ORDER
P. Sathasivam, J.
1. First defendant in O.S.No.20 of 1987 on the file of the Additional Subordinate Judge, Cuddalore has filed the above appeal. The plaintiff/respondent herein filed the said suit against the first defendant and 15 others, for recovery of a sum of Rs.30,41,285.30 from the first defendant with interest thereon at the rate of 19.5 per cent per annum from the date of suit till date of payment. By judgment and decree dated 25.10.90, the Court below has granted a decree for Rs.19,18,792 with interest per annum at 12 per cent per annum from 5.10.83 to 29.9.86, and from the date of the suit till date of
realisation with proportionate costs, hence the present appeal by the first defendant.
2. The case of the plaintiff is briefly stated hereunder:- The plaintiff entered into a contract of insurance with the first defendant on 12.9.1983 to cover the second defendant’s buildings, machinery, stocks of all kinds, raw materials, gunny bags, barrels, tins, firewood waste cashew nut shells, etc., stored and are lying in the building at Survey No. 195/1, Neyveli Road, Panickenkuppam village, Panruti Taluk, South Arcot District, against risk of fire, riot, etc., for a period between 12.9.83 and 12.9.84. The defendants 7 to 12 stood as guarantors to the loan transaction between the plaintiff and the 2nd defendant firm. The first defendant issued a policy of insurance to the plaintiff on 17.9.83. Under the policy, the first defendant is bound to indemnify the plaintiff against any loss or damage the plaintiff may suffer or incur because of loss or damage to the properties of 2nd defendant covered by the said policy of insurance, due to fire, riot, strike, etc., to the extent of Rs.53 lakhs. On 5.10.1983, there was a big fire in the second defendant’s factory at Panickankuppam village. Due to the fire, the properties covered by the contract of insurance in question suffered a heavy loss. As per the contract of insurance, the first defendant is liable to make good the loss suffered by the plaintiff as well as the 2nd A suit is filed defendant. A suit is filed to recover a sum of Rs.19,18,702. After taking long time, the first defendant repudiated the claim of the second defendant on untenable grounds by its letter dated 23.9.85, received by the plaintiff on 28.9.85. Thereafter, inspite of deliberations and representations, the first defendant has not chosen to settle the claim; hence the present suit.
3. The first defendant filed a written the statement wherein Insurance Company admitted the policy of insurance. However, it is stated that their liability if any is subject to the terms and conditions of the policy and clauses attached to and forming part of the said policy. The plaintiff has no valid cause of action inasmuch as they have instituted a suit on 29.9.86 beyond a period of 12 calendar months from the date of disclaimer of liability as per condition No. 19 of the policy in question. The date of repudiation is 23.9.85 and the 12 calendar months from the date of disclaimer expired on 23.9.86. The claim should be dismissed for not having been made as a subject matter of a suit in a court of law within the period stipulated under condition 19 of the policy in question. The insured failed to comply with condition No.3 before the occurrence of the alleged loss. The insured had two policies of insurance with United India Insurance Company Limited during the period between 29.4.83 and 29.4.84. The insured/plaintiff failed to notify this material fact to the first defendant as provided under condition No.3 of the policy and hence committed breach of the policy conditions. In any event, it is stated that the loss of property to the value of Rs. 19,19,892 is erroneous.
4. In the light of the above pleadings, two witnesses were examined on the side of the plaintiff as P.Ws., 1 and 2 and Exs. A-1 to A-27 were marked,
on the other hand, on the side of the contesting first defendant. No witness was examined and no document was marked. The learned Subordinate Judge after framing necessary issues and after considering the oral and documentary evidence, accepted the case of the plaintiff and granted a decree for Rs.19,18,792 with interest at 12 per cent from 5.10.83 to 29.9.86, and from the date of the suit till date of realisation with proportionate costs.
5. Heard the learned counsel for the appellant as well as respondent.
6. Mr. Nageswaran, learned counsel appearing for the appellant, after taking us through the pleadings of both parties, oral and documentary evidence as well as the judgment of the learned Subordinate Judge, would contend that,
(i) the suit filed on 29.9.86 is beyond the period of 12 months from the date of disclaimer-Ex.A-12; accordingly the Sub Court ought to have dismissed the suit on the ground of limitation;
(ii) inasmuch as condition No.19 of the policy of insurance is valid and acceptable on the date of the filing of the suit, namely, 29.9.86, nothing survived and the trial court ought to have dismissed the suit;
(iii) inasmuch as the plaintiff has suppressed the earlier policy and in view of condition No.3, the learned Subordinate Judge ought not to have granted any relief.
