Mrs Asha Soni vs M/S The New India Assurance Co. Ltd
2008 Latest Caselaw 1882 Del

     *IN THE HIGH COURT OF DELHI AT NEW DELHI


                        +CS (OS) No. 2164/1997

%                                Date of decision : 23.10.2008

MRS ASHA SONI                                          ....Plaintiff
                             Through: Mr Harish Malhotra, Sr Advocate
                                      with Mr Vipul Gupta, Advocate



                                 Versus

M/S THE NEW INDIA ASSURANCE CO. LTD                    ....Defendant
                              Through: Mr Niraj Singh, Advocate.


CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

1.    Whether reporters of Local papers may
      be allowed to see the judgment?                  Yes

2.    To be referred to the reporter or not?           Yes

3.    Whether the judgment should be reported          Yes
      in the Digest?


RAJIV SAHAI ENDLAW, J.

1. The Plaintiff has sued for recovery of Rs. 24,88,763/- being the

balance of Rs. 32,28,530/- claimed by the Plaintiff from the

Defendant under a policy against the risk of fire taken from the

Defendant. The Plaintiff also claims pendente lite and future

interest. On the defences raised in the written statement (to which

replication was filed), the following issues were struck on 25th

August, 1999.

(1) Whether the Plaintiff has no locus standi to institute and

maintain the present suit? OPD

(2) Whether the suit is bad for non-joinder of Punjab National

Bank as a party, if so, its effect? OPD

(3) Whether the payment of Rs. 7,11,237/- made by Defendant

No. 1 under the policy of insurance was in full and final

settlement of the claim of the Plaintiff? OPD

(4) Whether the Plaintiff is entitled to the amount claimed in

the suit or any other amount? OPP

(5) Whether the Plaintiff is entitled to any interest, if so, at

what rate and for what period? OPP

(6) Relief.

2. The Plaintiff filed affidavit by way of examination-in-chief of

Shri Naveen Soni being the son and attorney of the Plaintiff. He was

cross-examined before the Local Commissioner. The Plaintiff also

summoned and examined as PW-2, Mr. J.L. Tikku, the Joint Surveyor

in the case and as PW-3, Mr. Mahendra Singh. The examination-in-

chief of PW-3/ Mr. Mahendra Singh was deferred on the request of

the counsel for the Plaintiff since he had not brought the summoned

record. However, the record does not show the said witness to have

been examined after 5th September, 2005. Thus, factually, two

witnesses as aforesaid, were examined by the Plaintiff. The

Defendant filed affidavit by way of examination-in-chief of its

Divisional Manager Shri A.K. Gupta who was cross-examined before

the Local Commissioner. The Defendant also examined before the

Local Commissioner as DW-2, Mr. Adarsh Kumar Gupta, one of the

surveyors. The Defendant also examined as DW-3, Mr. O.P. Gupta

also working as senior Divisional Manager with the Defendant and

who was also cross-examined before the Local Commissioner. The

counsels for the parties have been heard.

My issue-wise findings are as under:-

Re : Issues No. 1 and 2 -

[(1) Whether the Plaintiff has no locus standi to institute and maintain the present suit? OPD

(2) Whether the suit is bad for non-joinder of Punjab National Bank as a party, if so, its effect? OPD]

3. The Plaintiff in the plaint itself stated that she had taken

various limits from the Punjab National Bank and had also taken a

hypothecation limit against the hypothecation of stocks which the

Plaintiff used to maintain at the premises where the incident of fire

occurred. It was further pleaded that since the loan was taken by

the Plaintiff from Punjab National Bank and further since the goods

were hypothecated with the Bank, the said goods were got insured

by the Bank for the account of the Plaintiff and for which the policy,

subject matter of suit was taken. The objection of the Defendant is

that the policy was issued by the Defendant to Punjab National Bank,

Khari Bavli branch, Delhi and as such the said Bank alone has the

right to sue, if at all and the Plaintiff has no right to sue for claims

under the policy which is not in the name of the Plaintiff and in any

case, without impleading the said Bank as a party to the suit.

4. The Plaintiff filed only the temporary cover note which has

been proved as Ex. P-1 which shows the name of the insured as of

the Bank, a/c M/s New Gayatri Cork Industries. The Defendant in

the written statement admits the Plaintiff to be proprietor of M/s

New Gayatri Cork Industries though claims that it was always Mr.

