This judgment dismisses a suit for insurance claim recovery. The court held that plaintiffs failed to prove the goods destroyed (finished razor blades) were hypothecated goods covered by the policy or establish the loss quantum due to lack of stock registers.
Claim dismissed; no order as to costs.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
1
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
LONG CAUSE SUIT NO.775 OF 1976
M/s.T.T.Blades and Anr. ..Plaintiffs
Vs.
The United India Fire & General
Insurance Co.Ltd. ..Defendants
Mr.Simil Purohit i/b Little and Co. for the
plaintiffs
Mr.Sanjiv Singh i/b Narichania and Narichania for
the defendants
CORAM : S.U.KAMDAR, J
DATED :10TH APRIL, 2006
ORAL JUDGMENT:
1. The present suit is filed for the recovery
of sum of Rs.4,44,155/- with further interest @ 9%
p.a. on the principal amount of Rs.3,50,000/- from
the date of the suit till the date of decree and @
6% p.a. from the date of the decree till payment
and/or realisation. Some of the material facts of
the present case are briefly enumerated as under:
2. The plaintiff no.1 are a partnership firm
2
and are interalia carrying on business of
manufacturing and selling safety razor blades,
having their factory and place of business at
T.T.Blade Building, 9A Saki Naka, Andheri,
Bombay-72. The plaintiff no.2 are a Banking
Company incorporated under the Indian Companies Act
and having their registered office at Mangalore and
branch office interalia at Mahim. The defendants
are an Insurance Company carrying on business of
General Insurance prior to its nationalisation. On
nationalisation of the General Insurance business
under the provisions of the General Insurance
(Acquisition and Transfer of Undertakings) Act,
1972, the defendant company has been merged with
the General Insurance Corporation w.e.f.1.1.73.
The said General Insurance Corporation was taken
over by the defendant company namely The United
Fire and General Insurance Co. Ltd. Thus, the
defendants are the successors in title of a company
known as Madras Motor and General Insurance Company
Limited as
3. The plaintiff no.1 for the purpose of its
business made an application to the plaintiff no.2
3
for giving various credit facilities. Amongst the
other credit facilities, the plaintiff no.1 also
sought a demand cash credit facility on the basis
of hypothecation of various movable properties. On
7.6.71, an agreement was executed by and between
the plaintiff no.1 and plaintiff no.2 hypothecating
various goods belonging to the plaintiff no.1 with
plaintiff no.2. It is the case of the plaintiffs
that the hypothecation of goods was blades in
process as well as finished blades lying at the
factory premises of the plaintiff no.1. It is the
case of the plaintiff no.1 that the said
hypothecation agreement was renewed on 10.7.72.
However, the description of the goods remained the
same. In view of the fact that the goods were
hypothecated by the plaintiff no.1 with plaintiff
no.2, plaintiff no.1 obtained an Insurance Policy
from the defendants on account of plaintiff no.2
who as a creditor to whom goods were hypothecated
had an insurable interest in the said hypothecated
goods. The defendants were requested by the
plaintiff no.2 to issue an insurance policy in
respect of goods and stocks hypothecated by the
plaintiff no.1 with plaintiff no.2. It is the case
4
of plaintiffs that the said policy was valid for
the period 9.6.72 to 9.6.73. The total claim under
the policy was for Rs.3,50,000/-. Thus, the
defendants undertook to indemnify the plaintiffs
against any loss which may be caused to the
plaintiffs in respect of the insured goods. The
said insurance policy was a fair insurance policy.
It is the case of the plaintiffs that accordingly
as per the request of the plaintiff no.2, the
defendants issued a fair insurance policy
dt.14.6.72 being policy no.F.195740. The said
policy described the said goods as under:
"On stock of raw materials, such as steel
strips, tools, spared, die punches and such
other materials pertaining to the Insured’s
trade belonging to them and under
hypothecation to the Bank whilst stored
and/or lying in the ground floor of the
premises of I Class construction situate at
Survey No.14, Hissa No.5, Plot no.9A,
Village Mohilla, Sakinaka, Vihar Road,
Sakinaka, Bombay-72."
