Bombay High Court
M/S. Boghara Polyfab Pvt. Ltd vs National Insurance Company Ltd on 27 November, 2012
Author: Anoop V. Mohta
Bench: Anoop V. Mohta
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION NO. 804 OF 2009
M/s. Boghara Polyfab Pvt. Ltd.
111, Jeevan Deep Complex, Ring Road,
New Subjali, Surat, Gujarat .... Petitioner
Vs.
National Insurance Company Ltd.
(thru: Divisional Manager),
Divisional Office No.5, ig
Kamani Chambers, 32, R. Kamani Marg,
Ballard Estate, Mumbai - 400 038. .... Respondent
---
Mr. Ragesh S. Mehta a/w. M.S. Rachana Dalal, Ms. Yashoda Jondhale,
Ms. Purnima Bhatia I.b. Ms. Purnima G. Bhatia, for the petitioner.
Mr. Zal Andhyarujina a/w. Ms. Ankita Singhania, Mr. A.S. Vidyarthi,
Mr. Ranjan B. Tripathi i/b. Mr. A.S. Vidyarthi, for Respondents.
---
CORAM : ANOOP V. MOHTA, J.
RESERVED ON : 06 November, 2012
PRONOUNCED ON : 27 November, 2012
JUDGMENT :
The Petitioner, original-Claimant, being aggrieved by award dated 25th June 2009 passed by the learned Sole Arbitrator has invoked Section 34 of the Arbitration and Conciliation Act, 1996 (for short, "the Arbitration Act").
::: Downloaded on - 09/06/2013 19:26:14 ::: pmw/spb 2arp804-09.sxw 2 The basic events as per the Petitioner are as under :-
On 4.8.2003, the Petitioner obtained from the Respondent's, a Standard Fire and Special Perils Policy bearing No.250501/11/03/3100145 (the Policy) covering stocks of all kinds of yarn stored in the godown located at plot No.9 at Saroli, Gujarat.
The period of Policy as stated across the face of the Policy document was 4.8.2003 to midnight of 3.8.2004. The sum insured was Rs.3 Crores.
3 On 22.9.2003, first endorsement as and by way of Duplicate Schedule bearing No.67308 was carried out to the Policy whereby an additional godown as specified was added to the Policy and the sum insured was also increased by Rs.3 Crores. The sum insured under the Policy stood increased to Rs.6 Crores. With this endorsement the said Policy was converted into a Floater Policy. The additional premium of Rs.40,409/- was charged to the Petitioner on pro-rata basis for the period of 317 days i.e. between 22.9.2003 (date of the endorsement) and 3.8.2004 (date of the expiry of the Policy).
The first endorsement schedule bore the following remarks at the end of the page :
"Hence forth the above captioned policy is now converted into floater policy on pro-rata basis".::: Downloaded on - 09/06/2013 19:26:14 ::: pmw/spb 3
arp804-09.sxw "All other terms and conditions remain unaltered except above".
4 On 9.10.2003, second endorsement as and by way of Duplicate Schedule bearing No.67310 was carried out to the Policy whereby another godown as specified was added to the policy. As specifically mentioned in the endorsement document itself "all other terms and conditions of the said Policy remain unaltered".
5 On 27.5.2004, the Petitioner wrote to the Respondent requesting the addition and inclusion of four new godowns as specified in the letter to the Policy. The letter specifically requested to "include the new godowns with our existing insurance Policy of old godowns". It was also requested to increase the sum insured by another Rs.6 Crores. A cheque of Rs.23,328/- was enclosed as premium amount. The additional premium of Rs.23,328/- under the Policy was paid by the Petitioner in accordance with the calculation thereof made and advised by the Respondent.
6 The third endorsement as and by way of Endorsement Schedule bearing No.62600 to the Policy was carried out so as to ::: Downloaded on - 09/06/2013 19:26:14 ::: pmw/spb 4 arp804-09.sxw include four new godowns viz. godowns located at Plot Nos. 1, 2, 3 and 12 at Saroli. While the endorsement document correctly recorded that the date of the issue of the Policy was 4.8.2003 and its date of expiry was 3.8.2004; it incorrectly recorded elsewhere across the face of the endorsement that the sum insured under the Policy stood increased by Rs.6 Crores for a period of two months only i.e. from 27.5.2004 to 26.7.2004. The endorsement also stated that the premium of Rs.23,328/- was hereby charged to the insured and that "all other terms and conditions of the Policy remain unaltered".
