9911796707
TMI Blog1997 (3) TMI 568X X X X Extracts X X X X X X X X Extracts X X X X ..... Riot and strike damage which for the purpose of this endorsement shall mean (subject always to the special conditions hereinafter contained). Loss of or damage to the property insured directly caused by:- 1. The act of any person taking art together with others on any disturbance of the public peace (whether in connection with a strike or lock-out or not) not being an occurrence mentioned in condition 6 of the special condition thereof. 2. The action of any lawfully constituted authority in suppressing or attempting to suppress any such disturbance or in minimising the consequences of any such disturbances. 3. The willful act of any striker or locked out worker done in furtherance of a strike or in resistance to a lock-out. 4. The action of any lawfully constituted authority in preventing or attempting to prevent any such act or in minimising the consequences of any such act." The Special condition No.5 (i) (b) which is relevant for the determination of the appellant's case is as under: "SPECIAL CONDITIONS For the purposes of this endorsement but not otherwise there shall be substituted for the respectively numbered Condition of the policy the following:- CONDITION 5. (i) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent No. 1 reiterated that the claim was covered by the two policies. The Trial Court, vide its judgment dated 30th June, 1986, observed that condition No. 19 was not hit by section 28 of the contract Act and further that the suit was otherwise barred by limitation as the claim was repudiated by the letter dated 10.5.1977 and the suit filed on 2.6.1980 was after a lapse of more than three years from the date of such repudiation . The Trial Court also found that the damage was not covered by the Insurance Policy in view of the special Condition 5(i)(b) of the Riot and Strike Endorsement. In appeal, the High Court allowed the claim holding that the condition No. 19 could not limit the period during which the suit was to be filed and that it simply required the respondent No.1 to make its claim known within the period of 12 months from the happening of the loss or damage. It also reversed the finding of the Trial Court that the claim was not covered by the two policies. so far as limitation is concerned, the High Court further observed that the letter dated 10.5.1977 could not be read as a letter of repudiation of claim as by then no claim whatsoever was preferred by the responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... V. The Satyanarayan Marine & Fire Insurance Co. Ltd., 1913(15) Bombay Law Reporter 948. In the letter case, the Clause in question read thus: "12. Forfeiture -- If the claim be made and rejected and an action or suit be not commenced within three months after such refection all benefit under this policy shall be forfeited." The clause meant nothing more than this, namely, if the suit is not filed within three months of rejection of the claim, the rights under policy will be forfeited. The Bombay High Court following certain English decisions held that the contract Act as the Clause did not restrict the limitation but merely extinguished the right. In Baroda Spinning & Weaving Co. Ltd. (supra), in the High Court of Bombay the five insurance policies provided that 'if the claim be made and rejected and action or suit cannot be commenced within three months after such refection all benefits under the policy shall be forfeited'. On the suit being filed three months after the rejection of the claim the High Court held that the said condition was not within the scope of section 28 of the contract Act since that section spoke about enforcement of a subsisting right and not a right whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A mortgage was executed by him in favour of the respondent-bank. The bank insured the mortgage properties from time to time with the appellant-company under different insurance policies, the terms whereof being same . Afire broke out in the factory premises and the insurance company was duly informed . The surveyor estimated the loss at Rs. 4620/- without prejudice to the terms and conditions of the policy . After some correspondence, the appellant-insurance company repudiated the claim under the terms of the policy. Thereupon respondent No.1 wrote to the insurance company that since it had repudiated the claim , a difference had arisen between the parties and appointed a sole arbitrator to decide the dispute. At the same time it mentioned that if the insurance company desired to nominate an arbitrator it may do so . The insurance company however took the stand that since it had repudiated the claim, the arbitration clause in the policy was rendered inoperative and no arbitration proceedings could legally be initiated. This led to the respondent No.1 filing an application under section 20 of the Arbitration Act, 1940. The application was contested. The trial court held that on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsurance companies. The insurance companies filed appeals in the High Court which were allowed holding that the terms of the guarantee concerned in each case did not entitle the appellant to sue the insurance companies after 'six month' period from the date of termination of the respective contracts with the rice millers. The matter was therefore carried in appeal to this Court. Under the fidelity Insurance Guarantee the concerned insurance company had undertaking to make good the loss upto the specified limit when claimed by the appellant, of course subject to the restriction "that the Corporation shall have no rights under this bond after the expiry of (period) six months from the date of termination of the contract, i.e., the contract with the rice miller. On a plan reading of this restriction clause, it is clear that if the appellant desired to enforce its rights under the contract, if should do so within 'six months' of the termination of the contract and if it failed to do so its right under the contract would extinguish. It was therefore, imperative for the appellant to lodge its claim with the insurance company within the period of six months to assert its rights failing w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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 a 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 with in 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 ca 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t period by making a claim to the Insurance Company. It was therefore held that the clause extinguished the right itself and was therefore not hit by Section 28 of Contract Act. Such clause are generally found in insurance contracts for the reason the undue delay in preferring a claim may open up possibilities of false claims which may be difficult of verification with reasonable exactitude since memories may have faded by then and even ground situation may have changed. Lapse of time in such cases may prove to be quite costly to the insurer and therefore it would not be surprising that the insurer would insist that if the claim is not made within a stipulated period, the right itself would stand extinguished. Such a clause would not be hit by Section 28 of the Contract. Keeping the above legal distinction in mind we may not consider the facts of the present case. The two insurance policies were both for a period of twelve months and bore a 'Riot and Strike' endorsement convering damage caused by riot and strike to the property of the insured. On account of the strike in the unit from 26.3.1977, the production had come to a halt and as the management was not allowed to remove the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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