4. It is the case of the plaintiffs that under
the policy all the goods of the plaintiff no.1
which were lying in the said premises have been
insured. The plaintiffs were manufacturers of
5
safety razor blades.
5. Sometime in or about 24.5.73 in the morning
at about 4 a.m. a fire took place in plaintiff
no.1’s factory due to the cable fault. The fire
gutted the ground floor of the factory premises and
consequently, the blades which were kept for drying
after being dipped in the chemicals caught fire.
The fire was noticed by the plaintiff no.1’s
watchman who called for the help and ultimately
fire was brought under control with the help of
employees of plaintiff no.1. It is the case of the
plaintiffs that the blades which were lying in the
factory were badly damaged due to the fire and
consequently, the plaintiff no.1 suffered a loss of
blades worth Rs.3,86,654.36. Immediately,
thereafter the defendant company was contacted and
were informed about the said fire. It is the case
of the plaintiffs that at about 11.15 a.m. on the
very same day, one Mr.Patel accompanied by one
Mr.Narsimham from the defendant company visited the
premises. It is further the case of the plaintiffs
that the Surveyors M/s.Mehta & Padamsey P.Ltd also
visited the plaintiffs factory premises at 5.p.m.
6
on the very same day and carried out survey. The
plaintiffs have stated in the plaint that because
of the request of the technician of Electric Supply
Company i.e. Bombay Suburban Electric Supply, the
plaintiffs were required to remove the damaged
blades from the place where they were lying so that
the electricity repair work can be carried out by
the said technician. Accordingly, the plaintiffs
removed the said blades which were lying near the
cable area. Thereafter the electricity supply
company started the repairs of the said damaged
cables. On 24.5.73 the plaintiff no.1 informed the
Inspector of Police, Kurla Police Station, Bombay
72 about the said fire. On 24.5.73 the plaintiff
no.1 also informed the Asst.Collector of Central
Excise Division No.10, Bombay regarding the said
fire in the factory and informed him that the
factory would remain closed till new cable was
installed. The plaintiff no.1 by letter dt.26.5.73
informed the Asst.Collector of Central Excise
Division No.10 about the damages quantity of goods
i.e. blades which were lying nearby the place of
fire. It is the case of the plaintiffs that the
Superintendent of Central Excise visited the
7
plaintiff no.1’s factory premises on 26.5.73 and
verified the damaged blades and made a panchnama on
30.5.73 and recorded the statements of plaintiff
no.1’s employees. On 1.6.73, the Superintendent of
Central Excise informed the plaintiff no.1 that the
quantity of blades damaged and/or rendered
unserviceable in the fire accident should not be
removed from the factory premises without the
permission of his office. On 27.5.73, the
plaintiff no.1 addressed a letter to M/s.Mehta and
Padamsey P.Ltd and forwarded all necessary
documents to them. By letter dt.30.5.73, the said
surveyors asked for certain explanation from the
plaintiff no.1 and also called for various
documents for verification. On 6.6.73 the
plaintiff no.1 furnished all the necessary
particulars required by the surveyors. On 23.6.73,
the plaintiffs wrote a letter to the surveyors and
requested the surveyors that they should get the
claim of the plaintiff processed and pass for the
insurance also in respect of the said fire. It is
the case of the plaintiffs that after the surveyor
carried out survey and survey report was prepared,
there was a considerable correspondence between the
8
surveyor and the plaintiffs about the nature of
goods which has been caught fire. It has also been
the case of the surveyor in correspondence that the
plaintiffs had mixed up the goods so as to make
them unable to identify which are the goods which
are the subject matter of insurance policy and
which are not.
6. However, it is the case of the plaintiffs
that since the defendants were not processing the
claim and paying the said amount, the plaintiffs by
attorney letter dt.11.5.76 called upon the
defendants to make payment by deciding the claim of
Insurance Policy in respect of damaged goods which
were covered by the said policy. Inspite of the
correspondence, when no payment was forthcoming,
the plaintiffs filed the present suit for the
recovery of the aforesaid amount under the
insurance policy.
