Delhi District Court
M/S. Kay Dee Industries 02:20:3 vs M/S. Royal Sundram Alliance Insurance ... on 21 December, 2021
IN THE COURT OF MS. SHELLY ARORA
ADDITIONAL DISTRICT JUDGE-01, SOUTH EAST DISTRICT
SAKET COURTS, NEW DELHI
CNR No. DLSE01-002829-2016
CS No. 210267/2016 (old case of 2011) Digitally
signed by
SHELLY
SHELLY ARORA
(10 Year old matter) ARORA Date:
2021.12.23
1. M/s. Kay Dee Industries 02:20:30
30 KM Stone, Kundli +0530
District Sonepat,
Haryana.
2. M/s. Kafila Forge Limited
Having Registered Office at
32, Rajasthani Udyog Nagar,
G.T. Karnal Road,
Delhi - 110033.
Through its Director Shri P.R. Malhotra
...... Plaintiffs
VERSUS
1. M/s. Royal Sundram Alliance Insurance Company Ltd. Rider House, Ground & 1 st Floor, Plot No. 136, Sector 44, Gurgaon, Haryana.
2. M/s. Container Corporation of India Ltd.
Inland Container Depot, NR Tuglakabad, New Delhi - 110020.
...... Defendants
Date of Institution : 04.04.2011
Date of Reserving judgment : 16.12.2021
Date of Judgment : 21.12.2021
CS 10267/16 M/s Kay Dee Industries & Anr. Vs. Royal Sundram Alliance Page 1 of 41
Judgment:
1. The plaintiff no.1 M/s. Kay Dee Industries having merged with
plaintiff no.2 M/s. Kafila Forge Limited has filed the present suit seeking recovery of Rs.39,65,438/- against defendant no.1 M/s. Royal Sundram Alliance Insurance Company Ltd. and defendant no.2 M/s. Container Corporation of India Ltd.
Plaintiff's case
2. It is the case of plaintiff that Plaintiff No.1 is a partnership firm duly registered and Sh. P.R. Malhotra was the registered partner of Plaintiff No.1. Vide an agreement dated 29.10.2010, Plaintiff No.1 merged with Plaintiff No.2.
2.1. Plaintiff No.1 was carrying on business of manufacturing of Motor Vehicle Parts and with its registered office located at Delhi and factory based at District Sonepat, Haryana. Plaintiff No.1 has been supplying motor parts across India and also exporting to other countries.
2.2. Plaintiff No.1 had taken a Marine Cargo Open Policy bearing no.MC00006579 for the period 24.02.2010 to 23.02.2011 from Defendant No.1. As per terms of the policy, which was valid from 24.02.2010 to 23.02.2011, plaintiff No.1 used to deposit the insurance premium in advance and accordingly a sum of Rs.40,000/- was deposited by Plaintiff No.1 on 24.02.2010 and CS 10267/16 M/s Kay Dee Industries & Anr. Vs. Royal Sundram Alliance Page 2 of 41 13.03.2010 against the receipts.
2.3. As per Insurance Policy issued by Defendant No.1, Plaintiff No.1 would declare the shipment and premium lying deposited with Defendant No.1 would be adjusted against the premium payable in respect of the consignment. There was surplus balance with Defendant No.1 to cover up the amount of consignments, insurance of which were taken from Defendant No.1. During the period 24.02.2010 to 31.03.2010, plaintiff took insurance in respect of 5 consignments, details of which are given as under :
Invoice no. Date Amount Insured Decl. Certificate no.
(110% of Inv value
Ex-36 28.02.10 48,04,070.00 MC 00083902
Ex-38 19.03.10 33,34,454.00 MC 00083906
Ex-43 31.03.10 31,23,787.00 MC 00083908
Ex-44 31.03.10 36,54,001.00 MC 00083909
Ex-45 31.03.10 36,04,652.00 MC 00083910
2.4. Out of five consignments, one consignment bearing Invoice No. Ex.45, during the process of export at ICD, Tuglakabad, in the premises of Defendant No.2, a fire took place on 10.04.2010 and the goods which were to be exported got completely damaged.
2.5. Plaintiff No.1 informed Insurance Company on 12.04.2010 regarding total loss of consignment asking it to depute the surveyors. Plaintiff No.1 in response to the Public Notice dated 10.04.2010 issued by Defendant No.2 also informed the Container Corporation of India Ltd. about their consignment having been burnt in the fire at the instruction of Defendant No.1.CS 10267/16 M/s Kay Dee Industries & Anr. Vs. Royal Sundram Alliance Page 3 of 41
2.6. On receipt of the intimation by Defendant No.1, M/s. Atul Kapur & Company were appointed as Surveyors. M/s. Atul Kapur & Company by a communication of 26.04.2010 desired production of some documents and accordingly, plaintiff vide letter dated 03.05.2010 supplied complete set of documents and further, joint inspection was carried out on 21.05.2010.
2.7. It is further averred that such joint inspection was carried out in presence of representative of Defendant No.2 and by Inter Ocean Surveyors Pvt. Ltd., where representative of Plaintiff No.1, representative of insurance company i.e. M/s. Atul Kapur & Company and CHA representative were present and it was certified that cargo was of auto parts and due to fire, the total cargo was damaged.
2.8. It is further averred that Plaintiff No.1,upon receipt of report addressed a letter to the Dy. Commissioner of Customs (Exports) requesting him to cancel their shipping bill, goods of which was destroyed in the fire at Tughlakabad, Delhi on 10.04.2010. Again vide letter dated 31.05.2010, Surveyor M/s. Atul Kapur & Company sought certain information and documents, requesting to file a claim with M/s. Container Corporation of India Ltd.
2.9. It is further averred that in the meantime, the surveyors of Defendant No.1 submitted their report and as per email dated 06.07.2010, the surveyors attached the consent format to be signed and stamped with the amount. According to the surveyors, the loss CS 10267/16 M/s Kay Dee Industries & Anr. Vs. Royal Sundram Alliance Page 4 of 41 was assessed to Rs.25,11,344/- and as regards the value of the scrap, they intimated Plaintiff No.1 that they would reimburse as and when the same is received from Defendant No.2.
2.10. Plaintiff No.1 thereafter by various emails and communications informed Defendant No.1 that all documents particulars of insurance etc. have been given and verified by the surveyors and the same were again submitted to them on 23.09.2010 and by a further communication of 19.10.2010 as addressed to Defendant No.1, plaintiff again requested Defendant No.1 to settle their claim at the earliest.
2.11. That on 26.10.2010, Defendant No.1 took a frivolous plea of not substantiating the availability of adequate premium balance in the policy to cover the claimed consignment. Similar letter was received from defendant on 27.10.2010 when a detailed statement was sent to them vide communication dated 18.11.2010, wrongly mentioned in the letter as 18.11.2011. Alongwith the said letter, details of shipment was also sent and Defendant No.1 was informed that though they were not under obligation to furnish the details of the shipment for which risk was not insured even though they have sufficient premium to even cover up those consignments which not got insured from Defendant No.1.
2.12. It is further averred that defendant No.1 appeared to look for frivolous reason to deprive the Plaintiff No.1 of their rightful and lawful claims and as such started raising unsustainable and baseless CS 10267/16 M/s Kay Dee Industries & Anr. Vs. Royal Sundram Alliance Page 5 of 41 pleas, thus, forcing the Plaintiff No.1 to serve a legal notice which legal notice was sent to Defendant No.1 on 23.11.2010 and 05.01.2011. By the said notices, a demand of Rs.36,04,652/- was made by the plaintiff.