Naveen Soni who appeared as PW-1 who represented the said M/s

New Gayatri Cork Industries. The Defendant filed the insurance

policy on which no exhibit mark has been given but which can always

be read against the Defendant and which is to the same effect, i.e.

showing the name of the insured as of the Bank, a/c M/s New Gayatri

Cork Industries. The other relevant documents on these issues are

the legal notice dated 25th May, 1996 proved as Ex. P-3 got issued by

the Plaintiff to the Defendant and the letter dated 15th July, 1996

proved as Ex. P-5 issued by the Defendant to the Plaintiff informing

the Plaintiff that the claim of the Plaintiff had been settled for Rs.

7,11,237/-. Ex. DW 1/17 is the receipt issued by the Plaintiff and the

Punjab National Bank in favour of the Defendant of Rs. 7,11,237/-.

The cheque for the said amount was also drawn by the Defendant in

favour of the Bank a/c of M/s New Gayatri Cork Industries. The

claim-form was filled by the Bank and the initial correspondence of

the Defendant was with the Bank, though subsequent

correspondence of the Defendant prior to the payment aforesaid is

with the Plaintiff.

In the aforesaid circumstances, it has to be adjudicated whether the

Plaintiff alone could maintain the present suit.

5. In my view, in the present day business scenario where

financial assistance from the institutions/Banks is a must and a norm

for any business to be carried on, and where the Banks themselves,

as a condition for such financial assistance against hypothecation of

stocks etc., insist upon the said stocks being insured, the Bank is but

a mere intermediary in the insurance. The insurance premium is

also paid from the or deducted from the account of the client of the

Banks. It is thus not as if the Bank is the beneficiary in its own

rights. The Bank is the beneficiary only to secure the amounts

advanced. If during the term of the insurance, the dues of the Banks

are settled, the Bank even if continues to be shown as the insured, is

not the beneficiary and the insurance is for the benefit of the person

in whom the title of the goods vests. It is not as if the Plaintiff in the

present case is a stranger or an assignee of the Bank, who would not

be entitled to the benefit of the insurance. The Defendant at the

time of insurance itself and at all subsequent times after the incident

and during the settlement of the claim, was fully aware that in fact, it

was the Plaintiff which was the beneficiary. The Defendant also

insisted upon taking the signatures of the Plaintiff on the receipt

obtained by it of full and final settlement. In the circumstances, it

cannot be said that the Plaintiff is not entitled to maintain the suit.

The Plaintiff in such situation, if aggrieved by the action of the

Defendant, cannot compel the Bank to initiate proceedings against

the Defendant. The reason for the Banks insisting on taking

insurance policy in the Bank‟s name is to, in the event of security in

the form of goods on which the Bank has advanced monies,

disappearing and in the further event of advances of the Bank being

not settled, to enable the Bank to realise the insurance claims in

settlement of its dues.

6. The counsel for the Defendant argued that there is some

controversy about the cheque for Rs. 7,11,237/- issued by the

Defendant. It is the case of the Defendant that the said cheque

though in the name of the Bank to the account of the Plaintiff was

handed over by the Defendant to M/s New Gayatri Cork Industries.

It is further the case of the Defendant that the Defendant received

complaint from the Bank that the Plaintiff had not deposited the said

cheque with the Khari Bavli branch of the Bank which had advanced

monies to Plaintiff but with some other branch of the Bank. Even

though we are in this suit not concerned with the said controversy

but it shows that the Defendant was satisfied in handing over the

cheque to the Plaintiff and did not insist upon handing over the

cheque to the Bank which was the insured. Even though the senior

counsel for the Plaintiff has argued that the Plaintiff has since settled

all its accounts with the Bank, in my view irrespective of the same, if

the Defendant is ultimately found liable in this suit to the Plaintiff,

the controversy can be resolved by directing the Defendant to issue

the cheque for the said amount in the name of the Bank to the

account of the Plaintiff as before and/or if the Plaintiff wants the

cheque in her own name, by directing the Plaintiff to, at the time of

execution, produce the „no objection‟ of the Bank. However, the suit

cannot be defeated for the said reason.

7. I also do not find the suit to be bad for nonjoinder of the Bank.

As aforesaid, the lis in such disputes is between the Plaintiff and the

Defendant and requiring the Bank to be impleaded as the party

would not only have burdened and delayed the trial but would also

have put the Bank to unnecessarily incur costs in appearance in the

present suit, when its interest can be satisfied by moulding the relief,

as aforesaid. Even otherwise the claim, if any, of the Plaintiff cannot

be defeated for nonjoinder. At best, notice would have to be issued

to the Bank, of which also, as aforesaid, need is not felt.

