-1- IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION APPEAL NO. 103 OF 2008 IN SUIT NO. 1723 OF 1978 M/s. Century Textiles & Industries Ltd., ) a public limited Company registered under the ) Indian Companies Act, 1913 having their registered ) office at Century Bhuvan, Dr. Annie Besant Road, ) Bombay-400 030 )...Appellant (Orig.Plaintiff) v/s. 1. Oriental Fire & General Insurance Co. Ltd. ) a limited company registered under the Indian ) Companies Act, and having its registered office at ) Oriental House, A-25/27, Asaf Ali Road, ) New Delhi-110 002. ) 2. New India Assurance Co. Ltd., ) a limited company registered under the Indian ) Companies Act, 1913, having its registered office at ) New India Assurance Building, 87 Mahatma Gandhi ) Road, Fort, Bombay-400 023. ) 3. National Insurance Co. Ltd., a Limited Company, ) registered under the Companies Act and having its ) Registered office at 3 Middleton Street, ) Calcutta-700 071 ) 4. United India Fire & General Insurance Co. Ltd., ) a Limited Company, registered under the Companies ) Act and having its Registered office at SIAC Building ) 24, Whites Road, Madras-600 014 )..Respondents Mr. Rahul Narichania, with Mr. Prakash Shah and Hardik Sanghavi, instructed by M/s. PDS Legal, for the appellant. -2- Mr. E.P. Bharucha, Senior Advocate, with Mr. Cyrus Bharucha, Mr. Mohan Salian, Mr. Mayur Shetty & Ms. Vaijayanta Shete, instructed by M/s. Gagrats, for the respondents. CORAM: P.B. MAJMUDAR & ANOOP V. MOHTA, JJ. DATE: AUGUST 30, 2010. ORAL JUDGMENT: (Per P.B. Majmudar, J.) This appeal is directed against the judgment and order passed by the learned single Judge dated 4th May, 2007 in Suit No. 1723 of 1978. By the impugned judgment, the learned single Judge dismissed the suit of the appellant. 2. The appellant is the original plaintiff of Suit No. 1723 of 1978. It is the case of the plaintiff that the plaintiff is a Public Limited Company registered under the Companies Act, 1913 and it owns and runs three divisions known as Century Rayon Division, Century Rayon Tyrecord Division and Century Chemicals. All the aforesaid three divisions are situate at Murbad Road, Kalyan. The Defendants are Companies which carry on general insurance business. Between the period 1st January, 1977 and 1st January, 1978, the plaintiff obtained seven insurance policies from the defendants. The first six policies are described collectively as policies of fire insurance. Subsequently, by way of extension clause, these policies have also been extended to cover risk of loss and damage caused by riot and strike, malicious damage and explosion. -3- The seventh policy is a policy to cover consequential loss. 3. It is the case of plaintiff that prior to 4th April, 1977, labour unrest took place within and outside the factory premises of the appellant company. On 4th April, 1977, an agitation took place by the workmen within the premises of the factory at Kalyan. The agitating workers damaged the car of the President of the Company. The plaintiff apprehending widespread riot and damage declared a lock-out. A notice of lock-out was also published. It is the case of the plaintiff that in spite of the lock out notice, the workmen remained within the factory premises till 2.00 a.m. on 5th April, 1977. The workers stopped work in protest against the lock out. The lock out was subsequently lifted on the intervention of the Minister for Labour, State of Maharashtra. It is the case of the plaintiff that the workmen of the second shift had been directed that before leaving the plant they should break the threads and lift the spinning machines to facilitate the bleeding of viscose, in order to avoid the viscose getting jammed in the pipelines/tanks. The workers did not do so which caused the viscos in the tanks, pipelines, machinery and accessories to coagulate and solidify. In the Chemical Division, the agitation of the workmen is alleged to have resulted in (i) corrosion due to leakage of chlorine, (ii) leakage of mercury in the cell house, (iii) leakage of freon gas in the refrigeration system and (iv) decomposition of soda bleach in the hypo plant. The plaintiff thereafter lodged their claim with the insurance company in connection with the loss which it had -4- sustained. The surveyor of the Company viz. Mehta & Padamsey undertook the survey work and submitted its survey report on 30th March, 1978 quantifying the losses suffered by the plaintiff at Rs. 2,20,40,126/-. 4. According to the plaintiff, since the defendants had failed to discharge its obligation under the policy that ultimately the aforesaid suit was filed to recover the said amount. The suit of the plaintiff was resisted by the defendant. It is the case of the defendant that the loss in question falls within the excepted peril and the same is not covered by the seven policies of insurance. It is the case of the defendant that the plaintiff sustained loss due to stoppage or cessation of work which is expressly excluded from the purview of the seven insurance policies. The learned single Judge raised various issues arising out of the pleadings and after recording the oral evidence led by the parties and after considering the insurance policies and other documents on record, came to the conclusion that the plaintiff has failed to prove its case. It was found that the loss suffered by the plaintiff is not covered by the insurance policies and ultimately the learned single Judge by the aforesaid judgment dismissed the suit against which the plaintiff has filed this present appeal. 5. The learned counsel for the appellant, in order to substantiate his say about the damage regarding the machineries of the plaintiff, has relied upon the evidence of one Suresh Manjnath Bandekar, Vice-President of Rayon Plant -5- of the Company. The said witness has tendered affidavit of evidence in lieu of examination-in-chief. In his affidavit he has averred in paragraph 15 that the plaintiffs were having labour trouble in the aforesaid plant prior to 4th April, 1977 and the workmen of the plaintiffs had resorted to violence both within and outside the factory premises. As per the affidavit of the said witness, the workmen resorted to rowdyism and resorted to an act of lawlessness and disorder, intimidation of their co-workers, etc. It is also averred in the affidavit of the said witness that he was personally present and witnessed the incident. As per the said affidavit, the rioting workmen caused damage to the plaintiff’s property and damaged the car of the President of the Company viz. S.P. Mandelia. Regarding violence and rowdyism of the workmen, he has narrated the details in his affidavit. He has also narrated the incident about damage to the mirror glass which, according to him, was damaged and smashed by the workmen. In the cross-examination of the said witness, the witness has admitted