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The New India Assurance Company Ltd. v/s M/s. Rishi Cotton Mills (P) Ltd. through its Director Jeetmal Jain & Others

    Civil Writ Nos. 14318 of 2016 & 14320 of 2016

    Decided On, 06 January 2017

    At, High Court of Rajasthan Jodhpur Bench


    For the Petitioner: Jagdish Vyas, Advocate. For the Respondents: Anil Bhandari, Advocate.

Judgment Text

1. These two writ petitions involve common questions of facts and law and are thus being decided by this single order.

2. These writ petitions have been preferred challenging two separate orders dated 03.06.2016 passed by the Permanent Lok Adalat, Pali in Cases No.4/- 2011 and 5/- 2011 whereby, the orders passed by the petitioner Insurance Company repudiating the insurance claims of the respondents were quashed and set aside and the company was directed to reimburse the claims for loss of insured goods lodged by the respective parties under the Marine Insurance Policies held by them.

3. The respondents herein had taken Marine Insurance Policies from the petitioner Company to cover the risk of textiles material being transported from Pali City to different parts of the country by road transport. Bales of cloth insured under the Marine Insurance Policies were transported by the respondents from Pali to Kolkata and were unloaded at the Godown of Inland Road Transport Pvt. Ltd, Kolkata. A huge fire broke out in the godown of the transport company on the night intervening 13-14th February, 2010 and the insured bales of cloth were destroyed therein. As per Clause 2 of the Marine Insurance Policy, the liability of the Insurance Company to cover the risk of the goods under the Marine Policy was valid for a period of seven days from the date of actual delivery of goods. The transport company i.e. the Inland Road Transport Pvt. Ltd, Kolkata issued a non-delivery certificate dated 11.06.2010 to the parties where after, Insurance claims were lodged by the respective consignor respondent for different sums of money. The Insurance company, however, repudiated the claims of the Insured Consignors by separate orders (Annexure-A/1) dated 20.05.2011 assigning identical reasons. The language of the order repudiating claim is relevant for the purpose of deciding the controversy and thus is reproduced herein below for the sake of ready reference:-

"With reference to your above mentioned claim filed with us, we have to intimate that the competent authority as repudiated this claim on following grounds:-

1. As per Insurance Act, the insurance terminates on delivery to any other Warehouse whether prior to or at destination which the insured may elect for Storage other than in ordinary course of transit or for allocation or distribution. In this case also the consignees were using the transports godwon as further distribution/sell hence, the coverage of policy seized at the time of goods unloaded in godwon.

2. As per the available statement of goods burnt at Kolkatta the goods dispatched in the months of April, 2009 to December-2009 and January-2010 to date of loss was also lying at the same godwon it clearly shows that, consignee were using the above godwon as storage of their goods for all the time hence, our cover seized as soon as goods reached at above godwon.

As per the Marine Act, if the insured elects to use a part of warehouse for Storage this, would be outside the ordinary course of transit and the same is not covered under the policy.

3. The all damaged goods stored at transporter godwon were falls under the definition of goods held in trust for which transporter had the Fire policy from Oriental Insurance Company amounting Rs.7.50 Crore.

4. As per the invoice copies available in the claim file the insured was sending the goods on purchase risk basis and as per insured letter the freight charges also paid by the consignees. The insured has debited the purchaser account at the time of hand over the goods to transporter which shows, that the insured was selling the goods on FOB basis.

5. Condition No.7 in open policy of Marine Insurance that insured is bound and will declare each and every dispatch coming under the scope of the policy without any exception but in this case insured has violated the condition by not declaring the dispatches of Rs.12,66,827/-

In view of the above facts, as the said loss does not comes in the coverage of Marine Policy, hence the competent authority has repudiated the said claim finally, which please be intimated to you."

4. The respondents herein challenged the orders repudiating their claims by filing separate applications under Article 22 of the Local Services Authorities Act, 1987 before the Permanent Lok Adalat, Pali which after detailed consideration, accepted the applications and directed the Insurance Company to reimburse the claims of the respondents herein with interest @ 6% per annum vide separate orders dated 03.06.2016. Being aggrieved by these orders, these two writ petitions have been preferred.

5. Shri Jagdish Vyas, learned counsel for the petitioner Insurance Company referred to the following terms and conditions of the Marine Insurance Policy under which the destroyed goods were insured:-

Liability Of The Underwriters

The condition no. '5' of the INLAND TRANSIT (Rail or Road)- A (All Risks) reads as under :-


5. This Insurance attaches from the goods leave the warehouse and/or the store or the place named in the policy for the commencement of transit and continues during the ordinary course transit including costomary transshipment, if any.

i) Until delivery to the final warehouse as the destination named in the policy or.

ii) In respect of transit by Rain only or Rail and Road, until expiry of 7 days after arrival of the railway wagon at the final destination railway station or

iii) in respect of transits by Road only until expiry of 7 days after arrival of the vehicle at the destination town named in the policy.

Whichever shall first occur.

