Calcutta High Court
M/S Banerjee & Banerjee vs National Insurance Co.Ltd on 8 July, 2013
Author: Soumen Sen
Bench: Soumen Sen
ORDER SHEET
CS No.334 of 1989
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
ORIGINAL SIDE
M/S BANERJEE & BANERJEE
Versus
NATIONAL INSURANCE CO.LTD.
BEFORE:
The Hon'ble JUSTICE SOUMEN SEN
Date : 8 th July, 2013.
Appearance:
Mr. Dhruba Ghosh, Adv.
For the plaintiff
Mr. Utpal Bose, Adv.
Mr. Abhijit Gangopadhyay, Adv.
Mr. Kanak Kiran Bandopadhyay, Adv.
For the Defendant.
The Court: The plaintiff has filed a suit for recovery of a sum
of Rs.12,13,761/-on account of goods stolen from the construction
site at Farakka Super Thermal Power Station of National Thermal
Power Corporation Ltd. (hereinafter referred to as "NTPC").
2
The said claim is arising out of a burglary policy being
No.1090/7507767 dated 29th November, 1984 entered into between
the plaintiff and the defendant.
The plaintiff was engaged as a sub-contractor by M/S
Hindustan Steel Works Construction Ltd. (hereinafter referred to as
HSCL) for construction of a portion of the main power house of
NTPC on the basis of a letter of intent issued on 5th March, 1984
followed by the execution of a formal agreement on 12th March,
1984. The value of the construction work allotted to the plaintiff
was Rs.1.90 crores. The plaintiff, in order to execute the project,
required various types of construction materials, building
materials, structural materials and items of plaint and machinery
at the site of work at Farakka. The plaintiff contended that the site
of work at Farakka was protected by brick built boundary wall
under the security arrangement of Central Industrial Security
Force (hereinafter referred to as CISF). The plaintiff was allotted a
yard for storage of its construction articles inside of such walled-up
protected area. The plaintiff also put barbed wire fencing, at its
cost, as a measure of additional security of the said area. The
plaintiff also engaged security guards for guarding and protecting
such materials stored inside.
3
The plaintiff on 4th December, 1984 sent a telegram to NTPC
with a copy forwarded to HSCL for information stating that the staff
of the plaintiff had left the site under severe threat and the guards
posted there are insufficient and panicstriken. The plaintiff
solicited arrangement of guarding materials and assets of the firm.
Thereafter on 13th December 1984 the plaintiff vacated the
site and filed a writ petition being CO No.8289 (W) of 1984 for
police help. Initially an order was passed in terms of prayer (g) and
thereafter on 17th January, 1985 the following directions were
passed:
"Let the interim order of injunction passed on 18.12.84
be continued until further order subject to following
modifications: -
1. The respondent No.1 will be a liberty to proceed
with the following works;
i) Multiple trench between compressor house and power house (from culvert to B.C.Ray complete).
ii) Let over portion of trenches on the north of power house (along 850 South Rd.).
iii) ACW Pump and Cooler foundation between axis 10 & 11 CD Bay cComplete.
iv) Handling over of AHU room at 16 M.
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v) Central Oil Soakpit.
vi) C-D Bay basement work.
vii) D.G.Building.
viii) Paving and trenches in boiler feed Pump area.
2. But while proceeding with such works, the respondent no.1 will not be entitled to impose any penalty or charge on damage against the petitioner for non-executing the work and such work if it is done by the respondent No.1 will be done at their own risk and costs.
3. The Police authorities are directed to secure the law and order in the area and protect the materials and stocks lying at the site and to render all assistance in this regard."
The plaintiff declared lockout on 13th December, 1984 and on December 14, 1984 the notice declaring lockout dated 13th December, 1984 was claimed to have been sent to the Insurance Company under certificate of posting.
On 16th February, 1985 resident engineer of the plaintiff on inspection at the site found that some plant, machinery and goods kept at the yard were stolen. On 19th February, 1985 the Officer- in-Charge of the local Police Station was informed about the said 5 burglary. The copy of the said letter was forwarded to the defendant on 1st March, 1985. The plaintiff lodged its claim on April 1, 1985 with the defendant-II.
Mr. Dhruba Ghosh, learned Counsel appearing on behalf of the plaintiff, submits that there is no dispute that the burglary policy was issued to the plaintiff and the plaintiff has suffered a loss arising within the policy. From the report of the surveyor, Exbt.C, and also from the evidence on the defendant witness in answers to question numbers 13, 23, 27, 37, 43 and 44 during chief and answer to question number 78 in cross examination the said fact is proved and established. There has been no serious dispute even as to the quantum of liability. In any event the surveyor has acknowledged a substantial amount of the claim. The defendant has only cited technical reasons for vitiating the policy and not disputed the fact of burglary or its quantum.
It was argued that the claim was lodged on 1st March, 1985. The defendant appointed a surveyor on 4th April 1985 and despite his report, the defendant did not respond for more than three years till March 7, 1988, when for the first time the defendant tried to repudiate the claim on the ground that "the claim is not admissible as per terms and conditions of the policy". However, in view of the order passed by the Writ Court on 19th December, 1988 the 6 defendant considered the representation but deny its liability on technical reasons for vitiating the policy. It was argued that the finding of the Writ Court would show that the letter of March 7, 1988 was quashed and in no uncertain terms, it was held that the records do not show that the petitioner had committed any breach of the terms and conditions of the original policy. The petitioner was granted leave to make an application and representation to the respondents and the respondents were directed to consider such representation afresh and pass an appropriate order. It was further observed that the petitioner would be entitled to seek remedies in accordance with law in proper forum if the petitioner is not satisfied with the order passed by the defendant. The Hon'ble Court set aside the letter dated 7th March, 1988.
Consequent thereupon the representation was made by the plaintiff. The defendant, however, on an apparent consideration of such representation repudiated the claim of the plaintiff by letter dated 3rd April, 1989, inter alia, on the following grounds:-
a) You did not disclose all material facts relevant to under writing of risk at the time of submission of the proposal. You had stated that the construction of the building was of pucca walls and roof open, but both the surveyors and the investigators found that 7 the area of construction site earmarked for you was protected only by barbed wire fencing and the pucca walls as declared by the related to the entire structure site within which your storage area was used.
b) The policy of insurance was taken out by you only when the danger of your stocks became imminent because of labour trouble and not before.
c) The prevailing labour trouble and unrest at the site and the imminent danger to your property was not disclosed before taking out the policy of insurance.
