Delhi High Court
The New India Assurance Company ... vs Central Bank Of India And Anr. on 5 October, 2018
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ RFA No. 421/2006
% 5th October, 2018
THE NEW INDIA ASSURANCE COMPANY LIMITED
..... Appellant
Through: Mr. Gaurav Mishra and Mr.
Siddharth Pandey, Advocates
(Mobile No. 7359067379).
versus
CENTRAL BANK OF INDIA AND ANR. ..... Respondents
Through: Mr. S.P. Gairola, Advocate for
R-2 (Mobile No. 9811671021).
CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA
To be referred to the Reporter or not?
VALMIKI J. MEHTA, J (ORAL)
1. This Regular First Appeal under Section 96 of the Code
of the Civil Procedure, 1908 (CPC) is filed by the defendant no. 4/
insurance company, in the suit, impugning the Judgment of the Trial
Court dated 02.03.2006 by which the trial court has decreed the suit
filed by the respondent no. 1/plaintiff/Central Bank of India against all
four defendants in the suit. Defendant nos. 1 to 3 in the suit were
RFA No.421/2006 Page 1 of 9
partners in a partnership firm who had availed the loan from the
respondent no.1/plaintiff/bank. The issue qua the appellant/defendant
no. 4 was whether it was liable because the insurance policy issued by
it to make payment of the loss caused by the fire in the factory
premises of respondent no. 2/defendant no. 1 on 31.07.1987, although
as per the appellant/defendant no. 4/insurance company there was a
violation of Clause No. 6 of the Insurance Policy which required
immediate intimation of loss by the respondent no. 2/defendant no. 1
to the appellant/defendant no. 4/insurance company.
2. I need not narrate in detail the cause of action pleaded in
the suit by the respondent no. 1/plaintiff against the defendant nos. 1
to 3, with respondent no. 2 in this appeal being the defendant no. 1 in
the suit, inasmuch as such cause of action of the respondent no.
1/plaintiff is relevant qua this appeal as the same is for claim against
the defendant nos. 1 to 3 on account of loan having been taken by the
respondent no. 2/defendant no. 1/partnership firm of which defendant
nos. 2 and 3 were partners.
3. The facts of the case are that the respondent no.
2/defendant no. 1 took an insurance policy from the
RFA No.421/2006 Page 2 of 9
appellant/defendant no. 4/insurance company with respect to
hypothecated goods of the respondent no. 2/ defendant no. 1 lying at
the premises being no. 226-268-C, Karawal Nagar, Shahdara, Delhi.
There is no dispute that the insurance policy was valid when the fire
broke out in the factory of the respondent no. 2/defendant no. 1 on
31.07.1987. The defence of the appellant/defendant no. 4/insurance
company was that it was not liable under the policy because fire took
place on 31.07.1987 and the respondent no. 2/defendant no. 1
intimated the event of fire to the appellant/defendant no. 4/insurance
company only on 19.10.1987 i.e. after roughly about two and a half
months. The relevant Clause No. 6 of the policy with which we are
dealing, reads as under:-
"6. (i) On the happening of any loss or damage the insured shall
forthwith give notice thereof to the company and shall within 15 days after
the loss or damage or such further time as the company may in writing
allow in that behalf, deliver to the company;
(a) A claim in writing for the loss or damage containing as
particular on account as may be reasonably practicable of all the
several articles or items or property damaged or destroyed, and of
the amount of the loss or damage thereto respectively having
regard to their value at the time of the loss or damage not including
profit of any kind.
(b) Particulars of all other insurances, if any
The insured shall also at all times at his own expenses
produce, procure and give to the company all such further
particulars, plans, specifications, books, vouchers, invoices,
RFA No.421/2006 Page 3 of 9
duplicates or copies thereof, documents, proofs and information
with respect to the claim and the origin and cause of the insured
perils and the circumstances under which the loss or damage
occurred, and any matter touching the liability or the amount of the
liability of the company as may be reasonably required by or on
behalf of the company together with a declaration on Oath or in
other legal form of the truth of the claim and of any matters
connected therewith.
