BEFORE A.P STATE CONSUMER DISPUTES REDRESSAL COMMISSION AT HYDERABAD

C.C.NO.105 OF 2012

Between:

M/s Manjushree Strech Film Pvt Ltd.,

Rep. by its Director Madhusudhan Kakani

S/o S.N.Kakani, Age 52 years, Occ: Business

R/o D.No.7-4-102, Gaganpahad R.R.Dist

Hyderabad-323                                                                                                                                                                                                                        

The National Insurance Co.Ltd.,

Rep. by its divisional Manager

D.O.No.IV, Begum Bazar Branch

5-5-677/78, 101, 1^stSana Plaza, Opp.Police Lane

Hyderabad
                                                               

Counsel for the Appellant             

Counsel for the Respondent          

QUORUM:  

Oral Order (As per Sri R.Lakshminarasimha Rao, Hon’ble Member)

***

1.            `35,88,296/-with interest @18% p.a. and`1,00,000/- towards compensation for suffering mental agony and costs.

2.            

3.            `35,88,296/-. The complainant had furnished details sought for by the opposite party. The complainant-company clarified all queries of the surveyor, M/s Professional Surveyor and Loss Adjudicators Pvt Ltd. The surveyor assessed the loss at`24,18,403/-. The opposite party assured the complainant that it would settle the claim and after 1 ½ years, the opposite party appointed an investigator, M/s Zubair &Company and the complainant-company objected that after a long gap of accident, investigator cannot be appointed.

4.            

5.            

6.            

7.             `55 lakhs and on Stock and Stock in Process for sum insured`50 lakhs, (2) `60 lakhs and on Stock and Stock in Process for sum insured`200 lakhs; (3) M/s Govind Industries, 6-48/1, Front Portion Side, Gagan Pahad, R.R.District bearing Policy No.551703/11/08/3100000754 covering risks on Plant/Machinery for sun insured Rs.3 lakhs and on Stock and Stock in process`2 lakhs; and (4) M/s Manjusree Polymers (P) Ltd., Part of 6-48/1, Rear Middle Portion, Gagan Pahad, R.R. District bearing policy NO.551703/11/08/3100000695 covering risks on Plant/Machinery and accessories for sum insured`14 lakhs and on Stock and Stock in process for sum insured`16 lakh.

8.             `55 lakh and on stock in process for`50 Lakh and not on the stock at Godown.

9.            

10.           

11.           

12.           

13.           

14.           

15.           

i)            Whether the fire accident occurred at the premises mentioned in the insurance policy?

ii)          Whether the claim is maintainable after stipulated period?

iii)         Whether there is deficiency in service on the part of the opposite party?

iv)        To what relief?

16.           : 

17.   

18.   

19.   “ M/s Manjunath Strecth Film Pvt Ltd.,   

20.   

“On visit to the site of accident for investigation on 24.06.2009, it was found that all the electrical wires, switch gears and unused old machines and connected items were in burnt condition due to fire.

On further investigation, it is learnt that the accident occurred in the godown, due to electrical short circuit in aged lighting wire because of insulation failure, the fire was spread immediately catching inflammable plastic materials. 

21.   

“The year in which the said SSI certificate issued was 1998.   

22.           

“I humbly submit that as per the terms and conditions of the Policy in question at (B) General Conditions (1) the Policy shall be voidable in the event of misrepresentation, mis-description or non-disclosure of any material particulars by the Insured, I the present case as per the policy in question there is no insurable interest since the alleged fire accident occurred on2 9/30.5.2009 in the intervening night at alleged Godown situated at 6-48/1, where there is no policy issued by the opposite party insurance company. 

23.           

“It is humbly submitted that as per the terms and conditions of the Policy in question at (B) General Conditions (6) (ii) in no case whatsoever shall be 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; if the being expressly agreed and declared that if the company shall disclaim liability for any claim hereunder and such claim shall not within 12 calendar 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 the purposes be deemed to have been abandoned and shall not thereafter be recoverable hereunder and accordingly the complainant is not entitled any amounts as claimed in the above complaint from this Hon’ble Commission”.

