New India Assurance Co. Ltd. vs NONSUCH TEA ESTATE LIMITED

THIS is a First Appeal against the order dated 1st September, 1992 passed by the State Consumer Disputes Redressal Commission, Tamil Nadu at Madras in Original Petition No. 122 of 1992 by which the Complainant Nonsuch Tea Estate Limited who is Respondent in the present Appeal was allowed a compensation of Rs. 1,46,531/-. The Appeal has been filed by the New India Assurance Co. Ltd., 87, Mahatma Gandhi Marg, Fort, Bombay who was Opposite Party No. 4 in the complaint. Opposite Party Nos. 1 to3 are all the different offices of Opposite Party No. 4 situated at different places. While referring to Opposite Party,we will be referring to New India Assurance Company''s Head Office, Bombay. The Complainant took a Marine Insurance Policy (Cargo) with the Opposite Party for a sum of Rs. 10.00 lakhs for the period from 26th October, 1988 to 25th November, 1989. The policy covered risks to tea starting from the plucking stage to storage cover for 60 days at the destination. The process is that the green leaves plucked every day are spread out in withering troughs and air is blown through the tea leaves to gradually remove moisture and are kept in the troughs till next morning when proper withering is achieved. The leaves are then fed into rollers to break the leaf cells and get the juice exposed so as to get oxidation (fermentation) started. Once the leaves reach optimum oxidation levels, they are fed into driers where hot air is passed through the oxidised (fermented) leaves and moisture is removed to below certain level. At this stage black bulk tea is ready and then it is cleaned and graded according to size, packed and despatched. On 7th January, 1989,19,767 kgs. of green leaves were plucked and sent to the factory for withering process. But the workmen belonging to all the Unions of the factory went on strike from the commencement of the working hours on 28th April, 1989 and consequently the tea leaves plucked on the previous day could not be processed and manufactured into tea. Those became a total waste. The Insurance Co. was duly informed of this and claim was made under claim form dated 23rd May, 1989. According to the Complainant the total out turn of the tea out of the 19,767 kgs. of leaves at 24.65% would come to 4,873 kgs. of marketable tea. The average selling price in April, 1989 of tea was Rs. 30.07 per kg. and thus the total value of 4,873 kgs. of manufactured tea was Rs. 1,46,531/-. The Insurance Co. appointed a Surveyor but no action has been taken. On 2nd April, 1990 the Divisional Office of the Insurance Co. sent a letter to the Complainant stating that the loss was due to delay in processing the leaves conesquent on the lightning strike by the labour and therefore, does not fall within the scope of the policy. According to the Complainant this amounts deficiency in rendering of service. Hence he prayed for an award of Rs. 1,46,531/- with interest at 24%.

THE Opposite Parties, as noticed above are different offices of the Insurance Co. and they filed a common counter. It was contended that the claim was barred by time as it was rejected on 2nd January, 1990 and the period for preferring a suit or complaint expired on 1st January, 1991. On merits it was contended that one Mr. Venugopal was appointed as Surveyor but he could not give his report for want of particulars from the Complainant. Subsequently only after the letter dated 6.10.1989, the Complainant vide letter dated 12th October, 1989 disclosed the value of conversion. That letter was received on 16th October, 1989 and verifycation was made and report was submitted on 23rd November, 1989. As this was a complicated matter involving legal opinion there was some delay in rejecting the claim. According to the Opposite Party the plain meaning of the policy can only be a physical damage done to the subject matter by the strikers and cannot be stretched to loss or damage that occurs as consequences of non-availability of labour because of the strike. Reliance is placed on excluion clause (2.2). Hence it was contended that loss or damage proximately caused by the absence, shortage or withholding of labour of any description whatsoever during any strike does not fall within the ambit of the policy. The State Commission held that the complaint was not time barred as the Article of Limitation Act applicable to the present case is the residuary Article 113 which prescribes a period of limitation of three years when the right to sue accrues and in the present case the right to sue accrued from 2nd January, 1990 when the claim was rejected by the Opposite Parties and the complaint was filed on 11th March, 1992 well within the time. It was further remarked that even if it was assumed that the right to sue accrued on the date the tea leaves were plucked the complaint was well within time. It was further held that the case was covered by clause 1.1 of Item 1 of the Risk Clause and as the loss occurred due to strike, the Opposite Parties were liable to pay the damages. Feeling aggrieved the Insurance Co. has filed this appeal.

The case depends upon the various clauses of the note "Strike, Riots and Civil Commotion Clause" for short SRCC (Inland transit not in conjunction with Ocean going voyage).

