Madras High Court
M/S.Stevens Soap vs The New India Assurance on 6 October, 2021
A.S.No.480 of 2010
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 06.10.2021
CORAM:
THE HONOURABLE MS.JUSTICE P.T.ASHA
A.S.No.480 of 2010
M/s.Stevens Soap
Manufacturing Company Pvt.Ltd.,
rep. by its Managing Director
J.V.Stephen, No.25, Elango
Adigal Street,
Padmanabhan Nagar,
Chennai – 600 094. ...Plaintiff/Appellant
Vs
1.The New India Assurance
Company Limited, rep. by
its Branch Manager,
No.340 Mint Street,
Chennai – 600 079.
2.The Central Bank of India
rep. by its Branch Manager,
Sowcarpet Branch,
Chennai – 600 003. ...Defendants/Respondents
https://www.mhc.tn.gov.in/judis
1/20
A.S.No.480 of 2010
PRAYER Appeal Suit filed under Section 96 of the Code of Civil
Procedure against the Judgment and decree passed by the learned
VI Additional City Civil Judge, Chennai on 10.10.2003 in
O.S.No.4110 of 1996.
For Appellant : Ms.Jayalakshmi
for M/s.Paul and Paul
For Respondents : Mr.S.Dhakshinamoorthy
for R1
[ R2- Not ready in Notice]
JUDGMENT
The plaintiff in the suit O.S.No.4110 of 1996 before the VI
Additional City Civil Judge, Chennai has filed this appeal
challenging the Judgment and Decree dated 10.10.2003, in and by
which the suit filed by them for recovery of a sum of
Rs.3,63,283.29/- together with interest at 17.5% per annum from
the date of the suit till the date of the decree and thereafter at 6%
per annum on Rs.3,01,688.55/- till the date of the realization had
https://www.mhc.tn.gov.in/judis
A.S.No.480 of 2010
been dismissed. In order to appreciate the contentions of the
appellant, challenging the Judgment and decree of the Trail Court,
it is necessary to briefly touch upon the facts of the case. Parties are
referred to the same litigative status as before the Trail Court.
2.The Plaintiff's Case:-
The plaintiff is a Small Scale Industry who was engaged in
manufacturing soap and its allied products which were marketed to
reputed customers. For the purpose of manufacturing soap, the
plaintiff would stock raw materials in the form of Caustic Soda,
Soda ash, Sodium Silicate, acid slurry and soft soap etc., in their
premises. The plaintiff would also store finished goods in the
godown.
3.It is the case of the plaintiff that normally they would have a
stock in hand of both raw materials as well as finished goods to the
tune of Rupees 4 to 5 lakhs at any point of time. The plaintiff with a
intention of protecting the goods from various risk, availed an
https://www.mhc.tn.gov.in/judis
A.S.No.480 of 2010
insurance policy offered by the 1st respondent. The policy in
question was a Fire Policy and the same was issued for an assured
sum of Rs.4,30,000/- covering the period 29.05.1985 to 29.05.1986
on a premium of Rs.1,513/-. The plaintiff had also availed an
additional sum of Rs.329/- towards “Fire Extra Endorsement” on
07.11.1985. Although the insurance policy was a Fire Policy, its
coverage was also extended to loss on account of flood.
4.It is the case of the plaintiff that in the month of November
1985, heavy rain lashed the city of Madras and between 10th to 13th
of November 1985, the city experienced a heavy downpour which
caused floods in various areas. The locality in which the plaintiff's
factory/godown was situated was one of the area that had been
severely affected by the floods. The flood was also caused on
account of the release of the flood water from the nearby lake.
Since, the period when the flood had taken place fell during the
festival season of Diwali, the staff members could not reach the
factory in time as the factory premises was surrounded with water.
https://www.mhc.tn.gov.in/judis
A.S.No.480 of 2010
The Managing Director of the plaintiff's company who had visited
the factory was also not able to enter the factory on 13.11.1985.
Thereafter, on the next day, the Managing Director along with few
of the staff members entered the factory premises with very great
difficulty and found that the premises was water logged to a height
of three to four feet and the goods both raw materials as well as
finished good were completely damaged and washed away.