2.13. Defendant No.1, upon receipt of the said notices was raising frivolous issues of non-payment of the amount. Thereafter, a fresh legal notice was sent by plaintiff to Defendant No.1, whereby the demand was made, however, no amount was paid. It is further averred that Plaintiff No.1 received a letter dated 07.12.2010 from Defendant No.2 to settle the claims with Defendant No.1 upon receipt of which plaintiff informed vide communication dated 15.01.2011 addressed to defendant no.2 that the claim is still to be settled by Defendant No.1. Plaintiff No.1 thereafter, received a letter dated 24.01.2011 from Defendant No.2 informing Plaintiff No.1 to remove the salvage within 15 days otherwise the same would be disposed of. Plaintiffs have also addressed a communication dated 09.03.2011 to the defendants requesting them not to auction the salvage.
2.14. Plaintiffs submitted that if cargo is disposed of by the Container Corporation of India, neither the plaintiff nor Defendant No.1 would get any amount out of the cargo. No relief was claimed against Defendant No.2 but being a necessary party, has been impleaded as performa party.
2.15. It is further averred that since defendant No.1 without any CS 10267/16 M/s Kay Dee Industries & Anr. Vs. Royal Sundram Alliance Page 6 of 41 justifiable reasons, failed to pay the amount, they are liable for payment of interest @ 12% p.a. which is the market rate of interest and the suit amount has been calculated after taking into account the interest from day the amount was payable by Defendant No.1.
Hence, it is prayed that a decree for a sum of Rs.39,65,438/- with pendente lite and future interest @ 12% with cost of the suit be passed in favour of the plaintiffs and against Defendant No.1.
Court Proceedings
3. After institution of the suit, summons of the suit were issued to the defendants. Defendant No.1 & 2 appeared in the court through their respective counsels.
Written Statement on behalf of defendant no.1
4. Written Statement on behalf of defendant No.1 was filed, whereby the contents and averments of the plaint of plaintiff were denied and pleaded that the present suit is not maintainable and is liable to be dismissed. It is stated that the Plaintiff No.1 has no locus standi to file the suit as co-plaintiff with Plaintiff No.2 and thus, suit is bad for misjoinder of necessary parties.
4.1.It is pleaded in Written Statement that plaintiffs have knowingly and deliberately not disclosed in the plaint that vide letter dated 21.12.2010, Defendant No.1 had duly intimated Plaintiff No.1 / insured regarding repudiation of its insurance claim in question by giving specific reasoning and the basis of denial of liability in the CS 10267/16 M/s Kay Dee Industries & Anr. Vs. Royal Sundram Alliance Page 7 of 41 said letter. In reply to the legal notice dated 23.11.2010 of Plaintiff No.1, vide letter dated 31.12.2010. Defendant no.1 reiterated the earlier stand of repudiation of the insurance claim which was communicated vide letter dated 21.12.2010 and thus the plaintiffs were fully aware at the time of filing of the suit that Defendant No.1 had repudiated the insurance claim in question but in the plaint, Plaintiff No.1 has wrongly pleaded that Defendant No.1 has not taken any decision in respect to the insurance claim.
4.2.Defendant no.1 pleaded that Survey report submitted by Surveyor duly notes that plaintiff no.1 was under an obligation to declare each and every consignment without exception and taking the same into account, it is evident that policy was deficient of requisite premium balance at the time of commencement of transit of claimed damaged consignment with the insured sum having fallen short of benchmark to cover the risk of claimed consignment.
4.3. It is noted that Plaintiff no.1 specifically mentioned in plaint about premium at Rs.40,000/- paid during relevant period which was not categorically and specifically denied by defendant no.1 in WS. It is also noted that policy, its duration and specific adherence to its terms and the Declaration Clause was not disputed in WS by defendant no.1. Other contents in the plaint were specifically denied. It was prayed that suit of plaintiff is liable to be dismissed.
Replication to WS of defendant no.1
5. Plaintiff has filed replication to the written statement filed by defendant CS 10267/16 M/s Kay Dee Industries & Anr. Vs. Royal Sundram Alliance Page 8 of 41 no.1, wherein, plaintiff has reiterated the contents of plaint and denied the allegations leveled by Defendant No.1. It is, however, submitted that the plaintiff specifically mentioned in the plaint that surveyors of Defendant No.1 assessed the loss on the basis of documents provided to him despite which defendant No.1 repudiated the claim of the plaintiff. Even reply to legal notice as sent by Defendant No.1 is based on unjustifiable grounds and in law, Defendant No.1 was duty bound to pay the claim of the plaintiffs. Other contents of WS were denied by the plaintiffs. It is further reiterated that the policy in question was taken by the plaintiff for a period from 24.02.2010 to 23.02.2011 and the sum insured was Rs.16,666,667/- and the premium payable was @ 0.12% on the insured sum and the policy was a revolving policy as reflected from the letter and receipt of Defendant No.1 itself. A sum of Rs.20,000/- as additional premium was paid over and above the insured amount and on payment of additional premium the sum insured automatically got increased. The suit of plaintiff is thus liable to be decreed.
Written Statement on behalf of defendant no.2
6. Written Statement on behalf of Defendant No.2 was also filed, whereby Defendant No.2 pleaded that Defendant No.2 is a Public Sector Company, has been incorporated by Government under Ministry of Railways. Further, it is a proforma party in the present suit and no relief in the plaint has been claimed against it. It is averred that suit of the plaintiff is bad for misjoinder and non-joinder of the parties. It is pleaded that plaintiff has wrongly impleaded defendant no.2 as a party to suit despite the fact that there is no contract between the plaintiff and the defendant no.2. The goods were temporarily placed at the site CS 10267/16 M/s Kay Dee Industries & Anr. Vs. Royal Sundram Alliance Page 9 of 41 known as transit warehouse and after getting clearance, the goods were stuffed into shipping line container booked by shipping company with CONCOR to rail. It is further averred that the defendant company carries out the work on behalf of the shipping company under the Railways Act and CONCOR carries the container only by rail. It is further averred that the alleged unfortunate fire took place and CONCOR is not responsible for the loss, destruction, damage or deterioration arising from any cause and the fire has not been caused on account of any negligence on the part of the CONCOR. Other contents were denied.
Issues
7. From the pleadings of the parties, following issues were framed vide order dated 09.01.2012:
1. Whether the plaint has been signed, verified and instituted by a duly authorized person? OPP.
2. Whether the defendant has illegally repudiated the insurance claim vide communication dated 20 th October, 2011? OPP.
3. Whether the plaintiff is entitled to the suit amount ? OPP.
4. Whether the plaintiff is entitled to interest? If so, at what rate? OPP.
5. Relief.
Evidence Led By Plaintiff
8. Statement of Sh.Yash Pal was recorded as PW-1 in lieu of Plaintiff Evidence. The affidavit of evidence of PW1 is Ex. PW1/A. PW1 relied upon the following documents :
CS 10267/16 M/s Kay Dee Industries & Anr. Vs. Royal Sundram Alliance Page 10 of 41 S. No. Ex. / Mark Description of document
1. Ex. PW1/1 Certified Copy of Form B
2. Ex. PW1/2 Extract of the minutes of Meeting of
Board of Director of Kafila Forge Ltd.