that at the time when he entered the factory, tyre cord plant of the plaintiff’s factory was functioning and at the time of incident he was in Tyre cord textile office. In the cross-examination, witness has admitted that the incident took place on the main road which is about 100 feet away from the Tyre Cord building and he could see the incident. The said witness has given the names of the agitating workmen. The said witness has also stated in the cross-examination that there was damage to the main door glass which was broken and telephone operator’s desk was also damaged. The said witness has -6- stated about the damage to the administrative building. Regarding question asked to him about the particulars of the incident, the said witness has stated that there were incidents of violence but he did not recollect the exact nature of the incidents. The said witness has also stated in his cross-examination that it is correct to say that damage to the machines was caused by the workmen not carrying out the instructions of breaking the thread and lifting the machines. 6. The plaintiff has also tendered affidavit of witness Prahladrai Mohanlal Singrodia, who was serving as an Office, in-charge of Costing, insurance and Finance Department of the Company at the relevant time. In his affidavit he has averred that under the riot and strike endorsement in the first six insurance policies it was expressly provided that the insurance under the said policies would extend to cover riot and strike damage which for the purpose of said endorsement was specific to mean loss or damage to the property insured directly caused by an act of any person taking part together with others in any disturbance of the public peace. The said witness in his cross-examination has stated that he saw the incident from the window of his office. He has admitted that he did not personally any workmen breaking any machinery. He, however, stated in the cross-examination that he has seen accessories of spinning machines broken at some places. 7. On behalf of the defendants, affidavit of the Surveyor, one -7- Mr.Virendra Shah was tendered in evidence. In the said affidavit, he has clearly stated that the workers smashed the glasses of the main door of the administrative building. Regarding damage to the machinery he has stated as under in paragraph 8 of his affidavit. “ I say that damage had been caused to the machinery and accessories of the Plaintiffs’ Rayon and Tyre Cord Divisions. The damage was caused by the coagulation/solidification of viscose in the tanks and pipelines and machines and accessories of the Plaintiffs’ Rayon and Tyre Cord Divisions in all process departments upto yarn spinning. Less damage was caused in the departments of spinning, after treatment and packing.” In paragraph 10 regarding loss to machinery he has averred as under: “ The loss to machinery in the Rayon and Tyrecord Divisions was confined to accessories of the spinning machines, pipelines, tanks and other equipments of the viscose section. The same were choked or jammed with viscose, which coagulated when the work/processes were stopped/interrupted. Further damage was caused in the course of dismantling and/or cleaning of the same. No damage to machinery as a result of direct malicious act of the workmen was seen. There were minor damages in the other departments due to stoppage of work.” 8. Considering the aforesaid evidence, we are of the view that there is no direct evidence led by the plaintiff by which it can be said that the loss to the machinery can be said to be attributed to any violent act on the part of the -8- workmen. It is no doubt true that there is some damage to the glasses on the main door of the administrative building. The learned Judge has considered the oral evidence in its proper perspective so far as the aforesaid aspect is concerned. However, it is vehemently argued by the learned counsel for the appellant that since the appellant has obtained insurance policies in connection with riot and strike and when appellant has paid premium in this behalf and which endorsement is subsequently added in the fire policy, the risk can be said to have been covered as it is not necessary that such damage to the machinery should directly be attributed to the violent or overt act on the part of the workmen. It is submitted by the learned counsel for the appellant that in every strike, there is always a cessation of work but since the machinery was not properly looked after by the workmen and since it was left in running position without taking appropriate care, the damage caused to the machinery can be said to be an act directly attributed to the act of the workmen who did not attend the machineries and because of the same it was subjected to such damage. It is submitted that such passive act of the workmen is also sufficient to hold that because of something which has been done by the workmen in furtherance of the strike that such damage has been caused to the machinery of the Company. 9. So far as this aspect is concerned, we have dealt with in greater detail in cognate appeal being Appeal No. 102 of 2008. We have already held -9- that the special conditions attached with the policy is to be interpreted in its proper perspective. We have also held that unless there is an overt act and actual violence which has a direct nexus in connection with the damage to the machinery, the insurance company is not liable to indemnify the loss. It cannot be said that the workmen had resorted to any violent act or overt act in furtherance of the strike and if the machinery has been damaged only because of the same not having been attended to by the workmen, as per the special conditions attached to the policy, the insurance company is not required to indemnify such loss. 10. In view of the above, we do not find any substance in this appeal. However, so far as the damage sustained by the company regarding broken glass of the building is concerned, Mr. Bharucha, learned counsel appearing for the respondents, after taking instructions from his clients, states that though the quantum of the said loss may come to Rs. 742/- and in view of the lapse of considerable time, without prejudice to his clients right sand contentions, the respondents are ready and willing to pay Rs. 50,000/- towards the cost of the same which, of course, according to him, is the minor loss sustained by the company at the relevant time. The statement is Mr. Bharucha is recorded. If the Company exercises its option within six months by showing its inclination by accepting the offer of the respondent Company, the Company may act accordingly, provided the said option is exercised by the Company within a -10- period of six months from today. 11. Subject to what is stated above, the appeal is dismissed. P. B. MAJMUDAR, J. ANOOP V. MOHTA, J. -11-