Madhya Pradesh High Court
The Oriental Insurance Co. Ltd. vs M/S Daawat Foods Ltd. (A Subsidiary Of ... on 31 May, 2024
1
IN THE HIGH COURT OF MADHYA PRADESH
AT JABALPUR
BEFORE
HON'BLE SHRI JUSTICE RAJ MOHAN SINGH
&
HON'BLE SHRI JUSTICE VIVEK JAIN
ON THE 31st OF MAY, 2024
FIRST APPEAL NO. 318 OF 2024.
BETWEEN :-
1. THE ORIENTAL INSURANCE CO. LTD.
THROUGH ITS CHAIRMAN, A-25/27,
ASAF ALI ROAD, NEW DELHI-110002.
2. THE ORIENTAL INSURANCE CO. LTD.
THROUGH ITS REGIONAL MANAGER,
10TH FLOOR, HANSALYA BUILDING,
BARAKHAMBA ROAD, NEW DELHI-
110001.
3. THE ORIENTAL INSURANCE CO. LTD.
THROUGH ITS DIVISIONAL MANAGER,
DIVISIONAL OFFICE-15 SOUTH
EXTENSION-1, NEW DELHI - 110049.
....APPELLANTS
(BY SHRI ARPAN PAWAR - ADVOCATE)
AND
M/S. DAAWAT FOODS LTD. (A SUBSIDIARY
OF M/S. LT FOODS LTD. BRANCH OFFICE,
PLOT NO. 07, SATLAPUR GROWTH CENTRE
INDUSTRIAL AREA, MANDIDEEP, DISTRICT
RAISEN (M.P.) REGISTERED OFFICE AT UNIT
134, 1ST FLOOR, RECTANGLE-I, SAKET
DISTRICT CENTRE, SAKET- NEW
DELHI=110001 THROUGH ITS COMPANY
SECRETARY MS. ANU PUSHKARNA, W/O
SHRI SUMEET SHARMA, AGED ABOUT 34
YEARS R/O AJANTA APARTMENTS, IP
EXTENSION DELHI.
....RESPONDENT
2
(BY SHRI PRASHANT SINGH- SENIOR ADVOCATE WITH SHRI SHREY RAJ
SAXENA, SHRI SHIREESH SHRIVASTAVA AND SHRI ANKUR PANDEY -
ADVOCATES.)
----------------------------------------------------------------------------------------
This appeal came up for hearing on 15.05.2024 and the order was
kept reserved:-
ORDER
Heard on admission as well as I.A. No. 4056/2024 which is an
application for stay under order 41 Rule 5 of CPC.
2. The present appeal under Section 13(1) of the Commercial Courts
Act 2015 read with Section 96 of CPC has been filed arising out of the
judgment/ order dated 22-12-2023 passed by the Commercial Court/
VIIIth District Judge, Bhopal in suit No. COMMS/14/2020. By the said
judgment/order and decree, the commercial suit filed by the respondent
have been decreed and present appellants have been ordered to pay an
amount of Rs. 161,20,27,743/- within two months of the order along with
interest @ 6% per annum from the date of fire incident i.e. 07.06.2014 till
actual realization.
3. The suit had been filed by the insured for compensation as the
Insurance Company- appellant had repudiated the claim of the respondent-
plaintiff vide letter dated 04.02.2016 on the ground as detailed in the said
letter. The Commercial Court has held the respondent-plaintiff entitled to
compensation in terms of the Insurance Policy taken out by the respondent
and an amount of Rs. 161,20,27,743/- has been ordered to be paid to the
respondent-plaintiff which is equivalent to the loss caused to the
respondent- plaintiff on account of the fire incident.
4. Learned counsel for the appellant has submitted that the fire
incident took place on 07-06-2014 and a total of 3 different surveyors
were appointed by the Insurance Company. The first survey was ordered
to be conducted by M/s Adarsh Associates. The second survey was
ordered to be conducted by M/s Associated Surveyors and Consultants.
