DECIDING AUTHORITY: Supreme Court
DATE OF JUDGMENT: 22/02/2000
BENCH: S.Saghir Ahmad, S.N.Phukan
FACTS: The appellant has a factory wherein it manufacturers high tension insulators for transmission lines. The appellant had taken out an insurance policy known as ‘All Risk Insurance Policy’ for Rs. 50 lakhs tor installation of 25 M3 kiln with furniture.The policy covered risks against loss during storage-cum-erection including trial and testing. After completion of the erection of 25 M3 kiln, the same was loaded with insulators on 12.7.88 for trial and testing and when it was opened on 16.7.88 it was found that complete structure of kiln furniture with insulators had collapsed on kiln car and various items of kiln furniture were damaged. A claim of Rs. 5,73,397.43 was lodged with the respondent and the surveyors assessed the damage at Rs. 4.66,873. As the claim was not settled a complaint was filed before the State Commission alleging negligence on the part of the respondent and claiming the amount assessed by the surveyor with interest.
The respondent – Insurance Company in the reply to the complaint filed before the State Commission pleaded that damaged property was not covered by the insurance policy. The State Commission after considering the materials on record rejected the plea of the respondent and directed the respondent to indeminify the loss by making payment of Rs. 4,66,873/- with interest (@) 18% per annum. An appeal was filed before the National Consumer Disputes Redressal Commission which was allowed by it.
JUDGEMENT: It is the fundamental principle of insurance law that utmost good faith must be observed by the contracting parties and good faith forbids either party from non-disclosure of the lads which the parties known. The insured has a duty to disclose and similarly it is the duty of the insurance company and its agents to disclose all material facts in their knowledge since obligation of good faith applies to both equally.
In view of the above settled position of law we are of the opinion that the view expressed by the National Commission is not correct. As the above terms and conditions of the standard policy wherein the exclusion clause was included, were neither a part of the contract of insurance nor disclosed to the appellant respondent cannot. claim the benefit of the said exclusion clause. Therefore.. the finding of the National Commission is untenable in law.
We may refer to the next ground on which appeal has to be allowed. It is settled position of law that in an appeal the parties cannot urge new facts. From the pleadings of the respondent before the State Commission it is found that respondent pleaded that the property damaged was not covered under the insurance policy. This plea was given a go by before the National Commission and a new plea was taken up in the grounds of appeal that the terms and conditions of the insurance policy were violated by the appellant by using used kiln furniture. The National Commission accepted this new ground and allowed the appeal, which in our opinion is not sustainable in law.
HELD: Appeal Allowed.
By Tejasv Anand, IVth Year, Amity Law School, Delhi.
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