No claim under this policy shall be payable unless the terms of
these conditions have been compiled with."
4. The Clause No. 6 which is in issue in the present case on
the basis of which the appellant/defendant no. 4/insurance company
has pleaded denial of its liability on account of delayed intimation to
the appellant/defendant no. 4/insurance company by the respondent
no.2/ defendant no.1 of the loss caused by fire in the factory of
respondent no. 2/defendant no. 1, has been the subject matter of a
recent decision of the Supreme Court in the case of Sonell Clocks and
Gifts Ltd. v. The New India Assurance Co. Ltd., 2018(10)SCALE24;
MANU/SC/0891/2018, and in which judgment the Supreme Court has
held that in case there is non-compliance of the requirement of
immediate intimation contained in Clause No. 6 of the insurance
policy, then in such a case, the insurance company can validly
repudiate the claim of loss. The relevant paragraphs of the judgment
RFA No.421/2006 Page 4 of 9
in the case of Sonell Clocks and Gifts Ltd. (supra) are paragraphs 1,
14, 17, 19, 20 and 22, and these paragraphs read as under:-
"1. The Appellant filed a complaint before the National Consumer
Disputes Redressal Commission, New Delhi being Consumer
Complaint No. 20 of 2006, asserting that it had taken an Insurance
Policy from the Respondent (Insurance Company) for a period of
one year from 19th July, 2004 to 18th July, 2005, in respect of its
building, plant and machinery at plot No. 70/3, B.K. Textile
Compound, Dan Udyog Sangh Ltd., Piparia, Silvassa, Dadra
Nagar, Haveli, for a sum assured of Rs. 2,87,00,000/- (Two Crore
Eighty Seven Lakh Only) on reinstatement value basis. Due to
torrential rains and floods in the entire area, the water gushed into
the factory premises causing damage to the machinery as well as
raw material lying therein. This event occurred on 4th August,
2004. Intimation of the loss was given to the Respondent after a
gap of 3 months 25 days, on 30th November, 2004. Thereafter, the
Respondent appointed a surveyor to assess the loss caused due to
the flooding of the factory premises. The surveyor after causing
inspection submitted its report to the Respondent inter alia stating
that the claim was not payable on account of the failure of the
complainant to comply with the mandate of Clause 6 of the general
conditions of the policy. Acting upon the said report, the
Respondent vide letter dated 18th February, 2005 conveyed
rejection of the claim to the Appellant on the ground that neither
the intimation of the loss had been given to it immediately nor were
the requisite particulars of the loss conveyed within stipulated
period. Thus, there was breach of terms and conditions of Clause 6
of the general conditions of the policy.
XXX XXX XXX
14. The Respondent while refuting the said assertion of the
Appellant stated in the written version filed before the Commission
that the Appellant was negligent in dealing with its affairs,
including in the matter of informing the Respondent forthwith
about the claim after the loss or damage caused on account of
RFA No.421/2006 Page 5 of 9
flooding as was essential as per condition No. 6 of the policy.
Condition No. 6 of the policy reads thus:
6. (i) On the happening of any loss or damage the insured shall
forthwith give notice thereof to the Company and shall within 15
days after the loss or damage, or such further time as the Company
may in writing allow in that behalf, deliver to the Company.
...................................
No Claim under this policy shall be payable unless the terms of this
condition have been complied with.
The Respondent also urged that after the receipt of the claim
intimation from the Bank, it immediately appointed M/s. Saran
Engineers & Consultants to survey and assess the loss. The
surveyor after visiting the premises gave a detailed report dated
29th December, 2004 including its recommendation that the loss is
not payable as per the policy (B) General Conditions, Para 6. On
the basis of that report and keeping in mind the terms and
conditions of the policy, the Respondent repudiated the claim in
terms of policy condition No. 6 and intimated the repudiation of the
claim to the Appellant vide letter dated 18th February, 2005. The
Respondent also asserted that the true import of the letter of
repudiation is a matter of interpretation. In any case, the
appointment of the surveyor was necessary, otherwise the
Appellant would have complained about the non-appointment of
the surveyor. The Respondent urged that the Appellant was in
breach of the policy condition.