7. On the other hand, Mr. S. Sampathkumar, learned counsel appearing for the respondent/plaintiff has raised the following contentions:-
(i) Condition No.19 of the policy is void as per amended Section 28 of the Indian Contract Act;
(ii) Inasmuch as the appeal is the extension of the suit, it would be open to this Court to consider the validity of condition No. 19 in view of the amended section 28 of the Indian Contract Act;
(iii) Even otherwise, as per condition No.19, twelve months period from 28.9.85 namely, the date of receipt of repudiation letter dated 23.9.85 expired on 28.9.86 and the said last date, namely, 28.9.86 being a Sunday, the suit filed on 29.9.86 is within the prescribed time;
(iv) inasmuch as the plaintiff Bank received the disclaimer letter only on 28.9.85, the last day being a Sunday, the suit filed on 29.9.86 is quite proper. Even if it is accepted that the time limitation Act and the General Clauses Act are not applicable to private contracts, as per the general principles enshrined in the Maxims lex non cogit ad impossibilia actus curiae neminem gravabit which have been upheld by judicial decisions, the suit filed on 29.9.86 is within the period of limitation; and
(v) Since before the occurrence of the the loss or damage (5.10.83), the prior policy had been cancelled at their request with effect from 26.9.83, and there was no other policy with any other insurance company on the date of the accident, condition No.3 cannot be applied.
8. We have carefully considered the rival submissions.
9. There is no dispute that on account of the second defendant to whom the plaintiff Bank had advanced money, the plaintiff entered into a contract of insurance with the first defendant on 12.9.83 to cover the second defendant’s buildings, machinery, stocks of all kinds, raw materials, etc., stored and are lying in the building at Survey No.195/1, Neyveli Road, Panickenkuppam village, Panruti Taluk, occupied as Cashew Factory and/or dwelling house, against risk of fire, riot, etc., for a period between 12.9.1983 and 12.9.84. The defendants 7 to 12 stood as guarantors to the loan transaction between the plaintiff and the second defendant. It is also not disputed that the first defendant-Oriental Insurance Company issued a policy of insurance to the plaintiff on 17.9.83 through its Sivakasi office. As per the terms of the policy, the first defendant is to indemnify the plaintiff against any loss or damage the plaintiff may suffer or incur because of loss or damage to the properties of the second defendant covered by the said policy of insurance, due to fire, riot, strike, malicious damage, storm or flood to the extent of Rs.53 lakhs. It is also not disputed that on 5.10.83, there was a big fire in the second defendant’s factory at Panickankuppam village, Panruty taluk. Due to the fire, the properties covered by the contract of insurance in question suffered a heavy loss. It is the case of the plaintiff Bank that as per the contract of insurance, the first defendant is liable to make good the loss suffered by the plaintiff as well as the 2nd defendant. Due to the fire accident and with regard to the loss suffered, the claim of the plaintiff was repudiated by the first defendant-insurance company on 23.9.85. The said disclaimer letter dated 23.9.85 has been marked as Ex.A-12. The policy of Insurance has been marked as Ex.A-8. By relying on condition No. 19 of the policy, the first defendant would submit that the plaintiff has no valid cause of action inasmuch as they have instituted a suit only on 29.9.86 which is beyond the period of 12 months from the date of disclaimer of liability as per condition No. 19 of the policy. In this regard, it is the contention of the respondent/plaintiff that as per amended Section 28 of the Indian Contract Act, condition No. 19 of the policy is void and cannot be enforced. In the light of the rival contentions, it is useful to refer the condition No.19 of the policy in question:-
“No. 19. In no case whatsoever shall the company be liable for any loss or damage after the expiration 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 ihe 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.”
By heavily relying on the said condition (condition No.19), learned counsel appearing for the appellant would contend that since the 12 months period from the date of disclaimer, namely, 23.9.85 expired long back, the learned-Subordinate Judge ought to have dismissed the suit as barred by limitation. Before considering this contention which is based on merits, we shall consider the other legal aspects. We have already extracted the condition No.19 of the
policy-Ex. A-8. Learned counsel for the appellant even at the beginning, by relying on a decision of the Apex Court in National Insurance Company Ltd. v. Sujir Ganesh Nayak and Company, , would contend that the said condition in the policy is valid and acceptable. Before considering the decision of the Supreme Court, it is useful to refer the unamended section 28 of the Indian Contract Act, 1872, which stood as on the relevant date:-
“28. Agreement in restraint of legal proceedings void, -Every agreement, by which any party thereto is reslricted absolutely from enforcing his rights under or in respect of any conlract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights, is void to that extent;
Saving of contract to refer to arbitration dispute that may arise :
Exception 1, -This section shall not render illegal a contract, by which two or more persons agree that any dispute which may arise between them in respect of any subject or class of subjects shall be referred to arbitration, and that only the amount awarded in such arbitration shall be recoverable in respect of the dispute so referred.
