Partly allowed

New India Assurance Co.Ltd. v. Janatha Trading Company

Kerala HC9 Nov 2018RSA/190/2005

Case brief

AI extract

What is this about?

The High Court of Kerala allowed an appeal partly, modifying a decree. The court held there was no concluded 'total loss' contract because the insurer's final notice for wreck recovery was unaccepted. The appeal was allowed to the extent that the recoverable amount was limited to the final surveyor's assessed repair cost of Rs.51,711/-.

What did the court decide?

The Second Appeal was allowed in part; the decree and judgment of the first appellate court were modified to grant Rs. 51,711/- plus interest.

New India Assurance Co.Ltd. Vs Janatha Trading Company — Insurance | Kerala HC (2018)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR. JUSTICE P.SOMARAJAN

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FRIDAY,THE 09TH DAY OF NOVEMBER 2018 / 18TH KARTHIKA, 1940

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RSA.No. 190 of 2005

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AGAINST THE DECREE/JUDGMENT IN A.S. NO.301/2001 of DISTRICT COURT, THRISSUR DATED 09-09-2004

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AGAINST THE DECREE/JUDGMENT IN O.S.NO.650/1996 of IST ADDL.SUB COURT,THRISSUR DATED 30-06-2001

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APPELLANTS/RESPONDENTS/DEFENDANTS:

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1 NEW INDIA ASSURANCE CO.LTD. REP. BY ITS CHAIRMAN NEW INDIA ASSURANCE BUILDING, 87, M.G.ROAD, FORT, BOMBAY.

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2 DIVISIONAL MANAGER

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NEW INDIA ASSURANCE CO., DIVISIONAL OFFICER, II FLOOR, KOLLANNUR BUILDING, PALACE ROAD,THRISSUR.

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3 BRANCH MANAGER

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NEW INDIA ASSURANCE CO. LTD., THRISSUR.

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4 REGIONAL MANAGER NEW INDIA ASSURANCE CO. LTD., COCHIN-11.

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5 REGIONAL ENGINEER NEW INDIA ASSURANCE CO. LTD., M.G.ROAD, COCHIN-11., ALL APPELLANTS REPRESENTED BY ITS ASSISTANT, ADMINISTRATIVE OFFICER, REGIONAL OFFICE, M.G.ROAD,, ERNAKULAM.

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BY ADV. SRI.GEORGE CHERIAN (SR.)

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RESPONDENT/PLAINTIFF:

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JANATHA TRADING COMPANY IOC DEALER, REP. BY MANAGING PARTNER SUNIL GEORGE, S/O. PROF.O.K.GEORGE, VADAKKENCHERY, ALATHUR TALUK, PALAKKAD DISTRICT.

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BY ADV.

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SRI.P.R.VENKETESH-R1

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THIS REGULAR SECOND APPEAL HAVING BEEN FINALLY HEARD ON 09.11.2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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RSA.No. 190 of 2005 2

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JUDGMENT

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Aggrieved by the reversal of the judgment rendered in O.S.No.650/1996 by the Sub Court, Trissur in A.S. No.301/2001 by the District Court, Trissur, the defendants came up with this second appeal.

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A suit for recovery of damages based on a policy of insurance filed against the insurer, the defendants, claiming an amount of Rs.67,000/-. The trial court dismissed the suit. But it was reversed by the first Appellate Court by the impugned decree and judgment.

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There were several communications in between the plaintiff and the defendants by way of negotiations. According to the defendants, the communication itself would show a concluded contract to settle the issue on 'total loss basis' for an amount of Rs.73,500/-. Interalia it was also brought to the notice of this court that the total value of the vehicle entered into the policy comes to Rs.75,000/- and the liability of the insurance company was also confined to that extent. The surveyor employed by the company/defendant made an initial assessment under Ext.B4 at Rs.67,000/- and later on a final assessment was done under Ext.B5 by which the

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RSA.No. 190 of 2005 3

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cost of repair was finally assessed at Rs.51,711/-. The

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trial court dismissed the suit finding that there is a concluded contract and the parties have entered into a

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'total loss basis agreement' for an amount of Rs.73,500/-. The said finding of the trial court was

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reversed by the first appellate court holding that there is no concluded contract. Inter-alia the learned counsel

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for the appellants brought to the notice of this Court clause 4 of the insurance premium policy based on which it was submitted that whenever there is an accident or damage to the vehicle an option is always available with the defendant company to repair it by its own motion or to do repair otherwise through others, but the said option available with the company had been defeated by the plaintiff by selling the wreck for a consideration to a stranger without notice to the company. It was also submitted that since the insurer had agreed to settle the issue on a 'total loss basis' at Rs.73,500/- after deducting Rs.1500/- towards cost of proceedings out of the value of vehicle which comes to Rs.75,000/- as per

