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2002 Supreme(Cal) 641
High Court Of Calcutta
Asit Kumar Bisi
LOHIA JUTE PRESS (P) LTD - Appellant
Versus
NEW INDIA ASSURANCE CO.LTD - Respondent
C. S. 383 Of 1980
Decided On : 09/27/2002
ARINDAM SINHA, BIMAL KRISHNA CHATTERJI, S.K.Kundu, T.C.Dutt, V.Agarwal
Headnote:
FIRE INSURANCE - Claim - Loss of goods in fire - Fire Insurance Policy - Liability of Insurer - Limitation - Arbitration - Exclusion of time - Section 37(5) of the Arbitration Act, 1940 - Applicability - Interest - Interest Act, 1978 - Current rate of interest - Calculation of interest.
Fact of the Case:
Plaintiff, a jute press company, insured its stock of polythene granules stored in a customs' bonded godown with Defendant, an insurance company. On 8th May, 1976, a fire broke out in the godown, causing destruction and damage to the goods. Plaintiff claimed compensation from Defendant under the insurance policy. Defendant denied liability, alleging fraud and breach of policy conditions. Plaintiff filed suit for declaration of Defendant's liability and for recovery of compensation. The trial court set aside an arbitration award in favor of Plaintiff and dismissed the suit. Plaintiff appealed.
Finding of the Court:
1. Limitation: The suit was filed within three years from the date of the fire, as required under Article 44(b) of the Limitation Act, 1963. Plaintiff was entitled to exclude the period from the commencement of arbitration to the date of setting aside of the award, under Section 37(5) of the Arbitration Act, 1940, as the claim was the subject of pending arbitration. 2. Liability of Insurer: The fire insurance policy contained extinction clauses, but Plaintiff had made its claim within the stipulated period. Defendant failed to prove any fraud or breach of policy conditions by Plaintiff. Plaintiff had sufficiently discharged the onus of proving a prima facie case of loss within the policy. 3. Interest: Plaintiff was entitled to interest on the amount of compensation at the rate of 9% per annum from the date of the fire till the date of the decree, and further interest at the same rate from the date of the decree till realization of the dues.
Issues: 1. Whether the suit was barred by limitation? 2. Whether Plaintiff stored the materials in the godown as claimed in the plaint before the outbreak of the fire? 3. Whether the parties entered into an agreement on or about 16th August, 1976 in course of survey and assessment of loss by the surveyor appointed by Defendant No. 1 in the manner indicated in paragraph 9 of the plaint? 4. Whether any fraud was practised by Plaintiff upon Defendant No. 1 as alleged in paragraphs 1, 3 and 18 of the written statement? 5. Whether Plaintiff was entitled to get a decree for declaration as prayed for? 6. Whether Plaintiff was entitled to get a decree for Rs. 49,96,569. 76 or for any other sum? 7. Whether Plaintiff was entitled to get any alternative relief as prayed for as regards inquiry into the loss and damages and thereafter to get a decree for reimbursement or compensation? 8. To what other relief or reliefs was Plaintiff entitled?
Ratio Decidendi: 1. The period of limitation for filing a suit for compensation under a fire insurance policy is three years from the date of the fire, or from the date of denial of the claim by the insurance company, whichever is earlier. However, if the claim is the subject of pending arbitration, the period from the commencement of arbitration to the date of setting aside of the award can be excluded from the computation of the limitation period, under Section 37(5) of the Arbitration Act, 1940. 2. The burden of proving fraud or breach of policy conditions by the insured lies on the insurance company. In the absence of such proof, the insurance company is liable to indemnify the insured for the loss or damage suffered. 3. The insured is entitled to interest on the amount of compensation from the date of the loss or damage till the date of the decree, and further interest from the date of the decree till realization of the dues. The rate of interest is to be determined in accordance with the Interest Act, 1978, which empowers the court to allow interest at a rate not exceeding the current rate of interest.
