1. This is a suit for recovery of Rs. 54,007/5/6 on a Policy of Fire Insurance on account of damage caused by fire to goods insured under that policy.
2. The plaintiff carries on business as manufacturer of hosiery goods under the name and style of Bengal Hosiery Mills at 90/1 Hazra Road, Calcutta.
3. In September 1951 the machinery and stock of hosiery goods of the plaintiff's said business stored' in the said factory premises were insured against damage by fire, with Standard General Assurance Co., to the extent of Rs. 60,000/- of which Rs. 50,000/- was for the machinery and Rs. 10,000/- for the hosiery goods.
4. On 17-6-1952 a further insurance against loss and damage by fire was effected in respect of his said business with Calcutta Divisional Office of the defendant Sentinel Assurance Co. Ltd. for Rs. 1,00,000/- of which Rs. 25,000/- was for machinery and Rs. 75,000/- for the stock of hosiery goods.
5. Pending the issue of a policy in respect of the insurance effected with the defendant company, an Interim Protection Note dated 17-6-1952 was issued and delivered to the plaintiff in consideration of the premium paid by the plaintiff in respect of the said insurance. It was stipulated in the said Interim Note that the property of the plaintiff was thereby held injured against damage by fire, subject to the usual conditions of the Company's Policy and the interim insurance would be in force for 30 days only unless renewed in writing, and would cease immediately on delivery of the Policy.
6. On 12-7-1952 the stocks of hosiery goods stored in the plaintiff's said factory were damaged by fire which is alleged to be of accidental origin, and due notice thereof was given to the two Insurance companies.
7. File defendant company and the said Standard General Assurance Co. thereupon appointed Messrs. Sinclair Murray & Co., Ltd. of Calcutta to assess the said loss to the plaintiff's goods. The said Sinclair Murray and Co. assessed the loss and damage at Rs. 61,208/5/3 and submitted their assessment report to the two Insurance companies on or about 20-2-1953. According to the said assessment report the defendant company became liable to pay the proportionate amount of Rs. 54,007/5/6 and the Standard General Assurance Co. became liable to pay Rs. 7,200/15/9.
8. It appears that pursuant to the said assessment report the Standard General Assurance Co. made a part payment of Rs. 5,000/- but the defendant company tailed to make any payment in respect of their liability as determined by the said assessment report.
9. In the Written Statement filed by the defendant company it is stated that the Interim Protection Note not being stamped with the requisite stamps as prescribed by the Indian Stamp Act no claim is maintainable under the said Interim Note. It is further stated that the claim is also not maintainable as there was a breach of a material condition namely, the fire was occasioned by smoking (biri fire) which is strictly prohibited. It is further alleged in the Written Statement that the claim of the plaintiff is grossly initiated one and is inconsistent with the facts disclosed in the Books of Account of the plaintiff.
The defendant also charges the plaintiff with not keeping the Books of Account properly and not producing all the books and other documents which were required to be produced by the defendant. The assessment report of Sinclair Murray and Co. Ltd. is also challenged as an incorrect one. It is stated that the assessors based their report on hearsay evidence and on the oral statement of the plaintiff and they also failed to properly scrutinise the books of account of the plaintiff, with the result that the amount of loss assessed is far inexcess of the actual loss suffered by the plaintiff. The defendant further characterises the report as a perfunctory one and as liable to be rejected.
10. The following Issues were raised at the hearing:
1. Did the Fire originate from smoking (Biri) as alleged in paragraph 3 of the Written Statement and if so, is the claim maintainable.
2. What is the amount of loss suffered by the plaintiff due to the lire on 12-7-1952?
3. To what relief, if any, is the plaintiff entitled?
11. Joseph Harris, a Marine and Mechanical Engineer who is in the employment of Sinclair Murray and Co., Ltd. has deposed on behalf of the plaintiff. His linn had received instructions from the defendant Sentinel Assurance Co., Ltd. to assess the loss on behalf of the defendant (Q. 8) and so he alone with an Assistant named Bamandas was deputed by Sinclair Murray and Co., to make the survey and assess the damage and loss caused by the fire, of 12-7-1952. He went three or four times to the premises where the fire took place, in connection with the Assessment. (His Lordship summarised the testimony of this witness and continued:)
12. Now a good deal of cross-examination hasbeen directed towards establishing the fact that themajor part of the Report is based on informationreceived from or on opinions formed by others. Butin cases of assessments made by Surveyors, thelatter must necessarily depend to great extent uponinformation received from others. They are usuallyentrusted with the Survey some time after the actual occurrence of the five and as they are not themselves eye-witnesses of the incident their report mustto a certain extent be based on statements of otherpersons.****
13. It appears that the plaintiff had effected a Fire Insurance in 1951 with one Kaiserihind Insurance Co., Ltd. The policy has been produced before the Court and it appears that in the body of the policy there is a warranty to the effect that 'Smoking and cooking be strictly prohibited in or about the said premises except in places specially set apart for such purposes only.' So the plaintiff was aware that such a clause is inserted in a Policy of Fire Insurance. It also appears that the plaintiff posted notices in some parts of the premises warning people not to smoke in or about particular places ot the factory.
