Karnataka High Court
The Secretary, Taluka Agricultural ... vs The Custodian, New India Assurance Co. ... on 1 September, 1987
Equivalent citations: AIR1988KANT185, [1989]65COMPCAS109(KAR), AIR 1988 KARNATAKA 185
JUDGMENT Navadgi, J.
1. This is plaintiffs appeal against the Judgment and Decree dt. 23-11-1977 made by the I Additional Civil Judge, Kolar in O.S.No. 10/1974 on his file.
2. The appellant and respondents in this appeal would be hereinafter referred, with reference to the rank and position given to them in the array in the Original Suit.
3. The plain tiff-Society instituted the suit, out of which this appeal has arisen, for recovery of a sum of Rs. 31,602/- including the notice charges of Rs. 100/- and interest of I? s. 17,544-44 paise on Rs. 23,957.56 paise with costs, current interest and such other reliefs as the Court may deem it fit to grant to the plaintiff in the circumstances.
4. The averments in the plaint are these :
The plaintiff -Society insured the electrical goods in the premises of its Electrical Section with defendant- I against accidents off ire and consequent losses under Policy, No. 12832(X)OO. Defendant-I accepted the policy and assured the plaintiff against any losses due to accidents by fire.
On 17-0-1972, the electrical goods stored in the Electrical Section of the plaintiff were damaged due to accidental fire, resulting in a total loss of Rs. 23,957-56 paise. The plaintiff reported the occurrence to defendants-I and 2 and the authorities of the Department of Co-operation. The Divisional Manager of defendant- 1, arrayed as defendant-2, advised the plaintiff to send the claim forms in order to settle the claim of the plaintiff.
At the request of defendants-I and 2, the Fire Loss Surveyor and Assessor, examined as P. W. I at the trial of the suit was deputed to estimate the loss that resulted in the fire accident. P.W.1 inspected the premises of the plaintiff and assessed the loss at Rs. 22,47525 paise.
Defendant-2 assured the plaintiff to settle the claim on several occasions and agreed to compensate the loss by payment of money. But defendants-1 and 2 put off the payment for no valid reasons at all. Defendants informed the plaintiff in the month of April, 1973, by the letter marked as Ex-P-15, offering to pay a sum of Rs. 5,000/- in full settlement of the claim without assigning any reasons for educing the claim put forward by it.
The defendants, by their own assessment of the loss, correspondence carried on with the plaintiff, and conduct, have conceded the total loss suffered by the plaintiff as claimed. The stand taken by them is unreasonable. unjustified and devoid of any reasons.
5. With these averments, the plaintiff instituted the suit on 1-4-1974 for the recovery of the money.
6. Defendants-I and 2in their joint written statement, while admitting the fact of plaintiff having insured the electrical goods against fire accidents and consequential losses under the policy referred to in the plaint, contended that the insurance was subject to the terms and stipulations mentioned in the policy and the suit was not maintainable by virtue of Cl. 18 of the policy expressly providing for arbitration as a condition precedent to any right to action or suit upon the policy. They denied the averments in the plaint with regard to the damage suffered by the electrical goods in the Electrical Section of the plaintiff on 17-6-1972 due to any accidental fire, adding that the say of the plaintiff that the total loss was in a sum of Rs. 23,957-56paise was not correct. They contended that the claim put forth by the plaintiff was false, fraudulent and exaggerated.
According to the defendants, the loss at Rs. 22,375-25 paise arrived at by P.W. I was baseless and was made on the basis of the plaintiff's self-serving statement and the books of accounts. Defendants-I and 2 denied the assurance imputed to them and stated that they agreed to pay Rs. 5,000/-only in full settlement of the claim, subject to the acceptance of the same by the Head Office of defendant-1 Company.
According to them, the amount of Rs. 5,000/- offered was agreed as ex gratia payment after discussion with the Secretary of the plaintiff, examined &s P.W.3. They also contended that the plaintiff had not complied with the terms and conditions of the policy, particularly Cls. 11, 12 and 13, adding that in view of the non-compliance with the aforesaid clauses, the plaintiff was riot entitled to any benefit under the terms of the policy.
