IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.M.JOSEPH & THE HONOURABLE MR. JUSTICE M.L.JOSEPH FRANCIS TUESDAY, THE 19TH JULY 2011 / 28TH ASHADHA 1933 AS.No. 849 of 1996 -------------------- AGAINST THE JUDGMENT IN OS.986/1991 of PRL.SUB COURT, KOTTAYAM .................... APPELLANT(S): PLAINTIFF: --------------------------------------- M/s. MEENA SILICATE, VARANAD P.O., CHERTHALA, REPRESENTED BY ITS PROPRIETOR, C.K.ASOKAN. BY ADV. SRI.T.G.RAJENDRAN & SRI.K.M.SATHIANATHA MENON RESPONDENT(S): DEFENDANTS: ---------------------------------------------- 1. THE DIVISIONAL MANAGER, UNITED INDIA INSURANCE CO.LTD., DIVISIONAL OFFICE, UPPOOTTIL BUILDINGS, K.K.ROAD, KOTTAYAM 686 001. 2. THE BRANCH MANAGER, UNITED INDIA INSURANCE CO.LTD., IV/306-B, N.S.S BUILDINGS, CHERTHALA. 3. M/s.UNITED INDIA INSURANCE COMPANY LTD., 24-WHITES ROAD, MADRAS, 600 014, REPRSENTED BY ITS GENERAL MANAGER. R3 BY ADV. SRI.A.A.MOHAMMED NAZIR THIS APPEAL SUITS HAVING BEEN FINALLY HEARD ON 19/07/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: K.M.JOSEPH & M.L.JOSEPH FRANCIS, JJ. --------------------------------------- A.S.No.849 of 1996-G -------------------------------------- Dated, this the 19th day of July, 2011 J U D G M E N T K.M.Joseph, J. Appellant is the plaintiff in a suit for recovery of money. The suit stands dismissed by the trial Court. 2. In brief, the case of the plaintiff is as follows: Plaintiff is a proprietary concern. It had insured its silica plant with the 3rd defendant. Plaintiff was issued a policy dated 7.7.87 through the 2nd defendant. By the policy the defendants agreed to indemnify the plaintiff for any damage that might be caused to the boiler and other pressure plant described in the schedule of the policy. The policy has been issued in respect of a furnace also. Before the policy was issued the officers of the insurance company including the 2nd defendant visited the plant and satisfied themselves about the correctness of the statements in the proposal form. On 24.3.1988 a crack was noticed on the furnace of the plant. Melted silicate leaked out through the fissure. The plaintiff informed the 2nd defendant about the occurrence by letter dated 23.5.1988. Plaintiff made a claim to the defendants. The estimate prepared by Engineers for the re-construction of furnace was also sent to the defendants. The surveyor assessed the damage. The AS 849/1996 -2- policy was renewed on 29.7.1988. But, later the defendants cancelled the policy. The defendants did not settle the claim. After issuing notice to the defendants the suit was filed claiming Rs.3,39,798.52 ps. 3. Respondents inter alia contended that the suit is barred by limitation, the court has no territorial jurisdiction and that, it was by suppressing the material facts the plaintiff had obtained insurance policies. The case of lightning is denied. It is contended that the damage was only due to bad workmanship and use of unsuitable clay and that Warranty No.79 in the policy was not adhered to by the plaintiff. 4. The trial court, after framing 5 issues proceeded to hold that the suit is not barred by limitation, the court had jurisdiction, there was misrepresentation by the plaintiff and the plaintiff had obtained policies on the said basis. It is also found that the damage caused to the furnace was due to bad workmanship and has dismissed the suit. 5. We heard the learned counsel for the appellant and learned counsel for the respondents. The learned counsel for the appellant would submit that the court below erred in finding that there is misrepresentation. According to him, the furnace was essentially either a boiler or a pressure plant. He would further submit that it is a case where policy issued itself specifically enumerates the furnace in the AS 849/1996 -3- boiler and pressure plant policy and the reasoning of the court that there is misrepresentation cannot be sustained. He would also submit that there was a visit preceding the issuance of policy by the officers of the insurance company and it was only after it was satisfied of the particulars that the policy was issued and there can be no question of misrepresentation. As far as the question relating to bad workmanship, it is stated that DW1 is not an expert. He would submit that the judgment is unsustainable. 6. Per contra, the learned counsel for the respondents would support the judgment and decree. He would, in fact, submit that there is no challenge in the appeal memorandum to the finding of the trial court that there is bad workmanship in making of the furnace. The insurance company is not liable to pay. He would submit that as far as the fire policy is concerned, having regard to the state of evidence, the judgment is only to be upheld. He would point out that there is no evidence to show that the machinery was damaged by lightning. He would also submit that a contract of insurance is a contract entered into uberrima fide and there is a duty on the part of the insured to disclose every material fact unlike in case of other contracts. He would further submit that even accepting that there is no misrepresentation as such the fact remains that the judgment can be supported on the basis that there was bad workmanship in the making AS 849/1996 -4- of furnace and therefore even on that sole ground the appeal deserves to be dismissed. 