7. The defendants have tendered the written
statement and in the written statement various
defences are raised which are technical as well as
on merits. It has been contended that condition
9
no.19 of Fire Insurance Policy interalia requires
that the claim should be lodged within the period
of expiry of 12 months from the date of happening
of loss. No such claim has been lodged within 12
months and therefore, the claim is barred and
cannot be processed. It has been contended that
under condition no. 13, the suit must be filed
within 3 months of the rejection of the claim and
since suit is not filed within prescribed period of
3 months suit is not maintainable. Similar
contention raised is in respect of condition no.12
and it has been alleged that there has been no
compliance of condition no.12 and therefore suit is
liable to be dismissed. It has been contended in
the written statement that the plaintiffs have
failed to comply with the instruction of surveyor,
M/s.Mehta and Padamsey P.Ltd. that not to remove
the gods which are damaged in fire and inspite of
the same, goods are removed making it impossible
for the surveyor to identify whether the alleged
gods destroyed in the fire were infact covered by
the insurance policy or not. It has been submitted
that in view of non compliance and hindrances by
the plaintiff no.1, the surveyor is not able to
10
discharge his duty and therefore the plaintiffs are
not liable to make payment of any of the insurance
amount. Without prejudice to the aforesaid
submission, it has been submitted in the written
statement that the goods damaged were not covered
by the said policy. It has been submitted that
what was covered by the said policy. It is
submitted that only raw material and the process
product was the subject matter of hypothecation
with plaintiff no.2. It has been contended that
the goods in process or finished product of blades
were not hypothecated goods and therefore not
covered by the insurance policy. In so far as the
claim for damages is concerned, the defendants have
also denied the quantum of amount claimed and has
put the plaintiffs to strict proof thereof. In the
aforesaid circumstances, the defendants have
submitted in his written statement that the suit is
liable to be dismissed.
8. On the basis of aforesaid pleadings, this
court has framed the following issues:
11
1. Whether the 1st plaintiffs are a
registered firm under the Indian
Partnership Act?
2. Whether the plaint discloses no
cause of action in view of condition no.19
of the insurance policy, as contended in
paragraph 1 of the written statement?
3. Whether the plaint discloses no
cause of action in view of condition no.13
of the insurance policy, as contended in
paragraphs 2 and 13 of the written
statement?
4. Whether the suit is misconceived in
view of the fact that the risk of goods
which were allegedly damaged in the fire
was not covered under the insurance policy,
as contended in paragraphs 3 and 8 of the
written statement?
5. Whether the suit is misconceived
due to non-compliance by the plaintiffs
with condition no.12 of the insurance
policy, as contended in paragraphs 4 and 12
of the written statement?
6. Whether the suit is misconceived
for want of compliance by the plaintiffs
with condition no.11 of the insurance
policy, as contended in paragraphs 5 and 12
of the written statement?
7. Whether the plaintiffs prove that
the goods hypothecated with plaintiff no.2
included blades in process (including the
process of drying), as well as finished
blades (whether packed or unpacked), lying
at the factory of plaintiff no.2, as
contended in paragraph 8 of the written
statement?
8. Whether the plaintiffs obtained the
insurance policy from the defendants
pursuant to the provisions of any agreement
of hypothecation between the 1st and 2nd
12
plaintiffs?
9. Whether the officers of the
defendants inspected either the documents
or the factory of the 1st plaintiff before
issuing the insurance policy, or that the
insurance policy was issued after the
defendants were satisfied about the alleged
documents or the goods/stocks lying at the
1st plaintiffs’ factory?
10. Whether the plaintiffs prove that
any blades which were allegedly lying near
the cable in the room that was involved in
the fire, got damaged in the fire?
11. Whether blades worth
Rs.3,86,654.36, or worth anything at all,
were damaged in the said fire?
12. Whether the plaintiff no.1
deliberately prevented the surveyors M/s.
