TMI Blog2008 (12) TMI 664X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the National Insurance Company on 26th October 1987 to act as a lead company while the other Insurance Companies were to be co-sharers. After negotiations, the respondent agreed (on the 30th October 1987) to insure the timber lying in the South Zone in the value of Rs.3.42 Crores and also issued a cover note dated 7th November 1987 followed subsequently by a policy dated 16th November 1987 to be valid from 6th November 1987 to 5th November 1988. The appellant also deposited a sum of Rs.2,43,504 as the tentative premium subject to the approval by the Tariff Advisory Commission. It appears that on account of heavy rains in the Shimla region in September 1988 and consequent large scale flooding in the South Zone, the insured timber was washed away. This fact was conveyed to the respondent by several letters between 3rd October 1988 and 31st September 1989. The case of the appellant is that instead of meeting its contractual obligations, the respondent refuted its liability to pay on the 13th October 1988 on the pretext that the policy had, in fact, been issued for a period of 8 months only starting from 6th November 1987 and ending on 5th July 1988 and the period of one year ment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 44 of the Limitation Act provided a period of limitation of 3 years from the date of disclaimer and as such the period of 12 months fixed by clause 6(ii) could not be sustained by virtue of the provisions of section 28 of the Contract Act, 1872. In this connection, he has pointed out that this matter was concluded against the respondent by the judgment in Food Corporation of India vs. New India Assurance Co.Ltd. Ors. (1994) 3 SCC 324 which had been reaffirmed in Muni Lal vs. Oriental Fire General Insurance Co.Ltd. Anr. (1996) 1 SCC 90 and that Sujir Ganesh Nayak case (supra) which was based on the pre amended Section 28 ibid was, therefore, inapplicable. Mr. Nandwani, the learned counsel for the respondent has, however, submitted that the claim had, in fact, been repudiated on 13th October 1988 and as the 3 years period was deemed to have commenced from that day, the complaint was barred even on the appellant s best case as the complaint had been filed in April 1994. He has, further, argued that as far back as in the judgment in Vulcan Insurance Co.Ltd. vs. Maharaj Singh Anr. (1976) 1 SCC 943 and followed subsequently in several judgments (and even in those referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir Ganesh Nayak s case (supra) to hold that the complaint could not be entertained as being time barred. The counsel for the appellant had, however, argued before the Commission as before us, that as Section 28 of the Contract Act had undergone significant amendments, the aforesaid judgment required a re- appraisal. This submission had been rejected by the Commission by observing that it was bound by the judgment in Sujir Ganesh Nayak s case and that the appellant could agitate the question as to its correctness before the Supreme Court. The matter was, accordingly, adjourned by us to enable the parties to find out if the amendment had, indeed, been made and, if so, to what effect. During the resumed hearing, the learned counsel for the appellant candidly admitted that the amendment had been made but had thereafter been repealed and the matter would, thus, have to be examined under Section 28 of the Contract Act, as originally placed. We have, accordingly, chosen to deal with this matter under that provision. 7. It would be clear from the above prefatory note that the discussion would involve an appreciation of Clause 6(ii) of the Policy and Section 28 of the Contract Act. Both t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Sujir Nayak s case, Food Corporation of India s case (supra) has been specifically considered and Vulcan Insurance Company s case (supra) too had been relied upon. In Sujir Nayak s case, this Court was called upon to consider condition 19 of the policy which was in the following terms: Condition 19. In no case whatever shall the company be liable for any loss or damage after the expiration of 12 months from the happening of loss or the damage unless the claim is the subject of pending action or arbitration. 10.While construing this provision vis- -vis Section 28 of the Contract Act and the cases cited above and several other cases, in addition, this is what the Court ultimately concluded: 16. From the case-law referred to above the legal position that emerges is that an agreement which in effect seeks to curtail the period of limitation 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 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss or damage after the expiration of twelve months from the happening of loss or damage unless the claim is subject of any pending action or arbitration. Here the claim was not subject to any action or arbitration proceedings. The clause says that if the claim is not pressed within twelve months from the happening of any loss or damage, the Insurance Company shall cease to be liable. There is no dispute that no claim was made nor was any arbitration proceeding pending during the said period of twelve months. The clause therefore has the effect of extinguishing the right itself and consequently the liability also. Notice the facts of the present case. The Insurance Company was informed about the strike by the letter of 28-4-1977 and by letter dated 10-5-1977. The insured was informed that under the policy it had no liability. This was reiterated by letter dated 22-9- 1977. Even so more than twelve months thereafter on 25-10-1978 the notice of demand was issued and the suit was filed on 2-6-1980. It is precisely to avoid such delays and to discourage such belated claims that such insurance policies contain a clause like clause 19. That is for the reason that if the claims are preferr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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