1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION SUIT NO. 837 OF 1983 Smt. Tripta Revati Nanda, Indian Inhabitant of Jullunder, residing at 302, Lajpat Nagar, Jullunder City, State of Punjab. ... Plaintiff. V/s. The Oriental Fire & General Insurance Company Limited, a Company duly incorporated under Indian Companies Act, having its registered office at Oriental House, A/25-27, Asaf Ali Road, New Delhi-110 002 and having one of its branch office at City Divisional Office No.5, State Bank Building Annexe, Bank Street, Bombay – 400 023. ... Defendants. Mr. V.P. Vaze i/b. Mahendra Patel & Assoc. for the Plaintiff. None for the Defendants. CORAM : S.C. DHARMADHIKARI, J. RESERVED ON : 9th OCTOBER 2009. PRONOUNCED ON : 26th FEBRUARY 2010. ORAL JUDGMENT :- The Plaintiff has filed this Suit for recovery of a sum of Rs.2,63,118.00 from the Defendants. 2. The case of the Plaintiff in brief is that the Plaintiff is the widow of one Revati Raman Nanda, who died on or about 5th 2 June, 1981 at Jullunder (hereinafter referred to as the “said deceased”). The said deceased died leaving a Will and the Plaintiff is the sole executrix of the said Will. The Plaintiff is therefore entitled to recover the out standings and assets of the said deceased. 3. The said deceased during his life time, amongst other things, was carrying on business of Export and Import. The Defendant is a Nationalised Company and is duly incorporated under Indian Companies Act and amongst other things, carries on business of General Insurance at several places including Bombay. 4. The said deceased in or about September, 1978 placed an order for the Import of 4958 Sets of Glyco Main and Connecting Rod Bearings being the spare parts for earth moving machinery (hereinafter referred to as the “said goods”), from one M/s. Glyco Metal Works of Wiesbraden-13, West Germany, of the value of 2,37,984.00 Deutch Marks. For the purposes of aforesaid import, the said deceased on or about 27th September 1978 established an irrevocable Letter of Credit through New Bank of India Limited, Railway Road, Jullunder. 5. The Plaintiff says that the said deceased prior to April, 1979 received part of the said goods ordered by him of the aggregate value of 1,56,384.00 Deutch Marks in two separate consignments. 3 6. The Plaintiff says that the third and final Consignment of the said goods of the value of 81,800.00 Deutch Marks was dispatched by the said German Company from Hamburg to Jullunder by S.S. TRAUGUTT (hereafter referred to as the ‘said Vessel’) to the said deceased. The said Vessel commenced its journey from Hamburg on 25.4.1979 with the said Consignment on Board. 7. The Plaintiff says that the said deceased on 30.5.1979 insured the said Consignment on Board of the said Vessel with the Defendants for Rs.3,74,190/- under Cargo Policy bearing No.1150/325/04076/20/791910 issued by Bombay City Divisional Office No.5 of the Defendants (Hereafter referred to as ‘the said First Policy’). The Plaintiff craves leave to refer to and rely upon the said first policy when purchased. 8. The Plaintiff says that the said deceased on 31.5.1979 took another Insurance Policy bearing No. 1150/325/04076/20/7901921 for Rs.1,78,950/- being the profit from the said third Consignment dispatched by said German Company by the said Vessel (the said Policy is hereafter referred to as ‘the Profit Policy’). 9. Reliance is placed thereafter on the profits Insurance Clause which is part of the Profit Policy. In paragraphs 9 and 10 of the plaint this is what is stated :- 4 “9. The Plaintiff says that the said deceased was informed by M/s. Khemka & Co., (Agencies) Private Limited (hereafter referred to as the ‘Said Agents’) who are agents of the Shipping company which owned the said Vessel, by their letter of 19.7.1979 that the said Vessel caught fire on 18.6.1979 at about 0300 hours while laying in Karachi Roads; that to assist the fire fighting operations the Port of Karachi authorities tried to bring the said Vessel inside the Port but during towage the said Vessel went around of Manora Island; that the fire could not be extinguished entirely and the crew of the said Vessel was compelled to leave the said Vessel, that on 22.6.1979 the said vessel was seen from the town as being totally in flames; that due to monsoon no one could get on Board the said Vessel and examination of said Vessel and the Cargo would not be possible till September, 1979; that the said Vessel was a total loss but so far as Cargo was concerned it was possible that there might be something to be salvaged and that the efforts were being made to get on Board and Survey the Cargoes but till then there was no