Delhi District Court
M/S. San Bevarages Pvt. Ltd vs The New India Assurance Co. Ltd on 17 March, 2008
IN THE COURT OF SH. CHANDER SHEKHAR: ADDL. DISTRICT JUDGE:
DELHI.
Suit No. CS/214/07
In RE:-
M/S. San Bevarages Pvt. Ltd.,
having its Registered. Office at:-
BR-66-C, Shalimar Bagh,
Delhi-88.
------------------Plaintiff
Versus
The New India Assurance Co. Ltd.,
having its Registered Office at :-
87, Mahatma Gandhi Marg,
Fort, Mumbai and its Branch Office at :-
Gulab Bhawan, Bahadurshah Zafar Marg,
New Delhi-110002.
----------------Defendant
DATE OF INSTITUTION:-28.02.2005
RESERVED FOR JUDGMENT ON:- 07.03.2008
DATE OF JUDGMENT:- 17.03.2008
JUDGMENT:-
1. A suit for recovery of Rs.11,71,950/- has been filed by the plaintiff against the defendant. The plaintiff is a private limited company and the present suit has been instituted through its Director Sh. Sanjay Bhasin who is duly authorized 1 vide Board Resolution dated 12.03.04 in his favour. As per the averments made in the plaint, the plaintiff is the authorized agent of M/S. Pearl Drinks engaged in the distribution of the cold drinks. Cash is collected by the plaintiff from various retailers upon distribution of the stock. The collected cash after reconciliation of accounts is deposited with their accountant to be deposited with the bank on the next morning. Since the huge amount of cash is frequently transported from the office of the plaintiff to the bank, the plaintiff got itself insured with the defendant. The insurance policy commenced on 12.04.98 and has been renewed every year till 11.04.01. As the cash transportation increased substantially, the plaintiff by way of abundant precaution took another additional policy on 04.09.2000, insuring the cash in transit to the tune of Rupees twenty lacs.
2. As per the averments in the plaint, on 08.07.02 the accountant of the plaintiff, Sh. Surjit Jha was transporting a sum of Rs.9,17,000/- in cash and two cheques in the sum of Rs.1,81,831/- and Rs.5,044/- in his briefcase to be deposited with the bank. Their Maruti Esteem Car was on the way laid at Guru Teg Bahadur Nagar at about 10.30 am and his briefcase was snatched from him. A complaint was lodged immediately with the Police Station Mukherjee Nagar which culminated in FIR No. 318/02. An intimation was also given to the defendant company on the same day.
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3. The plaintiff subsequently received a sum of Rs.60,000/- recovered in this case by the police authorities. It is also stated that the plaintiff had adhered to the route and other terms and conditions of the policy which was in force uptil 03.09.02. Though a surveyor was appointed by the defendant and the plaintiff took steps to submit all the documents but the defendant failed to release the amount claimed.
4. The defendant has filed the written statement wherein it has denied the claim of the plaintiff mainly on the ground that the repudiation of the claim by the defendant is as per the terms and conditions of the policy. The case relates to Miscellaneous-Non-Traditional Business-Money Insurance Policy issued to the plaintiff. The plaintiff approached the defendant on 12th April, 1999 for the issuance of Money in Transit Insurance Policy and the policy bearing no. 48- 99-2910 was issued for the period from 12th April, 1999 to 11th April, 2000, which was renewed for the period from 2001-2002. The policy no. 48-01-402 for the period from 4th September 2001 to 3rd September 2002 is continuously renewed policy no. 48-00-312 and previous policies. The Proposal Form submitted at the time of insurance of first policy dated 12th April, 1999 states that the person carrying money will be accompanied by security gunman on the vehicle. In all these policies, it is clearly mentioned that " Details of armed guard (s), any other protection: Yes". It is further stated that it came to the 3 knowledge of the defendant that there was involvement of an employee of the Plaintiff at the time of robbery. Hence, for these reasons and in view of the fact that there was specific breach of the terms and conditions of the policy and declaration made in the Proposal Form, therefore, repudiation claim of the plaintiff on 26th May, 2004. The defendant further stated that no proposal was submitted against the later policies as first proposal remained base for all renewal of the policies. It is further submitted that on 4th September, 2000 the insured gave premium for sum insured of rupees ten crores as the sum had already been exhausted under policy No. 48-018 as happened in the previous year and the defendant issued fresh policy No. 48-00-312 instead of issuing extra-endorsement for increasing the sum insured for another rupees ten crores.
5. The plaintiff filed the replication to the written statement of defendant which was taken on record as per the order sheet dated 21.08.06. Plaintiff in his replication has re-iterated the contents of the plaint and denied the contents of the written statement.
6. The defendant was proceeded exparte and the Exparte Judgment and Decree was passed on 26.07.2005. However, lateron, on the application of the defendant exparte Judgment and Decree was set-aside vide order dated 28.10.2005.
