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 (From the order dated 04-12-2012 in Complaint Case No. 01/11 of the

Goa State Consumer Disputes Redressal Commission, Panaji)





















For the Appellant                   : Mr. Yatish Mohan & Ms. Pooja,




For the Respondent              : Ms. Savita Singh, Advocate







          This appeal has been filed by the appellant against the order dated 04-12-2012 passed by the Learned State Commission in Complaint No. 01/11 – M/s Global Ispat Pvt. Ltd. Vs. Oriental Insurance Co. Ltd., by which complaint was dismissed.

2.      Brief facts of the case are that the complainant-appellant manufacturer of steel ingots having factory in Industrial Estate,Cuncolim, Goa got it insured from opposite party/respondent under Standard Fire and Special Perils Policy  for a  period of one year from 13-04-2009 to 12-04-2010.  Later on, policy was modified to the extent that policy would extend to include loss or damage by fire only of or to the property insured caused by its own fermentation, natural heating or spontaneous combustion.  On 04-07-2009 at 5.30 P.M. there was a dreadful explosion in complainant’s factory causing extended damage to the factory premises, machinery and stock.  Complainant reported the matter to police and opposite party on the same day.  Opposite party got preliminary survey by local surveyor on the same date.  Mr. Vijay Kumar Saokar was appointed as surveyor by the opposite party who conducted survey on 05-07-2009 and joint inspection on 06-07-2009 along with General Manager of the complainant and surveyor by letter dated 13.07.2009 informed complainant that there was no damage to the sponge iron due to explosion and claim for sponge iron will not be entertained under the Perils of explosion.  Final report was submitted by surveyor on or about 05-09-2009 assessing gross loss of Rs.13,87,500/- and net loss payable Rs.7,09,556/-.  Opposite party forwarded discharge voucher for Rs.7,08,967/- in full and final settlement of the claim but complainant returned discharge voucher as this amount was offered against claim of Rs.99,48,635/-.  Alleging deficiency on the part of opposite party, complainant filed complaint before State Commission.  Opposite party resisted complaint and submitted that opposite party disclaimed their loss beyond Rs.7,09,556/- by letter dated 08-10-2009 and the complaint has been filed on 21-01-2011 whereas it should have been filed within 12 months from the date of disclaimer and as such complaint is not maintainable and prayed for dismissal of complaint.  Learned State Commission, after hearing both the parties, dismissed complaint as barred by limitation.

3.      Heard learned counsel for the parties finally at admission stage and perused the record.

4.      Learned counsel for the appellant submitted that learned State Commission has committed error in dismissing complaint as barred by limitation, hence appeal be allowed and impugned order be set aside and matter may be remanded back to learned State Commission for disposal on merits.  On the other hand, learned counsel for the respondent submitted that order passed by learned State Commission is in accordance with law, hence revision petition be dismissed.

5.      It is not disputed that explosion took place on 04-07-2009 and opposite party accepted claim of the complainant vide letter dated 8.10.2009 for Rs.7,09,556/- and forwarded discharge voucher for aforesaid amount as full and final settlement of the claim meaning thereby claim for rest of the amount was repudiated.  Complainant also served notice dated 06-11-2009 on the opposite party for re-calculating the assessment but opposite party vide reply dated 08-12-2009 refused to re-assess.  It is also not disputed that complaint was filed on 21.01.2011 i.e. after more than 12 months from repudiation of part of the claim and from serving notice for re-assessment.

6.      Clause 6(ii) of the general conditions of the policy reads as under:-

“6(ii) In no case whatsoever shall the company be liable for any loss or damage after the expiry of 12 months from the happening of the loss or damage unless the claim is the subject of pending action or arbitration; it being expressly agreed and declared that if the company shall disclaim liability for any claim hereunder and such claim shall not within 12 calendar months from the date of the disclaimer have been made the subject matter of a suit in a court of law then the claim shall for all purposes be deemed to have been abandoned and shall not thereafter be recoverable hereunder.”

7.      Aforesaid Clause makes it clear that complainant was under obligation to initiate proceedings for recovery of repudiated amount within 12 months from repudiation.  Learned State Commission after citing many judgments of Apex Court rightly observed as under:--

“14.3.     In Himachal Pradesh State Forest Co. Ltd., (2009) 2 SCC 252, the cases of Vulcan Insurance Co. Ltd., (supra), Food Corporation of India vs. New India Assurance Co. Ltd.,(supra) and National Insurance Co. Ltd., vs. Sujir Ganesh Nayak & Co. & anr., (supra) have again been considered by the Apex Court and it has been noted that in Sujir GaneshNayak & Co. & anr., (supra) to which primary reference was made by the learned counsel for the parties that while dealing with an identical situation  where a contract contained a provision prescribing a period of limitation shorter than that prescribed by the Limitation Act, it was held that the contractual provision was not hit by Section 28 as the right itself had been extinguished.  It was contended before the Apex Court that in the light of certain observation in Food Corporation of India case (supra) the observation in Sujir G. Nayak’s case (supra) were required reconsideration, but the Hon. Supreme Court found no merit in that plea for the reason that in Sujir G. Nayak case, Food Corporation of India case was specifically considered and   Vulcan Insurance Co.’s case too had been relied upon.