& Resolution
3. Ex. PW1/3 Copy of Agreement
4. Ex. PW1/4 Copy of Policy
5. Ex. PW1/5 Original Receipt dated 24.02.2010
6. Ex. PW1/6 Original Receipt dated 24.02.2010
7. Ex. PW1/7 Copy of Details of shipment
8. Ex. PW1/8 Copy of Invoice
9. Ex. PW1/9 Copy of Letter dated 12.04.2010
10 Ex. PW1/10 Original letter dated 26.04.2010
11 Ex. PW1/11 letter dated 21.05.2010 also containing
joint Survey Report
12 Ex. PW1/12 Original letter dated 31.05.2010
13 Ex. PW1/13 e-mail dated 06.07.2010
14 Ex. PW1/14 e-mail dated 10.07.2010
15 Ex. PW1/15 e-mail dated 13.07.2010
16 Ex. PW1/16 Letter dated 17.06.2010
17 Ex. PW1/17 e-mail dated 23.09.2010
18 Ex. PW1/18 Original Letter dated 19.10.2010
19 Ex. PW1/19 Letter of CONCOR dated 07.12.2010
20 Ex. PW1/20 letter of CONCOR dated 24.01.2011
21 Ex. PW1/21 Copy of Legal Notice
22 Ex. PW1/22 Copy of AD Card
23 Ex. PW1/23 Letter dated 15.01.2011 (wrongly
mentioned 15.01.2010)
24 Ex. PW1/24 Letter dated 27.10.2010
25 Ex. PW1/25 Letter dated 09.03.2011
26 Ex. PW1/26 Postal Receipt
CS 10267/16 M/s Kay Dee Industries & Anr. Vs. Royal Sundram Alliance Page 11 of 41
27 Ex. PW1/27 Postal Receipt
28 Ex. PW1/28 Postal Receipt
8.1.PW1 Sh.Yash Pal was duly cross examined by Ld. Counsel for Defendant No.1. In his cross examination, PW1 stated that earlier he was working with Plaintiff No.1 firm and later started working with Plaintiff No.2. He stated that both companies merged into one single entity i.e. Kafila Forge Ltd. on 29.10.2010.
8.2. PW1 produced the original minutes of proceedings dated 11.03.2011 placed on record as Ex.PW1/D1. PW1 stated that insurance policy Ex. PW1/4 was taken by General Member of Plaintiff No.1 from Defendant No.1 after due discussions. He further stated that he was not aware about the terms and conditions of the policy which were settled between Plaintiff No.1 and Defendant No.1. PW1 further stated that as per the terms of policy, Plaintiff No.1 was required to make declaration of the consignment which was being dispatched by Plaintiff No.1. PW1 further stated that fire took place on CONCOR Warehouse at Tuglakabad on 10.04.2010.
8.3. PW1 clarified there were 12 consignments which Plaintiff No.1 had dispatched during the period when the policy was taken. He responded that he was not aware whether there was any clause in the Insurance Policy about declaration of the consignment dispatched by Plaintiff No.1 to defendant no.1. He also stated that CS 10267/16 M/s Kay Dee Industries & Anr. Vs. Royal Sundram Alliance Page 12 of 41 the consignment which was got damaged in the fire was dispatched to Istanbul having value approximately USD 71705.83/-. PW1 further stated that he was not aware whether Plaintiff No.1 did not declare to D1 all the consignment dispatched by them during the period of issuance of policy and date of loss. He stated Plaintiff No.1 had lodged statutory damage claim with D2 for the loss suffered by the plaintiff but no claim was given to Plaintiff No.1 by defendant no.1 in regard to the above said claim having been rejected by defendant no.2 stating that the goods were insured with defendant No.1 and the plaintiff could claim the loss suffered by from defendant no.1.
8.4. PW1 Sh. Yashpal stated during cross-examination that M/s. Atul Kapoor and Co. was appointed by defendant no.1 to survey and assess the loss while Plaintiff no.1 had not appointed an independent surveyor to assess the loss suffered by them. PW1 further stated that it is correct that Plaintiff No.1 did not contact the officer of defendant no.1 with regard to the payment/settlement of the insurance claim.
8.5.PW1 denied the suggestion that he was not aware whether the claim was paid or rejected by defendant no.1 and volunteered that defendant no.1 has not paid the claim. PW1 denied the suggestion that he was not aware about the reason of non payment of the claim and volunteered that as per the report of M/s. Atul Kapoor, there was no sufficient surplus premium with defendant no.1 to cover the present consignment. PW1 further denied the suggestion that CS 10267/16 M/s Kay Dee Industries & Anr. Vs. Royal Sundram Alliance Page 13 of 41 plaintiff no.1 has exhausted the sum insured in the previous consignment and therefore there was no surplus premium with defendant no.1 to cover risk of consignment in question. He further denied that suggestion that the defendant no.1 has not unlawfully withheld the loss suffered by plaintiff no.1. He further denied that he was not authorized to depose before the court or that plaintiff no.1 and 2 have no legal entity and could not file the present suit or that he was deposing falsely.
8.6. In the cross-examination conducted by defendant no.2, PW1 stated that there was no claim against defendant no.2 in the suit and that no payment was made by plaintiff to defendant no.2.
Defendant evidence
9. Defendant No.1 examined in his defence D1W1, Sh. Satinder Singh, Legal Manager of Defendant No.1. DW1 tendered his evidence by way of affidavit Ex. D1W1/A. He affirmed that a document mentioned as Ex. D1W1/A which is copy of letter dated 21.12.2010, is not available on record thus the said document may be ignored. He also affirmed that the other document mentioned as Ex. D1W1/B in the evidentiary affidavit which is a Surveyor Report is also a copy on account of which, it be read as Mark A. It may thus be noted that there are no documents as Ex.D1W1/A or Ex.D1W1/B and that letter dated 21.12.2010 although pleaded in Written Statement and also affirmed and relied in the evidentiary affidavit, has not been placed on record.
9.1.D1W1 was cross examined by Ld. Counsel for the plaintiff. He CS 10267/16 M/s Kay Dee Industries & Anr. Vs. Royal Sundram Alliance Page 14 of 41 admitted that he never dealt with the plaintiff company personally and he was not involved at the time of issuance of Insurance Policy. He clarified that the policy issued was Marine Cargo Open Policy and that he was aware about terms and conditions of the policy but he could not tell exact stages upon issuance of the policy. DW-1 further stated that he was aware of the procedures of settling claims in the said policy and that it generally take approx 15-30 days to settle the claims, once required documents are received. It is further admitted by D1W1 that affidavit Ex. D1W1/A is based on records and not on basis of his personal knowledge. After seeing the case file, D1W1 stated that Rs. 20,000/- was paid as premium of the said policy against the sum insured of Rs.1,66,66,667/- and that he was not aware personally about repayment of Rs.20,000/- vide a cheque to the defendant company for enhancement of sum insured. Witness was confronted with the documents Ex. PW1/5 and PW1/6 after seeing the said documents, he stated that he could not tell detailing of those receipts. D1W1 also denied having information about consignments sent by the plaintiff company during the period 24.02.2010 to 23.02.2011.
9.2.D1W1 further stated that he was not aware of the details of an open ended policy. He asserted that insurance claim of the plaintiff was repudiated by defendant no.1 on the ground of non-submission of required documents, details and premium. D1W1 further admitted that M/s. Atul Kapoor and company was one of their panel surveyors. D1W1 has further denied that defendant no.1 intentionally did not disclose to the surveyor about the payment of additional premium of Rs.20,000/- by the plaintiff to defendant CS 10267/16 M/s Kay Dee Industries & Anr. Vs. Royal Sundram Alliance Page 15 of 41 no.1. It is denied that defendant no.1 did not send any communication to the plaintiff regarding repudiation of their claim.
9.3.Defendant No.2 filed affidavit of D2W1, Sh. Sumant Kr. Behera, Terminal Manager of Defendant no.2, however, the same was withdrawn by counsel for D2.
9.4.Defendant evidence was closed on 04.12.2018.
