JUDGMENT
1.This suit was instututed by Smt. Jayashree Roy Choudhury the soleproprietor of the business under the name of Industrial Distributors against the Oriental Insurance Co. Ltd., for realisation of a sum of Rs. 66,500/- on account of compensation for the loss of 190 gas cylinders, which according to the plaintiff were lost due to risks covered under the Burglary Insurance Policy bearing No. 3130/22/C/Misc./760/DP/79 dated 6th July, 1979. The said insurance policy was originally for the period from 7th July, 1979 to 7th July, 1980 (4 PM). By and under a special endorsement dated July 7, 1980, the said policy was renewed for a further period of 12 months from 7th July, 1980 to 7th July, 1981 (4 PM).
2. According to the plaintiff on the night of February 17-18, 1981, at about 2AM, a burglary took place at the godown of the plaintiff at No. 99C, Kankulia Road, Calcutta, where the insured goods were kept by the plaintiff. By reaosn of the said burglary, according to the plaintiff, 190 gas cylinders stored at the said godown were taken away by the burglers and were lost to the plaintiff. The
plaintiff claims the value of the said 190 gas cylinders which according to the plaintiff, was Rs. 350/- for each gas cylinder. The plaintiff was also claims in this suit interest at the rate of 18% per annum from July 1, 1983 until the date of the institution of the suit as also interim and further interest and costs.
3. In the written statement the defendant does not admit that the plaintiff had any insurable interest in the goods lost. The defendant also denied that the loss, if any, was covered by the insurance policy. The defendant also disputes the quantum of loss as alleged to have been suffered by the plaintiff. The further case of the defendant is that the contract of insurance became void by reason of omission of material fact from the proposal form. According to the defendant, the defendant in course of the enquiry by the Surveyor of the defendant and by the report of the surveyor, came to know that there were earlier instances of burglary in the godown in question and according to the defendant, the said facts with regard to the earlier burglaries which took place prior to July 7, 1979 were not mentioned in and/or were omitted to be mentioned in the proposal form and as a result thereof, the contract of insurance became void.
4. The further case of the defendant is that the policy of insurance was issued in favour of Central Bank of India. Ballygunge Branch, Calcutta-700 029 as mortgagees and M/s. Industrial Distributors as mortgagors’. According to the defendant the said Central Bank of India is a party to the contract and the defendant’s case is that the bank is a necessary party to the suit. As the said Central Bank of India has not been made a party to the suit either as plaintiff or as defendant, the suit according to the defendant, is not maintainable and is liable to be dismissed, on that ground alone.
5. At the time of the trial, the following issues were framed.
1.a) Did the plaintiff suffer any loss in respect of 190 Gas Cylinders as alleged in the plaint?
b) Did the plaintiff have insurable interest in the goods lost?
2. Is the alleged loss, if any, covered by the Insurance Policy?
3. What is the quantum of loss as suffered by the plaintiff?
4. Was the contract of insurance void by reason of omission of any material fact from the proposal form as alleged by the defendant?
5. Is Central Bank of India a necessary party in the above suit? If so, to what effect?
6. To what relief or reliefs is the plaintiff entitled?
6. Before I proceed to consider the various issues in the suit it should be noted that originally the written statement was filed by the defendant on 1st February 1985. Neither in the correspondence which was exchanged, as between the parties pursuant to the claim preferred by the plaintiff nor in the said original written statement, any point was taken by the defendant with regard to the non-joinder of the said Central Bank of India nor was its stated that the bank was a necessary party to the suit. It appears that the defendant obtained an order for amendment of the written statement on 19th April, 1991 i.e., after about six years after the original written statement was filed. It appears that pursuant to the said order, dated 19th April, 1991, the original written statement was amended and a further paragraph numbering 10 A was added to the written statement which inter alia states that the Central Bank of India was a co-assured and/or joint promisee along with the plaintiff and that the said co-assured and/or joint promisee has not been implead-ed in the suit either as plaintiff or as a defendant as required in law and that the suit was not maintainable and was liable to be dismissed in limine. The said paragraph however does not appear to be verified and there is no re-verification in support of the said paragraph. The said amendment was incorporated on 26th April, 1991 and the earlier verification which was made on 30th January, 1985 by Sudhin Kumar Ganguly could not and does not even purport to verify the said paragraph 10A. The law requiries that the written statement has to be verified. However, it can probably be urged on behalf of the defendant that the said point is a pure question of law and the Court can raise an issue on the poit of law even without the same being there in the written statement. Such issue has in fact been raised and the parties have led their evidence on the basis of the said issue. As such, I do not think that at this stage it will be right for this Court to disallow the
issue on the basis that the amendment was at all verified as required under law.
