M/S Anant Raj Agencies Pvt. Ltd vs M/S National Insurance Co. Ltd
2009 Latest Caselaw 2050 Del

*IN THE HIGH COURT OF DELHI AT NEW DELHI

+                 CS(OS)1413/1990

%                      Date of decision: 14 th May, 2009.

M/S ANANT RAJ AGENCIES PVT. LTD .......                         Plaintiff
                       Through: Mr. Uttam Datt & Ms. Biji Rajesh,
                                Advocates

                              Versus

M/S NATIONAL INSURANCE CO. LTD........ Defendant
                       Through: Ms. Sonia Sharma & Mr. Subhash
                                Chandu, Advocates


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

1.   Whether reporters of Local papers may
     be allowed to see the judgment?   Not necessary

2.   To be referred to the reporter or not? Not necessary

3.   Whether the judgment should be reported
     in the Digest? Not necessary


RAJIV SAHAI ENDLAW, J.

1. Suit for recovery of Rs.21,66,725.25 together with

pre-institution interest at 17.5% per annum of Rs.5,94,236.52

and for pendente lite and future interest is for adjudication. The

claim is on the basis of a Fire Insurance Policy for Rs.30 lacs in

respect of building including electrical, sanitary, wooden and

sidelining of cork in the factory (silent at present) at E-2

Jhandewalan Extension, New Delhi. The policy is stated to have

been renewed from time to time and last from 24th November, 1986

to 24th November, 1987. The incident of fire occurred on 1st June,

1987. The plaintiff claims to have spent Rs.21,66,725.25 on repairs

and reinstatement of the building to the original condition. Upon the

defendant refusing to settle the said claim of the plaintiff the suit

was filed. The defendant contested the suit inter-alia by pleading

that the plaintiff had no insurable interest in the building and had

obtained the policy by misrepresentation and fraud and was thus not

entitled to any claim.

2. On the pleadings of the parties, the following issues were

framed on 23rd February, 1995:-

1. Whether the suit is properly instituted and filed?

2. Whether the plaintiff had no insurable interest in the

premises as alleged?

3. Whether the insurance has been obtained by

misrepresentation and fraud as alleged?

4. To what amount the plaintiff is entitled to?

5. To what rate of interest, the plaintiff is entitled?

6. Relief.

The plaintiff examined only its Director Mr. Anil Sarin. The

defendant examined its Manager Mr. S.D. Mal and Mr. S.S.

Krishnan, Director of Mehta & Padamsey Surveyors Pvt. Ltd.

My issue-wise findings are as under:-

Re. Issue No.1 (Whether the suit is properly instituted and

filed?)

3. The plaintiff is a company i.e. a juristic person. In para 1 of the

plaint, it is stated that Shri Anil Sarin is the Director and is able and

competent to depose on the facts of the case with which he is well

conversant, he is also empowered and authorized to file, institute

and verify the suit for and on behalf of the plaintiff for which a

resolution has been passed by the Board of Directors of the plaintiff

company. The defendant in its written statement in preliminary

objection No.1 itself controverted that the suit is properly instituted

and filed. It was further averred that the defendant had not been

furnished any copy of the Resolution stated to have been passed by

the Board of Directors of the plaintiff authorizing the institution of

the present suit and/or authorizing Mr. Anil Sarin to institute the

suit. Para 1 of the plaint regarding the authority of Mr. Anil Sarin

was also denied in the reply on merits. The plaintiff was also put to

strict proof that Mr. Anil Sarin is a Director of the plaintiff and

competent to institute the suit. In view of the challenge by the

defendant the issue was struck.

4. As aforesaid, the plaintiff has examined only one witness. The

said witness namely Mr. Anil Sarin in his affidavit by way of

examination in chief has reiterated the contents of the plaint to the

effect that he is the Director of the plaintiff and was conversant with

the facts of the case and authorized to file, institute and verify the

suit for and on behalf of the plaintiff. His affidavit further states that

a Resolution had been passed by the Board of Directors of the

plaintiff and a true copy of the said Resolution was given Exhibit P-1.

