IN THE HIGH COURT OF JUDICATURE OF ANDHRA PRADESH AT HYDERABAD (SPECIAL ORIGINAL JURISDICTION) TUESDAY, THE 18th DAY OF JANUARY TWO THOUSAND AND ELEVEN HON’BLE SRI JUSTICE N. RAVI SHANKAR C.C.C.A.No.84 of 1998 BETWEEN: M/s. H.M.T. Limited, Machine Tools Division, rep. by its Dy. General Manager, Sri G.Ranganatham … APPELLANT (S) And M/s. United India Insurance Company Limited, rep. by its Divisional Manager … RESPONDENT(S) THE HON’BLE SRI JUSTICE N. RAVI SHANKAR C.C.C.A.No.84 of 1998 JUDGMENT: Appellant is the plaintiff in O.S.No.1858 of 1989 on the file of the Court of III Additional Judge, City Civil Court, Secunderabad (trial Court). The suit was brought for recovery of a sum of Rs.5,61,980/- stated to be due towards the balance of the insurance amount allegedly payable to the plaintiff by the defendant-insurance company. The trial Court after a contest from the defendant dismissed the said suit by its judgment and decree dated 14.02.1997. Aggrieved by the same, the plaintiff filed this appeal. 2. The admitted circumstances which led to the filing of the suit are these. The plaintiff is M/s.Hindustan Machine Tools Limited represented by its General Manager and the defendant is M/s. United India Insurance Company Limited, Secunderabad. On the order dated 25.07.1983 placed by the Bombay Port Trust authorities, the plaintiff supplied a machine called Horizontal Boring and Milling Machine and dispatched it in an open wagon under a railway receipt dated 22.04.1984 to the consignee. The machine was loaded in three packs and according to the plaintiff its cost was Rs.18,90,746/- and it was insured with the defendant- insurance company. The machine reached the Bombay Port Trust at Balala on 11.07.1984 and it was unloaded at the Bombay Port Trust workshop on 01.08.1984 and the machine reached the said place after 101 days. During the transit, the above machine was damaged. 3. There was some discussion between the officials of the plaintiff, the defendant and the surveyor and the machine was ultimately brought to plaintiff’s factory or premises at Hyderabad for another survey and a detailed survey was held by the insurance surveyors J.B. Boda Marine & General Survey Agencies Private Limited, Hyderabad. The said survey report dated 25.03.1987 showed that the damage was assessed at Rs.12,98,160/-. The other details are not necessary. Based on the above survey report the plaintiff after adding what it calls certain expenses made a revised claim for Rs.13,68,335/- on 12.04.1987 demanding the said amount from the defendant. 4. The plaintiff’s grievance is that on 15.12.1987 a representative of the defendant-insurance company met an official of the plaintiff-company who was not at all connected with the matter and deliberately suppressed the facts and tendered a cheque for Rs.3,06,355/- to the said official and obtained a discharge slip from him to the effect that the said amount along with the previously paid Rs.5,00,000/- i.e. in all Rs.8,06,355/- was accepted by the plaintiff in full and final settlement of the claim as against the sum of Rs.13,68,335/- claimed by it. The plaintiff’s version here is that it earlier received a sum of Rs.5,00,000/- from the defendant apart from the amount of Rs.3,06,355/- aggregating to Rs.8,06,355/-. 5. The plea of the plaintiff is that it never accepted the sum of Rs.8,06,355/- in full and final settlement of the claim and that the defendant’s officials misrepresenting the facts obtained a discharge slip from the plaintiff’s official and subsequently refused to pay the balance of Rs.5,61,980/-. Basing on the above pleadings, the plaintiff brought the suit for recovery of the said amount of Rs.5,61,980/- (i.e. the balance remaining out of Rs.13,68,335/- after receipt of Rs.8,06,355/-) from the defendant. It also claimed interest @ 6% per annum on the said amount from the date of the suit to the date of realization. 6. The defendant in its written statement admitted all the above facts relating to insurance of the machine and its damage. Its plea however is that it never accepted to pay Rs.13,68,335/- claimed by the plaintiff towards the damage of the machine. Simply stated, it took the stand that the plaintiff company in full and final settlement of the claim accepted the sum of Rs.8,06,355/- and received it and therefore it is not open for the plaintiff now to resile from it and claim the balance amount of Rs.5,61,980/-. The defendant also let in evidence in support of this stand. 