This information was very material particularly in the context of the lockout that was declare by you within a very close proximity of taking out the policy and the nature of loss alleged to have been sustained by you.
d) Your representation that there was forcible violent entry into your premises does not appear to be correct.
e) You had not taken reasonable precaution for the safety of your property and you did no provide or make necessary arrangement for protection of your property.
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f) Our Divisional Office has not received any letter dated 14.12.84 alleged to have been sent by you under certificate of posting intimating the declaration of lockout.
The plaintiff dissatisfied with the said repudiation filed an application under Article 226 of the Constitution of India for quashing the said decision of repudiation.
The plaintiff being aggrieved by the said letter filed the instant suit on 10th May, 1989.
The plaintiff contended that in view of the judgment and order dated 19th December, 1988 holding that the plaintiff did not commit any breach of the terms and conditions of the policy, it is no more open to the Insurance Company to repudiate the claim holding that the plaintiff was responsible. The said finding of the Writ Court operates as res judicata on the defendant and, accordingly, the defendant is liable to pay a sum of Rs.12,13,761/- together with interest of the plaintiff.
It was argued that each of the grounds on which the said claim is sought to be denied are untenable and unsustainable in law and in fact. There could not be any dispute that there was a pucca wall around the entire Farakka premises (a protected site) and that the plaintiff had a barbed enclosure to store its goods. It 9 would also be evident from the report of the surveyor that there was also a shed with roof tiles form which the plaintiffs goods were burgled. The policy was taken out in November, 1984 and the lockout was declared on December 13, 1984. There is nothing to show that it was within the plaintiff's knowledge in November 29 or November 30 1984 when the policy was taken and issued in favour of the plaintiff that lockout was declared before the acceptance of the policy. The lockout was a subsequent event after the insurance of the policy and could not have been ascertained before. The attempt to deny its liability on the ground that labour trouble unrest before taking a policy is a mere conjecture of the defendant to avoid policy. The defendant failed to establish any nexus between labourers and burglars.
The representation of forcible and violent entry was also unfounded and set at rest by the surveyor who had opined that there was forcible and violent entry and their witness on behalf of the defendant admitted that there was a burglary.
The grounds for not taking reasonable precaution for safety of the property and absence of due diligence in regard to the policy unfounded and based on no evidence. The defendant has failed to establish that the plaintiff did not take any reasonable precaution. In fact the plaintiff deployed its security guards for the purpose of 10 safety of the property. The surveyor was also satisfied with precaution taken by the plaintiff. In fact there was no allegation that the plaintiff was required to maintain security guards. There is no finding nor any allegation that plaintiff had abandoned the site.
The notice dated 14th December 1984 was sent under certificate of posting which the defendant is intentionally avoiding and denying receipt. The witness of the plaintiff (PW2) has referred to the said notice and the said notice was marked as Exbts. L and K. The notice of lockout and certificate of posting are marked as exhibited L and K. It was argued that however, nothing much turns on the non- receipt of the said notice since the declaration of lock out post policy does not absolve, the defendant from its liability. There was no requirement under the burglary policy that the plaintiff would be required to intimate the defendant in case of lockout.
Mr. Ghosh has referred to the exception clauses appearing in the said policy in order to show that labour unrest or lockout would not absolve the defendant from denying its liability towards the plaintiff arising out of the burglary policy.
The learned Counsel also referred to Clause 47 of the Warranty Slip to show that "all ordinary protections be taken by 11 the insured to protect the property hereby insured" has been followed by the plaintiff. The fact that security guards were appointed to protect the property, and the plaintiff had approached the Writ Court for seeking police protection in view of labour unrest would show that the plaintiff acted diligently and accordingly the claim of the plaintiff could not have been denied either on the ground of non-intimation of the lockout or labour unrest or that the plaintiff did not take reasonable precaution for safety of its property.
Mr. Ghosh has relied upon paragraph 3 and 4 of the survey report to show that the surveyor recorded its satisfaction with regard to the precaution taken by the insured to safeguard the insured properties during the lockout period. He has relied upon the following observation of the surveyor made in paragraph 4 of the report:
"It is stated by the insured that they informed the declaration of lockout at site to the insurers under certificate of posting on 14.12.84 vide their letter No.BB:NICL: IX:84-84-294A. Although the Photo Copy of the said letter dated 14.12.84 and postal receipt bearing postal seal of 14.12.84 has been sent to us, but it is observed from the corresponding file that the 12 insurers did not acknowledge the receipt of the said letter and possibly, the same was not delivered to them by the postal authorities. We feel that the notification of declaring lockout may not be of much importance to bring it to the notice of the insurers, but the insured should take adequate measures for protection of their property during the period of lockout as well as prepare a list of property owned by them or held in trust on the date of declaring such lockout. We are of course satisfied with the precaution taken by the insured to safeguard their interest during the lockout period."
It was argued that the submission made on behalf of the defendant that there was material change in the risk insured or a change in the facts stated in the proposal form by reason of lockout or non-intimation of lockout or withdrawal of security guards and these changes were not intimated to the defendant does not find place in the letter of repudiation.
Mr. Ghosh submitted that if there is any ambiguity or doubt in respect of any clause, the contract should be construed against the insurance company. In this regard he has relied upon the decision reported in AIR 1966 SC 1644 (General Assurance Society Ltd.,-Vs- Chandmull Jain) and 2010 (10) SCC 567(Suraj Mal Ram 13 Niwas Oil Mills Ltd-Vs- United India Insurance Company Limited & Anr).
It is submitted that the contracting parties must observe the utmost good faith and should not conceal any material facts when the contract is concluded. In this regard, he has relied upon a decision reported in 92 Company Cases at pages 333 and 334, placitum "E to H" which reads as follows :
"It is a fundamental principle of insurance law that utmost good faith must be observed by the contracting parties. Good faith forbids either party from concealing (non-disclosure) what he privately knows, to draw the other into a bargain, from his ignorance of that fact and his believing the contrary. Just as the insured has a duty to disclose, similarly, it is the duty of the insurers and their agents to disclose all material facts within their knowledge, since obligation of good faith applies to them equally with the assured.
