Latifur Rahman CJ
Kazi Ebadul Hoque J
Mainur Reza Chowdhury J
Chalna Marine Products…Appellants
Bangladesh General Insurance Co. Ltd……………..Respondents
December 14, 2000.
Cases Referred to-
AIR 1914 Bombay 225; Borada Spinning and Weaving Co. Ltd. Vs. Satyanarayan Marine and Fire Insurance Co. Ltd. AIR 1924 (Cal) page 186; Girdharilal Monuman Box Vs. Eagle Star and British Dominions Insurance Co, Ltd. 4 PLD (Dhaka) 595; Sree Hari Sankar Nandi Majumder Vs. Sree Promode Chandra Roy Choudhury; Sadharan Bima Corporations Vs. Sanjib Kumar Das and another, 47 DLR (AD) 97; Chelikani Kondayya Rao and others vs. Uppalapati Naganna and others AIR 1941 Madras 367; K.U.K kulkarni, Receivers and another vs. Ganpat Hiraji Teli, Applicant and another’s, AIR 1942 Bombay 191; Emperor vs. Phuchai and another AIR 1929 All. 33.
Mahmudul Islam, Senior Advocate, instructed by Md. Aftab Hossain, Advocate-on-Record – For the Appellant.
Manjur-Ur-Rahim, Advocate, instructed by Sharifuddin Chaklader, Advocate-on-Record – For the Respondent.
Civil Appeal No. 83 of 2000.
(From the Judgment and Order dated 15 March 1999 passed by the High Court Division in First Appeal No. 277 of 1994)
Mainur Reza Chowdhury J.- This Civil appeal by leave arises out of the judgment dated 15.3.1999 passed by a Division Bench of the High Court Division allowing the appeal being First Appeal No. 277 of 1994 and setting aside the judgment and decree dated 31.7.1994 passed by the Subordinate Judge, First Court, Khulna in Money Suit No. 24 of 1989 filed by the appellant. The learned Subordinate Judge decreed the suit for the full amount of Tk. 47,13,905.70.
2. The appellant as plaintiff filed the suit stating inter alia, that the plaintiff is a private limited company and has a freezing plant in Chalna. The freezing plant runs by public power supply from Power Development Board (P.D.B). The plaintiff runs the Business by taking loan from Janata Bank. The stock of shrimps of the plaintiff is kept in the refrigeration room and is insured with the defendant respondent under two policies. The Deterioration of Stock Policy (DOS Policy) was for Tk. 1,75,00,000/- and the Machinery Break Down Policy (MBD Policy) was for Tk. 30,000,00,00. The policies were taken to cover the risk of loss or deterioration of stock due to incidents including failure of public power supply under DOS policy and the loss due to machinery break down under MBD policy.
3. On 28.11.88 at 8.35 A. M. there was sudden disruption of public power supply in the plaintiff’s freezing plant. The plaintiff immediately started its standby generator to maintain power supply in its factory, but the generator continued to supply power until 11.10 P. M on 2.12.88 and then it started giving trouble and stopped. The plaintiff tried to repair the generator locally, but failed and then sent it to Dhaka for repair. The generator was ultimately restored in the factory in 5.12.88. During 4.12.88 to 5.12.88 there was irregular supply of power by the P.D.B to the plaintiff’s plant for short time and the power supply was finally restored by the P.D.B on 6.12.88 at 6. P.M. After failure of public power supply the plaintiff informed the matter to the local police station by making a G.D. entry, to the Janata Bank local office, the co-insurers and to the defendant by various letters. The defendant appointed Asian Surveyors for survey who visited the plaintiff’s factory only on 7.12.88. The standby generator went out of order from 2.12.88 and the factory remained completely without power supply up to 5.12.88. The stock of shrimps in the refrigeration room deteriorated and decomposed. After segregating the decomposed shrimps the plaintiff destroyed the same in presence of the Sanitary Inspector and local public. Value of the decomposed stock was Tk. 47,13,905.00 and the plaintiff submitted a claim of the aforesaid amount to the defendant under DOS policy, but the defendant by letter dated 26.2.89 repudiated the claim.