7. The other important fact to be noted is that after the said amendment was carried out by the defendant introducing the new defence, the plaintiff made an application for amendment of the plaint and for addition of the said Central Bank of India as a party defendant to the suit. According to the plaintiff, the Central Bank of India had no interest in the subject-matter of the claim and that the said Central Bank of India is not a necessary party to the suit. The plaintiff however, wanted to make the said Central Bank of India as a party to the suit in view of the defence taken by the defendant. The plaintiff even relied on a letter dated 25th March, 1991 whereby the bank had certified that it had no interest in the goods covered by the said policy. The defendant however opposed the said application and the said application in view of the respective cases taken by the parties, was rejected by Court.
8. The plaintiff examined Deepnath Roy Chowdhury as witness on behalf of the plaintiff. The said Deepnath Roychowdhury is the son of the plaintiff. The defendant examined one Nani Gopal Ghatak, an Assistant Manager of the defendant Companyposted in Division III thereof, which issued the policy.
9. The policy covers loss or damage by house breaking or burglary or any attempt thereat or if there shall arise any damage by the risks insured against or falls to be made good by the insured, then the Company shall pay or make good to the insured such loss or damage to the extent of the intrinsic value of the property so lost or to the amount of damage so sustained. The words ‘house breaking or burglary’ have been defined in the policy itself which according to the policy shall mean– “(a). Theft of property from the premises described in the Schedule to this policy falling upon felonious entry in the said premises by violent and forcible means or (b) — Theft by a person in the premises who subsequently obtains exit by practicing violent and forcible means’. This means that the entry or exit should be obtained by violent and forcible means.
10. The schedule to the policy mentions that the same is subject to agreed bank clause as per slip attached. Such agreed bank clause inter alia provides as hereunder; (i). That
upon any moneys becoming payable under this policy the same shall be paid by the Company to the bank and such part of any moneys so paid as may relate to the interests of the other parties insured hereunder shall be received by the bank as agent for such other parties”. This clause means, that in a given case, where the claim or part thereof relates to the interest of the mortgagor, the bank will receive such claim as agent of the mortgagor. When money becomes payable under the policy, it may relate to the interest of the mortgagee or mortgagor or both of them in part. If the money payable relates to the interest of the mortgagee, the same goes to the mortgagee on its own account, to the extent of mortgagees interest. The balance is received by the bank as agent of mortgagor.
