IMPORTANT POINT
The court upheld the trial court's decision to award damages for insured property loss due to a cyclone, confirming the maintainability of the civil suit despite an arbitration clause.

JUDGMENT :

V. Gopala Krishna Rao, J.

1. This appeal is filed against the judgment and decree, dated 31-12-2001, in O.S.No.52 of 1991, passed by the learned Senior Civil Judge, Gudivada. The appellants are defendants 1 and 2 and the respondent is the plaintiff in the said suit.

2. For the sake of convenience, the parties herein will be referred to as arrayed before the trial Court.

3. The plaintiff in O.S.No.52 of 1991 before the trial Court filed the plaint with a prayer for recovery of Rs.1,28,025/- including Rs.12,025/- as interest at 12% per annum on Rs.1,16,000/- from 12-6-1990 to 23-4-1991 as damages of the property insured.

4. The brief averments in the plaint filed by the plaintiff are as follows:

It is pleaded that the stock of paddy rice, broken rice, bran and gunny bags stored and kept lying in the rice mill premises of the plaintiff was insured by the 2nd defendant for Rs.4,00,000/- on 01-12-1989, covering additional risk of cyclone till 30-11-1990 and premium was paid to the agent of the defendants. On 09-5-1990, there was a cyclone and the defendants' surveyor estimated the damages at Rs.1,16,000/- and as the defendants offered to pay only a sum of Rs.28,053/-, the plaintiff refused to receive the same and filed the suit.

5. The brief averments in the written statement filed by the 2nd defendant, which was adopted by the 1st defendant, are as follows:

It is stated that there is an arbitration clause in the policy, that the plaintiff stored some stocks in the mill area and also in the verandah of the said rice mill, that the surveyor separately assessed the loss of property in the mill area at Rs.59,586/- and assessed the damages to the paddy etc., kept in the verandah at Rs.51,505/-, that the stock in verandah of the rice mill was not covered by the policy and rain water entered into the rice mill through ventilators without there being any damage to the ventilators or roof sheets and thus causing damage to the goods would not fall within the purview of the policy and that as a special case, they offered the plaintiff Rs.28,053/- and the plaintiff is not entitled to claim interest.

6. Based on the above pleadings, the trial Court framed the following issues for trial:

(1) Whether the plaintiff is entitled to claim damages ? If so, to what extent ?

(2) Whether the suit is not maintainable as there is non-compliance of the arbitration clause of the agreement between the parties ? and

(3) To what relief ?

7. During the course of trial, on behalf of the plaintiff, P.Ws.1 to 4 are examined and Exs.A-1 to A-14 are marked. On behalf of the defendants, D.W.1 is examined and Exs.B-1 to B-4 are marked.

8. After completion of the trial and hearing the arguments of both sides, the trial Court partly decreed the suit with proportionate costs for Rs.1,01,091/- with pending and future interest at 6% per annum on the above amount.

9. Heard Sri S. Agastya Sharma, learned counsel for the appellants and Sri T. Lalith, learned counsel representing Sri Turaga Sai Surya, learned counsel for the respondent.

10. The learned counsel for appellants would contend that though the surveyor specifically assessed loss of property in the mill area amounting to Rs.59,586/-, which is covered by the insurance policy, the trial Court granted more amount towards damages. He would further contend that the finding of the trial Court that the plaintiff is entitled to claim damages as per the report of the surveyor deputed by the defendants themselves is contrary to law. The learned counsel for appellants further contend that there is no privity of contract for payment of interest on quantum of damages, but the trial Court granted interest at the rate of 6% per annum on the amount of Rs.1,01,091/- from the date of suit till the date of realization. He would further contend that the appeal may be allowed by setting aside the judgment and decree passed by the trial Court.

11. Per contra, the learned counsel for respondent would contend that on appreciation of the entire