4. Defendant-respondent No. 1 in the written statements denied the material assertions of the plaint and asserted, inter alia, that the suit was beyond the term of insurance policy. The suit was also barred under Article 8 of the insurance policy. The public power supply failed on 29.11.88 due to cyclone and as such the defendant was not responsible for payment under DOS policy. The plaintiff willfully kept the standby generator out of operation on disruption of public power supply with bad motive and the survey report submitted by the surveyor after visiting the factory showed that power disruption was due to cyclone which disentitled the plaintiffs claim. The claim of the plaintiff was not payable as per terms of Clause 8B of the DOS policy. The plaintiff appellant having not submitted his claim under MBD policy for break down of the generator, the claim was not entertainable. The plaintiff appellant’s suit filed on 2.10.89 was not maintainable as it was not filed within 6(six) months from the date of repudiation.
5. The trial court after hearing the case decreed the suit in full. It held that the public power supply failed on 28.11.88 at 8.35 a.m. resulting in the deterioration of stock of shrimps and that the suit was not barred under clause 8B of the Insurance Policy and the plaintiff was entitled to get a decree of the money claimed.
6. The defendant respondent No. 1 filed First Appeal No. 277 of 1994 against the decree before a Division Bench of the High Court Division. The plaintiff filed an application under Order 47 rule 1 of the Code of Civil Procedure initiating Miscellaneous Case No. 129 of 1994 for awarding interest on the aforesaid decretal amount under section 47B of the Insurance Act, 1938 which was allowed by the trial Court. The defendant respondent No. 1 filed First Appeal No. 129 of 1995 against the decree relating to interest.
7. A Division Bench of the High Court Division heard the two first appeals together and disposed them of by a single judgment passed on 15.3.1999 whereby the High Court Division allowed First Appeal No. 277 of 1994 and dismissed the suit of the plaintiff and dismissed First Appeal No. 129 of 1995 as being infructuous. So the plaintiff obtained leave to appeal against the impugned judgment of the High Court Division allowing appeal in F.A. No. 277 of 1994. The High Court Division, inter alia, found that the plaintiff failed to prove its case by adducing necessary evidence and all the “evidence and materials show and support the case of the defendant that the public power disruption was caused due to cyclone which took the shape of a mature cyclone on 26.11.88 and from 27.11.88 in the locality”. And the suit of the plaintiff was barred under clause 8(b) of the insurance policy having not been filed within 6 months from the date of repudiation of the claim.
8. Leave was granted by this Division against the said judgment and order of the High Court Division to consider the submission by the appellant that the judgment of the High Court Division was not proper judgment of reversal inasmuch as the High Court Division reversed the findings of the trial court without adverting to the reasons assigned by the trial court for its findings and without taking into consideration important pieces of unimpeachable evidence brought on record, namely the oral evidence of P.W 3 the Executive Engineer, the certificate of the Executive Engineer, Ext. 23 and the power disruption register maintained by PDB, Ext. ‘Ta’. It is also submitted that the High Court Division was wrong in disregarding the log book, Ext.6, on the ground of overwriting without taking into consideration that the relevant figures in the log book were not overwritten and as such overwriting of other figures are inconsequential for the purpose of the present case. The power disruption register Ext. ‘Ta’, maintained by PDB corroborates the relevant figures in the log book, Ext.6. The High Court Division without taking into consideration the material evidence of unimpeachable nature developed a wholly unsustainable impression that the plaintiff manipulated the evidence to fit its case and wrongly evaluated the case of the respective parties on such wrong impression which has led to wrong decision and failure of justice. Leave was also granted to consider the submission that the High Court Division committed an error of law in holding that the suit of the plaintiff appellant was barred by limitation for not filing in time upon an erroneous view that the words “suit or action” mean one and the same thing relying on some decisions which are not applicable to the present case.
