M/S Fibre Deals Ltd. vs. Respondent: Sadharan Bima Corporation and Others

IN THE SUPREME COURT OF BANGLADESH
(HIGH COURT DIVISION)

Appeal From Original Decree (F.A.) No. 160 of 1992

Decided On: 15.01.2002

Appellants: M/s Fibre Deals Ltd.
Vs.
Respondent: Sadharan Bima Corporation and others

**Hon’ble Judges:**A.B.M. Khairul Haque and Khondker Musa Khaled, JJ.

Subject: Contract

Catch Words

Mentioned IN

**Acts/Rules/Orders:**Contract Act, 1872 - Section 17, Contract Act, 1872 - Section 18

Counsels:
For Appellant/Petitioner/Plaintiff: Syed Mahmudul Ahsan, Advocate

For Respondents/Defendant: Md. Manzur-Ur-Rahim with A.H.M. Mushfiqur Rahman, Afreen Mohiuddin, Advocates, for the respondent No. 1, Khondker A.H.M. Mohsen Uddin Ahmed, for the respondent No. 5

Disposition:
Appeal Dismissed

Citing Reference:

Relied On

 1

Case Note:
Contract Act, 1872 (IX of 1872)
Section - 18
The discrepancy (between the claim of the plaintiff and the survey report) in respect of the quantity of jute damaged is a matter of opinion and in circumstances may vary and do not at all substantiate a case of misrepresentation of fact as envisaged under section 18 or do not bring it within the ambit of section 17.
Limitation Act, 1908 (IX of 1908)
Article 86 and the stipulated period**
The suit was filed on 7.6.1988 within the period of limitation under Article 86 still the same is liable to be dismissed because of the failure of the plaintiffs to file the suit within the stipulated period as specifically mentioned in the policy document**

Industry: Miscellaneous

JUDGMENT

A.B.M. Khairul Haque, J.

1. This appeal arises out of the judgment and order dated 18.4.1992 and the decree drawn upon 25.4.1992 passed by the Subordinate Judge. Commercial Court. Khulna, in dismissing the Money Suit No. 11 of 1988. The facts leading to the filing of this appeal are that the Fibre Deals Limited a company, took out a fire insurance policy on 25.9.1985 in respect of the jute stored in its godown no. 4 from Sadharan Bima Corporation (SBC). That fire broke out in a nearby godown and in order to extinguish the said fire and also to prevent spreading of the fire to other godowns, the fire brigade sprayed water all around including the godown no. 4 of the plaintiff. As a result 531 bales of just of the plaintiff got water soaked causing loss to the extent of 5,13,350/- to the plaintiff but their claim was repudiated. The suit was contested by the defendant No. 3 by filing a written statement on 15.2.1989 and also by filing another additional written statement filed on behalf of the defendant nos. 1 to 3, denying all the material allegations made in the plaint and further contended inter alia that the plaintiff no. 1 in violation of the specific absolute warranties attached with the policy document stored excess quantity of jute beyond the prescribed limit.

