Madras High Court · 2025

(Transit) Insurance, Fire, Burglary, Money in Transit, Money in safe and Fidelity Guarantee Insurance Policy for the period from 01.10.2008 to

30.09.2009. The tender offered by RELIANCE accepted by TASMAC and they entered into mutual agreement, which came into force from 18.10.2008. Till January 2009, the claims of TASMAC was settled without any dispute. Thereafter, from February 2009 to September 2009, only 70% of the TASMAC claim was paid. RELIANCE withheld 30% citing failure to adopt loss control measures, which was suggested by RELIANCE and ought to have adopted by TASMAC in the normal course of business. Indicating Non- Standard Settlement of Claim, owing to the TASMAC repeated ignorance of maintaining the package standard, deduction of 30% in the claim was made by RELIANCE.

2. The case of RELIANCE, based on Clause 2.3 of the Insurance Policy, which reads as under:- “2.3 Loss damage or expense caused by insufficiency or unsuitability of packing or preparation of the subject-matter insured (for the prupose of this Clause 2.3 “packing” shall be deemed to include stowage in a container or liftvan but only when such stowage is carried out prior to attachment of this insurance or by the Assured or their servants.”

3. Being aggrieved, TASMAC laid suit against RELIANCE for the following relieves:- (a)To pay a sum of Rs.3,51,14,655/- together with interest @ 18% on Rs.2,57,45,245/- from the date of plaint till the date of realisation; (b)Directing the defendants to pay costs.

4. RELIANCE contested the suit by filing written statement and examining witnesses. The suit was resisted stating that TASMAC failed to ensure the goods are packed in properly and secured cardboard cartons. The breakage and loss was because of the failure of TASMAC to ensure:- (a)the quality of packing, (b)avoidance of recycling of bottles (c)over loading and casual handling of the materials at the time of loading and unloading. (d) use of Taurus vehicles which are prone to jerk.

5. TASMAC was informed about the breach in package standard. Only thereafter, relying Clause 2.3 of the Policy condition, 30% from the bill was deducted.

6. Based on the pleadings, Issues framed and later, recasted as (i)Whether the defendant was justified in making a deduction of below:- 30% of the claim amount for the period between February 2009 and September 2009?

2. Whether the action of the defendant in deducting 30% of the value of the claims during the aforesaid period is within its powers under the contract of Insurance dated 18.10.2008?

3.Whether the deduction made by the defendant is arbitrary and is in breach of the conditions contained in the tender document and the policy of insurance?

4.Whether the plaintiff is entitled to recover the 30% of the claim amount? payment?

5.Whether the plaintiff is entitled to interest on the delayed

6.Whether the plaintiff had taken loss minimization efforts and ensured that the packing was sufficient with stnad jerks and jolts during road transit?

7.Whether the recovery rights were protected as stipulated in the policy condition by the plaintiff?

8.Whether the defendant is not estopped from contending that the recovery rights were not protected and that the documents required to be furnished were not furnished by its own conduct of settling 70% of the claim amount?

7. One witness on each side and 24 documents for the plaintiffs were marked as Ex.P1 to Ex.P24 and one document on the side of the defendant was marked as Ex.D1.

8. The Learned Judge, partly allowed the suit, directing the defendant (RELIANCE) to pay a sum of Rs.3,19,91,515/- with 12% interest p.a. on Rs.2,57,45,245/- from the date of suit, till date of payment.

9. The Learned Judge, primarily analysing the exclusion clauses in the Policy, had examined the expression used in Clause 2.3 and has observed that,

8.4 No doubt Clause 2.3 would exclude the damage or expense caused by insufficiency or unsuitability of the packing. As already adverted to, the policy condition in respect of packaging shows that the packaging must be standard and customary and the cartons should have segregations for bottles and premium bottles are packed with extra lining. The policy does not prescribe a particular standard of packing namely IS 9313-1979. There is nothing in the policy to show that the plaintiff is required to ensure that the goods are loaded in the lorries are packed as per the standards required in IS 9313-1979. In the absence of a contractual requirement, the defendant cannot insist on a particular standard of packing.

