Calcutta High Court
Hindusthan Motors Ltd vs National Insurance Co. Ltd on 25 September, 2014
Author: Debangsu Basak
Bench: Debangsu Basak
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
Original Side
Before:
The Hon'ble Justice Debangsu Basak
C.S. No. 799 of 1979
Hindusthan Motors Ltd.
Vs.
National Insurance Co. Ltd.
For the Plaintiff : Mr. Dhruba Ghosh, Advocate
Mr. Arindam Mukherjee, Advocate
Mr. Jeevan Ballav Panda, Advocate
Mr. Rishav Dutta, Advocate
For the Defendant : Mr. Pradip Kumar Ghosh, Sr. Advocate
Mr. S.K. Das, Advocate
Mr. Abhijit Gangopadhyay, Advocate
Mr. Sarathi Dasgupta, Advocate
Hearing concluded on : July 03, 2014
Judgment on : September 25, 2014
DEBANGSU BASAK, J.
The suit is for recovery of money on account of damages suffered by the plaintiff in respect of the incidents claimed to be covered under policies of insurance issued by the Defendant Nos. 1 and 2.
There are 6 defendants in the suit. The claim of the plaintiff is against the Defendant Nos. 1 and 2. The plaintiff does not seek to any relief against the other defendants.
The plaintiff claims to be a manufacturer of motor vehicles with the factory of the plaintiff being situate at Hind Motor in the State of West Bengal. The plaintiff claims to be insured by 6 several policies of insurance issued by the Defendant Nos. 1 and 2 on various aspects. The plaintiff claims that, the liabilities of the first and the second defendant under 4 policies are in the ratio of 70:30 and for two policies the liability is that of the first defendant only. The plaintiff claims that, it got itself insured against flood. During the currency of the insurance policies, the plaintiff suffered damages on account of flood and inundation. These eventualities are covered under the policies. The plaintiff claims to have suffered loss in excess of Rs. 7 crores on such account. The plaintiff also claims that, it suffered damages on account of interruption, interference, and stoppage of business for a sum in excess of Rs. 6 crores. These incidents are, according to the plaintiff, covered by the policies of insurance and that, these incidents happened during the currency of the insurance policies.
The Defendant Nos. 1 and 2 filed a joint written statement. The Defendant No. 5 has also filed a written statement.
The Defendant Nos. 1 and 2 in their written statement denied that there was any extension of the six policies of insurance from September 26, 1978 or from any other date to cover the loss or damage caused by storm, flood and tempest. The Defendant Nos. 1 and 2 claimed that the proposal for extension of cover and the cheque for the extra premium were not received by the Defendant No. 1 earlier than September 29, 1978. They went on to claim that, the cover under the six policies of insurance were extended with effect from September 26, 1978 on the faith and basis of representation made on behalf of plaintiff to the effect that, the cheque covering the extra premium was left at the office of the Defendant No. 1 on September 26, 1978. They claimed that, the proposals for extensions of the policies were not in good faith. On September 26, 1978 flood waters had already entered into the factory premises and had caused the alleged damages. The Defendant Nos. 1 and 2 claimed that, the plaintiff did not disclose to and/or concealed from the defendants material facts relating to the risk involved and that, the contracts of insurance are void and/or voidable at the instance of the defendants and that the defendants avoid the same. The defendants claimed that, the assessment of the damage is excessive and inflated. According to the defendants, the plaintiff had under insured itself. The plaintiff had declared a lock out of its factory between September 19, 1978 and October 5, 1978. Lock out at the factory premises is a material fact which the plaintiff was bound to disclose as such event increased the risk of loss and damage. The defendant claimed that, the factory of the plaintiff was under water on September 26, 1978 and that, such fact was not made known to the defendants. A contract of insurance is of utmost good faith and the plaintiff wrongfully withheld and suppressed facts in breach of its obligation. The plaintiff did not deliver its claim in writing within the stipulated period. The plaintiff is guilty of fraud. The plaintiff did not take steps for mitigating its losses. The plaintiff failed and neglected to appoint any emergency staff. The computation of loss by the plaintiff is erroneous.
The Defendant No. 5 has filed its written statement. The Defendant No. 5 is a banker of the plaintiff. The Defendant No. 5 claims that, all the stocks and goods of the plaintiff are hypothecated and/or pledged in favour of the five bankers. The stocks and goods of the plaintiff damaged by the insurance are securities of the five bankers. Consequently, in the event, the plaintiff succeeds, the payment should come to the five bankers.
The issues in the suit were settled on February 20, 2002. The issues are as follows:-
1. (a) Did the defendants nos. 1 & 2 insure the plaintiff against the perils and the properties mentioned in the plaint?
(b) Did the defendants nos. 1 & 2 extend the six policies with effect from September 26, 1978, to cover the alleged loss and damage by the perils as alleged in the plaint?
(c) Whether by reasons of the defendants accepting the extra premium and the issuance of relevant bills, endorsements, and the letter dated 17.10.1978, the defendants were estopped from contending that flood risk was not effective from 26.09.1978?
2. (a) Did the plaintiff pay the extra premium on September 26, 1978 as alleged in the plaint?
(b) Was the cheque for the alleged extra premium received by the defendant no. 1 not earlier than September 29, 1978 as alleged in the Written Statement?
3. (a) Were the extension of the six policies obtained on 29th September, 1978 or thereafter by concealment of materials facts or by misrepresentation as alleged in the Written Statement?
(b) Did the plaintiff send its proposal for flood cover only after the plaintiff's factory was inundated?
(c) Was the factory of the plaintiff inundated before the policies were issued as alleged in the written statement?
(d) Did the policies became void or the defendants ceased to be liable under the policies as alleged in paragraph 14A of the Written Statement?
4. Did the plaintiff suffer loss and damages to the extent as alleged in paragraph 8 of the plaint or otherwise?
5. (a) Was the business carried on by the plaintiff interrupted and interfered with and its business completely stopped on or after September 19, 1978 as alleged in paragraph 9 and 10 of the plaint?
(b) If so, did the plaintiff suffer loss and damages? If yes, to what extent?
(c) Was the alleged loss and damages covered by Policy No. 3200020?
6. (a) Did the plaintiff under-insure the subject matter of the policies of insurance as alleged in paragraph 9 of the Written Statement?
(b) If so, are the defendants liable for the loss and if so, to what extent?
7. Did the plaintiff fail and neglect to take steps to mitigate its damage as alleged in paragraph 14E and 14F of the Written Statement?
8. Did the policies of insurance become void or voidable at the option of the defendants nos. 1 & 2 as alleged in the Written Statement?
9. Did the plaintiff fail and deliver its claim in writing of the loss or damage within 15 days as alleged in paragraph 14C of the Written Statement? If not, with what effect?