9. We may now consider the judgment of the High Court Division.
The High Court Division after considering the submission of both the parties found that the important points to be decided was whether the public power supply had failed and disrupted on 28.11.88 at 8.35 A.M. whether the standby generator was immediately put into operation and whether the same went out of order on 2.12.88 at 11. P. M and repaired at Dhaka and restored again on 5.12.88. It was also examined whether the suit was barred under Clause 8(b) of the DOS Policy. On the question whether the public power supply was disrupted on 28.11.88 at 8.35 A.M. as claimed by the plaintiff appellant, P. W. 1 who is the Managing Director of the plaintiff company, deposed the plaintiff’s case as made out in the plaint of the suit. The definite and specific case of the plaintiff was that the failure of public power supply to the plaintiffs freezing plant at 8.35 A.M. on 28.11.88 was the root cause of deterioration of stock of shrimps. The High Court Division observed that the success of the plaintiffs case rested on the material point as to whether the public power supply was disrupted on 28.11.88 at 8.35 A. M. as claimed which was the probable/possible cause of deterioration. The High Court Division therefore discussed the evidence of P. W. 1 who deposed that the public power supply was disrupted in his factory at 8.35 A. M. on 28.11.88, that he put the standby generator into operation immediately and the log book of the Engine room maintained in the factory also substantiates the same. He further stated that he made G.D. entry dated 30.11.88 Ext. 4 to the local police station on the failure of public power supply and made another G.D. entry to the local police station on 4.12.88 vide Ext. 5 on failure of generator. The High Court Division found from Ext. 4 that the plaintiff in his G.D. entry dated 30.11.88 informed:
Text in Bangla
Another G.D. entry Ext. 5 dated 4.12.88 informing the failure of the generator reads as follows:
Text In Bangla
Exhibit 7 and Ext. ‘ka’ is a letter dated 30.11.88 written by the plaintiff to the Manager, local Janata Bank in which it is stated:
“We have to inform you that supply of Electricity to our factory has been disrupted since 27 November, 88………..”
Exhibit 24 is a latter dated 1.12.88 written by the local Manager of the Janata Bank to the defendant informing that:
Text In Bangla
10. Exhibit 6 is the log book maintained in factory by machine room operators of the date and time of public power failure. It is recorded as on 28.11.88 at 8.35 A.M. but was found by the High Court Division to have been “overwritten in place of something else’. It contained a number of over writings erasures, interpolations etc. Which has been admitted by P.W. 1 himself on cross examination. Exhibit ‘Ta’ produced by the local power development board officer called for by the court at the instance of the defendant, snowed that the time of power failure was recorded there at 8.05 A. M. on 28.11.88.
11. The High Court Division found that the exhibits 4.5.7 and 24 referred to above were made and written to different persons by the plaintiff disclosing the date and time of the occurrence of power failure fresh from personal knowledge and memory and in those exhibits the date of power failure was clearly mentioned as 27.11.88, but observed that in the suit filed on 2.10.89 the date and time of power failure was given as on 28.11.88 at 8.35 A.M. in the plaint and the managing Director of the plaintiff also corroborated the same in his deposition as P.W. 1 for reasons best known to him.
12. It further held: this material discrepancy on such an important issue which is the basis of the suit and the claim on which one has to pay a huge amount of money to the claimant (plaintiff), cannot be overlooked nor could it be looked upon lightly. It also totally disproves the case of the plaintiff, The High court Division found no explanation in the plaint nor by the P.W. 1 that the date or power failure on 27. 11.88 put in the exhibits referred to was made by mistake and inadvertence. There was no scope under Section 92 of the Evidence Act to exclude and override the documentary evidence made at the earliest opportunity from the direct the personal knowledge of the matter by oral evidence. There was also no explanation in the plaint or evidence why the plaintiff wrote letters to the local Janata Bank on 30.11.88 and to the defendant on 6.12.88. When the power, according to him, was disrupted on 28.11.88. On the question of the generator there was no evidence that the generator was put into operation on 28.11.88. On the entries in exhibit 6 maintained in the factory that the generator went out of order on 2.12.88 and put to operation again on 5.11.88 at 8 P.M. It was found that although it was singed by 6 operators none of them had been examined on this vital point of power failure. P. W. 3 the Executive Engineer of the POP who is said to have visited plaintiffs factory on 28.11.88 to restore the power supply, did not say anything about functioning of the generator. The High Court Division found Ext. 3 dated 3.12.88 from the plaintiff stating that the engine section of the generator developed faults yesterday and their machine in charge tried his best to put the malfunction into order but ultimately he failed, and we have arranged for buying the necessary spare parts from Dhaka was a different story from the testimony of P.W. 1 who deposed that he tried to repair the generator locally by local engineer but failed and then sent it to Dhaka for repair. The failure to examine the local engineer and different stories put forward, “negative the case of the plaintiff and exposes the behavior of the plaintiff to great suspicion and doubt and bears the testimony of dishonest and malafide motive”. From the above facts, materials and evidence on record, among other observations, the High Court Division held that the plaintiff had miserably failed to prove his case of public power failure on 28.11.88 at 8.35 A.M. as well as operation of the standby generator “beyond reasonable doubt”.
