JUDGMENT
1. In this appeal, the defendant challenges the judgment and decree in OS No.36 of 1980 dated 23-12-1985 on the file of the Additional Subordinate Judge, Guntur, decreeing the claim of the respondents-plaintiffs herein for a sum of Rs.1,01,313-39 with future interest at 6% from the date of the suit with proportionate costs.
2. The suit claim is for a sum of R.1,19,100/- towards damages of the insured tobacco goods. The first plaintiff does business in tobacco under the name and style of Famous Leaf Tobacco Company at Yetukur Road, Guntur and the second plaintiff is the bank with whom the plaintiff No.1 was having credit facilities under due hypothecation of the tobacco stocks and mortgage of properties and also under the promissory notes and other documents. The case of the plaintiff No.1 is that as per the policy cover note FD No.041521 dated 20th March, 1978, stocks of tobacco were insured for a value of Rs.11,00,000/- for a period of three months. Further the buildings and other properties were also insured for a value of Rs.3,00,000/-for a period of three months on the same date. Later, another slock of tobacco worth Rs.5,00.000/- was insured for a period of three months under cover note FD No.641540 dated 17-9-1978. The first plaintiff requested the defendant that the insurance coverage of Rs.5,00,000/- may be extended against the risk under ‘spontaneous combustion’ and accordingly the difference amount of premium at Rs.225/-was paid and the acceptance of coverage was issued by the defendant on 25-5-1978 for the period from 15-5-1978 to 15-8-1978. Thereafter, due to spontaneous combustion fire, the stock was damaged and the first plaintiff had addressed a letter dated 8-7-1978 for the necessary certificate and making a claim for the said loss. Accordingly, on conducting survey, a minimum value of Rs. 1,20,000/- together with expenses was assessed. However, inspite of such certificate, no amount was paid and the defendant by letter dated 19-2-1979 stated that no loss or damage had appeared and there is no liability under the policy. And further that the policy does not extend to such loss of the tobacco in question. After further correspondence, resulting in no payment, the present suit is filed.
3. The defendant appellant contested the suit admitting the existence of insurance but in two different policies one for Rs.11,00,000/- on 20-3-1978 and the second for Rs.5,00,000/- on 15-5-1978. It is only in policy No.13500/01/1/11245 for an amount of Rs.5,00,000/- for a period of three months from 15-5-1978 to 18-8-1978, as per the letter of the plaintiff No. 1 dated 17-5-1978 for extending the same for spontaneous combustion, that the same was extended. However, as regards the other insurance policy, the plaintiff did not seek any such extension to cover spontaneous combustion. Therefore, the tobacco stocks worth Rs.5,00,000/- covered under the spontaneous combustion risk can only be honoured and the question of covering any other such damage to the tobacco under the other policy docs not arise. The surveyor initially has conducted a comprehensive survey and submitted a report under a mistaken impression that both the policies cover the
spontaneous combustion clause. However, when it was noticed, immediately the plaintiff was intimated and thus the damage was correctly valued and it had repudiated the claim of the first plaintiff. Therefore, the plaintiff is not entitled to the entire claim except to the extent of Rs.54,890-26 falling within the contract of insurance with coverage.
4. On these and other various allegations made in the respective pleadings, the Court below framed the issues. During the trial, the plaintiff examined PWs.1 and 2 and marked Exs.A1 to A17 and the defendant examined DW1 and marked Exs.Bl to B9.
5. On a consideration of the evidence and material on record, the suit was decreed for a sum of Rs. 1,01,313-39 and for the rest, it was dismissed.
6. On hearing both the Counsel elaborately and by going through the record, the question which falls for consideration in this appeal is: whether the existing policies cover the liability towards the loss due to spontaneous combustion of the stock of tobacco?
