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ORISSA STATE CONSUMER DISPUTES
REDRESSAL COMMISSION, CUTTUCK
Hon’ble Mr. Justice S.A. Shah, President;
Ms. Leelaben Trivedi, Member; Dr. R.K. Shah, Member
SAHEEN SCREEN PRINTS—Complainant
versus
THE UNITED INDIA INSURANCE CO.—Opposite Party
A-ONE SCREEN PRINTERS—Complainant
versus
THE UNITED INDIA INSURANCE CO.—Opposite Party
Complaints No. 112 of 91 & 113 of 91—Decided on 8.1.1992
Counsel for the Parties :
For the Complainant :Mr. K.F. Ambakhutwala, Advocate.
For the Respondent:Mr. M.C. Desai, Advocate.
A clause in an insurance policy that provides for the abandonment of the claim if not filed within a specified time is valid and enforceable and does not violate Section 28 of the Indian Contract Act.
Headnote:
INSURANCE - REPUDIATION OF CLAIM - LIMITATION PERIOD - SECTION 28 OF THE INDIAN CONTRACT ACT - VALIDITY OF CLAUSE LIMITING TIME FOR FILING SUIT - ABANDONMENT OF CLAIM - INTERPRETATION OF POLICY TERMS - SCOPE OF INSURANCE COVERAGE - ASSESSMENT OF DAMAGES.
Fact of the Case:
The complainants, Saheen Screen Prints and A-one Screen Printers, took insurance policies from the United India Insurance Company for their sheds, materials, and stock. On June 15, 1989, heavy rains and a storm damaged their properties. The insurance company repudiated their claims on November 7, 1989, citing that the damage was not covered under the policy. The complainants filed complaints before the Consumer Commission more than 12 months after the repudiation.
Finding of the Court:
1. Clause 4(iii) of the insurance policy, which provided that the claim would be deemed abandoned if not filed within 12 months from the date of disclaimer, was valid and enforceable. It did not violate Section 28 of the Indian Contract Act because it did not restrict the right to enforce the claim but rather provided for the abandonment of the claim if not pursued within the specified time. 2. The damage caused by heavy rains was not covered under the terms and conditions of the policy. 3. The complainants failed to provide sufficient evidence to substantiate their claim for damages.
Issues: 1. Whether Clause 4(iii) of the insurance policy, which limited the time for filing a suit to 12 months from the date of disclaimer, was void and contrary to Section 28 of the Indian Contract Act. 2. Whether the damage caused by heavy rains was covered under the terms and conditions of the policy. 3. Whether the complainants had provided sufficient evidence to substantiate their claim for damages.
Ratio Decidendi: 1. Section 28 of the Indian Contract Act prohibits agreements that restrict the right to enforce legal proceedings or limit the time within which such rights can be enforced. However, the court held that Clause 4(iii) of the insurance policy did not fall within the ambit of Section 28 because it did not restrict the right to enforce the claim but rather provided for the abandonment of the claim if not pursued within the specified time. The court relied on several precedents, including Baroda Spinning and Weaving Co. Ltd. v. Satyanarayana Marine and Fire Insurance Co. Ltd. (AIR 1914 Bombay 225) and Hindustan Ideal Insurance Company Ltd. v. Jamnadas & Co. (First Appeal No. 648 of 1967), which had upheld the validity of similar clauses in insurance policies. 2. The court found that the damage caused by heavy rains was not covered under the terms and conditions of the policy. It noted that the policy did not provide coverage for damage caused by natural calamities such as storms or floods. 3. The court held that the complainants had failed to provide sufficient evidence to substantiate their claim for damages. It noted that the complainants had not produced relevant evidence such as accounts books, purchase invoices, or stock registers to support their claim.
Final Decision: The court dismissed the complaints filed by the complainants on the grounds that they were filed after 12 months from the date of repudiation of the claim and that the damage caused by heavy rains was not covered under the terms and conditions of the policy.
Mr. Justice S.A. Shah, President—Both these complaints are against the United India Insurance Company and has arisen out of the damage to their goods under the insurance policy due to heavy rains. That the common question of law and facts are same in both the cases and, therefore, at the request of both the advocates and parties, both the complaints are disposed of by single judgment.
2. It is not disputed that the complainants have taken insurance from the opposite party on the same date i.e. 3.8.88. The complaint filed by Saheen Screen Prints took an insurance for the sum of Rs. 6 lakhs for the shed having class A & B construction and other materials like tables with wax, fans, tubes, other electrical installations and fittings, stock of cloth colour and chemicals etc. The Insurance was for the period commencing from 5.8.88 to 4.8.89. The complainant of complaint No. 113/91, A-one Screen Printers took the insurance for shed of Class A & B construction with tables with wax, fans, tubes, other electrical installation and fittings and stock of clothes, colour, chemicals etc. commencing from the same period i.e. from 5.8.88 to 4.8.89. The complaint No. 112/ 91 is signed by Hasina Farid Mohammed the owner of Saheen Screen Prints and complaint No. 113/91 is signed by Farid Mohammed Ganibhai Tizoriwala, the owner of A-one Screen Printers. Both the works are adjoining to each other at Danilimda opposite to P.W.D. Guest House bearing Plot No. 64 at Ahmedabad.
3. In para 3 the complainant has averred that on account of heavy rains and thunder and storm lashed the city on 15.6.89 and because of the heavy rain the factory and sheds in question was damaged at large scale by thundering storm and rain in the night of 15.6.89 whereby the entire shed came down. That the impact of the thunder was high to such an extent that the shed, tables, electric fittings designs and other materials lying in the factory were damaged at large scale. Same are the averments in complaint No.1 13/91. The applicant of complaint No.112/91 has claimed Rs. 4,15,440/- as damages whereas the complainant in case No.1 13/ 91 has claimed Rs. 2,69,727/- as damages. Both the complainants have also claimed for the interest @ 15% from the date of accident till the realisation of the entire amount. In support the complainants have also produced copy of the insurance policy, electricity bill and a letter written by Mr. Bharat J. Mehta wherein Mr. Mehta has complained that the complainants were not sending material to assess the value and has given time to send the same. The complainants in both the matters have replied and the copy of the letter is also produced.
4. It appears that the Insurance Company repudiated the claim by its letter dated 7.11.89 in following words.
“As per the details of Survey report and other papers, we have observed that the claim is not within the scope of the policy cover. Hence we regret our inability to settle the claim.”
The repudiation of the claim of both the complainants are in the same wording by the letter of the same date.
5. In pursuance of our Summons the opposite party has filed its version alongwith affidavit and documents including report of the surveyor and report of Engineer Mr. J J. Mehta. The main contention of the opposite party is that the claim application is barred as per Clause 4 of the conditions of policy since the opposite party has vide letter dated 7.11.89 disclaimed its liability and as the claim having not been made within 12 calendar months from the date of such disclaimer the claim of the applicant for all purposes has been deemed to have been abandoned. The resultant effect is that the application deserves to be rejected.
The further contention of the opposite party is that the applicant has not followed the terms of the policy which was issued. On the happening of the alleged loss or damage the insured has not informed the company within 15 days after the alleged loss or damage and hence the policy has become void.