5. The record does not show that the affidavit was formally

tendered before the Joint Registrar into evidence. Mr. Anil Sarin

appeared for his cross examination on 27th January, 1999. The first

question put to him in cross examination was whether he had

brought the minutes book regarding the Resolution extract whereof

had been given Exhibit P-1 in the affidavit. He replied in the

negative. In reply to another question he deposed that there was no

other Resolution or Power of Attorney authorizing him for the

present suit except the Board Resolution dated 19th February, 1990

on extract whereof Exhibit P-1 had been given. Inspite of the said

cross examination, neither any time was sought by the plaintiff for

producing the minutes book nor for examining any other witness in

that regard. The plaintiff closed its evidence on the same date.

During arguments also the aforesaid cross examination was

highlighted. Even then there was no attempt to seek any opportunity

for proving the Resolution.

6. The defendant admits having insured the plaintiff. The

defendant does not thus dispute the plaintiff being a private limited

company. Order 29 of the CPC authorizes a private limited company

to be sued and sue in its name, and the pleadings to be signed and

verified on behalf of the such company by the Secretary or by any

Director or other Principal Officer of the Corporation/company, who

is able to depose to the facts of the case. Mr. Anil Sarin has deposed

that he is the Director and aware of the facts of the case. There is no

serious challenge to this aspect in the cross examination. The

defendant has not in the cross examination suggested otherwise.

Thus to the extent of signing and verification, it has to be held that

the plaint is properly filed. However, as held by this court in Nibro

Ltd. Vs. National Insurance Co. AIR 1991 Delhi 25, due signing

and verification is distinct from institution. Order 29 does not cover

institution of the suit. A corporation, as the plaintiff in the present

case is, when an issue in this regard is framed is also to prove valid

institution of the suit. Such valid institution can only be under the

authority of the company. Such authority can flow only from the

Board of Directors of the company. Thus, it is to be established that

the suit has been instituted under the authority of the Board of

Directors of the company and/or under the authority of some person

empowered by the Board of Directors of the company to from time to

time institute suits and legal proceedings for claims of the company.

7. The plaintiff being fully aware of the aforesaid, sought to prove

the Resolution of the Board of Directors. However, neither does the

affidavit by way of examination states that the book required to be

maintained in law containing the minutes of the meetings of the

Board of Directors can be produced on demand nor was the said

book produced when the witness entered into the box. Inspite of

cross examination no opportunity was also sought.

8. What is before the court and has alone been before the court is

the extract taken out of the minute book. The said extract is

secondary evidence under Section 63 of the Indian Evidence Act.

Section 64 thereof provides proof by primary evidence. Secondary

evidence can substitute primary evidence only when foundation

therefor is laid down. No foundation has been laid in the present

case. Thus in law there is no Exhibit P-1 and no Resolution of the

Board of Directors of the plaintiff authorizing the institution of this

suit or authorizing Mr. Anil Sarin to institute the suit. The suit is thus

liable to fail on the first part of issue No.1.

9. In relation to the monetary claims of nationalized banks and

financial institutions, the Apex court in United Bank of India Vs.

Naresh Kumar AIR 1997 SC 3 has undoubtedly held that such

technical pleas ought not to defeat the claims. The plaintiff is not a

bank or a public financial institution. No public monies are involved

in the present suit. It is the private claim of the plaintiff. The

Division Bench of this court subsequently in M/s Birla DLW Ltd.

Vs. M/s Prem Engineering Works 77 (1999) DLT 171 has held

that notwithstanding United Bank of India (Supra) upon failure to

prove valid institution of the suit the suit is liable to be dismissed.

10. Qua issue No.1, thus it is held that the suit has been proved to

be properly filed but not proved to have been properly instituted.

Re. Issues No.2&3 (Whether the plaintiff had no insurable interest in the premises as alleged?) & (Whether the insurance has been obtained by misrepresentation and fraud as alleged?)