Arguments and Written Submissions
10. Brief written submissions were filed on behalf of plaintiff wherein it is argued that the plaintiff has been successfully able to prove the issues on the basis of relevant documents and the unshaken testimony of PW1, with DW1 having failed to produce any record to dispute the contention of plaintiff. It is accordingly pleaded that the plaintiff having proved its case is entitled to a decree in his favour.
11. Written submissions were also filed on behalf of defendant no.1, wherein it was argued that plaintiff was duly intimated about the basis of repudiation of its insurance claim with obligation upon insured to declare each and every consignment within the policy in terms of the declaration clause and with transit value having exceeded the sum insured as per the applicable premium on the basis of surveyor report, there is no ground with plaintiff no.1 to claim insurance qua the damage consignment. It is accordingly prayed that suit of the plaintiff be dismissed.
CS 10267/16 M/s Kay Dee Industries & Anr. Vs. Royal Sundram Alliance Page 16 of 41Decision and Legal Reasoning
12. I have heard arguments advanced by both the sides and have gone through the entire record carefully. My issue wise findings are as under:-
Issue no.1
1. Whether the plaint has been signed, verified and instituted by a duly authorized person? OPD.
13. The onus to prove this issue has been mentioned to be upon plaintiff as per order dated 09.01.2012 however this being one of the preliminary objection taken by defendant no.1, the onus of proof ought to be upon defendant no.1 with respect to the issue at hand.
13.1. Defendant no.1 has contended in written statement that Sh. P.R. Malhotra is not a duly authorised person to sign, verify and institute the suit for and on behalf of plaintiffs. D1W1 Sh. Satinder Singh also so deposed in his evidentiary affidavit Ex. D1W1/A. Apart from making a bald affirmation, nothing has been placed on record to substantiate the contentions raised on behalf of defendant no.1. Present case was filed by Sh. P.R. Malhotra in the capacity of Managing Director of plaintiff no.2 who was authorised by a Board Resolution dated 11.03.2011 to sign and verify the plaint and also to institute the suit. The extract of resolution is placed on record as Ex. PW1/2. The cause of action against defendant no.1 arose while plaintiff no.1 was a partnership firm with Sh. P.R. Malhotra as its registered partner. Subsequently, upon execution of an agreement, CS 10267/16 M/s Kay Dee Industries & Anr. Vs. Royal Sundram Alliance Page 17 of 41 placed on record as Ex. PW1/3, plaintiff no.1 merged with plaintiff no.2. No dispute has been raised with respect to execution of any such agreement or with respect to the legal viability of such merger. Sh. P.R. Malhotra in the capacity of Managing Director of plaintiff no.2 which existed as an entity on the date of institution of suit, signed and verified the plaint, while in the capacity as registered partner of plaintiff no.1, he was privy to the transactions between plaintiff no.1 and defendant no.1 which gave rise to cause of action in the present suit. Interest of plaintiff no.1 in the subject matter stood taken over by plaintiff no.2 and thus, with actual existing interest in the subject matter, Authorised Representative as Managing Director of plaintiff no.2 instituted the present suit. There is nothing on record to dispute the capacity of Sh. P.R. Malhotra with respect to his entitlement to sign and verify the plaint or to institute the present matter. Issue no.1 accordingly stands decided in favour of the plaintiff and against the defendant.
Issue no.2, 3 and 4
2. Whether the defendant has illegally repudiated the insurance claim vide communication dated 20 th October, 2011? OPP.
3. Whether the plaintiff is entitled to the suit amount ? OPP.
4. Whether the plaintiff is entitled to interest? If so, at what rate? OPP.
14. Since issue no. 3 and 4 are primarily based upon decision of issue no.2 and thus being interconnected are being taken up for discussion and adjudication together. Onus to prove these issues is upon the plaintiffs.
CS 10267/16 M/s Kay Dee Industries & Anr. Vs. Royal Sundram Alliance Page 18 of 4114.1. It is primarily a suit wherein plaintiff has sought recovery of amount on account of loss of its insured consignment against a Marine Cargo Open Policy from defendant no.1.
14.2. It is important at this stage to dwell upon the legal aspects of Contract of Insurance which is under deliberation in this case:
"Every contract of insurance except Life Insurance is primarily a contract of indemnity. It is basically to compensate the beneficiary of the policy against uncertain events leading to actual economic losses. It is, thus an assurance to the insured that a sum of money will be paid to him upon happening of a particular event as covered under the Insurance Policy, thus, it protects the insured against any unanticipated losses. So there has to be a person who promises to bear the loss and another person whose loss is covered or is to be compensated. This contract, although not strictly covered u/s. 124 and 125 of Indian Contract Act, 1872, however, constitute a valid contract with all principles of General Law of Contract as contained in Section 1 to 75 of the Indian Contract Act, 1872 as applicable to it.
Contract of Indemnity has been defined under Section 124 of Indian Contract Act, 1872 with the rights of Indemnity Holder covered under Section 125 of Indian Contract Act. These two provisions are reproduced hereunder for ready reference as well as to afford better understanding of the subject at hand.
Section 124 "Contract of indemnity" defined. - a contract by which one party promise to save the other from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person, is called a "contract of indemnity."
Section 125 Rights of indemnity-holder when sued -
CS 10267/16 M/s Kay Dee Industries & Anr. Vs. Royal Sundram Alliance Page 19 of 41The promisee in a contract of indemnity, acting within the scope of his authority, is entitled to recover from the promisor -
(1) all damages which may be compelled to pay in any suit in respect of any matter to which the promise to indemnify applies;
(2) all costs which he may be compelled to pay in any suit if, in bringing or defending it, he died not contravene the orders of the promisor, and acted as it would have been prudgent for him to act in the absence of any contract of indemnity, or if the promisor authorised him to bring or defend the suit;
(3) all sums which he may have paid under the terms of any compromise of any such suit, if the compromise was not contrary to the orders of the promisor, and was one which it would have been prudent for the promisee to make in the absence of any contract of indemnity, or if the promisor authorised him to compromise the suit.
Contract of Insurance is a special contract between two parties where insurer undertakes against payment of premium to pay the insured a fixed amount of some money on the happening of certain event. Thus, it safeguards insured against unforeseen eventualities and against loss or uncertainty. It is a form of contingent contract defined in Section 31 of Indian Contract Act 1872 but is not a wager as it requires "insurable interest"
as an important stipulation without which it would fail to qualify as a contract of insurance. Insurable Interest is the pecuniary interest which the Policy Holder is promised under the policy against loss or damage of insured subject matter. Thus, financial sufferance of a party is a must to constitute a valid insurable interest.
The Insurance Contract being contract of indemnity is based on principle that the Insurer undertakes to put the Insured in the same position which the Insured occupied prior to happening of an event which caused damage to CS 10267/16 M/s Kay Dee Industries & Anr. Vs. Royal Sundram Alliance Page 20 of 41 the subject matter. It is important to note that an insured is not entitled to make profit out of his loss. Thus, only the actual loss becomes payable and not the assured sum. Also, if insured amount is less than the actual loss or value of property, then liability is incurred only qua the amount under insurance. Thus, insured has to prove that he took an Insurance Policy which remains valid and alive on the date of loss against applicable premium to cover the monetary loss and actual monetary loss qua the subject matter in dispute was suffered by the insured with the Insurer an obligation to indemnify the actual loss upto the extent of Insured amount. It is important to understand that if the Insured gets some amount from the third party after being indemnified from the Insurer or has been paid more money than the actual loss, the indemnifier can seek recovery of the remaining amount. Further, an Insurer is subrogated to any alternative rights and remedies to recover or to mitigate the amount paid to the insured, having paid the actual loss to the Insured, thus, it comes into the shoes of the Insured qua the loss suffered and allowing the alternative amounts to be enjoyed by the insured would rather become gainful for the Insurer which is contrary to the principles of indemnity.