access to the said Vessel. It was therefore not possible for the Shipping Company to issue notice of total loss without further examination by the surveyors. The said deceased after the receipt of said letter made enquiries with the said Agents but no information about the said 5 goods valued at 81,600.00 Deutch Marks of the said deceased was given by the said Agents. The said deceased therefore by his letter of 20.8.1979 addressed to said Agents requested the said Agents to inform the said deceased about the fate of his Cargo to enable the said deceased to take necessary steps. By the said letter the said deceased also informed the said Agents about the appointment of one Mr. Rajinder Singh Kohli as the Constituted Attorney of the said deceased in connection with the said Consignment. The Plaintiff will refer to and rely upon the correspondence referred to in this paragraph when produced. 10. The Plaintiff says that the Constituted Attorney of the said deceased by his letter of 10.9.1979 addressed to the said Agents lodged a claim of Rs. 3,62,666,66 for the total loss of the said Cargo covered by the said policies and sent copies of the Bill of Lading and Shippers Invoice with the said letter. The said Agents by their letter of 14.9.1979 repudiated the claim lodged by the said deceased on the ground that the said voyage had been ‘FRUSTRATED’ and hence Shipping Company was not responsible for the delivery of the said Cargo. The Plaintiff will crave leave to refer to and rely upon the correspondence set out in this paragraph, when produced.” 6 10. Therefore, the deceased lodged the claim with the Defendant under the two Policies on 11st September 1979. He sent the necessary documents on 12th October 1979 so as to enable the Defendants to settle the claim. The Defendants by their letter dated 23rd November 1979 acknowledged the receipt of this letter and documents and registered the claim. 11. There is a letter dated 21st January 1980 addressed to the Plaintiffs by the Defendants, wherein they state that only after receipt of a letter from the deceased that he does not desire to re-import the goods and which is confirmed by the Controller of Imports that the claim would be considered. The deceased clarified by his letter dated 7th March 1980 that there is no need to obtain such a certificate or letter from the Controller of Imports because the goods in question were included in the list of Open General License items (O.G.L. for short). 12. In paragraphs 14 and 15 of the plaint, the Plaintiff states thus :- “14. The Plaintiff says that after exchange of certain correspondence between the said deceased and the Defendants, the defendants by their letter of 8.5.1980 informed the said deceased that the Defendants had settled the claim of the said deceased for Rs.3,74,190.00 in respect of the said First Policy and sent loss voucher for the same to the said deceased and asked the said deceased to 7 return the same duly discharged. The said deceased with his letter of 12.5.1980 sent to the Defendants the duty discharged receipt and other documents and pointed out that the claim of the said deceased under said Profit Policy was not settled by the Defendants and asked the Defendants to settle the same immediately. Hereto annexed and marked as Exhibit ‘D’ is a copy of Defendants’ letter of 8.5.1980. Hereto annexed and marked as Exhibit ‘E’ is a copy of the letter of said deceased of 12.5.1980. 15. The Plaintiff says that the Defendant with their letter of 19.5.1980 addressed to the said deceased sent their cheque for Rs.3,74,190.00 being the amount due under the said First Policy to the said deceased. The said deceased duly received and realised the said cheque and now nothing is due by the Defendants to the Plaintiff under the said First Policy.” 13. The Plaintiff is now claiming under the first policy and he once again confirmed that there is no desire to re-import the materials and the goods are under O.G.L. Yet, the Defendants, by their letter dated 11th April 1981 stated that the claim of the deceased under the Profit Policy was repudiated because the deceased did not apply for replacement of import license when that was permissible. 