Delhi High Court
M/S Anant Raj Agencies Pvt. Ltd vs M/S National Insurance Co. Ltd on 14 May, 2009
Author: Rajiv Sahai Endlaw
Bench: Rajiv Sahai Endlaw
*IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CS(OS)1413/1990
% Date of decision: 14 th May, 2009.
M/S ANANT RAJ AGENCIES PVT. LTD ....... Plaintiff
Through: Mr. Uttam Datt & Ms. Biji Rajesh,
Advocates
Versus
M/S NATIONAL INSURANCE CO. LTD........ Defendant
Through: Ms. Sonia Sharma & Mr. Subhash
Chandu, Advocates
CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
1. Whether reporters of Local papers may
be allowed to see the judgment? Not necessary
2. To be referred to the reporter or not? Not necessary
3. Whether the judgment should be reported
in the Digest? Not necessary
RAJIV SAHAI ENDLAW, J.
1. Suit for recovery of Rs.21,66,725.25 together with pre-institution interest at 17.5% per annum of Rs.5,94,236.52 and for pendente lite and future interest is for adjudication. The claim is on the basis of a Fire Insurance Policy for Rs.30 lacs in respect of building including electrical, sanitary, wooden and sidelining of cork in the factory (silent at present) at E-2 Jhandewalan Extension, New Delhi. The policy is stated to have been renewed from time to time and last from 24th November, 1986 to 24th November, 1987. The incident of fire occurred on 1st June, 1987. The plaintiff claims to have spent Rs.21,66,725.25 on repairs and reinstatement of the building to the original condition. Upon the defendant refusing to settle the said claim of the plaintiff the suit CS(OS)1413/1990 Page 1 of 22 was filed. The defendant contested the suit inter-alia by pleading that the plaintiff had no insurable interest in the building and had obtained the policy by misrepresentation and fraud and was thus not entitled to any claim.
2. On the pleadings of the parties, the following issues were framed on 23rd February, 1995:-
1. Whether the suit is properly instituted and filed?
2. Whether the plaintiff had no insurable interest in the premises as alleged?
3. Whether the insurance has been obtained by misrepresentation and fraud as alleged?
4. To what amount the plaintiff is entitled to?
5. To what rate of interest, the plaintiff is entitled?
6. Relief.
The plaintiff examined only its Director Mr. Anil Sarin. The defendant examined its Manager Mr. S.D. Mal and Mr. S.S. Krishnan, Director of Mehta & Padamsey Surveyors Pvt. Ltd.
My issue-wise findings are as under:-
Re. Issue No.1 (Whether the suit is properly instituted and filed?)
3. The plaintiff is a company i.e. a juristic person. In para 1 of the plaint, it is stated that Shri Anil Sarin is the Director and is able and competent to depose on the facts of the case with which he is well conversant, he is also empowered and authorized to file, institute and verify the suit for and on behalf of the plaintiff for which a CS(OS)1413/1990 Page 2 of 22 resolution has been passed by the Board of Directors of the plaintiff company. The defendant in its written statement in preliminary objection No.1 itself controverted that the suit is properly instituted and filed. It was further averred that the defendant had not been furnished any copy of the Resolution stated to have been passed by the Board of Directors of the plaintiff authorizing the institution of the present suit and/or authorizing Mr. Anil Sarin to institute the suit. Para 1 of the plaint regarding the authority of Mr. Anil Sarin was also denied in the reply on merits. The plaintiff was also put to strict proof that Mr. Anil Sarin is a Director of the plaintiff and competent to institute the suit. In view of the challenge by the defendant the issue was struck.
4. As aforesaid, the plaintiff has examined only one witness. The said witness namely Mr. Anil Sarin in his affidavit by way of examination in chief has reiterated the contents of the plaint to the effect that he is the Director of the plaintiff and was conversant with the facts of the case and authorized to file, institute and verify the suit for and on behalf of the plaintiff. His affidavit further states that a Resolution had been passed by the Board of Directors of the plaintiff and a true copy of the said Resolution was given Exhibit P-1.