10. To what relief, if any, is the plaintiff entitled?
The suit is contested by the Defendant No. 1. The parties disclosed several documents. The plaintiff examined one witness. The Defendant No. 1 examined three witnesses.
The claims of the plaintiff for compensation for loss and damages are in two parts. On one part, the plaintiff claims to be covered by a flood insurance and seeks compensation for loss and damages caused by flood. On the second part, the plaintiff claims to be covered by a policy of insurance for strike and industrial unrest and seek compensation for loss and damages suffered due to strike and lock out of its factory.
Parties addressed me on issue Nos. 3(a), 3(d) and 8 first. According to the Defendant No. 1, a contract of insurance is one of utmost good faith. According to the Defendant No. 1, the plaintiff suppressed material facts which vitiated the contract of insurance. The Defendant No. 2 refers to clause 2 of the policy which lays down that, if there is any misrepresentation by the proposer or any omission then the insurance company shall not be liable under the policy. Some facts were within the knowledge of the plaintiff and were material to the contract of insurance and were suppressed by the plaintiff. The Defendant No. 1 contends that, by reason of such suppression the contract of insurance became void ab initio. The plaintiff is guilty of suppressing that, its factory was situate in a low lying area and that there was a subsisting lock out at the factory premises at the material point of time.
In support of the contention that, a contract of insurance is based on the principle of utmost good faith the Defendant No. 1 relies upon Mcgee "Modern Law of Insurance", The Law of Insurance Practice by Malcolm A. Clarke. On what constitutes a material fact, suppression of which will lead to avoidance of a contract for insurance reliance is placed on 1994 Volume 3 All England Law Reports page 581 (Pan Atlantic Insurance Co. Ltd. & Anr. v. Pine Top Insurance Co. Ltd.), 1996 Volume 1 All England Law Reports page 96 (St Paul Fire and Marine Insurance Co. (UK) Ltd. v. McConnell Dowell Constructors Ltd. & Ors.), 1996 Volume 6 Supreme Court Cases page 428 (United India Insurance Company Limited v. M.K.J. Corporation) and 2009 Volume 8 Supreme Court Cases page 316 (Satwant Kaur Sandhu v. New India Assurance Company Limited). Satwant Kaur Sandhu (supra) was relied upon the plaintiff for a different proposition. The Defendant No. 1, however, relies upon the same in support of the aforesaid proposition.
The Defendant No. 1 relies upon the interim report dated April 25, 1979 of Surveyor being Exhibit 'BU' and the final report dated September 18, 1980 being Exhibit '1' in support of the contention that, the factory of the plaintiff is situate on a low lying area. Reliance is placed on various answers given by Mr. Arunachalam who carried out such survey as well as answers given by Mr. Sharma the witness of the plaintiff.
The Defendant No. 1 contends that, it specifically pleaded that a contract of insurance is a contract made in utmost good faith. Such pleading appears in paragraphs 14A, 14B as well as 14D of the written statement. In paragraph 14D of the written statement the Defendant Nos. 1 and 2 claimed that, the plaintiff suppressed material facts.
It is submitted on behalf of the Defendant No. 1 that, lack of details in the pleadings cannot be a ground to reject a case. Reliance is placed on 2010 Volume 2 Supreme Court Cases page 689 (Sree Swayam Prakash Ashramam & Anr. v. G. Anandavally Amma & Ors.), All India Reporter 2013 Supreme Court page 2028 (Joseph John Peter Sandy v. Veronica Thomas Rajkumar & Anr.) and All India Reporter 1999 Supreme Court page 3325 (Hari Singh v. Kanhaiya Lal) in this regard. The Defendant No. 1 also relies upon 2010 Volume 2 Supreme Court Cases page 689 (Sree Swayam Prakash Ashramam & Anr. v. G. Anandavally Amma & Ors.) in support of the proposition that, despite absence of specific issue when the parties are not taken by surprise the issue can be raised and decided.
The Defendant No. 1 relies upon Order XIV Rule 5 of the Code of Civil Procedure, 1908 and submits that, if an issue is not framed it can be framed at any stage.
The Defendant No. 1 claims that, a contract of insurance being a contract of utmost good faith, the plaintiff was aware of the material facts and was under a duty to make full disclosures of such facts. The failure of the plaintiff to do so renders the contract of insurance void. Chitty on Contract and Cheshier and Fifoot on Law of Contract are relied upon in support of such proposition.
According to the Defendant No. 1, the plaintiff suppressed the existence of a lock out at the factory premises at the material point of time. The Defendant No. 1 submits that, there was a strike and a lock out in the factory of the plaintiff from September 19, 1978 till October 5, 1978 and that, the same will appear from answers given by the witness of the plaintiff to question nos. 155 to 162 and 176 to 180 as well as Exhibit 'B'. The plaintiff did not inform the Defendant Nos. 1 and 2 of the subsisting lock out on September 26, 1978 when the plaintiff claimed to have applied for the insurance coverage. This is a material fact which the plaintiff suppressed. There is a distinction, according to the Defendant No. 1, between a strike and a lock out. A strike is undertaken by the workmen while a lock out is declared at the behest of the management. The declaration of a lock out by the management is a material fact which the plaintiff ought to have disclosed on September 26, 1978 when according to the plaintiff it was applying for the insurance coverage.
According to the Defendant No. 1 reliance of the plaintiff on Exhibit '2A' being a notice dated September 19, 1978 does not help the plaintiff. Such notice was not received by the Defendant No. 1. At least there is no evidence on record to establish receipt of such notice by the Defendant No. 1. The letter dated September 25, 1978 being Exhibit 'BC' intimates the Defendant No. 1 of the strike and not about the lock out. Further, the Defendant No. 1 doubts the veracity of Exhibit 'BC'. The Defendant No. 1 contrasts Exhibit 'BY' with Exhibit 'BC' and submits that, there was an alleged declaration of lock out from September 19, 1978 while the letter being Exhibit 'BC' speaks of a strike. The document being letter dated September 19, 1978 was not exhibited.
According to the Defendant No. 1, the factory of the plaintiff was inundated from September 26/27, 1978 as will appear form Exhibit 'BU'. This was another material fact suppressed by the plaintiff.
The Defendant No. 1 relies upon 60 Company Cases page 445 (Sarojam v. Life Insurance Corporation of India) in support of the proposition that, an insurance company was entitled to repudiate the policy on the ground of misrepresentation and non-disclosure. In support of the proposition that, the rights and obligations of the parties to a contract of insurance are governed by the terms and conditions of the policy reliance is place on 2010 Volume 10 Supreme Court Cases page 567 (Suraj Mal Ram Niwas Oil Mills Private Limited v. United India Insurance Company Limited & Anr.) and 2010 Volume 5 Supreme Court Cases page 294 (Amravati District Central Cooperative Bank Limited v. United India Fire and General Insurance Company Limited).