7. The oral and documentary evidence let in by both sides in support of their respective stands are shown in detail in the appendix of evidence given at the foot of the trial Court judgment and therefore they are not repeated here. 8. On the arguments addressed by both sides the following points arise for determination in this appeal. (1) Whether the plaintiff accepted the sum of Rs.8,06,355/- from the defendant in full and final settlement of the claim?. (2) Whether the plaintiff is entitled to the amount of Rs.5,61,980/- towards the balance of the amount due from the defendant if point No.1 is decided in its favour? (3) Whether the plaintiff is entitled to interest at 6% per annum? (4) To what relief? Point No.1: 9. The respective cases of the parties on this point have already been set out supra. Ex.B.3 is the survey report dated 25.03.1987 regarding damage to the machine and the claim assessed by the surveyor of J.B. Boda Marine & General Survey Agencies Private Limited, Hyderabad. This Ex.B.3 corresponds to the Ex.A.7 survey report filed by the plaintiff. There is no dispute about the same. This survey was conducted at the premises of the plaintiff after the machine was brought back to Hyderabad from Bombay. DW.3-Sri P.K. Narayanan was the surveyor of the aforementioned survey agency who conducted the said survey and prepared Ex.B.3/Ex.A.7 survey report. It was thereafter the plaintiff sent Ex.A.8 letter dated 16.04.1987 making a revised claim demanding Rs.13,68,335/-. The defendant has sent original of Ex.B.5 letter dated 23.04.1987 in reply to Ex.A.8 of the plaintiff calling upon the plaintiff to give certain information regarding the claims. 10. It is not clear from the record as to what reply was given by the plaintiff pursuant to Ex.B.5 letter of the defendant. Thereafter the defendant received Ex.B.4 letter dated 29.08.1987 from the survey agency showing that the loss is assessed at Rs.8,06,355/- . Thereafter the defendant sent original of Ex.A.10 letter dated 15.12.1987 to the plaintiff informing that it approved the claim of the plaintiff and agreed to settle it at Rs.8,06,355/-. The defendant did not file any document to show that the plaintiff in reply to Ex.A.10 accepted to settle the claim at Rs.8,06,355/- except the oral evidence of D.W.1 and D.W.2. D.W.2 is another official of the defendant-company and his evidence more relates to issuance of policy for the machine in question and the damage suffered by it and is not of much help to the defendant on this point. 11. Then coming to the evidence of D.W.1 M.S.Pratap he is the then Senior Divisional Manager of the concerned divisional office at Hyderabad of the defendant-company. He is the official who is said to have gone to the office of the plaintiff-company and handed over the cheque for Rs.3,06,355/- to one K.V.Ramana Murthy the then Joint General Manager of the plaintiff-company and obtained Ex.B.1 voucher for Rs.3,06,355/- from him. This Ex.B.1 voucher is in a printed proforma and after the blanks meant for filling up of the amounts it contains printed matter to the effect that the amount received by the person under it has received it in full and final settlement of the claim. It is basing upon this printed matter the defendant contends that the said K.V.Ramana Murthy accepted the said amount in full and final settlement. It is difficult to accept the said contention of the defendant. 12. As already mentioned supra the defendant did not file even a single document to show that the plaintiff which is an undertaking of the Government of India gave a letter or any other document signifying that it was accepting the settlement of the claim at Rs.8,06,355/-. It should be noted that the plaintiff-company is not the personal estate of the above official K.V.Ramana Murthy and therefore a word from his mouth is not enough to bind the plaintiff for the settlement pleaded by the defendant. The latter should have obtained a document from a competent authority of the plaintiff or at least even that of K.V.Ramana Murthy showing that he was authorized to accept the sum of Rs.8,06,355/- in full and final settlement of the claim when the plaintiff already made a claim earlier through its Ex.A.8 letter dated 16.04.1987 for Rs.13,68,335/-. 