11. The discussion on these two issues being found to be

interconnected are taken up together. At the outset, an interesting

feature of this case may be noticed. On the first date of the

commencement of the final hearing, it was pointed out t the counsels

that neither was the insurance policy, on the basis whereof the claim

in suit has been made, on record nor any copy thereof, leave apart

poof thereof. All that the plaintiff has filed is a renewal endorsement

and on which Exhibit P-3 has been put. The said renewal

endorsement does not contain the terms & conditions of insurance.

Though in the absence of the policy, the claim of the plaintiff must

fail but considering that the Apex court in National Insurance Co. Vs.

Jugal Kishore AIR 1988 SC 719 though with respect to Motor

Accident Policy has held that it is incumbent upon the insurance

company as a instrumentality of state to act fairly and to produce the

insurance policy in the court, and not take shelter behind abstract

doctrine of burden of proof, opportunity was given to both parties to

produce the insurance policy. The counsel for the plaintiff on the

next date informed that the same was not available with the plaintiff.

The counsel for the defendant also on the next date informed that

the policy was not available with the defendant either. However, the

factum of issuance and of the same being in force at the time of the

incident is not in dispute. No objection in this regard appears to have

been taken at any time in the proceedings also. Though I entertain

serious doubts on the maintainability of the present suit itself in the

absence of the insurance policy and in the absence whereof this

court is not in a position to adjudicate the claim under the said policy

but the issues having been struck and in view of the requirement of

the law of this court as the first court being required to give a

finding on all issues, I am proceeding to do so.

12. First on the aspect of insurable interest. The case in the plaint

is that the plaintiff had entered into an agreement dated 11th

September, 1981 with one Shri Balraj Virmani who was acting not

only for himself but also as Karta of Balraj Virmani & Sons (HUF)

and as Managing Director of Virmani Refrigeration & Cold Storage

(P) Ltd. The plaintiff claims that under the said agreement it was

given possession of 60% of the area of property No.E-2 Jhandewalan

Extension, New Delhi which was placed at the absolute disposal of

the plaintiff. The plaintiff thus claims that it had insurable interest in

the building and obtained the insurance.

13. The defendants in the written statement contended that since

according to the agreement aforesaid relied upon by the plaintiff, the

plaintiff had only agreed to build, re-develop, construct & re-

construct the aforesaid property and after carrying out the said work

would have been entitled to 60% of the constructed area, the

plaintiff without carrying out the said works had no rights in the

property. Admittedly, no works of building, re-development,

construction & re-construction had been carried out by the plaintiff

till the incident of fire. It is further averred by the defendant that

there was no factory in the premises and the ice factory earlier

existing in the premises had ceased operations in 1961 and the

building was lying closed. It is the case of the defendant that the

plaintiff without disclosing any of the said facts had obtained the

insurance by misrepresentation and fraud and in breach of the

principles of Ubberima Fides and the contract was thus void. It was

further averred that the sidelinings of cork which had inter-alia been

got insured by the plaintiff and which is also mentioned in the

renewal endorsement Exhibit P-3 and for damage to which also claim

was made was in fact, on the date of the insurance itself junk, in as

much as the same was for the purposes of running an ice factory and

which had not been running in the premises for over 20 years prior

to insurance. It was further averred that in any case under the

agreement of the plaintiff the Virmanis, the plaintiff was to re-

construct the building and therefore the said cork lining even if of

any value, on the date of the incident had no value and was not

required to be replaced or used in the agreed future development of

the property.

14. The plaintiff in its replication stated that though under the

earlier agreement the plaintiff was entitled to only 60% share in the

property but now the plaintiff was in exclusive possession of the

property and thus had an insurable interest therein. It was further

pleaded that all the said facts were disclosed while giving the

proposal for taking out the insurance and the defendant had insured

after satisfying itself that the plaintiff was the purchaser of 60%

share in the property and thus had a insurable interest therein. It

was further pleaded that since the building had been damaged it had

to be restored and for which the claim had been made.

