THE UNITED INDIA INSURANCE CO. LTD. versus M/S M.K.J. CORPORATION

Citation: [1996] SUPP. 5 S.C.R. 20 · Decided: 21-08-1996 · Supreme Court of India · Bench: K. RAMASWAMY, G.B. PATTANAIK · Disposal: Disposed off

Judgment (excerpt)

A 
B 
c 
THE UNITED INDIA INSURANCE CO. LTD. 
v. 
MIS M.K.J. CORPORATION 
AUGUST 21, 1996 
[K. RAMASWAMY AND G.B. PATTANAIK, JJ.] 
Insurance Act, 1958: Section 64(U). 
Tariff Advis01y Committee Reconunendation-Clause (b) of Section 
2-Fire Policy 'C' of Pmt-Il-Fire policies, Endorsements, Clauses and War-
ranties-~ature and binding effect of recommendation. 
Insurance Po/icy-Strike organised by workmen of the insured--
Damage to leather in process due to spoilage-Claim for damages-Ex-
clusion my clause not included in fllsurance Policy at the time of ente1ing into 
D contract-Held the appel/ant-/11sure1; admittedly had w1de1taken liability for 
the 1iot or sflike, damage due to 1iot or st1ike-As the appellant-Insurer had 
not inco1porated the exclusionmy clause as pa1t of the policy unde1take11 with 
the insured is not bound by the exclusionary clause-The appellant-insurer is 
liable to pay the insured amount for the ~poi/age of the leather caused due to 
E 
strike organised by the workmen. 
Insurance-Claim for damages-I111erest--Claim made 
by in-
sured--Submission of rep01t by Swveyo1~17iereafter insurer should be al-
lowed two momhs time to take a decision whether claim requires to be settled 
or rejected--Insurer liable lO pay interest after expiry of two months-In-
F 
surance Company held liable to pay illlerest @ 12%. 
G 
Insurance law-P1inciple of good faith-Held applicable to insured and 
insurer equally-Duty of good faith is of a continuing nature-After comple-
tion of contract no mate1ial alteration can be made in its te11ns except by 
mutual consent. 
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 6075-76 
of 1995 Etc. 
From the Judgment and Order <lated 12.1.95 of the National Con-
sumer Disputes Redressal Commission, New Delhi in O.P. Nos. 62 & 102 
H of 1993_ 
20 
'-
UNITEDINDIAINSURANCECO.LTD. v. M.KJ.CORPN. 
21 
S.M. Suri, Sanjay Chhabra and Pramod Dayal for the Appellant. 
A 
S. Raghavan, k.B.S. Rajan and Smt. Pushpa Rajan for the Respon-
dent. 
The following Order of the Court was delivered : 
We have heard learned counsel on both sides. 
Both the appeals are heard and disposed of together since claims 
arising out of them arise out of the same cause of action. 
B 
These appeals arise from the orders dated January 12, 1995 of the C 
National Consumer Redressal Commission (the "Commission", for short) 
made in Original Petition No. ~2 and 102 of 1993. Admittedly, the respon-
dent was holding two policies. First policy covered the period from March 
31, 1986 to March 31, 1987 and the second policy covered the period from 
April 1, 1987 to March 31, 1988. During the said period, admittedly, due D 
to the employees' strike the leather in process was damaged due to the 
spoilage. The respondent laid claims for damages caused during the first 
period for a sum of Rs. 4,99, 453.23 and for the second period for Rs. 5,000 
amount to the total of Rs. 5,04,453.23 with interest from the date of the 
claim. The Tribunal accepted the claim and directed payment of the said 
amount with interest at 18% from one month after the date of the claim. E 
The respondent's appeal Nos. 11443-44/95, though arise from the im-
pugned order, is for the claim of consequential loss in the sum of Rs. 
14,00,000. 
Shri Suri., the learned counsel for the appellant-Company contended 
that insurance coverage is only for riots and strikes and malicious damages 
and spoilage "under spoilage item 8" clearly enumerates as under : 
"Stocks or leather of all kinds in process during' soaking, liming, 
fleshing tamning, wet blue, sammying, splitting, shaving, dye liquer-
F 
ing setting, vacumming drying." 
G 
The learned counsel relying upon these clauses, seeks to read clause 
(b) of "Section 2 - Fire Policy 'C' of Part II - Fire Policies. Endorsements. 
Clauses and Warranties" as recommended by Tariff Advisory Committee 
constituted under Section 64(U) of the Insurance Act, 1958. Since these 
recommendations are made by the Advisory Committee which is a H 
22 
SUPREME COURT REPORTS [1996) SUPP. 5 S.C.R. 
A 
statutory authority binds the appellant-insurer they are integral part of the 
policies referred to hereinbefore. Resultantly, by operation of Clause (b), 
the insurance does not cover if loss or da~age results from total or partial 
cessation of work or the retarding or interruption or cessation of any 
process of operation or omissions of any kind. According to the learned 
B 
c 
counsel, since the damages was caused due to the strike

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