13. One aspect which should be noted is that the defendant much relied upon the non-examination of K.V. Ramana Murthy by the plaintiff and contended that that itself shows that the plaintiff accepted the above settlement. There is no force in this contention though the trial Court relied upon this aspect also to find in favour of the defendant on this point. P.W.1 D.Veera Shankar the then accounts official of the plaintiff deposed that he was very much present with the Ramana Murthy when D.W.1 came and gave the cheque for Rs.3,06,355/- and obtained the signature of Ramana Murthy in Ex.B.1 voucher and he stated that himself and Ramana Murthy were busy and that Ramana Murthy received the cheque and signed Ex.B.1. He also stated that at that time Ramana Murthy questioned D.W.1 about the total claim and that D.W.1 at that time told Ramana Murthy that the cheque for Rs.3,06,355/- be received by giving Ex.B.1 voucher and that the matter can be discussed later on with the officials. He then said that it was in the above circumstances Ramana Murthy received the cheque and signed the voucher but he never accepted the amount of Rs.8,06,355/- in full and final settlement of the claim. 14. Nothing was elicited from P.W.1 to disbelieve his version. Further the defendant failed to show any document given under the authority of the plaintiff which is a Government of India undertaking to show that it accepted the amount of Rs.8,06,355/- in full and final settlement of its claim which it made at Rs.13,68,335/-. After the receipt of Rs.3,06,355/- under Ex.B.1 voucher corresponding to Ex.A.9 voucher the plaintiff has addressed Ex.A.11 message and Ex.A.13 letter informing the defendant that it did not accept for any settlement at Rs.8,06,355/- and it is entitled to the entire amount claimed by it. Further a perusal of Ex.A.9 voucher filed by the plaintiff would show that endorsements were made on it by the concerned official that the amount was much less than the claim and that it should not be accepted and that the matter should be taken up with the insurance company. This attitude of the plaintiff’s officials and also the above circumstances show and fortify the plaintiff’s case that it did not accept for any settlement as pleaded by the defendant. 15. The learned counsel for the defendant relied upon M/S.BHAGWATI PRASAD PAWAN KUMAR vs. UNION OF INDIA[1] and NATIONAL INSURANCE CO. LTD. vs. NIPHA EXPORTS PVT. LTD.[2] in support of his contention that going by the propositions laid down therein the plaintiff must be held to have accepted Rs.8,06,355/- in full and final settlement of the claim. Both these cases decided by the Supreme Court are distinguishable on facts. In the first case the claimant before railways accepted the cheques sent by the railways which were sent by the railways calling upon the claimant to accept the cheques if he was ready to receive that amount in full and final settlement of the claim. The claimant accepted the cheques. He however sent a protest letter but there was no evidence to show whether he accepted the cheques before sending the protest letter or after sending the protest letter. In those circumstances, the claimant is held to have accepted the cheque amounts in full and final settlement of the claim. In the second case, the insured gave a discharge certificate indicating that he accepted the amount in full and final settlement of the claim. That is not the case here. 16. As will be presently seen under point No.2, the defendant got Ex.B.4 survey conducted on 29.08.1987 and got the loss assessed at Rs.8,06,355/- and basing on that assessment of loss the defendant unilaterally decided that the claim should be settled at Rs.8,06,355/- and paid that amount and set it up as its defence in its pleading that the abovementioned official Ramana Murthy accepted that amount in full and final settlement of the claim. The defendant did not file any document to show that the plaintiff’s official was authorized to receive the sum of Rs.8,06,355/- in full settlement of the claim. The defendant relied upon Ex.B.1 voucher which contains a printed matter that the amount paid under it was accepted in full settlement of the claim. Such a printed matter will be available on any voucher and just by that printed matter itself it cannot be inferred that the plaintiff accepted Rs.8,06,355/- in full and final settlement of the claim. The defendant did not file, to repeat, any document to show from the plaintiff that it accepted the above amount in full settlement of the claim. Hence, the above two decisions do not help the defendant. 17. Thus, for the aforesaid reasons it is held that the trial Court erred in accepting the case of the defendant under this point and accordingly this point is decided in favour of the plaintiff. 