It is also important to know that an Insurer is liable for a loss on account of a proximate cause of loss of the subject matter and not of any distant cause which is not covered under the policy. An Insurance Contract is based on principle of utmost good faith where both the parties to contract are under an obligation to disclose all the material facts.
Section 124 of Indian Contract Act, only recognises a contract of Indemnity which carries a promise to save another person from loss which may be caused by the conduct of the Promiser or by conduct of any other person.
Thus, it has a limited expanse which does not provide for compensation of the loss, not arising out of human CS 10267/16 M/s Kay Dee Industries & Anr. Vs. Royal Sundram Alliance Page 21 of 41 agency. Thus, the promise to indemnify the loss either caused by accidents or any event not based upon conduct of any person, strictly speaking, do not fall within the definition of Section 124 of Indian Contract Act 1872. It was held in Gajanan Mureshwar Parelkar Vs. Mureshwar Madan Mantri (1942) 44 BOMLR 703 that "Section 124 and 125 of Indian Contract Act, 1872 are not exhaustive of the law of Indemnity and the Courts in India who apply the same equitable principles that the Courts in England do." It was held therein that the definition provided under Section 124 of Indian Contract Act, 1872 does not deal with cases where indemnity arises from loss caused by events or accidents which may or may not depend upon the conduct of the indemnifier or any other person. Under English Law, the word 'Indemnity' caries a much wider meaning and includes a contract to save the Promisee from any loss whether or not it is caused by any human agency. Thus, it covers all forms of indemnities. Under English Law, it constitutes to be a promise to save harmless from any loss caused as a result of transaction covered by the Promiser under the Policy. Thus, if an insurer promises to pay compensation in the event of loss by fire, it constitutes a contract of Indemnity which is a special contract although not covered with the definition of within the purview of Sec. 124 of the Act but constitutes a valid contract, being a contingent contract under Section 31 of Indian Contract Act 1872 which is defined therein as under:
Section 31 "Contingent contract" defined - A "contingent contract" is a contract to do or not to do something, if some event, collateral to such contract, does or does not happen.
It was held in the case of New India Assurance Company Ltd. Vs. Kusumamchi Kameshwra Rao & Ors. LAWS(SC)-1996-11-27 "contract of indemnity is a direct engagement between two parties, thereby one promises to save the other harm. It does not deal with those classes of cases where the indemnity arises from CS 10267/16 M/s Kay Dee Industries & Anr. Vs. Royal Sundram Alliance Page 22 of 41 loss caused by events or accidents which do not or may not depend upon conduct of indemnifier or any other person. Thus, if under a Contract for Insurance, an insurer promises to pay compensation in the event of loss by fire, such a contract does not come within the purview of Section 124 of the Act. Such a contract is a valid contract as being in contingent contract as defined in Section 31 of Contract Act." It is also noted that a contract of insurance is not a contract of wager as wager is not contingent upon any event which caused loss upon promisee.
It is also underlined that any contractual document must be read and construed on its face value as can be apparently understood from the terms and conditions contained therein. It is held by Hon'ble Supreme Court of India in case titled as State Bank of India & Anr. Vs. Mula Sahkari Sakhar Karkhana Ltd. AIR 2007 SC 2361 as "A document as is well known must be construed on the basis of the terms and conditions contained therein. It is also trite that while construing a document, the court shall not supply any words which the author thereof did not use. The document in question is a commercial document, it does not on its space contain any ambiguity........ surrounding circumstances are relevant for construction of a document only if any ambiguity exist therein, and not otherwise". Insurance Contract contained in the policy thus constitutes one such contractual document, reading and interpretation of which forms the subject matter of the suit.
14.3. Having gone through basic legal principles, we proceed to examine applicability of these principles for adjudication of issues at hand. Coming to the factual matrix of the case, at the outset it is noted that repudiation of insurance claim was a contention made by defendant no.1 in the written statement communicated vide letter dated 21.12.2010 and reiterated in reply to legal notice vide letter CS 10267/16 M/s Kay Dee Industries & Anr. Vs. Royal Sundram Alliance Page 23 of 41 dated 31.12.2010. This was the primary defence pleaded on behalf of defendant no.1 with the submission that plaintiff deliberately chose not to disclose about repudiation of insurance claim in the plaint contradicting the averment on the part of plaintiff that defendant no.1 did not take any decision in respect of insurance claim in question. DW1 Satender Singh appeared on behalf of defendant no.1. Letter dated 21.12.2010 was the primary document relied upon on behalf of defendant no.1, however, he affirmed that the copy of document was not available on record and thus the said document may be ignored. The contents of letter dated 21.12.2010 and even another correspondence dated 31.12.2010, vide which defendant no.1 company claimed to have repudiated the insurance claim presented by plaintiff, are therefore not available on record for the court to understand or to comment upon the same.
14.4. PW-1 Sh. Yashpal has affirmed that plaintiff no.1 had taken a Marine Cargo Open Policy from defendant no.1, with validity from 24.02.2010 to 23.02.2011 which is placed on record as Ex. PW1/4.
This contention is not disputed between the parties. PW-1 has also affirmed that a premium amount of Rs. 40,000/- was deposited vide receipt dated 24.02.2010 placed on record as Ex. PW1/5 and 13.03.2010 as Ex. PW1/6 against the policy in question and that as per policy, plaintiff was required to declare the shipments and accordingly, premium lying deposited with defendant no.1 was to be adjusted against the premium payable in respect of consignment with a surplus balance to cover up the amount of consignment. It is further affirmed that plaintiff took insurance in respect of 5 consignments during the period 24.02.2010 till 31.03.2010 even CS 10267/16 M/s Kay Dee Industries & Anr. Vs. Royal Sundram Alliance Page 24 of 41 though it exported 12 shipments during the period and the total premium, even including those not declared, came out to Rs. 39,799/- which is less than the premium paid by plaintiffs during that period.
14.5. Defendant no.1 as D1W1 in evidentiary affidavit Ex. D1W1/A has affirmed that plaintiff no.1 did not declare some of the invoices to defendant no.1 which is in contravention to Declaration Clause of Marine Cargo Open Policy, as per which all dispatches made during the previous month were to be received by defendant no.1 within 30th of the following month.
14.6. Defendant no.1 has based repudiation of insurance claim solely upon the Survey Report dated 24.11.2010 copy of which was relied and placed on record as Mark A, as per which value of the transit till the claimed consignment in question had exceeded the sum insured and some of the invoices were found to be undeclared. The value of the total transits were found to be 3,22,79,932/- against sum insured of Rs.1,66,66,667/- which concluded that there was prima facie no balance available in the policy at the time of commencement of transit of the alleged damaged consignment and thus the claim of defendant no.1 was not admissible under the policy.
14.7. The Survey Report of Surveyor is not being relied by the plaintiff. It is pleaded by plaintiff that the Surveyor was appointed by defendant no.1 and that plaintiff no.1 had never appointed an CS 10267/16 M/s Kay Dee Industries & Anr. Vs. Royal Sundram Alliance Page 25 of 41 independent Surveyor. Plaintiff has only relied upon Ex. PW1/11 vide which, after a joint survey, it was communicated to plaintiff that the Cargo has been found to be completely damaged on account of fire. Plaintiff has also filed email dated 06.07.2010 placed on record as Ex. PW1/13 which had Draft Assessment Report as an attachment, however copy of any such Draft Assessment Report has neither been filed nor relied by plaintiff no.1.
