Bombay High Court
United India Insurance Co. Ltd vs Precious Plasto Packing Pvt Ltd on 12 November, 2024
2024:BHC-AS:43293
901-SAST-18815-2023.docx
rrpillai IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
SECOND APPEAL (ST) NO. 18815 OF 2023
WITH
INTERIM APPLICATION NO. 13483 OF 2023
United India Insurance Co. Ltd.
Having office at Mumbai Regional Office
No.1., Stadium House, 5th Floor,
Veer Nariman Road, Churchgate,
Mumbai-400 020
Through its Regional Manager ... Appellant
Versus
Precious Plasto Packing Pvt. Ltd.
Having its registered office at Building No.3,
Gala No. 1-9, Agarwal Udyog Nagar,
Sativali Road, Vasai (E)
District Thane- 401 208 ... Respondent
Mr. Anup Kumar Mathur a/w. Mr. Shreyas Shrivastava and Mr.Saurabj
Shrivastava i/b. Shrivastava Legal LLP for the Appellant.
Mr. Vishal Kanade a/w. Mr.Rubin Vakil, Mr. Maulik Vora and Ms.
Akshata Pawar i/b. M/s. Pramodkumar & Co. for the Respondent.
CORAM: GAURI GODSE J
RESERVED ON: 14th AUGUST 2024
PRONOUNCED ON: 12 th NOVEMBER 2024
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JUDGMENT:
1. By order dated 3rd July 2024, the following substantial questions of law were framed for hearing the Second Appeal finally at the admission stage :
(i) Whether the First Appellate Court could have enhanced the quantum of the plaintiff's claim in the absence of any cross-
appeal or cross-objection preferred by the plaintiff ?
(ii) Whether the quantum regarding the claim of the plaintiff decreed by both the Courts is on correct appreciation of the Surveyor's report at Exhibit-59, relied upon by the appellant ?
(iii) Whether the appellant proved that there was any fraud committed by the plaintiff at the time of submitting the claim ?
(iv) Whether the appellants proved that the claim was time- barred in view of the repudiation of the contract in terms of a letter dated 12th May 2003 ?
(v) Whether the First Appellate Court committed any error in not recording correct findings with reference to point no.1 ? 2/32 ::: Uploaded on - 12/11/2024 ::: Downloaded on - 13/11/2024 01:19:00 :::
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2. So far as the first question of law is concerned, learned counsel for the respondent (plaintiff), on instructions, has not pressed for the enhanced amount granted by the First Appellate Court. It was submitted on behalf of the respondent that they accept the quantum as decreed by the trial court and would not press for the enhanced amount as modified by the First Appellate Court. The statement regarding question no. 1 is recorded in the order dated 14 th August 2024. Hence, the Second Appeal was heard on the remaining questions of law.
Facts in brief :
3. The respondent is the original plaintiff. The plaintiff is a company that manufactures precision plastic components by injection and blow moulding. The plaintiff filed Special Civil Suit No. 567 of 2007 for recovering an amount of Rs. 92,07,739/- towards the plaintiff's claim against the insurance policies issued by the appellant (defendant). The trial court accepted the claim to the extent of Rs.53,07,690/- along with interest @ 6% per annum from 15 th March 2003. Being aggrieved by the trial court's decree, the defendant filed the first appeal, which is 3/32 ::: Uploaded on - 12/11/2024 ::: Downloaded on - 13/11/2024 01:19:00 ::: 901-SAST-18815-2023.docx partly allowed, and the plaintiff is held entitled to an amount of Rs. 62,00,000/- from the defendant with interest @ 6% per annum from 15th March 2003. Hence, this Second Appeal is filed by the defendant- insurance company.
4. The defendant issued a total of five insurance policies to the plaintiff to secure the stock, machinery, building, furniture, fixtures and equipments of the plaintiff company against the risk of fire, storm, flood, etc., and allied policies in its regular course of business. It is the plaintiff's case that the defendant issued the policies and undertook to indemnify the plaintiff's property or any part of such property if it was destroyed or damaged by any of the perils specified during the period of insurance.