8. I thus hold the Plaintiff to have locus standi to institute the

suit and do not find the suit to be bad for nonjoinder of the Bank.

The issues no. 1 and 2 are thus decided in favour of the Plaintiff and

against the Defendant.

Re: Issue No. 3 -

(Whether the payment of Rs. 7,11,237/- made by Defendant No. 1 under the policy of insurance was in full and final settlement of the claim of the Plaintiff?)

9. The documents show the Plaintiff to have got issued legal

notice dated 25th May, 1996 proved as Ex. P-3 to the Defendant for

non-settlement of her claims and threatening that the Defendant

would also be liable for interest at the rate of 24% per annum. The

Defendant vide letter dated 15th July, 1996 proved as Ex. P-5

informed the Plaintiff that the claim had been settled for Rs.

7,11,237/- towards full and final settlement, as recommended by the

Surveyors and also enclosed to the said letter, discharge vouchers in

duplicate for the Plaintiff to have the said discharged by the Bank as

well as by herself and to return to the Defendant to enable the

Defendant to make the payment. The vouchers enclosed to the said

letter have been proved as Ex.P-6. They are in printed form and

provide for the amount to have been received in full settlement of

claims under the policy. The Defendant has also proved as Ex. PW

1/14, the office copy of the letter dated 22nd August, 1996 sent to the

Plaintiff as reminder to the letter dated 15th July, 1996 supra. The

A.D. card returned to the Defendant from address of the Plaintiff has

been proved as Ex. DW 1/15. There is no cross-examination of DW-1

by the counsel for the Plaintiff with respect to the said letter and

A.D. card and hence, I take the said letter to have been proved and

delivered to the Plaintiff. The Defendant has also proved as Ex. DW

1/16, a letter dated 4th October, 1996 purportedly sent by the

Plaintiff to the Defendant, enclosing therewith the receipt as desired

by the Defendant and asking for the issuance of the cheque. Though

the said document was denied by the Plaintiff during

admission/denial but again I do not find the Plaintiff to have in the

cross-examination of DW-1 challenged the said document. The said

document even otherwise appears to be in the normal course of the

business. The letter dated 15th July, 1996 of the Defendant to the

Plaintiff to collect the cheque after giving the receipt for full and

final settlement is an admitted document. I have also found the

reminder dated 22nd August, 1996 supra to have been served by the

Defendant on the Plaintiff. It is also not in dispute that the cheque

for Rs. 7,11,237/- is dated 4th October, 1996. It is also not in dispute

that the receipts of full and final settlement signed by the Plaintiff

and the Bank were given prior to the delivery of the said cheque by

the Defendant to the Plaintiff. In the circumstances, the version of

the Defendant that the receipts were sent under cover of DW 1/16 is

more believable than the denial of the Plaintiff. The signatures on

DW 1/16 appear to be same as the admitted signatures on the full

and final receipt Ex. DW 1/17 as well as the signatures of PW 1 Mr.

Naveen Soni on his affidavit by way of examination-in-chief. It is,

therefore, believable that the Bank on the same day made and

delivered the cheque to the authorized signatory of the Plaintiff who

had given the letter dated 4th October, 1996 proved as Ex. DW 1/16

and also signed the full and final receipt. It is the evidence of the

Defendant that the said person is none other than Mr. Naveen Soni,

attorney of the Plaintiff. It is the admitted case of both the parties

that it was Mr. Naveen Soni who was dealing with the Defendant on

behalf of the Plaintiff. It is further admitted in evidence that Mr.

Naveen Soni/PW 1 had collected the cheque on 4th October, 1996.

10. The importance of Ex. DW 1/16 is that the same does not state

that the Plaintiff is giving the receipts without prejudice to its rights

and contentions or reserving rights to claim the balance.

11. The next relevant plea in this regard is with respect to a legal

notice dated 5th October, 1996 which the Plaintiff in its pleadings

claimed to have got sent to the Defendant. The Plaintiff claimed to

have informed the Defendant vide the said letter that the sum of Rs.