XXX XXX XXX
17. In the present case, it is common ground that the letter of
repudiation dated 18th February, 2005 elucidates that the claim of
the Appellant was rejected on the ground that neither the intimation
of the loss had been given to it immediately after the loss nor were
the requisite particulars of the loss conveyed within stipulated
period and there was breach of terms and conditions of Clause 6 of
the general conditions of the policy. Additionally, the surveyor
report predicates that it was very difficult to estimate the damages
for the reasons mentioned therein and that the claim of the
Appellant was not payable on account of breach of Clause 6 of the
general conditions of the policy. That recommendation commended
to the Respondent. It has been so incorporated in the letter of
repudiation dated 18th February, 2005.
XXX XXX XXX
19. The expression "duration" is of some significance which is
reflective of the existence or otherwise of the policy itself. In the
present case, there is no dispute about the subsistence of the policy
but is one of violation of condition No. 6 of the policy.
Furthermore, in the present case the controversy will have to be
answered on the basis of Standard Fire and Special Perils Policy
relatable to condition No. 6 obligating the insured to give forthwith
intimation of the loss to the insurer. The two clauses are materially
different and relate to two different and distinct insurance policies.
In other words, Clause 5 of the Marine Insurance Policy and Clause
6 of the present policy are incomparable being qualitatively
different.
20. To put it differently, Galada's case (supra) was not a case which
considered repudiation based on a premise or a reason similar to
condition No. 6 of the present policy and a specific plea taken by
the insurer in that behalf in the repudiation letter itself. Notably,
Clause 5 of the Marine Insurance Policy which was the subject
matter in Galada's case (supra) did not have a negative covenant as
in this case in the proviso to condition No. 6 of the subject policy.
The fulfillment of the stipulation in Clause 6 of the general
conditions of the policy is the sine qua non to maintain a valid
claim under the policy.
XXX XXX XXX
22. Suffice it to observe that Galada's case (supra) will be of no
avail to the facts and circumstances of the present case. In that, the
event occurred on 4th August, 2004 but intimation was given to the
insurer only on 30th November, 2004 after a gap of around 3
months 25 days. No explanation was offered for such a long gap
muchless plausible and satisfactory explanation. The stipulation in
condition No. 6 of the policy to forthwith give notice to the insurer
is to facilitate the insurer to make a meaningful investigation into
the cause of damage and nature of loss, if any. This Court in
Parvesh Chander Chadha (supra) has held that it is the duty of
insured to inform the loss forthwith after the incident."
(Underlining Added)
5. A reading of the aforesaid paras show that the
requirement of immediate intimation of the insured event as per
Clause No. 6 of the insurance policy has been held to be mandatory by
the Supreme Court, and which is because an insurance company is
always entitled to immediate intimation for it to verify the validity of
the claim and qualification of the loss. Since, in the present case, the
intimation to the appellant/defendant no. 4/insurance company is not
immediately after the loss caused by fire on 31.07.1987, and
intimation to the appellant/defendant no. 4/insurance company was
only on 19.10.1987 i.e. after around two and a half months, therefore,
in accordance with the ratio of the judgment of the Supreme Court in
the case of Sonell Clocks and Gifts Ltd. (supra), the
appellant/defendant no. 4/insurance company rightly repudiated the
claim and raised such defence accordingly in the written statement.
6. In view of the aforesaid discussion, this appeal is
allowed. The impugned Judgment of the trial court dated 02.03.2006
so far as appellant/defendant no. 4/insurance company is set aside.
The suit as against the appellant/defendant no. 4/insurance company
will stand dismissed. Parties to bear their own costs. Decree sheet be
prepared.
7. The amount deposited by the appellant/defendant no. 4,
in this Court, along with accrued interest, be refunded back to the
appellant/defendant no. 4 by the Registry of this Court within four
weeks.
OCTOBER 05, 2018 VALMIKI J. MEHTA, J
AK
