POLYMAT INDIA P. LTD. AND ANR. versus NATIONAL INSURANCE CO. LTD. AND ORS.

Citation: [2004] SUPP. 6 S.C.R. 535 · Decided: 01-12-2004 · Supreme Court of India · Bench: B.N. AGRAWAL · Disposal: Dismissed

Judgment (excerpt)

POLYMAT INDIA P. LTD. AND ANR. 
A 
v. 
NA TI ON AL INSURANCE CO. LTD. AND ORS. 
DECEMBER 1, 2004 
'l 'f.). 
B 
[B.N. AGRAWAL AND A.K. MATHUR, JJ.] 
Insurance-Of premises and goods of a factory against fire-Insured 
specifically mentioned that no goods were stored in open-Subsequent 
request of the insured to amend the Policy so as to cover the gpods inside 
as well as outside the building-Non-amendment of Policy to that effect-
C 
No further action by insured to repudiate the policy-Loss-Assessment only 
in respect of goods lying in covered area-Assessment amount further 
reduced by insurance company-Reasons for reduction given-Claim before 
National Consumer Redressal Commission-Order for payment of 75% of 
assessed amount with 18% interest holding that goods inside as well as D 
outside the covered area were covered under Policies-On appeal, held: 
In view of the declaration of the insured, the goods lying in the covered 
area were only insured and non else-Terms of contract having been 
reduced in writing and the same not being amended by insurance Company, 
the same could not have been changed without mutual agreement of both 
the parties-Reasons for reduction of assessment amount justified-The 
action taken by insurance Company was within reasonable time, hence levy 
of interest @ 18% not justified-Contract-Factories Act, 1948. 
Deeds and Documents-lnte1pretation of-Held: Documents have to 
E 
be construed in the manner it is presented and cannot be interpreted dehors p 
the context. 
Appellant, a factory, entered into two fire insurance Policies with 
the respondent-Insurance Company. In the said Policies the location of 
the property was mentioned as "factory-cum-godown and office 
premises". In clause 8 of the policy the appellant answered that no goods G 
were stored in open, or in kutcha shed or timber built or thatched roof 
building within 15M (50ft) of the property to which proposal applied. 
After receipt of the proposal of Policy appellant requested the respondent-
Com pany to carry out corrections in both the Policies i.e. (1) 
incorporating name of Bank as mortgagee (2) coverage of plant and H 
535 
536 
SUPREME COURT REPORTS [2004] SUPP. 6 S.C.R. 
A 
machinery inside or outside the building and coverage for stock and 
stock in process and (3) deletion of expression "Godown-cum-factory" 
as there was no godown. Respondent-Company agreed for amendment 
to the extent of including t~e Bank as mortgagee and no further 
amendment was made to the original Policies. The said factory premises 
B and the entire building, furniture, fixtures and fittings, stocks in process 
and other material lying outside factory shed were completely destroyed 
in fire. Surveyors assessed the losses only inside the covered area and 
assessed the loss at Rs. 48,73,095. But the Respondent-Company reduced 
the amount to Rs. 20,04,675 on the ground that the balance amount was 
assessment in respect of portion and things lying outside the building 
C and in respect of things beyond purview of the policy. 
Appellant filed claim before the National Consumer Disputes 
Redressal Commission. National Commission held that factory premises 
included the plant and machinery and goods inside the shed as well as 
D outside the shed and were covered under the Policies; that as per 
guidelines assessee was entitled to 75% of the claim assessed by the 
Surveyors and levied interest @ 18% holding that due to dilatory 
approach adopted by Insurance Company appellant-complainant had 
to suffer additional interest liability by the financial institutions. Hence 
the cross appeals. 
E 
Allowing the appeal of the Insurance Company and dismissing that 
of the Complainant-factory, the Court 
HELD: ·1.1. So far as the definition of factory is concerned as given 
F in Factories Act, 1948 it shows that where the manufacturing process 
is undertaken, that means the manufacturing process which is undertaken 
within the plants. This does not cover the outside area of plant. But each 
definition has to be construed in the context in which it is used. Loosely 
the expression, 'factory' may include the whole premises of factory. But 
each expression has to be given the meaning in the context where it 
G occurs. The expression "Factory-cum-Godown" has to be read in the 
present context with the other conditions which appear in the Policy 
document. It is admitted that there was no godown. The documents have 
to be construed in the manner it is presented and the 

Excerpt shown. Read the full judgment & AI analysis in Lexace.