M/S Malnad Traders vs M/S New India Assurance Co. Ltd

3. Brief facts needed for disposal of this appeal are as under:

4. The appellant - M/s. Malnad Traders (hereinafter

referred to as "the appellant firm") is a registered

partnership firm carrying on its business in Rice Mills and Oil

Mills at Shimoga in various buildings, godowns and open

yards. On 7.12.1982, the entire premises of the appellant

firm including buildings, machineries, equipments and

stocks in trade were insured with the respondent - M/s. New

India Assurance Company Ltd. (hereinafter referred to as

"the respondent company") under the fire insurance policy

bearing No.1229400593. On 26.3.1983, there was a fire

accident in the business premises of the appellant firm

resulting in damage to the insured properties and as well as

injuries to two of its employees. On 11.4.1983, a detailed 3

report of the incident and extent of damages suffered was

sent to the respondent company. After completing the

formalities, the Surveyor of the respondent company

inspected the premises and prepared a detailed report about

the extent of damages caused to the properties of the

appellant firm. Thereafter the appellant firm lodged its claim

with the respondent company amounting to Rs. 3,33,056.87

as compensation for damages caused to its properties due

to the fire accident along with documentary evidence. On

failure of the respondent company in settling the claim, the

appellant firm served a legal notice on 5.7.1984 which

remained uncared for by the respondent company.

Thereafter the appellant firm filed the suit bearing No. 61 of

1986 claiming inter alia an amount of Rs. 3,33,055.87

towards damages along with interest @ 19.5% per annum

before the Principal Civil Judge (Sr. Dn.) and C.J.M. at

Shimoga. The Principal Civil Judge, Shimoga decreed the

suit for a sum of Rs. 1,26,055.87 and awarded interest at

6% from the date of filing of the suit till realization. The 4

respondent company being aggrieved by the same filed RFA

No. 959 of 2001 before the High Court of Karnataka at

Bangalore which was allowed in part reducing the amount

of damages of Rs. 1,26,055.87 granted by the trial court to

that of Rs. 48,556/- with interest @ 6% from the date of

filing of the suit till realization. Hence this appeal.

5. We have heard the learned counsel for the appellant

and perused the impugned judgment and the material made

available on record. Despite service of notice none appeared

on behalf of the respondent company.

6. Appearing on behalf of the appellant, Shri G.V.

Chandrashekar, learned counsel submitted that the High

Court has committed serious error in reducing the amount

of damages without assigning any reason whatsoever. It

was also submitted that the High Court was under an

erroneous impression as if the appellant was seeking further

enhancement of the claim and in the process made an 5

observation commenting as if the appellant manipulated and

altered the documentary evidence.

7. It is to be noted that both the courts concurrently

found that the insurance coverage was in respect of entire

premises and machinery installed therein and the policy was

alive and in force on the date of fire accident. The appellate

court even rejected the submission of the respondent

company that the appellant under document Exhibit D-5

agreed to receive a sum of Rs. 21,440/- only in full and final

settlement of the claims. The appellate court in this regard

came to the conclusion that there was no proof of full and

final settlement of claims in terms of document Exhibit D-5.

8. The damages claimed by the appellant firm were

classified under the following heads:-

1. Damage to building.

2. Damage to machinery

3. Damage to electrical wiring. 6

In support of the claim the appellant firm relied on the

documents viz. bills (Exhibit P-6 to Exhibit P-213) and also

oral evidence of PW-2 to PW-9.

9. PW-2 Ramachandrappa, a building contractor has been

examined who stated in the evidence that a sum of Rs.

30,000/- was spent for purchase of materials and a sum of

Rs. 5,000/- was paid for labour charges towards the civil

works of the building. The learned trial court upon

appreciation of the evidence allowed only a sum of Rs.

5,000/- towards labour charges and the amount spent

towards purchase of building materials was disallowed for

want of proof. The learned appellate court construed the

finding of the trial court as if the appellant firm preferred

appeal in that regard and in the process came to the

conclusion that there was no proof regarding the amount

spent for purchase of materials. In fact, the trial court did

not award any amount in that regard. The approach adopted 7

by the appellate court is more or less similar in respect of all

the issues.

10. The appellate court went on upholding the findings

recorded by the trial court which actually were not in favour

of the appellant firm. The whole approach adopted by the

High Court was as if the appellant firm preferred the first

appeal without any merit whatsoever. The first appeal, in

fact, was preferred by the respondent company.

11. The appellate court having upheld and accepted the

reasoning of the trial court without recording any reason

whatsoever modified the amount of damages of Rs.

1,26,055.87 awarded by the trial court to that of Rs.

48,556/-.

12. A perusal of the trial court judgment discloses that it

had not only taken note of oral evidence but of each and

every document filed by the parties and recorded a specific 8

finding in respect of each of the items. The trial court held

that the appellant firm is not entitled to a sum of Rs.

2,07,000/- out of the total claim of Rs. 3,33,055.87 in the

following manner:

1. Item No. 71 for Rs. 88,000.00

2. Item No. 76 for Rs. 30,000.00

3. Item No. 77 for Rs. 47,000.00

4. Item No. 78 for Rs. 40,000.00

Plus Rs. 2,000.00

Total: Rs.2,07,000.00

The reason adopted in disallowing the claims in respect

of the items referred to herein above has been upheld by

the High Court but without recording any reason further

reduced the amount of damages granted by the trial court.

There is no reason whatsoever based on which the High

Court could have interfered with the well considered

judgment of the trial court. It is clear that the trial court

upon appreciation of evidence upheld the receipts in exhibit 9

P-70, P-71, P-72, P-75, P-77, P-181 and P-183. The trial

court also relied upon exhibit P-190 and P-199. The trial

court relying upon exhibit P-190, exhibit P-188 and exhibit

P-199 and for the detailed reasons had granted Rs. 5,000/-,

Rs. 8,000/- and Rs. 5,000/- respectively under the said

documents. Total amount thus comes to Rs. 1,26,055.87.

The trial court after an elaborate consideration rightly

deducted the claim in respect of item Nos. 71, 76, 77 and

78 and accordingly allowed only a sum of Rs. 1,26,055.87

towards the damages. There is not a single reason in the

judgment of the High court for reducing the quantum of

damages awarded by the trial court.

13. For the aforesaid reasons, the appellant succeeds in

this appeal. The impugned judgment of the High court

made in RFA No. 959 of 2001 is set aside and the decree

and judgment of the trial court is accordingly restored. 10

14. The appeal is, accordingly, allowed without any order

as to costs.

..........................................J. (Lokeshwar Singh Panta)

..........................................J. (B. Sudershan Reddy)

New Delhi;

January 22, 2009 11 12