14.8. The original of Survey Report of Surveyor M/s. Atul Kapoor & Co. has not been filed by defendant no.1, with its copy placed as Mark A. Thus, apart from that copy placed on record, defendant no.1 has not taken any steps for its admissibility as per applicable rules of evidence. The Surveyor has not been called in witness box to prove any such report. It is the case of defendant no.1 itself that the Survey Report was handed over to defendant no.1 which repudiated the claim of plaintiff no.1 on the basis of this report communicated vide letter dated 21.12.2010 and also affirmed to be reiterated in reply to legal notice vide letter dated 31.12.2010. It is noted that letter dated 21.12.2010 as well as letter dated 31.12.2010, although relied upon, have not been filed on record by defendant no.1. PW-1 in his cross-examination clearly submitted that Mr. Atul Kapoor did not submit any Survey Report to Plaintiff no.1. It is also not stated anywhere by defendant no.1 that any such copy of report was supplied to plaintiff. No suggestion was given by Ld. Counsel for defendant to PW-1 that Survey Report was duly provided to the plaintiff. Survey Report does not reflect that any true copy was also sent to the plaintiff.
CS 10267/16 M/s Kay Dee Industries & Anr. Vs. Royal Sundram Alliance Page 26 of 4114.9. It is not the stand taken by defendant no.1 that the document/ report was destroyed or lost or there was any reason not arising from default or neglect on the part of defendant no.1 that it could not produce the same or that it was never in possession or power of the said document or was not legally bound to produce it or that its contents have been admitted and relied upon by the opposite side that there was no obligation on its part to prove the same by producing the document in original, which is the primary evidence, making the copy as proof of secondary evidence or content of document in question as admissible. So the only basis put forth by defendant no.1 to discredit the claim of plaintiff no.1 is wholly unsubstantiated.
14.10. D1W-1 has testified that value of total transits were Rs.
3,22,79,932/- against sum insured of Rs. 1,66,66,667/- from the date of start of policy till the date of loss as per the statement of dispatches provided by plaintiff no.1 to the surveyor and thus, value of transit of plaintiff no.1 till the date of damaged consignment already exceeded the sum insured. It is also affirmed by DW-1 in evidentiary affidavit Ex. D1W1/A that :
"prima facie no balance was available in the policy at the time of commencement of transit of the alleged damaged consignment and accordingly in terms of the relevant Declaration clause of the Insurance Policy, the claim in respect of damages to the consignment was not admissible."
14.11. PW1 Sh.Yash Pal has affirmed that amount of premium paid CS 10267/16 M/s Kay Dee Industries & Anr. Vs. Royal Sundram Alliance Page 27 of 41 against insurance policy till 31.03.2010 was Rs. 40,000/-, as deposited in part of Rs. 20,000/- each on 24.02.2010 and 13.03.2010, original premium payment receipts placed on record as Ex. PW1/5 and Ex. PW1/6. There is nothing mentioned in the evidentiary affidavit Ex. D1W1/A of D1W1 about the amount of premium paid by plaintiff no.1 company against the Insurance Policy. In cross examination of D1W1, he stated that Rs.20,000/- was paid as premium of the policy and denied knowledge about payment of additional premium of Rs.20,000/- on 13.03.2010 for enhancement of sum insured. He was also confronted with documents/receipts Ex.PW1/5 & Ex. PW1/6 but he declined to comment upon detailing of those receipts. Relevant excerpts of his cross-examination are reproduced hereunder :-
" After seeing the court file, the witness stated Rs. 20,000/- was paid as premium of the said policy. After seeing the court file, the witness stated sum insured of the said policy was Rs. 1,66,66,667/-. I am not aware personally that the plaintiffs company again paid Rs. 20,000/- vide a cheque to the defendant company for enhancement of sum-
insured. Witness confronted with the Ex.
Documents which is PW1/5 and PW1/6, after seeing the said documents witness stated that I cannot tell the detailing of the receipts.
D1W1 also denied suggestion that defendant no.1 intentionally did not disclose about payment of additional premium of Rs.20,000/- by plaintiff to defendant no.1. It was put to PW1 during his cross examination by counsel for defendant no.1 that there was no surplus premium with defendant no.1 for the period 24.02.2010 till 31.03.2010 which he denied.CS 10267/16 M/s Kay Dee Industries & Anr. Vs. Royal Sundram Alliance Page 28 of 41
14.12. Plaintiff no.1 pleaded payment of additional premium of Rs.20,000/- in the plaint, later affirmed by PW1 in his evidentiary affidavit Ex. PW1/A, which has not been specifically denied in the written statement on behalf of defendant no.1 and has also not been counter affirmed or not tried to be alternatively explained. Ex. PW1/5 & Ex. PW1/6 have been placed in original on record clearly containing the Agency Code as EC 194289 and the description of receipt of payment. It is not the case of defendant no.1 that subsequent payment of Rs.20,000/- was not against the insurance claim in question or that any such deposit had no purpose whatsoever with respect to enhancement of assured sum under the insurance policy or even that any such sum was not received at all by defendant no.1. The admitted premium policy has cargo premium mentioned as Rs. 20,000/- collected vide cheque no. 911723 dated 06.02.2010 against which receipt has been placed on record on behalf of plaintiff as Ex. PW1/5. Nowhere has defendant no.1 claimed that there was no provision of increase of the insured sum under the policy in question upon payment of additional premium. The premium payable is 0.12% of the sum insured. Also the policy in question is an 'open' policy which means that the policy does not deal with a fixed sum rather is dependent upon the value of consignment to be declared on the basis of which to compute the value of sum insured as well as the premium. The Declaration Clause also gives an option to the insured to make good the deficiency of premium, if any, alongwith the monthly declaration. Said Declaration Clause is reproduced hereunder for better understanding and immediate reference:
CS 10267/16 M/s Kay Dee Industries & Anr. Vs. Royal Sundram Alliance Page 29 of 41"It is a condition of the Policy that the insured is bound to declare hereunder every consignment which comes within the scope of this Policy, without exception, the insurers being bound to accept the same up to but not exceeding the limits specified herein below subject to availability of sum insured/ premium to the credit of the Assured and deficiency of premium if any being made good along with the monthly declaration.
Notwithstanding what is stated above and the liability of the insured to declare every consignment falling within the scope of this Policy, it is clearly agreed and understood that no liability shall attach to the insurer in respect of consignments which are not declared in the manner and within the time specified above.".
14.13. It can be gathered from plain reading of declaration clause itself that there is no impediment upon insured to pay deficient premium, if any, qua declared consignments. Further, it is apparent that although clause thrust an obligation upon insured to declare every consignment, however, the mandatory binding part is the agreement of parties that insurer will not be liable for any undeclared consignment. So it is only for any declared consignment that liability can be attached upon the insurer and not otherwise. It is not mentioned that non declaration of even a single consignment would be fatal to the insurance claim of the insured, subject to the total available limit of insured sum under the scope of policy. Also, had it been so, there was no occasion to put an obligation upon insured to every time declare a consignment to insurer if it simply meant to include all. There also appear no mechanism in place by defendant no.1 to notify the insured about exhaustion of the limit of insured sum or the necessity to pay deficient premium at the commencement of any declared consignment. Policy thus carried a CS 10267/16 M/s Kay Dee Industries & Anr. Vs. Royal Sundram Alliance Page 30 of 41 provision for providing insurance on the increased sum assured subject to and in proportion to the additional premium paid. While plaintiff has produced and proved additional premium receipts, D1W1 has not placed any record to discredit the claim of plaintiff to prove that only payment of Rs.20,000/- as premium was paid at the time of taking policy and not otherwise as contended by plaintiff. The case of the plaintiff therefore that an amount of Rs. 40,000/- as insurance premium with additional payment made vide receipt Ex. PW1/6, therefore, cannot be rejected.
