THE HON'BLE SRI JUSTICE P.S.NARAYANA A.S.No.962 of 1993 15th April, 2010 Between :- M/s.United India Insurance Company Limited, Rep. by its General Manager, 24, Whites Road, Madras and another .. Appellants And West Godavari District Coop.Marketing Society Limited, Eluru, Rep. by its Business Manager .. Respondent THE HON'BLE SRI JUSTICE P.S.NARAYANA A.S.No.962 of 1993 JUDGMENT:- The defendants in O.S.No.107/84 on the file of the Subordinate Judge, Kovvur, being aggrieved of the Judgment and Decree dt.30-11- 92, made in O.S.No.107/84 on the file of the Subordinate Judge, Kovvur, preferred the present appeal. The Trial Court on appreciation of evidence available on record, decreed the suit for Rs.1,09,858/-with proportionate costs and interest. 2. In C.M.P.No.6455/93 this Court granted interim stay on condition the appellant deposits Rs.44,200/- together with interest and costs within a period of six weeks from 12-4-1993. The said amount was deposited. An application C.M.P.No.10817/93 to vacate the said interim was filed and while making the said interim stay absolute, the respondent-plaintiff was permitted to withdraw the amount deposited without furnishing any security. 3. Sri Venugopal Reddy, the learned Counsel representing the appellant had taken this Court through the respective stands taken by the parties and the evidence available on record and the findings recorded by the Trial Court ad would maintain that the direction given by this Court while granting interim stay being just and equitable direction, the Decree be modified accordingly, especially in the light of the Surveyor’s Report. The Counsel also would contend that even otherwise the terms and conditions of the Insurance Policy as such had not been complied with and the total quantum under the policy had not been deposited and they had not taken the Insurance policy to the total stocks. The Counsel incidentally had pointed out to clause 18 of the Policy in question and would maintain that the matter ought to have referred to the arbitration for adjudication. The Counsel had taken this Court to the loss assessed by the Surveyor applying the necessary deductions and also pointed out to the terms and conditions of the Policy and would maintain that in the facts and circumstances of the case, the decree to be modified accordingly. 4. The Counsel representing respondent however would point out that in the light of the convincing reasons recorded by the learned Judge, this is not a fit matter to be interfered with. The learned Counsel also pointed out that merely because there is some difference between the actual stocks and the quantum for which the stocks had been insured, that itself cannot be a ground for making deduction and hence the Trial Court is well justified in making such Decree. 5. In the light of the submissions made by the Counsel on record, the following points arise for consideration in this appeal:- 1) Whether the findings recorded by the Trial Court decreeing the suit for Rs.1,09,858/- with proportionate costs and interest at 6% per annum from the date of suit till the date of realization to be confirmed or to be set aside in the facts and circumstances of the case? 2) If so, to what relief, the parties would be entitled to? 6. Before taking up the further discussion on the points for consideration specified supra, it may be appropriate to refer to the respective pleadings of the parties, the issues settled, the evidence available on record, and the findings recorded by the Trial Court in brief. Respective pleadings of the parties:- 7. It was pleaded in the plaint that the plaintiff is a Cooperative Society . In 1983 the plaintiff stored rice and sugar in a building in Nidadavole Municipality and the stocks were insured with the defendants for Rs.5,00,000/- under Cover Note dt.5-10-1983. Due to the unprecedent cyclone and extensive floods, the stocks were damaged due to the flood water. The plaintiff employees could not prevent the stocks from the damages due to flood water. The defendants Insurance Company deputed Sri N.Valyutham & Co., Madras, to assess the damage done to the stocks by flood water. The damage was assessed on 19-10-1983 by Valayutham & Co., and found that 440 bags of rice each containing 74 Kgs. And 200 bags of sugar each containing one quintal of sugar were completely damages and unfit for human consumption. It was also found that 37 bags of sugar were partly damaged. The Valayutham & Co., requested the plaintiff society to dispose of the damaged stock of gunny bags and accordingly an amount of Rs.534/- was realized. Since the claim was not settled and the compensation claimed by the plaintiff society was not paid, a notice was issued to the defendant on 16-5-1984. The plaintiff society is entitled to claim interest at 18% per annum. 8. The 2nd defendant filed written statement pleading that clause No.18 of the Insurance Policy all disputes relating to the measure of damages shall be referred to Arbitration for decision. The defendants appointed a Surveyor for assessing the damage. This defendant is not liable for the claim in respect of 200 bags of sugar. The claim is barred by limitation. The plaintiff is not entitled to claim damages. The plaintiff society deliberately and wantonly avoided settlement through Arbitration as provided in the contract. 9. The 1st defendant filed adoption memo adopting the written statement of the 2nd defendant. 10. Issues settled:- 1) Whether the suit is not maintainable as prohibited by clause 18 of the contract? 2) Whether this Court has jurisdiction to entertain the suit without prior reference to the arbitrator? 3) Whether the plaintiff complied acts to mitigate the damages? 