13. The High Court Division came to the finding that the disruption of the public power supply was caused by cyclone. The plaintiff himself admitted that there was a severe cyclone on 29.11.88 and this was admitted by P.W. 3. D.W. 3 the General Manager of local Janata Bank in his letter vide Ext. ‘Gha’ said that there was a serious cyclone in the area on 29.11.88 which disrupted the public power supply in the area including the factory. Ext, ‘Ta’ was found to have lent also strong support that there was a severe cyclone which finally hit the area on 29.11.88. The High Court Division also considered a copy of the “SPARRSO NEWSLETTER” which reported devastating cyclone having hit Bangladesh coast on 29 November, 1988. These evidence and materials were found by the High Court Division to give strong support to the defense case “that the public power supply disruption was caused due to cyclone which took shape of a mature cyclone on 26.11.88 and from 27.11.88 in the locality.” The DOS policy contains exclusion of certain risks including loss or damage caused by cyclone. Clause 7 under the general conditions of the DOS policy reads as follows:
The insurers shall not be liable for
“7. Loss or damage directly or indirectly caused by or arising out of or aggravated by
(d) fire, direct lighting, chemical explosion, extinguishing of a fire or subsequent demolition, aircraft or other aerial devices or articles dropped there from, thefts or attempts thereat, collapse of buildings, flood, inundation, earthquake, subsidence, landslide, avalanche, hurricane, cyclone, volcanic eruption or other natural catastrophes. In any action, suit or other proceeding where the insurer allege that by reason of the provisions of Exclusion as above any loss, destruction or damage is not covered by this policy, the burden of proving that such loss, destruction or damage is covered shall be upon the insured.”
14. The High Court Division came to the opinion that the deterioration of the stock of the plaintiff respondent was “caused due to power failure directly or indirectly caused by the cyclone” and remarked that the plaintiff brought the suit for damages with bad motive and dishonest intention for illegal gain attributing public power supply failure on 28.11.88 at 8.35 A.M. as the cause, but failed to prove as required under the term. The disruption having been caused by cyclone the claim was excluded under clause 7 of the DOS policy. It also held that the plaintiff had failed to prove the breakdown of the standby generator. Although the trial court had found that there was a breakdown of the generator the plaintiff himself disowned it by admittedly refusing to claim under MBD policy. Lastly the High Court Division held that the suit filed by the plaintiff was not maintainable as it was not filed within the stipulated time of 6 months as mentioned in the DOS policy.
15. The High Court Division held that the suit filed on 2.10.89 was clearly beyond the period of 6 months as laid down in clause 8(b) of the DOS Policy and as such was not maintainable in law. The plaintiff had forfeited its right to sue the defendant under the policy by commencing the legal proceeding, the suit beyond the prescribed period of time. It held the learned trial court totally misconstructed and misinterpreted Clause 8(b) of the policy and decreed the suit erroneously. On this point also the suit was liable to be dismissed.
16. On these considerations the High Court Division allowed F.A. No. 277 of 1994 and set aside the judgment and decree passed in Money Suit No. 24 of 1989 passed by the learned Subordinate Judge, First Court, Khulna. F.A No. 129 of 1995 was also dismissed as it became infractuous upon the dismissal of the suit and on setting aside the decreed of the subordinate Court.
17. The High Court Division it appears came to the conclusion that the deterioration of the stock of shrimps was caused not because of power supply failure starting on 28.11.88 as claimed by the plaintiff but was caused directly or indirectly by cyclonic weather which started on 27.11.88 and hit the Bangladesh on 29.11.88. There was no break down of generator and it was manipulated for the purpose of making out a cause for claim against the insurer company. The surveyor had reported that the plaintiff did not inform him of the break down while he was on inspection and there was no claim for break down for machinery although the claim form for such break down was given to the plaintiff. The High Court Division it appears in coming to its conclusion found that the deterioration of stock did not start on 28.11.88 and has referred to certain correspondence to which we have referred to above in which the consistent position of the plaintiff was that power disruption started on 27.1188.