5.The plaintiff submitted that when the damage due to flood
occurred, the policy was in force. The plaintiff had immediately
informed the 1st defendant company who had deputed its Surveyor
to inspect the premises after the flood waters receded from the
factory premises in the 3rd week of November, 1985. The Surveyor
inspected the premises and took photographs of the existing
condition and also submitted his report. The Surveyor had
requested the plaintiff to submit a worksheet showing the damages
and losses due to the floods which was also worked out and
submitted to the defendant's Insurance Company.
https://www.mhc.tn.gov.in/judis
A.S.No.480 of 2010
6.The plaintiff had evaluated the loss at a sum of
Rs.3,01,688.55 and a detailed estimate was submitted to the 1st
defendant. Thereafter on 19.02.1986, the 1st defendant had
requested certain clarifications and additional particulars which was
also sent by the plaintiff vide letter dated 03.03.1986. The plaintiff
was lulled into believing that their claim would be processed and
they would receive the amount. However, to their utter shock they
received a communication on 03.04.1986 stating that the claim had
been referred to the 1st defendant's Vigilance department, as they
received a anonymous complaint with reference to the genuineness
of the claim.
7.The plaintiff immediately brought to the notice of the 1st
defendant that not only was it is a Small Scale Industry but it goods
were also hypothecated to the 2nd defendant bank who had been
financing their business. The plaintiff had also informed the 1 st
defendant that they have been periodically submitting details of the
https://www.mhc.tn.gov.in/judis
A.S.No.480 of 2010
raw materials and finished good available with them to the 2nd
defendant and the 2nd defendant has also been carrying out
periodical inspection. The plaintiff therefore once again was
confident that their claim would be processed but however by letter
dated 15.05.1986, the 1st defendant had repudiated their liability by
stating that the plaintiff was not entitled under Condition No.13 of
the Fire Policy for compensation.
8.Thereafter the plaintiff was constrained to inform the 2nd
defendant about the same and the 2 nd defendant had also addressed
a letter dated 05.06.1986 to the 1st defendant clearly and
categorically stating that the goods damaged during the flood in the
plaintiff's factory premises were, in fact, hypothecated to the 2nd
defendant and that there was no fraud or mischief in the claim.
However, this letter did not get any response and thereafter the
plaintiff was constrained to file the above suit.
9.Written statement of the 1st defendant:-
https://www.mhc.tn.gov.in/judis
A.S.No.480 of 2010
The 1st defendant had resisted the claim inter-alia denying the
plaintiff's claim. They would submit that after they received the
claim of the plaintiff, they had received an anonymous information
that the claim made by the plaintiff was a false claim. The plaintiff
who had claimed amounts towards the alleged damage was unable
to substantiate the same by producing documentary evidence like
Stock Register, purchase register etc., both for finished products as
well as for raw materials stored in their godown for the purpose of
manufacturing the goods. The defendant had also sought for
clarification but however the same was not submitted by the
plaintiff. The 1st defendant further submitted that the plaintiff was
not entitled for a claim under Condition No.13 of the Fire Policy.
Although sufficient opportunities were given to the plaintiff to
substantiate their claim, the plaintiff ultimately expressed their
inability to provide documentary proof. The 1st defendant was
therefore left with no other alternative but to reject the claim. The
defendant would submit that without proof of the damage and the
quantum of loss, the plaintiff cannot demand that the 1 st defendant
https://www.mhc.tn.gov.in/judis
A.S.No.480 of 2010
has to compensate their loss. The claim can be made only in
accordance of the terms of the policy and unless the plaintiff
adheres to the same, the defendant will not be in a position to
compensate the plaintiff.