5. Due to heavy rainfall on 26th June 2002, the plaintiff's factory suffered heavy losses due to floods as the entire premises was submerged under the flood water. Pursuant to the claim application filed by the plaintiff, a survey was carried out by the surveyor appointed by the defendant, who submitted a report on 30 th October 2002. The defendant's surveyor Mr. R. B. Davar, assessed the loss of 4/32 ::: Uploaded on - 12/11/2024 ::: Downloaded on - 13/11/2024 01:19:00 ::: 901-SAST-18815-2023.docx the plaintiff at a sum of Rs.50,12,058/- and Rs.45,09,349/- under two different policies. The defendant appointed another investigator, Mr. Vinod Sharma, to investigate the assessment done by Mr. Davar. Since the defendant did not settle the plaintiff's claim, the plaintiff approached the National Consumer Disputes Redressal Commission. The defendant submitted the reports of both surveys along with their reply before the consumer forum. During the pendency of the complaint, the plaintiff received the defendant's letter dated 12 th May 2003 repudiating the plaintiff's claim. The plaintiff's complaint was rejected on 1st September 2003 as not maintainable.
6. Thereafter, the plaintiff filed a complaint on 12 th July 2004 before the Insurance Regulatory and Development Authority of India ("IRDA"). On 30th November 2004, IRDA dismissed the plaintiff's complaint on the ground that it does not carry out any adjudication. Hence, the plaintiff filed the suit to claim their amount under the insurance policies. Submissions on behalf of the Appellant (defendant) :
7. Learned counsel for the appellant relied upon Section 64UM of The Insurance Act of 1938. Learned counsel for the appellant relied 5/32 ::: Uploaded on - 12/11/2024 ::: Downloaded on - 13/11/2024 01:19:00 ::: 901-SAST-18815-2023.docx upon sub-section (4) and its proviso. He submitted that in view of sub- section (4) read with its proviso, the defendant was entitled to repudiate the claim by relying upon the second surveyor's report. Learned counsel for the appellant submitted that the surveyor was appointed as a third-party surveyor in view of Section 64UM. He submitted that in clause (X) of the report dated 14 th February 2003 (Exhibit-59), the surveyor reported the assessment of machinery loss. He submitted that the plaintiff's claim was for the replacement of machinery and its parts. However, the surveyor's report at Exhibit-59 indicates that there is no replacement or repairs carried out. To support his submissions that there was no replacement of machinery or its parts or no repairs were carried out, learned counsel relied upon the findings recorded in clause (X) of Exhibit 59.
8. Learned counsel for the appellant relied upon the pleadings in the written statement, particularly paragraphs 12, 15 and 17. He submitted that the defendant had clearly pleaded the particulars regarding false and fraudulent claim submitted by the plaintiff. He submitted that payment of the two bills allegedly issued by M/s. Mech Art was made to a third party, M/s.S.M. Electrical Engineers. However, 6/32 ::: Uploaded on - 12/11/2024 ::: Downloaded on - 13/11/2024 01:19:00 ::: 901-SAST-18815-2023.docx there was no explanation given by the plaintiff for reliance placed on the bills and payments made in different name.
9. To support the allegation of fraud, learned counsel for the appellant relied upon the stock register of the plaintiff company, based on which the claim was raised for Rs.10,94,912/- towards the cost of finished goods. However, according to the defendant, the register showed a Nil balance. With reference to the allegation of fraud, learned counsel for the appellant submitted that the plaintiff, with an intention to complete formalities for claiming compensation, submitted false quotations from two different firms, i.e. M/s. Mech Art and M/s. L& T. He submitted that the actual repairs to the major machines in question were already completed by M/s. Mech Art before 1 st July 2002. He further relied upon a letter dated 21 st December 2002 issued by M/s. L&T to contend that the plaintiff's claim was based on fraudulent documents as the claim was with reference to the floods due to heavy rains in June 2002.
10. Learned counsel for the appellant vehemently argued on the allegations of fraud. To support his submissions on fraud, learned 7/32 ::: Uploaded on - 12/11/2024 ::: Downloaded on - 13/11/2024 01:19:00 ::: 901-SAST-18815-2023.docx counsel relied upon Section 17 of the Indian Contract Act, 1872. Learned counsel for the appellant submitted that the plaintiff created fictitious documents to show replacement only with an intention to escalate the claim. He submitted that the general conditions of the policies contained in clause 6(i)(b) provide for coverage for machines and plants, stocks, furniture and fixtures and goods. The plaintiff filed claims against all three policies; however, in view of the fraudulent documents placed on record only with an intention to escalate the claim amount, the defendant repudiated the claim by relying upon clause (8) of the general conditions.
11. Learned counsel for the appellant thus submitted that in view of clause (8) read with clause (6) of the general conditions of insurance policy, the defendant was entitled to repudiate the plaintiff's claim. He submits that, however, both the courts ignored the facts regarding fraud and the defendant's entitlement to repudiate the claim by relying upon clause (8) of the general conditions.