The plaintiff contends that, suppression and non-disclosure of topography of the factory, declaration of lock out at the factory and inundation of the factory on September 26, 1978 are either not pleaded or proved or both. On the aspect of the factory being situate on a low lying land the same is not pleaded in the written statement, no issue in this regard was framed and, consequently, the argument from the Bar on a question of fact should not be sustained.
The plaintiff contends that, the Defendant Nos. 1 and 2 never repudiated any of the policies of Insurance by any communication on the ground of alleged concealment of any fact. The plaintiff points out that, the Defendant No. 1 issued receipt on October 5, 1978 and issued the policy on October 17, 1978 after the officers of the plaintiff visited the Factory Premises of the plaintiff. The Defendant Nos. 1 and 2 never raised any issue with regard to the topography of the Factory of the plaintiff. The plaintiff points out that, the suit is of 1979 and the written statement in the suit was filed in 1980. The point of concealment of topography of the Factory of the plaintiff is not pleaded in the written statement. Moreover, the written statement was amended 6 (six) years later and again this aspect was not included in the pleading.
The plaintiff contends that, no question with regard to the topography of the Factory as well as his alleged concealment was put to any of the witnesses of the defendant. No issue with regard to concealment of topography was framed. No particulars of the alleged misrepresentation appear in the written statement.
The plaintiff claims that, the Defendant Nos.1 and 2 were obliged to find out the topography of the Factory of the plaintiff as well as the nature of the area where the Factory of the plaintiff is situate. Furthermore, according to the plaintiff, Hind Motor at which place the Factory of the plaintiff is situate, is notoriously known to be a low lying area and that such information is available in the public domain.
The plaintiff points to the existence of the relationship between the plaintiff and the Defendant Nos. 1 and 2 prior to the policy covering flood and submits that, the Defendant Nos.1 and 2 cannot be allowed to feign ignorance as to the topography of the Factory of the plaintiff.
On the aspect of lock out, the plaintiff claims that, the Defendant No. 1 was informed on September 26, 1978 and September 29, 1978 before the flood policy and that, the Defendant Nos. 1 and 2 had knowledge about such fact. On the aspect of inundation of the factory, the plaintiff claims, that the factory was inundated on September 26, 1978 was not proved, and in any event the same is contrary to the Surveyor's findings as well as the official records.
The plaintiff submits that, it faced labour problems on and from September 19, 1978 at the factory of the plaintiff, when a section of its employees resorted to illegal stoppage of work. The plaintiff refers to various answers given by its witness and submits that, the Paint Spray Guns were removed by the workmen affecting the production of the cars. Such illegal acts were intimated by the plaintiff to the Police Authorities as will appear from the Exhibit 'I'. The defendants were also intimated in this regard and the plaintiff refers to answers given by the witness of the plaintiff to question Nos. 161, 721 to 724. The workmen of the plaintiff were called upon by a notice to stop the illegal stoppage of work. Exhibit 'BX' is referred to in this regard. The workmen not having complied with such request, another notice was issued on the same day. By the second notice, the plaintiff declared lock out. Exhibit 'BY' is the notice of the lock out.
The plaintiff refers to a letter dated September 19, 1978 being Exhibit '2A' claiming that, the same is an intimation of the lock out to the Defendant Nos. 1 and 2. The plaintiff also refers to a letter dated September 25, 1978, being Exhibit 'BC', and submits that, the contention of the defendants, that the strike and the lock out were suppressed, are not true.
According to the plaintiff, the industrial disturbance continued from September 19, 1978 till November 19, 1978 with the lock out commencing from September 25, 1978 and till October 5, 1978. The lifting of the lock out on October 5, 1978 will appear from Exhibit 'BZ'. The decision to withdraw the lock out was communicated by a letter dated October 5, 1978, being Exhibit 'CG'.
The plaintiff points out that, the aforesaid communications will demonstrate that, the defendants were well aware of the labour dispute as well as the strike and lock out at the Factory for the period of time as stated in the correspondences. The plaintiff points out that, the two witnesses of the defendants did not adduce any evidence with regard to the allegation that, the plaintiff had suppressed this fact.
The plaintiff submits that, there was no suppression as to water entering the factory premises. According to the plaintiff, the policy commenced from September 26, 1978 and the flooding happened from September 27, 1978. According to the plaintiff, there is no evidence that the factory stood inundated on September 26, 1978. The plaintiff refers to the pleading in the written statement of the Defendant Nos.1 and 2 particularly paragraph 4(c), 14B and 14D of the amended written statement and submits that, according to the defendants water came into the factory premises on September 28, 1978 or September 29, 1978.
The plaintiff points out that the process of obtaining Flood Insurance commenced from May, 1978 and that the same ultimately matured on September 26, 1978.
The plaintiff submits that, a party cannot travel outside its pleadings and no amount of evidence is tenable if not pleaded. Reliance is placed on 2003 Volume 4 Supreme Court Cases page 161 (Bonder Singh & Ors. v. Nihal Singh & Ors.), 2003 Volume 10 Supreme Court Cases page 653 (Rajgopal v. Kishan Gopal & Anr.) and All India Reporter 1930 Privy Council page 56 (Commissioner of Income-tax, Bombay Presidency v. Ahmedabad New Cotton Mills Company Limited).
The plaintiff claims that, there was no suppression. What will constitute concealment and will entitle the insurance company to avoid a policy, according to the plaintiff is laid down in (1558-1774) All England Reporter reprint page 183 (Carter v. Boehm).
The contract between the parties is one of flood insurance. A contract of insurance is one of utmost good faith. Suppression of a material fact will vitiate a contract of insurance and will allow the party affected thereby to avoid the same. What constitutes material fact in a contract for insurance is not defined in the Insurance Act, 1948. What constitutes material fact received consideration by various Courts.
Pan Atlantic Insurance Co. Ltd. & Anr. (supra) deals with a marine insurance. What constitutes misrepresentation or non- disclosure of a material fact under Section 18(2) of the Marine Insurance Act, 1906 came up for consideration before the House of Lords. St Paul Fire and Marine Insurance Co. (supra) again was on the interpretation of Section 18 of the Marine Insurance Act, 1906.
Both the authorities are of the view that, an insurer is entitled to avoid a contract of insurance for non-disclosure or misrepresentation of a material fact only where the prudent underwriter would have taken that fact into account when assessing the risk which he is agreeing to assume and where the actual underwriter is induced by the non- disclosure or misrepresentation to enter into the contract. Moreover, it is not necessary for a fact which is material that it should lead to an increased rather than diminished risk.