2. At the trial on behalf of the plaintiff no. 1 one Kali Nath Arch deposed as D.W. 1. He stated in his examination in chief that the plaintiff company is an exporter of raw jute, that they used to store raw jute in their hired godown. That 4211 bales of jute was stored in the said godown. He further stated that the said jute were insured with the defendant Sadharan Buna Corporation from the period since 25.9.1985 to 25.9.1986. That fire broke out on 13.11.1985 in the adjacent jute godown of Surma Lid. That the fire brigade sprayed water in their said godown also so that it may not catch fire. That due to such spraying of water 531 bales of jute were damaged. That they dried the said jute and also sold it but at a loss of Tk. 5,13,350/-. That they made a G.D. entry in the police station and the police and the fire brigade conducted an investigation there. That according to the terms and conditions in the policy document 32,000 mounds of jute could be kept in the godown although they used to keep lesser quantity. That they informed the defendants about the loss and lodged their claim in writing on 11.9.1986, and on their final rejection of their claim on 5.3.1988, they filed the instant suit. He further stated that the defendants were aware of the capacity of keeping 32,000 mounds of jute in their godown. He denied that they kept excess quantity of jute in the godown in violation of the terms and conditions of the insurance policy. That the concerned quantity of jute was mortgaged with the plaintiff no. 2 the Bank. In his cross-examination he stated that on 13.11.1985 fire broke out but not in the godown of Fibre Deals Ltd. but in the adjacent godown of Surma Ltd. That the SBC engaged a surveyor, namely, Mordern Surveyor Ltd and they submitted a report but did not furnish them with any copy. That he did not know whether the survey report mentioned loss of 435 bales of jute. He further stated that they lodged their formal claim in respect of damage to 531 bales of jute on 11.9.1985. That they did to engage any surveyor of their own to find out the loss caused to their stored jute in their godown. He further stated that in order to find out the damaged jute they brought those out and 531 bales of jute were found wet. That there were salvaged jute also amongst the said 531 bales of jute. That after proceeding they sold those jute. That they got permission from the surveyor of the defendant no. 1 on their behalf to sell those jute. That he denied that the Modern Surveyor handed them over 435 bales of jute. He admitted that clause 11 of the policy mentioned about the area of the godown and also the quartil of the jute to be stored. He denied that they did not inform the defendant in accordance with the provisions of clause 11 and about their claims. That as such, their claim became time barred, that they did not file the suit within the time limit as mentioned in clause 19. He proved their letter dated 15.11.1986 and further stated that they repudiated the claim firstly on 27.3.1987 but he denied that they did not file this suit within three months from that date. One Sadhan Kumar Sen deposed as P.W. 2 on behalf of the plaintiffs. He stated in his examination in-chief that he was the supervisor of Ishwar Jute Press, knew the plaintiff and their godown. He stated that fire broke out on 13.11.1985 in the godown of Surma Limited. That the distance of the said godown from the godown of M/s. Fibre Deals, Ltd. was about 20/21 feet. That the fire brigade sprayed water all around so that the godown of M/s. Fibre Deals Ltd. may not catch fire. That this witness himself saw the incident. That it was necessary to spray water to save from fire, that the jute of M/s. Fibre, Deals Ltd. became wet because of spraying of water and some quantity of jute were damaged and quality of some jute also suffered. He was cross-examined but nothing material came out of it.

3. One A.F.M. Kashem Chowdhury deposed as D.W. 1 on behalf of the defendant SBC. He was an Assistant General Manager of the corporation at the relevant time. He admitted that the plaintiff had a fire policy with a condition that 4,000 bales of jute which is equivalent to 20,000 mounds, would be kept in the godown, there was an absolute warranty clause attached with the fire policy as took out by the plaintiffs. That the stock policy was for an amount of Tk. 1,15,00,000/-but the plaintiff stored jute in violation of the terms and conditions of the policy. He further stated that during survey it transpired that the plaintiff kept excess quantity of jute for which the policy was taken out. That the preliminary report from the Modern Surveyor was obtained on 20.11.1985 and it mentioned loss of 435 bales of jute as such loss to the extent of Tk. 1,89,394,90 paisa was stated in their report, that the surveyor submitted their final report 24.8.1986. He further stated that the plaintiff did not lodge their claims in time, that the plaintiffs lodged their claims in excess and claimed that 531 bales of jute were damaged. The claim of the plaintiffs was not correct, that the plaintiff by its letter dated 29.3.1987 claimed loss of 435 bales of jute but their claim was repudiated on 27.10.1986 and they were informed accordingly, that the plaintiffs did not file any suit within the next three months from the aforesaid date, as such their claim was lost in view of clause 11/13 of the policy document. He further stated that clause 19 of the policy document was violated because the plaintiff did not file the suit within the period of 12 months from the date of occurrence as such the plaintiffs are not entitled to any amount as damages. In his cross-examination this witness stated that he himself did not see the godown of the plaintiff and there was no investigation from their office that the papers from the plaintiff were accepted in good faith, that the investigation was not mandatory, that the said godown was constructed on 1.7.1978 as written in the papers. He further stated that the plaintiff violated Claus 9(a) of the absolute warranty clause and also clauses 11,13, and 19 of the policy document. He denied that since the godown of the plaintiff was an old one as such clause 9(a) was not applicable. He admitted that after taking on the policy, the plaintiff used to submit report on the stock of jute stored by them month wise and he got it that the said return showed that the plaintiff used to keep jute in excess of 4,000 bales but they did not raise any objection. He further stated that according to the daily return of stock. Premium was calculated and they received such premium. He further admitted that at the time of final calculation they did not raise any objection with regard to the storage of jute in excess of 4,000 bales because premium was received on calculation of the average quantity shown in the return. He denied that the claim of the plaintiff was correct and they are entitled to get damages in accordance with the survey report. He further stated that the damage mentioned in the survey report was deemed correct by them.