Mehta & Padamsey P.Ltd. from checking and
verifying the quantities of different kinds
of blades alleged to have been damaged, and
from checking and testing them to ascertain
the extent of damage, if any, and whether
the plaintiffs thereby contravened
condition no.12 of the insurance policy,
and all the benefits under the insurance
policy were forfeited, as contended in
paragraph 4 of the written statement?
13. Whether the plaintiffs prove that
the defendants waived the stipulations of
condition no.19, or of any other condition,
of the insurance policy, or that the
defendants led the plaintiffs to believe to
their detriment that the plaintiffs’ claim
was maintainable, or that it was not barred
by any of the provisions of the said
policy, or that it was not obligatory on
the part of the plaintiffs to comply with
any condition precedent, or that the
defendants led the plaintiffs to believe
that the defendants would not rely upon any
clause or condition of the policy in
13
rejecting the plaintiffs’ claim on such
ground or stipulation?
14. Whether the defendants are stopped
and/or precluded from relying upon the
terms and conditions of the said policy, as
contended in paragraph 10 of the plaint?
15. Whether the plaintiffs prove that
the loss to electrical installations in the
1st plaintiffs’ factory was covered by the
said insurance policy, as contended bin
paragraph 11 of the plaint?
16. Whether the defendants are liable
to pay Rs.4,45,155/- or any other sum, or
interest, to the plaintiffs?
17. In the event of this Hon’ble Court
deciding issues 1 to 9 and 12 to 14 against
the defendants, whether for the purpose of
issue no.10, 11, 15 and 16 the dispute
would have to be referred to arbitration in
view of condition no.18 of the insurance
policy, having regard to the judgment of
the supreme court in Vulcan Insurance
vs.Maharaj Singh, A (1976) 287, vide
paragraphs 11 and 12 of the said judgment?
9. After the issues are framed, the parties
have laid both oral as well as documentary
evidence. In so far as plaintiffs are concerned,
plaintiffs have laid the evidence of one Mr.Hari
G.Nagpal and has tendered the various documents
being Ex.P1 to P86. Similarly the defendants have
laid the evidence of one Mr.P.B.Jariwala, Director
of M/s.Mehta and Padamsey P.Ltd. and have tendered
14
the various documents in the form of survey report
dt.29.5.75 and the correspondence entered into by
the said Surveyor with the plaintiffs herein.
10. The learned counsel for the plaintiffs has
submitted that the insurance policy which was
obtained by the plaintiffs covered the loss
suffered by the plaintiffs due to fire. It is
submitted that it is because the said was Fire
Insurance Policy. The learned counsel for the
plaintiffs has further submitted that the goods
which were damaged in fire were in fact the goods
covered under insurance policy and were duly
hypothecated with the plaintiff no.2. It has been
submitted that on a plain reading of the terms and
conditions of the insurance policy, there is no
doubt that goods which were destroyed in fire were
a subject matter of insurance policy and thus, the
plaintiffs are entitled to claim for loss suffered
by them under the insurance policy. The learned
counsel for the plaintiffs has submitted that
though originally the claim was made for the
purpose of destruction of the cable and electricity
installation however, the said claim has been given
15
up by them and the claim has been restricted only
in respect of razor blades and other material which
was insured by the plaintiffs under the said
insurance policy. It has been submitted that
though plaintiff no.2 has taken out policy but
plaintiff no.1 has paid for the premium and thus,
plaintiff no.1 and 2 both are entitled to maintain
the present suit for the recovery of amount in
respect of the said policy.
11. The learned counsel for the defendants has
on the other hand contended that the suit is not
maintainable in view of condition no.19 and 13 of
the the terms and conditions of the said policy.
On merits, he has submitted that the suit claim
cannot be entertained because the plaintiffs have
miserably failed to establish that the goods
destroyed and damaged in fire were the very same
goods which were covered by the Insurance Policy.