12. Learned counsel for the appellant referred to paragraph 6 of the trial court's judgment. He submits that the trial court accepted the 8/32 ::: Uploaded on - 12/11/2024 ::: Downloaded on - 13/11/2024 01:19:00 ::: 901-SAST-18815-2023.docx report at Exhibit 59 only selectively for the amount assessed; however, the learned Judge ignored the other findings in the report. Learned counsel for the appellant further submitted that a perusal of the report at Exhibit 59 would indicate that the amount quantified by the surveyor does not form part of the replacement of any parts of the machinery. However, according to the learned counsel for the appellant, a perusal of the surveyor's report indicates that authentic bills for the replacement of parts were not submitted by the plaintiff, which shows that the plaintiff had raised a fraudulent claim. Thus, the learned counsel for the appellant supported the defendant's action of repudiation by issuing the letter dated 12th May 2003.
13. Learned counsel for the appellant thus submits that the falsification of the plaintiff's claim is clearly stated in the surveyor's report at Exhibit 59. He, therefore, submits that the defendant rightly forfeited the contract by invoking clause (8) of the general conditions.
14. To support the submissions on repudiation of the claim on the ground of fraud, learned counsel for the appellant relied upon the decision of the Queen's Bench Division of the High Court of Justice 1. 1 [2005] EWHC 2318 (TCC) 9/32 ::: Uploaded on - 12/11/2024 ::: Downloaded on - 13/11/2024 01:19:00 ::: 901-SAST-18815-2023.docx For a similar proposition, learned counsel for the appellant relied upon the decision of the Apex Court in the case of Vikram Greentech India Limited and Another vs. New India Assurance Company Limited 2, United India Insurance Co. Ltd. vs. Rajendra Singh and Others 3 and National Insurance Co. Ltd. vs. Harjeet Rice Mills 4. Learned counsel for the appellant submitted that clause (8) of the general conditions provides that the contract would be vitiated on the ground of fraud. He thus submits that in view of the surveyor's report at Exhibit 59, the plaintiff's claim was based on fraudulent documents. Thus, the defendant had rightly repudiated the claim by invoking clause (8) of the general conditions read with clause (6). Learned counsel for the appellant thus submitted that both the courts committed serious errors in completely ignoring the pleadings on fraud and the defendant's entitlement to repudiate the claim by invoking clause (8) of the general conditions.
15. With reference to the fourth question of law regarding the claim being time barred, learned counsel for the appellant relied upon the repudiation of the contract on 12 th May 2003, the dismissal of the 2 (2009) 5 SCC 599 3 (2000) 3 SCC 581 4 (2005) 6 SCC 45 10/32 ::: Uploaded on - 12/11/2024 ::: Downloaded on - 13/11/2024 01:19:00 ::: 901-SAST-18815-2023.docx consumer complaint on 1st September 2003 and the intimation dated 30th November 2004 of the rejection of the complaint by IRDA. Learned counsel for the appellant referred to the trial court's findings in paragraph 18. Learned counsel for the appellant submitted that the IRDA is not a court; therefore, the date of repudiation would be the relevant date for calculating the period of limitation. He submitted that the trial court erroneously referred to the communication received by the plaintiff on 30th November 2004 regarding IRDA's rejection. Learned counsel for the appellant thus submitted that the suit was barred by limitation as the period of limitation was required to be calculated from the date of repudiation, i.e. 12 th May 2003.
16. Learned counsel referred to the First Appellate Court's findings in paragraph 23 of the judgment. Learned counsel for the appellant submitted that only in the last three lines of paragraph 23 did the First Appellate Court accept the trial court's findings to be correct without analysing the submissions made on behalf of the appellant that the suit was time barred. He thus submits that the question of law framed on the suit being time barred is required to be answered in favour of the defendant as the suit is liable to be dismissed as time barred. 11/32 ::: Uploaded on - 12/11/2024 ::: Downloaded on - 13/11/2024 01:19:00 :::
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17. Learned counsel for the appellant also referred to the points of determination framed by the First Appellate Court, which pertain to only appreciation of the legal aspects of the trial court's decision. Learned counsel for the appellant submits that the First Appellate Court failed to frame proper points for determination and erroneously accepted the trial court's findings without recording any conclusion.
18. Learned counsel for the appellant relied upon the legal principles settled by the Hon'ble Apex Court in the case of Banarsi and Others vs. Ram Phal 5 . Learned counsel for the appellant submitted that in view of the legal principles settled by the Apex Court in the case of Banarsi the First Appellate Court is required to analyse the trial court's judgment by invoking Rule 33 of Order XLI of The Code of Civil Procedure, 1908.