In United India Insurance Company Limited (supra), the Supreme Court lays down as follows:-
"6. It is a fundamental principle of Insurance law that utmost good faith must be observed by the contracting parties. Good faith forbids either party from concealing (non-disclosure) what he privately knows, to draw the other into a bargain, from his ignorance of that fact and his believing the contract. Just as the insured has a duty to disclose, "similarly, it is the duty of the insurers and their agents to disclose all material facts within their knowledge, since obligation of good faith applies to them equally with the assured".
7. The duty of good faith is of a continuing nature. After the completion of the contract, no material alteration can be made in its terms except by mutual consent.
..........................................................................."
Satwant Kaur Sandhu (supra) considers Carter v. Boehm (supra). It explains the term "material fact" in paragraphs 22 to 25. It holds as follows:-
"22. The term "material fact" is not defined in the Act and, therefore, it has been understood and explained by the courts in general terms to mean as any fact which would influence the judgment of a prudent insurer in fixing the premium or determining whether he would like to accept the risk. Any fact which goes to the root of the contract of insurance and has a bearing on the risk involved would be "material".
23. As stated in Pollock and Mulla's Indian Contract and Specific Relief Acts:
"any fact the knowledge or ignorance of which would materially influence an insurer in making the contract or in estimating the degree and character of risks in fixing the rate of premium is a material fact."
24. In this regard, it would be apposite to make a reference to Regulation 2(1)(d) of the Insurance Regulatory and Development Authority (Protection of Policy-holders' Interests) Regulations, 2002, which explains the meaning of term "material". The Regulation reads thus:
"2. Definitions.- In these Regulations, unless the context otherwise requires,-
(a)-(c) * * *
(d) "proposal form' means a form to be filled in by the proposer for insurance, for furnishing all material information required by the insurer in respect of a risk, in order to enable the insurer to decide whether to accept or decline, to undertake the risk, and in the event of acceptance of the risk, to determine the rates, terms and conditions of a cover to be granted;
Explanation.- 'Material' for the purpose of these Regulations shall mean and include all important, essential and relevant information in the context of underwriting the risk to be covered by the insurer."
Thus, the Regulation also defines the word "material" to mean and include all "important", "essential" and "relevant" information in the context of guiding the insurer to decide whether to undertake the risk or not.
25. The upshot of the entire discussion is that in a contract of insurance, any fact which would influence the mind of a prudent insurer in deciding whether to accept or not to accept the risk is a "material fact". If the proposer has knowledge of such fact, he is obliged to disclose it particularly while answering questions in the proposal form. Needless to emphasise that any inaccurate answer will entitle the insurer to repudiate his liability because there is clear presumption that any information sought for in the proposal form is material for the purpose of entering into a contract of insurance."
The evidence on record shows that, the factory is undoubtedly situate at a low lying area. The report of the Surveyor establishes such fact. There is no denial of such fact by the plaintiff. The Defendant No. 1 submits that, the topography of the factory assumes importance when a flood coverage is sought for particularly when the factory is situate in a low lying area and would therefore, be prone to water logging. The plaintiff never applied for nor obtained flood insurance from the Defendant No. 1 before. The previous transactions between the plaintiff and the Defendant No. 1 did not make the topography of the factory of the plaintiff as important as that in an insurance for flood. A claim for damages on account of loss caused by flood and which such event is invoked in the suit, then the topography of the place sought to be insured is an important and relevant information and a material fact which will undoubtedly affect the decision of the insurer in accepting the risk or not and at what premium.
The plaintiff submits that, the issue was not raised and that it is not pleaded in the written statement of the Defendant Nos. 1 and 2 and, therefore, should not be considered.
The written statement of the Defendant Nos. 1 and 2 speaks of suppression and concealment of material facts. The plaintiff claims that, the plaintiff suppressed the topography of the factory, the strike and the lock out at the relevant point of time and the alleged inundation of the factory on September 26/27, 1978 are not pleaded in the written statement. The Defendant Nos. 1 and 2 has pleaded in paragraph 4(d) that, the plaintiff is guilty of suppressing and concealing material facts. The Defendant Nos. 1 and 2 however, in their written statement did not specifically state that, the plaintiff is guilty of suppressing the topography of the factory of the plaintiff. The written statement is one of general concealment of material fact indulged into by the plaintiff.
In paragraph 14A of the written statement of the Defendant Nos. 1 and 2 specifically states that, the plaintiff suppressed the lock out at its factory premises. In paragraph 14B of the written statement it is stated that, flood water had entered the factory premises well before September 28, 1978 and that such fact was suppressed by the plaintiff. In paragraph 4(d) of the written statement, the Defendant Nos. 1 and 2 claim that, the plaintiff did not disclose to and/or concealed from the Defendants Nos.1 and 2 material facts relating to the risk involved and/or alteration and/or increase thereto at the time of making the proposal for extending the cover, of which the defendants were not aware. The Defendant Nos. 1 and 2 went on to allege that, the plaintiff concealed material facts from the Defendant Nos.1 and 2. Reading the written statement as amended as a whole, I find that the Defendant Nos. 1 and 2 did make out a case of concealment of material facts by the plaintiff. The allegations of concealment of material facts appear in paragraph 4(d). Paragraphs 14A, 14B and the other paragraphs of the written statement refer to specific instances of material facts alleged to be suppressed by the plaintiff.
The issue No. 3(a) of the issues settled by the Order dated February 20, 2002 relates to suppression of material fact as pleaded in the written statement of the Defendant Nos. 1 and 2.
I am satisfied that the pleadings as to concealment and suppression of material facts exist in the written statement and that an issue with regard thereto was framed for trial.
Bonder Singh (supra) and Raj Gopal (supra) are of the view that, no evidence can be looked into in absence of pleading. Raj Gopal (supra) is of the view that, Courts are precluded from taking cognizance of an instant on evidence in absence of specific pleading. The Privy Council in Commissioner of Income Tax, Bombay Presidency (supra) is of the same view.
In Sree Swayam Prakash Ashramam (supra), the Supreme Court, in the facts of that case, found that the finding arrived at by the Trial Court was on consideration of pleading and evidence. Considering the facts of that case, the Supreme Court was of the view that, although there was no specific issue on the question of implied grant, but as the parties have understood their case and for the purpose of proving and contesting implied grant had adduced evidence, the Trial Court and the High Court had entered a conclusion that the plaintiff had acquired a right of easement, there was no need for the Supreme Court to reverse the findings of fact in exercise of powers under Article 136 of the Constitution of India.
In Hari Singh (supra), the Supreme Court was considering the question as to whether the High Court, in the facts and circumstances of the case before it, rightly exercised its jurisdiction in setting aside the finding recorded by both the courts below. It goes on to say that, lack of details in the pleading cannot be the reason to set aside concurrent finding of facts. The appeal before the Supreme Court was from a second appeal.