5. The record does not show that the affidavit was formally tendered before the Joint Registrar into evidence. Mr. Anil Sarin appeared for his cross examination on 27th January, 1999. The first question put to him in cross examination was whether he had brought the minutes book regarding the Resolution extract whereof had been given Exhibit P-1 in the affidavit. He replied in the negative. In reply to another question he deposed that there was no other Resolution or Power of Attorney authorizing him for the CS(OS)1413/1990 Page 3 of 22 present suit except the Board Resolution dated 19th February, 1990 on extract whereof Exhibit P-1 had been given. Inspite of the said cross examination, neither any time was sought by the plaintiff for producing the minutes book nor for examining any other witness in that regard. The plaintiff closed its evidence on the same date. During arguments also the aforesaid cross examination was highlighted. Even then there was no attempt to seek any opportunity for proving the Resolution.
6. The defendant admits having insured the plaintiff. The defendant does not thus dispute the plaintiff being a private limited company. Order 29 of the CPC authorizes a private limited company to be sued and sue in its name, and the pleadings to be signed and verified on behalf of the such company by the Secretary or by any Director or other Principal Officer of the Corporation/company, who is able to depose to the facts of the case. Mr. Anil Sarin has deposed that he is the Director and aware of the facts of the case. There is no serious challenge to this aspect in the cross examination. The defendant has not in the cross examination suggested otherwise. Thus to the extent of signing and verification, it has to be held that the plaint is properly filed. However, as held by this court in Nibro Ltd. Vs. National Insurance Co. AIR 1991 Delhi 25, due signing and verification is distinct from institution. Order 29 does not cover institution of the suit. A corporation, as the plaintiff in the present case is, when an issue in this regard is framed is also to prove valid institution of the suit. Such valid institution can only be under the authority of the company. Such authority can flow only from the Board of Directors of the company. Thus, it is to be established that the suit has been instituted under the authority of the Board of Directors of the company and/or under the authority of some person CS(OS)1413/1990 Page 4 of 22 empowered by the Board of Directors of the company to from time to time institute suits and legal proceedings for claims of the company.
7. The plaintiff being fully aware of the aforesaid, sought to prove the Resolution of the Board of Directors. However, neither does the affidavit by way of examination states that the book required to be maintained in law containing the minutes of the meetings of the Board of Directors can be produced on demand nor was the said book produced when the witness entered into the box. Inspite of cross examination no opportunity was also sought.
8. What is before the court and has alone been before the court is the extract taken out of the minute book. The said extract is secondary evidence under Section 63 of the Indian Evidence Act. Section 64 thereof provides proof by primary evidence. Secondary evidence can substitute primary evidence only when foundation therefor is laid down. No foundation has been laid in the present case. Thus in law there is no Exhibit P-1 and no Resolution of the Board of Directors of the plaintiff authorizing the institution of this suit or authorizing Mr. Anil Sarin to institute the suit. The suit is thus liable to fail on the first part of issue No.1.
9. In relation to the monetary claims of nationalized banks and financial institutions, the Apex court in United Bank of India Vs. Naresh Kumar AIR 1997 SC 3 has undoubtedly held that such technical pleas ought not to defeat the claims. The plaintiff is not a bank or a public financial institution. No public monies are involved in the present suit. It is the private claim of the plaintiff. The Division Bench of this court subsequently in M/s Birla DLW Ltd. CS(OS)1413/1990 Page 5 of 22 Vs. M/s Prem Engineering Works 77 (1999) DLT 171 has held that notwithstanding United Bank of India (Supra) upon failure to prove valid institution of the suit the suit is liable to be dismissed.
10. Qua issue No.1, thus it is held that the suit has been proved to be properly filed but not proved to have been properly instituted. Re. Issues No.2&3 (Whether the plaintiff had no insurable interest in the premises as alleged?) & (Whether the insurance has been obtained by misrepresentation and fraud as alleged?)