10. Regarding payment of 70% and with holding of 30% of the loss claimed by TASMAC, the Learned Judge had observed that,

8.6.The correspondence between the parties vide Ex.P10 to Ex.P24 would demonstrate that the only dispute between the parties was the deduction of 30% of the claim by the defendant on the ground that the packaging was insufficient and that there was mishandling at the distillery point. Therefore, I do not think that the defendant could be allowed or permitted to raise the issue relating to non-furnishing of documents or failure on the part of the plaintiff to ensure recovery rights. The entire correspondence between the parties commencing from the first letter dated 04.04.2009 marked as Ex.P10 to Ex.P24 dated 16.12.2009 would show that the entire dispute was relating to the 30% deduction on the basis of the alleged deficiency in packing.

8.9 As I had already pointed out the contract of Insurance does not enable the defendant to make any deduction on a non-existent exclusion clause. It is not the case of the defendant that the products were not packed, the defendant woud claim that the packaging was not up to the standard prescribed in IS 9313-1979. The policy condition does not require such standard of packaging. It only states that there should be a standard and customary packing and the carton should have separators between bottles. There is no evidence to show that such packing was not there. It was well open to the defendant to have repudiated the policy, but the defendant persisted with the policy and chose to deduct a certain percentage without any basis.

11. In the grounds of appeal, RELIANCE mainly contends that, The learned Judge has wrongly arrived at the conclusion that the appellant had never raised the issue related to insufficiency in packing prior to deduction of claim and based the entire impugned judgment on this wrong premise. The judgment and decree dated 02.11.2021 only takes into account the Letter dated 05.06.2009 sent by the appellant regarding non-standard packing, recycling of bottles and improper handling at distillery plant etc. The appellant had sent Letters dated 31.01.2009, 30.03.2009, 24.04.2009,

20.05.2009 informing the respondent of the poor and insufficnet packing of the subject matter insured and asking it to take appropriate steps in order to minimise the loss. Further, the appellant had also submitted a report by the National Test House regarding sub-standard packing and the detailed report by the Surveyors.

12. The learned Judge has failed to observe the fact that the respondent was duty bound to ensure that the goods are packed in glass bottles are properly and securely kept in carboard cartons, while being transported so that breakage is minimized. The respondent had failed to ensure the quality of packing, avoidance of the use of recycled bottles, prevention of overloading and avoidance of Taurus vehicles which are prone to jerks, the loss percentage had increased and hence the appellant was well within its rights to make appropriate deductions on the claims made. The learned Judge has failed to take into account key clauses of the policy which clearly states that it is the duty of the assured and their servants and agents to take such measures as may be reasonable for the purpose of averting or minimising such loss (Clause 9.1 of Policy).

13. The learned Judge should have strictly construed the terms of the policy General Exclusion Clauses dealing with declarations and the exclusion of liability, respectively, are specific (Clause 2.3: In no case shall this insurance cover loss, damage or expense caused by insufficiency or unsuitability of packaging or preparation of the subject matter insured). The learned Judge erred in overlooking the fact that the basis of 30% deductions by the appellant was fully and repeatedly disclosed to the respondent and the same was in complete adherence to the Marine Inland Open Policy document dated 18.10.2008, the provisions of which bind both the parties in the instant matter. The learned Judge ought to have considered that the respondent was duty bound to minimize the risks and losses involved in the transit of the subject matter and that non-compliance of the said clause amounts to a breach of the contract while activating the exclusion clause in favour of the appellant. The learned Judge erred in not taking into consideration the photographs taken by the surveyors of the slipshod handling of the subject matter insured on the part of the respondent that has caused increasing losses for which the appellant cannot be held liable. The learned Judge failed to take on record the reports issued by accredited neutral third parties definitely concluding that the packing material used by the respondent in the ordinary course of business was not up to the Indian stndard of packing.

14. The learned Senior Counsel representing the Appellant/ RELIANCE submitted that the Learned Single Judge failed to appreciate the evidence properly. He erred in observing that the entire correspondence between the parties commenced only from the first letter dated 04.04.2009 marked as Ex.P10 to Ex.P24. In fact, the correspondence regarding poor quality of packing started much earlier and in the letter dated 24.04.2009 marked as Ex.P-13, there is a reference about the earlier correspondence dated 30th March 2009 and in the letter dated 30.03.2009, there is a reference about the previous correspondence dated 13.01.2009 regarding the loss minimization measures to be implemented by TASMAC. Though there is evidence to show that there was continuous communication regarding non compliance of package policy, unfortunately, those letters were not marked during the trial. However, in the pleading references about these letters find place. In the cross examination, the witness for TASMAC admits the receipt of these letters. Therefore, he submitted that, the petition filed under Order 41 Rule 27 CPC to receive additional documents be allowed to provide opportunity for the plaintiff/appellant to establish the fact that the respondent/defendant- TASMAC had committed gross violation of policy condition.