11. I shall now consider the different issues which have been raised in this suit.
Issue No. 1 (a). This is with regard to the fact as to whether the plaintiff suffered any loss in respect of 190 gas cylinders as alleged in the plaint. The evidence of the plaintiff’s witness is that the said godown was kept under locks during night. According to the said witness the incident of burglary took place sometime betwen 2 A.M. to 3-30 A.M. on the night of February 17 and 18, 1981. The miscreants had cut the boundary wall and had also broken several padlocks and entered the godown. The tied up the durwans and guards and went away with 190 gas cylinders. The witness, though not present at the time of burglary, yet he was informed over phone by the godown keeper after the miscreants had left. He immediately informed the police and the police had come. The police checked everything the stock book register and they found the broken locks and the diary was lodged and later the Insurance Company was informed about the burglary (Q. 36). Further evidence of the said witness is that he went to the place of occurrence, as soon as he was informed about the incident and he himself saw the broken locks and the marks on the gates. He also said that the time gap after the incident took place was half an hour from the time of the receipt of the information over phone (Q.47 to 49). Apart from this, the Insurance Company appointed a Surveyor shortly after the incident on or about the 28th February, 1981. The said Surveyor in his report had accepted the occurrence of burglary. The said surveyor in his report has inter
alia stated that about 20 miscreants came on the place of occurrence. They scaled the wall. He has also accepted that the said miscreants apprehended Debdas Mitra and Mehta and put them inside the office room after binding them with a rope. The miscreants broke open the locks on the collapsible iron door and G.I. sheet door of the godown. According to the said surveyor’s report, the stock records of the plaintiff who scrutinised and were found to have been properly maintanied. According to stock records the insured had in all 809 cylinders, out of which 279 were empty cylinders. As per the said report, after the incident only 619 gas cylinders remained and 190 cylinders were found to be missing. The Surveyor also says that the surveyor made a physical checking and the number of cylinders so ascertained exactly tallied with the book balance. In the said report the Surveyor further states that cylinders are supplied by the Indian Oil Corporation at the rate of Rs. 350/- per cylinder. On making of the calculations the said Surveyor came to the conclusion that the total value of the cylinders lying in the insured, godown was Rs. 3,0,456/-and the insurance was only for Rs. 3 lakhs. As such, there was under insurance to the extent aforesaid. The Surveyor takes out the average and according to him, the loss covered by the policy only came to the extent of Rs. 65,310/-though the value of the lost cylinders was Rs. 66,500/-. He reduced the figure of the loss covered by the policy on the ground of under insurance. It has been submitted that the plaintiff is willing to accept the claim only to the extent of Rs. 65,310/- in view of the report of the surveyor and the plaintiff does not press for the balance sum of Rs. 1190/- which has been reduced by the Surveyor on the ground of under insurance.
12. There is also a police report (Ext. D1) which has been tendered in evidence and the said report gives the abstract of the particulars of the occurrence. According to the said report between 2 hours and 3-30 clocks in the morning, a burglary took place at the godown at 99C. Kankulia road and a theft was committed in respect of 190 gas cylinders from there by unknown persons. The said police report was also received by the defendant-Insurance company.
13. Mr. Ghatak, the witness on behalf of the defendant, went to the extent of saying that but for the discovery with regards to the
omission and/or misstatement in the proposal form, the claim of the plaintiff would have been paid. Mr. Ghatak was only relying upon the survey report. Even the letters for rejection of the claim only mentions grounds of concealment/non-disclosure of the material facts in the proposal form. There are tetters and documents to show that the Indian Oil Corporation made a claim against the plaintiff for the value of the 190 gas cylinders which were lost as a result of the said burglary and there is also evidence on record which proves that the plaintiff paid a sum of Rs. 66,500/- to the Indian Oil Corporation as the value of the said lost gas cylinders.
14. Taking into account the entire evi
dence of the record, I am of the view that the
plaintiff did suffer a loss in respect of 190 gas
cylinders as a result of the said incident of
burglary and the Issue No. l{a) is answered in
the affirmative.
15. Issue No. 1(b) : The case of the plaint tiff is that the said empty gas cylinders were the properties of the Indian Oil Corporation which were being held by the plaintiff at the relevant time as a bailee on behalf of the said Indian Oil Corporation. The further evidence is that the said Indian Oil Corporation made a claim on account of the said 190 lose cylinders to the extent of Rs. 66500/ – and the said claim of the Indian Oil Corporation which is also a Government of India concern, was duly paid by the plaintiff. The plaintiff as a bailee of the said empty gas cylinders had an insurable interest in the said gas cylinders and actually did pay the claim of the Indian Oil Corporation in respect of the said lost cylinders. The learned Counsel on behalf of the defendant did not dispute that the plaintiff did have insurable interest in the said gas cylinders. This Court is also of the view that the plaintiff did have insurable interest in the goods lost and the Issue No. 1(b) is accordingly answered in the affirmative.