8 14. It is this claim which is now raised by the Plaintiff on the Defendants and in paragraphs 19 and 20 of the plaint he states the reasons. These paragraphs are reproduced hereinbelow :- “19. The Plaintiff says that the repudiation of the claim of the said deceased under said Profit Policy by the Defendants is wrongful, illegal and against the law. The Defendants’ contention that the said deceased by not applying for fresh License committed breach of the conditions of said policy is wrong and not tenable in law. The Plaintiff says that under the said Profit Policy the Defendants were not entitled to insist upon the said deceased applying and/or obtaining fresh license for reimporting the said goods. The Plaintiff says that on a true and proper interpretation of the terms and conditions of the said policy it was not incumbent upon the said deceased to have applied for a Replacement Import License, even if the same was obtainable. The allegations of the Defendants that since the Replacement Import License was obtainable, no claim was payable is contrary to the terms and conditions of the said Profit Policy. The Plaintiff submits that merely because a Replacement License was available did not debar the said deceased from obtaining a claim under the said 9 Policy. The said term merely provided that if the deceased had obtained such a licence the said deceased could not make a claim under the said Policy. As however, the said deceased had opted not to apply for a replacement Licence the Defendants were bound and liable to pay the claim of the said deceased under the said Policy. 20. The Plaintiff after the death of the said deceased by Plaintiff’s Advocate’s letter of 15.12.1982 addressed to the Defendants recorded the aforesaid facts and called upon the Defendants to pay a sum of Rs.1,78,950.00 due under said Profit Policy together with interest at 18% per annum from 20.5.1980. The Defendants have duly received the said letter but have failed and neglected to comply with the requisition made therein. Hereto annexed and marked as Exhibit is the copy of the Plaintiff’s Advocate’s said letter of 15.12.1982.” 15. The Plaintiff has pointed out that the claim is not barred by limitation. It is in these circumstances that the above amount is claimed in the Suit. 16. The Written Statement of the Defendants was filed wherein they have taken a stand that they have rightly repudiated it under the Profit Policy. Paragraph 11 of the Written Statement reads as under :- 10 “11. With reference to para 19, the Defendants say that they have rightly repudiated the claim under the Profit Policy under the terms and conditions of the said policy which contains a “Profit Insurance Clause” attached to the said policy. The said clause forms part of the policy and was binding on the deceased. The Defendants will crave leave to refer to and rely upon the said policy and the “Profit Insurance Clause” when produced in Court for the true meaning and interpretation thereof. The Defendants deny that the repudiation of the claim is wrongful, illegal and against the law as alleged or otherwise. The Defendants deny that their contention about the breach of policy conditions is wrong and not tenable in law. Defendants deny that under the said Profit Policy they were not entitled to insist upon the deceased applying and/or obtaining fresh licence for reimporting the said goods. Defendants do not admit the interpretation put by the deceased on the “Profit Insurance Clause”. Defendants deny that their decision in rejecting the claim is contrary to the terms and conditions of the Profit Policy. The Defendants do not admit the interpretation sought to be put by the deceased on the “Profit Insurance Clause”. Defendants deny that their decision in rejecting the claim is contrary to the terms and conditions of the Profit Policy. The Defendants do not admit the interpretation sought to 11 be put by the Plaintiff on the “Profit Insurance Clause”.” 17. Thereafter, they have raised the plea of the claim being barred by limitation in paragraph 14 of the plaint. 18. In the light of the rival pleadings, this Court framed the following Issues :- “1. Whether the Plaintiff proves that the profit clause of the suit insurance policy subsisted and enforceable at the time of loss of cargo ? 2. Do the Defendant company prove that for want of fresh licence from the Controller of Imports the policy lapsed ? 3. Is the Suit barred by limitation ? 4. What oder ?” 19. In the light of the directions issued, the Plaintiff has filed his affidavit in lieu of examination in chief. Mr. R.S. Kohli, Constituted Attorney of the Plaintiff was present in the Court on 17th September 2009. He has produced the original Power of Attorney. He has identified the signature of the Plaintiff thereon. He tendered his affidavit in lieu of examination in chief and after all statements therein were confirmed, the said 12 affidavit has been taken on record. The documents are referred to in the affidavit and each of them as set out in the compilation is proved. The witness has stated that the contents of the same are true and correct. The documents have been marked as Exhibit P-1 to P-18 on 3rd August and 29th August 2009. This exercise was undertaken after giving complete liberty to the Defendants to object to their contents and test their veracity. They chose not to cross-examine the witness despite liberty being given to them to do so on 29th August 2009 and 17th September 2009. 