Saving of contract to refer questions that have already arisen
Exception 2, -Nor shall this section render illegal any contract in writing, by which two or more persons agree to refer to arbitration any question between them which has already arisen, or affect any provision of any law in force for the time being as to reference to arbitration.”
With reference to the condition of the policy providing shorter period than the period prescribed by law, namely, Section 28 of the Indian Contract Act, the Supreme Court in the above decision has held thus:- (para. 17)
“17. 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 provides 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…”
As per ihe decision of the Supreme Court, though 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. Accordingly, the policy of insurance provides that if a claim is made and rejected and no action is commenced within the fime stated in the policy, the benefits flowing from the policy shall stand extinguished and any subsequent action would be time-barred. In the light of the above mentioned decision, there is no hesitation in holding that condition No. 19 of the policy is valid and acceptable. Mr. S. Sampathkumar, learned counsel appearing for the respondent/plaintiff, by drawing our attention to amended Section 28 of the Indian Contract Act, 1872, would contend that condition No.19 of the policy is void. He also brought to our notice the Amendment Act I of 1997 published in the Gazette of India, Extraordinary, Part II, Section 2 dated 8.1.1997. Amended Section 28 reads thus:-‘
“Section 28. Agreements in restraint of legal proceedings void : Every agreement, —
(a) by which any party thereto is restricted absolutely from enforcing his rights under or in,respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights; or
(b) which extinguishes the rights of any party thereto, or discharges any party thereto from any liability, under or in respect of any contract on the expiry of a specified period so as to restrict any party from enforcing his rights, is void to that extent..”
Mr. Sampathkumar while stating that the present appeal is the extension of suit, in view of the amendment made to Section 28 of the Indian Contract Act, the day on which this Court considers condition No.19, its validity or otherwise is to be decided. No doubt, with regard to the said contention, Mr. Nageswaran, learned counsel appearing for the appellant-Insurance Company, would contend that in the absence of such a plea in the plaint, the same cannot be considered at this stage. Though elaborate arguments were advanced on this aspect, we are of the view that it is unnecessary to refer the same since the amendment to Section 28 was’brought into effect only on 8.1.1997. In the absence of any specific reference in the amended provision regarding its operation, it is presumed that it is only prospective. Though it is clear that by the Indian Contract (Amendment) Act, 1997, the original section 28 has been replaced by a new paragraph in which such extinction of right unless exercised within a specified period of time, if not beyond the period of limitation, is also rendered void. As observed earlier, in the absence of any specific reference in the amended Act, it is prospective in nature and the same cannot affect the contract made earlier. However, the law as it now stands after this amendment not only the curtailment of limitation period is impermissible, but also the extinction of right, if sought to be brought by the agreement within a specified period, which period is less than the period of limitation prescribed for the suit under the contract in question is also rendered void. In view of our conclusion,
as stated earlier, it is unnecessary to consider the contention regarding failure to plead etc.
10. Now we shall consider the merits of the claim made by the plaintiff and the defence taken by the appellant/Insurance company. There is no dispute that there was a big fire on 5.10.83 in the second defendant’s factory at Panickankuppam village, Panruti Taluk. The Assistant Manager of the plaintiff Bank has been examined as P.W.I. He deposed that the 2nd defendant firm had transaction with their bank from 1980. The 2nd defendant firm is an Exporter in Cashew Nuts. According to him, as per Ex.A-8 policy of insurance, particularly in terms of condition No. 19, the suit has to be filed within a period of 12 months. The Chief Law Officer of the plaintiff Bank has been examined as P.W.2. In chief examination, he has he explained the various communications from the Chairman-head office to the first defendant. In his cross-examination, he has explained the reason for not filing suit before 29.9.86 stating that the Chairman, two General Managers, and the Chief Officer had series of meetings between December, 1985 and February, 1986. He further deposed that since the first defendant-Insurance company conveyed their intention to settle their claim for payment of Rs.10 lakhs, the matter was delayed at their instance. Though the learned counsel appearing for the appellant has heavily commented the statement of P.W.2 for filing the suit only on 29.9.86, after going through his entire evidence including his cross-examination, we are satisfied that his evidence is probable and acceptable and the contra argument made by the learned counsel for the appellant is liable to be rejected.