14.4.     Thereafter, the Hon. Supreme Court referred to condition 19 inSujir G. Nayak’s case which provided that the Company would not be liable for loss or damage from happening of loss or damage unless the claim was the subject of pending action or arbitration and held that while construing that provision vis-à-vis Section 28 of the Contract Act and the cases cited above and several other cases, in addition, it held that:

“16. From the case law referred to above the legal position that emerges is that an agreement which in effect seeks to curtail the period of limitation and prescribes a shorter period than that prescribed by law would be void as offending Section 28 of the Contract Act.  That is because such an agreement would seek to restrict the party from enforcing his right in Court after the period prescribed under the agreement expires even though the period prescribed by law for the enforcement of his right has yet not expired.  But there could be agreements which do not seek to curtail the time for enforcement of the right but which provide for the forfeiture or waiver of the right itself if no action is commenced within the period stipulated by the agreement.  Such a clause in the agreement would not fall within the mischief of Section 28 of the Contract Act.  To put it differently, curtailment of the period of limitation is not permissible in view of Section 28 but extinction of the right itself unless exercised within a specified time is permissible and can be enforced.  If the policy of insurance provides that if a claim is made and rejected and no action is commenced within the time stated in the policy, the benefits flowing from the policy shall stand extinguished and any  subsequent  action  would  be time-barred.  Such a clause would fall outside the scope of Section 28 of the Contract Act.  This, in brief, seems to be the settled legal position.  We may now apply it to the facts of this case.

19. The clause before this Court in Food Corpn. case extracted hereinbefore can instantly be compared with the clause in the present case.  The contract in that case said that the right shall stand extinguished after six months from the termination of the contract.  The clause was found valid because it did not proceed to say that to keep the right alive the suit was also required to be filed within six months.  Accordingly, it was interpreted to mean that the right was required to be asserted during that period by making a claim to the Insurance Company.  It was therefore held that the clause extinguished the right itself and was therefore not hit by Section 28 of the Contract Act.  Such clauses are generally found in insurance contracts for the reason that undue delay in preferring a claim may open up possibilities of false claims which may be difficult of verification with reasonable exactitude since memories may have faded by then and even ground situation may have changed.  Lapse of time in such cases may prove to be quite costly to the insurer and therefore it would not be surprising that the insurer would insist that if the claim is not made within a stipulated period, the right itself would stand extinguished.  Such a clause would not be hit by Section 28 of the Contract Act.

21.     Clause 19 in terms said that in no case would the insurer be liable for any loss or damage after the expiration of twelve months from the happening of loss or damage unless the claim is subject of any pending action or arbitration.  Here the claim was not subject to any action or arbitration proceedings.  The clause says that if the claim is not pressed within twelve months form the happening of any loss or damage, the Insurance Company shall cease to be liable.  There is no dispute that no claim was made nor was any arbitration proceeding pending during the said period of twelve months.  The clause therefore has the effect of extinguishing the right itself and consequently the liability also.  Notice the facts of the present case.  The Insurance Company was informed about the strike by the letter of 28/04/1977 and by letter dated 10/05/1977.  The insured was informed that under the policy it had no liability.  This was reiterated by letter dated 22/09/1977.  Even so more than twelve months thereafter on 25/10/1978 the notice of demand was issued and the suit was filed on 2/6/1980.  It is precisely to avoid such delays and to discourage such belated claims that such insurance policies contain a clause like Clause 19.  That is for the reason that if the claims are preferred with promptitude they can be easily verified and settled but if it is the other way round, we do not think it would be possible for the insurer to verify the same since evidence may not be fully and completely available and memories may have faded.  The forfeiture Clause 12 also provides that if the claim is made but rejected, an action or suit must be commenced within three months after such rejection; failing which all benefits under the policy would stand forfeited.  So, looked at from any point of vie, the suit appears to be filed after the right stood extinguished.  That is the reason why in Vulcan Insurance case while interpreting a clause couched in similar terms this Court said:

“23.  …It has been repeatedly held that such a clause is not hit by Section 28 of the Contract Act….’   

   Even if the observations made are in the nature of obiter dicta we think they proceed on a correct reading of the clause.”

   “In the light of the fact that Food Corpn. Case has been considered inSujir Nayak case, no further argument remains in the matter, as Clause 6(ii) and Condition 19 are, in their essence, pari materia”.      

14.5.     The Hon. Supreme Court, therefore has held that in the light of the fact that Food Corporation case has been considered in Sujir G. Nayakcase, no further argument remains in the matter, as Clause 6(ii) and Condition 19 are, in their essence, pari materia.  We have already noted that it is this very clause 6(ii) which came for consideration in Himachal Pradesh State Forest Co. Ltd., (supra).

15.         In the case at hand the complainant was required, in terms of clause 6(ii) of the general conditions of the policy, to prefer the claim within 12 calendar months from the date of the disclaimer or else the claim for all purposes was deemed to have been abandoned or the right extinguished and the liability ceased.   The complainant’s claim is deemed to have been abandoned on completion of 12 months from 08/10/09 and it could not have been revived or extended by sending a legal notice.  The complaint therefore, deserves to be dismissed, as not having being filed within the period stipulated by clause 6(ii) of the policy and as per the  law laid down by the Apex Court in various decisions cited hereinabove and ending with Himachal Pradesh State Forest Co. Ltd., (supra).


8.      As complainant has not filed complaint within period of 12 months from the date of repudiation of part of the claim, complaint filed by the complaint before State Commission was barred by limitation and complainant was not to get benefit of limitation provided under Section 24 (A) of Consumer Protection Act and learned State Commission has not committed any illegality in passing the impugned order and appeal is liable to be dismissed.

9.      Consequently, appeal filed by the appellant is dismissed with no order as to costs.



     (K. S. CHAUDHARI, J)








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