The third survey was ordered to be conducted by one Shri R.C. Bajpai.
While the report of even the first survey was awaited, the Insurance
Company had appointed an Investigator namely M/s. J. Basheer to carry
out investigation and the said investigator submitted its report even prior
to report of first surveyor. The second surveyor had appointed one third
Agency namely M/s Truth Lab for conducting forensic testing of the
samples and the report of the said lab was also received.
5. From the arguments of the learned counsel for the appellant, it has
been deduced that the first surveyor was appointed on 07-06-2014 and it
gave its report on 30-12-2015. The second surveyor was appointed on 14-
08-2014 and it gave its report on 05-01-2016. The second surveyor had
appointed M/s Truth Lab for forensic analysis which collected samples on
07-11-2014 and report was received on 01-12-2014. The investigator
namely J.Basheer was appointed on 19.12.2014 who gave its report on 17-
06-2015.
6. Learned counsel for the appellant while assailing the impugned
judgment/ order has submitted that since this is a first statutory appeal
against the money decree, hence, the appeal should be admitted for
hearing on merits and execution of the decree also needs to be stayed to
secure the interest of the appellant-Insurance Company.
7. The learned counsel for the appellant while pressing the case of the
appellant for grant of stay has submitted written submission and
contended that the Commercial Court has merely relied on the report of
first surveyor and has not carried out any independent assessment of the
loss caused to the respondent-plaintiff. It is argued that by only recording
that as per the first survey report, the loss assessed is Rs. 161,20,27,743/-,
the Commercial Court has passed the decree which is not proper. It is
further argued that the repudiation letter dated 04-02-2016 (Ex. P/273) is
a very well reasoned and speaking order and there was no good cause for
the Commercial Court to have allowed the claim of the respondent-
plaintiff despite the repudiation letter being speaking and reasoned order.
The repudiation was based on condition No. 8 of Fire Policy which was
just and proper.
8. It is further contended by learned counsel for the appellant that the
second surveyor had suggested deduction of 25% of the amount from net
adjusted loss, because the second surveyor had found that the stacks of
paddy which was subjected to fire incident were stored in close proximity
to each other, the distance as per norms was not maintained which lead to
less recovery of salvage and if proper distance between stacks had been
maintained, then the recovery of more salvage could have been made and
on this count 25% deduction was recommended, but the Commercial
Court has not accepted that aspect.
9. It is also contended that the because of fire could have been some
act of arson and the fire of paddy could not have been caused by electrical
short circuit (spark) as found by the investigator M/s J. Basheer, but the
Commercial Court has not adverted to that aspect at all. By heavily
relying on the report of investigator M/s J. Basheer, it is argued by the
learned counsel for the appellant-Insurance Company that the entire case
against the appellant is fictitious because the investigator found paddy to
be fire retardant commodity and it could not have caught fire only on
account of electrical short circuit. It is also argued that as per the report of
M/s Truth Lab, there was presence of Hydro Carbon in the ash of the
destroyed paddy and the presence of hydro carbon indicates that some
some external accelerant was used to cause the fire and the fire did not
occur in the manner, it has been projected by the respondent-plaintiff.
Thus the repudiation was just and proper.
10. It is also submitted that there are so many weak links in the case of
the plaintiff against the present appellant that there is no merit in the suit
and suit must fail and as the suit deserves to fail, the judgment and decree
under appeal deserves to be stayed in terms of Order 41 Rule 5 of CPC so
as to prevent irreparable loss to the appellants.
11. Another argument was raised in the matter of seeking stay on
impugned order/decree, that the suit was not maintainable and this non-
maintainability of the suit goes to the root of the matter which also entitles
the appellants to get stay on the money decree.
12. Per contra, Learned senior counsel appearing for the respondent has
referred to various documents placed on record to counter the submissions
of the appellants. Apart from merit of the case, it is argued that as per
Order 41 Rule 5 (3) of CPC, a money decree should not be lightly stayed
and the appellant has not shown any substantial loss which may be caused
to the appellant because the appellant is in the business of insurance and
the Commercial Court has only ordered to pay the amount of insurance to
the respondent.
