NATIONAL INSURANCE COMPANY LTD Vs. BEARDSELL LTD

JUDGEMENT

(1.) CHALLENGE is made to an order of dismissal made by the learned single Judge of this Court in O.P.No,674 of 2008, whereby the award dated 26.07.2008 made by the majority members of the Arbitral Tribunal was confirmed.

(2.) SHORT facts necessary for the disposal of the appeal can be stated as follows: The appellant/petitioner insurance company issued two Standard Fire and Special Perils policies valid for the period from 01.01.2005 to 31.12.2005. The first policy covered various stocks, including raw materials, finished goods, semi finished goods, etc. lying in 13 different places, while the latter covered the building, plant and machinery at the first respondent's factory premises at Thane, Mumbai. The policies value are Rs.2,63,05,000/- and Rs.5,38,39,500/- respectively. Due to heavy rain on 26th July, 2005, the 1st respondent suffered damage to its plant and machinery, stocks and materials. Hence, the 1st respondent notified the loss to the appellant/petitioner insurance company, in turn, the insurance company appointed M/s. Protocol surveyors and Engineers Private Limited, to inspect, verify and assess the damage that could have occurred. An interim report was filed on 18.10.2005 and a final report on 23.09.2006. The said surveyor assessed the net liability of the appellant at Rs.49,38,118/-. The stock declaration statement for the month of June, 2005, disclosed only the value of the stock at Thane in the factory premises at Rs.10,40,000/-. Hence, the 1st respondent sent a letter on 04.10.2005 to the appellant under Ex.C-12 stating that they had mentioned the stock of the finished goods alone in the monthly stock declaration statement without including the raw materials and finished goods. It was due to mistake that the raw materials and finished goods were also covered under the policy and hence, a revised statement for the period February, 2005 to July, 2005, showing the stock value as Rs.70,58,598/- was to be considered for payment. The insurance company sent a letter on 10.10.2005 to the Surveyor, as could be seen under Ex.R-2, that the revised declaration statement might be reckoned. The Surveyor found that the revised declaration and bank's statement containing the details of the stock of the raw materials and finished goods for the month of June, 2005 were found to be tallied with the revised statement of the 1st respondent. The surveyor's interim report under Ex.R-9 dated 18.10.2005 and the final report under Ex.R-6 dated 23.09.2006 are also confirmed the same. The appellant offered Rs.3,31,010/- as against the claim assessed at Rs.29,04,669/- by its letter dated 29.08.2007 towards the loss of damage to stocks on the ground that the declaration of stock prior to the date of occurrence of the loss, showed a discrepancy of the stocks actually available on the date of occurrence was noticed. The appellant made a payment of Rs.11,08,325/- towards the damage to the building, plant and machinery as seen under Ex.C-3. Under Ex.C-1 dated 29.08.2007, the appellant insurance company offered to pay Rs.3,31,010/- in full and final statement of the claim, which brought forth the reply from the 1st respondent on 08.10.2007 that the 1st respondent was not ready to accept the same. Hence, the arbitration clause was invoked The claimant appointed three Arbitrators.

(3.) ADVANCING the arguments on behalf of the appellant, the learned counsel would submit that the terms and conditions prescribed by the Tariff Advisory Committee form part and parcel of the policy that it has got a binding effect that the learned single Judge has also held that when the clause was part and parcel of the policy, the same was binding on both sides that once the contents of the Tariff Advisory Committee report form part and parcel of the policy, then any violation of the policy conditions would be invalid that any violation of such conditions should have been construed as ultra vires, especially when the report stated that any breach should be dealt with as per the relevant provisions of the Income Tax Act, 1938 that the 2nd and 4th respondents herein had prejudged the issue before them in favour of the claimant and had applied the plurality of illogical assumptions to justify the same that they have also shown over indulgence and assumed facts which were not in existence at all that the stock value was revised on 04.10.2005 after the occurrence of the accident on 26.07.2005 that there was no provision in the policy for filing revised declaration even if there was a bona fide mistake that if it was allowed that will go against the very base of the declaration in the policy that if a declaration was allowed to be revised for whatever reason the very meaning of declaration, the stocks would lose its effect and it could be varied at any time according the convenience of the parties.