7. The appellant is a proprietary concern. There is no dispute that there are two policies viz. Ext.A4 fire policy and Ext.A10a which was a boiler and pressure plant policy. The appellant has laid the suit on the basis of the crack noticed on the furnace from which melted silicate leaked out through the fissure. As aforesaid, there are two contracts of insurance. He has laid claim under both. In regard to fire policy, apparently, the case is premised on the allegation that lightning struck on the relevant day resulting in damage to the furnace. As far as the contention is concerned, it is to be noted that there is no merit at all in the said complaint. The evidence does not disclose that there was lightning on the said day. As there is no evidence at all to show that there was lightning on the said day we reject the claim. Therefore, the only question is whether the appellant is justified in laying claim on the basis of boiler and pressure plant policy. The trial court has found that furnace is not either boiler or pressure plant. In this context the trial court placed reliance on the evidence of Dw1. Dw1 is the Surveyor. He has deposed that furnace is not boiler or pressure plant. According to him, boiler is for generation of steam and when there is no generation of steam the equipment is not a boiler. A furnace is used only for generation of heat, he says. The witness is not AS 849/1996 -5- cross examined on this point. It is also found that competency of Dw1 to depose the fact is also not in dispute and on the said reason it was found that furnace belonging to the plaintiff is not a boiler. Thereafter the trial court has also concluded that there is misrepresentation. According to the appellant, the then manager visited the insured articles and the company cannot say that there was misrepresentation. The case of inspection is apparently denied by the insurance company. It is noted that one Krishnan Nair was the person who allegedly inspected the property. The trial court blames the appellant for not examining him and thereafter it is found that if the purpose of inspection was to ascertain some other facts such as whether the furnace was in existence, the insurer cannot be said to have known whether it is a boiler or pressure plant. Therefore, even if the inspection is true, even then it was found that is insufficient to find that policy is not bad for misrepresentation. 8. We went through Ext.A10a which is a copy of boiler and pressure plant policy. We would notice that in the said policy furnace is specifically mentioned. If that be so, it was known to the insurance company that what was being insured was a furnace under the heading boiler and pressure plant policy. Therefore, we are of the view that the trial court may not have been justified in coming to the conclusion that there is misrepresentation as such. The fact that what AS 849/1996 -6- is being insured as either boiler or pressure plant was a furnace was well known to the respondents. If that is so there is no scope for invoking the principle that there is misrepresentation on the part of insured in the matter of securing the policy. 9. The further question arises as to whether the respondents are entitled to succeed as they have done in the trial court on the basis that there was poor workmanship in the matter of making furnace. In this regard evidence consists of Ext.B3 report and the deposition of Dw1. Ext.B3 is the report submitted by Dw1. Even though the appellant has a case that Dw1 is not an expert we are of the view that there is no merit in the said contention. Dw1 is a surveyor engaged not only by the respondent company but other companies. In fact, there is no challenge to his competency to speak as an expert. In Ext. B3 report he has inter alia dealt with the issue of bad workmanship. He has stated as follows: “8.CAUSE OF DAMAGE 8.1 Under the fire policy claim the insured's reason for damage is given as 'EXACT REASON IS NOT KNOWN. IT MAY BE LIGHTNING.” When asked to elaborate, the insured vide their letter dt.27.6.88 confirmed that there was lightning at about 3.45 PM on 24.3.88 at the insured's place. 