18. It may be noted that the finding under this point does not ipso facto entitle the plaintiff to the suit claim. Whether it is entitled to it or not relates to the merits of the suit claim and that has to be taken up under point No.2. Point No.2: 19. Then coming to this point which relates to the merits of the suit claim, it may be noted that after the machine was unloaded first at Bombay Port Trust godown or its place two surveys were conducted i.e. on 12.09.1984 and 03.12.1984 but no loss could be assessed. Thereafter Ex.A.6 inspection report dated 17.12.1985 was prepared at Bombay itself after inspecting the machine in the presence of the officials of the plaintiff and the defendant and this report shows that the machine was considered a total loss. Thereafter for some reasons the machine was brought back to the premises of the plaintiff company at Hyderabad. 20. At Hyderabad Ex.A.7 survey report dated 25.03.1987 was prepared for assessing the loss. This survey was conducted by D.W.3-P.K.Narayanan of the J.B. Boda Marine & General Survey Agencies Private Limited, Hyderabad. This D.W.3 in his cross- examination admitted that he conducted the said survey. The defendant also filed a copy of the survey report dated 25.03.1987 and it is marked as Ex.B.3. D.W.3 admitted that he conducted Ex.B.3 survey and he further admitted that at the time of the said survey the officials of the plaintiff and the defendant were also present. In this Ex.B.3/Ex.A.7 survey report he calculated the loss at Rs.13,07,200/- and after deducting Rs.9,040/- towards salvage value of certain parts he calculated the loss at Rs.12,98,160/-. It is clear that it was basing on this Ex.B.3/Ex.A.7 survey report dated 25.03.1987 the plaintiff sent Ex.A.8 letter dated 16.04.1987 claiming a sum of Rs.13,68,335/- towards loss from the defendant. It is thus clear that the plaintiff has made that claim basing on Ex.A.7/Ex/B.3 survey report. However, Ex.A.8 letter of claim does not show on what basis the plaintiff claimed Rs.13,68,335/- when the above survey report shows only a loss of Rs.12,98,160/-. The excess is Rs.70,175/-. The plaint or the evidence of P.W.1 on this aspect do not show any convincing material to uphold that claim. 21. It may then be noted that there is no letter from the defendant expressly indicating that Ex.A.7/Ex.B.3 survey was not acceptable to them though according to D.W.3 their officials were also present at the time of that survey. It may then be noted that D.W.3 the surveyor in his cross examination admitted that after conducting Ex.B.3/Ex.A.7 survey he went to Madras and discussed with defendant insurance company’s officials at that place and then came back to Hyderabad and prepared Ex.B.4 survey report/letter dated 29.08.1987 which shows that he assessed the loss at Rs.8,06,355/-. D.W.3 admitted that the plaintiff’s officials were not present when he saw the machine again for this survey. At one stage D.W.3 stated that he does not remember whether plaintiff’s officials were present or not. What emerges from his evidence is that after preparing Ex.A.7/Ex.B.3 survey report dated 25.03.1987 assessing the loss at Rs.12,98,160/- he went to Madras and discussed the matter with the defendant’s officials and again came back to Hyderabad and prepared Ex.B.4 new survey report/letter restricting the loss at Rs.8,06,355/- behind the back of the plaintiff’s officials which he ought not to have done. 22. It is clear that it is on the basis of the above second survey covered by D.W.3 the defendant sent the original of Ex.B.6 letter dated 27.01.1988 informing the plaintiff that it processed the claim and approved it at Rs.8,06,355/- after earlier sending the original of Ex.A.10 letter dated 15.12.1987 to the plaintiff to that effect. The defendant did not file any document to show that the plaintiff from its authorized representative agreed to accept that amount in full settlement of the claim. This exercise by the defendant was done only after the abovementioned second survey conducted by D.W.3 on 29.08.1987 i.e. Ex.B.4 survey without the knowledge of the plaintiff. The evidence of D.Ws.1 and 2 does not help the defendant to uphold its case that the plaintiff accepted the above proposal or letter of the defendant that it approved the claim at Rs.8,06,355/-. 