The duty of good faith is of a continuing nature. After the completion of the contract, no 14 material alteration can be made in its terms except by mutual consent. The materiality of a fact is judged by the circumstances existing at the time when the contract is concluded. In the present case, the introduction of the Tariff Advisory Committee document materially affects the terms of the policy, resulting in the denial of the very indemnity of claim. And this was what the appellant sought to do, at the stage of clearing of the complaint. The Commission rightly rejected the appellant's plea. Notwithstanding this, on behalf of the appellant, it was insisted that the instructions on the Tariff Advisory Committee form part of the contract. Admittedly, the appellant-insurer had not incorporated the above quoted clause as part of the policy undertaken with the insured. Consequently, the insured is not bound by this exclusionary clause of liability since the appellant-insurer, admittedly, had undertaken liability for the riot or strike, damage due to riot or strike.15
Since the surveyor had submitted a report after due verification that the damages to the leather was caused due to the strike organized by the workmen, in our considered view, the insurance is covered by the RSD and MD clause. Accordingly, the appellant-
insurer is liable to pay the insured amount for the spoilage of the leather caused due to strike organized by the workmen."
Mr. Ghosh in relying upon the aforesaid decisions submitted that the Hon'ble Supreme Court held that the insurance company would be liable to pay the insured amount for the spoilage of the leather goods caused due to strike organized by the workmen. In this case, however, it was not the case of the defendant that the labourers had stolen the goods and accordingly the claim could not have been denied.
Mr. Dhruba Ghosh submitted that the said passage from P.C. Chacao (supra) in effect support the contention of the plaintiff and it would be evident from the materials on record and the evidence adduced by the parties that the plaintiff did not suppress any fact. Mr. Ghosh argued that nondisclosure of the labour unrest when the proposal was submitted by the plaintiff nor the withdrawal of 16 security guard, (of course Mr. Ghosh does not admit that the security guard was withdrawn) could vitiate the said policy or could be a ground for repudiation of the said claim. The said site is a protected area guarded by CISF and there is no need as such to keep security guards.
It was argued that it cannot be said that lockout was within the special knowledge of the plaintiff at the time of applying for the policy since a lock out was declared after the policy was issued and there is no suppression of any material fact which could vitiate the policy. In fact, the defendant is aware of the said situation and accordingly did not take the plea of recession of the said policy on the ground of misrepresentation.
Mr. Ghosh has relied upon AIR 1959 Patna 413 paragraph 5 (Ratanlal-Versus- Metropolitan Insurance Company Ltd) which deals with what is material and what is not material. The said paragraph was also referred and relied in P.C.Chacao (Infra).
Mr. Ghosh submitted that a learned Single Judge of this Court in the case reported in AIR 1992 Cal.355 [Jayashree Roy Chowdhury -Vs- Oriental Insurance Company Limited] while referring to AIR 1960 Calcutta 696 observed that under the burglary insurance policy, the insurance company could not take any defence that due to the non-disclosure of the earlier instance of 17 burglary by the policy holder, he was not entitled to claim any compensation. In order to declare a policy void the non-disclosure and or misstatement of fact has to be material and it cannot be said that because there has been one or two instances of burglaries in the past, the same in any manner increases the possibility of any further occurrence of burglary.
This judgment was cited in order to emphasis which disclosures should be considered to be material in construing a burglary policy. The omission to mention labour trouble could not have been considered as material non-disclose in a burglary policy and could not have been a relevant consideration in repudiating the claim is the contention of Mr. Ghosh. It was further submitted that withdrawal of security guards was also not a material fact on which the claim could have been repudiated.
Mr. Utpal Bose, the learned Counsel appearing on behalf of the defendant Insurance Company submits that in the proposal form the plaintiff did not disclose that they were having labour problem. The evidence on record would show that the plaintiff had abandoned the site on 4th December, 1984 and did not inform the defendant about such abandonment and labour unrest.
Mr. Bose has relied upon the letter of 14th December, 1984 being Exhibit "J" and submitted that it is an accepted position and 18 would appear from evidence of the defendant that such notice alleged to have been sent by certificate of posting was never received by the defendant. Accordingly, the said letter could not be treated as an intimation to the defendant regarding lockout.
The plaintiff also withdrew their security guards and did not take any steps or measures to protect the articles insured under the said policy.
The learned Counsel relied upon the following observations of the Survey report:
10. "We visited the site first on 14.3.85 and took the stock of materials and machineries physically on that day in presence of Mr. Ashok Mallic, Resident Engineer. At the time of our second visit on 23.08.85, besides some scrap steel, we found neither any materials nor any machineries. We are informed verbally that the materials and machineries were taken away by HSCL but the documentary evidence could not be shown to do. The construction materials and some machineries were alleged to have been taken away from the open yard. However, some machineries and parts were taken away from the godown. It may be mentioned here that goods were stolen from a 'Protected Area'. We failed to understand how such huge quantities of materials can be burgled from a protected area. The employees of the insured showed a big hole in 19 the boundary wall where there was no guard. It was alleged that miscreants can easily take the materials from the big hole and reach safely to the nearby Village called 'Andhwa'. Then it may be said that materials were taken manually. So it is not a venture of one person and also not in one day's effort of the culprits. Thus it can be inferred that the miscreants came to the sport several times and took away the materials manually. The consumption or the materials within the plant area by the other contractors cannot also be rules out altogether. This is also confirmed by HSCL's letter about unauthorized use of 47 shuttering plates - of Banerjee & Banerjee during lockout by one contractor named Minu Chowdhury who, however returned the same after detection.
It was argued that it was incumbent upon the said plaintiff to inform the said change of events so that the Insurance Company could have taken an informed decision. It was submitted that the lockout declared by the plaintiff on 13.12.1984 comes within the purview of Clause 2(b), namely, "if there be any other material change in the risk insured under this Policy or any change in the facts stated in the Proposal unless the Company shall by memorandum hereon or attached hereto signed by a duly authorized representative of the Company agree to continue the Insurance in force" This material change during the continuation of the said 20 policy and failure to inform the factum of lockout, withdrawal of security guards and abandonment of site disentitled the plaintiff to make any claim under the burglary insurance policy. Mr. Bose has relied upon the evidence of the plaintiff to show that the place was abandoned and no measures were taken by the plaintiff to secure the materials insured under the said policy. The report of the Surveyor relied upon by the plaintiff would show that that the surveyor has filed the report with qualifications, namely, that the plaintiff has suffered a loss on account of burglary for a sum of Rs.8,13,953 subject to the observations made in the said report with regard to lock out.
Since this fact of lock out was never informed to the defendant, the plaintiff cannot make any claim under the policy in view of breach of Clause 2(b) of the Insurance Policy.