11. The discussion on these two issues being found to be interconnected are taken up together. At the outset, an interesting feature of this case may be noticed. On the first date of the commencement of the final hearing, it was pointed out t the counsels that neither was the insurance policy, on the basis whereof the claim in suit has been made, on record nor any copy thereof, leave apart poof thereof. All that the plaintiff has filed is a renewal endorsement and on which Exhibit P-3 has been put. The said renewal endorsement does not contain the terms & conditions of insurance. Though in the absence of the policy, the claim of the plaintiff must fail but considering that the Apex court in National Insurance Co. Vs. Jugal Kishore AIR 1988 SC 719 though with respect to Motor Accident Policy has held that it is incumbent upon the insurance company as a instrumentality of state to act fairly and to produce the insurance policy in the court, and not take shelter behind abstract doctrine of burden of proof, opportunity was given to both parties to produce the insurance policy. The counsel for the plaintiff on the next date informed that the same was not available with the plaintiff. The counsel for the defendant also on the next date informed that CS(OS)1413/1990 Page 6 of 22 the policy was not available with the defendant either. However, the factum of issuance and of the same being in force at the time of the incident is not in dispute. No objection in this regard appears to have been taken at any time in the proceedings also. Though I entertain serious doubts on the maintainability of the present suit itself in the absence of the insurance policy and in the absence whereof this court is not in a position to adjudicate the claim under the said policy but the issues having been struck and in view of the requirement of the law of this court as the first court being required to give a finding on all issues, I am proceeding to do so.
12. First on the aspect of insurable interest. The case in the plaint is that the plaintiff had entered into an agreement dated 11th September, 1981 with one Shri Balraj Virmani who was acting not only for himself but also as Karta of Balraj Virmani & Sons (HUF) and as Managing Director of Virmani Refrigeration & Cold Storage (P) Ltd. The plaintiff claims that under the said agreement it was given possession of 60% of the area of property No.E-2 Jhandewalan Extension, New Delhi which was placed at the absolute disposal of the plaintiff. The plaintiff thus claims that it had insurable interest in the building and obtained the insurance.
13. The defendants in the written statement contended that since according to the agreement aforesaid relied upon by the plaintiff, the plaintiff had only agreed to build, re-develop, construct & re- construct the aforesaid property and after carrying out the said work would have been entitled to 60% of the constructed area, the plaintiff without carrying out the said works had no rights in the property. Admittedly, no works of building, re-development, construction & re-construction had been carried out by the plaintiff CS(OS)1413/1990 Page 7 of 22 till the incident of fire. It is further averred by the defendant that there was no factory in the premises and the ice factory earlier existing in the premises had ceased operations in 1961 and the building was lying closed. It is the case of the defendant that the plaintiff without disclosing any of the said facts had obtained the insurance by misrepresentation and fraud and in breach of the principles of Ubberima Fides and the contract was thus void. It was further averred that the sidelinings of cork which had inter-alia been got insured by the plaintiff and which is also mentioned in the renewal endorsement Exhibit P-3 and for damage to which also claim was made was in fact, on the date of the insurance itself junk, in as much as the same was for the purposes of running an ice factory and which had not been running in the premises for over 20 years prior to insurance. It was further averred that in any case under the agreement of the plaintiff the Virmanis, the plaintiff was to re- construct the building and therefore the said cork lining even if of any value, on the date of the incident had no value and was not required to be replaced or used in the agreed future development of the property.