11. We have already stated that before filing of the suit on 29.9.86, the plaintiff had series of correspondences with the appellant Insurance Company. We have also observed from the evidence of P.Ws.l and 2 at one stage there was a settlement talk between the bank and the insurance company. However, the claim was repudiated by the insurance company/first defendant on 23.9.85. The said disclaimer letter dated 23.9.85 has been marked as Ex.A-12. We have already extracted condition No. 19 of the policy and as per the said condition, after the expiration of 12 months of the disclaimer, the suit cannot be laid. It is the contention of the learned counsel for the appellant that inasmuch as the claim was repudiated by the Insurance company in their letter Ex.A-12 as early as on 23.9.85, as per condition No.19 of the policy, the suit filed on 29.9.86 is hopelessly barred by limitation. As we have already referred to, the amendment to Section 28 came into force with effect from 8:1.97. We have also referred to the decision of the Apex Court reported in National Insurance Company Ltd. v. Sujir Ganesh Nayak and Company, , wherein similar condition in the policy is held as valid and acceptable. However, merely on the fact that the appellant Insurance Company by their letter dated 23.9.85, had disclaimed, the said date cannot be fixed as the relevant date and the contention that 12 months period prescribed in condition No.19 starts running from 23.9.85 cannot be sustained. As rightly contended by Mr. S. Sampathkumar, unless the repudiation letter dated 23.9.85 is brought
to the knowledge of the plaintiff Bank, the communication cannot be presumed as complete. In other words, the communication is complete where it is brought to the knowledge of the communicate, otherwise there will be gross injustice since repudiation letter may be pre-dated or posted later. If we accept the contention of the learned counsel for the appellant that the date of disclaimer, namely, 23.9.85 is a crucial date for the purpose of calculation of 12 months period as per condition No. 19 of the policy, without intimating the same to the communicate, namely, the plaintiff Bank, they cannot be expected to initiate legal proceedings within the period as prescribed in condition No. 19. As observed earlier, the repudiation tetter may be pre-dated or posted on a subsequent date, on the other hand, communication date may be ascertained by verification of the postal seal. Here, in our case, the plaintiff has established by acceptable legal evidence that they received Ex.A-12 letter only on 28.9.85 and the last date, namely, 28.9.86 being a Sunday- holiday, the plaintiff is entitle to file the suit on the next working day that is on 29.9.86. When the contention that the bank had received Ex.A-12 only on 28.9.85 is accepted, then the plea that they ought to have filed the suit on 27.9.86 (Saturday) is liable to be rejected.
12. Learned counsel for the appellant has also raised an objection that the period of one year having been prescribed not by enactment but only by a contractual term neither the provisions of the Limitation Act, nor the General Clauses Act are applicable. He also contended that in the absence of any plea in the plaint regarding delay and both the above referred statutory provisions are not applicable to contracts, entered between private parties, the suit filed on 29.9.86 is liable to be dismissed. The said contention is liable to be rejected for the following reasons. In Madura Company Private Ltd. v. A ,T. J, Musaliar, , a Division Bench of the Kerala High Court has held that the period of one year having been prescribed not by any enactment but only by a contractual term, neither Section 4 of Limitation Act, 1908 nor Section, 10 of the General Clauses Act, 1897 applied. The Bench has further held that even then the principle embodied in those sections and summed up in the maxims: Lex non cogit ad impossibilia and actus curiae neminem gravabit, could sustain the contention that the suit was filed within time. The Division Bench has explained that the former maxim says that the law does not compel a man to do that which he cannot possibly perform; and the latter that an act of the court shall prejudice no man. Their Lordships in the Division Bench have followed the Dictum laid down by this Court in Sambasiva Chart v. Ramasami Reddi, I.L.R. 22 Mad. 179: 8 M.L.J. 265 wherein it was held lhat although the parties themselves cannot extend the time for doing an act in court, yet if the delay is caused not by any act of their own, but by some act of the Court itself such as the fact of the court being closed they are entitled to do the act on the first opening day. With respect, we are in respectful agreement with the view expressed in those cases. Mr. S. Sampathkumar, learned counsel for the respondent has also brought to our notice another Division Bench decision of this Court in Indian Steamship Co. Ltd., v, Steel
Authority of India Ltd., 1991 (1) L.W. 297. In the said decision, the Division Bench after referring to the decision reported in Sambasiva Chart v. Ramasami Reddi, I.L.R. 22 Mad. 17 and Madura Company Private Ltd., v. A .T. J. Musaliar, , have held as follows:- (para 12)
“12….We state here without hesitation that the period no doubt will always be one year and shall not be extended with the aid of section 4 of the Limitation Act or in any provisions of the General Clauses Act, a case like this, where the rule is the discharge of liability and thus extinction of the right and not a bar to the claim as in the Limitation Act, but that one year shall be the year ending with the opening of the court after recess or a holiday if the calendar year ends during recess or a holiday…. ‘
In the light of the above decisions, we hold that 12 months’ period is only prescribed by a contractual term, and neither Section 4 of the Limitation Act, nor Section 10 of the General Clauses Act is applicable. Hence, in view of the above mentioned maxims, we sustain the contention that the suit which was filed on 29.9.86 is within time. For the same reasons, we also reject the contention that the plaintiff has not explained the reason for the delay in the plaint.