Condition 6(ii) of the Insurance policy reads as under:

(ii)      

24.           H.P. State Forest Co. Ltd. Vs. United India Insurance Company Ltd., reported in 2009 ACJ 684“ it was held:

In view of the above observations, we find that the second issue with regard to the implications of clause 6 (ii) of the policy vis-`-vis Section 28 is really academic, but as the learned counsel for the parties have addressed us on this score, we have chosen to deal with it as well. We see from the order of the Commission that it has relied upon Sujir Ganesh Nayak's case (supra) to hold that the complaint could not be entertained as being time barred. The counsel for the appellant had, however, argued before the Commission as before us, that as Section 28 of the Contract Act had undergone significant amendments, the aforesaid judgment required a re-appraisal. This submission had been rejected by the Commission by observing that it was bound by the judgment in Sujir Ganesh Nayak's case and that the appellant could agitate the question as to its correctness before the Supreme Court. The matter was, accordingly, adjourned by us to enable the parties to find out if the amendment had, indeed, been made and, if so, to what effect. During the resumed hearing, the learned counsel for the appellant candidly admitted that the amendment had been made but had thereafter been repealed and the matter would, thus, have to be examined under Section 28 of the Contract Act, as originally placed. We have, accordingly, chosen to deal with this matter under that provision. 7. It would be clear from the above prefatory note that the discussion would involve an appreciation of Clause 6(ii) of the Policy and Section 28 of the Contract Act. Both these clauses are reproduced below:

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 if the company shall declaim liability for any claim hereunder and such claim shall not within 12 calendar 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.

Section 28

Agreements in restrain of legal proceedings void-

Every agreement, by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights, is void to that extent. 

Exception 1 - This section shall not render illegal a contract, by which two or more persons agree that any dispute which may arise between them in respect of any subject or class of subjects shall be referred to arbitration and that only the amount awarded in such arbitration shall be recoverable in respect of the dispute so referred. Savings of contract to refer questions that have already arisen.

Exception 2 - Nor shall this section render illegal any contract in writing, by which two or more persons agree to refer to arbitration any question between them which has already arisen, or affect any provision of any law in force for the time being as to references to arbitration.

8. In Sujir Nayak's case (supra) to which primary reference has been made by the learned counsel for the parties while dealing with an identical situation where a contract contained a provision prescribing a period of limitation shorter than that prescribed by the Limitation Act, it was held that the contractual provision was not hit by Section 28 as the right itself had been extinguished.

9. Mr. Sharma has, however, submitted that in view of the observations in some paragraphs in Food Corporation of India's case, the observations in Sujir Nayak's case were liable to reconsideration. We, however, find no merit in this plea for the reason that in Sujir Nayak's case, Food Corporation of India's case (supra) has been specifically considered and Vulcan Insurance Company's case (supra) too had been relied upon. In Sujir Nayak's case, this Court was called upon to consider condition 19 of the policy which was in the following terms:

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.

10.While construing this provision vis-`-vis Section 28 of the Contract Act and the cases cited above and several other cases, in addition, this is what the Court ultimately concluded:

From the case-law referred to above the legal position that emerges is that an agreement which in effect seeks to curtail the period of limitation and prescribes a shorter period than that prescribed by law would be void as offending Section 28 of the Contract Act. That is because such an agreement would seek to restrict the party from enforcing his right in Court after the period prescribed under the agreement expires even though the period prescribed by law for the enforcement of his right has yet not expired. But there could be agreements which do not seek to curtail the time for enforcement of the right but which provide for the forfeiture or waiver of the right itself if no action is commenced within the period stipulated by the agreement. Such a clause in the agreement would not fall within the mischief of Section 28 of the Contract Act. To put it differently, curtailment of the period of limitation is not permissible in view of Section 28 but extinction of the right itself unless exercised within a specified time is permissible and can be enforced. If the policy of insurance provides that if a claim is made and rejected and no action is commenced within the time stated in the policy, the benefits flowing from the policy shall stand extinguished and any subsequent action would be time-barred. Such a clause would fall outside the scope of Section 28 of the Contract Act. This, in brief, seems to be the settled legal position.

25.           

26.           

                                                                                                                                                                                                                                                                                                                           కె.ఎం.కె*

APPENDIX OF EVIDENCE

For complainant                                                 

NIL                                                                                                                 

For complainant

Ex.A1               

Ex.A2               

Certificate dt.4.6.2009

Ex.A3               

Ex.A4               

Ex.A5               

Ex.A6               

Ex.A7               

Ex.A8               

For opposite party

Ex.B1       

Ex.B2       

Ex.B3       

Ex.B4       

Ex.B5       

Ex.B6       

Ex.B7       

Ex.B8       

Ex.B9       

Ex.B10      

Ex.B11      

Ex.B12      

Ex.B13      

Ex.B14      

Ex.B15