7,11,237/- had been received in part payment and the signatures on

discharge voucher were obtained by the Defendant from Plaintiff

under coercion. The receipt of the said notice was denied by the

Defendant in its pleadings as well as during admission/denial of

documents as well as in evidence. The said document on its face

shows the same to have been sent by registered post by the Advocate

for the Plaintiff to the Defendant and with copy to the Bank. In spite

of the denial by the Defendant, the Plaintiff neither filed any postal

receipt of having sent the said letter by registered post to the

Defendant nor made any effort to show that the copy of the said

letter was served on the Bank. The witnesses of the Defendant have

denied receiving the said letter. Mr. Naveen Soni, the only witness

of the Plaintiff did not even attempt to prove the said letter. The

admission of the letter into evidence was objected to and kept open

for adjudication at this stage. Though in affidavit by way of

examination-in-chief Ex. P-16 was given to the said letter but no

exhibit mark was put on the document and no evidence of despatch

by post of the said letter or of delivery of said letter, as required to

be led as laid down by Division Bench of this court in Surender Bala

vs. Sandeep Foam Industries (2004) IV AD (Delhi) 730 and by full

Bench of Gujarat in Memon Adambhai Haji Ismail vs. Bhaiya

Ram Das AIR 1975 Gujarat 54 was led. He was cross-examined with

respect to said letter and admitted that he had not filed any proof of

despatch of the said letter. The Plaintiff has filed and proved Postal

Receipts and A.D. card with respect to earlier legal notice dated 25th

May, 1996 and the failure to file proof of despatch and delivery or to

give any explanation for same leads to inescapable conclusion that it

was never sent. I find the said letter has not been proved and is to

be ignored.

12. The Plaintiff instituted the present in or about October, 1997

i.e. after more than one year of having received the payment of Rs.

7,11,237/- from the Defendant.

13. The Plaintiff in the plaint pleaded that the Defendant was in a

dominating position; the Plaintiff was financially hard pressed; that

the Defendant threatened the Plaintiff that in case the Plaintiff does

not sign the discharge voucher, then even the sum of Rs. 7,11,237/-

would not be paid; that on account of coercion exercised by the

Defendant, the Plaintiff was compelled to sign the discharge

voucher so that the payment of Rs. 7,11,237/- could be received and

the Plaintiff could liquidate its liability; that the Plaintiff received the

said payment without prejudice to her right to receive the balance

amount from the Defendant; that the Plaintiff, as aforesaid, vide

letter dated 5th October, 1996 informed the Defendant that the

payment had been received in part and not in full and final

settlement; that the payment of Rs. 7,11,237/- could not settle the

claim.

14. What has to be seen is whether on the basis of the aforesaid

documents and the evidence led by the Plaintiff, the aforesaid

contentions are substantiated. The law in this regard is no longer

res integra having been reviewed in Chairman and MD., NTPC Ltd

vs. M/s Reshmi Constructions, Builders & Contractors JT 2004

(1) SC 1, United India Insurance Co. Ltd vs. Ajmer Singh

Cotton and General Mills AIR 1999 SC 3027 and Damodar Valley

Corporation vs. K.K. Kar (1974) 1 SCC 141 relied upon by the

senior counsel for the Plaintiff. The counsel for the Defendant on the

contrary, has drawn attention in this regard to New India

Assurance Company Ltd vs. Sri Venkata Padmavathi R&B Rice

Mill (2000) 10 SCC 334, Ajmer Singh Cotton and General Mills

(supra).

15. The principle which emerges from the perusal of the aforesaid

judgments is that whether the payments have been made in full and

final settlement, is a question to be considered on the facts of each

case. When there is accord and satisfaction by final settlement of

the claims and the subsequent allegation of coercion is an after-

thought and a device to get over the settlement of dispute, the

contract is novated and action cannot be brought on the original

contract. The Apex court in Rashmi Constructions supra noticed that

public sector undertakings would not ordinarily release the money

unless No Dues certificate is signed and a person may have to

succumb to the other party to the bargain who is in a stronger

position. The Apex court however, hastened to add that such a case

has to be made out and proved before the adjudicating

authority/court. In facts of that case, the Apex court found that

disputes as regards the final bill and its acceptance had arisen prior

to the full and final receipt, that no settlement took place as a result

whereof the payment could be stated to have been accepted without

any reservation and also found the claimant therein to have

immediately after receiving the payment lodged its protest and

reiterated its claims.