It has been submitted that what was covered under
the Insurance Policy were the goods which were
hypothecated and the hypothecated goods were in the
form of raw material or material in process or semi
finished product but did not include the finished
16
goods duly processed and thus, the said goods are
not covered by the insurance policy. It has been
submitted by the learned counsel for the defendants
that the plaintiffs are entitled to claim only if
they can establish that the finished product of
blades were covered by virtue of hypothecation
agreement with plaintiff no.2 and therefore the
said goods are covered under the policy also. The
learned counsel for the defendants has thereafter
contended that the plaintiffs has not cooperated
with the Surveyor namely, M/s.Mehta and Padamsey
and in view of non-cooperation on the part of the
plaintiffs, Surveyor could not carry out proper
survey as mentioned by him in survey report and
thus, the plaintiffs are not entitled to maintain
the claim under the insurance policy on the ground
of loss suffered by them in fire. It has been
submitted by the learned counsel for the defendants
that in fact it is on evidence that the plaintiffs
have mixed up the goods contrary to the direction
and instruction of surveyor making it impossible
for him to identify the goods which are covered by
the Insurance Policy and the goods which are not
covered by the Insurance Policy. It has been thus,
17
submitted that if the plaintiffs have not been able
to establish that the goods destroyed or damaged in
fire were insured goods and they form part of
hypothecation agreement then only the plaintiffs
are entitled to maintain the suit for the recovery
of said amount. It has been further submitted by
the learned counsel for the defendants that
obviously the finished product cannot be part of
the hypothecation agreement because the plaintiffs
are entitled to sell the said finished product. If
it is a part of hypothecated goods with plaintiff
no. 2 then plaintiff no.1 cannot sell the said
product without the permission of plaintiff no.2
and therefore, also the said finished product could
not form a part of hypothecation agreement. The
learned counsel for the defendants has thereafter
submitted that in any event, the defendants have
not been able to establish the quantum of damages
due to goods lost or destroyed in fire. It has
been submitted that no documents in the form of
stock register which would show the stock available
with plaintiff no.1 as on the date of fire has been
produced. The learned counsel for the defendants
has submitted that mere correspondence with Excise
18
Authorities cannot establish the fact that the
goods destroyed were the quantity mentioned in the
said correspondence. The learned counsel for the
defendants has submitted that the plaintiffs have
miserably failed to establish the quantum of loss
suffered by him by virtue of destruction of goods
in fire and therefore the plaintiffs are not
entitled to any claim under the said Insurance
Policy. In rejoinder to the aforesaid submission,
the learned counsel for the plaintiffs has
submitted that infact the defendants have failed to
establish the Survey Report because the person who
was the author of the survey report has not been
examined. The Surveyor who is examined has only
deposed on the basis of record and not on his
personal knowledge. Thus, no evidence of surveyor
which is only based on the record can be accepted.
12. The plaintiffs have submitted that the
argument of the learned counsel for the defendants
that goods cannot be identified has to be rejected.
It has been submitted that even in respect of
finished product, the claim is covered because that
also forms part of hypothecation agreement and
19
therefore, consequently forms part of insurance
policy and thus they are entitled to recover the
same amount.
13. On the basis of aforesaid rival
contentions, I am required to determine the issues
which are framed and thus, I consider the case case
issue by issue as under:
14. In so far as issue no.1 is concerned, there
is no dispute that the plaintiff no.1 is a
registered firm and thus, I answer the issue no. 1
in affirmative.
15. Issue no.2 and issue no.13 are based on
condition no.19 of the policy. The said condition
no.19 of the policy reads as under:
"In no case whatever shall the Company be
liable for any loss or damage after the
expiration of twelve months from the
happening of the loss or damage unless the
claim is the subject of pending action or
arbitration."
16. Condition no.19 interalia prescribes that
20
incase of any loss or damage if the claim is not
lodged within twelve months from the happening of
such loss or damage then in that event the
defendant company will not be liable to make any
payment. In this behalf the two dates are relevant
and important. Firstly, that the fire took place
on 24.5.73 and the claim is lodged on 17.7.73 being
Ex.P54. By the said letter dt.17.7.73 the claim in
the prescribed format in respect of loss took place
due to fire has been lodged by the plaintiffs with
the defendants that is within the period of one
year. In fact the claim is lodged within the
period of two months from the happening of fire and
therefore in my opinion, condition no.19 is duly
complied with and there is no breach thereof. In
view thereof, I answer issue nos.2 and 13 in the
negative.