16. Issue No. 2 : So far as this issue is concerned, it has been pointed out on behalf of the defendant that it is for the plaintiff to prove that the gas cylinders were covered by and under the insurance policy and the same were lost by the burglary within the meaning of Clause 1 of the said policy. The fact that gas cylinders are covered by the policy, appears from the schedule to the policy which clearly mentions the item ‘Gascylinders (both full and empty)”. Therefore, it cannot be said that
gas cylinders (both full and empty) were not the items of properly or articles insured, because the same is clearly stated in the policy itself. The said gas cylinders were the properties of the Indian Oil Corporation and the plaintiff was a bailee in respect thereof which is also proved by the evidence. It is also proved that the said bailor. Indian Oil Corporation made a claim from the plaintiff and the plaintiff had to pay the said claim for the value of the lost cylinders. A bailee has insurable interest, and the said fact is not disputed. In fact the said item of property was an insured item and the said fact cannot be disputed.
17. Even so far as the incident is concerned, it is proved from the evidence on record that the entry into the godown was obtained by breaking the locks which is a violent entry or an entry by force. The witness himself saw the broken locks which were seized by the police immediately after the incident. The surveyor did not dispute and rather accepted that the loss was covered by the insurance policy. The witness on behalf of the defendant also in his evidence stated that the loss would have been paid, but for the discovery of the misstatements and/or suppression in the proposal form. I am, therefore, of the view that the loss which the plaintiff suffered was covered by the insurance policy and the issue No. 2 is answered accordingly.
18. Issue No. 3 : From the evidence on record, 1 am satisfied that the quantum of loss as suffered by the plaintiff amounted to Rs. 66,500/- and the Issue No. 3 is answered accordingly. However, in view of the fact that the plaintiff is not pressing its claim except to the extent as accepted in the surveyor’s report on account of under insurance, the quantum of loss is assessed at Rs.65,310/-.
19. Issue No. 4 : So far as the Issue No. 4
is concerned, the case of the defendant is that the plaintiff did not disclose in the proposal form the incident of burglary that took place prior to the date of submission of the proposal form. The original proposal form which was in possession of the defendant has not been produced not tendered in evidence. The defendant has tendered in evidence two xerox copies of the proposal form which vary from each other. Which one of them is the correct copy of the original proposal form could not be proved by the witness on behalf of the defendant and the said witness was also in-
competent to prove that. The xerox copy of the signature purporting to appear on one of the copies of the proposal form also could not be proved by the witness on behalf of the defendant. The witness on behalf of the plaintiff has stated in evidence that he does not know the writings and/or the signatures. There is no evidence on record to prove the handwritings or the signatures on the proposal form.
20. Even assuming that Ext. 2 is the correct copy of the proposal form, then also the grievance made is that is answer to question 6 of the plaintiff has not disclosed all the incidents as referred to in the surveyor’s report in the column ‘remarks’. The surveyor has not been called to give evidence in this suit. The alleged incidents which are alleged to have taken place on 20th October, 1975 and 20th April, 1977 are instances of snatching of cash money whilst in transit and cannot possibly have anything to do with any burglary or theft at the insured godown. There is no evidence on record to prove the happenings of any incident on 30th January, 1977. The plaintiff’s witness denied that there was any burglary on 30th January, 1977 and the language used in the paragraph under the heading ‘remark’ with regard to the incident of 30th January, 1977 and 25th June, 1978 is vague. It cannot be said in which incident, cash was involved or in which incident cylinders were involved and in which case both were involved. The only incident and/or occurrence which have been proved is the incident taking place on 25th of June, 1978. So far as the said incident dated 25th June, 1978 is concerned it also appears that the defendant company itself was the insured at the time of the occurrence and claim in respect thereof was made by the plaintiff from the defendant. The principles that govern cases like this has been discussed in the case (Rohini Nandan v. O.A. & G. Corporation).