15. The Learned Additional Advocate General representing TASMAC submitted that from the month of September 2008, till the month of January 2009, RELIANCE settled the claim. During that period also, the package and transport was same. Whereas for the subsequent period, 30% was deducted without assigning reason and data for the said deduction. As per the policy condition, the nature of packing should be standard and customary. Cartons with segregation for bottles; Premium bottles are to be packed with extra lining. Nowhere in the contract, it was agreed that the package must be of IS standard. Clause 2.3 of the policy which deals with exclusions nor clause

9.1 does speak about reduction of the claim unilaterally by the Insurer. The alleged letters demanding higher standard of packing not within the insurance policy. The documents in the form of letter communication between TASMAC and RELIANCE and other documents sought to be introduced at the appellate stage are irrelevant to the case, since no violation of the tender condition and in the tender, the package standard was not specified as BIS.

16. Point for determination:

1. Whether the appellant be permitted to adduce additional evidence, in view of the observations made by the learned Judge at paragraph

8.6 of the impugned judgment which is apparently contrary to Ex.P-13 ?

2. Whether RELIANCE is entitled to make a standard deduction of 30% exercising the exclusion clause in the policy ?

17. In the impugned judgment para 8.6, which is already extracted above, the learned Judge had mentioned about Ex.P-10 to Ex.P-24 and had concluded that the correspondents in these exhibits is only regarding deduction of 30% on the basis of alleged deficiency in packing. What we find in Ex.P-13 is a reference about an earlier communication regarding suggestions to minimise the loss. This suggestion emanates from Clause 9.1 of the Insurance Policy marked as Ex.P-9.

18. No doubt, there is no specific reference about BIS standard of packing or ISO standard of packing. The insurance policy only says, it must be standard and customary. Cartons with segregation for bottles. Only other condition is in respect of premium bottles, which are to be packed with extra lining.

19. RELIANCE, in the letter Ex.P-13, as a suggestion recommended measures to minimise the loss in transit had requested TASMAC to ensure quality of packing as well to desit from recycling bottles. Based on the Inspection Report, RELIANCE had informed TASMAC that manufacturers are loading BEER BOTTLEs without undergoing its mandatory cooling hours.

20. Clauses 9 and 10 of the Insurance Policy speak about minimising losses. They reads as below:- “MINIMISING LOSSES

9. It is the duty of the assured and their servants and agents in respect of loss recoverable hereinunder:-

9.1 to take such measures as may be reasonable for the purpose of averting or minimising such loss and

9.2 to ensure that all rights against carriers, bailees or other third parties are properly preserved and exercised by lodging a monetary claim against railway/road carriers/bailees within six months from the date of railway/lorry receipt or as prescribed by the relevant statute. And the underwriters will, in addition to any loss recoverable hereunder, reimburse the assured for any charges properly and reasonably incurred in pursuance of these duties.

10. Measures taken by the Assured or the underwriters with the object of saving, protecting or recovering the subject matter insured shall not be considered as a waiver or acceptance of abandonment or otherwise prejudice the rights of either party. “

21. The communications Ex.P-10 to Ex.P-24 as well as the other communications, which are sought to be adduced as additional documents, read as a whole proves that, RELIANCE though paid the claims till the month of January 2009, it had been suggesting improvement in packing and transport to minimize loss before it deciding to pay only 70% of the claim on Non- Standard Basis. The Policy term, particularly 2.3 and 9.1 are to be read conjunctively, to arrive at a right conclusion, whether the alleged breakage and damages to the bottles was due to non-adherence of the packing Standard.

22. Hence, to decide the second point, we are of the view that the additional documents sought to be adduced by RELIANCE in C.M.P.No:4098 of 2022 need to be examined. Hence, we allow the petition to receive additional documents 1 to 9 listed in the Judge’s Summon. Learned Master is requested to record the evidence and receive the documents subject to admissibility.

23. After the Learned Master completes recording of evidence, Registry is directed to list the case before the Court. (Dr.G.J.J.) & (M.S.K.J.)

07.11.2025 Index:yes Internet:yes Speaking order/non speaking order Neutral citation:yes/no Dr.G.JAYACHANDRAN, J. MUMMINENI SUDHEER KUMAR,J. delivery Order made in C.M.P.No.4098 of 2022 O.S.A.(CAD)No.36 of 2022 C.M.P.No.4097 of 2022

07.11.2025