14.14. Defendant no.1 has placed reliance upon Declaration Clause of the Marine Cargo Open Policy which put insured under mandatory obligation to declare each consignment being dispatched to defendant no.1. Same has been admitted by PW-1 in his cross- examination in the following words:
"it is correct that under the terms of the policy plaintiff no.1 was required to make declaration of consignment which was being dispatched by plaintiff no.1.
14.15. PW-1 Sh.Yash Pal however, denied knowledge whether plaintiff no.1 did not declare to defendant no.1 all the consignments dispatched by them during the period of insurance of policy and date of loss. PW-1 in evidentiary affidavit Ex. PW-1/A categorically affirmed that 12 shipments were exported during the period between 24.02.2010 and 31.03.2010, even though only 5 shipments were declared and applied insurance for. Thus, it is the case of plaintiff itself that all the shipments were not declared as per the mandatory Declaration Clause of the Insurance Policy.CS 10267/16 M/s Kay Dee Industries & Anr. Vs. Royal Sundram Alliance Page 31 of 41
14.16. As per the Declaration Clause, the declaration of shipment could be made within 30th of the subsequent month, while the policy itself was taken on 24.02.2010, there was an option with the insured to declare the same by 30 th of the following month i.e. 30 th March and for dispatches made during the month of March by 30 th April. Further, it is categorically mentioned therein that any liability would not attach to the insurer in respect of consignments which are not declared in the manner and within the time specified above. Nowhere has defendant no.1 claimed that the case of plaintiff has been rejected on account of non declaration of some of the dispatches made during the period 24.02.2010 till 10.04.2010.
14.17. Details of shipment made from policy inception till date of loss have been tabulated and placed on record as Ex. PW1/7 under the signatures of Director of plaintiff no.2 which contains record of 12 shipments, five of which were declared as per the Declaration Certificate, also mentioned respectively against the invoice numbers. These details have not been disputed on behalf of defendant no.1 as far as the factual matrix contained in this tabulation is concerned. As per details of shipment provided in Ex. PW1/7, total applicable premium, even if included for the consignments not declared, comes out to be Rs. 39,799/- which is inclusive of invoice no. EX-045 against which insurance claim was filed. In fact, DW-1 relied upon this tabulation in para no.9 of his affidavit Ex. D1W1/A, as having been provided by plaintiff no.1 to the Surveyor which established the total transit value as CS 10267/16 M/s Kay Dee Industries & Anr. Vs. Royal Sundram Alliance Page 32 of 41 Rs.3,22,79,932/- which became the basis of inference that value of transit of plaintiff no.1 already exceeded the sum insured.
14.18. The number of dispatches or the amount of value declared as per the applicable rate mentioned in the policy or even the premium sought to be applicable as per the stipulations laid down in the policy, as mentioned in Ex. PW1/7, even for the consignments not declared which plaintiff no.1 as per the survey report in terms of the Declaration Clause of the policy was bound to declare considering the technical specifications appended with each consignment are not disputed.
14.19. As already held, there was no basis for the defendant no.1 to exclude Rs. 20,000/- as additional premium paid towards the sum insured, there is no reason to discredit its beneficial applicability with respect to the calculations proportionately applicable upon exhaustion of the insured premium originally paid at the time of taking the policy. There is no mention as to when the said premium got exhausted upon certain declarations and the subsequent consignments remained uninsured. As plaintiff no.1 has been able to indisputably prove the amount of premium paid as Rs. 40,000/- instead of Rs. 20,000/-. the amount insured accordingly and proportionately increases and the applicable premium even upon including all the not declared consignments since the commencement of policy, comes out to be Rs. 39,799/- which includes the claimed damaged consignment.CS 10267/16 M/s Kay Dee Industries & Anr. Vs. Royal Sundram Alliance Page 33 of 41
14.20. D1W1 testified that the value of transits to be declared before claimed consignments was lesser for the insured amount as Rs.1,66,66,667/- instead of Rs.32,27,932/-. This evaluation deduced as per the survey report on the basis of which insurance claim of plaintiff no.1 was repudiated, primarily rested upon payment of premium of Rs. 20,000/- without taking into account the additional premium having been paid vide receipt Ex. PW1/6. In fact the tabulation sheet Ex. PW1/7, relied upon by Surveyor in his Survey Report Mark A, also contained the details of premium paid as Rs. 40,000/- from the date of inception of policy i.e. 24.02.2010 till the date of loss i.e. 10.04.2010. There is no mention as to why Rs. 20,000/- paid vide receipt voucher dated 17.03.2010, was not applied to enhance the sum assured. Infact in the entire report, there is absolutely no mention qua the amount of premium paid or payable against the increased value of insured amount while deducing that the amount required to be declared to be insured under the policy exceeded the sum insured.
14.21. It is apparent that the premium paid as per the schedule has to be determined as per the value of consignment sought to be declared and that there is a direct connection between the two. It is not the case of defendant no.1 that the assured did not take any measures for minimizing the loss or did not act with promptitude in bringing the loss to the knowledge of defendant no.1 or so acting under reasonable circumstances within their control. There is no reason why the survey report did not contain any specification about the premium paid or disputing what plaintiff no.1 claimed through CS 10267/16 M/s Kay Dee Industries & Anr. Vs. Royal Sundram Alliance Page 34 of 41 tabulation sheet Ex. PW1/7 which basically was relied upon to hold that there was no balance with defendant no.1 company against the amount insured before commencement of the claimed consignment. It was for defendant no.1, either to submit the necessary record to the surveyor or to verify from its own records about the correctness of the claim made on behalf of plaintiff no.1with respect to payment of premium. No counter document or even contrary submission denying the claim of plaintiff no.1 about payment of premium has been placed on record. The survey report gave a prima facie finding on the basis of policy schedule available with it without verifying from defendant no.1 about the actual premium or enhanced premium for increased assured amount.
14.22. The insurance policy Ex. PW1/4 is admitted. The claimed consignment bearing invoice no. EX-045 was duly declared with the defendant no.1 company. The said consignment suffered loss due to fire which was brought to notice of defendant no.1 vide communication dated 12.04.2010 which is Ex. PW1/9 on the record. Surveyors and Loss Assessors were appointed by defendant no.1 company to assess the value of loss. The said surveyor made communications with plaintiff no.1 company to provide necessary records and documents to be able to assess the loss which have been placed on record as Ex. PW1/10, Ex. PW1/11, Ex. PW1/13, Ex. PW1/14, Ex. PW1/15 and Ex. PW1/16. Vide letters dated 23.09.2010 and 19.10.2010 placed on record as Ex. PW1/17 and Ex. PW1/18 respectively, the relevant information about the claimed consignment was provided in addition to the information provided CS 10267/16 M/s Kay Dee Industries & Anr. Vs. Royal Sundram Alliance Page 35 of 41 to its representative on 03.09.2010. Necessary information was also provided to defendant no.2, representative of which was present during joint survey and which also asked defendant no.1 vide communication dated 23.11.2010 to settle the claim of plaintiff no.1 which is Ex. PW1/21 on record. Vide communication dated 26.10.2010 issued by surveyors against plaintiff no.1 company and communication dated 27.10.2010, placed on record as Ex. PW1/24, defendant no.1 asked plaintiff no.1 to provide the necessary details to ascertain the balance available under the policy as also to ascertain whether all the dispatches were declared as per Declaration Clause attached to the policy. The premium paid against the particular policy must be within positive knowledge of defendant no.1 and that only the declaration of dispatch was required to be ascertained from the records to see whether the premium paid covers the amount or not.