Receipt for Rs.23,328/- was issued by the Respondent clearly showing that the sum was appropriated as premium to the said Policy.
7 On 28.5.2004, immediately on receipt of the third endorsement, that is, the very next day, the Petitioner wrote to the Respondent stating that while it has paid a premium of Rs.23,328/-
for 69 days in relation to the said policy, the endorsement wrongly mentioned that the sum insured under the Policy stood increased by Rs.6 Crores for a period of two months i.e. from 27.5.2004 to 3.8.2004. A request was made to make the respective changes in the records of the Respondent and for a correct Policy to be sent. The Petitioner clarified that the Policy of Rs.12 Crores would expire on the ::: Downloaded on - 09/06/2013 19:26:14 ::: pmw/spb 5 arp804-09.sxw midnight of 3.8.2004;
8 Third endorsement bearing No.62600 was corrected in hand by the Respondent to reflect that the further increased cover of Rs.6 Crores stood effective for a period of 69 days from 27.5.2004 i.e. till 3.8.2004. Alongside the corrections made in hand, the seal of the Respondent was also put. It was handed over to the Petitioner after the corrections.
9 On 3.8.2004 and 4.8.2004, Torrential rains and consequent flood inundated the godowns of the Petitioner where yarn was stored caused large scale damage to the goods lying in all the four godowns, covered by the third endorsement dated 27.5.2004 (as corrected on 28.5.2004);
10 On 3.8.2004, the Petitioner having misplaced the copy of the corrected third endorsement dated 27.5.2004 (corrected on 28.5.2004) sought a fresh copy of the endorsement from the Respondent as a consequence of which Duplicate Schedule bearing Sr. No.67311 was taken out by the Respondent from the system and manually corrected under the seal of the Respondent to reflect the ::: Downloaded on - 09/06/2013 19:26:14 ::: pmw/spb 6 arp804-09.sxw coverage of a further sum of Rs.6 Crores upto the midnight of 3 rd August, 2004. This corrected Duplicate Schedule corresponded to the earlier Duplicate Schedule bearing No.62600.
11 On 5.8.2004, a Claim was filed by the Petitioner before the Respondent under the Policy. The Surveyors were appointed by the Respondent to assess the loss. On 6.12.2004, the Surveyors appointed by the Respondent issued final Survey Report assessing the loss net of salvage at Rs.3,35,01,078.80 and after deducting the compulsory excess of 5% amounting to Rs.16,75,053.94/-
recommended that the net payable amount to the Petitioner was Rs.3,18,26,025.00. The assessment was carried out by the Surveyors on the basis that the Policy was a floater Policy and the goods stored in all the four godowns covered by the third endorsement dated 27.5.2004 were also such as were insured on the date of the flood.
12 On 17.3.2004, the Respondent wrote to the Surveyors requesting them to reassess the loss by ignoring the third endorsement to the said Policy which; the letter stated, was valid only upto 26.7.2004 resulting in the sum insured being restricted to Rs.6 Croes on the date of loss. The Respondents, however, did not disagree with ::: Downloaded on - 09/06/2013 19:26:14 ::: pmw/spb 7 arp804-09.sxw either the quantum or the value of loss that the Surveyors had assessed in terms of their Final Survey Report.
13 On 15.3.2005, the Director of the Petitioner was summoned to the office of the Respondent and made to discharge an undertaking that it would accept the amount offered in complete satisfaction of its claim and that it would not prefer any further claims. The Petitioner was also promised that the payment under the claim would be released within 15 days.
14 On 22.3.2005, as per the direction of the Respondent, the Surveyor issued Addendum to Final Survey Report reassessing the loss net of under insurance at Rs.2,46,33,410.24 and after deducting the compulsory excess of 5% recommending that a sum of Rs.2,34,01,739.73 be paid to the Petitioner. The Addendum calculated that there was an under insurance on the Policy to the extent of 26.4698% on the basis that while the value of stocks located in the various godowns of the Petitioner were of a value of Rs.8,15,99,149.00 as originally assessed under the Final Survey Report issued earlier; the insurance covered under the Policy stood at only Rs.6 Crores on the date of the loss.