7. The facts which are not in dispute are that the plaintiff had initially entered into a contract of insurance under Ex.A1 dated 20-3-1978 for the stock of tobacco worth Rs.11,00,000/- from the end of April, 1978 to 15th May, 1978 and thereafter on purchase of additional four or five lakhs worth of tobacco, he insured the further stock for five lakhs by seperate insurance cover under Ex.A2 dated 15-5-1978. In pursuance of a letter Ex.A3 dated 17-5-1978, the plaintiff requested the defendant for extending the coverage under the second policy towards the loss by spontaneous combustion. Accordingly, the defendant accepted the same under Ex.A4 of the even date and called upon the plaintiff to pay the additional premium of Rs.225A which was duly paid by the plaintiff No. 1 under Ex.A4 dated 25-5-1978. Ex.AS is authorised slip attached to the cover note and Ex.A6 is the policy. Later, due to the damage caused to the stock as a result of self combustion, the plaintiff set up the claim and the surveyor of the defendant submitted a report in Ex.A13 dated 22-5-1978 followed by two other reports in Ex.A14 dated 17-7-1978 and Ex.A15 dated 31-5-1978 which have been counter-signed by the Inspector of Central Excise also.
8. In support of the plaintiffs claim, the first plaintiff was examined as PW1 and supported by PW2, an officer incharge of the Vishwa Bharath Agro Products, Guntur. PW1 reiterates the allegations made as to the chequered events leading to the filing of the suit from the date of entering into the contract of insurance. DW1 the surveyor, had inspected the slocks on 14-7-1978 and 15-7-1978 and submitted the reports. The case of the appellant defendant is that the said reports were under a mistaken impression that both the pol icies for Rs. 11,00,000/- and Rs.5,00,000/- cover the additional risk of spontaneous combustion and accordingly he assessed the Joss at Rs.1,01,313-39. On the said mistake being found out, an additional report in Ex.B9 was prepared by DW1 on 10-1-1979 wherein he assessed the loss at a sum of Rs.54,890-26. The Court below has taken into consideration the application fifed by the plaintiff No.1 in Ex.A3 dated 17-5-1978 as covering the first policy also whereas it is the case of the defendant that the said application only pertained to the extension of such coverage under the second policy and there is no such application as regards the first policy nor Ex.A3 specifically shows as to seeking any extension tor the first policy also. The lower Court has, however, took the extension as covering the first policy also and decreed the suit. Therefore,
in view of the controversy as to whether the claim as made by the plaintiff towards the damage of tobacco covered under the insurance with the defendant, necessarily, it is the documentary evidence which will throw more light than the oral evidence as let in on behalf of both the parties. Ex.A1 admittedly is the insurance policy covering the stock worth Rs.11,00,000/-dated 20-3-1978 and Ex.A2 is the second policy covering the stock worth Rs.5,00,000/-. Therefore, there is no dispute that these two policies as originally entered into did not extend to the coverage of loss for spontaneous combustion. It is only in pursuance of the application filed by the plaintiff No.1 in Ex.A3 dated 17-5-1978, the said clause was incorporated in Ex.A2. Both the policies under Exs.A1 and A2 are almost similar in their terms and conditions except the value of coverage i.e., Rs.11,00,000/- and Rs.5,00,000/- respectively. Ex.A3 reads as follows:
“We have insured of our tobacco stocks worth of Rs.5,00,000/- on 15-5-1978 and the relative cover note is being issued for the same.
We request you to kindly include in the above policy for ‘spontaneous combustion’ clause also for our above stocks,
The difference of premium for the above will be paid through the bearer Mr. K. Balakristna Prasad by cash.
Please do the needful in the matter and oblige.
Thanking You,
Yours faithfully,
For Famous Leaf Tobacco Company.,
Sd/-
Proprietor,
G.T.D. Ramachandra Rao”.