14. The plaintiff in its replication stated that though under the earlier agreement the plaintiff was entitled to only 60% share in the property but now the plaintiff was in exclusive possession of the property and thus had an insurable interest therein. It was further pleaded that all the said facts were disclosed while giving the proposal for taking out the insurance and the defendant had insured after satisfying itself that the plaintiff was the purchaser of 60% share in the property and thus had a insurable interest therein. It was further pleaded that since the building had been damaged it had to be restored and for which the claim had been made. CS(OS)1413/1990 Page 8 of 22
15. The witness of the plaintiff deposed that under the agreement dated 11th September, 1981 with the Virmanis the plaintiff was in possession of 60% area of the property placed at its disposal in terms of the said agreement; that the plaintiff was in possession of the original agreement and a copy thereof was given Exhibit P-2. He thus claimed that the plaintiff had insurable interest to the said 60% share in the property. Though the insurance policy was not proved but the renewal endorsement was proved as Exhibit P-3. The estimate of repairs obtained by the plaintiff received from M/s Rajan Agency was given Exhibit P-6. It was further deposed that after the incident of fire, the suit No. 601/1984 of this court filed by the plaintiff against the Virmanis had been decreed as compromised and as per which compromise the entire property had been sold to the plaintiff by the Virmanis and the possession of the entire property had been handed over to the plaintiff by the Virmanis on payment of entire sale consideration by the plaintiff. However, it was clarified that at the time of incident the plaintiff had insurable interest in 60% share only in the property. It is further deposed that the plaintiff had carried out extensive repairs and reinstated the building to its original condition and incurred Rs.21,66,725.25 on the same. Significantly, no document in this regard was referred to in the affidavit.
16. The said witness of the plaintiff in cross examination denied the suggestion that the building was to be demolished and thereafter to be constructed by the plaintiff; he claimed that under the agreement with the Virmanis the plaintiff was required to retain the building as it is and to only add a certain floor in the existing building. He admitted that the first agreement was entered into by CS(OS)1413/1990 Page 9 of 22 the plaintiff with the Virmanis in September, 1980 and deposed that a sum of Rs.11,000/- was paid as consideration by the plaintiff to Virmanis in September, 1980. He admitted that the said agreement had not been filed in the court. He further admitted that after the conclusion of the agreement Exhibit P-2 the cold storage which was earlier being run in the property ceased to run, though claimed that the facilities to run the same continued to exists. He denied the suggestion that the cold storage had ceased to operate in 1960-61 and denied knowledge that the licence was required to run a cold storage or that the said licence had not been renewed since 1960-61. In response to another question in the cross examination he denied that the plaintiff had reconstructed the property but claimed that the plaintiff had developed the property by making additions and alterations and the reconstruction was done in the year 1988. Though, he claimed that the accounts were maintained of the expenses incurred in the said development of the property but no accounts were produced. He claimed that the wooden floor and cork sidelinings which were burnt in the fire were replaced with pucca floors. He admitted that all the said works had been completed prior to the institution of the suit.
17. The witness of the defendant besides reiterating the pleas in the written statement, in cross examination deposed that his statement was based on an investigation got done by the defendant from a retired police officer and he had no personal knowledge of the matter.
18. The agreement on the basis whereof the plaintiff claims an interest in the property has again not been produced in original. Exhibit P-2 has been put on a photocopy. The same is not admissible CS(OS)1413/1990 Page 10 of 22 in evidence. In the absence thereof there is no document showing any insurable interest of the plaintiff in the property. No foundation has been laid for adducing secondary evidence with respect thereto.
19. Even if Exhibit P-2 is to be read in evidence, in the same, Virmanis are referred to as the co-owners and the plaintiff as the builder/promoter. The said document refers to the earlier documents dated 15th September, 1980 and 4th December, 1980 signed between the parties whereunder the plaintiff had agreed to build, redevelop, construct, reconstruct the property aforesaid on the terms and conditions mentioned therein. Exhibit P-2 is only of the Virmanis placing the property at the disposal of the plaintiff in terms of the earlier agreements. Thus without the earlier agreements being produced and for non-production whereof there is no explanation, this document is incomplete and would not constitute evidence for this reason only. Be that as it may, under the said document the plaintiff was put into possession of 60% of the area of the property as delienated in the plan stated to be annexed to the said document and which plan has again not been produced. It is further provided that the plaintiff shall make arrangement for safety of their goods and material lying in the 60% area placed at their disposal while the Virmanis were to continue to have their own safety arrangements. This document further records that the Virmanis and the plaintiff were entering into a separate agreement regarding the sale of entire plant and machinery of the cold storage. However, the said agreement has also not been produced. The plaintiff under the said document was to continue its efforts of having the tenants, licencees, occupants of the property evicted. The Virmanis under the said agreement confirmed having received from the plaintiff till that date CS(OS)1413/1990 Page 11 of 22 a sum of Rs.8 lacs only and the plaintiff agreed to pay a further sum of Rs.3 lac to the Virmanis.
