Kerala High Court
Central Bank Of India vs C.V.Muhammed Koya on 23 July, 2025
RFA 25/2013
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2025:KER:54435
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE C.PRATHEEP KUMAR
WEDNESDAY, THE 23RD DAY OF JULY 2025 / 1ST SRAVANA, 1947
RFA NO. 25 OF 2013
OS NO.349 OF 2008 OF I ADDITIONAL SUB COURT, KOZHIKODE
APPELLANT/1ST DEFENDANT
CENTRAL BANK OF INDIA
CHELAVOOR BRANCH, KOZHIKODE,REPRESENTED BY ITS REGIONAL
MANAGER,REGIONAL OFFICE, ERNAKULAM
BY ADV SRI.GEORGE CHERIAN (SR.)
SMT.LATHA SUSAN CHERIAN
RESPONDENTS/PLAINTIFF & 2ND DEFENDANT
1 C.V.MUHAMMED KOYA, S/O.ALIKOYA, PROPRIETOR, M/S.C.V.FLOUR
AND OIL MILLS, MOOZHIKKAL, KOZHIKODE,CHELAVOOR AMSOM
CHELAVOOR VILLAGE
PIN - 673001
2 THE NEW INDIA ASSURANCE COMPANY LIMITED
REP. BY ITS DIVISIONAL MANAGER, CALICUT DIVISIONAL OFFICE,
11, 2ND FLOOR, SHAFEER COMPLEX,KANNUR ROAD, CALICUT 673
001, KALATHINKUNNU AMSOM DESOM KOZHIKODE.
BY ADVS.
SHRI.K.V.SOHAN - R1
SHRI.LAL K.JOSEPH, SC - R2
SMT.SREEJA SOHAN K.
THIS REGULAR FIRST APPEAL HAVING BEEN FINALLY HEARD ON 17.7.2025,
THE COURT ON 23.07.2025 DELIVERED THE FOLLOWING:
RFA 25/2013
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2025:KER:54435
JUDGMENT
Dated : 23rd July, 2025 The 1st defendant in O.S.349/2008 on the file of the 1 st Additional Sub Court, Kozhikode, is the appellant. (For the purpose of convenience, the parties are hereafter referred to as per their rank before the trial court.)
2. The plaintiff filed this suit for damages. The plaintiff is the proprietor of M/s.C.V. Flour and Oil Mills. He had availed an open cash credit facility from the 1 st defendant/bank against hypothecation of stock of copra, coconut oil and coconuts stored at his business premises. Originally the cash credit facility was for Rs.7,75,000/- and later on it was enhanced to Rs.15,00,000/-. The hypothecated goods were insured with the 2nd defendant, the New India Assurance Co.Ltd. According to the plaintiff, on behalf of the plaintiff, it was the 1 st defendant/bank who had taken insurance policy from the 2nd defendant and they continued to renew the same after deducting the premium from his account. As per the plaint averments, on 19.7.2007 flood water entered his premises and caused mischief to the hypothecated goods. However, his claim petition was rejected by the 2 nd defendant on the ground that at the time of the flood, there was no valid insurance policy. Therefore, he filed the suit for damages from the 1st defendant. In the above circumstances, the trial court found that the 1st defendant was negligent in renewing the policy in time and hence, passed the impugned judgment and decree permitting the plaintiff to realise a sum of Rs.9,72,198/- with future interest at the rate of 12% per annum from the 1 st defendant. RFA 25/2013 3
2025:KER:54435 Being aggrieved by the above judgment and decree of the trial court, the 1 st defendant preferred this appeal.
3. Now the point that arise for consideration is the following :-
Whether the impugned judgment and decree of the trial court calls for any interference in the light of the grounds raised in the appeal ?
4. Heard Sri.George Cherian, the learned Senior counsel for the appellant/bank and Sri.K.V.Sohan, the learned counsel for the 1 st respondent/plaintiff and Sri.Lal K.Joseph, the learned Standing counsel for the 2nd respondent/insurer.
