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HIGH COURT OF CALCUTTA
G. K. Mitter
CHANDMULL JAIN - Appellant
Versus
GENERAL ASSURANCE SOCIETY LTD. - Respondent
Suit 4526 Of 1950
Decided On : APRIL 22, 1958
INSURANCE - CANCELLATION OF RISK - CONDITION 10 OF THE INSURANCE POLICY - APPLICABILITY - INTERPRETATION - RIGHT OF THE INSURER TO CANCEL THE POLICY - REASONABLENESS OF THE CANCELLATION - BURDEN OF PROOF - LOSS OF PROPERTY DUE TO EROSION OF RIVER - LIABILITY OF THE INSURER - CONTRACT OF INDEMNITY - PROOF OF ACTUAL LOSS.
Fact of the Case:
The plaintiffs, a joint Hindu family, filed a suit against an insurance company for loss of their property caused by erosion of the river Ganges. The plaintiffs had taken out two policies with the defendant, one for Rs. 51,000/- and the other for Rs. 65,000/-. The policies covered loss or damage by fire, cyclone, flood, change of course of river and/or erosion of river, land slides and subsidence. The defendant cancelled the policies on 6-7-1950, under Clause 10 of the conditions of their policy, which allowed the insurer to terminate the policy at any time on notice to the insured.
Finding of the Court:
The court held that Clause 10 of the policy was applicable to the case and that the defendant was entitled to cancel the policies. The court also held that the cancellation of the policies was not wrongful and that the defendant was not liable to indemnify the plaintiffs for the loss of their property.
Issues: 1. Was there any representation or promise or assurance by the defendant to the plaintiffs that the policies would not be cancelled or the risk declined during the period of one year from 3-0-1950? 2. Where the proposals made on the condition that the said policies would not be cancelled during the period of one year from 3-6-1950? 3. Was the defendant's acceptance of the plaintiff's proposals subject, to the terms and conditions of the cover notes and the usual terms and conditions of the defendant's policies? 4. Was the plaintiff bound by Clause 10 of the 'policies? 5. Was the cancellation of the risk on 6-7-1950 proper? 6. Were the properties lost in the manner alleged in paragraphs 12 and 13 of the plaint? 7. Did the plaintiffs suffer loss to the extent of Rs. 51,000/- and Rs. 65,000/- as alleged in paragraph 17 of the plaint? 8. What relief, if any, is the plaintiff entitled to?
Ratio Decidendi: 1. The court held that Clause 10 of the policy was applicable to the case and that the defendant was entitled to cancel the policies. The court relied on the following principles: * A contract of insurance is a contract of indemnity and the assured is not adequately indemnified against the loss of this property unless, so far as money can do so, he is restored to the position which he occupied at the time of the loss. * The value of the subject matter is its value at the time of the loss and the policy may contain an express provision to this effect. * The value of the subject matter is its value at the place of the fire. * The value of the subject matter is its real or intrinsic value to the assured and * In estimating the value of the subject matter, no allowance is to be made for the loss of prospective profit or other consequential loss. 2. The court also held that the cancellation of the policies was not wrongful and that the defendant was not liable to indemnify the plaintiffs for the loss of their property. The court relied on the following principles: * The contract of fire insurance is a contract of indemnity and the assured is not adequately indemnified against the loss of this property unless, so far as money can do so, he is restored to the position which he occupied at the time of the loss. * The value of the subject matter is its value at the time of the loss and the policy may contain an express provision to this effect. * The value of the subject matter is its value at the place of the fire. * The value of the subject matter is its real or intrinsic value to the assured and * In estimating the value of the subject matter, no allowance is to be made for the loss of prospective profit or other consequential loss.
Final Decision: The plaintiffs' suit was dismissed with costs.
( 1 ) THIS suit is based on a claim against an insurance company for loss of the plaintiff's property caused by erosion of the river Ganges at Dhulian. The defence put forward is that very soon after its acceptance the risk was cancelled under condition No. 10 of the defendant's standard policy of insurance for loss by fire and various other causes.
( 2 ) THE plaintiffs describe themselves as the kartas of a joint Hindu family governed by the Mitakshara School of Hindu law carrying on business under the name and style of Chandmull Lalchand at Anupnagar Bazar, Dhulian in the District of Murshidabad. The cause of action as laid in the plaint is as follows; (a) By two several proposals in writing both, dated 2-6-1950 the plaintiffs made proposals for insurance against loss or damage by fire, Cyclone, flood, change of course of river and/or erosion of river, land slides and subsidence to the extent of the sums of Rs. 51,000/- and 65,000/- on two several sets of houses and property belonging to the plaintiffs in Dhulian Municipality from 3-6-1950 to 3-6-1951. (b) The said proposals were accepted by the defendant. (c) The defendant well knew that the proposals were made on the basis and condition that the policy would not be cancelled or the risk declined during the said period of one year; a representation, promise or assurance was made by the defendant to the plaintiff that the said policy would not be cancelled or the risk declined during the abovementioned period and the plaintiffs acted upon such representation to their detriment. (d) The defendant issued two several cover notes respectively numbered 18848 and 18850 both dated 5-6-1950 and received premia in respect of the two proposals and became bound to issue and deliver a policy or policies for the two sums of Rs. 51,000/-and Rs. 65,000/- respectively. (e) The said two notes in so far as they purported to entitle the insurer to decline the risk were invalid. (f) Towards the end of June 1950 the river began to erode the town of Dhulian after which by a letter dated 6-7-1950 the defendant wrongfully purported to cancel the risk and the said two cover notes under Clause 10 of the conditions of their policy, (g) The standard policy of the defendant was not applicable to the contract between the parties and clause 10 thereof had never been agreed to and was of no effect. (h) The buildings and properties covered by the said two cover notes and policies numbering 444t7 and 44418 were completely washed away in the middle of August 1950. (i) In the premises the defendant was liable to indemnify and make good the loss to the plaintiff to the extent of the said two sums totalling Rs. 1,16,000/ -.
( 3 ) BY the written statement filed herein the insurer admitted the making of the proposals and the acceptance thereof but such proposals were alleged to be subject to the terms and conditions of the cover notes issued and to the usual terms and conditions of the defendant's fire policies, condition No. 10 whereof ran as follows:"this insurance may be terminated at any time at the request of the Insured, in which case the Society will retain the customary short period rate for the time the Policy has been in force. This insurance may also at any time be terminated at the option of the Society, on notice to that effect being given to the Insured, in which case the Society shall be liable to repay on demand a rateable proportion of the premium for the unexpired term from the date of cancelment". The defence relied on is that by writing dated 6-7-1950 both the cover notes were cancelled and the risk declined by the defendant and as such the plaintiffs have no cause of action. The defendant further denies having made any representation, promise or assurance as mentioned in the plaint or the plaintiffs having acted thereon or suffered any loss or injury as a result thereof.
( 4 ) THE issues settled are as follows:1. Was there any representation or promise or assurance by the
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