14. It appears to me that a clause or warranty for prohibiting smoking is one of the usual clauses ot the defendant company's Fire Insurance policies and such a clause or Warranty was intended to be a part of the contract of Insurance which was entered into between the plaintiff and the defendant company.
15. Now the question is whether the fire wascaused by Bin smoking or by some other agency.The plaintiff has admitted that some of his employees were in the habit of smoking.****
16. I am inclined to hold that the fire was caused by biri or cigarette fire. Rankin J. has observed 'Firus cannot always be explained' --'Dekhari Tea Co. Ltd. v. Assam Bengal Railway Co. Ltd.', AIR 1920 Cal 758 at p. 764 (A). Gentle J. has observed 'The cause of this fire, as in case of many fires must be a matter of some conjecture' (Ralliaram Dingra v. Governor-General of India in Council, AIR 1946 Cal 249 at p. 252 (B)). In the absence of any eye-witnesses, my conclusion is also based on conjecture.
17. Mr. Moitra submitted in course of his argument that even if there was a condition prohibiting smoking, the defendant company by its conduct had waived the breach if any, of this condition. Mr. Moitra referred to Mac Gillivray Insurance Law (2nd Edn., page 524). This contention cannot be taken notice of. The plea of waiver is a mixed question of law and fact.
It has to be specifically pleaded and a specific Issue has to be raised, otherwise a party cannot I be allowed to rely on such a plea. 'Florrie Edridge v. Rustomji Danjibhoy Sethna . In -- 'Kanahyalal v. Assicurazioni Generalli : AIR1939Cal105 the. facts as to waiver were specifically pleaded and there was an Issue raised and evidence was adduced on suck Issue. In the circumstances Lort-Williams J. gave effect to the plea o waiver.
18. Mr. J.C. Moitra has further submitted that there has been no breach of the terms of the warranty as set out in the Policy or contract of Insurance. Mr. Moitra argued that it is clear from the evidence of the plaintiff that he had posted notices on the material parts of the premises forbidding smoking in and around the places. So the insured has complied with the condition and the fact that some employee might have, in spite of the warning and prohibition of the plaintiff, smoked a biri or a cigarette on one occasion does not amount to a breach of the warranty nor is the defendant company exonerated from liability by reason of that fact.
19. I am inclined to accept this contention of Mr. Moitra. The language of the warranty is that 'smoking and cooking be strictly prohibited in or about the said premises except in places specially set apart for such purposes only'. The plaintiff' hits strictly complied with this condition by posting warning notices, and he has strictly prohibited smoking in and around the place where charge the Insurer.'
20. In McGillivray on Insurance Law (1947, 3rd Ed.) page 619 the following statement of the law occurs :
'And a temporary non-observance of a rule even by the assured himself may not be a breach of warranty as where the warranty was that no smoking should be allowed on the premises and it was held that if the rule was laid down and generally observed, the non-compliance on one occasion by the assured himself would not discharge the insurer.'
The learned author cites the case of -- 'James W. Hosford v. Germania Fire Insurance Co.', (1888) 127 US 399 (E).
21. Gray J. who delivered the judgment observed inter alia as follows :
'The Jury having found that the assured forbade smoking in the mill, the mere fact that other persons or even one of the assured did afterwards smoke there, was not sufficient to avoid the policy.'
22. It appears that the Court usually construes the warranties rather strictly.
23. In a Policy of Insurance on premises of a certain description 'where no fire is kept and no hazardous goods are deposited' it was held that these words must be understood to mean habitual use of fire and deposit of goods but as in this case the loss on the policy happened in consequence of the making a fire and bringing a tar barrel on the premises for the purpose of repairing them, the Insured was held entitled to recover. It was observed by Lord Tenterden as follows :
'I think the condition must be understood as forbidding habitual use of fire etc...... and not their occasional introduction etc.' See -- 'Dobson v. Sotheby', (1827) 1 Moo & Mal 90 (F).
24. Similarly in the case of -- 'Shaw v. Robberds, '(1837) 6 Ad & El 75 (G), Lord Denman held that a Pulicy of Insurance against fire was not avoided or forfeited by reason of a 'kiln for drying corn in use' being allowed by the Insured to be used gratuitously lor the drying of a bark when by reason of such user there was a fire in the premises and the premises were destroyed by such fire. This case also shows that Warranties in fire insurance policies are construed strictly.
25. But these cases turned on the special conditions of the policies which came up for construction by the Court, and it is therefore not necessary to multiply instances by reference to other similar cases.
26. Mr. Moitra referred to (1941) 1 KB 462 (H), but 1 do not think that this case has any application to the facts of this ease.