::: Downloaded on - 09/06/2013 19:26:14 ::: pmw/spb 8arp804-09.sxw 15 The Surveyors allowed the claim of the Petitioner; albeit on a reduced basis, on the goods lying in all the four godowns on 3.8.2004 and as covered by the third endorsement dated 27.5.2004 (as corrected on 28.5.2004); while on the other hand, the Surveyor proceeded on the basis that the third endorsement (on account of and as a result of which goods lying in the four godowns were covered under insurance in the first place) ought to be ignored as a result of which the endorsement increasing the sum insured by another Rs.6 Crores (total Rs.12 Crores) had expired on 26.7.2004 itself and the Policy accordingly covered a sum of Rs.6 Crores only.
16 In November, 2005, not having released any payment against the Claim filed by the Petitioner as far back as in August 2004, the Respondent again asked the Petitioner to make a commitment that it would accept whatever was offered and that it would not raise a dispute later. Despite the commitment, no payment was released by the Respondent.
17 On 13.3.2006, the Director of the Petitioner received a telephonic call from Mr. Satish Shinde, the Divisional Manager of the Respondent to make an immediate payment of Rs.2,443/- as a ::: Downloaded on - 09/06/2013 19:26:14 ::: pmw/spb 9 arp804-09.sxw condition precedent for making any payment under the claim. The purpose of the said demand and the details of its working were not indicated. The Petitioner wrote a letter referring to the telephonic conversation and enclosing a cheque for an amount of Rs.2,443/-.
The letter clearly recorded that the cheque was being sent with a request to provide the Petitioner with details regarding the purpose of the demand of Rs.2,443/- and the working of the same immediately.
18 On 21.3.2006, the Petitioner, under duress and coercion of the Respondent, signed the full and final discharge voucher in the format provided by the Respondent for Rs.2,33,94,964/- after which a cheque for the said amount was handed over to the Petitioner. The said format/ receipt clearly recorded that the claim was being settled under the Policy.
19 On 24.3.2006, the Petitioner wrote to the Chairman, IRDA (Insurance Regulatory and Development Authority), protesting about the conduct of the Respondent and providing details of how the Respondents dilatory and coercive tactics forced the Petitioner to execute the discharge voucher. The Petitioner prayed for intervention of IRDA.
::: Downloaded on - 09/06/2013 19:26:14 ::: pmw/spb 10arp804-09.sxw 20 In response to the Petitioner's letter dated 13.3.2006, wrote a letter dated 21.4.2006 under the cover of which a calculation sheet setting out how the sum of Rs.2443/- purporting to be the additional premium was worked out. The letter further narrated that in view of the discharge voucher having been executed by the Petitioner the Claim was closed.
21On 2.8.2006, in response to the letters dated 27.5.2006 and 27.7.2006 written by the Petitioner requesting the Respondent to pay to the Petitioner the differential amount of Rs.84,31,006/-
alongwith interest failing which to agree for arbitration in terms of the conditions attached to the Policy. The Respondent wrote to the Petitioner stating that since the claim of the Petitioner stood finally settled the question of invocation of the Arbitration Clause did not arise.
22 On 19.4.2007, in Arbitration Petition No.182 of 2006 filed by the Petitioner under section 11 of the Arbitration and Conciliation Act, 1996 ("Arbitration Act" for short), the Hon'ble Chief Justice of the Bombay High Court appointed Mr. Justice S.N. Variava (Retd.) as the Sole Arbitrator to adjudicate upon the disputes and differences ::: Downloaded on - 09/06/2013 19:26:14 ::: pmw/spb 11 arp804-09.sxw between the parties. The order of the Hon'ble Chief Justice of the Bombay High Court passed under Section 11 of the Arbitration Act, was challenged by the Respondent before the Hon'ble Supreme Court by way of a Special Leave Petition. The said Special Leave Petition filed by the Respondent was dismissed by the Hon'ble Supreme Court.
23 Between October, 2006 and March, 2008 Disciplinary proceedings were initiated and completed by the Respondent against its officers - Mr. B.G. Godbole and Mr. K.P. Shah. The Petitioner was not a party to these proceedings.
Under Rule 26 of the General Insurance (Conduct, Discipline and Appeal) Rules, 1975 a reduction in the basic pension by 50% per month was imposed upon Mr. D.G. Godbole and Mr. K.P. Shah was penalized with a reduction in basic pay to the minimum of the scale.