19. Learned counsel for the appellant thus submitted that in view of the inconclusive findings recorded by the First Appellate Court, the fifth question of law framed by this court also needs to be answered in favour of the defendant.
5 (2003) 9 SCC 606 12/32 ::: Uploaded on - 12/11/2024 ::: Downloaded on - 13/11/2024 01:19:00 ::: 901-SAST-18815-2023.docx
20. Learned counsel for the appellant thus submits that the second appeal be allowed and the plaintiff's suit be dismissed by setting aside the impugned judgments and decrees.
Submissions on behalf of the Respondent (plaintiff):
21. Learned counsel for the respondent supports the impugned judgments. He submits that, admittedly, the policies were issued by the defendant in favour of the plaintiff. He submitted that there was no dispute that there was a flood, and the plaintiff suffered losses due to the flood. Learned counsel for the respondent submitted that the plaintiff relied upon the surveyor reports prepared by the surveyors appointed by the defendant. Hence, the defendant cannot choose one of the reports and repudiate the claim.
22. Learned counsel for the respondent submitted that there are no pleadings regarding fraud. He submitted that the written statement does not refer to repudiation on the ground of fraud. He further submitted that even the letter of repudiation does not allege any kind of fraud. He submits that the letter of repudiation refers to only a false statement made in the claim filed by the plaintiff. Learned counsel for 13/32 ::: Uploaded on - 12/11/2024 ::: Downloaded on - 13/11/2024 01:19:00 ::: 901-SAST-18815-2023.docx the respondent submitted that the reports submitted by the surveyors appointed by the defendant are required to be seen in their entirety. He submits that perusal of the report at Exhibit 58 would indicate that the surveyor has quantified and revised the net loss suffered by the plaintiff company.
23. Learned counsel for the respondent referred to paragraphs 7 and 19 of the trial court's judgment. He submitted that the trial court thoroughly examined the reports at Exhibit 58 and Exhibit 59. He submitted that the surveyor Mr. Sharma, who prepared the report at Exhibit 59, was examined by the defendant. The evidence of the surveyor examined on behalf of the defendant indicates the loss suffered by the plaintiff company. He submitted that the First Appellate Court approves the conclusions and the findings of facts recorded by the trial court on reexamining the reports of both surveyors.
24. Learned counsel for the respondent, thus, submits that both courts correctly examined both reports. He submits that the quantification of the amount is as per the assessment of loss done by 14/32 ::: Uploaded on - 12/11/2024 ::: Downloaded on - 13/11/2024 01:19:00 ::: 901-SAST-18815-2023.docx the surveyors appointed by the defendant. He submits that the respondent is ready to accept the quantification done by the trial court. He thus submits that the second and third questions of law be answered in favour of the respondent.
25. Learned counsel for the respondent submitted that the decision of the Queen's Bench relied upon by the learned counsel for the appellant is distinguishable on facts. Learned counsel referred to paragraph 56 of the decision of the Queen's Bench and submitted that the observation in the said decision relied upon by the learned counsel for the appellant is with reference to the facts of the case reproduced in paragraph 56. He thus submits that the legal principles in the said decision relied upon by the learned counsel for the appellant would not apply to the facts of the present case.
26. With reference to the legal principles settled by the Hon'ble Apex Court in the case of United India Insurance Co. Ltd., learned counsel for the respondent submitted that the legal principles in the said decision are with reference to an injury claim and a completely different incident. He submitted that, for different facts of the present 15/32 ::: Uploaded on - 12/11/2024 ::: Downloaded on - 13/11/2024 01:19:00 ::: 901-SAST-18815-2023.docx case, legal principles settled by the Apex Court in the case of United India Insurance Co. Ltd. would also not be of any assistance to the submissions made on behalf of the appellant. According to the learned counsel for the respondent, the third decision relied upon by the learned counsel for the appellant in the case of National Insurance Co. Ltd. is also based on different facts, thus not helpful to the arguments raised on behalf of the appellant.
27. With regard to the arguments made on behalf of the appellant on the point of the suit being barred by limitation, learned counsel for the respondent relied upon the trial court's findings in paragraph 17. He submitted that the trial court has rightly relied upon the IRDA's rejection letter which is with reference to Section 14 of The Limitation Act, 1963. He submits that the trial court held the suit within limitation by referring to the IRDA's rejection dated 30 th November 2004. Learned counsel for the respondent also submitted that in the present case, the question of limitation is a mixed question of law and facts and thus, both the courts have correctly analysed the facts of the case and held that the suit is within limitation.