Hari Singh (supra) was followed in Joseph John Peter Sandy (supra).
Since I have found that, the defendant Nos. 1 and 2 have taken a specific stand as to concealment of material facts in the written statement and that, an issue with regard to the same was framed evidence, if any, with regard thereto can and should be considered.
What would constitute suppression of a material fact in a contract of insurance of the nature involved in the instance suit requires consideration. Insurance coverage involved in the instant suit is of flood. The factory of the plaintiff was flooded. The Defendant Nos. 1 and 2 claim that, they are not liable since the plaintiff suppressed various material facts from them. In fact, the Defendant Nos. 1 and 2 allege that, the plaintiff suppressed 3 (three) vital facts from them.
First fact alleged to be suppressed is of topography. The Defendant Nos. 1 and 2 claim that, the factory of the plaintiff is situate at a low lying area and that the same is within the knowledge of the plaintiff. In spite of such knowledge, the plaintiff suppressed the same from the defendant Nos. 1 and 2 while obtaining the flood coverage.
That the factory of the plaintiff is situate at a low lying area cannot be disputed. The plaintiff claims that, no evidence in this regard was led by the Defendant Nos. 1 and 2 excepting giving suggestions to the witnesses. I find that, there are two reports of the surveyor being Exhibits 'BU' and 'I'. Such survey reports state that, the factory of the plaintiff is situate at a low lying area and being susceptible to flooding. The survey reports are not disputed by the plaintiff. Therefore, in my view, there is ample evidence on record to establish that, the factory of the plaintiff is situate at a low lying area.
The next two questions are whether such fact is material and whether plaintiff suppressed the same from the Defendant Nos. 1 and
2. When a policy of insurance for flood is applied for, in my view, topography of the property involved, is material. However, the proposer must be aware of the topography to intimate the same to the insurer. In the instant case, the plaintiff is a manufacturer of motor vehicle and has a factory situate at a place, which is low lying. The plaintiff experienced inundation of the water on previous rainfalls occurring at the factory premises. The nature of the topography is known to the plaintiff. The plaintiff also claims that the topography of its factory is in public domain.
There is no evidence on record to suggest that, the plaintiff communicated the topography of its factory to the Defendant Nos. 1 and 2, while obtaining the insurance coverage for flood. The plaintiff submits that, the topography of the factory of the plaintiff is well known as the same is in public domain. Since such information is in public domain, the plaintiff, as the proposer for an insurance coverage for flood, is not obliged to state the topography of its factory to the Defendant Nos. 1 and 2.
A contract of insurance is based on utmost good faith. This principle requires a proposer not to suppress any information, which is relevant and material for the insurance coverage sought for from the insurer. Once it is found that, topography of a factory, in the facts and circumstances of the instant case, is relevant and a material fact requiring communication of the same by the plaintiff to the Defendant Nos. 1 and 2, it would not be a plea available to the plaintiff to state that, such information is in public domain. Principle of utmost good faith, in my view, requires a proposer to intimate to the insurer a material fact even though such fact may be in the public domain, to bring such fact to the notice to the insurer for the insurer to consider the same. A failure to do so, will be a breach of the principle of utmost good faith.
The Defendant Nos. 1 and 2 in the written statement took the point of concealment the labour problem at the factory during the material point of time as well as the inundation of the factory again at the material point of time.
So far, as the first allegation as to the suppression of labour problem is concerned, the plaintiff contends that, the same was made known to the Defendant Nos. 1 and 2 by the letter dated September 19, 1978. This letter is marked as an Exhibit '2A'. The next is a letter dated September 25, 1978, being Exhibit-"BC". Exhibit-"BC" is a letter dated September 25, 1978, written by the plaintiff to the Defendant No. 1, referring to the letter dated September 19, 1978, informing the Defendant Nos. 1 and 2 that, the factory of the plaintiff was under
strike from September 25, 1978. It goes on to say that, the plaintiff will advise the Defendant No. 1 as and when the same is withdrawn. Evidence on record discloses that, the plaintiff declared lock out at the factory on September 25, 1978. Reference in this regard can be made to the answers given by the witness of the plaintiff to question No. 1089. The witness of the plaintiff went on to say that, the car division of the plaintiff was under lock out.
The plaintiff claims to have sent the cheque for the premium for flood coverage on September 26, 1978. The plaintiff declared lock out at its factory premises on September 25, 1978. Again in my view, the declaration of the lock out is a material fact, which the plaintiff was required to intimate to the Defendant Nos. 1 and 2. Existence of labour problem at the factory when the first premium for flood insurance is claimed to be made over, assumes relevance and importance as well as the same is a material fact as such vital information influences the mind of a product insurer in deciding as to whether to accept or not to accept the risk.
The third ground of suppression and/or concealment alleged by the Defendant Nos. 1 and 2 in the written statement is that of the factory of the plaintiff being inundated by water on September 26, 1978 itself. However, the evidence on record particularly the two surveyor's reports speak of water entering into the factory premises of the plaintiff in the night of September 26, 1978. Therefore, if the version of the plaintiff, that it sent a proposal on September 26, 1978 is accepted by the Court, then also the plaintiff cannot be saddled with the allegation of suppression of inundation of its factory on September 26, 1978 at the time of making of the proposal since inundation happened subsequent to the sending of the proposal by the plaintiff to the Defendant No. 1.
The contract of flood insurance between the Defendant Nos. 1 and 2 on one part and the plaintiff on the other stands vitiated by reasons of the suppression and concealment.
Having found that the contract of insurance stands vitiated by reason of concealment and/or suppression of a material fact by the insured, the next question as to whether the defendant Nos. 1 and 2 are entitled to repudiate the contract, becomes relevant. The Defendant Nos. 1 and 2 cite Sarojam (supra) for the proposition that, it is the duty of the proposer disclose a material fact and that not having done so the insurer is entitled to repudiate the contract.
Sarojam (supra) is with regard to a health insurance. The division bench of the Kerala High Court in Sarojam (supra) is of the view that, a contract of insurance is uberrimae fidei and that a person seeking insurance is duty bound to disclose all material facts relating to risk involved in the policy of insurance.
Suraj Mal Ram Niwas Oil Mills (supra) is of the view that, an insurer is entitled to repudiate the contract upon the insured committing a breach of any of the terms and condition of the policy of insurance.
In Amravati District Central Co-operative Bank Limited (supra), the Supreme Court is of the view that, in interpreting documents relating to a policy of insurance, the duty of the court is to interpret the words in which the contract is expressed by the parties. It is not for the court to make a new contract, however reasonable, if the parities have not made it themselves. The terms of the agreement have to be strictly construed to determine the extent of liability of the insurer.