24 On 10.11.2008, the learned Sole Arbitrator issued directions in the matter, interalia, directing the parties to file Statement of Claim and Written Statement alongwith relied upon documents. The learned Arbitrator also made the following directions:-
"5. The parties, shall, on or before 16th February ::: Downloaded on - 09/06/2013 19:26:14 ::: pmw/spb 12 arp804-09.sxw 2009 made Statements of Admission and/or denials in respect of documents disclosed by the other side, indicating therein whether the admissions are limited to the execution of the documents or apply also to the correctness of the contents of the documents".
25 On 12.12.2008, the Petitioner filed a Statement of Claim alongwith relied upon documents. The Petitioner claimed as under :
a) Rs.84,31,061/-as the principal amount being difference between the amount originally assessed by the Surveyor and that was actually paid by the Respondent.
b) Interest of Rs.1,20,05,710/- by way of interest at 18% on Rs.3,18,26,025/- (comprising Rs.2,33,94,964/- already received on 21.3.2006 plus Rs.84,31,061/- now being claimed in Arbitration proceedings) from 3.11.2004 till 21.3.2006 and further interest on Rs.84,31,061/- from 22.3.2006 to 1.12.2008 (date of filing the Claim).
c) Rs.6,24,575/- towards legal expenses incurred in the High Court and Supreme Court.
d) Cost of Arbitration.
e) Interest @ 18% on the amount awarded from
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1.12.2008 till the date of award and further interest from the date of the award till the date of actual payment.
26 On 12.1.2009, the Respondent filed its Written Statement alongwith relied upon documents. The documents relied upon by the Respondent included the endorsements to the Policy bearing duplicate schedule numbers 62600 and 67311.
27 On 16.2.2009, in pursuance of the direction of the learned Arbitrator made on 10.11.2008, the Petitioner filed its response to the documents exhibited by the Respondent alongwith its Written Statement.
The Petitioner, interalia wrote as under :-
"2. I further say that I admit the execution and correctness of documents "R-1 to R-4".
The two documents (R-4 Colly.) were also filed by the Respondent alongwith its Affidavit in Reply to the Arbitration Petition No.182 of 2006 filed by the Petitioner under Section 11 of the Arbitration and Conciliation Act, 1996.
28 On 23.2.2009, eight issues were framed by the learned Sole Arbitrator after discussion with the Parties. Between February ::: Downloaded on - 09/06/2013 19:26:14 ::: pmw/spb 14 arp804-09.sxw 2009 and June 2009, Arbitration proceedings took place and were concluded. On 6.6.2009, at the conclusion of the arguments, the Advocate of the Petitioner filed Note of Written Arguments alongwith Statement of Expenses incurred by the Petitioner in Arbitration proceedings as well as litigation in the High Court and in the Supreme Court. The same were taken on record. On 25.6.2009, the learned Arbitrator made the Award whereby issue Nos. (i) and (iii) were decided in favour of the Petitioner and Issue Nos. (ii) (iv) (v)
(vi) (vii) and (viii) were decided against the Petitioner. Those two issues are as under :
i) Whether the Claimants executed the discharge voucher for Rs. 2,33,94,964/- under duress and/or implicit coercion of the Respondents as claimed, and if not, whether the Claim is not maintainable ?.
iii) Whether the endorsement passed under Insurance Policy bearing No. 250501/11/03/3100145, increasing the sum insured to Rs. 12 crores, is unauthorized and illegal ?
29 On 26.9.2009, the Petitioner filed the present Petition under Section 34 of the Arbitration.
::: Downloaded on - 09/06/2013 19:26:14 ::: pmw/spb 15arp804-09.sxw 30 The Respondent has not challenged the Award passed by the learned Arbitrator. Hence, Issue Nos. (i) and (iii) that have been decided in favour of the Petitioner have attained finality and conclusiveness.
31 The basic concepts referring to and related to fire insurance as circulated are as under:-
"Floater Policies :
2.Sometimes, an insured is not able to keep a day to day account of his stocks in his various godowns.
For various reasons he may have different godowns in different places in the same town, village, city, state or in other states too. His stocks may be stored at any of these godowns depending on the space available. He is able to give the insurance company only total value of all his stocks in these various locations/godowns. Against each godown he is not able to declare a separate value. To cater to such clients a floating policy is issued.
3.This policy covers in one Sum Insured stocks stored in different godowns. Since the exposure to hazard is higher such a policy is subject to an extra premium.