7. On the basis of these pleadings, the learned Civil Judge formulated as many as 5 issues for adjudication The issues read thus
1.Wheffier the plaintiff proves that the electrical goods in the electrical section of the plaintiff -Society were damaged due to the accidental fire resulting in a total loss of Rs. 23,957-56?
2. Whether the plaintiff further proves that the second defendant offered in his letter of April, 1973 to pay Rs. 5000/- in full settlement of the claim?
3. Whether the defendants prove that the plaintiffs have not complied with the terms and conditions of the policy particularly Cls. 11, 12 and 13 to negative their claim to the benefit under the policy?
4. Whether the suit is not maintainable by virtue of Cl. 18 of the Insurance policy?
5. Whether the plaintiff is entitled to recover Rs. 31,601/-?
8. At the trial of the suit, the plaintiff examined T. R. Kathiravelu (P.W. 1), the Fire Loss Surveyor and Assessor, who at the instance of the defendants, went to the premises of the plaintiff -Society and assessed the loss; M. Hanumantha Reddy (P.W. 2), who was working in the office of the Deputy Registrar of Co-operative Societies at Kolar at the material time and who, on being deputed at the request of plaintiff, had gone to the premises of the plaintiff-Society to estimate the loss, and Syed Shahabuddin (P.W. 3), the Secretary of the plaintiff-Society. In all 7 documents came to be admitted in evidence for the plaintiff.
9. As against this, on behalf of the defendants, R. Nandalal gave evidence as D.W. 1. Four documents were admitted in evidence for the defendants.
10. The learned Civil Judge, on consideration of the evidence, held that the plaintiff had failed to establish that the damage due to accidental fire resulted in a total loss of Rs. 23,957-56 paise. He also held that the defendants had established non-compliance with the Cls. 11 and 13 of the policy by the plaintiff. It was his conclusion that in view of the plaintiff having not availed of the arbitration clause in the policy, it was not entitled to maintain a suit. Recording his findings accordingly on all the issues, the learned Civil Judge dismissed the suit with no order as to costs.
11. The points that arise for determination in this appeal are these:-
1. Whether the plaintiff has established that the total loss suffered by it as a result of the accidental fire, damaging, its electrical goods, was in the sum of Rs. 23,957.56 ?
2. Whether the plaintiff has shown that its suit was maintainable not with standing the fact that it had not availed of the arbitration clause in the policy ?
3. Whether the judgment and Decree of the Court below are correct and legal"
12. Our findings on the above points are in the negative on points Nos. 1 and 2 and in the affirmative on point No. 3.
The evidence of P.W.1 would show that he visited the premises of the plaintiff- Society on 21-6-1972 with the representative of defendant-1 Company and assessed the damages caused to the electrical goods by verifying the account books of the plaintiff such as Stock Register, Stock Verification Register, Daily Sales Book, Purchase Invoices Book, and the Statement of Stocks submitted to the District Central Co-operative Bank, furnished by the Plaintiff on each fortnight. It is in his evidence that according to the Stock Register, the value of the stock of electrical goods in the Sales Rooms was about Rs. 44,000/- that some of them were found affected by fire and damaged; that lie took the inventory of the undamaged electrical goods that the value of the undamaged electrical goods was Rs. 10,000/-and that the remaining goods worth-Rs. 34,000/- were to be accounted for. P.W. 1 has clearly stated that it was the Sales Clerk of the Society who prepared the list of electrical goods involved in the accident; that he did not depend upon that fist and asked the Special Officer to certify the list and after receiving the certificate from the Special Officer, he assessed the loss. It is his evidence that the value of the salvage left over was to an extent of Rs. 2,800/1- and the same was handed over to the plaintiff.
13. We may observe here that the Sales Clerk of the Society, who prepared the list of electrical goods involved in the accident, has, not been examined by the plaintiff at the trial of the suit. The plaintiff also gave no explanation for non-examination of the Sales Clerk, whose evidence was the best evidence available to it to prove the claim.