20. Consequently, the entire evidence has gone un- controverted. The Defendants have not substantiated their pleas raised in the Written Statement either. Issue Nos. 2 and 3 clearly cast that burden on the Defendants which they have failed to discharge. Accordingly, written arguments have been tendered by the Plaintiff. 21. It is contended by Mr. Vaze, learned Counsel appearing on behalf of the Plaintiff that the basic facts are undisputed. He submits that the Plaintiff has produced at Exhibit A to the Plaint (page 17) the relevant extract of the Profit Insurance Clause. The first para indicates that the Claim under the Suit Policy was payable in the event of (loss) of the insured goods because of the operation of any of the perils insured under the Cargo Insurance. The event of loss of the Ship and/or Cargo by fire was one of the perils insured against under the cargo insurance. This is evident from the fact that the claim 13 under that policy was paid by the Defendant to the Deceased. The second condition stated in para two of the extract was that the Insurance would not be valid after arrival of the vessel at the destination port. This condition was also fulfilled as the vessel which caught fire at Karachi did not arrive at the destination port. The Plaintiff therefore submits that the Plaintiff has proved that the Profit Clause subsisted and was enforceable at the time of loss of cargo. 22. As far as issue of limitation is concerned, Mr. Vaze submits that the limitation for a claim under repudiated insurance policy is governed by Article 44(b) of the Limitation Act whereby the starting point of limitation is the date of repudiation. It is submitted that the Defendant referred to repudiation for the first time on 11/04/1981 (Exh.P-16). However, any specific date of repudiation is nowhere stated. Assuming that the letter dated 14/05/1980 (Exh. P-14) is the letter of repudiation, then also the Suit filed on 15/02/1983 is within 3 years from the said date. Therefore, the Suit is within the period of limitation. The Plaintiff has therefore proved that the Suit is not barred by limitation. 23. Despite the burden being cast on the Defendants as far as Issue No.2 is concerned, Mr. Vaze has pointed out that the original policy has been returned by the Plaintiff to the Defendants while submitting the claim. However, they have failed to produce the original policy. The Plaintiff has reproduced the relevant profit clause in the plaint. The said 14 clause is identical to the one referred to by the Defendants while repudiating the Plaintiff’s claim. The clause contemplates 75% of the loss suffered or 75% of the sum insured under the C.I.F. value caused by operation of any of the perils insured against in the C.I.F. Policy. Mr. Vaze submits that it is only if the Vessel arrives at the port of destination or if the replacement license was obtainable and if the claim had been paid before the license was obtained, that the amount was not payable. All aspects of O.G.L. have been emphasized and therefore, according to Mr. Vaze, the claim was covered by the subject clause. If that was not covered, then, the earlier claim/substantial part could not have been entertained and allowed. 24. Mr. Vaze submits that if the Defendants demand the confirmation from the deceased that the goods will not be re- imported and the deceased gives such a confirmation, then, rejection or repudiation of the claim on the ground that the deceased did not apply for replacement import license is illegal. 25. I have, with the assistance of Mr. Vaze, perused the plaint, written statement, affidavit in lieu of examination in chief and the documents exhibited on record. 26. Since, there has been no cross-examination and the Defendants did not lead any evidence, I do not have any benefit of their arguments. 15 27. From the un-controverted affidavit in evidence, it is proved that the deceased in or about September 1978 placed an order for the import of 4958 sets of Glyco Main and Connecting Rod Bearings being the spare parts for earth moving machinery. The original invoice is produced and the contents thereof are proved. The deceased also established an irrevocable letter of credit through New Bank of India Ltd., Railway Road, Jullunder. The original first bill of exchange is also produced which is marked as exhibit. The deceased, prior to April 1979 received part of the goods aggregating to Rs.1,56,384.00 Deutch Marks in two separate consignments. 