4.Certain general features of floater policies are :
(a) The policy can be granted only on the stocks.
The policy cannot be issued in respect of immovable property.
(b) The address of each godown has to be declared by the insured.
(c) The insured should have a good internal audit and accounting procedure under which the total ::: Downloaded on - 09/06/2013 19:26:14 ::: pmw/spb 16 arp804-09.sxw amount at risk and locations can be established at any particular time, if required.
(d) Unspecified locations cannot be covered."
32 It is relevant to note the concept Mid-Term Revision in Sum Insured :
44. In all cases where the insurers cancel the policy, the refund will be on pro-rata basis.
11. Mid-term revision in sum insured shall be allowed subject to the following :
Increase in sum insured : On pro-rata basis Decrease in sum insured : On short- period scale
45. The tariff has given simple rules for revision in the sum insured. The additional premium to be charged for the increased amount of sum insured will be on pro-rata basis for the balance period of policy.
46. Wherever there is a decrease in the sum insured, the premium that has to be retained on the decreased value of sum insured will be on short period scale."
33 The Insurance Regulatory and Development Authority (Protection of Policyholders' Interests) Regulations, 2002 issued under Clause (zc) of Sub-Clause 2 of Section 114A of the Insurance Act, 1938 (4 of 1938) of Sub-Section 14 and 26 of the Insurance ::: Downloaded on - 09/06/2013 19:26:14 ::: pmw/spb 17 arp804-09.sxw Regulatory and Development Authority Act, 1999 (41 of 1999).
34 The relevant clause 9 is as under:-
"9. Claim procedure in respect of a general insurance policy. - (1) An insured or the claimant shall give notice to the insurer of any loss arising under contract of insurance at the earliest or within such extended time as may be allowed by the insurer. On receipt of such a communication, a general insurer shall respond immediately and give clear indication to the insured on the procedures that he should follow. In cases where a surveyor has to be appointed for assessing a loss/claim, it shall be so done within 72 hours of the receipt of intimation from the insured.
(2)Where the insured is unable to furnish all the particulars required by the surveyor or where the surveyor does not receive the full co-operation of the insured, the insurer or the surveyor as the case may be, shall inform in writing the insured about the delay that may result in the assessment of the claim.
The surveyor shall be subjected to the code of conduct laid down by the Authority while assessing the loss, and shall communicate his findings to the insurer within 30 days of his appointment with a copy of the report being furnished to the insured, if he so desires. Where, in special circumstances of the case, either due to its special and complicated nature, the surveyor shall under intimation to the insured, seek an extension from the insurer for submission of his report. In no case shall a surveyor take more than six months from the date of his appointment to furnish his report.
(3)If an insurer, on the receipt of a survey report, finds that it is incomplete in any respect, he shall ::: Downloaded on - 09/06/2013 19:26:14 ::: pmw/spb 18 arp804-09.sxw require the surveyor under intimation to the insured, to furnish an additional report on certain specific issues as may be required by the insurer. Such a request may be made by the insurer within 15 days of the receipt of the original survey report:
Provided that the facility of calling for an additional report by the insurer shall not be resorted to more than once in the case of a claim.
(4)The surveyor on receipt of this communication shall furnish an additional report within three weeks of the date of receipt of communication from the insurer.
(5)On receipt of the survey report or the additional survey report, as the case may be, an insurer shall within a period of 30 days offer a settlement of the claim to the insured. If the insurer, for any reasons to be recorded in writing and communicated to the insured, decides to reject a claim under the policy, it shall do so within a period of 30 days from the receipt of the survey report or the additional survey report, as the case may be.
(6)Upon acceptance of an offer of settlement as stated in sub-regulation (5) by the insured, the payment of the amount due shall be made within 7 days from the date of acceptance of the offer by the insured. In the cases of delay in the payment, the insurer shall be liable to pay interest at a rate which is 2% above the bank rate prevalent at the beginning of the financial year in which the claim is reviewed by it."
35 The policy bearing No.250501/11/03/3100145 for the period 4.8.2003 to 3.8.2004 issued by the respondent in favour of the petitioner for a Standard Fire and Special Perils Policy. The claim was ::: Downloaded on - 09/06/2013 19:26:14 ::: pmw/spb 19 arp804-09.sxw raised by the petitioner as their godown got flooded with water and damaged their goods because of unprecedented heavy rains from 2 nd August, 2004. On 5.8.2004, the petitioner lodged the claim. There is no dispute that on or from 22.9.2003 the policy in question became a floater policy as endorsed. The floater policy was up to 3.8.2004.