23. One aspect should however be noted here and that is this. It may be noted that normally an insurance company would go for assessing the loss at the place where the machine is unloaded and get the loss assessed there and settle the claim. That did not happen here. It may also be noted that Ex.A.6 inspection report dated 17.12.1985 prepared at Bombay shows that the machine was a total loss after it reached Bombay. The machine was brought back to Hyderabad and a survey was again conducted on 25.03.1987 wherein the loss was assessed at Rs.12,98,160/- by D.W.3 in the presence of the officials of the plaintiff and the defendant. Ex.B.4 letter containing the second survey at Hyderabad shows that the defendant took a stand that the machine suffered further damage during its transit to Hyderabad and therefore it wanted the claim to be reduced on that basis to Rs.8,06,355/-. The plaintiff did not accept the same and no evidence was let in by the defendant to show that the plaintiff accepted that proposal. 24. As already mentioned supra Ex.A.6 inspection report dated 17.12.1985 prepared at Bombay in the presence of the officials of the plaintiff and the defendant showed that the machine was a total loss even by that date. The defendant did not take steps to get the loss assessed at Bombay when the machine first reached there showing what damage is suffered in transit from Hyderabad to Bombay. Defendant did not take steps to get the damage assessed to it because of long storage at Bombay. However, the defendant agreed for Ex.A.6 inspection report and the survey report dated 25.03.1987 wherein the surveyor assessed the loss at Rs.12,98,160/-. The very fact that the machine was a total loss even by 17.12.1985 shows that it could not have suffered any further damage while in transit to Hyderabad from Bombay and therefore the defendant cannot plead that it would reduce the amount because of that damage. 25. The defendant did not enter into any correspondence with the plaintiff to show that Ex.A.6 inspection report dated 17.12.1985 or Ex.A.7 survey report dated 25.03.1987 were not acceptable to it while the plaintiff agreed to the same. Instead behind the back of the plaintiff, the defendant again instructed D.W.3 to conduct another survey which he conducted on 29.08.1987 vide Ex.B.4 and reduced the loss to Rs.8,06,355/-. Basing upon this survey dated 29.08.1987 the defendant unilaterally proceeded to settle the claim at Rs.8,06,355/- and pleaded that the plaintiff approved the same which is not correct and which is already negatived under point No.1. It must be mentioned here that the defendant ought to have settled the claim by assessing the loss at the Bombay itself and instead it allowed Ex.A.6 inspection report dated 17.12.1985 to stand and allowed the second survey on 25.03.1987 wherein the loss was at Rs.12,98,160/- but again changed it by another survey vide Ex.B.4 without informing the plaintiff. In the circumstances the defendant must be held to have accepted the survey report dated 28.03.1987 vide Ex.A.7 wherein the loss was assessed at Rs.12,98,160/- and went back on it without showing a convincing reason basing upon Ex.B.4 survey which was done behind the back of the plaintiff. The oral evidence of D.Ws.1 and 2 is not at all helpful for the defendant to hold that the plaintiff accepted the claim at Rs.8,06,155/- which is the loss shown in Ex.B.4 survey report. 26. In the above circumstances it follows that the plaintiff is held entitled to the value of the loss assessed at Rs.12,98,160/- shown in Ex.A.7 survey report inasmuch as it failed to show on what basis it claimed Rs.13,68,335/- through its Ex.A.8 claim letter. Thus, the excess amount of Rs.70,175/- claimed by it has no basis and it has to be rejected. The plaintiff admittedly received Rs.8,06,155/- from the defendant and the balance which it would be entitled to would be Rs.4,92,005/-. This point is accordingly decided in favour of the plaintiff. Point No.3: 27. Regarding interest, it should be noted that both plaintiff and defendant are Government of India undertakings, the plaintiff being in the industrial sector and the defendant being in the general insurance sector. In fact both these parties ought to have avoided this litigation and should have amicably settled the matter. In the circumstances the plaintiff is awarded 4% simple interest per annum on the sum of Rs.4,92,005/- awarded to it from the date of the suit to the date of realization. This point is also accordingly decided in favour of the plaintiff. Point No.4: 28. In the result, this appeal is partly allowed and the judgment and decree of the trial Court are set aside and the suit is partly decreed for the sum of Rs.4,92,005/- with proportionate costs throughout and future interest at 4% per annum on the said sum from the date of the suit to the date of realization. ______________________ N. RAVI SHANKAR, J 18th January, 2011. CVRK [1] JT 2006 (11) SC 178 [2] 2006 ACJ 2849