THE HON’BLE SRI JUSTICE V.V.S.RAO SECOND APPEAL No.1395 OF 2011 Dated:16.12.2011 Between: M/s.K.Venkata Ramanamurthy and others Contrs., Ratna Rice Mill, represented by its Managing Partner, Kusumanchi Venkata Ramana Murthy, S/o.late Kamaraju, aged 65 years, Occ: Business, Pithapuram .. Appellant And The Oriental Insurance Company Limited, Represented by the General Manager, A-25/27, Ashrafali Road, New Delhi and another .. Respondents THE HON’BLE SRI JUSTICE V.V.S.RAO SECOND APPEAL No.1395 OF 2011 JUDGMENT: The Second Appeal is filed against the reversing judgment in A.S.No.27 of 2006 dated 29.03.2010 on the file of the Court of the Senior Civil Judge, Pithapuram. Learned Senior Civil Judge reversed the judgment and decree dated 16.12.2005 in O.S.No.187 of 2000 on the file of the Court of the Junior Civil Judge, Pitapuram and dismissed the suit. The appellant is the plaintiff. He is a merchant dealing in food grains like paddy, rice and pulses. He insured his paddy stock in thrashing floor of the rice mill for Rs.5,00,000/- for the period from 21.04.1996 to 20.04.1997. From the night of 29.09.1996 till 02.10.1996, there was a Cyclone and heavy rains. The insured stock of paddy was damaged. The appellant therefore raised insurance claim for Rs.1,13,850/- being the value of the damaged paddy stock. The second respondent rejected the claim observing that the actual damage being Rs.47,677.87 ps. is less than the policy excess and therefore the insurer is not liable to pay the same which is 45% of actual loss incurred as estimated by the surveyors. The suit was opposed by the second respondent/defendant relying on Clause (II) of the Condition attached to the policy issued to the appellant. It was mainly contended that unless and until the damage is more than 10% of the insured amount, the insurer is not liable; as the loss is below the excess, the insurer gets relieved from the liability. They also objected that the claim is barred by limitation. The trial Court framed six issues. The plaintiff examined himself as P.W.1 and marked Exs.A1 to A9. The defendants examined two witnesses and marked Exs.B1 to B7. As noticed supra, the trial Court came to the conclusion that the claim of the plaintiff is not barred by estoppel and that Clause (II) of Ex.B1 - policy does not bar by limitation. On appeal by the defendants, the learned Senior Civil Judge, Pithapuram framed five points for consideration. The points 1 to 3 mainly dealt with the maintainability of the claim having regard to Clause (II) of Ex.B1 - policy and question of estoppel having regard to Condition No.6 of Clause (II) of the policy. After re-appreciating the evidence, the first appellate Court came to the conclusion that the insured is bound by policy conditions and therefore when the damage is less than the policy excess, the claim is not maintainable. On the question of limitation, as the claim has to be made within 12 months as per Condition No.6 of Clause (II) and the suit was filed after expiry of the said period, it was held against the appellant. The counsel for the appellant would submit that the actual damage of Rs.47,739/- arrived at taking the value of paddy at Rs.410/- per quintal, would result in a short fall of Rs.2,271/- and this was deliberately done by the insurer to get exempted from the liability under the insurance contract. He, therefore, contends that the first appellate Court failed to consider that the value of the paddy would be Rs.440/- per quintal and not Rs.410/-. According to him, if the value of the paddy damaged is determined by taking the quintal price at Rs.440/-, the claim would be Rs.53,561/- and is well within the insurance conditions. After perusing the judgment of the trial Court as well as the appellate Court, this Court is convinced that the submissions made before this Court are totally misconceived. Considering this aspect of the matter, the first appellate Court referred to Ex.B3 - letter of the appellant, dated 05.10.1996 in which he did not even whisper about the value of paddy being Rs.440/- per quintal and accordingly arrived loss. The claim of the appellant is not genuine and not maintainable under law. This is a finding of fact which cannot be agitated in the Second Appeal. There is no dispute that the paddy was damaged during the Cyclone from 29.09.1996 till 02.10.1996. As per Condition No.6, the claim ought to have been made within 12 months from the date of disclaim by the insurer. But the appellant filed the suit on 30.09.1999 beyond the period of 12 months and therefore the suit claim is not maintainable. In National Insurance Company Limited v Sujir Ganesh Nayak and Company[1], the Division Bench of the Supreme Court considered the question whether Condition No.19 in Fire Policy issued by the National Insurance Company Limited is void as offending Section 28 of the Contract Act, 1872. Condition No.19 therein relieved the Insurance Company if any claim is made for loss or damage after expiration of 12 months from the happening of loss or damage unless the claim is the subject of any pending action or arbitration. There was no action or arbitration. The Supreme Court held that though the curtailment of period of limitation by shorter period than that prescribed by law would be void as offending Section 28 of the Contract Act, and any agreement which provides forfeiture or waiver of the right itself is valid. If no action is commenced within the period stipulated by the agreement would not fall under Section 28 of the Contract Act. The relevant observations may be beneficially extracted as hereinabove. … 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 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 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. … In H.P. State Forest Company Limited v M/s.United India Insurance Company Limited[2], the Supreme Court followed Surjir Ganesh Nayak and reiterated the same principle. In the result, the Second Appeal is misconceived and is accordingly dismissed. There shall be no order as to costs. _______________ (V.V.S. RAO, J) 16.12.2011 KH [1] (1997) 4 SCC 366 [2] (2009) 2 SCC 252 : AIR 2009 SC1407