18. The plaintiff on the other hand has submitted that date 27.11.88 mentioned in those letters was a mistake and that the power supply actually was disrupted on 28.11.88. That there was overwhelming oral and documentary evidence to prove that but were not believed by the High Court Division only because as the plaintiff had informed that the disruption took place on 27.11.88 and because there were inconsequential overwriting in the documents. Mr. Mahmudul Islam the learned Counsel for the appellant submitted that P.W. 1 who is Managing Director of the plaintiff company had deposed that according to the log book the power supply was disrupted on 28.11.88 at 8.30 A.M. and that the process of deterioration of the shrimp stock started on that day due to failure of power supply. P.W. 1 was not cross-examined on this point. P.W.3 Executive Engineer of Power Development Board in his statement said this P.W. 3 was also not cross-examined about the date of failure of power supply. P.W. 4 the Assistant Engineer of PDB deposed that Ext. ‘Ta’ was a register maintained by them showing disruption of power supply. The said exhibit showed that power supply was disrupted on 28.11.88 at 8.05 A.M. A certificate being Ext. 23 was issued by Executive Engineer of Bangladesh Power Development Board dated 30.7.89 stating that there was disruption of power supply on 28.11.88 at 8.05 A. M. The certificate reads as follows:
Text In Bangla
19. Exhibit ‘Ta’ has recorded that there was disruption of power supply on 28.11.88 and finally the log book maintained by the plaintiff which is Ext.6 also shows that the power supply from Power Development Board stopped at 8.30 A.M. on 28.11.88 . This log book has been disbelieved because of certain overwriting. But on examination it is seen that the overwriting in certain columns are inconsequential and there is no overwriting on relevant facts such as the date and time when the power supply was disrupted. The High Court Division did not correctly consider these oral and documentary evidence and simply disbelieved them because the plaintiff had earlier informed that the power disruption took place on 27.11.88 and because of certain inconsequential overwriting in the log book. Ext. ‘Ta’ is a register prepared and kept by the PDB. This register could not be manipulated by the insured plaintiff and it showed that power disruption started on 28.11.88 and not on 27.11.88. Therefore there was no legal basis in not believing that the power disruption took plan on 28.11.88.
20. The High Court Division also held that the power disruption was caused by cyclonic weather which started that on 27.11.88 and finally hit chalna on 29.11.88. Power failure due to cyclone came within the exclusion clause of DOS policy. The High Court Division in coming to the finding on the cause of disruption has relied on a copy of the SPARRSO NEWSLETTER (News and views about Remote Sensing and Space Technology in Bangladesh) Vol. 4, issue 1, January, 1989 published by the Meteorological Department of the Government of Bangladesh. In the said newsletter it was found under the caption “Cyclone hits Bangladesh coast” the following “material information”.
“The devastating cyclone which hit Bangladesh coast on the 29th November 1988 was monitored by the Meteorological Ground Station of SPARRSO receives satellite date regularly from the US satellites NoAA 10 and 11 (twice daily from each) and the Japanese GMS-3 (Every three hourly) for monitoring natural hazards in the region especially in Bangladesh as observed from the satellite imagery the cyclone had a huge dimension and took the shape of a mature cyclone on the 26th November when it was about 1100 km from Bangladesh coast. It is to be noted that Bangladesh being a low deltaic plain most of the destruction is caused by storm surges in the coastal area. The surge height this time was about 3 meters in Khulna coast (Hiron point) and less than 2 meters in Patuakhali/Bhola coast. Houses were damaged, trees were uprooted and lives were claimed by the cyclone mostly in the Khulna region. As the dimension of the cyclone was large, the region under its entire track came under the influence of its strong wind and heavy rains for several hours. It may be mentioned that on the average there was some 100 mm of rainfall all over the country during the night of 28th November”.
21. The High Court Division said that this report was an authorized information and read with other evidence came to the conclusion that cyclonic weather was prevailing in Chalna region from 27.11.88. However it is apparent from the above quoted information which the High Court Division found to be material, that on 26 November the cyclone was about 1100 kilometer from Bangladesh coast and that there was 100 mm of rainfall all over the country during the night of 28 November. There is no mention in this report that there was cyclone or cyclonic weather in the Khunla area on 27.11.88 as found by the High Court Division. Neither this report nor any evidence disclosed that there was cyclone in Bangladesh on 28.11.2000 when the power supply was disrupted. The High Court Division was therefore wrong in coming to the conclusion that the deterioration of stock of the plaintiff was “caused due to power failure directly or indirectly by the cyclone”. Consequently we find that the exclusion clause in the policy will not apply in the present case.
