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High Court of Judicature at Madras
ARUNA JAGADEESAN, J.
S.A. Raghunathan, Proprietor M/s. Efficient Business Centre Chennai
Versus
United India Insurance Company Limited Chennai & Another
CS. No. 840 of 2000
Decided on: 19-03-2014
Insurance - Fire Insurance - 010801/103/11/13/1528/96 - The Insurance Policy was issued in good faith on the basis of the proposal dated 12.6.1996 covering waste boiled cocoons for a sum of Rs.42.50,000/-stored at the godown at Ammapettai, Thiruporur. The issue of the Policy was not an admission of the availability or value of the property insured, especially when it pertains to stocks. The Plaintiff lodged a claim for loss of stocks stated to be 65.5 MT of total value of Rs.72,05,000/- in a fire that occurred on 30-13/12/1996. On intimation of the claim, the 1st Defendant appointed M/s. Mehta Padamsey Surveyors P Limited for conducting survey and subsequently M/s. Vasu Associates had been appointed as Investigator, whose report revealed that the alleged purchase of stocks were not true, the Plaintiff had no orders to justify the purchases, there were no such stocks available or destroyed in the fire and the claim of the Plaintiff is not true. The 1st Defendant rejected the claim by letter dated 29.1.1998 Ex.P1 for various reasons elaborately.
Fact of the Case:
The Plaintiff, engaged in the business of purchase and export sale of waste boiled cocoons, had insured a quantum of Waste Boiled Cocoons for a sum of Rs.42,50,000/-, covering the period 12.6.1996 to 11.6.1997. A fire broke out in the godown where the insured stocks were stored, resulting in a loss of over 62 tonnes of Waste Boiled Cocoons worth Rs.72,05,000/-. The Plaintiff filed a claim for Rs.42,50,000/-being the insured amount, which was rejected by the 1st Defendant.
Finding of the Court:
The court found that the Plaintiff suffered a loss of not less than 40,000 Kgs of waste boiled cocoons, and the 1st Defendant was liable to indemnify the Plaintiff for the said amount under the Fire Insurance Policy. The court also held that the suit was not barred by limitation and awarded interest at 9% p.a. from 01.11.1997 till the date of payment.
Issues: The issues framed for determination were whether the Plaintiff sustained the alleged loss, whether the Plaintiff was entitled to claim under the Policy of Insurance, whether the claim of the Plaintiff was payable under the Policy of Insurance, whether the Plaintiff was entitled to interest, and the reliefs the parties were entitled to.
Ratio Decidendi: The court relied on the survey report, confirmation of the Bank of the stock verifications, and the statutory character of the survey in accepting the Plaintiff's claim. The court also found that the Plaintiff suffered a loss of not less than 40,000 Kgs of waste boiled cocoons and was entitled to indemnity for the said amount under the Fire Insurance Policy. Additionally, the court held that the suit was not barred by limitation and awarded interest at 9% p.a. from 01.11.1997 till the date of payment.
Final Decision: The civil suit was allowed partly and decreed for a sum of Rs.24,60,000/- with interest at 9% p.a. from 01.11.1997 till the date of payment, and the 1st Defendant was liable to pay the same to the Plaintiff under the Fire Insurance Policy. However, in the circumstances of the case, there was no order as to costs.
1. This suit has been filed to pass a Judgment and Decree directing the 1st Defendant to pay the claim amount of Rs.42,50,000/- with interest at 18% p.a. on Rs.42,50,000/- till the date of payment in full and for costs.
2. The plaint averments are as follows:-
a. The Plaintiff is doing business of purchase and export sale of waste boiled cocoon ( a variety of silk waste). On 12.6.1996, the Plaintiff insured a quantum of Waste Boiled Cocoons, vide Policy NO.10801/ 103/11/13/1528/96 for a sum Rs.42,50,000/-, covering the period 12.6.1996 to 11.6.1997. In the Policy itself, all the particulars of the stocks, including the place in which they were stocked, have been disclosed. As per the business practice, the Policy is held in the name and custody of the Plaintiff's Banker i.e. the India Bank, the 2nd Defendant herein, so that in case of loss or damage to the insured consignment due to risk covered by the Policy, payment by the 1st Defendant will be made directly to the 2nd Defendant. On 30.12.1996 (or 31.12.1996) accidentally fire broke out in the godown Ammapettai, Thiruporur Taluk, where the insured stocks were stored. Immediately, the Fire Station was informed. With the best efforts of Fire Service Personnel and the employees of the Plaintiff, the fire was put out after four hours. The Plaintiff suffered a loss to tune of Rs.72 lakhs and filed a complaint with the Thiruppur Police Station. The Plaintiff, through the 2nd Defendant, submitted his claim for Rs.42,50,000/-being the insured amount to the 1st Defendant. In the fire accident, over 62 tonnes of Waste Boiled Cocoons worth Rs.72,05,000/-was destroyed. The cause for the fire accident was found to be short circuit of electricity.
b. M/s. Matha and Padamsey Surveyors P Limited appointed by the 1st Defendant to assess the loss, submitted a report, stating that it was total loss. The 1st Defendant also appointed another non technical Investigator by name M/s. Vasu Agencies in July 1997, who submitted a report, raising certain unsustainable and irrelevant objections, for which the Plaintiff replied by letter dated 11.2.1998. However, the 1st Defendant rejected the claim of the Plaintiff by letter dated 29.1.1998 and there is absolutely no reason for rejecting the claim of the Plaintiff. As far as the stock quantity is concerned, the 2nd Defendant has been periodically making inspections and verifications, which was made available to the 1st Defendant. The Plaintiff is entitled for 18% interest p.a. on the said claim amount from 30.12.1996 till the date of payment. Hence, this civil suit has been filed for the reliefs as stated above.
3. In the Written Statement filed by the 1st Defendant , it is averred as follows:-
a. On the basis of the proposal of the Plaintiff dated 12.6.1996, the 1st Defendant had insured stock of waste boiled cocoons stored at godown in Ammapettai, Thiruporur Taluk for a sum of Rs.42,50,000/-under Fire Policy No.10801/103/11/13/1528/1996 dated 12.6.1996 for the period from 12.6.1996 to 11.6.1997. The Policy was issued favouring the 2nd Defendant Bank and the Plaintiff, since the Bank was stated to be the mortgagee. The issue of Policy does not constitute any admission of the availability or value of property insured, especially when it pertains to stocks. The claim was lodged on 30-31/12/1996 and the Plaintiff claimed a quantity of 65.5 MT of value of Rs.72,05,000/- as the loss. The Investigator M/s. Vasu Associates appointed by the 1st Defendant, after thorough enquiry submitted a report dated 30.10.1997.
b. In the said report of the Investigator appointed by the 1st Defendant, it is stated as under:-
i. The Plaintiff is alleged to have entered the business of export of waste boiled cocoon on the basis of one order of an Italian buyer who opened a Letter of Credit in January 1992. The Letter of Credit expired in June 1992 and the only order was never executed. Even thereafter, without any order, the Plaintiff claims to have purchased and accu
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