10.The learned VI Additional City Civil Judge, Chennai had
framed the following issues:-
“1/ gj;jpu epge;jid vz;/19-d; go thjpapd; tHf;F epiyf;fjf;fjh>
2/ Kjy; gpujpthjpf;F vjpuhf. 2tJ gpujpjhd; ghyprpia bray;gLj;j ,aYkh>
3/ Kjy; gpujpthjp kWf;fg;gl;l njjpapypUe;J xU tUlj;jpw;Fs; 2tJ gpujpthjp
nfhhpf;if vGg;ghjjhy; mw;W ngha; tpl;ljh>
4/ Kjy; gpujpthjpahy; fhg;gPl bra;ag;gl;L. bghUl;fSf;F Mgj;J Vw;gl;ljh -
mt;thwhapd; nrjnkw;gl;ljh>
5/ nrjnkw;gl;ljhf brhy;yg;gLk; njjpapy; K:yg;bghUl;fs; kw;Wk; jahhp epiyapypUe;j
bghUl;fspd; kjpg;g[ vd;d>
6/ thjpapd; nfhhpf;if cz;ikahdjh. kw;Wk; thjpapd; tptu';fs; cz;ikah>
7/ gj;jpu epge;jid 13-d; go Kjy; gpujpthjpapd; nfhhpf;ifia epuhfhpf;f thjpf;F
chpika[s;sjh>
https://www.mhc.tn.gov.in/judis
A.S.No.480 of 2010
8/ thjpf;F ,Hg;g[ Vw;gl;ljh - mt;thwhapd; vt;tst[>
9/ jug;gpdh;fs; bgwf;Toa ghpfhu';fs; vd;d>”
11.The parties had gone to the Trial on the basis of these
issues and the Managing Director of the plaintiff's company had
entered the box as PW1 and filed Exhibits A1 to A9. The official of
the 1st defendant company had entered the box as DW1 and
Surveyor as DW2. The 1st defendant had marked Exhibits B1 to
B3. The learned Judge had perused the evidence both oral and
documentary and held that the claim was contrary to Condition
number 19 of the terms of the policy. The learned Judge observed
that the plaintiff had not produced any documents to show the
actual loss sustained by them. He held that the plaintiff had failed to
file any documents in support of their claim and therefore they are
not entitled for compensation.
12.Points for Consideration:-
After hearing the arguments on both sides, the only point for
https://www.mhc.tn.gov.in/judis
A.S.No.480 of 2010
consideration that arises in the above appeal is as follows,
“Whether the 1st defendant is liable to compensate the
plaintiff for the loss sustained by them?”
13.Ms.Jayalakshmi, learned Counsel appearing on behalf of
the appellant/plaintiff would submit that under Exhibit A2 the
details of the loss had been clearly given and that apart under
Exhibit B2 Surveyor report, the Surveyor clearly detailed the
quantum of goods that had been actually damaged. Therefore, the
observation of the learned Trail Court Judge that the proof of the
damage had not been submitted by the plaintiff is without any
basis.
14.She would further argue that the 2nd defendant bank with
whom the goods had been hypothecated had periodically
conducted inspections and that apart the stock available was
always communicated to the 2nd defendant and these details had
been acknowledged by the 2nd defendant in their letter addressed
https://www.mhc.tn.gov.in/judis
A.S.No.480 of 2010
to the 1st defendant marked as Exhibit A4. She would submit that
the Trail Court has not even considered the said statement. She
would also draw the attention of the Court to the cross-
examination of DW1, the official from the 1st defendant
Insurance company wherein he has admitted that the rejection of
the plaintiff's claim without offering them an opportunity was
wrong.
“thjpf;F re;jh;gk; bfhLf;fhky; thjpapd; nfhhpf;iffis epuhfhpj;jJ rl;lg;go
jtW/”
15.She would submit that this submission would clearly
show that a rejection by the 1st defendant was a preconceived
decision to deny the plaintiff claim. She would submit that the 1st
defendant could atleast have compensated the plaintiff for the
damage noted by the Surveyor in his report Exhibit B2.
16.Per Contra, Mr.Dhakshinamoorthy, the learned Counsel
for the 1st respondent would submit that the plaintiff has not
https://www.mhc.tn.gov.in/judis
A.S.No.480 of 2010
substantiated their claim by producing the relevant records. He
would submit that there was no report to show the stock that was
available as on the date of which the factory has been flooded and
what remained thereafter. He would further submit that none of
the reports show the stock position of the plaintiff and without
such records it was impossible to arrive at a just compensation.
Infact, as soon as the claim had been lodged, the 1st defendant
has requested the plaintiff to send separate documents. However,
the plaintiff did not respond to the said request. Meanwhile the
anonymous complaint had been received by the 1st defendant that
the claim was a false claim and therefore the records had been
sent to the Vigilance department. Despite knowing the same, the
plaintiff has not substantiated his claim with proof. Thereafter the
1st defendant had rejected the claim. Even after that the plaintiff
had not produced necessary documents and this proof has not
been filed even in the suit. He would therefore submit that the
Judgment and decree passed is just and the same does not require
any reconsideration.
https://www.mhc.tn.gov.in/judis
A.S.No.480 of 2010
17.Discussion:-
On a perusal of the pleadings and the records, it is seen that
the plaintiff claims to have suffered a loss on account of the
floods as a result of which the stock includes the finished
products as well as raw materials had been damaged as water had
that entered the factory premises. Since plaintiff have availed a
Insurance policy with the 1st defendant company a claim had
been lodged with them. However, the said claim had not been
processed but on the contrary has been rejected by the 1 st
defendant.