Final Decision: The suit was decreed in part. Plaintiff was granted a declaration that Defendant was liable to indemnify and/or reimburse and/or compensate Plaintiff for the loss of and damage to the insured goods. Plaintiff was also awarded a decree for the sum of Rs. 39,77,873.19 along with proportionate costs of the suit, with further interest at the rate of 9% per annum from the date of the decree till realization of the dues.
( 1 ) -THE plaintiff Lohia Jute Press (P) Ltd. instituted the suit claiming declaration that the defendant No. 1 the New India Assurance Co. Ltd. was liable to indemnify and/or reimburse and/or compensate the plaintiff or the defendant No. 2 or either of them for the loss of and damage to the insured goods lying stored at the godown No. 9fa at the factory premises at No. 28, Barrackpore Trunk Road, Calcutta-2, by reason of outbreak of fire and decree for Rs. 49,96,569. 76p in favour of the plaintiff or the defendant No. 2. Alternatively the plaintiff claimed an enquiry into loss and damages for such sum against the defendant No. 1 as might be found due upon such enquiry as payable by the defendant No. 1 by way of indemnifying and/or reimbursing and/or compensating the plaintiff or the defendant No. 2 or either of them for loss of and damage to the insured goods. The plaintiff also claimed further interest including interim interest and interest upon judgment @ 18% per annum and other reliefs.
( 2 ) BRIEFLY the case of the plaintiff is that the plaintiff company was the owner of the entire stock of Polythene Granules stored at godown No. 9fa at the factory premises of the plaintiff at premises No. 28, Barrackpore Trunk Road, Calcutta-2. The said stock of Polythene Granules so lying stored at the said godown consisted of 11546 bags x 25 Kgs. = 285650 Kgs. and 2980 torn bags consisting of 2788. 868 Kgs. total weight being 316540. 368 Kgs. In consideration of the premium paid by the plaintiff the defendant No. 1 insured the said goods against destruction or damage by fire or lighting during the period from 5th October, 1975 to 6th October, 1976 upto 4 P. M. for the sum of Rs. 60,00,000 (Rupees Sixty lacs) covering such insurance under Fire Insurance Policy No. 130431218 dated January 3, 1976 and Fire Extra Endorsement Nos. 105930014-16 dated April 8, 1976 and April 26, 1976. On 8th May, 1976 fire broke out after midnight at godown No. 9fa of the plaintiff where the said goods were lying stored causing destruction of and/or heavy damage to the said goods. The said godown is a Customs' Bonded Godown.
( 3 ) BY its letter dated May 8, 1976, the plaintiff duly reported the occurrence of the fire and the loss and damage caused by fire to the defendant No. 1 and invited defendant No. 1 to assess the loss and damage at the earliest. On or about the 12th May, 1976 in compliance with the requisition of defendant No. 1 the plaintiff duly filed a claim for Rs. 48,74,575. 37p before the defendant No. 1 on the basis of the value of the entire stock of Polythene Granules lying stocked at the said godown at the time of outbreak of fire and insured under the said policy. Defendant No. 1 appointed Mr. S. C. Majumdar and M/s. Ascon and Avins for survey and assessment of loss. The said Surveyors checked the records of the plaintiff relating to the said stock of Polythene Granules and found that a total quantity of 3,16,540. 305 Kgs. was lying in the said godown at the time of outbreak of the said fire instead of 3,16,530. 868 Kgs. as mentioned in the claim form submitted by the plaintiff. In the course of the salvage operation the said Surveyors handed over to the plaintiff 2261 bags containing 84025 Kgs. of Polythene Granules which according to the said Surveyors were in sound condition. The said Surveyors also handed over a further quantity of 7754 damaged bags of polythene granules containing 50339. 540 Kgs. which were in damaged condition and had depreciated in value being affected by fire. Out of the total quantity of 3,16,540. 305 Kgs. of polythene granules lying in the said godown at the time of outbreak of fire 1,82,175. 765 Kgs. of polythene granules were totally destroyed and lost to the plaintiff.
( 4 ) FURTHER case of the plaintiff is that in the course of the survey and assessment of loss by the Surveyors appointed by defendant No. 1 it was agreed inter alia that the claim of the plaintiff would be based on the rate of