In the said case it was held as follows:
“A contract of insurance is contract uberrima fides and there must be utmost good faith on the part of the assured. This imposes a duty and an obligation on the assured to make a full disclosure of all material facts which would affect the mind of the insurer whether to accept the risk or not and on what terms. The duty is to disclose material facts only. A false answer or non-disclosure or
concealment of a material fact will avoid the policy even though there is no fraud and the concealment is innocent.
To a claim under the insurance policy, a defence of concealment of material facts is available to the insurer, which, if established, will avoid the policy. In order to establish its defence of concealment, the insurer must prove: (1) that the facts alleged to have been concealed by the assured were true; (2) that they were material facts, and (3) that they were within the special knowledge, of the assured, Burden of proving these three facts is on the insurer who sets up this defence.
Where to a claim under the policy of insurance concealment of material facts is alleged by the insurer as entitling him to avoid the policy, the Court has to consider what is a material fact. Whether a particular fact is material depends upon the circumstances of a particular case. Evidence of materiality is not always necessary. Materiality in a particular fact may be obvious from its very nature. The test to determine materiality is whether the fact has any bearings on the risk undertaken
by the insurer. If the fact has any bearing on the risk it is material fact, if not it is
immaterial, (1922) 2 AC 413 (433) Ref.
Where a policy of insurance against burglary contained, inter alia, the question : Have you ever sustained a loss by fire, burglary, house-breaking and larceny?” to which the assured replied in the negative :
Held that the fact of burglary having been committed five years back in the ground floor of the same premises had no bearing on the risk undertaken by the insurer by insuring goods in the first floor of the same premises and that the fact of the previous burglary was not a material fact. Tart 338, Disting.”
21. That was a case of a burglary insurance and there was also a non-disclosure with regard to the previous occurrence. Justice P.C. Mallick held in the said case that in order to declare a policy void the non-disclosure and/or the misstatement has to be material. The learned Judge held that the said nondisclosure and/or misstatement was not material. The case before Justice P.C. Mallick as aforesaid is practically an identical case as the case before this Court and after looking into the facts and circumstances of this case and also in view of the aforesaid judgment, I |am of the view that even assuming that the
said Ext. 2 is to be taken as a correct copy of the original policy then also it cannot be said that there was any non-disclosure of mis-statement as to any material fact. In my opinion, it cannot be said that because there has been one or two instances of burglaries in the past, the same in any manner increases the possibility of any further occurrence of burglary. Even in this case, after the contract of insurance, there was a burglary on 18th January, 1980. A claim was preferred with the insurance company and in the said claim form the incident that took place on 25th June, 1978 was referred to and disclosed. Even after the said incident of 25th June, 1978 was disclosed to the insurance company and a claim lodged before the insurance company, the insurance company did not challenge the validity of the contract of insurance. On the other hand it continued the cover of insurance even after the knowledge of the incident of June, 1978. By that time the insurance company had knowledge of the claim on account of the incident of 18th January, 1980 and the insurance company had paid the claim of the plaintiff with full knowledge of the incident of June, 1978. Not only this the insurance company even after the knowledge with regard to the incident of 1978 as also the incident of 1980 renewed the contract in July, 1980 for further one year and received the premium for further one year. If at all the incident of 1978 or of 1980 had been or was material, then the insurance company could easily refuse to renew the contract if insurance for further one year but the insurance company received the premium and renewed the contract for further one year. Even after the incident of 17/18th February, 1981 the contract of insurance was allowed to continue for the rest of the contracted period. It was not disputed that the insurance company had . the right if it so desired to avoid the contract for future purposes with effect from any particular date.
22. All the aforesaid facts and the conduct of the defendant company go to show that the previous incident or occurrence of burglary is not material for a contract to take effect from a future date. Furthermore, in the facts and circumstances of this case, the insurance company itself did not consider the said previous incident of June, 1978 to be material even after the same was disclosed and did not consider the further incidents of January 1980 and February 1981 to be
material, even logically it cannot be said that an incident of burglary can be the cause of further incident of burglary, or that it increases the likelihood of further burglary.