The plaintiff is guilty of concealment of material fact. The Defendant Nos. 1 and 2 ceased to be liable under the policies. The issue Nos. 3(a) and (d) as well as 8 are answered in the affirmative in favour of the Defendant No. 1 and against the plaintiff.
Issue Nos. 1(a) to (c), 2(a), 2(b) and 3(b), 3(c) are taken up together. The extension of the six several policies of insurance relate to flood. There is no dispute that, the plaintiff applied for flood insurance. The dispute is as to whether such insurance has become voidable due to various factors or was void not.
The defendants contend that, the letter of the plaintiff dated September 26, 1978 with which the cheque for the premium was deposited by the plaintiff was not delivered by the plaintiff to the Defendant No. 1 on September 26, 1978. The letter and the cheque were received by the Defendant No. 1 at best on September 29, 1978. There is no evidence according to the Defendant No. 1 that, the letter dated September 26, 1978 and the cheque was received by the Defendant No. 1 on September 26, 1978. The Defendant No. 1 relies upon clause 2 of the policy of insurance. Referring to clause 2 of the policy of insurance the Defendant No. 1 contends that, no receipt was issued to the plaintiff on September 26, 1978. The policy was issued on October 17, 1978. Referring to clause 2 and Section 64VB of the Insurance Act, 1938, The Defendant No. 1 contends that, no risk can be assumed prior to October 17, 1978. Taking recourse to clause 2 of the policy and Section 64VB of the Insurance Act, 1938 the Defendant No. 1 contends that, the endorsement on the insurance policy that the risk date commences from September 28, 1978 is void, as the same is against Section 64VB of the Insurance Act, 1938. Referring to various answers given by the witness of the plaintiff, the Defendant No. 1 contends that, the representative of the Defendant No. 1 was not in his office till September 29, 1978. Therefore, there was no question of the Defendant No. 1 receiving the letter dated September 26, 1978 or the cheque for the premium on September 26, 1978.
The Defendant No. 1 relies upon Volume 101 Company Cases page 21 (Mrs. Hiralaxmi v. LIC) to submit that, mere encashment of the cheque sent along with the proposal does not attach any risk to the insurer.
The plaintiff contends that, the policy is valid from September 26, 1978 and this cannot be factually disputed in view of the endorsement made by the Defendant No. 1 on the policy itself. This endorsement has never been disputed nor challenged in any contemporaneous correspondences or by way of a counter-claim. In the criminal proceedings it was alleged that, the letter dated September 26, 1978 was antedated between September 28, 1978 and September 29, 1978. The criminal proceedings resulted in acquittal. On the contrary, it was established that, the cheque was received on September 26, 1978.
The plaintiff contends that, there is no evidence on record to prove that, the cheque or the letter dated September 26, 1978 was antedated. The plaintiff contends that, the evidence on record corroborates the decision and observation of the Criminal Court. The plaintiff relies upon Section 46 of the Negotiable Instruments Act, 1881 and contends that, a cheque is deemed to be paid upon delivery. Since the cheque was delivered on September 26, 1978, according to the plaintiff, the cheque is deemed to be paid on that date.
On Section 64VB of the Insurance Act, 1938 the plaintiff relies upon All India Reporter 2006 Karnataka page 240 (Yellamma v. Bhy Sukhdev Singh & Anr.), All India Reporter 2009 Madras page 124 (National Insurance Co. Ltd., Attur v. Deivanai & Ors.) and 2008 Volume 14 Supreme Court Cases page 598 (Deokar Exports Private Limited v. New India Assurance Company Limited).
The plaintiff also points out that, even at the time of filing of the suit the defendants did not repudiate the contract and remained silent with regard to the claim. The plaintiff relies upon 1993 Calcutta Law Times Volume 1 High Court page 47 (M/s. Bholenath Cold Storage v. The National Insurance Co. Ltd. & Ors.) for the proposition that, the concept of implied rejection is wholly unwarranted and uncalled for.
On the decision of the Criminal Court, the Defendant No. 1 contends that, such decision does not bind the Civil Court and relies upon 2004 Volume 1 Supreme Court Cases page 438 (Shanti Kumar Panda v. Shakuntala Devi) for the proposition that, a decision of the Criminal Court does not bind the Civil Court but a decision of the Civil Court binds the Criminal Court. The Defendant No. 1 relies upon All India Reporter 1955 Supreme Court page 566 (Anil Behari v. Latika Bala Dassi) for the proposition that, a previous judgment of the Criminal Court is not admissible in evidence in a civil action of the facts stated therein. The plaintiff refers to 2009 Volume 1 Madras Law Journal page 363 (K. Subramani v. Director of Animal Husbandry, Chennai) for the proposition that if any material is available in the case, which would corroborate or strengthen in the decision of the Criminal Court, then, there is no embargo for the Civil Court to place reliance thereon.
The first question, according to me requiring answer on the issues taken up for consideration is whether the letter dated September 26, 1978 enclosing the cheque of the premium was delivered by the plaintiff to the Defendant No. 1 on September 26, 1978 itself or not. The evidence on record in this regard does not disclose that, the plaintiff obtained any receipt for the said letter to be delivered on September 26, 1978. There is oral testimony of the witness of the plaintiff with regard to delivery of the letter. The witness of the plaintiff claims that, the letter and the cheque were sent through of its employees to Mr. Jain of the Defendant No. 1 on September 26, 1978. This fact is disputed by the Defendant No. 1. It is pointed out by the Defendant No. 1 that Mr. Jain did not attend office on September 26, 1978. In answer to question Nos. 298 to 355 the witness of the plaintiff states that, Mr. Jain of the Defendant No. 1 did not receive the cheque till September 29, 1978. The delivery of the cheque was, therefore, complete on September 29, 1978. There is no material on record to show that, the cheque and the letter dated September 26, 1978 were sought to be tendered to the Defendant No. 1 on September 26, 1978 itself. Even on the basis of the evidence of the plaintiff the cheque as well as the letter was received on September 29, 1978.
Mrs. Hiralaxmi (supra) considers Section 64VB of the Insurance Act, 1938 and is of the view that, in a life insurance policy mere encashment of the cheque sent along with the proposal does not attach any risk to the insurer. Its acceptance has to be communicated. In the facts of this case, the cheque for the premium was received by the Defendant No. 1 on September 29, 1978. The flood insurance will, therefore, if it otherwise is not vitiated, will commence from September 29, 1978 and not earlier in terms of Section 64VB of the Insurance Act, 1938.
The plaintiff claims that, the finding of the Criminal Court with regard to the receipt of the cheque on September 26, 1978 is sufficient evidence of its delivery and in absence of any other evidence to the contrary the Court should accept such finding of the Criminal Court.