22. The High Court Division also held that the plaintiff failed to prove the breakdown of the standby generator in the evening of 2.12.88 and did not believe the testimony of P.W. 1. Non examination of material witnesses made the ‘modus operandi of the plaintiff susceptible’ to suspicion and doubt. Mr. Mahmudul Islam has submitted that there was no reason why plaintiff should stop the operation of the generator and allow the stock of shrimps to be damaged. The insurer on inspection on 7.12.1988 must have been satisfied about breakdown of the standby generator for which the insurer sent MBD (Machinery Breakdown) Claim Form to the plaintiff. The plaintiff had given notice of failure of generator to the Bank with copy to insurer on 3.12.1988 which is Ext. Kha. D.W. 1 the representative of the insurer deposed that the insurer was confirmed about machinery breakdown. This D.W.I said “Machinery Breakdown Text In Bangla claim Text In Bangla”. The trial court had relied on this evidence on the fact as to the breakdown of the standby generator but the High Court Division it appears has totally ignored it. P. W. 1 in his testimony stated as follows:
Text In Bangla
23. It appears that P.W. 1 was not cross-examined on this statement with regard to standby generator. Therefore the High Court Division was wrong in not believing their evidence on the ground of non examination of material witnesses.
24. It appears from Ext. ‘Ta’ that supply from Batiaghata O/H to Chalna was snapped on 28.11.88 and the isolator in the Chalna bound line was kept open. The last two entries of Ext. ‘Ta’ that different electric lines were put into operation at 4.11. p.m. of 3.12.88 after the cyclone disrupted the lines on 29.11.88 and it also shows that the isolator in the Chalna bound line was kept open so that even though the effect of cyclone was removed, there was no electricity in the Chalna line and in the insured cold storage. At that time temperature in the cold storage of the insured was 11°C. Entry in Ext. ‘Ta’ of power development board shows that all the lines became fully operational from 11.50 A.M. of 6.12.88. Before that the generator was again put into operation at 8.27 P.M of 5.12.88 and at that time the temperature in the cold storage was +9°C. This and other evidence show that damage to the shrimps was not caused by cyclone but by the break down of machinery on 2.12.88 during the failure of public power supply from 28.11.88. The cause of loss of plaintiff’s stock was public power failure on 28.11.88 and the cyclone which hit the area on 29.11.88 was not the proximate cause. The process of deterioration started on 28.11.88. In any view of the matter it was burden of the insurer to show that cyclone was responsible for the damage but the insurer did not discharge the burden which the High Court Division failed to notice and consider.
25. Finally the High Court Division has upheld the insurer’s invocation of clause 8(b) of the DOS policy to deny the claim of the insured by saying that the insurer by Ext. 20 had repudiated the claim of the insured on 26.2.89 and the suit had been filed more than 6 months thereafter on 2.10.1989. The relevant clause 8(b) provides that the right of the insured would be forfeited if no “action or suit” is commenced within the period of 6 months from the date of disclaimer by insurer.
26. A forfeiture clause has to be strictly constructed. Clause 8 of the general constitution of the DOS policy is as follows:
Clause 8 (a) If the proposal…..payment hereunder:
(b) In the event of the insurer’s disclaiming liability in respect of any claim and if an action or suit is not commenced within six months after such disclaimer or in the case of arbitration taking place in pursuance of Condition 7 of this policy) within three months after the arbitrators or umpire have made their award, all benefit under this policy on respect of such claim shall be forfeited.”
27. It was argued by the learned counsel for the plaintiff appellant before the High Court Division that the words ‘action’ or ‘suit’ have been used disjunctively and the word ‘action’ implies and include the period of giving legal notice and its reply by the defendant. In the instant case the insured sent legal notice to the insurer on 14.5.1989 which is within 6 months of the repudiation and as such the forfeiture is not attracted as the legal notice is an action within the meaning of ‘action’ in clause 8(b) of the policy. On the other hand, Mr. Manzur-Ur-Rahim the learned counsel for the defendant respondent submitted that period of 6 months for bringing the suit starts from the date of letter of repudiation of the claim. He submits that the insurer by his letter dated 26.2.89 Ext. 20 clearly repudiated the claim of the insured in clear and unambiguous terms and said “we are closing the file as no claim” and in the legal notice vide Ext. 21 dated 14.5.89 in para 5 of the insured’s lawyer that his clients have been informed by letter dated 26.2.89 that they were unable to entertain the claim which shows that the insured had clearly understood the contents of the letter of repudiation and there was no ambiguity. Hence the period of 6 months as mentioned in clause 8(b) of the DOS policy would start from the date of receiving the said letter from the insurer by the insured plaintiff and a suit for that matter had to be commenced or brought within 6 months from the said date. In support of his argument the leaned counsel for the insurer has referred to 4 cases reported in AIR 1914 Bombay 225 between Borada Spinning and Weaving Co. Ltd. Vs. Satyanarayan Marine and Fire Insurance Co. Ltd. AIR 1924 (Cal) page 186 between Girdharilal Monuman Box Vs. Eagle Star and British Dominions Insurance Co, Ltd. 4 PLD (Dhaka) 595 between Sree Hari Sankar Nandi Majumder Vs. Sree Promode Chandra Roy Choudhury and 47 DLR (AD) 97 between Sadharan Bima Corporations Vs. Sanjib Kumar Das and another. In all the aforesaid decisions it has been held that the words ‘action’ or ‘pending action’ mean imitating a legal proceeding in court within the mentioned period and its failure by the insured, forfeits his right to sue under the policy.