27. I hold that there has been no breach of Clause I of the Warranties contained in the Policy (Ex. 8). The claim is maintainable and the plaintiff is entitled to recover.
28. Mr. J.C. Moitra the learned counsel for the plaintiff has contended that under Sections 18 and 20, Evidence Act, the Assessment reports of the Surveyor Sinclair Murray & CD. Ltd., is binding on the defendant as an 'admission of the amount of loss sustained by the plaintiff. I am unable to give effect to this contention. Section 18, Evidence Act, makes the statements made by an Agent of a party to a suit, who is expressly or impliedly authorised to make such statements, admissions which are binding on the party to the suit.
But there is no such case of agency pleaded in the plaint at all though no doubt it appears from the letter of the defendant to the plaintiff dated 14-7-1952 (PD 8/DD 4) that the defendant appointed Sinclair Murray & Co., to survey the loss on their behalf. In the absence of a proper case made in the pleading and in the absence of any amendment, the case of agency made at the hearing cannot be taken notice of by the Court.
Then Section 20, Evidence Act, cannot he said to apply to the facts and circumstances of this case. The illustration appended to this Section which is taken from the case of -- 'Williams v. Innes', (1805) 1 Camp 364 (1)', shows that the section requires that there should be three parties -- one of whom viz. A refers another viz., B to a third party viz., C for some information and the third party (i.e. C) supplies the information to B.
In such a ease the information supplied by C will be treated as an admission made by A. In the present case there is no question of referring the plaintiff to Sinclair Murray & Co., for any information. The defendant company simply informed the plaintiff that they had appointed Sinclair Murray as the Surveyor to assess the loss on their behalf and requested the plaintiff to assist the Surveyor from the plaintiff's side.
The Surveyors also dirt not supply any information to the plaintiff as contemplated by Section 20.
They submitted their Report to their employers and defendant company and Standard General Insurance Co. The evidence of the plaintiff is very definite on this point (Order 49, 54, 55 and 56 of S. Bhattacharjee).
The plaintiff did not receive any information from Sinclair Murray & Co. Ltd., direct.
29. Reference may be made to the case of --'M. D'Cruz v. Secretary of State', where Panckridge J., has attempted to explain Section 20, Evidence Act. (40 Cal WN 865 at pp. 868-869 (J)).
30. Even assuming that the two sections apply to this case the admission cannot be treated as conclusively binding on the defendant. It is open to the defendant to show that it his been made by mistake or it is untrue or that it was made fraudulently. Unless the party bound by the admission is precluded by the operation of the doctrine of estoppel from showing that the admission is not binding, an admission is not conclusive proot of the matters admitted (S. 31, Evidence Act).
31. In Welford and Otter-Barry's Book on Fire Insurance (3rd Ed. 1932) the 'following statement occurs: (page 303).
'Where the assured is unwilling to accept the sum offered to him by the insurers or where the Insurers refuse to take any step to have the loss adjusted or otherwise repudiate liability under the policy, the assured is entitled to have the question of liability determined, and the amount of the loss ascertained, in one or other of the following ways, namely:--
(1) By an action on the policy
(2) By Arbitration.
In this case the Insurers are not bound by any figures which may have been put forward on their behalf by the Assessors nor are they precluded by anything which may have been done by the assessors from repudiating liability altogether.' (p. 303).
32. In the case before me, there is an arbitration clause (clause No. 18) in the policy (Ex. 8) which has been put in. The Interim Protection Note was issued subject to the usual conditions in the Policy. But the parties have not chosen to have recourse to arbitration as perhaps no difference was expressed by the defendant company prior to the suit bring filed. The plaintiff has brought an action on the policy, and it appears to me that the defendant can refuse to be bound by the Assessment Report and they are entitled to show what is the actual loss suffered by the plaintiff and it is also open to them to repudiate the liability altogether.
33. Mr. Moitra placed reliance on the case of -- 'Luckie v. Bushby', (1953) 13 CB 864 (K) referred to in footnote (N) at page 303 of Welford & Otter-Barry's Book. But a reference to the case itself shows that there the parties had agreed as to the amount of the loss.
34. As there is no satisfactory evidence before me that the Account Books of the plaintiff were properly scrutinised or checked, I have no other alternative but to direct a reference to an officer of this Court for taking accounts, for the purpose of ascertaining as to what was the total quantity of the stock of finished goods, thans and yarn, lying in the store room of the factory premises on 12-7-1952 and what was the value of such stock.
The Registrar will allocate the reference to such officer as he thinks fit. The reference is to be treated as an urgent Reference. After the actual value of the stock is determined by the Referee, the value of the salvaged goods as determined by the Surveyor (Sinclair Murray & Co.) being the sum of Rs. 4042/9/- will be deducted from the amount determined by the Referee and the balance will be determined as the amount of loss suffered by the plaintiff.
The defendant will pay to the plaintiff the costsof the suit on Scale No. 2. Certified for two counsel. The question of costs of the Reference isreserved.