14. Ex.P-2 is the certificate issued by P.W. 1 to the plaintiff estimating the loss at Rs. 23,825-25 paise. The evidence of P.W-1 would show that he sent two reports, one preliminary and another final, to the defendants. Ex.D-1 is the report and Ex.D-2 is the clarification given by him on certain points asked by defendant-2. The admissions of P.W-1 would go to show that from the account books produced by the plaintiff, he could not find the description of the electrical goods damaged by fire and that on the basis of the certificate issued by the Special Officer, he made the assessment. It is in his evidence that he did not go to the office of the Deputy Registrar to verify the truth of the certificate. He revised his preliminary report on the basis of the said certificate and sent final report. These admissions make it amply clear that there was no material before P.W-1 which could have enabled him to inspect the electrical goods with a view to ascertain the extent of loss. The evidence of P.W-2 would not in any manner help the plaintiff in establishing the claim put forward by him as the loss occasioned as a result of the accidental fire. It is in the evidence of P.W. 2 that after inspecting the burnt and unburnt electrical goods, he called for accounts of the electrical goods from the Secretary; that the Audit Report, Invoices and Cash Book were produced before him; and that he was informed that the Stock Book was also burnt. On the basis of the opening stock as on 1-71971, the purchases made from 1-7-1971 to 17-6-1972, the sales effected and the stock available, he estimated the value of the burnt electrical goods at Rs. 23,825-19. The opening balance of the electrical goods as on 1-7-1971 was of Rs.-60,206.03 paise. The purchases made from 1-7-1971 to 17-6-1972 amount to Rs. 44,615.78. Thus, the total stock as on17-6-1972 a. mounts to Rs. 1.04,821-81 paise. The stock available as on 17-6-1972 was of the value of Rs. 30,416.02. Part of it was burnt. There is no explanation from any of the witnesses examined on behalf of the plaintiff .as to what happened to the balance stock worth Rs. 73,000/- and odd. P.W-2 did not inspect the Stock Register and Purchase Register expected to be in the custody of the Secretary, and the Sale Receipt Books showing the sales. Details of the electrical goods were not found mentioned in Ex.P-7, the Cash Book. The accounts of the Society, from 1-7-1971 to 17-6-1972 had not been audited.
15. Admittedly, the Stock Register was not produced either before P.W. 1 or before P.W-2. P.W-2 in his cross-examination has stated that there would be a Stock Register, and Purchase Register in the Society which would be in the custody of the Secretary. It is' also in his cross-examination that the Sales Book and Stock Book would give the correct picture of the articles that are said to have been burnt. P.W-3, the Secretary of the plaintiff-Society in his evidence stated that the Stock Book of the electrical goods was with him and not with the Sales Clerk. P.W-3 denied the suggestion that the Stock Book had not been placed along with the electrical goods and was not burnt. In his further cross-examination, he stated that the Verification Statement Book was also in the Electrical Section and it was also burnt. It is difficult to accept the plaintiff's case that the Stock Book and the Verification Statement Book which were not expected to be kept in the Electrical Section where the electrical goods had been stored, were burnt. The Verification Register containing the verification of electrical goods was not produced before the Trial court or the ground that it did not relate to electrical goods.
16. The learned Civil Judge referring to the evidence of P.W-1 and the initial estimation of loss made by him and reading. the evidence of P.Ws-2 and 3 and the other documentary evidence Ex.P-5 the Audit Report, Ex.P-6 the Invoices and Ex.P-7 the Cash Book, has rightly held that the plaintiff has failed to establish the total loss as claimed by it in the suit. The Sales Clerk of the plaintiff Society, who prepared the statement of electrical goods said to have been burnt on memory and who assisted R.W-l in the estimation of loss, and the Special Officer who had certified the list of electrical goods involved in the fire accident (prepared by the Sales Clerk), were not examined by the plaintiff. In the absence of the evidence of these witnesses, the documentary evidence lost its probative value and could not come to the help of the -plaintiff, who withheld the best available evidence from the Court, in establishing the loss.
