REGIONAL MANAGER ORIENTAL FIRE AND GENERAL INSURANCE COMPANY MADRAS Vs. SAVOY SOLVENT OIL EXTRACTIONS LTD

JUDGEMENT

(1.) These two cross appeals are preferred against the judgment and decree of the learned Subordinate Judge at Nizamabad in O.S.No.84 of 1980 dated 29-6-1985. The suit is for recovery of Rs.60,71,174.57 ps with future interest at 18% per annum claimed under three fire insurance policies marked as Exs.A.l to A.3 and the learned Subordinate Judge partly decreed the same for a total amount of Rs. 22,70,800-00 with 12% interest from 9-6-1980, the date of presentation of the suit, and proportionate costs. A.S.No.213 of 1987 is preferred by the first plaintiff Company which was the insured under Exs.A.l to A.3 (hereinafter referred to as 'the plaintiff company'). A.S.No.1423 of 1986 is preferred by the defendants who represent Oriental Fire and General Insurance Company, the insurer under the said three policies, and they will be referred to hereafter as 'the Insurance Company'. As the two appeals arise out of the same suit, they are heard together and are being disposed of by this common judgment. They give rise to questions relating to salvage and computation of amount payable under fire insurance policies for loss sustained by the plaintiff company by fire.

(2.) The facts first. The plaintiff company was incorporated in the year 1974. It set up a solvent extraction plant at its factory premises in Valmiki Nagar in Nizamabad Town for manufacturing rice bran oil from rice bran using hexane as solvent. It had also godowns and tanks in the said factory premises in which it stored the rice bran (the raw material), hexane, rice bran oil and deoiled rice bran (the by product). It was also exporting de-oiled rice bran produced by it and for that purpose transported the same to Kakinada and stored it in godowns belonging to M/s Sharif & Sons at Kakinada. For setting up the solvent extraction plant, the plaintiff company obtained a term loan from the Andhra Pradesh State Financial Corporation and for that purpose mortgaged its buildings, plant and machinery and others installations, fixtures and fittings, etc., to the said Corporation. The plaintiff company obtained various credit facilities from Indian Oversees Bank against hypothecation of rice bran, de-oiled rice bran, etc., and also from Indian Bank against hypothecation of rice bran, de-oiled rice bran, etc. The said Corporation and the Banks were insuring the respective properties and goods secured to them on the account of the plaintiff company.

(3.) It is the case of the plaintiff company that its factory including goods and properties were insured with the Insurance Company under Exs.A.1 to A3 policies for the following amounts against the risk of fire, etc. Ex.A.1 -Policy No. 4416/5/0/F/1 153-776351, Dated 26-10-1978 - Rs.8,00,000.00 Ex.A.2-Policy No. 4416/O/0/F/1492-990590 Dated 27-12-1978 - Rs.24,00,000.00 Ex.A.3 -Policy No. 4416/5/7/F/0333-186937 Dated 29-3-1979 - Rs. 31,27,000.00 According to the plaintiff company on the early hours of 5-5-1979 there was fire in the godowns at its factory premises at Valmiki Nagar and in that fire (i) 2,237.36 metric tonnes of rice bran and 140 metric tonnes of de-oiled bran of the total value of Rs. 20,20,168.50 covered by Ex.A.2 policy and (ii) 480 metric tonnes of rice bran pledged with Indian Bank of the value of Rs. 4,55,738.20 covered by Ex.A.l policy were damaged. The plaintiff company claims that the damage of the stock was total and therefore on that account it is entitled to be paid Rs.24,75,906.70 under Exs.A.1 and A.2 policies. The plaintiff company also claims Rs.4,37,600.00 under Ex.A.3 policy towards damage to civil works caused at that fire. In addition the plaintiff company also claims the following sums towards salvage, etc. (i) Salvage expenses for segregating the damaged stock (contained in 42,873 bags) which the Rs. 2,05,782.95. plaintiff is entitled to claim under law from the defendants. (ii) Transport costs for transporting the damaged stocks to Rs. 39,212.50. the rented godowns as advised by Surveyor (iii) Godown rent for 12 months (8) days for 42,873 bags at Rs. 2,62,811.49. Rs.0.50 ps per bag per month. The plaintiff also claims an additional sum of Rs.24,75,906.70 ps towards loss incurred by it due to inordinate delay in settlement of its claims on account of increase in the price of bran, etc. from 5-5-1979 when fire occurred to the date of filing of the suit i.e., 9-6-1980. Plaintiff company also claims interest of Rs. 1,73,954.68 ps from 1-6-1979 to 8-6-1980 on the basis mat the Insurance Company ought to have settled it Srclaim on or before 31-5-1979; however, it restricted this claim of interest only on the amounts relating to its claim for damage to civil work and for various salvage expenses totalling Rs.9,45,406.94 ps. Thus the total amount claimed by the plaintiff company in the suit comes to Rs. 60,71,174.57 ps.