12. It was stated that the theft occurred during the period of lockout. Although according to the proposal form, the insured will deploy 8 watchmen on 24 hours duty but no watchmen was there on the date of incidence. Thus the terms of the policy were not complied. Moreover, after the declaration of the lockout details of materials and machineries were not furnished by the insured to the insurer. A mere intimation of declaring lockout and withdrawing the guards cannot absolve the insured from the responsibility. It 21 was alleged that the insured had no prior knowledge that their watch and ward staff had left the site. They surprisingly know when their man entered the site first week of February, 1985 that their security guards left the site at the threat of theft lives and under tension it escaped the attention of the Insured to inform that fact to the Insurer. However, the insured sent a telegram on 4.12.84 to HSCL requesting them to protest their materials. Moreover, they moved a petition before Calcutta High Court who by order dated 17.1.85 directed the policy authorities to protect machineries and stock lying at site.
13. Although the loss was detected on 14.02.85 but it was intimated to the insurer on 1.3.85 i.e. after a lapse of 15 days, but as per policy condition the claim should have been made within 7 days after detection of any loss or damage. The claim form was in fact, submitted on 08.04.85. Delay in submitting the claim form was due to abnormal delay in ascertaining the loss, Total loss sustained by the insured, as per claim form, was Rs.12,13,761.00 details of which are encloses in separate sheet."
It was argued on behalf of the defendant that from 1985 plaintiff had disputes and differences with HSCL. An arbitration proceeding was initiated against HSCL. An Award has been obtained by the plaintiff in the said reference. Plaintiff has 22 admitted in the said reference that unauthorised persons had entered the plaintiffs work site from as early as on August 1984 and that there were thefts from September 1984. Plaintiff had abandoned work at Farakka. Such facts were suppressed from the defendant at the time of entering into the burglary policy as also in the proposal form.
Plaintiff misrepresented the defendant about its allotted area to be pucca as opposed to wire fenced area. Burglary policy is, therefore, unenforceable. No particulars of plaintiff s security guards also ever disclosed to defendant.
Plaintiff took out burglary policy by suppressing labour agitation on construction site since May, 1984 which fact of misrepresentation and/or suppression makes the burglary policy unenforceable.
Plaintiff obtained award against HSCL on January 30, 1988. Decree in terms of the award also passed on May 19, 1989. Selfsame claims cannot be agitated twice over and the plaintiff is seeking unjust enrichment by double payment.
There is a violation of clause 2(b) of the burglary policy. The atmosphere of labour agitation at the construction site and the fact of lockout was never disclosed to the defendant on which ground alone the policy of insurance ceases to be in force. 23
The plaintiff is not even aware as to the exact date on which the burglary took place. Moreover, the plaintiff made fradulent statement regarding the pucca nature of the premises, about security persons lodged thereat and about the labour problems and lockout that had been declared. Under the circumstances, under clause 8 of the policy the defendant is not liable to make any payment under the policy.
The plaintiff has sought to rely upon Exhibit G which is the burglary claim from. Surprisingly no exact date is given as to exactly when such burglary took place. It has been purported to be stated in the said form that such burglary allegedly took place between the period 13.2.84 to 16.2.85. The same is clearly not believable.
It was submitted that the Surveyor was appointed by the defendant who acted in terms of section 64UM of the Insurance Act, 1938. Such surveyors are independent personnel and their findings are not binding on the defendant and/or any other interested person. It was submitted that effect must be given to every word of the policy.
The burglary policy is complete by itself and Court should not make a new contract howsoever reasonable it might be. ( AIR 1966 SC 1644).
24
It was argued that merely because a surveyor and a commercial investigator was appointed to assess the loss of the plaintiff notwithstanding Clause 2(b) of the Insurance Policy it cannot be contended and held that the Insurance Company has waived its right or estopped from denying its liability under the policy in view of breach of the terms of the policy. It is contended that the survey report also does not support the case of the plaintiff. Mr. Bose has relied upon 2010 (10) SCC 567 (Suraj Mal Ram Niwas Oil Mills Pvt. Ltld.-Vs- United India Insurance Company Ltd. & Anr.) for the proposition that the terms of the insurance policy are to be strictly construed and the Court is not permitted to add, alter or to substitute terms of the insurance policy and could apply principle of equity in interpreting the said policy. In the same vein, 2010 (5) SCC 294 (Amravati District Central Cooperative Bank Ltd.-Vs-United India Fire & General Insurance Co. Ltd.) was also referred to and relied upon.
In view thereof, it was contended that the claim must fail. Mr. Dhruba Ghosh in answer to the argument made by Mr. Utpol Bose submitted that the sheet anchor of the defendant's argument is that no notice of lockout was given. It was argued that no notice was required to be given under the policy regarding the lockout. In any event, it is the plaintiff's case that notice was in fact given on 25 the lockout and the posting of the letter was proved by the Certificate of Posting (exhibits L and K). The documents were allowed to be accepted in the presence of the defendant during oral evidence. Labour trouble cannot be equated with burglary, there is no nexus between the labour unrest and the property insured. Lockout is an incident of labour law. It envisaged a suspension of work. It does not imply that the protection to the properties would be imperiled in any way. There is no evidence given that the lock out led to the burglary. It is the specific case of the plaintiff that the security guard was always there and in any way CISF (which is also mentioned equally in the personal form) were present. There is no evidence that the CISF had ever left the construction site. The surveyor was also satisfied with the precaution taken. There is no proof that the security guards were "withdrawn". The defendant's witness had never visited the site and gave evidence from records. The plaintiff's witness who were there in 1984 asserted that the security guards were there. It is apparent from the perusal of the survey report also. There is nothing on record to show that the plaintiff withdrew their guards. There was no misrepresentation regarding the employment of guards because it is nobody's case that guards were not employed. The onus of proof is on the defendant, if they take this point as a violation of clause of 26 burglary policy. There is nothing in the policy which says when and if the plaintiff shall oblige to inform the insurer of a material change.
There is moreover no cancellation or intimation or recession of the policy by the defendant. The first time they sought to repudiate the contract was after 23 years of the claim being made and the grounds were that the claim was not "as per rules". The defendant did not contend that the policy had ceased to be in force from the date of the lock out.
Drawing analogy of this policy with life insurance policies, it was argued that in life insurance policies the insurer is estopped from taking the plea of misstatement or suppression in the proposal form after a lapse of 2 years (Section 45 Insurance Act, 1938 which was then applicable). Here the insurance company never objected to suppression of material facts till April 3, 1989. In fact, it has never objected on the ground of 2(b) that there is a material change in the risk insured. There is no indication in the letter dated April 3, 1989 that the contract had ceased to be in force.