18.The plaintiff has filed Exhibit A2 in support of the
claim. This document is a statement showing the details of the
finished goods, raw materials and packing materials under three
heads as Intact material, Salvages and totally affected materials.
This is the statement that has been forwarded to the 1st defendant.
However the plaintiff has not supported the claim under each of
https://www.mhc.tn.gov.in/judis
A.S.No.480 of 2010
these heads with supporting documents. The statement would
show that the stock as on 09.11.1985 has been taken as the base
for calculating the loss. However, the statement of account/Stock
in hand register has not been produced to substantiate the fact. If
this register is produced it can be easily verified as to the
quantum of stock available in the godown. It is also to be noted
that the 1st defendant had received an anonymous letter
simultaneously that the claim was a false claim. Therefore they
had referred the claim to the Vigilance department.
19.The 1st defendant had thereafter vide a letter dated
15.05.1986 (Exhibit A3) rejected the claim, since the Vigilance
department which had investigated the claim was not in favour of
the settlement and had stated that rejection would fall within the
reason provided under Condition No.13 of the Fire Policy to
compensate.
20.Although the plaintiff in their plaint had relied upon
https://www.mhc.tn.gov.in/judis
A.S.No.480 of 2010
certain communications between the plaintiff and the defendant
dated 19.02.1986, 03.03.1986, 03.04.1986 etc., the said
communications have not been filed as a document. However,
from the pleadings, it appears that these are letters under which
the 1st defendant sought for clarification and production of
documents by the plaintiff to support their claim. It is no doubt
evident that the plaintiff had not availed the opportunity to clear
the doubts raised by the Vigilance department in respect of the
anonymous letter. In fact the said letter has also not been made
available to the plaintiff. Be that as it may be, once the plaintiff
has come forward with the claim, the same has to be
substantiated by supporting documents. Except for filing Exhibit
A2 which is nothing but a self prepared Statement of accounts,
there is no records to substantiate the claim either in the form of
the stock register, purchase register etc., to show that, as on the
date of the floods what was the quantity of raw materials and
finished goods lying in the factory premises. Only if details of the
opening stock in the factory is available it would be possible to
https://www.mhc.tn.gov.in/judis
A.S.No.480 of 2010
arrive at the loss sustained by the plaintiff. The plaintiff argued
that the Surveyor had noted the damages and the defendant could
compensate them for the loss however such an argument is
without any basis.
21.The plaintiff had come forward with a case that they had
sustained the damages with the tune of Rs.3,01,688.55/- but the
said statement is not supported by proof. Further, on perusal of
Exhibit B2, the Surveyor report shows the products that had been
damaged does not correlate to the goods shown in the statement
of accounts Exhibit A2. Therefore the contention of the plaintiff
that they should be compensated atleast to the extent reported by
the Surveyor cannot also be granted. It is an axiomatic principle
of law that the plaintiff has to prove his case and succeed on the
strength of his case and not the weakness of the defence. The
plaintiff has not only failed to prove his case but has also failed to
produce the documents which entails an adverse inference being
drawn against the appellant herein.
https://www.mhc.tn.gov.in/judis
A.S.No.480 of 2010
22.The plaintiff has miserably failed to prove the claim and
the Trail Court has rightly held so. Infact, a perusal of Exhibit
B2 (Surveyor report) would indicate that the Surveyor has
requested certain documents from the plaintiff which the plaintiff
has not produced. In these circumstances, the point for
consideration is answered against the plaintiff.
In fine, the appeal is dismissed and the Judgment and
decree given by the VI Additional City Civil Judge, Chennai in
O.S.No.4110 of 1996 is therefore confirmed. No costs.
06.10.2021
Index : Yes/No
Internet : Yes/No
Speaking Order/Non Speaking Order
gd
To
1.The New India Assurance
Company Limited, rep. by
https://www.mhc.tn.gov.in/judis
A.S.No.480 of 2010
its Branch Manager,
No.340 Mint Street,
Chennai – 600 079.
2.The Central Bank of India
rep. by its Branch Manager,
Sowcarpet Branch,
Chennai – 600 003.
P.T.ASHA, J,
gd
A.S.No.480 of 2010
https://www.mhc.tn.gov.in/judis
A.S.No.480 of 2010
06.10.2021
https://www.mhc.tn.gov.in/judis