17. Issue no.3 pertains to condition no.13.
The said condition no.13 also reads as under:
"If the claim be in any respect fraudulent,
or if any false declaration be made or used
in support thereof, or if any fraudulent
means or devices are used by the Insured or
any one acting on his behalf to obtain any
benefit under this Policy; or, if the loss
21
or damage be occasioned by the wilful act,
or with the connivance of the insured; or,
if the claim be made and rejected and an
action or suit be not commenced within
three months after such rejection, (or in
case of an arbitration taking place in
pursuance of the 18th condition of this
Policy) within three months after the
arbitrator or arbitrators or umpire shall
have made their award, all benefits under
this policy shall be forfeited."
18. Under condition no.13 it is provided that
from the date of rejection of claim within four
months, the plaintiffs should file an action in
this court. The claim in the present case is
refused on 30.4.76 which is Ex.P26 on record. The
suit is filed within 3 months from the refusal of
the said claim because the suit is filed in this
court in May 1976. Thus, even in respect of
condition no.13, the claim having been filed within
the time prescribed thereunder, I answer issue no.3
in the negative.
19. Now turning to issue no.4, whichis whether
the goods which are destroyed in fire are covered
under the insurance policy or not. Issue no.7 is a
connected issue because under issue no.7 the
plaintiffs are required to prove that the goods
which are destroyed in fire were blades in process
22
and duly hypothecated with plaintiff no.2. Issue
no.8 is also a connected issue. These three issues
are in respect of nature of goods which are
destroyed in fire and whether the said goods were
hypothecated with the bank and consequently,
covered by the Insurance Policy. Now in so far as
the said issues are concerned, the insurance policy
which has been produced is at Ex.P1 The said policy
describes the goods as under:
"On stock of raw materials, such as steel
strips, tools, spares, die punch and such
other materials pertaining to the Insured’s
trade belonging to them and under
hypothecation to the Bank whilst stored
and/or lying in the ground floor of the
premises of I class construction situate at
survey no.14, Hissa No.5, Plot No.9A,
Village Mohilla, Sakivihar Road, Sakinaka,
Bombay - 72."
20. Thus, the goods which are infact insured by
the defendant company are the raw materials, such
as steel strips, tools, spares, die punch and other
materials which are hypothecated to the bank and
stored at the factory premises. Thus, it was
necessary for the plaintiffs to establish that in
fact the goods which are destroyed in fire were
23
hypothecated with plaintiff no.2 bank under the
hypothecation agreement so as to claim the benefit
of the Insurance Policy.
21. It is an admitted position on record that
the plaintiffs have failed to produce any
hypothecation agreement for the period which is a
relevant period i.e. 1971-72 and upto the date of
fire i.e. 24.5.73. However, the plaintiffs has
produced the xerox copy of an hypothecation
agreement which is Ex.P86. The said hypothecation
agreement of a movable property is dt.9.4.74.
However, the plaintiffs did not produce the
agreement of the period 1971, 1972 and 1973 which
is the relevant period. The agreement which has
been produced dt. 9.4.74 is merely a xerox copy
and not the original and no evidence is laid by the
plaintiff no.1 to satisfy the court for introducing
secondary evidence which is necessary under the
provisions of s.63 r/w s.65 of the Evidence Act.
Thus, no case is made out to accept the said
document in evidence as a secondary evidence.
22. Apart from the aforesaid fact, in my
24
opinion the hypothecation agreement produced dt.