15. The witness of the plaintiff deposed that under the agreement

dated 11th September, 1981 with the Virmanis the plaintiff was in

possession of 60% area of the property placed at its disposal in terms

of the said agreement; that the plaintiff was in possession of the

original agreement and a copy thereof was given Exhibit P-2. He

thus claimed that the plaintiff had insurable interest to the said 60%

share in the property. Though the insurance policy was not proved

but the renewal endorsement was proved as Exhibit P-3. The

estimate of repairs obtained by the plaintiff received from M/s Rajan

Agency was given Exhibit P-6. It was further deposed that after the

incident of fire, the suit No. 601/1984 of this court filed by the

plaintiff against the Virmanis had been decreed as compromised and

as per which compromise the entire property had been sold to the

plaintiff by the Virmanis and the possession of the entire property

had been handed over to the plaintiff by the Virmanis on payment of

entire sale consideration by the plaintiff. However, it was clarified

that at the time of incident the plaintiff had insurable interest in 60%

share only in the property. It is further deposed that the plaintiff had

carried out extensive repairs and reinstated the building to its

original condition and incurred Rs.21,66,725.25 on the same.

Significantly, no document in this regard was referred to in the

affidavit.

16. The said witness of the plaintiff in cross examination denied

the suggestion that the building was to be demolished and thereafter

to be constructed by the plaintiff; he claimed that under the

agreement with the Virmanis the plaintiff was required to retain the

building as it is and to only add a certain floor in the existing

building. He admitted that the first agreement was entered into by

the plaintiff with the Virmanis in September, 1980 and deposed that

a sum of Rs.11,000/- was paid as consideration by the plaintiff to

Virmanis in September, 1980. He admitted that the said agreement

had not been filed in the court. He further admitted that after the

conclusion of the agreement Exhibit P-2 the cold storage which was

earlier being run in the property ceased to run, though claimed that

the facilities to run the same continued to exists. He denied the

suggestion that the cold storage had ceased to operate in 1960-61

and denied knowledge that the licence was required to run a cold

storage or that the said licence had not been renewed since 1960-61.

In response to another question in the cross examination he denied

that the plaintiff had reconstructed the property but claimed that the

plaintiff had developed the property by making additions and

alterations and the reconstruction was done in the year 1988.

Though, he claimed that the accounts were maintained of the

expenses incurred in the said development of the property but no

accounts were produced. He claimed that the wooden floor and cork

sidelinings which were burnt in the fire were replaced with pucca

floors. He admitted that all the said works had been completed prior

to the institution of the suit.

17. The witness of the defendant besides reiterating the pleas in

the written statement, in cross examination deposed that his

statement was based on an investigation got done by the defendant

from a retired police officer and he had no personal knowledge of the

matter.

18. The agreement on the basis whereof the plaintiff claims an

interest in the property has again not been produced in original.

Exhibit P-2 has been put on a photocopy. The same is not admissible

in evidence. In the absence thereof there is no document showing

any insurable interest of the plaintiff in the property. No foundation

has been laid for adducing secondary evidence with respect thereto.

19. Even if Exhibit P-2 is to be read in evidence, in the same,

Virmanis are referred to as the co-owners and the plaintiff as the

builder/promoter. The said document refers to the earlier documents

dated 15th September, 1980 and 4th December, 1980 signed between

the parties whereunder the plaintiff had agreed to build, redevelop,

construct, reconstruct the property aforesaid on the terms and

conditions mentioned therein. Exhibit P-2 is only of the Virmanis

placing the property at the disposal of the plaintiff in terms of the

earlier agreements. Thus without the earlier agreements being

produced and for non-production whereof there is no explanation,

this document is incomplete and would not constitute evidence for

this reason only. Be that as it may, under the said document the

plaintiff was put into possession of 60% of the area of the property as

delienated in the plan stated to be annexed to the said document and

which plan has again not been produced. It is further provided that

the plaintiff shall make arrangement for safety of their goods and

material lying in the 60% area placed at their disposal while the

Virmanis were to continue to have their own safety arrangements.