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7. From the pleadings of the parties and documents produced on record, following issues were framed on 9th March, 2006:-
(i) Whether repudiation of claim by the defendant suffers from any material irregularity? OPP
(ii) Whether plaintiff is entitled to the suit amount? OPP
(iii)Whether plaintiff is entitled to any interest on the suit amount, if so, for what period and at what rate?OPP
(iv) Relief.
8. The plaintiff has examined its Director Sh. Sanjay Bhasin as PW1 and Assistant Ahmad Sh. Rajiv Kumar as PW2 who brought the file containing the FIR, PW3 Smt. Shyama Panth, Addl. SHO PS Mukherjee Nagar, Delhi as PW3 who has proved copy of FIR EX. PW3/1 and PW4 Sh. Raghuraj Singh- stated to be an ex-employee of the plaintiff. Defendant has examined its Dy. Manager Sh. S. K. Soni as DW1 as its sole witness.
9. I have heard arguments as submitted by ld. counsels for the parties and gone through the entire material on record. Now, on the basis of the arguments submitted and material proved on record, I proceed to decide the issues as follow:-
10.ISSUES NO. 1 & 2:-
(i) Whether repudiation of claim by the defendant suffers from any material 5 irregularity? OPP
(ii) Whether plaintiff is entitled to the suit amount? OPP Since the facts involved in both the Issues are interconnected and interrelated with one another,so I take both the issues together for disposal. The onus to prove Issues No. 1 and 2 is on the plaintiff. Letter EX. PW1/18 dated 26.05.04 written by the defendant to the plaintiff is the most material document for the purpose of adjudication of these issues and this case which is reproduced herein below for the proper appreciation of the facts of the case:-
"26.05.2004 M/S. San Baverages Pvt. Ltd., 20/21/1, Kamalpur, Sant Nagar, Burari, Delhi.
Re:- Pol No. 48/402, Claim No. 48/02-03/34 date of loss 8.7.2002.
Sir, Refer to above and the formal claim you have lodged in respect of cash in transit loss under the above policy. Please note that the competent authority has agreed to repudiate the claim as it fall under the policy exclusion no. 3 read as under:-
Loss of money where the insured or his employee is involved as principal or accessory except loss value to fraud or dishonesty of the cash carrying employee of the insured occuring whilst in transit and discovered within 48 hours and breach of policy condition by not accompanying armed guard while 6 carrying the cash."
This is for your information and record."
Sd/-
11.DW1 Sh. S. K. Soni, Assistant Manager of the defendant while tendering his evidence by way of affidavit EX. DW1/X has re-iterated the contents of the written statement. This witness in his cross-examination stated that parties are governed by the contract in the form of Insurance Policy and the policy is issued on the basis of Proposal Form. He has also admitted that it is mandatory to fill proposal form for a fresh policy. Generally the duration of fresh policy is for one year but the same can be for lesser period also. The policy can not be for a period more than one year except under one or two conditions, which are mainly the project insurance cases. He has also admitted that policy EX. PW1/4 was renewed by EX. PW1/6 on its expiry. Ex. PW1/4 is a policy having policy period between 4th September,2000 to 03.09.01 and EX. PW1/6 which is also exhibited as EX. PW1/5 is having the policy period from 4th September,2001 to 03.09.02. Earlier Policy EX. PW1/3 was for the period of 12th April, 2000 to 11.04.2001. He also admitted that during the subsistence of policy EX. DW1/4 the plaintiff took another policy EX. PW1/6. However, he voluntarily stated that it was in lieu of mid term increase.
Apart from other facts as stated in the plaint, PW1 in his evidence has also stated that as per the terms and conditions of the policy for the period 04.09.2001 to midnight of 03.09.2002, no arm guard was required to be accompanied with the accountant and policy required an armed guard to be posted at the office of the plaintiff, which condition was complied with. It is further deposed in his affidavit that the services of Sh. Raghuraj Singh were terminated with effect from 5th June, 2002, though,he was neither assigned 7 any duty in respect to the sales dealing or deposit of cash with the bank nor ever dealt with cash of the plaintiff. However, this witness in his cross- examination has stated that they have not placed on record any documentary evidence to show that the termination letter EX. PW1/19 had been dispatched to Raghuraj Singh in June, 2002. He also admitted that name of Sh. Raghuraj Singh continued in their attendance register till August,2002. PW4 Sh. Raghuraj Singh in his cross-examination by ld. counsel for the defendant has admitted that in July,2002 he was not on payroll of plaintiff company. However, he admitted that in July, 2002 also his services were neither terminated nor he had resigned from plaintiff company.
12.In the case of Modern Insulator Ltd., M/S. Vs. Oriental Insurance Co. Ltd., AIR 2000 Supreme Court 1014, it has been observed as under:-
"It is the fundamental principle of insurance law that utmost good faith must be observed by the contracting parties and good faith forbids either party from non-disclosure of the facts which the parties known. The insured has a duty to disclose and similarly it is the duty of Insurance Company and its agents to disclose all material facts in their knowledge since obligation of good faith applies to both equally."