13. This court has heard learned counsel for both the parties at length.
14. The primary objection as to maintainability of suit is taken up first.
After hearing learned counsel for parties, prima facie, it appears that as
per Section 2(c)(xx), commercial dispute means the dispute arising out of
insurance and re-insurance. By referring to clause (xx) and (ix) of Section
2(c) of the Commercial Acts 2015, it is argued by the learned counsel for
the respondent that the suit was duly maintainable. After hearing learned
counsel for parties, prima-facie, it appears that the suit was maintainable
and appellants have not made out any good ground to get stay on the
impugned judgment and decree on this ground.
15. So far as the merits of the case are concerned, as already noted
above, three surveyors were appointed by the insurance company.
Surveyors were appointed by the insurance company in terms of Section
64(UM) of the Insurance Act. Sub Section 64 (UM) makes clear provision
that the insurer shall not settle any payment unless he has obtained report
on the loss from a licenced surveyor. It is a common ground of both the
parties that surveyors appointed were licenced surveyors, thus, it is clear
that the insurance company cannot disown the report of surveyors
appointed by it without any good cause by simply stating that the
insurance company is not bound by the report of surveyor. Though the
proviso to said sub section gives a right to insurance company to settle the
claim of any amount different from the amount assessed by the approved
surveyor but in the present case the case is case of repudiation of entire
claim and not settlement of claim at any lesser amount. It was argued by
learned counsel for appellant-insurance company that the report of M/s J.
Basheer should have been looked into and looking to the said report of
M/s J. Basheer, the claim of the respondent is not made out. However,
learned counsel for the appellant was unable to point out any statutory
provision under which, during pendency of survey proceedings by the
surveyor, while survey report of surveyor appointed by the Insurance
Company is pending, the Insurance Company can appoint another
investigator which is not contemplated under the Insurance Act.
16. Apart from the above, this court upon going through the records has
observed that the proprietor of M/s J. Basheer had expired prior to suit
coming up for evidence. In place of J.Basheer, an associate of the said M/s
J. Basheer had appeared as DW/2. This witness DW/2 i.e. Shri N.
Shivramkrishnan has deposed that he never personally visited the factory
premises in which the fire incident took place. He also deposed that Shri J.
Basheer also never visited the factory premises in which fire incident took
place. He also admitted that one investigation was carried out at the
instance of District Administration by the Sub Divisional Officer,
Mandideep. He also admitted that he never met the said Sub Divisional
Officer, though various doubts have been caused by report of J. Basheer
upon the report of Sub-Divisional Officer and on the fire incident taking
place in the manner it was claimed by the plaintiff-respondent. It is
difficult to believe that how a investigator could doubt the fire accident by
concluding that it appears to be by external intervention and not accident,
when the said investigator has not even cared to visit the spot.
17. The learned counsel for the appellant had relied on this report of
M/s J. Basheer which is dated 17.062015. It is relevant to mention here
that all the three survey reports have been received subsequent to the
report of M/s J. Basheer and all the three surveyors appointed by the
insurance company have taken into consideration the report of M/s J.
Basheer and still have not concluded that the claim should be rejected
because fire appears to have been external intervention. M/s J. Basheer
has given two reasons for its conclusion, firstly that an accelerant like
Kerosene was used and secondly that paddy is a fire retardant commidity.