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28. Learned counsel for the respondent referred to paragraph 3 of the written statement, which raised an objection to the cause of action. He submits that with reference to the objections raised on behalf of the defendant, the trial court has referred to Article 27 of the Limitation Act. Learned counsel for the respondent, however, submitted that the applicable Article in the facts of the present case is Article 44(b) of the Limitation Act, 1963. He submits that the first denial is dated 12 th May 2003 by the Consumer Forum, which was only on the point of cause of action. He submitted that the second denial was by the insurance company before the IRDA. Hence, based on the cause of action pleaded by the plaintiff in paragraph 39 of the plaint, the plaintiff was entitled to seek the benefit of Section 14 of the Limitation Act. He, therefore, submits that even if the first denial dated 12 th May 2003 is taken into consideration, the suit is within the limitation in view of the benefit available to the plaintiff under Section 14 of the Limitation Act, which is clearly pleaded by the plaintiff in paragraphs 31 to 37 of the plaint.
29. Learned counsel for the respondent thus submitted that the period consumed before the Consumer Forum and IRDA is correctly 17/32 ::: Uploaded on - 12/11/2024 ::: Downloaded on - 13/11/2024 01:19:00 ::: 901-SAST-18815-2023.docx excluded in compliance with the parameters of Section 14 of the Limitation Act. Learned counsel for the respondent further submitted that after the IRDA rejected the plaintiff's claim, the defendant reexamined the plaintiff's claim and rejected the same. He submitted that IRDA's rejection of the complaint amounts to a reexamination of the plaintiff's claim and rejection by the defendant as correctly dealt with by the trial court in paragraphs 17 and 18 of the judgment. Learned counsel for the respondent thus submits that both courts have rightly held that the suit claim is within limitation.
30. Learned counsel for the respondent submitted that the first appellate court correctly analysed the facts and evidence on record. He submits that the first appellate court dealt with all the issues while deciding the first point for determination. Learned counsel for the respondent, therefore, submits that the fourth and fifth questions of law be answered in favour of the respondent.
Submissions in rejoinder:
31. In response to the submissions made on behalf of the respondent, learned counsel for the appellant submitted that only 18/32 ::: Uploaded on - 12/11/2024 ::: Downloaded on - 13/11/2024 01:19:00 ::: 901-SAST-18815-2023.docx because loss is assessed by the insurance company, the defendant is not liable to pay the insurance claim. He submitted that in view of the proviso of sub-section (4) of Section 64UM of the Insurance Act, the report submitted by the surveyor appointed by the insurance company is not binding upon the insurance company. Learned counsel for the appellant further submitted that once the report falsifies at least 16 instances as quoted in the report, the same is sufficient to show that the plaintiff committed fraud only for escalation of the claim amount. He submitted that the trial court does not accept the surveyor's report at Exhibit 58. He submits that the plaintiff failed to file any cross objections to challenge the findings recorded by the trial court for not accepting the report at Exhibit 58. He thus submits that the suit is liable to be dismissed on the ground of being barred by limitation and by accepting repudiation of the claim on the ground of fraud.
32. With reference to the argument raised on the point of limitation, learned counsel for the appellant relied upon the decision of the Madras High Court in the case of M/s Bharti AXA General Insurance Co. Ltd. Vs M/s Shriram EPC Ltd and others 6. He submitted that 6 A. No. 2512 of 2021 & C.S.No. 604 of 2015 dated 2/11/2021 19/32 ::: Uploaded on - 12/11/2024 ::: Downloaded on - 13/11/2024 01:19:00 ::: 901-SAST-18815-2023.docx considering the view taken by the Madras High Court on the applicability of Article 44 of the Limitation Act, the present suit is liable to be dismissed as barred by limitation.
33. The decision of the High Court of Madras relied upon by the learned counsel for the appellant was distinguished by the learned counsel for the respondent. He submitted that in the written submissions in paragraph 28, the defendant specifically pleaded that two claims were allowed by the defendant out of five claims. Hence, the view taken by the Madras High Court will not be applicable to the present case in view of the two of the claims allowed by the insurance company.
34. On the ground of fraud based on the surveyor's report, learned counsel for the respondent relied upon the decision of the Hon'ble Apex Court in the case of Khatema Fibres Ltd. vs. New India Assurance Company Limited7. He submitted that in view of the legal principles settled by the Apex Court in the case of Khatema Fibres, the surveyor's report cannot be held to be binding to repudiate the claim on the ground of fraud.