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the entry in the insurance policy, the company can take

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away the wreck, which includes, the 'total loss assessment'. The dispute involved in the case is with

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respect to the claim over the wreck of the damaged lorry

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RSA.No. 190 of 2005 4

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as well as a claim based on the 'total loss basis

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agreement' entered into by the parties. The various communications between the parties were produced and marked as Ext.B1 and B2 and Ext.A1 to A6. Going by these communications, it would show that there was a proposal from the company/defendant for settling the issue based on 'total loss basis' and communication was sent to the plaintiff which was answered by the plaintiff by issuing reply. Ext.B1 and B2 and A1 to A5 show the different communications between the parties. But Ext.A6 is the last one. It is by virtue of Ext.A6, a claim for return of wreck was at first raised by the defendant company. In Ext.B1 and B2 and A1 to A5, no such clause or claim was incorporated. It was incorporated only in Ext.A6 letter issued by the company/defendant to the plaintiff which is the last communication in the series of B1,B2 and A1 to 5. It was not accepted by the plaintiff and which has necessitated the institution of the suit.

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Going by these letters and especially in view of incorporation of an additional claim in Ext.A6, it cannot be said that there is a concluded contract in between the parties. On one occasion, the company has expressed their willingness not to go with the 'total loss assessment'. But subsequently they turned against

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RSA.No. 190 of 2005 5

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it after receiving sanction from the Regional Officer for

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a settlement by way of 'total loss basis'. Even though, there were communications between the parties, there was

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actually no concluded contract as the parties at difference with respect to the terms and condition to be arrived at, so as to satisfy a concluded contract. Curiously enough to notice that, either in Ext.A1 to A5 or in Ext. B1 to B5, no claim of wreck was raised by the company. As discussed earlier, it was raised only in

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Ext.A6, the last communication issued by the company/defendant to the plaintiff. The learned counsel relied on clause 4 of the agreement so as to advance a case that they have the option to conduct repair over the damaged vehicle or to engage the work with others at their wish. It is true that going by clause 4 of Ext.B15

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such a power was agreed to be given to the defendant company. But in the instant case, there were

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communication for a longer period of more than three months between the parties and ultimately the last communication A6 raising claim over wreckage. There was

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no further communication between the parties and the suit

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was instituted after the failure of above said

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negotiations. So, I am of the view that in the said

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circumstances keeping of wreckage of the vehicle may

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RSA.No. 190 of 2005 6

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cause further damage to the owner of the vehicle and it

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is his duty to mitigate the damage by taking timely action.

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The claim over the wreckage of the vehicle or

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the price for which the wreckage was hold by the Insurance Company cannot be sustained, firstly on the reason that, there is no concluded contract on 'total loss basis'. The plaintiff has refused to accept the offer and not yet instituted a suit for recovery of damages. Secondly on the reason that, the claim of plaintiff is only for the amount assessed by the surveyor of the company as cost of repair of damaged vehicle and not for the total value of the vehicle. No claim raised either for the total value of the vehicle or for the value of wreckage. What is assessed by the Surveyor under Ext.B5 is only the cost of repair. It is true that the cost of repair includes the cost of damaged parts. That doesn't mean that the plaintiff has raised a claim for total value of the vehicle. In otherwords, the cost of repairs stands for the loss sustained by the parties due to the damage sustained to the vehicle and not for the value of the vehicle. So the claim of return of the wreckage or substitution of its value towards the amount to be awarded or compensated to the petitioner cannot be

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RSA.No. 190 of 2005 7

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sustained. The lower court has granted a decree for Rs.67,000/- based on Ext.B4 initial assessment. The final assessment shows an amount of Rs.51,711/-, the actual cost of repair/ the damage sustained and as such the decree and judgment of the first Appellate Court is liable to be modified to that extent. The decree and judgment of the Lower Court is modified, granting a decree to the extent of Rs.51,711/- with interest at the rate of 12% per annum, from the date of suit till the date of disposal and thereafter 6% per annum till the date of realisation.

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Appeal allowed accordingly in part. No order as to costs.

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Sd/-

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P.SOMARAJAN JUDGE

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msp

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//TRUE COPY//

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P.A. TO JUDGE

New India Assurance Co.Ltd. v. Janatha Trading Company

Case brief

What is this about?

What did the court decide?

New India Assurance Co.Ltd. v. Janatha Trading Company

Case brief

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What did the court decide?

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