The National Insurance Co. Ltd. v. T. P. Pappachan

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** **THE HONOURABLE MR.JUSTICE V.CHITAMBARESH & THE HONOURABLE MR. JUSTICE SATHISH NINAN** **TUESDAY, THE 28TH DAY OF FEBRUARY 2017/9TH PHALGUNA, 1938** **AS.No. 55 of 2001 (E) ----------------------** **AGAINST THE JUDGMENT AND DECREE IN OS.163/1997 of PRINCIPAL SUB COURT,NORTH PARAVUR DATED 31-07-2000** ## **APPELLANTS/DEFENDANTS:** **------------------------** **1.THE NATIONAL INSURANCE CO. LTD. PERUMBAVOOR, REPRESENTED BY ITS DIVISIONAL MANAGER, DIVISIONAL OFFICE, ALUVA.** **2.THE NEW INDIA ASSURANCE CO. LTD., PERUMBAVOOR, REPRESENTED BY ITS DIVISIONAL MANAGER, DIVISIONAL OFFICE, ALUVA.** **BY ADV. SRI.GEORGE CHERIAN (THIRUVALLA)** **RESPONDENT/PLAINTIFF:** **----------------------** **T.P.PAPPACHAN, S/O PAULOSE, THOPPILAN VEEDU, IYMURIKARA, KOOVAPPADY, PROPRIETOR, PEOPLES BUILDING WORKS AND FURNITURES MART, KOVAPPADY.** **BY ADV. SRI.ANIL GEORGE ADV. SRI.JOBY JACOB PULICKEKUDY** **THIS APPEAL SUITS HAVING BEEN FINALLY HEARD ON 07-02-2017, THE COURT ON 28.02.2017 DELIVERED THE FOLLOWING:** **vdv** ## **V.Chitambaresh & Sathish Ninan, JJ. ============================== A.S No.55 of 2001 ========================== Dated this the 28[th] day of February, 2017** ## **JUDGMENT** ## **Sathish Ninan, J** A decree for realisation of insurance claim is under challenge by the defendants/Insurance Companies. 2. The plaintiff is a proprietorship concern doing business in wooden doors, windows, T.V.boxes etc. The plaintiff had insured with the defendants the building, machinery and the stock of the business concern, against fire. The claim for insurance was made alleging fire accident on 05.02.1992 causing damage to the building, machinery and stock. Claim was made for 9,86,435/- towards damages. The court₹ below granted a decree for ₹ 1,96,688/- to be realised from defendants 1 and 2 in proportion to the amount of the insurance policies. A.S No.55/2001 2 3. Heard Sri.George Cherian, learned senior counsel on behalf of the appellants/defendants and Sri.Joby Jacob Pulickekudy on behalf of the respondent/plaintiff. 4. The learned senior counsel challenged the impugned judgment and decree mainly on three grounds. Firstly that the suit is barred by limitation; secondly, the court below went wrong in relying on Ext.A14 survey report produced by the plaintiff by ignoring Ext.B5 survey report obtained by the Insurance Companies through a surveyor licenced under Section 64 UM of the Insurance Act; and thirdly, the grant of interest at 18% per annum is arbitrary and excessive. 5. The plea of limitation is founded on clause 4(B) (iii) of the conditions of Ext.A1 policy which reads as under: “4(B)(iii) In no case whatsoever shall the Company be liable for any loss or damage after the expiration of 12 months from the happening of the loss or damage unless the claim is the subject of pending action or arbitration; it being expressly agreed and declared that A.S No.55/2001 3 if the Company shall disclaim liability for any claim hereunder and such claim shall not within 12 calender months from the date of the disclaimer have been made the subject matter of a suit in a court of law then the claim shall for all purposes be deemed to have been abandoned and shall not thereafter be recoverable hereunder.” According to the learned Senior Counsel since the suit is filed beyond the period of 12 months from the date of the incident, the suit is barred by limitation. 6. The relevant clause in the policy, as noted above provides that the company shall not be liable if there is no pending action or arbitration within 12 months from the date of the incident, and further that in case of disclaimer by the company, the suit shall be filed within 12 months from the date of disclaimer, failing which the claim shall be deemed to be abandoned. The question that arise is, whether the aforesaid clause in the insurance policy imposes a period of limitation and if so, is the clause valid? The learned senior counsel rests his arguments A.S No.55/2001 4 on the judgment of the Apex Court in **National Insurance Co. Ltd. V Sujir Ganesh Nayak & Co. (1997 (4) SCC 366)** . 7. It would be worthwhile to refer to the clause, the validity of which was considered by the Apex Court in **National Insurance Co. Ltd. V Sujir Ganesh Nayak & Co.** (supra). The clause runs as under, ““ _Condition 19_ .