8.2 However, as per India Meteorological department's weather certificate dated 28.7.88, the possibility of thunder and lightning is ruled out at the place and time reported. AS 849/1996 -7- 8.3 On investigation, our Surveyor satisfied that the cause of present damages to the insured's furnace is not due to risks covered under fire policy cited in 2.5 B above. And the insured has failed to substantiate that the damages occurred to the furnace is due to any one of the 6 risks covered under the fire policy. 8.4 Under the claim form for “Boiler & Pressure Plant Policy” the insured states the cause of the damage as “NOT KNOWN”. 8.5 Cause of damage is found not due to explosion or collapse as hereinafter defined of any boiler or other pressure plant. As was given under Preliminary Survey report, damaged furnace, in our opinion, also cannto be termed either as a bioler or as a pressure plant. 8.6 PROBABLE CAUSE OF DAMAGE: On the basis of detailed investigation conducted, we are of the opinion that the damage reported to the present furnace, in our opinion is due to: 8.7 “Bad workmanship and usage of unsuitable fire clay on internal surface of the furnace”. 10. He corroborates his report by the deposition which he has given in court. In fact there is no specific challenge to the finding based on his deposition. He would say that he is an Engineer. He was approved as an assessor by the Government of India. He is an independent surveyor of 4 insurance companies. He would depose that he has visited the appellant 2 to 3 times and filed Ext.B3 report. He AS 849/1996 -8- reiterates that boiler is for generation of steam and without generation of steam there is no boiler and furnace is not a boiler. He would specifically say that he has seen the furnace and according to him the reason for the crack apparently was bad workmanship, the gap between fire bricks was not uniform, the clay was substandard. He would say that he has examined the bills under which the clay was purchased by the appellant. It is stated that the clay used by the appellant originally was not quality clay and there is substantial difference between the clay used after the accident. That difference can be understood from the bill. He has got copies of the bill given by the appellant. He would say that he has not examined the clay. He would reiterate that the appellant has not adhered to warranty No.79 and he understood the same from the inspection of the stock record. 11. Thus we can come to the conclusion that there is bad workmanship in the making of furnace which has caused of damage. We see nothing erroneous in the finding of the trial court. In this regard as already noted there is no challenge in the appeal. We are of the view that Dw1 was indeed a person with expertise to speak on the subject. In this regard we must notice the contention taken in the written statement. In the written statement it is stated as follows: AS 849/1996 -9- 8. The damage was solely due to bad workmanship and usage of unsuitable fire clay on internal surface of the furnace. The defendants reminded the plaintiff several times that the warranty No.79 in the policy was not adhered to by the insured.” Thereafter, dealing with the 2nd policy namely boiler and pressure plant it is inter alia stated that it was obtained fraudulently. Still further we notice paragraph 13 which is as follows: “The reports obtained from the surveyors who are licenced by the Insurance Department, Ministry of Finance, Government of India revealed that the damage said to be caused to the plaintiff's machinery is not on account of the reasons covered by any of the above referred policies. So, the defendants are not liable as stated earlier under the above referred two policies.” 12. We may also notice that neither the appellant nor the respondents have produced the entire contracts of insurance containing various warranties and conditions. Even though the learned counsel for the appellant did make a request for remand at this stage we would not think that the contract of insurance of more than two decades ago would still be available. We are not in a position to find out whether it is an excepted clause. In the absence of the actual policy of insurance containing the risk which are actually covered and AS 849/1996 -10- the conditions in which the insurance company is exempted from making the payment it may not be possible for this Court to unsettle the decision of the court below on the basis of the finding that the cause of the damage was 'bad workmanship'. Therefore we would think that the appeal must fail only for the reason that the court is not in a position to find positively about the nature of the risk which is undertaken by the respondents and whether the cause of the damage was one which provided a ground for the insurance company to avoid liability. In the absence of evidence in this regard we would think that the appellant must fail. In such circumstances we confirm the judgment of the trial court and dismiss the appeal. No order as to costs. (K.M.JOSEPH) JUDGE. (M.L.JOSEPH FRANCIS) JUDGE. MS