16. However, the facts of the present case are entirely different.

The survey report on which strong reliance has been placed by the

senior counsel for the Plaintiff itself shows that the Surveyors had

been unable to reach any final conclusion and had suggested

payment of either Rs. 7,11,237/- or of Rs. 22,08,606/-, depending

upon the satisfaction of the Defendant with respect to a transaction

of which the Surveyor could not give a final opinion. The survey

report is dated 3rd March, 1996. The Plaintiff, the facts show was

fully aware of the same. It appears that there were negotiations

between the parties thereafter. The Plaintiff had also taken legal

counsel prior to the receipt of Rs. 7,11,237, as would be borne out

from the issuance of the legal notice Ex. P-3 supra dated 25th May,

1996. The Plaintiff in the said legal notice objected to the deduction

of Rs. 3,23,241/- on account of salvage. The Defendant vide Ex. P-5

dated 15th July, 1996 informed the Plaintiff of the settlement for Rs.

711,237/- in full and final settlement. There is nothing on the record

to show that the Plaintiff protested to the same. On the contrary, Ex.

DW 1/14 dated 22nd August, 1996 show that the Plaintiff had after

15th July, 1996 maintained a stoic silence leading to the issuance of

the reminder. In spite of the said reminder also, there is not a single

protest letter from the Plaintiff for the next more than 2 months.

Thereafter, as aforesaid, under cover vide DW 1/16 dated 4th

October, 1996 request for the release of cheque for Rs. 7,11,237/-

was made and the cheque collected on the same date and encashed

immediately thereafter. The Plaintiff has failed to prove the case set

up by it of having protested on the next day i.e. 5th October, 1996.

The failure of the Plaintiff to prove the letter dated 5th October, 1996

also shows the falsity of the case set up by the Plaintiff. The Plaintiff

filed the case after more than one year of having accepted the

payment in full settlement. The only witness of Plaintiff in cross-

examination stated he could not recollect whether he had met

officers of Defendant between July 1996 and 4th October, 1996.

Thus, there could be no occasion of Plaintiff protesting against Rs.

7,11,237/- offered by the Defendant in July, 1996.

17. The conduct of the Plaintiff shows that the allegations made in

the plaint of coercion etc. are an afterthought. The Plaintiff is found

to be lying on the plea of the Defendant having written full and final

settlement on the discharge vouchers after getting the same signed

from the Plaintiff. Ex. P-6 filed by the Plaintiff as well as Ex. DW

1/17 proved by Defendant, both have full and final

settlement/discharge/satisfaction printed and which could not have

been introduced after admitted signatures of Plaintiff. The witness

of the Plaintiff has also not been able to demonstrate any hardship

owing to which the Plaintiff was compelled to accept the said

payment. On the contrary, the failure of the Plaintiff to collect the

cheques immediately after 15th July, 1996 and the action of having

collected the cheque only on 4th October, 1996 shows that the

Plaintiff was under no pressure or hardship. No debts were

disclosed which had to be immediately settled with the said payment.

In the circumstances, the present is not a case where the Plaintiff

should be relieved of the written documents. Ordinarily under

Sections 91 and 92 of the Indian Evidence Act, a written document is

the sole repository of the transaction between the parties. However,

the courts have on special circumstances being established, relieved

the parties of the written document. However, no such

circumstances are found to exist in the present case. There is no

whisper of protest from the Plaintiff prior to the institution of the

suit. The averments in the plaint are drafted by lawyers steeped in

law but unless substantiated by evidence on oath, no credence can

be given thereto. The Plaintiff on the contrary, after deliberation is

found to have voluntarily and unequivocally accepted the payment of

Rs. 7,11,237/- in full and final settlement. It is significant that the

Plaintiff, prior to approaching the Defendant for the cheque for the

said amount also got the receipts of full and final payment signed

from the Bank. The time lag of more than three months between the

date when the payment was offered by the Defendant and when

finally accepted by the Plaintiff, also shows that the Plaintiff was in

no such hurry to receive the payment of Rs. 7,11,237/- at least. I

thus, find that the payment of Rs. 7,11,237/- was received by the

Plaintiff in full and final settlement of the claim and without any

protest and without any coercion and the Plaintiff is also not found to

be under any pressure to receive the said payment at least. The

Plaintiff after one year of so receiving the payment appears to have

changed his/her mind and instituted the present suit. There is no

evidence of the Plaintiff, after receiving intimation from Defendant

on 15th July, 1996 of Defendant offering Rs. 7,11,237/ in full and final

settlement, having protested against the same. There is no evidence

of Plaintiff having protested at the time of receiving the payment.

The Defendant had offered Rs. 7,11,237/- in full and final payment

which offer was unequivocally accepted by Plaintiff and Plaintiff now

cannot be permitted to resile and to the detriment of the Defendant.

