurance Company, based on the Surveyor's report, came to a sum of Rs.12,30,039.41np. Since this was not accepted by the appellant, arbitration between the appellant and the respondent began. Mr. P.B. Agrawal, one learned Arbitrator, found in favour of the appellant and awarded a sum of Rs.23,55,132.71p., with interest @ 10 % per annum from 10th March, 1986, up to the date of the Award and @ 6 % per annum from the date of the Award to the date of payment. Mr. P.P. Malhotra, another learned Arbitrator, came to the conclusion that the limit of the fire insurance policy itself was Rs.20 Lakhs and could not be exceeded and that the loss suffered by the claimant, as per the market value prevailing on the date of the fire, came to Rs.12,30,039.41np as per the Surveyor's report. In view of this divergence of opinion between the arbitrators, the matter was referred to an Umpire, namely Mr. S.C. Maheshwari, learned Senior Advocate. After considering the facts of the case, the learned Umpire concluded as follows :

“It is thus clear that the Insurance Company had accepted and agreed to insured's letter dated 1.7.85 and the property covered under the policy in question stood increased from Rs.20 lakhs to Rs.25,45,121.70 with effect from 1.7.85 to 13.10.85 and simply because an endorsement letter was not issued by the company before the date of happening, it would not mean that the Insurance Company can go back from its commitment. As discussed earlier, the first increment in the policy from Rs.10 lakhs to Rs.20 lakhs was though effected from 27.10.84 but the endorsement letter was issued by the company as late as 11.2.85 and had there been any happening in between 27.10.84 to 11.2.85, the company could not have taken the plea that the original policy was only for Rs.10 lakhs and the same was never increased. Having once given the implied consent, the Insurance Company is now estopped from pleading that the sum insured was only Rs.20 lakhs and not Rs.25,45,121.70 as claimed by the claimant.

9. Keeping in mind the evidence led by t