It was thus argued that the letter of repudiation is illegal and the defendant cannot avoid its liability. The plaintiff is entitled to 27 interest on the delay caused by the insurance company in processing the legitimate claim (92 Comp Cases 333).
Contracts of insurance are a species of contracts UBERRIMAE FIDEI (of utmost good faith). This is an exception to the general law of contract, as in a general law of contract, there is positive duty of disclosure. Consequently, both parties, the proposers and the insurers are bound to disclose every material fact affecting the risk to the other before the contract is concluded.
Jowitt's Dictionary of English Law, Second Edition defines UBERRIMAE FIDEI as follows:
"Uberrimae fidei, of the fullest confidence, of the utmost good faith. A contract is said to be uberrimae fidei when the promisee is bound to communicate to the promisor every fact and circumstance which may influence him in deciding whether to enter into the contract or not. Contracts which require uberrima fides are those entered into between persons in a particular relationship, as guardian and ward, solicitor and client, insurer and insured (London Assurance Co.-v. Mansel (1879) 11 Ch. D. 363; Joel v. Law Union, etc. Insurance Co. [1908] 2 K.B.863). Contracts of suretyship and partnership, though not strictly contracts uberrimae fidei, are, when once entered into , such as to require 28 full disclosure and the utmost good faith (Phillips -v. Foxall (1872) L.R.7 Q.B.666; Blisset - v.- Daniel (1853) 10 Ha.522)".
The insured's duty of utmost good faith continues beyond the time when the policy is initially effected and renewed so that it also operates when an insured seeks to claim against the insurers for a loss. It was held in Boulton-V- Houlder Bros & Co.[1904(1) KB 784] that it "is an essential condition of the policy of insurance that the underwriters shall be treated with good faith, not merely in reference to the inception of the risk, but in the steps taken to carry out the contract". The underlying rationale for the insured's continuing duty of good faith was explained by Hoffmann LJ in Orakpo -v-Barclays Insurance Services (1995) LRLR 443 at 451 in the manner following:
"I do not see why the duty of good faith on the part of the assured should expire when the contract has been made. The reasons for requiring good faith continue to exist. Just as the nature of the risk will usually be within the peculiar knowledge of the insured, so will the circumstances of the casualty; it will rarely be within the knowledge of the insurance company. I think that the insurance company should be able to trust the assured to put forward a claim in good faith".29
In CONSTRUING THE TERMS OF THE INSURANCE CONTRACT the Courts will interpret the words used in a contract according to "their natural, ordinary, normal and reasonable meaning" (Wood -v- General Accident Fire and Life Assurance Corpn (1948) 82 Lloyd's Rep.77 at 81. The Courts are required to give words the meaning intended by the parties to the policy, so that, "Authorities may determine the principles of construction, but a decision upon one form of words is no authority upoon the construction of another form of words"[In re an Arbitration between Coleman's Depositories Ltd, and The Life and Health Assurance Association (1907) 2 KB 798 at 812, per Buckley LJ]. "When one speaks of the intention of the parties to the contract, one is speaking objectively - the parties cannot themselves give direct evidence of what their intention was-and what must be ascertained is what is to be taken as the intention which reasonable people would have had if placed in the situation of the parties. Similarly when one is speaking of aim, or object, or commercial purpose, one is speaking objectively of what reasonable persons would have in mind in the situation of the parties". In Suraj Mal (supra) their Lordships were construing the following special condition and warranty "each and every consignment must be declared immediately before dispatch of goods". In paragraph 23 and 26 of 30 the said report Their Lordships have held that it is trite that in a contract of insurance, the rights and obligations are governed by the terms of the said contract. Therefore, the terms of contract of insurance have to be strictly construed, and no exception can be made on the ground of equity. In paragraphs 24 and 25 Their Lordships referred to General Assurance Society Ltd. And Harchand Rai Chandan Lal case and thereafter reminded the Court that the endeavour of the Court should always be to interpret the words in which the contract is expressed by the parties. The said paragraphs 23 and 26 are reproduced hereinbelow:
"23. Before embarking on an examination of the correctness of the grounds of repudiation of the policy, it would be apposite to examine the nature of a contract of insurance. It is trite that in a contract of insurance, the rights and obligations are governed by the terms of the said contract. Therefore, the terms of a contract of insurance have to be strictly construed, and no exception can be made on the ground of equity.
26. Thus, it needs little emphasis that in construing the terms of a contract of insurance, the words used therein must be given paramount importance, and it is not open for the Court to add, delete or substitute any words. It is also well settled that since upon issuance of an insurance policy, the insurer 31 undertakes to indemnify the loss suffered by the insured on account of risks covered by the policy, its terms have to be strictly construed to determine the extent of liability of the insurer. Therefore, the endeavour of the Court should always be to interpret the words in which the contract is expressed by the parties".
It appears that the reference was made to Chandmull Jain (supra) for the proposition that in the event of ambiguity any clause or where two interpretations are possible the interpretation in favour of the policy holders should be given.
Mr. Ghosh had also invited this Court to apply the Doctrine of Contract Proferentem as recognized in Chandmull Jain (supra) be applied in the instant case against the company in case of ambiguity or doubt. He has relied upon some portions of paragraph 11 of Chandmull Jain (supra) which is reproduced hereinbelow:
"In other respects there is no difference between a contract of insurance and any other contract except that in a contract of insurance there is a requirement of uberrima fides, i.e., good faith on the part of the assured and the contract is likely to be construed contra proferentem that is against the company in case of ambiguity or doubt. A contract is formed when there is an unqualified acceptance of the proposal. Acceptance may be 32 expressed in writing or it may even be implied if the insurer accepts the premium and retains it".
The principle of `contra proferentes' was also considered in Re Bradley and Essex and Suffolk Accident Indemnity Society. [1912(1)KB 415] Farewell LJ Surveyed the relevant authorities and stressed that:
"It is especially incumbent on insurance companies to make clear, both in their proposal forms and in their policies, the conditions which are precedent to their liability to pay, for such conditions have the same effect as forfeiture clauses, and may inflict loss and injury to the assured and those claiming under him out of all proportion to any damage that could possibly accrue to the company from non-observance or non-performance of the conditions. Accordingly, it has been established that the doctrine that policies are to be construed 'contra proferentes' applies strongly against the company".
However, an insured cannot avail him or herself of an apparent ambiguity where to a reasonable person its meaning would be clear. In this situation the court will follow the basic rule of interpreting the words reasonably.
It has to be seen whether the contract was vitiated by non- disclosure of material fact Material or Materiality was defined at 33 Jowitt's Dictionary of English Law, Second Edition, at page 1161 which is set out hereinbelow.