9. From the above, it is evident that the plaintiff No.1 had only referred to the insurance of tobacco stocks worth Rs.5,00,000/- taken on 15-5-1978 and also the relative cover note therefor. And it is under this insurance, coverage was requested to be included for spontaneous combustion also. There is no reference to the policy under Ex.A1 dated 20-3-1978 for the stock worth Rs.11,00,000/-. Thus, the specific request is only restricted to the policy cover under Ex.A2 but not under Ex.A1. In Ex.A4 dated 25-5-1978, the defendant referred to the same insurance as only Rs.5,00,000/- and its expiry dale being 15-8-1978 and an additional premium of Rs.225/- was charged thereunder. However, there is no reference to the insurance of Rs.11,00,000/- as covered under Ex.Al. Ex.A5 only reiterates the clause on the coverage of spontaneous combustion. Therefore, it is evident that what all the plaintiff No.1 had sought for is the extension of coverage under spontaneous combustion as regards the policy under Ex.A2 atone but not under Ex.A1 and he paid the additional premium accordingly. Unless and until such coverage is also extended for the policy covered under Ex.Al, similar benefit cannot be availed of by the plaintiff No.l as there exists no such contract of insurance or insurable interest to fasten any liability on such specific clause. Each contract of insurance is independent with distinct insurable interest. In both, the sums assured are different. It also cannot be said that the second contract is contemporaneous with the first, so as to constitute a comprehensive contract. Neither the letter nor the terms indicale any such oneness nor any such intention from cither side can be culled out. Apparently, the surveyor has prepared the report under Ex.A13 comprehensively for the entire loss by taking note of the two policies. Subsequently, the same was varied with the filing of additional report in Ex.A15 by the same surveyor on 31-5-1978 for the
loss to cover and fall within the policy under Ex.A2 which comes down to Rs.54,890-26. It is well settled that the liabilities for damages by the Insurance Company arise only if there exists a contract of insurance specifically – the insurer undertaking to protect the insured from any such loss or damage on the happening of such an event subject to the payment of the necessary premia as contemplated. The contract for fire insurance policy is a speculatory or aleatory contract and the same is a personal contract specifically agreeing for payment of money if the party suffers any such loss or damage due to fire with reference to the property insured. Admittedly, the plaintiff No.1 had fire insurance policy under Exs. 1 and A2 though originally withoul a clause covering for spontaneous combustion. It is only with a view to extend such coverage specifically, the plaintiff No.1 himself sought the cover under Ex.A3 though restricting it to the policy under Ex.A2. The acceptance cannot go beyond the extent of offer made. There is no reference to Ex.A1 nor there is nay other evidence to show that a request was made and has been accepted by the defendant covering the spontaneous combustion for both the policies and any such premia were paid. Further, for all these policies, the plaintiff No.1 had paid independent premia. The fact that only one additional premium was paid also strengthens the extension of such coverage only under one policy rather than two. The Court below has simply relied on Ex.B6 the first report and sought to allow the claim in its entirety taking in both the policies. However, there is no such basis to show the existence of any such contract of insurance or specific extension in this regard especially under Ex.A1. Accordingly, it has to be held that the plaintiff No.1 would be entitled to damages for the loss sustained to the goods as covered under Ex.A2 but not under Ex.A1.
10. On behalf of the respondent-plaintiff No.1, an objection was raised that there is no specific plea taken by the appellant-defendant as to such under valuation and accordingly the same cannot be permitted. It has to be noticed that the dispute as sought to be raised by the defendant is not on the quantum as such but the fixation of liabilities under the individual policies, if covered. Therefore, the question of any under valuation does not arise. It has been the case of the appellant-defendant even in the written statement that the said extent of cover for spontaneous combustion is not extended under both the policies but only under Ex.A2. Accordingly, the parties have also let in evidence in this regard and the Court below has also taken note of such a plea, though rejected. In these circumstances, I do not find any merit in the said objection and the same is rejected.
11. In view of the above, the appeal is partly allowed decreeing the suit only to the extent of Rs.54,890-26 and dismissing for the rest of the claim. However, in the circumstances, there shall be no order as to costs.