S P Kumarappan vs NATIONAL INSURANCE CO LTD

THIS appeal has been filed by the appellant against the order of the State Commission dismissing his complaint.

BRIEFLY the facts of the case are that the appellant who runs a small scale pharmaceutical unit had an insurance cover for Rs. 11 lakhs against fire loss. Appellants unit caught fire on the night of 24th -25th May, 1993 of which report was given to both the respondents i.e. the Insurance Company and the Bank. The Insurance Company appointed a Surveyor who surveyed the loss at Rs. 7,80,138.31 after some time. The Insurance Company settled the claim at this amount which was finally given to the second respondent Bank. The appellant as complainant had two grouses. Firstly, that Surveyor even though assessed the loss at over Rs. 11 lakhs, Insurance Company has paid only Rs. 7,80,138.31. The other grouse was against the second respondent that even though appellant had approached them for increasing the insurance cover from Rs. 11 lakhs to 14 lakhs, respondent No. 2 did not act on this direction which amunts to deficiency of service. The State Commission also noted that since the complaint before them has beeen filed after expiry of 12 months of the date of incident, hence, the complaint is violative of condition 6(11) of the policy of insurance which lays down that claim shall for all purposes be deemed to have been abandoned. ... if the claim is not made within 12 calendar months of the date of incident. The State Commission after hearing both the parties dismissed the complaint and on merits as well as barred within the meaning of Clause 6(11) of the Insurance Policy against which the appeal has been filed. It was argued by the learned Counsel for the Appellant that their case is not barred by limitation under Clause 6(11) of the Policy as the period of limitation of 12 months should start from the date of repudiation. Delay, if any, has been on account of the Insurance Company who did not settle the claim in time. On merits his arguments were limited to the point that the Insurance Company has no ground to limit his claim to Rs. 7,80,138.31 against an assessed loss of over Rs. 11 lakhs by the Surveroy appointed by the 1st respondent Company. They had no right to deduct the balance on account of salvage. In fact, this is a chemical unit. Loss was total. Nothing was left for use by the unit, hence, the 1st respodent should be directed to pay the full amount as assessed by the Surveyor with interest. As against the second respondent, it was argued by him that at the request of the appellant dated 20.5.1993, the Bank should have increased the insurance cover to Rs. 14 lakhs. His failure to do so is a clear case of deficiency of service. Bank should be asked to pay Rs. 3 lakhs to the unit. His appeal should be allowed against both the respondents. On the other hand, it was argued by the Counsel for the respondent that as held by the Honble Supreme Court in The national Insurance Co. Ltd. v. Sujir Ganesh Naik & Company and Another, II (1997) CPJ 1 (SC)=(1997) 4 SCC 366, Clause 6(11) of the policy is valid and complaint is time barred and has been rightly held to be so by the State Commission. On merits his case is that whatever amount of loss was assessed by the Surveyors, and this report has neither been challenged nor rebutted, that amount has been given. There is nothing more to be given. Appeal needs to be dismissed. Arguing on behalf of the second respondent, the Bank, it was stated that it was the Banks judgment as to what should be the amount of Insurance Policy cover in order to protect their loan amount. The Bank had to protect its own interest and it was covered even as per the valuation of stocks by the Surveyor of 1st respondent. There has been no deficiency on their part. It was prayed by him that in case this Commission decides to increase the amount awarded to the appellant, it should be given to the Bank.

WE have perused the material and heard the arguments. On the point of limitation as per Clause 6(11) of the Policy, this Commission has taken the view in First Appeal No. 450 of 1995 - Real Laminates Pvt. Ltd. v. The New India Assurance Co. Ltd. vide its order dated 18th July, 2001 that Supreme Court, however, did not interpret the effect of the amendment to Section 28 of the Indian Contract Act..... Theere is no dispute after the amendment of Section 28 of this Contract Act which reads as : Every Agreement (a) ..... (b) Which extinguishes the rights of any party thereto, or discharges any party thereto from any liability, under or in respect of any contract; on the expiry of a specified period so as to restrict any party from enforcing his right is valid to that extent.

IN view of our own order, we find no merit in the argument on the point of bar of limitation under Clause 6(11) of the policy. On merits of the case, we see that Surveyor has assessed the loss under four heads - (i) Packing material -Rs. 3,09,409.03 (ii) Loss of raw material -Rs. 1,89,057.17 (iii) Finished goods .Liquid in Bottles, etc. -Rs. 2,74,654.75 Rs. 8,19,425.43

THE final figure of amount i.e. Rs. 7,80,138.31 paid by the respondent No. 1 to the appellant has been arrived at after adjusting a small amount for under insurance. This is after providing for salvage value of Rs. 1,34,158.80, Rs. 1,72,874.88 and Rs. 25,345/ - in respect of items (i), (ii) and (iv) respectively. On record and also at the time of arguments, we do not see any rebuttal or denial on the part of the appellant with regard to the salvage value. Learned Counsel for the appelant was candid enough to admit that there is nothing on record to show the same based on any material before us or even for that matter before the State Commission. Salvage value has been assessed by the Surveyor after visiting the site of fire/factory. In fact, we also see that in respect of raw material salvage value has been allowed at after its verification by the Chemist of the appellant. No evidence or record has been produced before us to arrive at any other figure of salvage value then the one arrived at by the Surveyor. We also see no merit in the contention of the appellant that there was deficiency on the part of respondent No. 2 by not enhancing the insurance policy cover for Rs. 11 lakhs to Rs. 14 lakhs. Banks objective is to protect its own interest and they were satisfied with Insurance Cover of Rs. 11 lakhs. Nothing prevented the appellant from getting any additional Cover by approaching the Insurance Company directly. In any case the sequence of events are that he wrote on 20th May, 1993 to the Bank to take up the matter about enhancing the policy Cover amount and there was fire on 24th May, 1993. In our view no deficiency of service is proved on the part of the respondent Bank.

IN conclusion, we find that while the complaint is not barred by limitation as per terms of policy in the light of our order referred to earlier, we find that on merits no case has been made out by the appellant against the respondent. The appeal is dismissed. No order as to costs. Appeal dismissed.