"Material; Materiality. The question of whether an untrue representation or a concealment makes voidable a contract to the subject matter of which it relates, or whether an erasure of alteration avoids a written statement, depends in general upon whether the misrepresentation, concealment erasure or alteration is material and the question whether it is material depends partly on the facts of the case and partly on the nature of the transaction. Thus, altering the date of a cheque is a material alteration. So, if during the negotiation of a marine insurance, a statement is made which has no real bearing on the risk, but, which, nevertheless, influences the mind of the underwriter, as, for instance, an assertion that previous insurances have been obtained on the same ship at a low premium, the misrepresentation will entitle the insurer to avoid the policy".
In course of argument attention was drawn to a decision of the Hon'ble Supreme Court reported in (2008) 1 SCC 321 (PC CHACKO AND ANOTHER VERSUS CHAIRMAN, LIFE INSURANCE CORPORATION OF INDIA AND OTHERS), paragraphs 4, 14, 17, 18, 19, 23, and 28 where the Hon'ble Supreme Court considered the 34 aspect of misrepresentation, nondisclosure and burden of proof in relation to an insurance policy.
Colinvaux's Law of Insurance (Eighth Edition) has very lucidly dealt with "Burden of proof" in relation to an insurance policy. The learned author in paragraph 6.30 dealt with the subject which is reproduced hereinbelow:
A number of different matters have to be proved in a non- disclosure or misrepresentation case.
[1] The insurer must prove that there has been a false statement made to him, or that the assured has failed to disclose material facts to him. This burden of proving the fact of the absence or presence of a statement rests squarely on the insurer.
[2] Proof of the absence or falsity of the information provided by the assured rests equally on the insurer.
[3] The isnsurer must prove the materiality of the information withheld or misstated by adducing expert evidence. Subject to that principle, there is a presumption of materiality in respect of express questions put to the assured by the insurer, so that it will be difficult for an assured who has misrepresented the true position to deny the materiality of his answer, even though, in the absence of an express question, disclosure would not have been required. In such a case the parties are considered to have agreed 35 the difficult question as to which facts are material. By contrast, there is no presumption of immateriality in respect of information which is not specifically requested by an insurer. Thus where the assured's answers are literally true, the insurer is nevertheless not prevented from relying on non-disclosure in respect of an answer which is misleading, incomplete or evasive. Proof of materiality is possible only by expert evidence. In some situations such evidvence may be given by experts in the field: evidence relating to the assured's state of health may thus be given by doctors. Evidvence may also be received from other insurers, from brokers and from the insurer himself acting as a prudent insurer. The admissibility of the evidence of other insurers as to materiality clearly puts the assured under some difficulty, as it will be virtually impossible to rebut unanimous statements from insurers as to the materiality of a given fact. This indeed appears to have been recognised by Lord Mansfield in the root decision on the duty of utmost good faith, Carter -v-. Boehm, which the evidence of other underwriters was described by him as : "mere opinion; which is not evidence. It is opinion without the least foundation from any previous precedent or usage". This view has not, however, prevailed. A substantial part of the protection for an assured in relation to materiality is, therefore, the commercial sense of the trial judge in assessing the 36 weight to be given to such testimony. There are few cases in which the evidence of other insurers has been rejected or criticised by a Court, although Colman J. warned in Strive Shipping Corporation - v- Hellenic Mutual War Risks Association that expert evidence would not be uncritically accepted by the Courts.
[4] Fourthly, the insurer must prove that he was induced to enter into the contract by the assured's failure to make a fair presentation of the risk".
The Hon'ble Supreme Court in P.C. Chacao (supra) relied upon Mithoolal Nayak in paragraph 14 of the said report in order to show what could be regarded as material and the consequence of nondisclosure of such material fact. The said paragraph is reproduced hereinbelow.
"14. There are three conditions for application of second part of Section 45 of the Insurance Act which are:
"(a) the statement must be on a material matter or must suppress facts which it was material to disclose;
(b) the suppression must be fraudulently mad by the policy-
holder; and
(c) The policy-holder must have known at the time of making the statement that it was false or that it suppressed facts which it was material to disclose."
37
It was held in paragraph 17 of the said report that proposal can be repudiated if a fraudulent act is discovered. The proposer must show that his intention was bona fide. It must appear from the face of the record. The said paragraph is reproduced hereinbelow.
"17. The purpose for taking a policy of insurance is not, in our opinion, very material. It may serve the purpose of social security but then the same should not be obtained with a fraudulent act by the insured. Proposal can be repudiated if a fraudulent act is discovered. The proposer must show that his intention was bona fide. It must appear from the face of the record. In a case of this nature it was not necessary for the insurer to establish that the suppression was fraudulently made by the policy-holder or that he must have been aware at the time of making the statement that the same was false or that the fact was suppressed which was material to disclose. A deliberate wrong answer which has a great bearing on the contract of insurance, if discovered may lead to the policy being vitiated in law."38
It would appear from the said paragraph that the question of material and materiality of facts and misrepresentation would depend upon the nature of the policy and it would not always be necessary for the insurer to establish that the suppression was fraudulently made by policy holder or that he must have been heard at the time of making the statement that the same was false or the fact was suppressed which was material to disclose. A deliberate wrong answer having a bearing on the contract of insurance if discovered may lead to the policy being vitiated in law.
The Hon'ble Supreme Court in P.C. Chacao (supra) in paragraphs 18, 19, 23 and 28 very succinctly explained the distinction between representation and warranty and the principle of Uberrimae fidei which are reproduced hereunder.
"18. It is no doubt true that there exists a distinction between a "representation" and a "warranty". A Division Bench of the Madras High Court in S.P. Maheshwari upon taking into consideration the history of insurance laws in the United States of America, in England and in Indian stated: (AIR p. 487, para 10)".
"10. One great principle of insurance law is that a contract of insurance is based upon utmost good faith uberrima fides; in fact it is the fundamental basis upon which all contracts of insurance are 39 made. In this respect there is no difference between one contract of insurance and another. Whether it be life or fire or marine the understanding is that the contract is Uberrima fides and though there may be certain circumstances from the peculiar nature of marine insurance which require to be disclosed, and which do not apply to other contracts of insurance, that is rather an illustration of the application of the principle, than a distinction in principle. From the very fact that the contract involves a risk and that it purports to shift the risk from one party to the other, each one is required to be absolutely innocent of every circumstance which goes to influence the judgment of the other while entering into the transaction".