9.4.74 cannot be relied upon to establish that the
goods which are hypothecated and are destroyed by
fire on 24.5.73 were identical. Once it is
established that the plaintiffs have failed to
prove that the goods which were gutted in fire were
infact hypothecated with plaintiff no.2 bank then
the defendants are not liable to make payment under
the said insurance policy because the insurance
policy contains a condition that the goods which
are hypothecated with plaintiff no.2 bank are the
only goods which are covered by the Insurance
Policy against the risk of fire. In the present
case, the plaintiffs have miserably failed to
establish that the goods which were gutted in fire
were infact hypothecated with plaintiff no.2 bank.
23. Apart from the aforesaid fat, I am also of
the further opinion that xerox copy of
hypothecation agreement produced is of a period
subsequent to the fire. Thus, even if the said
document is considered in evidence still the same
is totally irrelevant and does not establish that
as of the date of fire which were the goods
25
hypothecated with the plaintiff no.2. I am not
impressed with the argument of the learned counsel
for the plaintiffs that goods in earlier
hypothecation agreement and a xerox copy produced
for subsequent period are identically described
because in absence of any evidence on record, I
cannot by assumption hold that the goods are
identically described. In that view of the matter,
I hold that the plaintiffs have failed to establish
the goods which are gutted in fire were
hypothecated with the plaintiff no.2 bank.
24. Another angle which has been argued by the
learned counsel for the defendants is that the
goods which are infact hypothecated with the bank
are only raw material and or semi processed
material and not finished blades. It has been
brought on record by virtue of the correspondence
with the Excise Authorities that what was gutted in
fire was finished blades and not the semi processed
material or raw material. The correspondence which
has been produced by the parties indicates that the
plaintiff no.1 has contended that though the blades
were finished blades they were soaked in chemical
26
and were kept for drying that means that they are
the blades in process and semi processed gods and
therefore covered by the said Insurance Policy.
Though in view of my finding that the plaintiffs
have failed to establish that the goods are covered
by the hypothecation agreement and consequently, no
claim can be entertained for insurance policy. I
need not assume this argument at all but then, on
consideration of the said argument also I am of the
opinion that the plaintiffs have failed to
establish that the goods were raw material and/or
semi finished products. Immediately, after the
fire, the plaintiffs have mixed up the said goods
into 10 drums. The said goods were all mixed. The
panchnama which has been produced by the plaintiffs
and relied upon by them being Ex.P44 and on which
there is no dispute indicates that the goods were
put in 10 drums and were weighing about 1524.70
kgs. The panchnama also indicates that what was
contained in the 10 drums was the finished product
of blades of stainless steel in damaged condition.
It is also mentioned in the panchnama that these
goods had brown spots thereon and the Excise
Authorities had declared them as unfit for use.
27
From the evidence which is produced by the
plaintiffs, it is evident that what was destroyed
in fire was a finished product namely razor blades
of stainless steel which were all mixed up in 10
drums and laying there. It is now well settled
that the conditions of the policy has to be
strictly construed. The description of the goods
mentioned in the policy does not in any way include
the goods which are already finished product i.e.
blades which are meant for sale. What is covered
by the insurance policy is raw material, such as
steel strips, tools, spares, die punch and such
other materials pertaining to the Insured’s trade
and belonging to them and hypothecated with the
bank. It does not cover at all the items such as
finished razor blades and thus in my opinion, it is
difficult to accept the contention of the learned
counsel for the plaintiffs that even the razor
blades are covered by the insurance policy or that
merely because the razor blades were put in
chemical this should be treated as semi finished or
material in process for the purpose of giving the
benefit of insurance policy to the plaintiffs
herein. Thus, in my opinion, the plaintiffs have
28
failed to establish the case that the goods which
are destroyed in fire were infact covered by the
insurance policy and they are entitled to the
benefit of insurance policy and the defendants are
liable to make payment to the plaintiffs herein.
25. In so far as issue nos.5, 7, 9, 10, 12 and
14 are concerned, there are certain disputes about
permitting the surveyor to survey the said goods.
In view of answers given to issue nos.4, 7 and 8,I
do not find it necessary to go into these issues at
all.