13.In the case of United India Insurance Co. Ltd. Vs. M/S. M.K.J. Corporation AIR 1997 Supreme Court 408, respondent was holding policies and due to employees' strike, leather in process was damaged to the spoilage. Claim was lodged and the payment was directed to be made. Insurance Company challenged such order and it was contended that insurance did not cover loss or damages resulting from total or partial cessation of work. It was contended that as per recommendations of the Tariff Advisory Committee (TAC) such 8 claim could not have been awarded in view of the specific exclusion clause as recommended by TAC. It was also contended that TAC was a statutory authority and insurance Company was bound by the same and such recommendation were to be assumed as integral part of the policies. Such contention was repelled by the Hon'ble Supreme Court observing as under:-
"We are unable to agree with the learned counsel. It is true that the Advisory Committee is a statutory body which has gone in and recommended the policies for riot, strike and malicious damages. The clause would exclude the insurance company from the coverage, if the loss or damage resulted from total or partial cessation of any process of operation or omissions of any kind which would include strike by its workers. This may be due to either the operational inconvenience due to non-supply of the electricity or strike by the employees or any cause but the insured must be put on notice of this clause.
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 contrary. 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.
The duty of good faith is of a continuing nature. After 9 the completion of the contract, no material alteration can be made in its terms except by mutual consent. The materiality of a fact is judged by the circumstances existing at the time when the contract is concluded. In the present case, the introduction of the Tariff Advisory Committee document materially affects the terms of the policy, resulting in the denial of the very indemnity of claim. And this was what the appellant sought to do, at the stage of clearing of the complaint. The Commission rightly rejected the appellant's plea. Notwithstanding this, on behalf of the appellant, it was insisted that the instructions of the Tariff Advisory Committee from part of the contract. Admittedly, the appellant-Insurer had not incorporated the above quoted clause as part of the policy undertaken with the insured. Consequently, the insured is not bound by this exclusionary clause of liability."
14.It is admitted by the defendant in para 4 of the written statement while replying on merit that defendant issued fresh policy. It is also a fact on the record that there is no 'Proposal Form' attached with the fresh policies. There is also no document on record wherein the exclusion clauses exists as mentioned in document EX.PW1/18. It is evident from the evidence on the record that exclusion clause has not been proved by way of any documentary evidence to be a part of the fresh Insurance Policies EX. PW1/4 and EX.PW1/6 and these clauses are not mentioned in these policies. Insurance Company ought to have got the new proposal form filled-up with the issuance of the new policies EX. PW1/4 and EX. PW1/6. Insurance Company should have also disclosed about the exclusion clauses by incorporating the exclusion clauses in the policies itself. There is no evidence to this effect on the record of this court to 10 prove that the Insurance Company disclosed to the plaintiff by incorporating the exclusion clauses in the Polices EX. PW1/4 and EX. PW1/6 which is also exhibited as EX. PW1/5. In these circumstances, I am of the opinion that in the absence of terms and conditions, which are mentioned as exclusion clause and in the absence of evidence to prove that these clauses regarding the involvement of the employee or not accompanying the armed guard in the Insurance Policy, these can not be made applicable to the case of the plaintiff and there is no breach of terms and conditions of the policy as stated by the defendant in its evidence and the written statement. Therefore, I do not find any specific breach of the terms and conditions of the policy on the part of the plaintiff. I also do not find any cogent reason on the record from the side of the defendant to repudiate the claim of the plaintiff vide letter EX. PW1/18. Ld. Counsel for the defendant has relied upon the case titled as Polymat India (P)Ltd. & Another Vs. National insurance Co. Ltd. and others reported in (2005) 9 SC Cases 174 and another case law titled as United India Insurance Co. Ltd. Vs. M/s. Harchand Rai Chandan Lal reported in AIR 2004 SC 4794, the facts whereof are not applicable to the facts of the present case in view the facts as discussed hereinabove. Hence, in view of the above discussions and the law discussed herein-above, I have no hesitation to hold that the repudiation of claim by the defendant suffers from material irregularities. Hence, the plaintiff is entitled to the suit amount. Issues no. 1 and 2 are accordingly, decided in favour of the plaintiff and against the defendant.
15.ISSUE NO. 3 :-
(iii)Whether plaintiff is entitled to any interest on the suit amount, if so, for what period and at what rate?OPP In view of the findings of Issues No. 1 and 2 since repudiation of the claim by 11 the defendant to the plaintiff suffers from material irregularities, the plaintiff is entitled to pendente-lite and future interest at the rate of 9% per annum as per market usage and custom. Issue no. 3 is accordingly, decided in favour of the plaintiff and against the defendant.
16.RELIEF:-
Suit is accordingly decreed for a total sum of Rs.11,71,950/- and plaintiff is also held entitled to pendente lite and future interest at the rate of 9% per annum till its realization with costs. Decree Sheet be prepared. The file be consigned to the record room after completing the necessary formalities.
ANNOUNCED IN OPEN COURT (CHANDER SHEKHAR)
DATED:-17.03.2008 Addl. Distt. & Sessions Judge:
( 2 spare copies attached) Delhi.
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