New India Assurance Co.Ltd vs SATISH SOLVENT EXTRACTION LTD

THE appellant Insurance Company has preferred this appeal against the order of District Forum, Dhule in Complaint No. 138/1994, directing the Insurance Company to pay Rs. 73,091/- being the amount of Insurance Claim for the loss consequent upon the accident to the consignment sent by the complainant dated 14.5.1991 under the Open Marine Transit Policy No. 21 /322, plus cost, interest etc. THE undisputed facts are that the complainant had taken out Open Marine Policy (Cargo) for the period between 3.7.1990 to 2.7.1991, being the Policy No. 2115190100322/ 020. THE initial cover was to the tune of Rs. 10 lakhs which was raised to Rs. 20 lakhs. THE subject matter covered by the Insurance was of all types of edible oil stored in new tins whilst in course of transit of road/rail, from the insured''s factory to anywhere lndia as per the declaration submitted from time to time. THE period of insurance was 12 months or till the sum insured gets exhausted by declaration whichever is earlier. Basis of declaration-Invoice cost only. THE condition dearly provided that: "It is a condition of this insurance that assured is bound and will declare each and every despatch coming under the scope of the Open Policy without any exception within 24 hours or as may be agreed from the time of issue of the Railway Receipt/ Lorry Receipt/Postal Receipt/Airway Bill."

IT seems that on 14th May, 1991, the complainant loaded 600 tins of edible oil under lorry receipt No. 2238 as per credit bill Nos. 118 & 125. When the vehicle travelled about 15 kms. from Dhule to Mumbai on National Highway No. 6, it met with an accident causing loss of oil from the oil tins. The Surveyor Mr. Varma carried out the insurance survey on 15.5.1991 and submitted the report about the accidental loss. The value declared for insurance was Rs. 3,25,000/-. The insured preferred the claim for recovery of the amount under the above policy but the same was declined, and hence the complaint and order of the District Forum as indicated above. The District Forum observed that as per the terms of insurance, the complainant was entitled to the value of the despatch of consignment dated 14.5.1991, as the same was covered by the declaration under the policy condition.

However, Surveyor, Mr. Sisodia carried out the entire survey and found that the complainant had despatched the tins worth Rs. 4.25 crores between the date of policy and the date of accident. However, the complainant gave only 5 declarations, one of which the last consignment dated 14.5.1991 valued for Rs. 3,23,400/-. Prior to that there were only 4 declarations on the following dates. 1. 30.11.1990 - 600 tins 2. 1.11.1990 - 600 tins 3. 29.11.1990 - 600 tins 4. 30.11.1990 - 600 tins They were despatched from Dhule to Bombay. The last despatch dated 14.5.1991 was sent to Pune. The further enquiry shows the (sic.) of consignments were sent by the complainant but no declarations were filed. It is the established proposition of law that the contract of insurance is a contract of utmost faith between the parties. The conditions of the policy had to be adhered to strictly and as indicated, the same policy required complainant to declare each and every despatches. The same was not done in this case.

IN the affidavit of Mr. Narayan V. Shejawala, Divisional Manager, New INdia Assurance Co., Dhule, it is stated that on 14.5.1991, the opening balance of stock shown by the complainant was Rs. 8,68,000/-. That would mean from 8.7.1990 to 14.5.1991 only an amount of Rs. 11,32,000/- was exhausted, out of Rs. 20 lakhs. The complainant was called upon to furnish the explanation and the same explanation was to the effect that complainant had despatched 184 consignments worth Rs. 4.25 crores between the period from 8.7.1990 to 14.5.1991. Out of these huge consignments, only 5 consignments were declared by the complainant. The small consignments were not at all reported. The Surveyors report also support this fact. According to the Surveyor, even if the consignment covered by the insurance obtained by the consignee and sales effected ex-factory are excluded the total consignments between 3.7.1990 to 14.5.1991, was 1.23 crores. With such a detailed report, we feel that complainant did not give declaration in respect of all me consignments. The learned Counsel for the complainant has alleged that the complainant had godown at Nasik and the despatch in that godown would not be subject matter of insurance cover. We have gone through the policy terms and we are unable to extract from the terms that such consignments which were from one godown to another godown or from one factory to another godown of the complainant should be excluded. However, we do not wants to adjudicate upon that aspect of the arguments. The fact remains that the consignment of Rs. 1.23 crores definitely exceeded the limits of 20 lakhs. The limit of 10 lakhs was exhausted on 18.7.1991 and the increased sum of Rs. 20 lakhs was exhausted on 21.8.1990. Obviously, therefore, the loss arising out of the accident on 14.5.1991 was not covered by the insurance policy. The complainant had committed breach of the insurance policy and hence is not entitled to the amount ordered by the District Forum. We, therefore, pass the following order. ORDER The appeal is allowed. The order of the District Forum is set aside. The complaint is dismissed with our no orders to cost. Appeal allowed.