14.23. There are no independent computations produced to show that the amount of premium was far less than the dispatched consignments. It would not be out of place to mention that details of premium as pleaded by plaintiff was not categorically denied in the corresponding para of written statement by defendant no.1 with no specific claim whatsoever in the entire written statement or the evidentiary affidavit of DW1 Ex. D1W1/A about the amount of premium actually paid or the amount of premium which was payable instead on account of all the declared consignments, all the undeclared consignments and the total consignments for the period of policy since the commencement of policy till the date of claimed CS 10267/16 M/s Kay Dee Industries & Anr. Vs. Royal Sundram Alliance Page 36 of 41 consignment to understand the case being putforth by defendant no.1. The case putforth by plaintiff, on the other hand, is that although all the consignments were not declared as yet, considering that there was a period applicable within which consignments were to be declared as per the declaration clause of the admitted policy, considering that there is a fixed premium as per the value of consignment which is 0.12 % of the insured sum with limit of Rs. 50 lakhs qua per conveyance / qua anyone location with also 110% of Invoice value as sum insured, therefore, even calculating and adding premium with respect to undeclared consignments, the value of premium payable comes out to be Rs. 39,799/- which is less than Rs. 40,000/- which is the total premium submitted to have been paid to defendant no.1. This also includes premium for EX034 and EX039 which are INCO Terms 'EX-WORK' which were not included even by the Surveyor in Survey Report Mark A. Communications between surveyor and plaintiff placed on record as Ex.PW-1/10 and Ex.PW-1/12 make mention of previous emails exchanged between them dealing with possibility of risk coverage at the end of buyer. Reference to those emails contain clarifications on the part of plaintiff that the claimed consignment was 'CFR' as per which, "the buyer's risk starts once the vessel leave the Indian boundary" and thus, there was no ground with the plaintiff to involve buyer as the goods were damaged at the warehouse before being even loaded at the vessel. Although, defendant no.1 has not disputed the claim of plaintiff on this basis, however, it is mentioned that this became immaterial considering that the goods were destroyed even before the relevant stage. This was also taken note of, by the surveyor in his survey report and therefore, even excluded CS 10267/16 M/s Kay Dee Industries & Anr. Vs. Royal Sundram Alliance Page 37 of 41 two of the consignments from the calculations made to assess the loss. The insured sum was Rs.1,66,66,667/- as per the premium of Rs.20000/- which is 0.12% of Rs.1,66,66,667/- and accordingly, can be calculated to be Rs.3,33,33,333/- against premium of Rs.40,000/- while the transit value, even including all the declared and non- declared consignment, including the claimed damaged consignment is given to be Rs.3,22,79,932/- which is less than the total sum insured upon the paid premium.
14.24. It is noted that the damaged consignment was duly declared with defendant no.1 and premium against the said consignment was duly paid by plaintiff. There is no dispute that the entire consignment got damaged due to fire. It is also proved that plaintiff informed defendant no.1 with due promptitude to carry out a survey and pay for the loss incurred on account of damaged consignment. It is also proved by plaintiff that the entire consignment got damaged on account of fire as per joint survey report Ex.PW-1/11 by independent surveyors assigned by various agencies involved. Defendant no.1 appointed a surveyor to assess the loss which communicated with plaintiff asking for documents and which gave a report to defendant no.1. Defendant no.1 repudiated the insurance claim solely on the basis of the survey report adopting the said basis of low premium balance against total transit value at the commencement of claimed consignment and thus, did not allow the insurance claim of the plaintiff. Defendant no.1 utterly failed to contest the claim of plaintiff that an additional premium was paid which thereby as per the tabulation sheet containing the record of entire declared and undeclared consignments with amount of CS 10267/16 M/s Kay Dee Industries & Anr. Vs. Royal Sundram Alliance Page 38 of 41 premiums added even against undeclared consignments, which thereby increased the limit of policy sum insured, thus, providing cover of the claimed damaged consignments, in all forms. Defendant no.1 is under a liability to indemnify plaintiff of the loss of damaged consignment as per the scope of policy. It is accordingly held that plaintiff has been able to convincingly prove that there was indeed sufficient premium balance available with defendant no.1 to cover insured claimed consignment and thus, the basis underlined by defendant no.1 to disallow the claim raised by plaintiff against loss suffered is rejected.
14.25. Plaintiff has claimed recovery of amount of Rs.39,65,438/-
against the loss suffered. Ld. Counsel for plaintiff fairly conceded when clarification was sought from him that the principal amount of suit was indeed value of the consignment which is Rs.32,26,762.35 whereas in the legal notice, amount of Rs.36,04,652/- was claimed as insured sum being 110% of invoice value which became the basis of decreetal amount prayed as Rs.39,65,438/-. It is also noted that the value declared in the tabulation sheet containing shipment details Ex.PW-1/7 also contain the declared value as Rs.36,04,652/-. It is settled that the amount of actual loss has to be paid to the insured as insured cannot be placed to gain any advantage or profit out of loss rather only to compensate for what has been lost in order to put it in same position as if no consignment was sent. The amount of actual loss has been certified by plaintiff to be Rs.31,52,242/- as per Ex.PW-1/16 which was also basis of claim lodged with defendant no.2 by plaintiff, although the declared value is Rs.36,04,652/-. Considering that the actual loss of cargo as CS 10267/16 M/s Kay Dee Industries & Anr. Vs. Royal Sundram Alliance Page 39 of 41 assessed by plaintiff itself is Rs.31,52,242/-, defendant no.1 is under an obligation only qua this amount payable to plaintiff. It is also clearly mentioned in legal notice Ex.PW-1/21 that the right of subrogation was given by plaintiff to defendant no.1 with respect to salvage value and other rights in goods. Therefore, any deduction qua the salvage value is uncalled for. Plaintiff is thus held entitled to recovery of amount of Rs.3152242/-. There is nothing mentioned with respect to any agreement between the parties qua grant of any pre-suit interest. Pendentelite and Future interest @ !2 % p.a. has been sought in the prayer clause which appear to be on a higher side. Scale of justice would be balanced if pendentelite interest @ 9% per annum and future interest @ 6% per annum is granted. Accordingly, pendente-lite interest @ 9% per annum on the principal amount is granted from the date of filing of the suit till date of decree in favour of the plaintiff and against the defendants. Further, future interest @ 6% per annum is also granted since the date of decree till realization of the principal amount.
14.26. Issues no.2, 3 & 4 are accordingly decided in favour of plaintiff and against the defendant no.1. It is noted that no evidence has been led on behalf of defendant no.2 and no relief has been sought against defendant no.2.
Issue no.5
(v) Relief
15. In view of the above discussion, suit of the plaintiff is accordingly decreed for a total amount of Rs.31,52,242/- payable CS 10267/16 M/s Kay Dee Industries & Anr. Vs. Royal Sundram Alliance Page 40 of 41 by defendant no.1 along with pendente-lite interest @ 9% per annum since commencement of the suit till date of decree.
Further, future interest @ 6% per annum is awarded to plaintiff since the date of decree till realization of amount. Future interest will become payable after 3 months from the date of decree if decreetal amount is not paid to the plaintiff by defendant no.1 within the said period.
16. Decree sheet be prepared accordingly. Costs of the suit are also allowed in favour of the plaintiff and against defendant no.1.
17. File be consigned to record room.
Announced in the open (SHELLY ARORA)
Court on 21.12.2021 Additional District Judge - 01 (SE)
Saket Courts, New Delhi
CS 10267/16 M/s Kay Dee Industries & Anr. Vs. Royal Sundram Alliance Page 41 of 41