Anil Behari (supra) was considering an application for revocation of a grant of probate. The Supreme Court is of the view that, a judgment in a criminal proceedings is relevant only to show that there was such a trail resulting in the conviction and sentence.
Shanti Kumar Panda (supra) is of the view that, a decision by a Criminal Court does not bind the Civil Court while a decision by the Civil Court binds the Criminal Court. An order passed by the Executive Magistrate in proceedings under Sections 145 and 146 of the Criminal Procedure Code is an order by a Criminal Court and that too based on a summery enquiry. The order is entitled to respect and weight before the competent Court at the interlocutory stage. At the stage of final adjudication of rights, which would be on the evidence adduced before the Court, the order of the Magistrate is only one out of several pieces of evidence. It goes on to say that, the reasoning recorded by the Magistrate or other findings arrived at by him have no relevance and are not admissible in evidence before the competent Court and the competent Court is not bound by the finding arrived at by the Magistrate even on the question of possession though, as between the parties, the order of the Magistrate would be evidence of possession. In a civil action between different parties the finding of a Criminal Court cannot be treated as binding except to the extent of being evidence of the factum of a particular judgment having being delivered by the particular Criminal Court on a particular date. The competent Court has the jurisdiction and would be justified in arriving at a finding inconsistent with the one arrived at by the Executive Magistrate even on the question of possession.
K. Subramani (supra) is rendered by the Madras High Court in a proceedings under the Motor Vehicles Act. It is of the view that if a party to the case relies upon a decision of a Criminal Court and insists the Civil Court to give credence to such decision, it is incumbent upon the party to gather further materials in the case, which would support the observations and the decisions of the Criminal Court. If any material is available in the case, which would corroborate or strengthen the decision of the Criminal Court, then, there is no embargo for the Civil Court to place reliance upon it.
In the facts of the instant case the plaintiff relies upon the finding of the Criminal Court that the letter dated September 26, 1978 and the cheque enclosed therewith was received by the plaintiff on September 26, 1978 itself. Apart from this finding of the Criminal Court there is no other material on record to substantiate such finding or to corroborate the same. The only evidence is that of the witness of the plaintiff claiming that, an employee of the plaintiff delivered the letter dated September 26, 1978 along with the cheque to the Defendant No. 1 at its office on September 26, 1978 itself. The person who delivered such letter has not been called as a witness. There is no document showing that the Defendant No. 1 received the letter dated September 26, 1978 on that date itself. On the contrary, the witness of the plaintiff states that, the representative of the Defendant No. 1 Mr. Jain came across the letter on September 29, 1978.
Applying the ratio of the three previous decisions referred above, it is for the plaintiff to adduce further evidence to show that the finding of the Criminal Court with regard to the receipt of the notice dated September 26, 1978 on that date itself.
I have no evidence before me to say that, the Defendant No. 1 received the letter dated September 26, 1978 and the cheque enclosed thereto on September 26, 1978. Clause 2 of the insurance policy requires a receipt to be granted by the Defendant No. 1. There is no receipt for the premium paid by the Defendant No. 1 on September 26, 1978. Clause 2 of the policy is a follows:-
"2. No payment in respect of any premium shall be deemed to be payment to the Company unless a printed form of receipt for the same signed by an Official or duly appointed Agent of the Company shall have been given to the Insured."
Section 64VB of the Insurance Act, 1938 lays down as follows:-
"64VB. (1) No insurer shall assume any risk in India in respect of any insurance business on which premium is not ordinarily payable outside India unless and until the premium payable is received by him or is guaranteed to be paid by such person in such manner and within such time as may be prescribed or unless and until deposit of such amount as may be prescribed, is made in advance in the prescribed manner.
(2) For the purposes of this section, in the case of risks for which premium can be ascertained in advance, the risk may be assumed not earlier than the date on which the premium has been paid in cash or by cheque to the insurer.
Explanation. ~ Where the premium is tendered by postal money-order or cheque sent by post, the risk may be assumed on the date on which the money-order is booked or the cheque is posted, as the case may be.
(3) Any refund of premium which may become due to an insured on account of the cancellation of a policy or alteration in its terms and conditions or otherwise shall be paid by the insurer directly to the insured by a crossed or order cheque or by postal money-order and a proper receipt shall be obtained by the insurer from the insured, and such refund shall in no case be credited to the account of the agent.
(4) Where an insurance agent collects a premium on a policy of insurance on behalf of an insurer, he shall deposit with, or despatch by post to, the insurer, the premium so collected in full without deduction of his commission within twenty-four hours of the collections excluding bank and postal holidays.
(5) The Central Government may, by rules, relax the requirements of sub-section (1) In respect of particular categories in insurance policies."
Section 64VB of the Insurance Act, 1938 lays down that an insurance policy takes effect from the date of payment of the premium. The plaintiff relies on Section 48 of the Negotiable Instruments Act, 1881 and submits that, a cheque is deemed to be paid upon delivery.
Factually I have found that there is no evidence on record to show that the cheque was delivered to the plaintiff on September 26, 1978. I find from the evidence of the witness of the plaintiff that the Defendant No. 1 received the letter dated September 26, 1978 as well as the cheque enclosed thereto on September 29, 1978. The cheque being delivered on September 29, 1978 payment in accordance with Section 48 of the Negotiable Instruments Act, 1881 is, therefore, on September 29, 1978. The endorsement on the policy that it will take effect from September 26, 1978 will not assist the plaintiff. The plaintiff cannot enforce an insurance policy contrary to Section 64VB of the Insurance Act, 1938. Since an insurance policy will commence from the date of receipt of the premium, the plaintiff cannot be allowed to contend that it had in its favour an insurance policy commencing from a date prior to the payment of premium.
Yellamma (supra) is of the view that under Section 64VB of the Insurance Act, 1938 a policy can be issued against the issuance of a cheque and the liability commences from the date of issuance of a cheque and not from the date of its encashment.
In National Insurance Co. Ltd. (supra) on the facts of that case it was found that, the cheque was made over to the Insurance Company on February 20, 1992 and the accident took place on February 23, 1992. Although the policy was issued on March 2, 1992 the same will not come into the way of the accident being covered under the policy as the cheque was with the Insurance Company on February 20, 1992 prior to the occurrence of the incident.
In Deokar Exports Private Limited (supra) the Supreme Court is of the view that, the insurer does not assume risk unless and until premium is received, granted or deposited. It is also of the view that, a policy to assume a risk from a retrospective date can be issued provided such date is not earlier than the date on which premium has been paid in cash or by cheque to the insurer. The facts of the instant case disclose that the insurance policy issued in October 1978 to say that the policy commences from September 26, 1978. The cheque for the premium, however, was received by the Insurance Company on September 29, 1978. In view of Section 64VB of the Insurance Act, 1938, particularly the explanation therein, and in view of the ratio of Deokar Exports Private Limited (supra) the Defendant No. 1 could not have issued a policy giving a date prior to the date of receipt of the insurance premium.