Issue no. 3 is decided in favour of the Defendant and against the

Plaintiff.

Re: Issue No. 4 -

(Whether the Plaintiff is entitled to the amount claimed in the suit or any other amount?)

18. The senior counsel for the Plaintiff admitted that the Plaintiff

had before this court not proved the loss of Rs. 32,28,530/- for the

balance whereof the suit is filed before this court. The emphasis

however was that the Surveyors appointed by the Defendant under

Section 64 UM (2) of the Insurance Act had found the loss of the

Plaintiff to be of Rs. 32,01,956/- and the deductions made therefrom

of Rs. 1,60,098/- towards dead stocks and of Rs. 4,78,594/- towards

value of stocks lying on the roof top were not correct and the

Plaintiff was thus entitled to the amount. The counsel for the

Defendant on the contrary relied upon letter dated 7th April, 1996 of

the Surveyor to the Defendant proved as Ex. DW 1/9 (collectively)

whereby the Surveyors had recommended payment of Rs. 7,11,237/-

19. There being no independent evidence of the Plaintiff, the

questions which arise for consideration are:-

(i) Whether the Survey Report is binding on the insurance

company and the insurance company is bound to pay in

accordance therewith?

(ii) What does not Survey Report recommend in the present

case?

As far as the legal position is concerned, in my opinion, the same

admits of no controversy in view of the proviso to Section 64 UM (2)

and which is as under:

"Section 64 UM (2) No claim in respect of a loss which has occurred in India and requiring to be paid or settled in Indian equal to or exceeding twenty thousand rupees in value on any policy of insurance, arising or intimated to an insurer at any time after the expiry of a period of one year from the commencement of the Insurance (Amendment)Act, 1968, shall, unless otherwise directed by the Authority, be admitted for payment or settled by the insurer unless he has obtained a report, on the loss that has occurred, from a person who holds a licence issued under this section to act as a surveyor or loss assessor (hereafter referred to as "approved surveyor or loss assessor"):

Provided that nothing in this sub-section shall be deemed to take away or abridge the right of the insurer to pay or settle any claim at any amount different from the amount assessed by the approved surveyor or loss assessor."

20. It is thus clear that the insurer though bound to appoint a

Surveyor is free to pay more or less than recommended by the

Surveyor. The Surveyor, it appears is a fact finding authority but the

insurance company has the final say in the matter and is entitled to

draw its own inferences from the Survey Report. The senior counsel

for the Plaintiff has relied upon United Indian Insurance

Company Ltd. vs. Roshan Lal Oil Mills Ltd (2000) 10 SC 19 to

contend that the insurer is bound by the Survey Report. I, however,

do not find the Apex court to have laid down any such proposition.

All that the Apex court did in that case was to remand the matter to

the National Commission for the reason of the National Commission

having not considered the Survey Report. The Apex court laid down

that no decision could be given by the National Commission without

adverting to the factors enumerated therein for rejecting the claim.

The counsel for the Defendant has also relied upon a number of

decisions of the National Commission but the legal principle which

can be deciphered therefrom also is only to the extent that Survey

Report is an important piece of evidence. No judgment has been

brought to my notice in which it has been held that the Survey

Report is decisive.

21. In my view, the Survey Report even otherwise cannot be made

decisive. If the Survey Report was to be decisive, there would be no

possibility of disputes as to the insurance claim coming before the

courts and other forums for adjudication. If that had been the intent,

the Surveyor would have been anointed as a referee within the

meaning of Section 20 of the Indian Evidence Act whose word would

be binding as an admission on the parties. However, that is not so.

22. The only legal conclusion therefore is that even if the Survey

Report is in favour of the claimant and if the insurer has differed

from the same, the claimant would still have to establish its claim

which was accepted by the Surveyor before the court. Of course, in

such a situation depending upon the facts, the onus may shift.

However, if the facts are as such that the claim can be established by

evidence which in the domain of the claimant only, the claimant only

will have to satisfy the court of the claim and cannot rely on the

doctrine that the onus is shifted. Of course, if the facts are such that

the insurer is repudiating, the Survey Report for reasons not factual,

the onus would be on the insurer to satisfy the court that its

repudiation is correct.