4. On behalf of the plaintiffs policy documents and other papers were produced in Court and made exhibits. The Ext. 1 is the enquiry report dated 7.9.1986 by a sub-inspector of police of Doulatpur police station Ext. 2 is the letter dated 16.11.1986 issued on behalf of the plaintiff no. 1 to the defendant no. 2 Ext. 3 is a letter written on behalf of the defendant no. 1 on 27.10.1986 repudiating the claim of the plaintiff no. 1. Ext, 3(Ka) is another letter dated 11.3.1987 written by the defendant no. 2 to the plaintiff no. 1. Reiterating their decision to repudiate the claim of the no. 1 Ext. 3. (Kha) is the letter dated 5.3.1988 written on behalf of the defendant no. 1 confirming their earlier decision repudiating the claim of the plaintiff no. 1 Ext. 4 is the fire policy document dated 25.9.1985. The defendants also submitted certain papers, such as Ext. Kala letter written by the plaintiff No. 1 to the defendant no. 2 on 27.7.1987. Ext. Ka (1) is another letter written by the plaintiff No. 1 to defendant no. 2 on 29.3.1987. In these letters they renewed their claim in respect of damage to 435 bales of jute out of 4211 bales stored in their godown Ext. Ka(2) is another letter written by the plaintiff no. 1 to the defendant no. 2 on 15.11.1986 praying for reconsideration of their claim on the loss occurred due to water, damaging their jute Ext. Ka(3) is another letter dated 11.9.1986 by the plaintiff no. 1 to the defendant no. 2 enclosing certain documents for further consideration Ext. Kha is the fire policy dated 25.9.1986. Ext Ga is the survey report dated 24.8.1986 Ext. Gha is a fire claim made on 11.9.1986 made on behalf of both the plaintiffs. Ext. Uma is the forwarding letter dated 17.12.1985 from the Modern Surveyors Ltd. enclosing their preliminary report to the defendant no. 1 and Ext. Uma (I) is the preliminary report dated 20.11.1985 conducted by them.

5. The learned Judge at the trial considered the following issues:

1. Is the suit maintainable in its present form?

2. Is the plaintiff entitled to decree for money from the defendant as prayed for.?

3. Is the plaintiff entitled to any other relief?

The learned Judge on consideration of the evidence on record found inter alia that jute were stored in excess of 20,000 mounds as stipulated by Clauses 9 of the absolute warranty clause attached with the fire policy. On this and other finding the learned Judge, dismissed the suit. Being aggrieved the plaintiff no. 1 filed this appeal.

6. Mr. Syed Mahmudul Ahsan, Advocate, appears on behalf of the appellant while Mr. Munjur-Ur Rahim appears with Mr. A.H.M. Mushfiqur Rahman, Mrs. Afreen Mohiuddin, Advocates on behalf of the respondent No. 1 and Mr. Khondker A. M. Mohsen Uddin, Advocate, appears on behalf of the respondent No. 1 and Mr. Khondker A.M. Mohsen Uddin, Advocate appears on behalf of the respondent No. 5.

Mr. Syed Mahmudul Ahsan, the learned Advocate appearing on behalf of the appellant took us through the plaint, written statement the depositions and the judgment of the Court on 8.1.2002 on the first day of hearing and on his prayer the hearing was adjourned till 13.1.2002 and the matter was again taken up for hearing on 14.1.2002 but the learned Advocate was not available in Court in support of his contentions in the appeal. This conduct on behalf of the learned Advocate for the appellant is unfortunate to say the least.

7. It appears that the plaintiff Fibre Deals Ltd. took out a fine insurance Policy which was renewed from time to time and was taken again on 25.9.1985 for a period till 25.9.1986. During the subsistence of the said policy a fire broke out in an adjacent godown of one Surma Ltd. and the fire brigade not only sprayed water on the affected godown but also on all adjacent godowns in order to protect those from catching fire as a precautionary measure and in such a process the stored jute in the godown of the plaintiff no. 1 were also damaged by water. According to the claim of the plaintiff the quantity of the damaged jute was 531 bales. They immediately of course informed about the incident not only to the police and fire brigade and also to SBC. In due course a surveyor was appointed who by their report dated 24.8.1986 found that 435 bales of jute were damaged. But the defendant No. 1 by their letter dated 27.10.1986 repudiated their claim. The plaintiff made certain further correspondence praying for reconsideration of their decision on repudiation but failed. Ultimately the plaintiff no. 1 the owner of the jute which were insured along with Agrani Bank, Clay Road Branch, Khulna with which the said jute were pledged, instituted the instant suit.