19. While the parties entered into a contract of insurance the same shall, subject to statutory interdict, be governed by the ordinary law of contract. The insurer may not rely upon the disclosures made by the insured. It may gather information from other sources. The Madras High Court, although in our opinion, has rightly issued a note of caution to construe a "representation" and "warranty" as a general proposition which may operate harshly against the policy-holders, itself noticed: (S.P.Maheshwari case, AIR P.488 para12). 40
"12. The principles underlying the doctrine of disclosure and the rule of good faith oblige the proposer to answer every question put to him with complete honesty. Honesty implies truthfulness. But it happens that no man can do more than say what he believes to be the truth".
23. In LIC of India -vs.- Asha Goel whereupon reliance has been placed by Mr. Satish, it was held (SCC P.168, para 12) "12 ....The contracts of insurance including the contract of life insurance are contracts uberrima fides and every fact of material (sic material fact) must be disclosed, otherwise, there is good ground for rescission of the contract. The duty to disclose material facts continues right up to the conclusion of the contract and also implies any material alteration in the character of the risk which may take place between the proposal and its acceptance. If there are any misstatements or suppression of material facts, the policy can be called into question. For determination of the question whether there has been suppression of any material facts it may be necessary to also examine whether the suppression relates to a fact which is in the exclusive knowledge of the person intending to take the policy and it could not be ascertained by reasonable enquiry by a prudent person".
41
28. In Ratan Lal -v. Metropolitan Insurance Co. Ltd. a distinction was made between as to what is material and what is not material. In regard to the disclosure of facts in that case itself, it was opined : (AIR p.415, PARA 5):
"5. The well-settled law in the field of insurance is that contracts of insurance including the contracts of life assurance are contract uberrima fides and every fact of materiality must be disclosed otherwise there is good ground for rescission. And this duty to disclose continues up to the conclusion of the contract and covers any material alteration in the character of the risk which may take place between proposal and acceptance".
Lord Mansfield took the opportunity to explore the scope of the duty of disclosure borne by proposers of insurance. He stated:
"Insurance is a contract of speculation. The special facts upon which the contingent chance is to be computed lie most commonly in the knowledge of the assured only; the underwriter trusts to his representation, and proceeds upon confidence that he does not keep back any circumstance in his knowledge to mislead the underwriter into a belief that the circumstance does not exist.. .. Although the suppression should happen through mistake, without any fraudulent intention, yet still the underwriter is deceived and the policy is void; because the risque run is really 42 different from the risque understood and intended to be run at the time of the agreement .. .. .. Good faith forbids either party, by concealing what he privately knows, to draw the other into a bargain from his ignorance of the fact, and his believing the contrary"[Carter-Vs-Boehm (1766) 3 Burr 1905]. Even non- fraudulent suppression of materials facts would have the same result Lord Mansfield CJ in Carter (supra) framed the duty in narrower terms so that the "insured privately knows, and the insurer is ignorant of, and has no reason to suspect". The mutuality of the disclosure obligation is with both and there should be a free and frank disclosure of all material facts on which either party could take an informed decision. Deliberate failure to disclose facts which misleads the insurer is fraudulent that renders the contract void for want of good faith.
In the instant case the Court is required to take into consideration the events prior to the acceptance of the proposal by the insurance company. The lock out notice being Exbt. L disclosed by the plaintiff shows that since May, 1984 the plaintiff was facing labour trouble at the construction site. It appears from the notice that the casual workmen were indulging in criminal activities and some of the workmen along with associates and collaborators resorted to the acts of ransacking and damaging the 43 machinery for which the plaintiff claimed to have sustained huge loss of properties. The lock out notice was made effective since 23rd November, 1984. The policy was taken on 30th November, 1984 at a point of time when there was a turmoil at the site. The witness on behalf of the plaintiff in answer to question no.57 in cross- examination admitted that from 1st December there was nobody at the site to protect the materials although Mr. Dhruba Ghosh would argue that this Court would read the said evidence to mean that payment of salary could not be made and there is no abandonment of the site. The witness of the plaintiff could not say when the burglary took place and how long the securitymen were posted at the site. There is no evidence on record to show that the securitymen were deployed in an around the site from December 1984 or salaries were paid to them. The plaintiff did not disclose any document to show that the security guard, in fact, were there at the site from December, 1984. There is no evidence on record to show that security men were in fact present at the site on and from December, 1984. Moreover in order to appreciate what facts would be material and if there is any misrepresentation the Court is required to take into consideration the sequence of events from May, 1984 which could be easily ascertained from the lockout notice. That the plaintiff was facing a labour problem since May, 44 1984 and there was labour unrest and ransacking of office and damage to the materials caused prior to the policy would constitute material facts which ought to have been disclosed with the insurance company before the policy was taken. Having regard to the fact that the proximate cause for such loss could have been the labour unrest which had resulted in the abandonment of the site, it cannot be said that the defendant has wrongfully and illegally repudiated the claim. The test for determining the materiality of any circumstances would be that every circumstance is material which would influence the judgment of a 'prudent insurer' in fixing the premium, or determining whether he would take the risk. The test of 'prudent insurer' or in other words, reasonable insurer or underwriter, is the objective yardstick against which the materiality of the non disclosed fact is to be tested so that the view of the particular insurer is irrelevant [Ionides -V- Ponder [1874]LR 9 QB 531 at 538 Container Transport International Inc.-V- Oceanus Mutual Underwriting Association (Bermuda) Ltd [1984] 1 Lloyd's Rep.476].
It is no doubt that an insurer who seeks to rely upon non- disclosure when repudiating a claim bears the burden of proof to establish, on a balance of probabilities, that the insured failed to disclose the existence of a fact known to him or her when effecting 45 the policy. [Butchor -Vs-Dowlen (1981) 1 Lloyd's Rep.310]. Mr. Ghosh would argue that the insurance company with ordinary diligence could have known that there was labour unrest and an insured need not disclose any circumstance which is known as presumed to be known by the insurer, or any circumstance the fact of which is waived by the insurer. It cannot be said on a reading of evidence that it was not known to the plaintiff that a lockout is impending and the lock out notice itself records that the lock out would be effective from 23rd November, 1984 which is prior to the issuance of the policy. This fact is within the special knowledge of the plaintiff. Although the work at the site claimed to have commenced since May, 1984 the plaintiff applied for the policy only on 30th November, 1984 and soon thereafter security guards left and lockout declared. It would appear from the lock out notice that there had been illegal and criminal activities and illegal cessation of work since 23rd November, 1984 and the salary and wages of the workers were suspended. The materials at the site were in danger.