28. He has referred to the meaning of the word ‘action’ as defined and explained in Halsbury’s Laws of England, 3rd Edition which says: An “action,” according to the legal meaning of the term, is a proceeding by which one party seeks in a court of justice to enforce some right against, or to restrain the commission of some wrong by another party. More concisely it may be said to be “the legal demand of a right” or “the mode of pursuing a right to judgment”. It implies the existence of parties, of an alleged right, of an alleged infringement thereof (either actual or threatened), and of a court having power to enforce such a right. In its wider meaning the term includes both civil and criminal proceedings; it was frequently so used by old writers and the House of Lords has recognized that it is a generic term, inclusive, in its proper legal sense, of suits by the Crown, and comprehending, in legal phraseology, every suit, whether by a subject, or in the name of the Sovereign, or by the Attorney-General on behalf of the Crown. It is, however, generally used in a more restricted or popular sense as denoting a civil action commenced by writ or plaint.
29. Mr. Manjur-Ur-Rahim, defended the judgment of the High Court Division by quoting profusely from the aforementioned cases and particularly the decision of this Division in the case of Sadharan Bima Corporation Vs. Sanjib Kumar Das reported in 47 DLR (AD) 97 which has discussed the cases motioned above’. In that case reference was made to Balck’s Law Dictionary, 4th Edition, page 49 the distinction between ‘action’ and ‘suit’ was stated as here-under:
“Strictly applied, action does not usually refer to chancery practice……….But terms “action” and “suit” are now nearly, if not entirely, synonymous…or, if there be a distinction, it is that the terms “action” is generally confined to proceedings in a court of law, while “suit” is equally applied to prosecutions at law or in equity,………Formerly, however, an action was considered as terminating with the giving of judgment, the execution forming no part of it. A suit included the execution. So, an action is termed by Lord Coke, “the right of a suit.”
30 The Judgment also referred to Aiyer’s Law Terms and phrases, 7th Edition in which the word ‘action’ is defined as hereunder:
“Action is a generic term and means a litigation in Civil Court for the recovery of individual right as the redress of individual wrong inclusive, in its proper legal sense, of suits by the Crown.”
31. It appears from the judgment of this case that at the trial the argument was in fact centered round condition No. 19 of the insurance policy which reads as follows:
“19. In no case whatever shall the Corporation be liable for any loss or damage after the expiration of twelve months from the happening of the loss or damage unless the claim is the subject of pending action or arbitration.”
This Division after elaborate discussion on the definition and leading decisions, held that pending action means suit. It said:
“We would like to say in the same vein that the words ‘pending action’ have been understood in this sub-continent for well over 80 years as pending suit and we fined no jurisprudential backing, no unfurling of a novel proposition of law and no impelling consideration of justice and fair play in the judgment of the High Court Division to disturb that understanding. The High Court division clearly misinterpreted and misunderstood the words ‘pending action and we have no hesitation in disapproving of the same.”
32. Mr. Mahmudul Islam has submitted that the decision reported in 47 DLR (AD) 97 interprets “pending action” and does not consider the meaning of “action or suit” and the stare devises principle is not attracted as the previous decisis which has been taken to be foundation of the principle of stare decisis did not interpret the expression “action or suit” but only “pending action” and as such the decision reported in 47 DLR (AD) 47 is not applicable in the present case. He has argued that the forfeiture clause as found in clause 8(b) of the DOS policy has to be strictly construed and he referred to the decision reported in AIR 1936 Patna 372. In that case it was said, “it is well established that a forfeiture clause must be literally and strictly construed and be taken most strongly against the lessor inasmuch as he can always provide as stringent condition as he likes.” In the instant case the decision of the insurer is similar to that of lessor. He submits that when same word is used in different places of a document, it should generally carry the same meaning, conversely when different words have been used in the same part of a documents those words are to be construed as carrying different meaning. If the expression “action” is construed as meaning “suit” the expression “action” becomes redundant and it is an established principle of interpretation of a document that no word or phrase should be rendered redundant by interpretation. In support of it he refers to the decision in the case of Chelikani Kondayya Rao and others vs. Uppalapati Naganna and others, reported in AIR 1941 Madras 367. In that case it was observed:
“In the construction of a deed the question is one of intention to be deduced or inferred from a consideration of the entire deed, brining into action every part of it and rejecting none, unless the expressions are contradictory and incapable of being reconciled, or there is a repugnancy which calls for the rejection of one part in Order the more effectually to carry into effect the real intention of the parties gatherable from the part retained. Rejection should be the last resort, after very means to reconcile are exhausted, The Court should rather lean towards a construction which would give a meaning and effect to every one of the clauses in a deed that towards one which would result in a nullification of any one or more of them in the end.”
