M/S. Boghara Polyfab Pvt. Ltd vs National Insurance Company Ltd
2012 Latest Caselaw 400 Bom

    pmw/spb                              1
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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").

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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".

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"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

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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

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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

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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

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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.

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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

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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.

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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.

On 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

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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

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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

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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.

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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

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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

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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

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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

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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

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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.

It 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

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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.

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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

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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.

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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

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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

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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

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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

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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

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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.

In 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

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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. 





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(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.)

                                        .....