23. Coming to the facts of the present case, it is found that the

value of the stocks at the time of the incident of fire was dependent

upon sale of some of the stocks earlier claimed by the claimant at the

time of making an earlier insurance claim and which sale, the

claimant subsequently represented had not fructified. Thus, the

Surveyors found that if stocks worth Rs. 15,26,286/- had not been

disposed of by the Plaintiff, then the value of the stocks in the

premises at the time of fire was Rs. 32,01,956/- and if had been

disposed of as earlier claimed by the Plaintiff, then the value of the

stocks at the time of fire was Rs. 10,36,978/-.

24. The legal position as found above is that that the Plaintiff has

to establish its claims before the court. The Plaintiff has not led any

evidence whatsoever before the court of the stocks lying in the

premises at the time of the incident. The said evidence could have

been in power and possession of the Plaintiff only and thus the facts

are not such where the onus had shifted on the Defendant.

25. The senior counsel for the Plaintiff argued that the Surveyor

has in para 11 of the Report stated that the version of the Plaintiff

that the deal of sale of stocks had not materialized seemed to be

correct because the raid at the premises of the Plaintiff by the Excise

Authorities on 30th March, 1993 as per inventory prepared wherein,

the sale had not been effected. However, the same Surveyor has in

the letter dated 7th April, 1996 supra and for the reasons stated

therein stated that it was unlikely that stocks of such value were

lying in the premises. The Surveyor has in the said letter opined that

considering the space available at the premises and the volume

which stocks of such value would occupy, it could not be believed

that stocks of such large value were lying in the premises. The

Surveyor also expressed doubt as to why stocks of such large value

were kept for a long period and that too in the open, specially

considering nature thereof.

26. The senior counsel for the Plaintiff faced with the said letter

contended that the said letter had not been proved by the Surveyor

when examined by the Defendant and as such there was no need for

the Plaintiff to cross-examine the Surveyor with respect to what has

been opined in the said letter. I am unable to accept the said

contention of the senior counsel for the Plaintiff. Once the letter

dated 7th April, 1996 had been admitted into evidence and further

since the Plaintiff without leading any evidence before the court of

its claims is relying only on the Surveyor‟s report only, it was

incumbent upon the Plaintiff to cross-examine the Surveyor with

respect to the reasoning given in the letter dated 7th April, 1996.

The Surveyors in the Report, did not give any categorical finding of

the Plaintiff being entitled to the claim of approximately Rs. 32 lacs.

The Surveyors after placing the facts left it for the decision of the

Defendant. The Defendant decided, and which it under the law as

aforesaid was entitled to decide, that a case of claim of Rs. 7,11,237/-

only was made out. If the Plaintiff deferred from the said decision of

the Defendant, it ought to have proved before the court basis for a

higher claim. The insurer under Section 64 UM of the Insurance Act

is entitled to seek clarifications from the Surveyor appointed by it.

The letter dated 7th April, 1996 is such a clarification given by the

Surveyor and, thus forms part and parcel of the Report of the

Surveyor and the Plaintiff cannot pick and choose some part of the

Report of the Surveyor and reject the other. I am inclined to take

the said view also for the reason that I find the Plaintiff to have not

followed the principle of ubberima fides in the present case. Not

only has the Plaintiff been found to have lied with respect to the

letter dated 5th October, 1996 but a perusal of the Survey Report

relied upon by the Plaintiff also shows that the Plaintiff did not make

all the records available to the Surveyors. It is recorded in para 10

of the Survey Report that the purchase records were not made

available, that the stocks which the Plaintiff claimed to be existing at

the time of the incident had not been shown in the income tax

records of the Plaintiff for the previous years; of course the Plaintiff

gave explanation for the same but the Plaintiff ought to have placed

at the disposal of and before the court all the said material from

which this court could have deciphered whether the stocks on the

basis whereof loss is claimed existed or not. The affidavit of the only

witness of the Plaintiff in this regard is absolutely quite on the

subject. Considering the nature of the stocks i.e. cork which is

highly inflammable, it is difficult to believe that the Plaintiff would

retain the stocks for such long periods or store the same in the open

on the terrace.

27. The next objection of the counsel for the Plaintiff is with

respect to exclusion by the Surveyors of the value of the stocks lying

at the roof top. The reason in the survey report given, therefor, is of

the said stocks being not covered under the scope of the policy. The

Plaintiff, as aforesaid, did not even bother to prove the policy. It was

only argued orally that the stocks lying on the roof could not be

excluded. In my opinion, such arguments cannot be raised without

reference to the policy. Considering the nature of the stocks i.e. the

cork which is highly inflammable, it is possible for the insurer to

insist that the stocks insured should be kept in the covered space

only and be not kept in open. The Plaintiff claims its goods to be

lying in open on the terrace for over a period of three years.