20. From the material available, it appears that the agreement of the plaintiff with the owners of the property was what is in trade parlence known as a collaboration agreement. Under such agreements and as appears to be in the present case also from the limited evidence available, the owner of a property for consideration of monies if any received from the builder and for further consideration of the builder at its own cost and expense redeveloping the property, agrees to transfer a share of the land under the property in favour of the builder or his nominee.
21. This court in Ansal Properties & Industries Pvt. Ltd. Vs. Dr. Anand Nath MANU/DE/0824/1991 (and which judgment unfortunately does not appear to be reported in any of the journals having large circulation) has adjudicated nature of such collaboration agreements and even specific enforceability thereof. It was held that such collaboration agreements are agreements to transfer immovable property as distinct from agreements of construction of immovable property. It was further held that such agreement contemplates exchange between the owner of the land and the owner of the building constructed thereon, after the building has come into existence. The argument that a suit for specific performance of such agreement lies only after the building comes into existence was negatived. It was further held that on construction of building, one is the owner of land and other of the building and at that point of time, a deed of transfer or exchange is contemplated - At that time, the properties belonging to both are in CS(OS)1413/1990 Page 12 of 22 existence, so clearly exchange of each other's property will then be simultaneous. It was further held that merely because of ownership of land, building constructed thereon by builder under contract with owner of land, will not belong to the owner on the principle of accretion; the building having come into existence in accordance with terms of the contract and with investment of the builder, belongs to the builder. A portion of the building belonging to the builder is then transferred/exchanged to/with the owner of land in consideration of owner transferring an undivided share in land underneath to the builder.
22. On such understanding of collaboration agreements, the courts have been issuing interim orders in disputes arising therefrom. Reference must be made to one such order of Justice H.L. Anand of this court in Kailash Nath & Associates Vs Shri Badri Prasad in suit No.221/1981, disposing of interim applications on 14th September, 1981.
23. Thus, it cannot be said that the plaintiff had no insurable interest in the property on the date of the insurance or on the date of the incident insured against. The plaintiff on that date was an agreement purchaser with respect to the said property and had paid part consideration of Rs.8 lac for the property and in part performance of such agreement of sale/transfer was in possession of the property. This court in Kuldeep Singh Suri Vs. Surinder Singh Kalra 1998 IV A.D. (Del.) 469 has taken judicial notice of such transactions happening in Delhi owing to the restrictions imposed in the perpetual lease of the land underneath the properties. The agreement between the parties is of much prior to the amendment to the Registration Act making agreements to sell CS(OS)1413/1990 Page 13 of 22 whereunder possession is delivered in part performance compulsorily registrable. The plaintiff under section 53 A of the Transfer of Property Act had an interest not only to enforce the agreement with respect to the property but also in the property, having been put into possession thereof in part performance of the agreement.
24. Once, it is found that the plaintiff had an interest in the property, the said interest would definitely be insurable and the defendant has also not shown any reason for the said interest being not insurable. The only contention of the defendant was that since the plaintiff is not disclosed to be the owner of the property or having any registered document with respect to the property, the plaintiff would have no insurable interest. However that position has not been found to be correct. However what was the extent of the said insurable interest is a different matter.
25. A person who is so interested in the property as to have benefit from its existence and prejudice by its destruction is said to have insurable interest in that property. Such a person can insure the property against fire. The interest in the property must exist both at the inception of the policy as well as at the time of loss. If it did not exist at the time of commencement of contract, it cannot be the subject matter of insurance and if it did not exist at the time of loss, he suffers no loss and so needs no indemnity. Here, the plaintiff on the date of inception of policy was certainly interested in the property. Whether the plaintiff was to be prejudiced from destruction thereof or not is a different matter.