13. Regarding the contention, relating to condition No.3 of the policy, here again, learned counsel for the respondent has brought to our notice that no issue was framed before the trial Court and no serious argument advanced. Though the appellant states that in the light of condition No.3 of the fire policy, the plaintiff suppressed the earlier policy with other Insurance Company, it is seen from the records that the prior policy was cancelled at the request of the plaintiff as and from 26.9.1983. This is prior to the date of the accident, namely, 5.10.83. We also perused the oral and documentary evidence in this regard and hold that there is no other policy with any other Insurance Company on the date of the accident on 5.10.83. Ex.A-10 tetter of the insurer (2nd defendant) to the first defendant-Insurance company makes the position clear. Hence, there is no violation of any of the-conditions including condition No.3 and nothing is detrimental to the appellant.
14. In view of our conclusion, though the learned counsel for the appellant has relied on certain1 other decisions with regard to liability of the Insurance company under various other enact-ments, it is unnecessary for us to refer the same.
15. Before winding up, it is also useful to refer the decision of the Supreme Court in Madras Port Trust v. Hymanshu International, regarding frequent technical objection being raised by Government and public authorities including Insurance companies. The case before the Supreme Court which pertains to refund of amount of wharfage, demurrage and transit charges paid to the appellant therein, was barred by Section 110 of the Madras Port Trust Act (11 of 1905) in para 2, Their Lordships have held thus:-
“2…..The plea of limitation based on ihis section is one which the court always looks upon with disfavour and it is unfortunate that a public authority like the Port Trust should, in all morality and justice, take up such a plea to defeat a just claim of (he citizen. It is high time that governments and public authorities adopt the practice of not relying upon technical pleas for the purpose of defeating legitimate claims of citizens and do what is fair and just to the citizens. Of course, if a Government or a public authority takes up a technical plea, the Court has to decide it and if the plea is well-founded, it has to be upheld by the Court, but what we feel is that such a plea should not ordinarily be taken up by a government or a public authority, unless of course the claim is not well-founded and by reason of delay in filing it, the evidence for the purpose of resisting such a claim has become unavailable…. ”
The above observation of the Supreme Court decries the technical plea taken by the insurance company. We have already held that though the claim was repudiated by the Insurance company on 23.9.85, the same .was received only on 28.9.85 and the 12 months’ period from the date of the said disclaimer ends on 28.9.86. The said day (28.9.86) being a Sunday, the plaintiff Bank is entitled to file a suit on 29.9.86 that is on the next working day. As observed by the Supreme Court, it is unfortunate that the appellant insurance company having taken a policy cannot be permitted to take such a plea to defeat the just claim of the plaintiff. The Insurance companies, when citizens make claim based on their policies, must act fairly and such technical plea should not ordinarily be taken up unless the claim is not well-founded. We have already observed in the earlier part of our Judgment that immediately after the fire accident that is on 5.10.83, there were series of correspondences and discussions for the settlement of claim in terms of the policy at the higher level and due to failure in settling the claim through negotiations, the plaintiff Bank has rightly filed the suit within the prescribed period; accordingly the objection by the insurance company on the ground of delay in filing the suit cannot be sustained. As a matter of fact, except filing a written statement, nothing has been brought before the trial court in the form of oral and documentary evidence in support of their defence. The learned Subordinate Judge, on appreciation of oral and documentary evidence let in by the plaintiff Bank, has correctly granted the decree to the extent of Rs.19,18,792 with interest at 12 per cent from 5.10.83 that is the date of occurrence till date of settlement. We do not find any error or infirmity in the .impugned judgment of the learned Subordinate Judge. On the other hand, we are in agreement with the conclusion arrived at by the learned Judge, since the same is based on acceptable and legal evidence.
16. Net result, the appeal fails and the same is dismissed with costs.