23. In the circumstances, I am unable to accept the case of the defendant that the contract of insurance was void or trial the defendant has proved the proposal form or that there was any omission of any material fact. The Issue No. 4 is therefore answered in the negative.
24. Issue No. 5: In the instant case the articles that were lost were the empty cylinders. The evidence on record clearly proves that the said cylinders were the property of Indian Oil Corporation which is a Government of India Organisation. The said Government of India Organisation even realised the money from the plaintiff, who was the bailee of the goods. The witness on behalf of the plaintiff has stated that the plaintiff could not and was not entitled to mortgage or hypothecate the same empty cylinders to the bank, as the same was not even the property of the plaintiff. The witness on behalf of the plaintiff has said that it was a loss of the property of the Indian Oil Corporation while the same was in the custody of the plaintiff. The said empty cylinders were not and could not be mortgaged to the bank. The plaintiff has also tendered in evidence letters from the said bank which inter alia state that the bank was not interested in the claim preferred by the plaintiff in respect of the said 190 empty gas cylinders. The bank has also stated that the gas cylinders were not within the items of mortgage or charge in favour of the bank. The plaintiffs evidence also shows that the bank was not at all interested in the claim. In the contract of insurance the bank was not the party who made any proposal or offer to the defendant. The bank was only made beneficiary at the instance of the plaintiff to the extent of the interest of the bank. It is clearly mentioned in the agreed bank clause that so far as the claim of the other insured is concerned, the bank will only receive the claim as agent on behalf of the other insured i.e. the plaintiff. The total loss was suffered by the plaintiff. The bank never made any claim from the defendant. There is no subsisting hypothecation or charge in favour of the bank. According to the evidence of the plaintiff the bank is not at all interested in the instant claim. If at all it was
the case of the defendant that the bank is interested party, then there was nothing to preclude the defendant from calling somebody from the bank to give evidence in this suit. If the bank had no subsisting claim or interest in the property loss, the bank could not possibly be expected to make a claim in respect of the loss of the property which was not even mortgaged to the bank. Furthermore, as the things stand to-day, the bank has no subsisting claim whatsoever as against the plaintiff on account or any loan or hypothecation. In the facts and circumstances of this case, I am of the view that the Central Bank of India had no interest in the subject-matter of the suit and/or the property lost and in my opinion, the said bank is not a necessary party in the above suit. Furthermore, the agreed bank clause only becomes operative upon any moneys which become payable under the policy. If the bank has interest as morgagee then the bank can retain the amount to the extent of its claim and if the money is payable relate to the interest of the other insured namely, the plaintiff, the same is received by the bank as agent for the plaintiff. It has been submitted on behalf of the plaintiff that the agency of the bank as it stands is not coupled with interest and the same is revocable at the option of the principal and an agent is not a necessary party to the suit nor can the agent sue or be sued unless there is a contract to the contrary. In the facts of this case, neither the bank preferred any claim at any stage nor was it the case of the defendant at any point of time that the bank had any interest in the subject-matter of the claim. Even, in the original written statement no such point was taken. It was only in 1991 that the defendant took this point by amending the original written statement. It is to be noted that after such amendment, the plaintiff made an application for adding the bank as a party defendant. The defendant however resisted such an application. All that the plaintiff wanted to establish was that the bank had no interest. Having resisted the prayer for addition should the defendant be allowed to say that the bank had interest considering the entire facts and circumstances of this case, 1 am of the view that the loss was suffered by the plaintiff alone and the property lost belonged to the Indian Oil Corporation and the plaintiff alone had insurable interest therein as a Bailee. The articles insured were not and could not be mortgaged or hypothe-
cated to the said bank and the question of the bank having any interest therein could not and did not arise in this case. The letters written by the bank arc also to the same effect. The issue No. 5 is therefore answered in the negative.
25. There will, therefore, be a decree in favour of the plaintiff and against the defendant for a sum of Rs. 65,310/-. There will also be a decree for interim interest and interest on judgment at the rate of 12% per annum and for costs.
26. Order accordingly.