8. It appears that the defendant no. 1 by its letter dated 27th October, 1986 (Ext. 30 repudiated the claim of the plaintiff no. 1 on the ground of storing 4211 bales of jute instead of 4,000 bales in the godown for keeping 211 bales in excess in violation of clause 9(a). of the warranty slip Clause 9(as) of the absolute warranties, attached to the policy document reads as follows:

9(a). The volume of all new godowns to be constructed shall not exceed 70,000 cubic feet nor shall such godown contain more than 4,000 pucca bales or 20,000 mounds of jute.

It appears that the said provisions is in respect of new godowns. The concerned godown of the plaintiff no. 1 was constructed on 1.7.1978 and admittedly was within the knowledge of the defendant (cross-examination of D.W. 1) but no effort was made on behalf of the defendants to bring it home to the knowledge of the plaintiff no. 1 as to whether their godown comes within the ambit of new godown or not when the policy was taken in 1985. Besides the D.W. 1 admitted in his cross examination that they knew from the monthly statements of jute stock that more than 4,000 bales of jute were used to be stored in the godown but they did not raise any objection. As such it appears that they acquiesced the excess storage of jute. In such circumstances the repudiation of claim of plaintiff no. 1 because of storage of excess quantity of 211 bales of jute in violation of clause 9(a) of the absolute warranties by the letter dated 27.9.1980 (ext. 3) issued on behalf of the defendant no. 1 had no legal basis and was done illegally.

9. The learned Judge, also found that since the loss occurred not due to fire but due to spray of water, the claim of loss by the plaintiff was not covered by the insurance of fire policy. This view of the learned Judge, is also not correct. In this case, there was no fire in the godown of the plaintiff no. 1. The fire occurred in a nearby godown as such, strictly speaking since there was no fire, there could not be any claim on a fire insurance policy but when there was a fire nearby with a serious apprehension that soon the concerned godown might also catch the same and as a precautionary measure, the fire brigade in their prudence, sprayed water around all the godowns. In clouding that of the plaintiff no. 1 in the case, although the godown of the plaintiff no. 1 itself did not catch fire but the cause cousins of loss is the fire, although occurred in the immediate neigh boarhound. In these circumstances, the plaintiff’s right to be indemnified cannot be denied because although the immediate cause of loss was water but it was actually due to fire.

It is very true that it is always for the plaintiff to prove his claim on preponderance of evidence. It is also true that neither in the plaint nor in their deposition the plaintiff did not make any endeavour to elaborate the extent of loss occasioned to their jute. How they salvaged and the cost involved in it and how they calculated their loss, whether there was any mitigation of their such loss, was not narrated but they simply stated that 531 bales of jute were damaged and they suffered loss to the extent of Tk. 5,13,350/-. They ought to have elaborated on their loss and these facts ought to have been brought before the Court, be that as it may it is not disputed that certain quantity of jute were damaged. This was found in the survey conducted by the defendants themselves. The survey report dated 24.8.1986 (ext. Ga) shows that 435 bales of jute were damaged causing loss to the extent of Tk. 1,89,394,90 paisa this survey report is not disputed by the defendants, rather damage to 436 bales of jute and the consequent loss to the extent of Tk. 1,89,394,90 was admitted on behalf of the defendants. Since the defendant at least impliedly admitted the damage caused to 435 bales of jute the plaintiff need not prove the said fact to that extent. It is proved on admission.

10. The next contention of Mr. Manzur ur-Rahim, the learned Advocate is that since the plaintiff no. 1 stated in their claim that 531 bales of jute were damaged whereas the finding of the survey report shows that only 435 bales were damaged, as such the plaintiffs claim was tainted with misrepresentation of facts and on that ground alone the claim of the plaintiff is liable to be repudiated because a contract of insurance is a contract of utmost good faith and in this connection the learned Advocate also referred to clause 13 of the fire policy document. But this contention of the learned Advocate is not correct. True it is that the contract of insurance being a contract uberima fiddle or utmost good faith, if there was fraud or misrepresentation by one of the parties to the contract, the other Party will be at liberty to repudiate the contract. But the statement of claimed damage to the alleged excess quantity of jute presupposes a contract entered earlier and it has got nothing to do with the validity of the said contract. The facts do not suggest that the validity of the said contract is at all an issue in this case. As such the contention of the learned Advocate that because of the discrepancy in the claim of damage disentitled the plaintiff of their claim on the insurance because of misrepresentation of fact and also because it was hit by clause 13 of the policy document is misconceived Clause 13 reads as follows:

11. “13. If the claim be in any respect fraudulent, of if any false declaration be made or used in support thereof or if any fraudulent means or devices are used by the instead or any one action on his behalf to obtain any benefit under this policy or, if the loss or damage be occasioned by the wilful act, or with 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 (in case of an arbitration taking place in pursuance of the 18th condition of this policy) within three months after the arbitrator or arbitrator or impire shall have made their award. All benefit under this policy shall be forfeited.”

A plain reading will show that this clause has got no manner of application-in this case. Had it been the case that no water was sprayed on the stored jute in the godown of the plaintiff or even if it was sprayed the damage was so insignificant that no claim can at all be made, in that case, the claim itself can be disallowed. But even in that case without rescinding the contract of insurance but within it, on the ground of failure to prove the alleged damage for which the insurance was taken. In this case, the plaintiff no. 1 claimed that their 531 bales of jute were damaged but the surveyor found damage to 435 bales of jute. The defendants may not agree with the claim of the plaintiffs so far 531 bales of jute is concerned and may rely on the survey report so far 435 bales is concerned. But it cannot on that ground repudiate the claim of the plaintiff. This discrepancy in respect of the quantity of jute damaged is a matter of opinion and may in circumstances vary and do not at all substantiate a case of misrepresentation of fact as envisaged under section 18 of the Contract Act or do not bring it within the ambit of section 17 of the Contract Act or even within clause 13 of the policy Document (Ext. Kha).

12. The learned Judge, next held that since the suit was filed much beyond the period mentioned in clause 13 and clause 19 of the policy Document the suit is liable to be dismissed. Clause 13 has already been quoted above. It requires that any suit challenging the rejection of the claim, if not filed within three months from such rejection, all benefit under the policy shall be forfeited. Clause 19, on the other hand, envisages that after the expiration of twelve months from the date of the happening of the loss, the corporation shall not be held liable. Clause 19 of the policy Document reads as follows:

19 In no case whatever shall the corporation be liable far 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.

Mr. Manzur Ur Rahman the learned advocate argued that since in this case the claim of the plaintiffs was repudiated on 27.10.1986 but the suit was filed long thereafter on 7.6.1988 the benefit, even if there be any had already been forfeited both under clause 13 and clause 19 of the policy Document. In this context the learned Advocate referred to the case of Sadharan Bima Corporation Vs. Sanjib Kumar Das 47DLR(AD)1995 97 and submitted that the instant suit was rightly dismissed.

13. In the case of Sanjib Kumar Das mentioned above Mustafa Kama (as his Lordship then was) scrutinized the impact of clause 13 and 19 of the policy Document. The upshot of this decision are as follows. Firstly clause 13 requires that the suit for a claim on the policy has to be filed within three months from the date of repudiation of the clause. Secondly clause 19 requires that such a suit has to be filed within twelve months from the date of happening of the loss. Thirdly after expiry of the periods, as mentioned in clause 13 or in clause 19, the assured may have his remedy but his right on the policy will be extinguished Fourthly, clause 19 may be deemed to be waived, it is not involved properly and in time.

14. In view of the legal position discussed above with special reference to clause 19 and clause 13 of the policy Document we are of the view that the plaintiff ought to have filed this suit within 12.11.1986, twelve months from the date of happening of the loss an 13.11.1985 or within 26.1.1987 three months from the date of repudiation of the claim on 27.10.1986 in view of the contractual provision couched in clause 13 and clause 19 mentioned above. The right of claim of the plaintiff on the insurance policy was forfeited after the expiry firstly on 19.11.1986 and then on 26.1.1987. It appears that this suit was filed as late as on 7.6.1988. Beyond the periods stipulated in the contractual provisions specifically spelt out in the policy document although this suit was filed within the period of limitation under article 86 of the Limitation Act still is liable to be dismissed, because of the failure of the plaintiffs to file the suit within the stipulated period as specifically mentioned in the policy document.

15. In the result the appeal is dismissed but without any order as to cost. Send down the L.C. record, forthwith.