5. From the evidence it is revealed that, after a gap, the 1st defendant renewed the insurance for the hypothecated goods on 18.7.2007. As per the plaint averments, the flood entered the premises of the plaintiff and caused damage to the hypothecated goods on 19.7.2007. Therefore, prima facie there was valid insurance policy as on the date of the mischief on 19.7.2007. However, in the plaint, no relief was sought against the 2nd defendant. At the time of argument, when it is revealed that on the date of damage to the hypothecated goods there was valid policy, while there was no prayer against the 2nd defendant/insurer, the plaintiff filed I.A.2/2025 to amend the plaint seeking relief either from the 1st defendant or from the 2nd defendant. The application was strongly opposed by the learned counsel for the 2nd respondent/insurer on the ground that the claim against the insurer is barred by limitation, as damage to the hypothecated goods occurred on 19.7.2007 while the amendment application was filed only on 22.6.2025.
RFA 25/20134
2025:KER:54435
6. The learned counsel on both sides relied upon the decisions Canara Bank v. Leatherrold Plastics Pvt.Ltd, MANU/SC/0446/2020, Sarasamma v. Valli Amma Rudrayani Amma (Died), 2024 KLT OnLine 3004 and Mallavva v. Kalsammanavara Kalamma, 2024 KLT OnLine 3051 (SC) regarding limitation of the claim against the 2nd defendant. The decision of this Court in Puthenkulangara Devaswom v. C.P.Raghava Pisharadi, 2025 KHC OnLine 624 can also be considered in this context. Since I am leaving open the question of limitation to be decided by the trial court, those decisions are not discussed in detail, in this order.
7. Since policy was renewed on 18.7.2007 and damage was caused to the hypothecated goods only on 19.7.2007, prima facie the insurer/2nd respondent is liable. At the same time, in the suit, there was no prayer against the insurer. In the impugned judgment, the trial court has observed that since the flood started in the place where the plaintiff's godown is situated on 16.7.2007, and the policy was renewed on 18.7.2007 suppressing the flood, the insurer has no liability. Ext.A2 is the intimation given by the 2nd defendant rejecting the claim made by the plaintiff. In Ext.A2 even the 2nd defendant has no case that the policy was renewed suppressing material facts. Since even the 2nd defendant has no such case, the finding to that effect made by the trial court is without any legal support.
8. On the other hand, from the evidence it is revealed that though flood started in the place where the plaintiff's unit was located on 16.7.2007, it entered the business premises of the plaintiff only on 19.7.2007. Since according to the plaintiff, RFA 25/2013 5 2025:KER:54435 the flood entered his premises only on 19.7.2007 and only thereafter damage was caused to the hypothecated goods and the policy was renewed on 18.7.2007, the trial court was not justified in mulcting the liability on the 2 nd defendant on the ground that the policy was renewed suppressing flood.
9. Though in the written statement the 2nd defendant has taken a contention that they have no role in taking the insurance for the hypothecated goods, from the evidence on record it appears that it was the 2 nd defendant who used to take and renew the policy from the 3rd defendant. It is also revealed that the 2nd defendant used to receive commission from the 3rd defendant for taking the policy for the customers. Therefore, there was lapse on the part of the 1 st defendant in renewing the policy before it expired. It is true that thereafter they renewed the policy on 18.7.2007. In other words, the contention of the 2nd defendant that they have no role in taking and renewing the policy and that it was the responsibility of the plaintiff does not hold good, in the facts of this case.
10. In the above circumstance, the matter requires reconsideration by the trial court, especially in the light of the proposed amendment. At the same time, an opportunity also is to be granted to the insurer to contest the claim raised against them. Unless the proposed amendment is allowed, the plaintiff and the 1 st defendant will be put to irreparable injury and hardships. In the above circumstances, for an effective and proper adjudication of the dispute between the parties, the proposed amendment is to be allowed and the matter requires to be remanded to the trial court RFA 25/2013 6 2025:KER:54435 for fresh disposal. Point answered accordingly.
11. In the result, I.A.2/2025 is allowed. The plaintiff/1 st respondent is directed to carry out the amendment within seven days from today. The matter is remanded to the trial court for fresh disposal after affording opportunity to the insurer to file additional written statement, if any, and affording opportunity to both sides to adduce further evidence, if any. The question of limitation is also left open to be considered and decided by the trial court. Considering the fact that this suit is of the year 2008, the trial court is directed to dispose of the same, as expeditiously as possible, at any rate, within a period of nine months from the date of receipt of a copy of this judgment.
Sd/- C.Pratheep Kumar, Judge Mrcs/17.7.