7 Civil Appeal No. 9050 of 2018 20/32 ::: Uploaded on - 12/11/2024 ::: Downloaded on - 13/11/2024 01:19:00 :::
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35. I have considered the submissions made by both parties. I have perused both the judgments, pleadings and evidence on record. There is no dispute about the floods that occurred on 26 th June 2002. There is no dispute that the plaintiff's machinery, stocks, building, furniture, computers and accessories were covered against the risk of fire, storm, flood, etc., by five insurance policies issued by the defendant. The loss suffered by the plaintiff due to the damage caused by the floods is not disputed; however, the defendant disputes the claim on the ground that the claim is false and frivolous.
36. Learned counsel for the appellant argued that the respondent's claim was based on fraudulent documents. I do not find any substance in the arguments of the learned counsel for the appellant based on the proviso to sub-section (4) of Section 64UM of The Insurance Act of 1938. It is a well-settled principle of law that under the Insurance Act while settling a claim, the assistance of a surveyor should be taken by the insurance company; however, findings in the report while assessing the loss cannot be a sole ground to repudiate the claim on 21/32 ::: Uploaded on - 12/11/2024 ::: Downloaded on - 13/11/2024 01:19:00 ::: 901-SAST-18815-2023.docx the ground of fraud. The said provision would not entitle the defendant to repudiate the claim only by partially relying upon the second surveyor's report. Even otherwise, the findings in the report do not indicate any fraud.
37. The learned counsel for the appellant relied upon Section 17 of the Indian Contract Act 1872 to support the allegation of fraud. As per the definition of fraud, any act or omission to deceive or which the law declares to be fraudulent would amount to fraud. Deception has serious consequences and is to be judged on facts. Thus, the particulars and details of fraud must be pleaded and proved. Learned counsel for the appellant relied upon paragraphs 12, 15 and 17 of the written statement. A perusal of the pleadings indicates that allegations in the said paragraphs relate to raising discrepancies in two bills of M/s Mech Arts and payment made to M/s S.M. Electrical Engineers, alleged replacement of hydraulic pump and other parts and subsequent letters issued regarding repairs already completed before 1st July 2002. All these allegations are based on the findings in the report at Exhibit 59. Learned counsel for the respondent rightly relied upon the decision of the Hon'ble Apex Court in the case of Khatema 22/32 ::: Uploaded on - 12/11/2024 ::: Downloaded on - 13/11/2024 01:19:00 ::: 901-SAST-18815-2023.docx Fibres. As held by the Hon'ble Apex Court, the surveyor's report is not the last and final word. Hence, in the present case, only based on a selected few findings in the surveyor's report, the allegation of fraud cannot be accepted to deny the plaintiff's claim.
38. A perusal of the findings in the report at Exhibit 59 deals with all the bills, payments made, replacement of parts and repairs. The findings recorded in the report are not conclusive on fraudulent or false documents, in as much as clause (X) of the report says that it is not possible to check the replacement of parts. The surveyor has thus investigated the assessment done in the report at Exhibit 58 and approved 80% of the claim by considering all the aspects. Except for relying upon the findings in the report at Exhibit 59, the appellant was unable to prove fraud by any cogent evidence. There is no evidence to support the arguments of the learned counsel for the appellant that the plaintiff created fictitious documents to show replacement with an intention to escalate the claim. The report says that it is not possible to verify the replacement of parts. Hence, without any valid proof of fraud, the appellant is not entitled to rely upon the general conditions of the policies in clause (8) to repudiate the claim. 23/32 ::: Uploaded on - 12/11/2024 ::: Downloaded on - 13/11/2024 01:19:00 :::
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39. Clause (X) of the report dated 14 th February 2003 (Exhibit 59) makes the assessment of machinery loss. Exhibit 59 is an investigation report dated 14 th February 2003 prepared by Vinod Sharma, Surveyor and Loss Adjusters. The report records that the loss has been surveyed by Shri. R.B. Davar, Surveyor, who submitted his report dated 3rd October 2002. The report further says that Vinod Sharma investigated the loss as per the scope of investigation mentioned by the defendant in their letter dated 11 th December 2002. It further says that, accordingly, his team visited the site on 12 th December 2002 and 16th January 2003 for necessary enquiries and verifications. A perusal of the report indicates that the loss assessed by Shri Davar, Surveyor, was investigated by Vinod Sharma by reverifying all the details, including verification done from M/s L&T and M/s Mech Art, who carried out the work of repairs of the damaged machines. Exhibit 59 is an exhaustive report with each and every particular of the claim documents. Findings recorded in clause (X) of the report referred to and relied upon by the learned counsel for the appellant do not refer to any fraud. The findings says that it is not possible to verify the replacement of parts; however, the findings also 24/32 ::: Uploaded on - 12/11/2024 ::: Downloaded on - 13/11/2024 01:19:00 ::: 901-SAST-18815-2023.docx record that the machinery was damaged due to flood water, as confirmed by M/s L&T. Assessment of loss is explained in the report that it is on account of service charges, rewiring of panel board and cost of electrical and electronic parts, etc. Thus, the survey report of Mr Davar allowing 80% of the claim is investigated by Mr Sharma and approved to be correct.