The plaintiff submits that if the proposal of insurance is accepted retrospectively, the policy is not rendered invalid. According to the plaintiff, policies take effect from the commencement of the day mentioned on the policy. In the facts of the instant case, according to the plaintiff, the policies took effect from midnight of September 25, 1978 well before the flood waters entering into the factory premises. The plaintiff relies upon All India Reporter 1995 Madhya Pradesh page 171 (The Oriental Fire and General Insurance Company Limited v. Ramsingh & Ors.) and 1990 Volume 2 Supreme Court Cases page 680 (New India Assurance Company v. Ram Dayal & Ors.).
The Oriental Fire and General Insurance Company Limited (supra) deals with an accident with regard to a motor vehicle. In the facts of that case it first found that, the plea of fraud or misrepresentation or concealment of material fact cannot be based on suspicion and conjectures. It goes on to say that, a policy taken on a particular day commences from the previous midnight. On facts it was found that, the policy was not avoided nor cancelled nor the amount of premium refunded within 15 days repudiating the liability.
New India Assurance Company (supra) holds that, when a policy is taken on a particular date, its effectiveness is from the commencement of that date.
The facts of this case disclose that the cheque was received by the Defendant No. 1 on September 29, 1978. The flood waters entered into the factory premises on the night of September 26, 1978. Although the policy is set to commence retrospectively from September 26, 1978, by virtue of Section 64VB of the Insurance Act, 1938, the policy will commence from September 29, 1978 when the cheque was received by the Defendant No. 1. The plaintiff did not have a flood insurance policy on the date when flood waters entered its factory premises.
The Defendant No. 1 relies upon 1984 Volume 2 Supreme Court Cases page 719 (Life Insurance Corporation of India v. Raja Vasireddy Komalavalli Kamba & Ors.) and submits that, mere receipt and retention of premium does not give rise to a contract. Execution of policy is not an acceptance according to the Defendant No.
1. For the acceptance to be complete, the same must be communicated to the insured only then the contract is complete.
Life Insurance Corporation of India (supra) is of the view that, mere receipt and retention of premium until after the death of the insured or mere preparation of the policy document is not acceptance and, therefore, do not give rise to a contract. The general rule is that the contract of insurance will be concluded only when the party to whom an offer has been made accepts it unconditionally and communicates his acceptance to the person making the offer. In the facts of the instant case, the insurance premium was received on September 29, 1978 after the flood waters had inundated the factory premises.
The plaintiff relies on M/s. Bholenath Cold Storage (supra) and submits that, the same Defendant No. 1 did not repudiate the contract for insurance for another insured. M/s. Bholenath Cold Storage (supra) ultimately directs the Insurance Company to consider the claim of the insurer and to dispose of the same in accordance with law. The decision was rendered in a writ petition. Such decision does not say that the Insurance Company was liable. In the instant case the Insurance Company has not paid requiring the plaintiff to file the instant suit. Granted that there was no repudiation of the contract of insurance by the Insurance Company in writing prior to the suit being filed at the same time the Insurance Company had neither paid nor settled the claim of the plaintiff, necessitating the plaintiff to file the instant suit. The Defendant No. 1 is now contesting the claim of the plaintiff.
There are six several policies of insurances involved. All the policies relate to various risks apart from flood. So far coverage for flood is concerned the same stand vitiated. The other risks remain valid.
In view of the discussion above, so far issue No. 1(a) is concerned, the Defendant Nos. 1 and 2 insured the plaintiff against the perils and the properties mentioned in the plaint, with the flood coverage being initiated. Issue Nos. 1(b), 1(c) and 2(a) are answered in the negative and against the plaintiff. Issue No. 2(b), 3(b) and 3(c) are answered in the affirmative in favour of the Defendant No. 1.
Clause 11 of the insurance policy requires an insured to give notice of the happening of any loss or damage to the insurer within 15 days after the loss or damage was occasioned. Clause 11 also provides that no claim under the policy shall be payable unless the terms of the/and the condition of clause 11 are complied with.
Exhibit 'BY' is a notice dated September 19, 1978. Exhibit 'BY' is issued by the factory Manager of the plaintiff. By such notice the plaintiff declared a lock out in its car division in all shifts effective from 2.15 P.M. on September 19, 1978 until further notice. Exhibit 'BY' was not intimated to the Defendant No. 1. At least there is no evidence on record to show that such notice was delivered to the Defendant No. 1 by the plaintiff.
Exhibit 'BC' is a letter dated September 25, 1978 addressed by the plaintiff to the Defendant No. 1 with a copy thereof to the Defendant No.
2. By this letter the plaintiff refers to an earlier letter dated September 19, 1978 and says that, the factory of the plaintiff was under strike from September 24, 1978. The plaintiff, therefore, informed the Defendant Nos. 1 and 2 of the strike at its factory from September 24, 1978 as will appear from Exhibit 'BC'. The lock out was lifted on October 5, 1978 as will appear from Exhibit 'BZ'. The decision to withdraw the strike and lock out was communicated to the Defendant No. 1 by a letter dated October 5, 1978 being Exhibit 'CG'.
The plaintiff claims loss and damages on account of this strike. Policy No. 3200020 is a policy covering loss on account of strike.
Flood waters had entered into the factory premises on and from September 26, 1978. The flood waters remained till October 21, 1978. The strike and lock out period is between September 19, 1978 till October 6, 1978. Since the factory was flooded for the period between September 27, 1978 till October 21, 1978 and in the meantime the lock out being lifted on October 3, 1978. There is no evidence before me to say the quantum of loss, if any, suffered by the plaintiff for the period of commencement of the strike till the flood waters entered the factory premises. There is also no evidence before me to say the quantum of loss suffered by the plaintiff due to strike and labour unrest during the period when flood water remained at the factory premises notwithstanding the flooding of the factory premises. I am, therefore, unable to allow the claim of the plaintiff on this account. The plaintiff is not entitled to any compensation for the policies on account of loss suffered due to strike and lock out. Issue Nos. 4, 5(a) to (c) are answered accordingly.
Issue Nos. 6(a), 6(a), 7 and 9 are not dealt with in view of the findings arrived at with regard to the other issues. So far as issue No. 10 is concerned, I find that the plaintiff is not entitled to any relief in this suit.
C.S. No. 799 of 1979 is dismissed, however, without any order as to costs.
[DEBANGSU BASAK, J.]