4) Whether the total loss of 200 sugar bags is true? 5) Whether the alleged loss of the rice bags is true? 6) Whether the plaintiff is entitled to the amounts claimed under items 3 to 6 in para 13 of the suit? 7) Whether the plaintiff is entitled to the interest? 8) Whether the cause of action is true? 9) Whether the plaintiff is entitled to the damages claimed in the suit and if so to what amount? 10)To what relief? 11. Evidence available on record:- Witnesses examined for Plaintiff:- P.W.1 :- Kommareddi Satyanarayana P.W.2 :- Immanni Seshagiri Rao Witnesses examined for defendants:- D.W.1 :- Anne Srihari Rao D.W.2 :- Nalarajam Velayutham Documents marked on behalf of the plaintiff:- Ex.A.1, dt.24-4-87 :- True copy of Order under Section 15-A in R.C.No.13835/87 S.W. (M) issued by the Additional Registrar of Cooperative Societies, Hyderabad. Ex.A.2, dt.16-5-84 :- Office copy of registered notice issued by the plaintiff’s Advocate to the 2nd defendant. Ex.A.3, dt.17-5-84 :- Postal acknowledgment of 2nd defendant. Ex.A.4, dt.10-5-84 :- Postal acknowledgment Documents marked on behalf of the defendants :- Ex.B.1, dt.30-11-84 :- Fire policy of United India Insurance Co.Ltd. Ex.B.2, dt.1-9-84 :- Survey Report of Sri N.Velayutham & Co., Madras. 12. Findings recorded by the Trial Court:- Issue No.1 is whether the suit is not maintainable as prohibited by clause 18 of the contract and while answering the same, at para 6, it was observed that the said Issue is not pressed. While answering Issue No.2, whether this Court has jurisdiction to entertain the suit without prior reference to the arbitrator, at para No.7, it was observed that this issue also was also not pressed before the Court. Though this was raised as a ground since these Issues were not pressed before the Trial Court, the Counsel cannot be permitted to re-agitate those questions before this Court. While answering Issue No.3, it was observed that the evidence on record clearly shows that the plaintiff-society did not take steps to mitigate the damages and thus answered the Issue against the plaintiff. While answering Issues No. 4, 5, 6 and 9 reasons had been recorded at para 10 and it was held that it is not justified in reducing the damages to Rs.44,187/- and thus held that the plaintiff is entitled to the damages of Rs.1,09,858/-. Further reasons had been recorded while answering the other issues as well at paras 11, 12, 13, 14 and 15 and ultimately the suit was decreed for Rs.1,09,858/- with proportionate costs and the plaintiff also is entitled to interest @ 6% per annum from the date of suit till the date of realisation. 13 Point No.1:- The respective pleadings of the parties, the evidence available on record and findings recorded by the Trial Court already had been referred to above. Inasmuch as, the ground of non- maintainability of the suit as per clause 18 of the contract, these Issues having been not pressed, the said questions cannot be permitted to raise again in this appeal. The Trial Court appreciated the evidence of P.W.1, P.W.3, D.W.1 and D.W.2 and also Ex.A.1, Ex.A.2, Ex.A.3, Ex.A.4, Ex.B.1 and Ex.B.2. Ex.B.1 is the Fire Policy of the United India Insurance Co.Ltd., and Ex.B.2 is the Survey Report, dt.1-9-84. 14. D.W.2 is person who was deputed by the defendants Insurance Company to assess the damage. D.W.2 visited the plaintiff’s godown at Nidadavole and conducted the survey of damage and he assessed the damage at Rs.1,09,858/-, but proportionately reduced the damage because the stocks worth Rs.12,07,188/- were stocked in the godown at the time of damage. It is not in controversy that the stocks were insured for Rs.5,00,000/-. The liability of the Insurance Company is restricted to Rs.5,00,000/- at the maximum. The learned Judge was of the opinion that since no party as such had been cited any authority for reducing the damage proportionately, a reduction of damage to Rs.44,187/- being not justified, it was held that the plaintiff is entitled to the damages of Rs.1,09,858/-, No doubt, certain submissions were made regarding terms of policy and further certain further submissions had been made that there is no condition relating to the payment of interest as well. These conditions being self-explanatory need not be discussed in elaboration. On a careful examination of Ex.B.2 and the evidence of D.W.2 and also D.W.1 as well coupled with the evidence of P.Ws. 1 and 2 and Ex.A.1 to Ex.A.4 and also Ex.B.1 and further taking into consideration, the worth of the stocks being Rs.12,07,188/-, the stocks being insured for Rs.5,00,000/- only, the proportionate reduction calculated by the Surveyor cannot be found fault but however this Court while granting interim stay directed the appellants to deposit Rs.44,200/- together with interest and costs within six weeks and the same had been deposited and while making the interim stay absolute, this Court also permitted the respondent to withdraw the same. In the light of the same, this Court is of the considered opinion that both in the light of the terms and conditions of the policy and also taking into consideration the fact in particular Ex.B.2 and D.W.2, it would be just and proper to modify the Decree and Judgment of the Trial Court confining to the quantum which had been already deposited and withdrawn by the respondent-plaintiff. 15. Point No.2:- Accordingly, the appeal is allowed to the extent indicated above restricting the liability of the appellants to the amount already deposited by the appellants and withdrawn by the respondent without furnishing security as directed by this Court. The appeal is accordingly allowed to the extent indicated above. The parties to bear their own costs. _____________________ Justice P.S.Narayana 15th April, 2010 smr