The Arbitrator in fact recorded "thus endorsement No.250501/11/04/31/3004145 cannot be said to be unauthorised and illegal". The endorsement itself means increased cover of Rs.12 Crores as claimed. The issue only in the matter is the covered period is of 60 days or 69 days. The learned Arbitrator therefore framed issue No.II and answered against the petitioner.
36 It is always necessary to consider the nature of transactions including the terms and conditions. The concept of floater policy in the present facts and circumstances, as defined and explained read with the practice of covering the respective godowns/premises/goods in one floater policy just cannot be overlooked and so also the undisputed position and the endorsements on the record whereby it was specifically endorsed from time to time that "other terms and conditions remain unaltered." That was at the time of increase of the sum assured amount under the caption "the ::: Downloaded on - 09/06/2013 19:26:14 ::: pmw/spb 20 arp804-09.sxw Policy". It is the case that the respondent officer, manually corrected the endorsement and recorded that it would remain in effect for 69 days i.e. 3.8.2004 which was the date of expiry of the said policy. The hand written endorsement was initialed by the concerned officer whose evidence was also recorded accordingly. It was further followed by the seal of the respondent.
37It is not the case of the respondent that there was no such endorsement and/or the sum assured was not increased from Rs.6 Crores to Rs.12 Crores. It is also not the case that there is no such captioned policy which was valid upto 3.8.2004. The endorsement was made/effected from 27.5.2004. It is also not the case of the respondent that there was any misrepresentation, fraud or any extraneous consideration which compelled the officers to make that endorsement. Admittedly, the goods were damaged because of the unpredicted and unprecedented rains from 2.8.2004. There was no occasion for the petitioner to plan any thing.
38 The submission is that there was no practice of the respondent to issue and/or make any hand written correction on such policies. It is always subject to computerized generated correction ::: Downloaded on - 09/06/2013 19:26:14 ::: pmw/spb 21 arp804-09.sxw and or printed endorsement on the policies/ receipts. The Respondent is not in a position to deny the fact of the endorsement given by their officers. The fact remained that though officer in question was retired, yet, permitted to work for further period and specifically during this period also. The petitioner or such other person, one who wants their policy and/or endorsement to be corrected/ made just cannot ask authorisation or demand and/or enquire whether the concerned official who had authorized to work is entitled to sign or make such corrections. The internal dispute and/or action, if any taken by the respondent in no way dis-entitles and/or takes away the rights of the person like petitioner to rely upon the said endorsement.
The fact remains that the endorsement, in view of the written representation made on 28.5.2004 by the petitioner, was got corrected, realizing the mistake in view of admitted position that the policy was expiring on 3.8.2004 and not on 26.7.2004. There was no reason or purpose and/or any malafide intention in restricting the sum assured amount to Rs.12 Crores only for 60 days (for a period of two months from 27.5.2004 to 26.7.2004) though the policy was expiring on 69 days i.e. 3.8.2004.
::: Downloaded on - 09/06/2013 19:26:14 ::: pmw/spb 22arp804-09.sxw 39 It is also necessary to note that while endorsing the increased sum insured, other basic terms and conditions remained unaltered. Admittedly, from time to time, the parties agreed and covered other premises under the policy. The requisite premiums were paid accordingly. The parties acted throughout, keeping in mind the expiry date of the policy expiring on 3.8.2004. The expiry period of policy was remained intact despite time to time additions of premises or increase of assured amount.
40 The correct endorsement as recorded above got proved.
The challenge was only to the hand written endorsement. The challenge with regard to the authorization of Mr. Godbole, the Officer in question can not be treated as the ground and/or a foundation to deny the rights the petitioner in view of the official and the proved endorsement in question. There are materials on record to substantiate the case of the petitioner that the endorsement was made by the officer who was performing his official duty, that itself is sufficient to accept the case of the petitioner.
41 I am inclined to observe that it is necessary to consider the relevant and respective clauses of the commercial contract from ::: Downloaded on - 09/06/2013 19:26:14 ::: pmw/spb 23 arp804-09.sxw the point of view of the nature of the business and/or transactions in question. Contracts cannot be read in isolation without considering the purpose, object and the nature of it between the parties, apart from its purpose and object in law based upon which the contract was entered into by and between the parties. The governing law is the Insurance Act, 1938 and the Insurance Regulatory and Development Authority Act, 1999 and the Rules and Regulations framed thereunder.