This document further records that the Virmanis and the plaintiff

were entering into a separate agreement regarding the sale of entire

plant and machinery of the cold storage. However, the said

agreement has also not been produced. The plaintiff under the said

document was to continue its efforts of having the tenants, licencees,

occupants of the property evicted. The Virmanis under the said

agreement confirmed having received from the plaintiff till that date

a sum of Rs.8 lacs only and the plaintiff agreed to pay a further sum

of Rs.3 lac to the Virmanis.

20. From the material available, it appears that the agreement of

the plaintiff with the owners of the property was what is in trade

parlence known as a collaboration agreement. Under such

agreements and as appears to be in the present case also from the

limited evidence available, the owner of a property for consideration

of monies if any received from the builder and for further

consideration of the builder at its own cost and expense redeveloping

the property, agrees to transfer a share of the land under the

property in favour of the builder or his nominee.

21. This court in Ansal Properties & Industries Pvt. Ltd. Vs.

Dr. Anand Nath MANU/DE/0824/1991 (and which judgment

unfortunately does not appear to be reported in any of the journals

having large circulation) has adjudicated nature of such

collaboration agreements and even specific enforceability thereof. It

was held that such collaboration agreements are agreements to

transfer immovable property as distinct from agreements of

construction of immovable property. It was further held that such

agreement contemplates exchange between the owner of the land

and the owner of the building constructed thereon, after the building

has come into existence. The argument that a suit for specific

performance of such agreement lies only after the building comes

into existence was negatived. It was further held that on

construction of building, one is the owner of land and other of the

building and at that point of time, a deed of transfer or exchange is

contemplated - At that time, the properties belonging to both are in

existence, so clearly exchange of each other's property will then be

simultaneous. It was further held that merely because of ownership

of land, building constructed thereon by builder under contract with

owner of land, will not belong to the owner on the principle of

accretion; the building having come into existence in accordance

with terms of the contract and with investment of the builder,

belongs to the builder. A portion of the building belonging to the

builder is then transferred/exchanged to/with the owner of land in

consideration of owner transferring an undivided share in land

underneath to the builder.

22. On such understanding of collaboration agreements, the courts

have been issuing interim orders in disputes arising therefrom.

Reference must be made to one such order of Justice H.L. Anand of

this court in Kailash Nath & Associates Vs Shri Badri Prasad in

suit No.221/1981, disposing of interim applications on 14th

September, 1981.

23. Thus, it cannot be said that the plaintiff had no insurable

interest in the property on the date of the insurance or on the date of

the incident insured against. The plaintiff on that date was an

agreement purchaser with respect to the said property and had paid

part consideration of Rs.8 lac for the property and in part

performance of such agreement of sale/transfer was in possession of

the property. This court in Kuldeep Singh Suri Vs. Surinder

Singh Kalra 1998 IV A.D. (Del.) 469 has taken judicial notice of

such transactions happening in Delhi owing to the restrictions

imposed in the perpetual lease of the land underneath the

properties. The agreement between the parties is of much prior to

the amendment to the Registration Act making agreements to sell

whereunder possession is delivered in part performance

compulsorily registrable. The plaintiff under section 53 A of the

Transfer of Property Act had an interest not only to enforce the

agreement with respect to the property but also in the property,

having been put into possession thereof in part performance of the

agreement.

24. Once, it is found that the plaintiff had an interest in the

property, the said interest would definitely be insurable and the

defendant has also not shown any reason for the said interest being

not insurable. The only contention of the defendant was that since

the plaintiff is not disclosed to be the owner of the property or

having any registered document with respect to the property, the

plaintiff would have no insurable interest. However that position has

not been found to be correct. However what was the extent of the

said insurable interest is a different matter.

25. A person who is so interested in the property as to have benefit

from its existence and prejudice by its destruction is said to have

insurable interest in that property. Such a person can insure the

property against fire. The interest in the property must exist both at

the inception of the policy as well as at the time of loss. If it did not

exist at the time of commencement of contract, it cannot be the

subject matter of insurance and if it did not exist at the time of loss,

he suffers no loss and so needs no indemnity. Here, the plaintiff on

the date of inception of policy was certainly interested in the

property. Whether the plaintiff was to be prejudiced from destruction

thereof or not is a different matter.