18. To conclude that accelerant was used, report of M/s Truth Lab have
been relied. M/s Truth Lab has found presence of certain hydro carbons in
the ashes collected on 07.11.2014, though the fire incident had taken place
on 07-06-2014. The sample collection report indicates that the burnt ashes
had been stored and dumped at some other place in the same
premises/yard. It has been argued by the learned counsel for the
respondent-plaintiff that this transport of ashes was carried out by
employees in dumpers and JCB machines. Leakage of diesel etc. from the
heavy machinery cannot be ruled out. Even otherwise hydro carbons were
found present in only 5 out of 9 samples. It is further pointed out by the
respondent that the samples were collected by M/s Truth Lab but they
were not tested by Truth Lab but were handed over to a Laboratory of
Council for Scientific and Industrial Research (CSIR). The witness of that
testing Laboratory of CSIR was produced in evidence by the Insurance
Company in defence. The said witness DW/5 had stated that they only
give reports and do not give analysis. In para 11 of the deposition DW/5
had stated that samples did not have any seal and signatures. There is
nothing on record to indicate that the hydro carbon which was found in the
ashes were the hydro carbons referable to kerosene or diesel. The Scientist
of the CSIR Laboratory has not stated anything in that regard. There is no
technical data placed on record to show that the hydro carbon found are
not usually found in the ashes and what is the permissible limit of such
hydro carbons in ashes. In absence of any such data, mere presence of
some hydro carbons cannot be presumed to mean that diesel and kerosene
were used to set the paddy on fire. It is also relevant to mention here that
the report of second surveyor M/s Associate Surveyors had duly
considered the report of M/s Truth Lab had negated the angle of arson.
First Surveyor had also negated the theory of arson.
19. Prior to testing of samples by M/s Truth Lab, the State Forensic
Science Laboratory run by State of M.P. was also requested by Sub
Divisional Officer to test the sample of ashes. The said Forensic Science
Laboratory of the State of Madhya Pradesh did not find presence of hydro
carbon in the samples.
20. The officer of the Insurance Company Shri Domnic Minz (DW/1)
had admitted that the surveyors have followed all the protocol of the
process of surveyors and also that none of the surveyors have recorded
any breach of policy conditions.
21. Learned counsel for the appellants has also vehemently argued that
the second surveyor had recommended 25% deduction on account of
stacking of paddy in close proximity to each other. However, the said
deduction was proposed on account of less salvage recovered which as per
second surveyor was due to close stacking. However, the learned counsel
for the appellant despite pointed query by this Court repeatedly, was at
loss to explain that what are the industry norms of distance to be
maintained for stacking of paddy. He was unable to point out to any such
acceptable industry norms either laid down by the Insurance Company or
laid down by any other competent authority, for storage and stacking of
paddy at some minimum distance between the stacks. In such a situation,
no prima facie case on this count seems to made out in favour of the
appellant so as to warrant stay of money decree.
22. So far as the third surveyor aspect is concerned, the learned
commercial court has already recorded that DW/3 had admitted in para 7
that he has prepared the survey report without actually visiting the spot.
Thus, no prima facie opinion can be found by this Court looking to the
report of third surveyor who also allowed the claim of the respondent, but
at some lesser side.
23. Learned counsel for the respondent-plaintiff has relied on the
judgment delivered in the case of Malwa Strips Private Limited Vs.
Jyoti Limited (2009) 2 SCC 426 to contend that money decree should not
be stayed lightly more so when the appellants have been unable to make
any prima facie case.
24. Considering the aforesaid circumstances of the case, we do not find
any prima facie case is made out so as to warrant stay of money decree,
I.A. No. 4056/2024 is rejected.
25. In view of the provisions of order 41 (1) (3) , Order 41 (5) (5) and
Order 41 (6) (1) of CPC, it is directed that in case the decretal amount is
deposited by the appellants before the Executing Court then the
respondent shall be entitled to withdraw 50% of the amount without
furnishing any security. Rest 50% amount may be withdrawn by the
respondent after furnishing bank guarantee of the amount to be
withdrawn.
26. The appeal is formally admitted for hearing.
27. Office is directed to list the appeal for hearing by fixing a date in
view of Section 14 of Commercial Courts Act, 2015.
(RAJ MOHAN SINGH) (VIVEK JAIN)
JUDGE JUDGE
MISHRA
ARVIND KUMAR MISHRA
2024.06.01 14:27:53 +05'30'