6. And urged that the extended coverage of seven days while the goods are lying in the godown can not apply to the situation at hand because it was admitted by the Insured consignors that they were using the godown of the transporter as their final warehouse. He urged that delivery to the final warehouse had been made as per condition No.5(i) of the Liability of the Underwriters and the risk cover stood extinguished immediately thereafter. He relied upon the Supreme Court Judgment in the case of Suraj Mal Ram Niwas Oil Mills Private Limited v. United India Insurance Company Limited And Another, [reported in (2010)10 SCC 567] and urged that the language of insurance contract is to be construed strictly. Words of an insurance contract must be given paramount importance and accepted without any addition, deletion or substitution. He urged that the impugned orders were passed in total disregard to the terms and conditions of the Insurance Contract and thus, the same should be set aside and the orders repudiating the claims of the respondents be restored.

7. Per contra, Shri Anil Bhandari, Advocate representing the respondents vehemently opposed the submissions advanced by Shri Jagdish Vyas. He urged that the insurance cover does not refer to the final warehouse of the consignor. He submitted that clause No.5(i) of the Marine Insurance Policy on the basis whereof, the insurance claims were repudiated would come into play only when the contract specifically refers to the final warehouse as the destination name in the policy. In the cases at hand, the final warehouse was nowhere in picture because admittedly the consignors had no warehouse of their own at Kolkata. The goods upon reaching the destination town are kept in the godown of the transporter in routine course. Intimation of delivery is sent to the consignee who takes the delivery thereof as per convenience. Thus, clause No.5(iii) of the policy conditions was clearly applicable in the case at hand and the goods which were destroyed at the godown of the transport company within 7 days from the date of arrival at the destination town were certainly and without any doubt covered by the Insurance policy and the petitioner Insurance Company is liable to reimburse the claims of the insured. He urged that the orders repudiating claim passed by the Insurance Company were totally arbitrary and perverse and were rightly set aside by the Permanent Lok Adalat. He supported the impugned orders dated 03.06.2016 passed by the Permanent Lok Adalat as being perfectly just and proper and urged that the writ petitions being devoid of merit should be dismissed.

8. I have heard and considered the arguments advanced by the learned counsel for the parties and have gone through the material available on record.

9. The following question arises for consideration and determination in these writ petitions in view of the pleadings of the parties and the arguments advanced before this Court:-

Whether destruction of the insured goods at the godown of the transporter even if the same was being used as a warehouse by the insured consignors can be held as hit by clause No.5(i) of the Insurance Policy so as to justify the decision of the insurer in repudiating the claims.

10. It is an admitted position from the material available on record that the consignors (insured) were not having any godown at Kolkata. In the correspondence exchanged with the Insurance Company, the consignors admitted that they were using the godown of the transporter company because they did not have godowns of their own at Kolkata. The goods transported by the consignors from the months of April, 2009 onwards till 13th February, 2010, were lying in the godown of the transporters and were destroyed in the very same incident of fire. The Surveyor who conducted survey pursuant to the lodging of claims by the insured, did not recommend the claims for the goods lying in the godown of the transporter from more than seven days prior to the incident of fire. Thus, it has to be examined as to whether the Insurance Company can escape liability of reimbursing the claim regarding the goods delivered in the godown of the transporter within a period of 7 days from the incident of fire by taking the recourse of Clause 5(i) referred to supra. Plain and simple reading of this clause, makes it clear that the goods insured would be covered up to the final warehouse if such final warehouse is named as the destination in the Insurance Policy. Clause 5(iii) of the Policy upon which claims of the insured were based clearly stipulates that the duration of the risk coverage will be continued as regards transit of goods by road until expiry of seven days after arrival of the consignment at the destination town named in the policy.

11. The Marine Insurance policy has been placed on record with the reply as Annexure/R/1. In such Insurance Policy, there is no mention of any final warehouse to which the delivery was to be made. The goods were insured for a specified period from Pali to anywhere in India. The survey report (Annexure-R/2) clearly indicates that while transporting the goods, the transportation documents indicted that the goods were to be delivered at Kolkata. Therefore, the situation would definitely be covered by clause No.5(iii) of the Marine Insurance Policy because the insured goods were destroyed by fire within a period of seven days from being received at the destination town Kolkata City where the same were transported. Hence, the moment the goods were received at the destination town, the period of seven days referred to in Clause 5(iii) of the Policy started ticking and the coverage of the insured goods would come to an automatic end on the completion of the said perio

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d and the risk coverage would be limited for the said period only. Admittedly, the insured goods were destroyed in fire within the said window of seven days and therefore, the respondents Insured were definitely entitled to reimbursement of the damage of insured goods suffered in the incident of fire as per the terms of the Marine Insurance Policies. Thus, ex-facie, clause 5(i) would not have any application whatsoever and cannot come to the defence of the Insurance Company. The learned Permanent Lok Adalat, after detailed, thorough and appropriate discussion of the entire material available on record, arrived at the only just and logical conclusion that the Insurance Company was liable to reimburse the claims of the insured. The impugned orders dated 03.06.2016 ex-facie do not suffer from any illegality, irregularity, perversity or error apparent on the face of the record so as to require interference in exercise of the supervisory/extraordinary writ jurisdiction of this Court. In wake of the discussion made herein above, there is no merit in these writ petitions which are hereby dismissed. Stay applications are also dismissed. No order as to costs. A copy of this order be placed in each file. Petition Dismissed.