26. The defendant has neither produced any documents or records

of the time when the insurance was taken nor examined any witness

in that regard. Thus there is no evidence to show as to what was

represented by the plaintiff to the defendant at the time of insurance

or on what parameters/basis the defendant agreed to insure the

property aforesaid of the plaintiff. In fact as aforesaid the insurance

policy itself is not before the court.

27. All that this court has is Exhibit P-3 being the renewal

endorsement. The same in the column "description" which

purportedly is of the property insured, contains the following:-

"On Building (above plinth level) only including electrical, sanitary, wooden and sidelining of cork belonging to the insured whilst stored and/or lying and/or fitted in insured factory (silent at present) built of first class construction, situated at E-2 Jhandewala, New Delhi as per fire policy".

The sum insured is shown as Rs.30 lacs and the renewal

premium of Rs.4,500/- had been paid by the plaintiff.

28. From the aforesaid, it is not clear as to what was insured

whether the building or anything lying in the building. The plaintiff

in para 3 of the plaint has stated that the plaintiff under its

agreement with Virmanis was "to make arrangement for safety of

their goods and material lying in 60% area placed at the disposal of

the plaintiff". However, in para 5 it is stated that the plaintiff had

taken out a fire insurance policy "in respect of the premises in

possession of the plaintiff at E-2 Jhandewalan Extention". The

written statement of the defendant also proceeds as if the insurance

was of the building.

29. The plaintiff having not produced the entire agreements in its

favour with respect to the property, one can safely presume that the

same were not produced before the defendant also. This court is

totally at a loss to determine as to on what basis the defendant had

insured, treating the plaintiff as owner or as an agreement

purchaser. The renewal endorsement is of no help in this regard.

The list of tenants/occupants annexed to Exhibit P-2 shows as many

as nine tenants on the first floor of the 60% portion. Nothing has

come on the record as to what happened to the said tenants and/or

how they were affected by the incident of fire. It is not the case that

the fire was limited to the ground floor only of the property.

30. A perusal of the renewal endorsement discloses at least one

thing that the insurance was with respect to the sidelinings of cork

also. It is clearly admitted that the said sidelining of cork, if any, was

of no value because the property was to be

redeveloped/reconstructed. It is not the case of the plaintiff also

that the cold storage or the ice factory in the property was to

continue. Considering the nature of the cork embedded in the walls

of a ice factory/cold storage irrespective of the age thereof, the same

can have no salvage value by way of reuse in some other property.

Thus, the insurance with respect thereto is not understandable. At

the same time, it is not as if the defendant was not aware of the

factory being closed. The defendant before accepting the proposal

for insurance is expected to investigate the same. The same is

evident from the renewal endorsement itself containing, with

respect to the factory "silent at present". The defendant having

insured the premises, it has to be presumed that the defendant was

aware of all the aspects with respect thereto. The case is not found

of the nature where certain facts could be in the personal knowledge

of the plaintiff only and which the defendant had no way of

discovering or knowing unless disclosed by the plaintiff. The

insurance was of a immovable property and the title with respect

thereto can easily be investigated.

31. Thus the defendant has failed to prove that the insurance had

been obtained by misrepresentation and fraud.

32. The issues No.2&3 are thus decided in favour of the plaintiff

and against the defendant.

Re. Issue No.4 (To what amount the plaintiff is entitled to?)