28. The third and final consignment of the goods of the value of Rs.81,800.00 Deutch Marks was dispatched by the German Company (M/s. Glyco Metal Works of Wiesbraden-13, West Germany) from Hamburg to Jullunder by the Vessel S.S. TRAUGUTT. The Vessel commenced its journey on 25th April 1979 with the consignment on Board. This consignment was insured by the deceased on 30th May 1979 with the Defendants for Rs.3,74,190/-. The original policy is forwarded with the letter dated 12th October 1979. This letter is undisputed and therefore, was marked as an Exhibit P-5. 29. The Defendants took out another Insurance Policy for the third consignment and more particularly, being the profit from the said third consignment. That is in the sum of Rs. 1,78,950/-. Numbers of these policies with their dates are mentioned in paragraphs 6 and 7 of the affidavit in chief. The 16 clauses of the policy are set out in paragraph 8. 30. In paragraph 9 of his examination in chief, this is what is stated :- “9. I say that the said deceased was informed by M/s. Khemka & Co., (Agencies) Private Limited (hereafter referred to as the ‘said Agents’) who are agents of the Shipping Company which owned the said Vessel, by their letter of 19th July 1979 that the said Vessel caught fire on 18th June 1979 at about 0300 hours while lying in Karachi Roads; that to assist the fire fighting operations the port of Karachi authorities tried to bring the said Vessel inside the port but during towage the said Vessel went a ground of Manora Island; that the fire could not be extinguished entirely and the crew of the said Vessel was compelled to leave the said Vessel, that on 22nd June 1979 the said Vessel was seen from the town as being totally in flames, that due to monsoon no one could get on Board the said Vessel and examination of the said Vessel and the Cargo would not be possible till September 1979, that the said Vessel was a total loss but so far as Cargo was concerned it was possible that there might be something to be salvaged and that the efforts were being made to get on Board and Survey the Cargoes but till then there was no access to the 17 said Vessel. It was therefore not possible for the Shipping Company to issue notice of total loss without further examination by the Surveyors. I produce the said original letter dated 19th July, 1979. (tendered and marked Exhibit “F”). The said deceased after the receipt of the said letter made enquiries with the said Agents but no information about the said goods valued at 81.600.00 Deutch Marks of the said deceased was given by the said Agents.” 31. Therefore, the Constituted Attorney of the deceased on behalf of the deceased lodged the claim for Rs. 3,62,666.66 under the two policies and has pointed out that this claim for Rs.3,74,190.00 was settled under the First Policy which amount was received, cheque realized and nothing is due and payable thereunder. 32. As far as the claim under the First Policy is concerned, the repudiation is on the grounds mentioned and reproduced hereinabove. 33. In that behalf, in paragraph 19 of the affidavit in chief, this is what is stated :- “19. I say that the repudiation of the claim of the said deceased under said profit policy by the Defendants is wrongful, illegal and against the law. 18 The Defendants contention that the said deceased by not applying for fresh license committed breach of the conditions of said policy is wrong and not tenantable in law. I say that under said profit policy the Defendants were not entitled to insist upon the said deceased applying and/or obtaining fresh license for re-importing the said goods. I say that on a true and proper interpretation of the terms and conditions of the said policy it was not incumbent upon the said deceased to have applied for a Replacement Import License, even if the same was obtainable. I say that the allegations of the Defendants that since the Replacement Import License was obtainable, no claim was payable is contrary to the terms and conditions of the said profit policy. I submit that merely because a replacement license was available did not debar the said deceased from obtaining a claim under the said Policy. The said term merely provided that if the deceased had obtained such a Replacement License the said deceased could not make a claim under said policy. As however, the said deceased had opted not to apply for a replacement license the Defendants were bound and liable to pay the claim of the said deceased under the said Policy. I have