40. The Trial Court has thoroughly examined the report of Mr Davar at Exhibit 58 and the Investigation report of Mr Sharma at Exhibit 59. In paragraph 14 of the judgment, the Trial Court referred to the conclusions of the report of Exhibit 59. It correctly held that the report at Exhibit 59 not only records the mistakes, irregularities and discrepancies of the report at Exhibit 58 but also mentions the basic parameters for revising the assessment and approving the claim. There is no substance in the arguments made by the learned counsel for the appellant that the trial court did not accept the report at Exhibit
58. The trial court referred to both reports and relied upon the analysis done by Mr Sharma and the conclusions in the report at Exhibit 59.
41. The First Appellate Court also thoroughly examined the reports at Exhibits 58 and 59 and the oral evidence and recorded findings on 25/32 ::: Uploaded on - 12/11/2024 ::: Downloaded on - 13/11/2024 01:19:00 ::: 901-SAST-18815-2023.docx the allegation of fraud. The First Appellate Court rightly held that the claim cannot be held to be fraudulent only because the defendant finds it excessive. In paragraph 17 of the judgment, the First Appellate Court held that the defendant contented repudiation of the claim; however, it released two cheques towards the claim, based on the assessment report of Mr. Davar at Exhibit 58. The reasons recorded by the First Appellate Court are based on correct appreciation of the evidence on record.
42. The legal principles settled in the decisions of Queen's Bench Division of the High Court of Justice, the decision of the Apex Court in the case of Vikram Greentech India Limited and in the case of United India Insurance Co. Ltd., is of no assistance to the appellant. As held in the decision Queen's Bench Division of the High Court of Justice, mere exaggeration of an insurance claim will not itself be fraud. The legal principles settled in the decision of Vikram Greentech India Limited are on the construction and interpretation of the terms of the policy, which is not a subject matter of controversy in the present case. The case of United India Insurance Co. Ltd. deals with the remedy to move for recalling the order based on the newly discovered facts 26/32 ::: Uploaded on - 12/11/2024 ::: Downloaded on - 13/11/2024 01:19:00 ::: 901-SAST-18815-2023.docx amounting to fraud, which is also not a controversy in the present case.
43. On perusal of the report at Exhibit 59 and the reasons recorded by the Courts, I do not find any illegality or perversity in the findings. The defendant accepts the reports of the surveyors appointed by the defendant. Hence, the defendant cannot rely upon only a selected few findings and ignore the conclusions in the reports. It is important to note that after the report of Mr. Davar, the defendant accepted the claim partially and also issued two cheques. The reports are correctly read by both the courts in their entirety and relied upon the conclusions. Thus, the loss of stock, machines, and accessories, as well as the loss of furniture and fixtures, is correctly examined by both the Courts. The conclusions recorded by both courts in not accepting the allegation of fraud cannot be faulted. The defendant opposed the suit claim by relying upon the repudiation letter; however, the letter of repudiation of claim is not on the ground of fraud. Hence, the second and third questions of law are answered in favour of the respondent, accepting the findings of both the courts to be correct. 27/32 ::: Uploaded on - 12/11/2024 ::: Downloaded on - 13/11/2024 01:19:00 :::
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44. It is necessary to note the relevant dates for examining the objection on the suit claim being time barred. The defendant, for the first time, rejected the plaintiff's claim by letter of repudiation dated 12 th May 2003, issued during the pendency of the complaint before the National Consumer Disputes Redressal Commission. After the complaint was rejected as not maintainable on 1 st September 2003 by the National Consumer Disputes Redressal Commission, the plaintiff filed a complaint before IRDA. The complaint before the IRDA was rejected and communicated on 30 th November 2004. Hence, the Trial Court held that the suit filed within three years from 30 th November 2004 was within limitation. The First Appellate Court confirmed the Trial Court's findings and held that the suit was within limitation in view of Article 27 of the Limitation Act.