33. In the light of the aforesaid discussion and the nature of right

of the plaintiff, I do not find the plaintiff to be entitled to any amount

under policy. The purpose of insurance is to place the insured in the

same position as he would have been had the incident insured

against not occurred i.e. to insure against the losses from the

incident insured. From above, it is clear that the plaintiff was

merely a collaborator in the redevelopment of the property. The

plaintiff had till the incident of fire not redeveloped the property and

thus not incurred any expenses thereon. The plaintiff had only paid

Rs.8 lacs to the owners of the property till then. The plaintiff was to

pay a further Rs.3 lac which also from the reading of the

compromise in the suit between the plaintiff and the Virmanis, (copy

whereof was filed by plaintiff and even though not proved can be

read against the plaintiff) it appears were not paid till the said

compromise. The plaintiff nevertheless got the property insured for

Rs.30 lac, though having paid Rs.8 lac themselves for the same. The

existing structure on the property as per the collaboration

agreement was in any case to be re-developed. No material has

been placed before this court to show the extent of the fire or the

damage caused thereby. Though the witness of the plaintiff sought

to prove an estimate of the cost of repairs from M/s Rajan Agency

but without author of the document being produced the same is not

evidence in law. Nothing has been stated as to what the old

structure of the property was. Ordinarily when floors are to be

added and/or the property redeveloped, the old structure is found to

be of no use. I had during the hearing inquired from the counsel for

the plaintiff whether any basement had been constructed

underneath the property as is now the norm or as to how many

floors the property comprised earlier and now. Nothing was

forthcoming. Common sense tells that a structure meant for ice

factory or a cold storage is of no value in conversion of the property

to commercial as it admittedly now is. Exhibit P-2 does not disclose

that any portions of the structure were to be retained. No site plan

has been proved before the court. The plaintiff has suppressed the

best evidence from this court. The plaintiff to be entitled to any

amount under the policy ought to have proved the structure which

was damaged and as to how that structure was of use/relevance in

the work of redevelopment of the property admittedly carried out by

the plaintiff.

34. As far back as in Gnana Sundaram Vs. Vulcan Insurance

Co. Ltd., AIR 1931 Rangoon 210 (DB) it was explained:-

"A man is interested in a thing to whom advantage may arise or prejudice happen from the circumstances which may attend it and whom it is important that its condition as to safety or other quality shall continue. Interest does not necessarily imply a right to the whole or part of the thing, nor necessarily and exclusively that which may be the subject of privation, but he having some relation to, or concern in the subject of the insurance; which relation or concern, by the happening of the perils insured against, may be so effected as to produce a damage, detriment or prejudice to the person insuring.

And where a man is so circumstanced with respect to matters exposed to certain risks and dangers as to have a moral certainty of advantage or benefit but for these risks and dangers, he may be said to be interested in the safety of the thing. To be interested in the preservation of a thing is to be so circumstanced with respect to it as to have benefit from the existence, prejudice from its destruction."

It was further held "only those can recover who have an insurable interest and they can recover only to the extent to which that insurable interest is damaged by the loss. In the course of the argument it has been sought to establish a distinction between a fire policy and a marine policy. It has been urged that a fire policy is not quite a contract of indemnity and that the assured can get something more than what he has lost. It seems to me that there is no justification in authority, and I can see no foundation in reason, for any suggestion of that kind. What is it that is insured in a fire policy? Not the bricks and materials used building the house, but the interest of the assured in the subject-matter of insurance, not the legal interest only, but the beneficial interest.

Thus it follow that insurable interest need not necessarily be whole interest, it can also be a part of the interest."

35. The plaintiff has not proved any such thing. The insurable

interest of the plaintiff in the property was only to the extent of

preserving it for the purposes of redevelopment. No loss is found to

have been occasioned to the said insurable interest of the plaintiff.

There is no evidence of loss or damage or of the extent of the

incident of fire. The report of the Delhi Fire Service though on

record has also not been proved. If the same is read the same shows

that the property involved in the fire was care taker house,

household articles, one Lambretta scooter, one cooler, old furniture,

electrical fittings, godown insulation cork and also building

damaged. The plaintiff in the claim form also though not proved but

which can always be read against the plaintiff had stated that the

property was primarily vacant and only old furniture was lying

therein.