26. This takes me to another issues which is
issue no.15, the plaintiffs have fairly submitted
that the electrical installations in the plaintiff
no.1’s factory are not covered by the insurance
policy and infact they have given up the said
claim. In that view of the matter, my answer to
issue no.15 must be in negative.
27. In so far as issue nos.11 and 16 are
concerned, the same pertains to quantum of damage
caused by the plaintiffs by virtue of destruction
29
of fire. In my view, having given a finding that
the plaintiffs have failed to prove that the said
goods damaged in fire not covered by the
hypothecation agreement and consequently, they are
entitled to the claim under the insurance policy,
strictly speaking, it is not necessary to answer
the aforesaid issues nos.11 and 16. However, even
if I had to answer the said issues I would answer
in favour of the defendants and against the
plaintiffs.
28. In the present case, the plaintiffs have
miserably failed to prove the quantum and value of
goods which are destroyed in fire. The primary
evidence for proving the quantum and value of goods
was to produce the record of the company to show
that as on the date of 24.5.73 what were the goods
which were in stock available with plaintiff no.1
and which were hypothecated with plaintiff no.2.
However, in place of doing so the plaintiffs have
merely produced a statement issued by plaintiff
no.2 in a letter dt.7.6.73. The said letter has
been addressed by the bank and contains the
annexures thereby giving the value of goods
30
hypothecated with the bank. The plaintiffs have
also relied upon the correspondence being Ex.P49B
being letter dt.27.5.73, a panchnama Ex.P-44 of the
Central Excise Authorities and correspondence with
the surveyor in which the plaintiffs have put
forward certain amount as quantity of the goods.
The said correspondence is at Ex.P49 A and Ex.P49B.
The plaintiffs have heavily relied upon the
panchnama Ex.P44 and a statement at Ex.P45. On the
basis of the aforesaid documents, the plaintiffs
have contended that there was a loss of goods of
more than Rs.350000 and thus, the plaintiffs are
entitled to an amount of Rs.350000 covered under
the insurance policy.
29. In so far as the aforesaid contention is
concerned, I am of the opinion that the claim
raised by the plaintiffs cannot be granted at all.
Firstly, the plaintiffs have failed to establish
the value and quantity of goods on the basis of
documents which were available with the plaintiffs
such as purchase register, stock register and the
goods in process register. The plaintiffs have not
laid any evidence that whether they are maintaining
31
the said record or for any such reason such as fire
the said evidence has bene destroyed. Even
otherwise, looking into the evidence produced by
the plaintiffs, I am of the opinion that the same
does not establish either the quantum of goods
which are destroyed in fire or the valuation
thereof.
30. In my opinion, the correspondence which has
been entered into by the plaintiffs with the
Surveyor or the letter written by the plaintiff
no.2 to the plaintiff no.1 would not be sufficient
enough to establish the claim of loss or damages by
the plaintiffs in respect of quantum of goods and /
or value thereof. The non production of relevant
material and/or documents leads me to the
conclusion that the plaintiffs have failed to
establish the claim in the suit both in respect of
description of goods, quantity of goods and value
of goods destroyed in fire. I am therefore, of the
opinion, that plaintiffs are not entitled to ay
relief in the present suit.
31. In so far as issue no.17 is concerned,
32
neither of the parties have pressed the same and
therefore the same is not dealt with. In the
circumstances aforestated, I am of the opinion that
the plaintiffs have failed to establish their case
for recovery of amount from the defendants under
the said insurance policy for the goods loss and/or
destroyed in fire which took place in the plaintiff
no.1’s premises on 24.5.73 and consequently, I am
of the view that the suit of the plaintiffs must
fail and accordingly, the same is dismissed.
However, there shall be no order as to costs.
3 issues framed by the court
Whether the suit is maintainable given the failure to prove that the goods destroyed were hypothecated and covered under the insurance policy.
Whether the plaintiffs can establish the quantum and value of the goods destroyed in the fire.
Whether the defendants are liable to pay the claimed amount under the insurance policy.
M/s.T.T.Blades and Anr.
The United India Fire & General Insurance Co.Ltd.
S U Kamdar
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court