26. The defendant has neither produced any documents or records of the time when the insurance was taken nor examined any witness CS(OS)1413/1990 Page 14 of 22 in that regard. Thus there is no evidence to show as to what was represented by the plaintiff to the defendant at the time of insurance or on what parameters/basis the defendant agreed to insure the property aforesaid of the plaintiff. In fact as aforesaid the insurance policy itself is not before the court.
27. All that this court has is Exhibit P-3 being the renewal endorsement. The same in the column "description" which purportedly is of the property insured, contains the following:-
"On Building (above plinth level) only including electrical, sanitary, wooden and sidelining of cork belonging to the insured whilst stored and/or lying and/or fitted in insured factory (silent at present) built of first class construction, situated at E-2 Jhandewala, New Delhi as per fire policy".
The sum insured is shown as Rs.30 lacs and the renewal premium of Rs.4,500/- had been paid by the plaintiff.
28. From the aforesaid, it is not clear as to what was insured whether the building or anything lying in the building. The plaintiff in para 3 of the plaint has stated that the plaintiff under its agreement with Virmanis was "to make arrangement for safety of their goods and material lying in 60% area placed at the disposal of the plaintiff". However, in para 5 it is stated that the plaintiff had taken out a fire insurance policy "in respect of the premises in possession of the plaintiff at E-2 Jhandewalan Extention". The written statement of the defendant also proceeds as if the insurance was of the building.
CS(OS)1413/1990 Page 15 of 22
29. The plaintiff having not produced the entire agreements in its favour with respect to the property, one can safely presume that the same were not produced before the defendant also. This court is totally at a loss to determine as to on what basis the defendant had insured, treating the plaintiff as owner or as an agreement purchaser. The renewal endorsement is of no help in this regard. The list of tenants/occupants annexed to Exhibit P-2 shows as many as nine tenants on the first floor of the 60% portion. Nothing has come on the record as to what happened to the said tenants and/or how they were affected by the incident of fire. It is not the case that the fire was limited to the ground floor only of the property.
30. A perusal of the renewal endorsement discloses at least one thing that the insurance was with respect to the sidelinings of cork also. It is clearly admitted that the said sidelining of cork, if any, was of no value because the property was to be redeveloped/reconstructed. It is not the case of the plaintiff also that the cold storage or the ice factory in the property was to continue. Considering the nature of the cork embedded in the walls of a ice factory/cold storage irrespective of the age thereof, the same can have no salvage value by way of reuse in some other property. Thus, the insurance with respect thereto is not understandable. At the same time, it is not as if the defendant was not aware of the factory being closed. The defendant before accepting the proposal for insurance is expected to investigate the same. The same is evident from the renewal endorsement itself containing, with respect to the factory "silent at present". The defendant having insured the premises, it has to be presumed that the defendant was aware of all the aspects with respect thereto. The case is not found of the nature where certain facts could be in the personal knowledge CS(OS)1413/1990 Page 16 of 22 of the plaintiff only and which the defendant had no way of discovering or knowing unless disclosed by the plaintiff. The insurance was of a immovable property and the title with respect thereto can easily be investigated.
31. Thus the defendant has failed to prove that the insurance had been obtained by misrepresentation and fraud.
32. The issues No.2&3 are thus decided in favour of the plaintiff and against the defendant.
Re. Issue No.4 (To what amount the plaintiff is entitled to?)