45. Learned counsel for the respondent relied upon Article 44(b) and submitted that the defendant second time denied the claim before IRDA; thus, the suit filed within three years from IRDA"s rejection on 30th November 2004 was within limitation. The learned counsel for the respondent rightly submitted that the period spent in prosecuting the complaint before the National Consumer Disputes Redressal 28/32 ::: Uploaded on - 12/11/2024 ::: Downloaded on - 13/11/2024 01:19:00 ::: 901-SAST-18815-2023.docx Commission and later before IRDA is to be excluded in view of Section 14 of the Limitation Act. The dates of filing the complaint before the National Consumer disputes Redressal Commission and later before IRDA and it's rejection on the ground of maintainability are not in dispute. Hence, the period spent prosecuting the complaints relating to the same matter in issue, and its rejection on the grounds of maintainability has to be excluded from computing the period of limitation for filing the suit. Thus, the suit filed within three years of the rejection of the complaint by the IRDA was within limitation. Hence, even if the letter of repudiation dated 12 th May 2003 is treated as a rejection of the claim as contemplated under Article 44(b), the suit filed within three years from IRDA's communication of the rejection dated 30th November 2004 is within limitation, by excluding the time spent in prosecuting the complaints before the National Consumer Disputes Redressal Commission and IRDA. As held by the Hon'ble Apex Court in the case of P. Sarathy vs. State Bank of India 8, Section 14 does not speak of a civil court but speaks only of a court, hence any authority or tribunal having the trappings of a court would be a court within the meaning of Section 14. Learned counsel for the appellant was unable 8 (2000) 5 SCC 355 29/32 ::: Uploaded on - 12/11/2024 ::: Downloaded on - 13/11/2024 01:19:00 ::: 901-SAST-18815-2023.docx to substantiate his argument that IRDA would not be covered within the meaning of the word 'court' used in Section 14. Thus, respondent who was bonafidely prosecuting complaint before National Consumer Disputes Redressal Commission and later before IRDA is entitled to exclusion of time for calculating period of limitation for filing the suit. Therefore, the suit is rightly held within limitation by both courts. Thus, in view of the facts of the present case, the decision of the Madras High Court relied upon by the learned counsel for the appellant is not helpful to the appellant's contentions. Thus, the fourth question of law is answered in favour of the respondent.
46. The First Appellate Court has examined all the issues in detail and recorded conclusions on point no. 1 by recording comprehensive findings on all the issues. A perusal of the reasons recorded by the First Appellate Court indicates that all the aspects relating to all the issues are covered. I do not find any illegality or perversity in the reasons and findings recorded by the First Appellate Court. However, the enhancement of the amount is not justified. The respondent has not supported the enhanced amount and made a statement that the respondent is accepting the amount decreed by the trial court. Hence, 30/32 ::: Uploaded on - 12/11/2024 ::: Downloaded on - 13/11/2024 01:19:00 ::: 901-SAST-18815-2023.docx the fourth question of law is answered accordingly by partly accepting the findings recorded by the First Appellate Court to be correct and setting aside the enhancement of the amount.
47. The plaintiff does not press for the enhanced amount granted by the first appellate court. Hence, I do not find it necessary to elaborate on the submissions made by the learned counsel for the appellant by relying upon the decision of the Hon'ble Apex Court in the case of Banarsi. Hence, the first question of law is answered accordingly. The plaintiff is held to be entitled to the amount decreed by the trial court.
48. For the reasons recorded above, the second appeal is partly allowed by passing the following order:
i) The judgment and decree dated 18 th January 2023 passed by the learned Extra Joint District Judge, Vasai, in Regular Civil Appeal No. 9 of 2017, is quashed and set aside to the extent of granting enhancement of the claim amount.
ii) The judgment and decree dated 4th May 2009 passed by the learned Civil Judge, S.D. Vasai, in Special Civil Suit No. 567 of 2007, is confirmed.31/32 ::: Uploaded on - 12/11/2024 ::: Downloaded on - 13/11/2024 01:19:00 :::
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49. Interim Application No. 13483 of 2023 for interim relief is disposed of as infructuous.
[GAURI GODSE, J.] Digitally signed by RAJESHWARI RAJESHWARI RAMESH RAMESH PILLAI PILLAI Date:
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