In Colinvaux's Law of Insurance, Eighth Edition, the learned author considered the aspect of change of risk and it was osbserved:
"Where the change occurring is not merely an increase in the risk faced by the insurer, but amounts to a substantive change in 46 the insured subject matter itself, the common law discharges the insurer from all liability for loss to the subject matter. This consequence follows even though the alteration in the subject matter does not necessarily increase the risk of loss, and even though the alteration was beyond the control of the assured.
Where a policy is stated to cover subject matter of a particular description, and the subject matter has never met that description, the risk simply fails to attach and the policy is void.
If the assured has warranted that the subject matter will continue to meet its description throughout the currency of the policy, any material alteration in that description will deprive the assured of his rights; by contrast, if there is no continuing warranty, the insurer must demonstrate that the change rendered the subject matter different from that which was originally insured. The question of exactly what degree of change has this effect is more likely to arise in cases of this type than in cases of failure to meet description from the outset, as warranties will not be construed as continuing unless expressly stated to be so".
Mr. Ghosh submitted that keeping a watchman is not a warranty in the policy and accordingly the withdrawal of watchman could not have been a basis for repudiating the claim. He would 47 rely upon paragraph 545 of Mac. Gillivray and Parkington on Insurance (Eighth Edition) which is reproduced herein below.
"545. If there is a warranty in a burglary policy that a night watchman shall be kept on the assured's premises, the insurer's liability on the policy will be discharged if the assured ceases to employ a night watchman".
The learned authors very lucidly explained the essential characters of a warranty and its distinction with representation in paragraphs 546 to 548 which are reproduced below:-
"546. The essential characteristics of a warranty are briefly these:
(i) it must be a term of the contract;
(ii) the matter warranted need not be material to the risk;
(iii) it must be exactly complied with;
(iv) a breach entitles the insurer to repudiate the contract
notwithstanding that the loss has no connection with the breach or that the breach has been remedied before the time of loss.
547. Warranty distinguished from repudiation. The differences between a warranty and a representation will now be evident, and these were established two centuries ago in a series of decisions of Lord Mansfield, who did much to rescue 48 insurance law from the incoherence in which the judicial irresolution of his predecessors had left it. The case commonly cited on the elementary distinction between a warranty and representation is Pawson v. Watson, where Lord Mansfield emphasised that a warranty or condition "makes part of a written policy" whereas a representation is made outside the written contract, and added that, where there was a warranty, "Nothing tantamount will do or answer the purpose; It must be strictly performed, as being part of the agreement. If, therefore, the insured vessel was there warranted to carry 12 carriage guns and 20 men the warranty would not be fulfilled if there were 10 carriage guns, 9 swivel guns and 16 men and 11 boys, although the latter might be the stronger force. In De Hahn v. Hartley he returned to this theme and said, "There is a material distinction between a warranty and a representation. A representation may be equitably and substantially answered; but a warranty must be strictly complied with. Supposing a warranty to sail on the 1st of August, and the shop did not sail till the 2nd, the warranty would not be complied with. A warranty in a contract of insurance is a condition or a contingency, and unless that be performed, there is no contract. It is perfectly 49 immaterial for what purpose a warranty is introduced; but, being inserted, the contract does not exist unless it be literally complied with.
548. The consequence of a breach of warranty is to entitle the insurer to repudiate the contract as from the date of the breach but without prejudice to any liability already incurred by that date. Warranties must, therefore, also be distinguished from certain other terms which are part of the contract of insurance but the breach of which does not avoid or vitiate the policy of insurance."
The representation in the proposal form of 8 security guards and absence of security guards since December, 1984, lack of any proof of evidence showing continuation of the security guards before the theft occurred thereby left goods unattended apart from labour problem brewing since May 1984 prior to the acceptance of the policy are also relevant considerations and grounds on which the claim could be repudiated.
It is true that there is no clause specifically with regard to keep a watchman at the site but Clause 47 of the warranty makes it clear that the duty of the plaintiff to take all ordinary precautions to safeguards the property insured under the policy would involve employment of security guards and then continuation. Moreover, 50 Clause 2(b) of the conditions of insurance clearly stipulates if there be any other material change in the risk issue under this policy or any change in the facts stated in the proposal unless the company agreed to continue insurance policy in force, the policy would cease to exist.
The argument that duty of disclosure would continue up to the continuation of the contract and covers any material alteration in the character of the risk which might take place between proposal and acceptance and does not continue thereafter is always subject to an agreement that may be entered into between the insured and insurer.
The submission of the Insurance Company appears to be that there has been a deliberate misrepresentation of facts with regard to the labour unrest and the danger to the materials at the site prior to the proposal submitted by the plaintiff. The fact of labour unrest and the prevailing condition at the site should have been informed to the Insurance Company when the defendant was considering the said proposal. These are essential facts that assumes significance in view of the theft of the materials immediately after the policy was taken and the circumstances would suggest that when the Insurance Company accepted the said policy the plaintiff must have realized that the damage to the 51 materials or the loss of materials would be inevitable. Irrespective of the fact whether there has been a deliberate misrepresentation or an innocent act in not disclosing the aforesaid facts to the Insurance Company the fact remains that on such grounds the Insurance Company can avoid its liability and in my view the Insurance Company was justified in repudiating the claim. The labour unrest and the prevailing conditions are within the special knowledge of the plaintiff which fact cannot be denied.
If in spite of the notice of the aforesaid facts the Insurance Company had agreed to grant such policy with the existing terms and conditions and theft had occurred as it happened in the instant case, the Insurance Company would have been estopped from denying its liability and could not have taken plea of non-disclosure of such facts.
In view of the aforesaid, the suit stands dismissed. However, there shall be no order as to costs.
Mr. Utpol Bose submits that in terms of an order passed on 23rd March, 2004 the defendant had deposited a sum of Rs.20 lakhs with the Registrar Original Side out of which the plaintiff has withdrawn a sum of Rs.12 lakhs after furnishing bank guarantee in favour of the Registrar, High Court Original Side. 52
In view of the dismissal of the suit the Registrar, Original Side, shall invoke the bank guarantee for Rs.12 lakhs and encash the fixed deposit prematurely and pay the entire proceeds thereof to the defendant after retaining poundage.
The learned Counsel for the defendant prays for stay of operation of the judgment and decree. The said prayer is considered and allowed for two weeks.
(SOUMEN SEN, J.) snn/s.chanda/sp/dg2