33. In the light of the aforesaid discussion and the nature of right of the plaintiff, I do not find the plaintiff to be entitled to any amount under policy. The purpose of insurance is to place the insured in the same position as he would have been had the incident insured against not occurred i.e. to insure against the losses from the incident insured. From above, it is clear that the plaintiff was merely a collaborator in the redevelopment of the property. The plaintiff had till the incident of fire not redeveloped the property and thus not incurred any expenses thereon. The plaintiff had only paid Rs.8 lacs to the owners of the property till then. The plaintiff was to pay a further Rs.3 lac which also from the reading of the compromise in the suit between the plaintiff and the Virmanis, (copy whereof was filed by plaintiff and even though not proved can be read against the plaintiff) it appears were not paid till the said compromise. The plaintiff nevertheless got the property insured for Rs.30 lac, though having paid Rs.8 lac themselves for the same. The existing structure on the property as per the collaboration agreement was in any case to be re-developed. No material has CS(OS)1413/1990 Page 17 of 22 been placed before this court to show the extent of the fire or the damage caused thereby. Though the witness of the plaintiff sought to prove an estimate of the cost of repairs from M/s Rajan Agency but without author of the document being produced the same is not evidence in law. Nothing has been stated as to what the old structure of the property was. Ordinarily when floors are to be added and/or the property redeveloped, the old structure is found to be of no use. I had during the hearing inquired from the counsel for the plaintiff whether any basement had been constructed underneath the property as is now the norm or as to how many floors the property comprised earlier and now. Nothing was forthcoming. Common sense tells that a structure meant for ice factory or a cold storage is of no value in conversion of the property to commercial as it admittedly now is. Exhibit P-2 does not disclose that any portions of the structure were to be retained. No site plan has been proved before the court. The plaintiff has suppressed the best evidence from this court. The plaintiff to be entitled to any amount under the policy ought to have proved the structure which was damaged and as to how that structure was of use/relevance in the work of redevelopment of the property admittedly carried out by the plaintiff.
34. As far back as in Gnana Sundaram Vs. Vulcan Insurance Co. Ltd., AIR 1931 Rangoon 210 (DB) it was explained:-
"A man is interested in a thing to whom advantage may arise or prejudice happen from the circumstances which may attend it and whom it is important that its condition as to safety or other quality shall continue. Interest does not necessarily imply a right to the whole or part of the thing, nor necessarily and exclusively that which may be the subject of privation, but he having some relation to, or concern in the subject of the insurance; which relation or concern, by the happening of the perils insured against, may be so effected as to produce a damage, detriment or prejudice to the person insuring.CS(OS)1413/1990 Page 18 of 22
And where a man is so circumstanced with respect to matters exposed to certain risks and dangers as to have a moral certainty of advantage or benefit but for these risks and dangers, he may be said to be interested in the safety of the thing. To be interested in the preservation of a thing is to be so circumstanced with respect to it as to have benefit from the existence, prejudice from its destruction."
It was further held "only those can recover who have an insurable interest and they can recover only to the extent to which that insurable interest is damaged by the loss. In the course of the argument it has been sought to establish a distinction between a fire policy and a marine policy. It has been urged that a fire policy is not quite a contract of indemnity and that the assured can get something more than what he has lost. It seems to me that there is no justification in authority, and I can see no foundation in reason, for any suggestion of that kind. What is it that is insured in a fire policy? Not the bricks and materials used building the house, but the interest of the assured in the subject-matter of insurance, not the legal interest only, but the beneficial interest.
Thus it follow that insurable interest need not necessarily be whole interest, it can also be a part of the interest."
35. The plaintiff has not proved any such thing. The insurable interest of the plaintiff in the property was only to the extent of preserving it for the purposes of redevelopment. No loss is found to have been occasioned to the said insurable interest of the plaintiff. There is no evidence of loss or damage or of the extent of the incident of fire. The report of the Delhi Fire Service though on record has also not been proved. If the same is read the same shows that the property involved in the fire was care taker house, household articles, one Lambretta scooter, one cooler, old furniture, electrical fittings, godown insulation cork and also building damaged. The plaintiff in the claim form also though not proved but which can always be read against the plaintiff had stated that the property was primarily vacant and only old furniture was lying therein.