36. The counsel for the plaintiff relied heavily on the survey

report. With respect to the survey report, before proceeding to

discuss the same I may notice that the Apex court recently in New

India Assurance Company Ltd. Vs. Pradeep Kumar Civil Appeal

No.3253/2008 decided on 9th April, 2009 has held that although the

assessment of loss by the approved surveyor is pre-requisite for

payment or settlement of claim of Rs.20,000/- or more by insurer but

surveyor's report is not the last and final word. It is not that

sacrosanct that it cannot be departed from. It is not conclusive. It

was further held that the approved surveyor's report may be base or

foundation for settlement of a claim by the insurer in respect of the

loss suffered by the insured but surely such report is neither binding

upon the insurer nor insured.

37. The surveyors have reported that the building was constructed

in 1950 to use as an ice factory and cold storage but after some

years the ice factory and cold storage was closed. They have also

reported that the fire was serious in nature and caused heavy

damage to the building and contents. The entire insulation

coverings on the walls, ceilings and columns in the storage

chambers consisting of bitumen layers, wooden framework and cork

lining had been burnt/destroyed and the value of the cork insulation

constituted the major part of the loss. Besides the same, it is

reported that the cement plaster on the walls, ceilings and columns

was dislodged and the brick walls at places had developed cracks

and/or were broken by the fire brigade to fight the fire effectively.

The wooden doors and windows are also reported to have been

burnt. Some of the columns are reported to have been damaged and

the RCC slabs of the extended balconies is stated to have been badly

damaged. The concrete floors at places is reported to have bulged

out due to heat and required replacement. The surveyor assessed

the loss on reinstatement value basis at Rs.21,88,034.00 and at

depreciated value at Rs.10,58,203.00. The surveyor left the question

of insurable interest to be decided by the defendant.

38. Even though, the survey report as aforesaid is not binding on

the defendant but the plaintiff to be entitled to any claim thereunder

ought to have shown as to how the plaster of walls which was

dislodged, the brick walls which had developed cracks and the

columns and the RCC slabs which were damaged and the concrete

floor which had bulged out were relevant in the context of

redevelopment of the property, which was the only right of the

plaintiff on the date of the incident and only which could have been

insured. The plaintiff would have been found to be entitled to any

monies under the policy only on establishing that the walls, columns

and floors aforesaid which were damaged if had not been damaged

were to be retained in the same manner and position during

redevelopment also and could have been used and as to how much

expense the plaintiff has had to incur in repairing, replacing,

strengthening the same. In the year 1951 which the surveyors have

reported to be the year of construction and to which nothing adverse

has been shown by the plaintiff, construction was generally of load

bearing walls. The modern construction is on columns and beams

with walls being merely to partition. In the normal course, the

original load bearing walls, columns the RCC slabs, wooden floors

would not be retained or be of any use in redevelopment of the

property. The surveyors have also reported that the main loss was

owing to the burning of the cork linings along the walls. However,

the said cork lining was of no value in the future plans of the

building and as aforesaid by its very nature had no salvage value

even if had not been burnt. It appears that the said cork lining and

bitumen layers on the walls for the purposes of insulation must have

been the cause of the fire smouldering for long.

39. Thus even the survey report does not advance the case of the

plaintiff any further. The plaintiff has not proved any expenses

incurred. The plaintiff has not proved any loss suffered or any

prejudice suffered by it owing to the incident of fire.

I, thus, decide Issue No.4 in favour of the defendant and

against the plaintiff.

Re. Issue No.5 (To what rate of interest, the plaintiff is entitled?)

40. Since, the plaintiff has not been found entitled to any amount,

the question of the plaintiff being entitled to any interest does not

arise. This issue has become infructuous.

Re. Issue No.6 (Relief)

41. The plaintiff having failed on issue No.1 and the issue No.4,

the suit is liable to be dismissed. The plaintiff is found to have not

even made any effort to prove its case and the case of the plaintiff is

found to be false. In fact, the entire circumstances do not inspire any

confidence in the purpose for the plaintiff obtaining the insurance.

Thus the plaintiff is also burdened with costs of the suit. Counsel's

fee for the defendant assessed at Rs.50,000/-.

Decree sheet be drawn up.

RAJIV SAHAI ENDLAW (JUDGE) May 14, 2009/PP