Considering the various festivities in the cities during which there is

a display of fireworks in all localities, it is highly unlikely that such

large stocks would be kept on the terrace. The insurance policy

though not proved also shows that it was one of the conditions of

insurance that if the nature of occupation of or other circumstances

affecting the building insured or containing the insured property be

changed in such a way as to increase the risk of loss or damage by

insured, the insurance would cease. The insurance was of the goods

lying in the premises and cannot extend to goods lying on the terrace

of the premises. Open terrace of the premises cannot form part of

the premises.

28. Ex. D-1 being the proposal of the Plaintiff for insurance also

shows that the Plaintiff while obtaining the insurance described the

premises where the goods sought to be insured were to be stored, to

be of 1st class construction having opening of a front door only and

which can refer to a closed premises only. Thus, no fault can be

found with the Surveyor excluding the goods lying on the open

terrace.

29. The documents filed by the Defendant also show that the

Surveyors had to repeatedly write to the Plaintiff to produce its

records. In this regard, letter dated 16th June, 1993 has been proved

as Ex. D-8, and another letter dated 16th June, 1993, letter dated 18th

June, 1993, 19th June, 1993, 22nd June, 1993, 24th June, 1993, 26th

June, 1993, 23rd July, 1993, 28th October, 1993, 24th January, 1994, 4th

February, 1994, 18th March, 1994, 27th October, 1994 have all been

collectively proved as Ex. DW 1/9 and all of which show a non-

cooperative attitude of the Plaintiff and the reluctance of the Plaintiff

to produce the records for the Surveyors. The Defendant has also

proved Minutes of the meeting held on 25th April, 1995 and 10th May,

1995 as Ex. DW 1/10 and Ex. DW 1/11 and in which also it is

recorded that the Plaintiff had agreed to produce the documents.

This shows that the Plaintiff even after 2 years after the incident had

not produced its records for the Surveyor.

30. I thus find the Plaintiff to have failed to prove before the court

that it suffered any loss more than for which the Plaintiff has already

been paid by the Defendant. Without the Plaintiff having proved any

loss which was insured, the Plaintiff cannot be found entitled to the

amount claimed or any other amount. Issue No. 4 is thus decided in

favour of the Defendant and against the Plaintiff.

Re: Issue No. 5 (Whether the Plaintiff is entitled to any interest, if so, at what rate and for what period? )

31. The Plaintiff having not been found entitled to any amount, the

question of the Plaintiff being entitled to any interest does not arise.

However, I may notice that the issues were framed on 25 th August,

1999 and the trial dates were fixed for 11th and 12th February, 2003.

However, as on 9th November, 2001 also, the Plaintiff had not filed

any list of witnesses. The Plaintiff failed to do so in spite of being

given time by the Registrar and further time was given to the

Plaintiff on 30th October, 2002. The Plaintiff still did not take any

steps and when the matter came up on 11th February, 1993, the

Plaintiff, subject to costs was permitted to file affidavits within 6

weeks. The Plaintiff yet again failed to file any evidence as noted in

the order dated 12th January, 2005. Finally on 22nd March, 2005, it

was again recorded that the Plaintiff had till then also not filed any

list of witnesses or affidavits. The Plaintiff has thus been guilty of

delaying the suit and even if the Plaintiff had been entitled to any

amount, the Plaintiff would not have been entitled to pendente lite

interest for the period for which the Plaintiff itself delayed the suit.

Re: Issue No. 6 - (Relief)

32. In view of my findings on Issues No. 1 to 5 above, the Plaintiff

is not entitled to any relief and the suit of the Plaintiff is liable to be

dismissed. I have also found the Plaintiff to have set up a false case

with respect to the letter dated 5th October, 1996 and of the

Defendant having introduced "full and final payment‟ in the receipt

and discharge voucher. Not only so, the Plaintiff failed to lead any

evidence on loss before the court. In the circumstances, the only

conclusion is that the Plaintiff approached the court with no case

whatsoever. I am, therefore, constrained to, while dismissing the

suit burden the Plaintiff with costs of Rs. 50,000/- payable to the

Defendant within 8 weeks of today.

Decree sheet be drawn up accordingly.

RAJIV SAHAI ENDLAW (JUDGE)

October 23, 2008 smp