CS(OS)1413/1990 Page 19 of 22
36. The counsel for the plaintiff relied heavily on the survey report. With respect to the survey report, before proceeding to discuss the same I may notice that the Apex court recently in New India Assurance Company Ltd. Vs. Pradeep Kumar Civil Appeal No.3253/2008 decided on 9th April, 2009 has held that although the assessment of loss by the approved surveyor is pre-requisite for payment or settlement of claim of Rs.20,000/- or more by insurer but surveyor's report is not the last and final word. It is not that sacrosanct that it cannot be departed from. It is not conclusive. It was further held that the approved surveyor's report may be base or foundation for settlement of a claim by the insurer in respect of the loss suffered by the insured but surely such report is neither binding upon the insurer nor insured.
37. The surveyors have reported that the building was constructed in 1950 to use as an ice factory and cold storage but after some years the ice factory and cold storage was closed. They have also reported that the fire was serious in nature and caused heavy damage to the building and contents. The entire insulation coverings on the walls, ceilings and columns in the storage chambers consisting of bitumen layers, wooden framework and cork lining had been burnt/destroyed and the value of the cork insulation constituted the major part of the loss. Besides the same, it is reported that the cement plaster on the walls, ceilings and columns was dislodged and the brick walls at places had developed cracks and/or were broken by the fire brigade to fight the fire effectively. The wooden doors and windows are also reported to have been burnt. Some of the columns are reported to have been damaged and the RCC slabs of the extended balconies is stated to have been badly CS(OS)1413/1990 Page 20 of 22 damaged. The concrete floors at places is reported to have bulged out due to heat and required replacement. The surveyor assessed the loss on reinstatement value basis at Rs.21,88,034.00 and at depreciated value at Rs.10,58,203.00. The surveyor left the question of insurable interest to be decided by the defendant.
38. Even though, the survey report as aforesaid is not binding on the defendant but the plaintiff to be entitled to any claim thereunder ought to have shown as to how the plaster of walls which was dislodged, the brick walls which had developed cracks and the columns and the RCC slabs which were damaged and the concrete floor which had bulged out were relevant in the context of redevelopment of the property, which was the only right of the plaintiff on the date of the incident and only which could have been insured. The plaintiff would have been found to be entitled to any monies under the policy only on establishing that the walls, columns and floors aforesaid which were damaged if had not been damaged were to be retained in the same manner and position during redevelopment also and could have been used and as to how much expense the plaintiff has had to incur in repairing, replacing, strengthening the same. In the year 1951 which the surveyors have reported to be the year of construction and to which nothing adverse has been shown by the plaintiff, construction was generally of load bearing walls. The modern construction is on columns and beams with walls being merely to partition. In the normal course, the original load bearing walls, columns the RCC slabs, wooden floors would not be retained or be of any use in redevelopment of the property. The surveyors have also reported that the main loss was owing to the burning of the cork linings along the walls. However, the said cork lining was of no value in the future plans of the CS(OS)1413/1990 Page 21 of 22 building and as aforesaid by its very nature had no salvage value even if had not been burnt. It appears that the said cork lining and bitumen layers on the walls for the purposes of insulation must have been the cause of the fire smouldering for long.
39. Thus even the survey report does not advance the case of the plaintiff any further. The plaintiff has not proved any expenses incurred. The plaintiff has not proved any loss suffered or any prejudice suffered by it owing to the incident of fire.
I, thus, decide Issue No.4 in favour of the defendant and against the plaintiff.
Re. Issue No.5 (To what rate of interest, the plaintiff is entitled?)
40. Since, the plaintiff has not been found entitled to any amount, the question of the plaintiff being entitled to any interest does not arise. This issue has become infructuous.
Re. Issue No.6 (Relief)
41. The plaintiff having failed on issue No.1 and the issue No.4, the suit is liable to be dismissed. The plaintiff is found to have not even made any effort to prove its case and the case of the plaintiff is found to be false. In fact, the entire circumstances do not inspire any confidence in the purpose for the plaintiff obtaining the insurance. Thus the plaintiff is also burdened with costs of the suit. Counsel's fee for the defendant assessed at Rs.50,000/-.
Decree sheet be drawn up.
RAJIV SAHAI ENDLAW (JUDGE) May 14, 2009/PP CS(OS)1413/1990 Page 22 of 22