The booklets and/ or instructions paper books and/or advertisement revolving around the same; apart from guiding manual for the agent based upon which, anybody can act and proceed just cannot be overlooked. The practice and procedure so adopted by and between the parties starting from proposal and the proposal form including "cover" for the premium so paid and claimed and the points to be covered in such policies apart from the terms and conditions and reciprocal obligations of both the parties always play an important role in such types of transactions. Basic requirement is how such insurance policy should cover, state and provide details, is again a matter of practice and understanding between the parties including the public at large. The mechanism to settle the dispute/grievance is also provided and that there is a different provision/ procedure for different policies.
::: Downloaded on - 09/06/2013 19:26:14 ::: pmw/spb 24arp804-09.sxw 42 For the purpose of the present matter, we are concerned with the claim procedure in respect of the general insurance policy as contemplated under Regulation-9. Though such a type of policy/ cover is a commercial document but fact remains that in the most of such matters the agents and/or advertisements play important role, in so far as representations of the policy, its benefits, losses, terms and conditions apart from requisite premium payable or to be paid by the person concerned. It is not only the sole purpose and object of having such general insurance policy but to cover and protect the movable and immovables property of the insurer. The basic details are provided in such insurance policies, including the name, address of the insurer, description of the movable and immovable property and the interest therein, location of the property insured under the policy, the period of insurance, sums assured, perils covered and /or not covered, premium payable, policy terms and conditions and warranties, respective obligations, apart from the special conditions attaching to the policy and provisions for cancellation of the policy with details of the riders, if any attaching to the main policy.
43 It is further necessary to note the object and purpose of floater policy including the practice/ concept of Mid-Term Revisions ::: Downloaded on - 09/06/2013 19:26:14 ::: pmw/spb 25 arp804-09.sxw for the increase in sum insured. The subsequent charge of amount/ premium that is after expiry of the policy period, in no way sufficient to overlook the admitted position on record with regard to the expiry period that is 3.8.2004, the endorsement that the same terms and conditions are applied and the sum assured was increased by Rs.6 Crores. The dispute, therefore, with regard to days 60 and/or 69 by challenging and denying hand written endorsement made by the respondent officials; in my view, in no way sufficient to decide the nature of contract, policy and the practice of respondent dealing with the policyholders in such circumstances. I am inclined to observe that the subsequent payment and the endorsement and or vouchers-cum-
receipt even if any just cannot be the facts to overlook the admitted position about the nature of policy and its expiry date. There is nothing pointed out from the record that the endorsement so made was independent clause and/or the earlier endorsements and/or the two months increase in the sum assured was independent contract and nothing to do with the other terms of the floater policy. In my view, all these things are interlinked and interconnected. It is difficult to dissect. Therefore, the endorsement just cannot be read in isolation as sought to be contended by the learned counsel appearing for the respondent. Therefore, taking overall view of the matter, the terms ::: Downloaded on - 09/06/2013 19:26:14 ::: pmw/spb 26 arp804-09.sxw and conditions of the policy and the practice read with the endorsement in question, I am inclined to observe that reasoning given by the learned Arbitrator on these issues require reconsideration on merit of the claim itself.
44 If it is 69 days, it covers the period of basic agreed expiry date i.e. midnight of 3.8.2004, but, if not, the policy as observed by the Arbitrator expired on 28.5.2004 thereby denied the claim of the petitioner as prayed. The period if covered upto midnight of 3.8.2004, the goods were damaged because of unprecedented flood on 2.8.2004, the petitioner would be entitled to get the damages and or compensation in view of the terms and conditions of the basic policy which was modified/ sum assured amount was increased by the hand written endorsement would change whole reasons and the award so passed by the learned Arbitrator.
45 In case of such default, therefore, it is necessary that at the time of adjudicating such claims under the policy, the authority and /or the court has to consider the over all scheme of the policy.
I am inclined to observe that the isolated clause and/ or clauses thus cannot be taken and/or read, interpreted and/or granted and/or ::: Downloaded on - 09/06/2013 19:26:14 ::: pmw/spb 27 arp804-09.sxw rejected with regard to the claim arisen out of such insurance policies.