VARIOUS clauses as appeared in the policy under the Clause Risk covered and exclusions and reproduced by the State Commission reads as under : "1. Subject otherwise to the terms, conditions and warranties of the policy on goods against transit risks, this insurance covers, except as provided in Clause 2 below loss of or damage to the subject matter insured caused by (Risk Clause): 1.1 Strikes, Locked-out workmen, or persons taking in labour disturbances, riots or civil commotions, 1.2 any terrorist or any person acting from a political motive; 1.3 persons acting maliciously. Exclusions:

In no case shall this insurance cover: 2.1 loss damage or expense proximately caused by delay inherent vice or nature of the subject matter insured. (General Exclusion Clause). 2.2 loss, damage or expense proximately caused by the absence, shortage, or withholding of labour of any description whatsoever during any strike, lock-out, labour disturbance, riot or civil commotion. 2.3 any claim for expenses arising from delay or other consequential or indirect loss or damage of any kind, 2.4 loss damage or expense caused by war, civil war, revolution, rebellion insurrection or civil strike arising there from, or any hostile act by or against a belligerent power."

The case put forward by the Complainant before the State Commission was that the loss was caused on account of inability to carry on the withering process caused by strike and was covered by clause 1.1 of the SRCC clause. The Insurance Company''s contention is that the case squarely falls under exclusion 2.2 as the loss and damage was proximately caused by the absence, shortage or withholding of labour due to strike. The State Commission held that in clause 1.1 of SRCC clause, the word used is "strikes" and not "strikers" and there was no dispute about that fact because the policy was produced both by the Complainant and the Opposite Party containing the word "strike" not "strikers". The State Commission further remarked that if the word used was "strikers" it could be successfully argued, as contended by the Opposite Party, that clause deals with physical damage to the subject matter of insurance by the striker. The State Commission also noticed that the counter filed by the Opposite Parties also proceeded on the basis as if the word is "strikers". The closing portion of paragraph 8 of the counter was reproduced. It reads as follows: "The policy clearly states that the loss or damage to the subject matter insured/ caused by strikers. The plain meaning for that can only be the physical damage done by the strikers and cannot be stretched to loss or damage that occurs as consequences of non-availability of labour because of strike: About that para, the State Commission remarked that evidently the Opposite Parties seem to be under the mis-impression that the word used in Clause 1.1 of SRCC Clause is "strikers" instead of "strikes". In view of the above, the explicit language of clause 1.1 in using the word "strikes" and not "strikers", it was satisfied that the loss and damage was sustained by the tea leaves plucked on 27th January, 1989 was because of the strike which commenced on 28th April, 1989. About, the exclusion clause 2.2 of the SRCC clause excluding risk of loss, damage or expense proximately caused by the absence or shortage, or withholding of labour of any description whatsoever during any strike every strike necessary implies refusal by the labour to work or to work normally and hence involves withholding of labour and therefore, the said clause 2.2 takes away the risk cover given by clause 1.1 and thus there was apparent inconsistency between clauses 1.1 and 2.2 and the two clauses cannot co-exist. The State Commission further remarked that it was the cardinal rule of construction of deeds and documents that the intention of the parties should be gathered from the language used by the parties in such deeds and documents and it was not, therefore, the function of the Court to substitute the word "strikers" for "strikes" in clause 1.1 which must be read at its stands and such a substitution would amount to making a new contract. It was also held by the State Commission that if there is repugnancy, ambiuity or doubt between two clauses in a policy of insurance the contract has to be considered contra proferentem i.e. against the Insurance company as pointed out by the Supreme Court in General Assurance Society Ltd. v. Chand Mull Jain and Another (AIR 1966 SC 1644).

AFTER carefully going through the file, we are of the opinion that in clause 1.1 there appears to be a mis-print. The word V has been inadvertently left out and thus the word "strikers" appears in the policy instead of "strikers". The Insurance Company has filed SRCC clause which appears to be subsequently printed out future policies. Clause 1.1 reads as follows: "1.1 Strikers, Locked-out workmen, or persons taking part in labour disturbances, riots or civil commotions"; "1.2 any terrorist or any person acting from a political motive."

Both the clauses if interpreted in a general sense deal with situation where strikers, locked-out workmen, terrorists etc. indulge in violent acts and cause damage to the subject of insurance. The present case is squarely covered by clause 2.2 reproduced above. Loss or damage was proximately caused by the absence of labour during the strike. Absence of labour is not covered by the words "withholding of labour" which might be due to the act of the insured. When there are two clauses in a deed which prima facie appear to be inconsistent, harmonious interpretation is to be given to the various clauses. It is to be presumed that in a document unnecessary words and inconsistent clauses are not made part of the document. In the light of the above discussion we are of the opinion that the present case is squarely covered by 2.2 of the exclusion clause and, therefore, the Insurance Co. rightly rejected the claim. It is futile to urge on behalf of the Complainant that absence of labour during strike cannot be a valid exclusion to the perils covered by the insurance. Accordingly we accept the present appeal, set aside the impugned order and dismiss the complaint filed by the Complainant. In the circumstances of the case, we make no order as to costs. Appeal accepted.