33. In the interpretation of statutes, it has been held that when different words have been used in the same section of the law, it has to be presumed that the framers of the law intended that they carry different meaning. In the case of K.U.K kulkarni, Receivers and another vs. Ganpat Hiraji Teli, Applicant and another’s, reported in AIR 1942 Bombay 191, it was considered whether the word “salary” includes “wages”. It was observed:
“What is urged is that the term “salary” includes the “Wages of laborers” and that consequently the letter are subject to exemption to the extent stated in the latter part of cl. (h) of section 60. That argument assumes that the Legislature used the two analogous words “wages: and “salary” in the same sense. According to Maxwell “where analogous words are used each may be presumed to be susceptible of a separate and distinct meaning, for the Legislature is not supposed to use words without a meaning.” The Legislature, in my opinion, must always be presumed to aim at precision and in so doing would naturally follow the safe rule of always calling the same thing by the same name. If it has used two different expressions, though analogous in nature, in different parts of the same clause, it must be assumed that they were intended to be used in a different sense……The rule of construction avoids absurdity or redundancy in a legislative enactment.”
In the case of the Emperor vs. Phuchai and another reported in AIR 1929 All 33, it was held by the Full Bench of the High Court.
“When two distinct words are used in the same section, the ordinary rule of construction is that they do not mean identically the same thing”.
34. Therefore the word action or suit appearing in clause 8(b) should not be interpreted as having identical meaning and the word action would include legal notice served by the insured on the insurer. It was further argued that in such case of commercial documents the principle of contra proferentem rule is applicable and the rule implies that any ambiguity in a document must be resolved against the party which drafted the document. If there is any dispute about the word used in a policy, it is to be construed more strictly against the company. This rule of construction, that verba chartarum fortius accipiuntor contra proferetem, is a principle applicable to all commercial transactions where one party has prepared the form of contract. A party who prepares an instrument cannot be permitted to use ambiguous words in the words in the hope that the other side will understand them in a particular sense, and that the court which has to construe them will give them a different sense. Here the policy has been drafted by the insurer and there fore the ambiguity or confusion by the uses of the expression “action or suit” should be resolved in favour of the insured.
35. Having heard and considered arguments from both the sides we hold that the words ‘action or suit’ in clause 8(b) of the policy being different words and used in the same clause it is to be presumed that they carry different meaning. If the expression ‘action’ is construed as meaning ‘suit’ only the expression ‘action’ becomes redundant. The meaning has to be construed strictly keeping in mind that the terms of the policy is drawn up by the insurer and the interest of the insured depends on the interpretation of the terms. The expression ‘action’ in the circumstances means and includes legal notice and not suit. The insured has taken action by making his claim through legal notice. We therefore do not agree with the High Court Division that the word ‘action’ in clause 8(b) means only ‘suit’.
36. On consideration of the materials on record and for the reasons stated above we are of the view that the impugned judgment of the High Court Division is not a proper judgment of reversal by adverting to the materials and reasons assigned by the trial court in decreeing the suit and the construction of the word “action” is also not in accordance with law. We are also constrained to note that the High Court Division without considering the preponderance of evidence adduced by the parties in the light of their respective pleading imported the concept applicable in criminal trial that “plaintiff must prove its own case beyond all reasonable doubt” and thereby committed error of law in assessing the evidence and in reversing the judgment and decree of the trial court. So we are of the view that the impugned judgment of the High Court Division is liable to be set aside and judgment and decree of the trial court liable to be restored.
37. In the result the appeal is allowed with costs. Judgment and decree of the High Court Division appealed from are set aside and those of the trial court restored including the interest awarded.
Source : II ADC (2005) 96