In the present case, we are concerned about hand written endorsement on the policy in question and, as recored above, its effect over the main contract between the parties. It is not a question of only plain reading of the policy in question. I am not inclined to accept the statement of the learned counsel appearing for the respondent that having once finding recorded by the learned Arbitrator, based upon the material available on record, including the terms and conditions of the policy and as there is nothing illegal, the view so taken by the learned Arbitrator, cannot be stated to be perverse. Therefore, the court under section 34 should not interfere with the same.
46 The premium amount was paid as asked and it was never the issue. The basic issue was only an hand written endorsement.
The period of insurance cover as per endorsed policy was upto 03.08.2004. I am of the view that for the above reasons and the insurance practice and principles, the policy holder is entitled to get benefits of the floater policy.
47 As recorded above and as there is no serious dispute with ::: Downloaded on - 09/06/2013 19:26:14 ::: pmw/spb 28 arp804-09.sxw regard to the nature and/or purpose and object of such cover of insurance policy. It is necessary to consider all the clauses of the policy. The written endorsements are final and binding on the parties. The overlooking of the basic clauses/provisions, in my view amounts to wrong reading of the policy/contract itself. This takes away the basic object and purpose of the policy which causes hardship and injustice. Admittedly the valid policy period was up to 03.08.2004. The same was also accepted by the respondents officer, as the mistake was pointed out immediately. There is no dispute with regard to the fact that there was proposal to enhance the amount, referring to the existing policy in question. The respondents was also no where in a position to deny this fact about the enhancement as well as hand written endorsement so made. I am inclined to observe that the pendency of the enquiry itself means that the respondents were duly aware that their official at the relevant time based upon the proposal and the representation so made by the Petitioner and after considering the admitted clauses of the policy, corrected the endorsement which definitely covers and falls within the ambit of proper and correct policy. The submission that the respondents never endorsed and/or corrected any policy in such fashion is unacceptable. There is no such representation and/or ::: Downloaded on - 09/06/2013 19:26:14 ::: pmw/spb 29 arp804-09.sxw material placed on record to demonstrate that the respondent officer's hand written endorsement was not permissible at any point of time nor the case is made out accordingly. I am inclined to observe that the respondents' main object and purpose is to serve interest of the public at large and not to go into such technical details to avoid and/ or prejudice the parties in such an unprecedented situation.
48In view of the above, since the issue of 60 days or 69 days and/or policy expiry date is 26.7.2004 and/or 03.08.2004, goes to the root of the matter, I am inclined to remand the matter for that purpose. All challenged issues are required to be re-considered again.
I am remanding the matter back for reconsideration and re-argument based upon the material already available on the record.
49 Regulation 9(6) which is mandatory, as held by this Court, entitled the petitioner and/or person like petitioner to claim interest @ 2% above the Bank rate prevalent at the beginning of the financial year in which the claim is received by them. This point is also kept open.
50 The learned counsel appearing for the Petitioner pointed ::: Downloaded on - 09/06/2013 19:26:14 ::: pmw/spb 30 arp804-09.sxw out that the Respondents have not challenged the order/ nor raised issues with regard to the finding given in favour of the Petitioner i.e. issue no. I and issue No. III. These issues and relevant facets, therefore, need not be reopened again. Thus findings on basic issue No.2 and the other connected issues Nos. IV, V, VI, VII and VIII only to be reconsidered by giving opportunity to the both the parties. In the present case considering the above circumstances, I am not inclined to retain the matter in the High Court for any other purpose. The restricted remand is permissible. This is the only way to get the matter disposed off as expeditiously as possible to avoid further delay in getting the claim arising out of the insurance policy.
51 In the result, Award dated 25.02.2009 is modified to the following extent. The resultant order is as under :
(a) The Award is maintained with regard to the findings on issue Nos. (I) and (III).
(b) Rest of the Award is set and aside and the matter is remanded back for rehearing before the learned Arbitrator Tribunal on issue Nos. II, IV, V, VI, VII & VIII.
(c) The parties to take steps accordingly. ::: Downloaded on - 09/06/2013 19:26:14 ::: pmw/spb 31 arp804-09.sxw
(d) All points are kept open with regard to these issues except issue Nos. (I) and (III).
(e) The Arbitration proceeding is expedited.
52 The Arbitration Petition is disposed of accordingly. No order as to costs.
ig (ANOOP V. MOHTA, J.)
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