17. For the reasons aforesaid, we concur with the findings recorded by the learned Civil Judge on Issue Nos. 1 and 5.
18. The learned Civil Judge after extracting Cls. 11, 12, 13 and 18, has held that the plaintiff has not complied with Cls. 11 and 13. He has also held that the plaintiff's suit was not maintainable by virtue of Cl. 18 of the Policy. Clause 18, of the Policy reads thus :
"If any difference arises as to the amount of any loss or damage such difference shall independently of all other questions be referred to the decision of an arbitrator, to be appointed in writing by the parties in difference, or if they cannot agree upon a single Arbitrator, to the decision of two disinterested persons as Arbitrators of whom one shall be appointed in writing by each of the parties within two calendar months after having been required so to do in writing by the other party. In case either party shall refuse or fail to appoint an Arbitrator within two calendar months after receipt of notice in writing requiring an appointment, the other party shall be at liberty to appoint a sole arbitrator; and in case of disagreement between the Arbitrators, the difference shall be referred to the decision of an Umpire who shall have been appointed by them in writing before entering on the' reference and who shall sit with the Arbitrators and, preside at their meetings. The death of any party shall not revoke or affect the authority or powers of the Arbitrator, arbitrators or Umpire respectively; and in the event 6f the death of an Arbitrator or Umpire another shall in each case be appointed in his stead by the party or Arbitrators (as the case maybe) by whom the, arbitrators or Umpire so dying was appointed. The costs of the reference and of the award shall be in the description of the Arbitrator, Arbitrators or Umpire making the award. And it is hereby expressly stipulated and declared that it shall be a condition precedent to any right of action or suit upon this policy that the award by such Arbitrator, Arbitrators or Umpire of the amount of the loss or damages if disputed shall be first obtained."
19. There is no dispute that the plaintiff filed the suit without seeking arbitration as required by Cf. 18 of the Policy.
20. Sri V. S. Gunjal, the learned counsel for the plaintiff, contended that since defendants-1 and 2 repudiated the claim and disputed liability under the policy, Condition No. 18 was not a bar for the plaintiff to approach the Civil Court for the recovery of damages. In support of that contention, he relied upon the decision of the Supreme Court in The Volcan Insurance Co. Ltd. v. Maharaj Singh, . In para 12 of the Judgment at Page 2'90, the dicta of the Supreme Court is as follows :
".... It may well be that after the liability of the Company is established in such a suit for determination of the quantum of the loss or damage, reference to arbitration will have to be resorted to in accordance with Cl. 18. But the arbitration clause, restricted as it is by the use of the words "if any difference arises as to the amount of any loss or damage", cannot take within its sweep a dispute as to the liability of the Company when it refuses to pay any damage at all."
21. Ex.P-15 clearly evidences that there was an agreement between the plaintiff and defendants, that there should be a settlement of the loss on payment of Rs. 5,000/_ for which a voucher was sent along with Ex.P-15. Therefore, it is not a case of repudiation of the claim or dispute of liability on the part of the Insurer, but offering to pay less than the claim put forward as loss. The difference was as to the amount of loss. Therefore, the quantum of damages claimed by the plaintiff attracted arbitration under Cl. 18. Therefore, the view of the learned Civil Judge that the plaintiff was not entitled to maintain the suit cannot be held to be incorrect. However, we proceed to make the observation that the learned Civil Judge has committed an error of law in holding that the suit has been filed 12 months after the occurrence of the loss due to fire, contrary to Condition No. 19 of the policy and, therefore, the suit was barred by time. We must state the correct position in law. Perhaps, the insurance forms were all printed long prior to the coming into force of the present Limitation Acton 1-4-1964. Under Art. 44(b) of the Schedule to the Limitation Act, three years period is provided for filing a suit to recover damages sustained on account of any loss under an Insurance Policy. The time starts running against the plaintiff only on the date of the occurrence causing the loss or the date on which the claim is denied by the Insurance Company. Therefore, the view expressed by the learned Civil Judge is not sustainable in law, as well as on the ground that the defendants did not plead that, nor was an issue raised for the Trial Court to come to a conclusion.
22. Subject to the above observation, we affirm the finding on issue No. 4. No other point was canvassed in support of the appeal. We find the appeal devoid of merit. We therefore, dismiss the appeal.
In the circumstances of the case, there will be no order as to costs in this appeal.
23. Appeal dismissed.