—In no case whatever shall the company be liable for any loss or damage after the expiration of 12 months from the happening of loss or the damage unless the claim is the subject of pending action or arbitration.” The clause provided that the company shall not be liable unless action is initiated with 12 months from the incident. The Apex Court held that any agreement restricting the period of limitation is not valid, but proceeded to explain that the effect of the said clause was not to restrict the period of limitation, but it provided for extinguishment of the right and liability itself. Accordingly, the clause was held to A.S No.55/2001 5 be valid. The clause in Exhibit A1 policy is similar to the one considered by the Apex Court. The validity of the clause is only to be upheld. 8. It is to be noticed that the alleged incident was on 05.02.1992.The plaintiff had approached the Consumer Disputes Redressal Forum on 16.07.1993 in O.P No.172 of 1993. The O.P was ultimately disposed of on 31.03.1995 relegating the complainant/ plaintiff to Civil Court. The plaintiff had submitted the claim to the defendants on 15.02.1992. On 02.08.1993, the second defendant/second appellant Insurance Company issued Ext.B18 letter of repudiation of the claim. As per Clause 4(B)(iii) of the terms and conditions of Ext.A1 policy, above referred to, the insured has the right to file a suit within twelve months from the date of repudiation. The repudiation as noted above was on 02.08.1993 and therefore, the suit ought to have been filed on or before 02.08.1994. The present suit is filed on A.S No.55/2001 6 16.01.1996 (filed as an indigent). However, it is to be noticed that the proceedings before the Consumer Disputes Redressal Forum was pending in the meantime and the same was disposed of only on 31.03.1995 and that too, relegating the parties to the civil court. That the plaintiff is entitled to get exclusion of the period during which he was prosecuting the proceedings bonafide before the Consumer Disputes Redressal Forum admits of no doubt.( _see M/s.Deokar Exports Pvt. Ltd. v. New India Assurance Co. Ltd. - AIR 2001 Bombay 327, The City Municipal Council v. S.A. Latheef and Co. - AIR 2004 Karnataka 491, Shangrilla Apartments Co-op. Housing Society Ltd., Goa and Others v. Rivin Builders, Goa and Others - 2016 KHC 2258, Laxmi Engineering Works v. P.S.G. Industrial Institute - AIR 1995 SC 1428 and Saushish Diamonds Ltd. v. National Insurance Co. Ltd. - 1998 (8) SCC 357_ ). Therefore, the plaintiff would be entitled to get exclusion of the period upto A.S No.55/2001 7 31.03.1995, from 02.08.1993, the date of repudiation since the proceedings were pending before the Consumer Disputes Redressal Forum during the said period. The suit is filed on 16.01.1996 within a period of one year from 31.03.1995, the date of disposal of the complaint by the Consumer Disputes Redressal Forum, and hence it can safely be concluded that the suit is well within time. But it is to be noted that Ext.B18 letter of repudiation was issued by the second defendant alone. Therefore, the claim as against the first defendant cannot be held to be within the period as stipulated in Ext.A1 policy and hence is unsustainable. 9. Coming to damages, Ext.A14 is a survey report obtained by the plaintiff assessing the damages. Ext.B5 is the report obtained by the Insurance Company through its licenced Surveyor in terms of Section 64 UM of the Insurance Act. It is seen that regarding part of the claim namely, regarding the A.S No.55/2001 8 building, the court below has accepted Ext.A14 report in preference to Ext.B5 report while the latter has been accepted for damages to machinery and stock, the reason given being that Ext. B5 report was prepared by a mechanical engineer. The mere fact that the person who conducted Ext.B5 survey is a mechanical engineer, by itself, would not justify rejection of his valuation regarding the building. No sufficient reasons are indicated to discard Ext.B5 in respect of part of the assessment. Ext.B5 is a report prepared by licensed Surveyor under the Act. Normally the report is to be accepted in the absence of sufficient material to disprove the same. No acceptable reasons are attributed by the court below to discard Ext.B5 towards part of the damages assessed. We find that the course adopted by the court below in the said regard was not proper. Damages in respect of the building is re-fixed at Rs.31473/- as assessed in Ext.B5 surveyor's report. A.S No.55/2001 9 10. Coming to the claim for interest, as pointed out by the learned senior counsel, the grant of interest at 18% per annum is arbitrary and unjust. Taking into consideration the prevalent rate, we feel that grant of interest at 9% per annum is just and proper. In the result, the appeal is allowed. A decree is granted allowing the plaintiff to realise an amount of 1,51,833/- with interest at 9% per₹ annum from the date of the suit till realisation and also proportionate costs from the second defendant. The suit will stand dismissed as against the first defendant. **Sd/-** ## **V.Chitambaresh, Judge** Sd/- **Sathish Ninan, Judge** vdv