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PETITIONER: M/S MODERN INSULATORS LTD.

       Vs.

RESPONDENT: THE ORIENTAL INSURANCE CO.  LTD.

DATE OF JUDGMENT:       22/02/2000

BENCH: S.Saghir Ahmad, S.N.Phukan

JUDGMENT:

     PHUKAN,J,

     This  appeal  is  directed  against  the  order  dated 08.01.97  passed by the National Consumer Disputes Redressal Commission whereby the Commission set aside the order passed by  the State Commission of Rajasthan in the appeal filed by the respondent.

     The  appellant has a factory wherein it  manufacturers high  tension  insulators  for   transmission  lines.    The appellant  had  taken out an insurance policy known as  ’All Risk Insurance Policy’ for Rs.  50 lakhs tor installation of 25 M3 kiln with furniture.  The policy covered risks against loss   during  storage-cum-erection   including  trial   and testing.   After  completion of the erection of 25 M3  kiln, the same was loaded with insulators on 12.7.88 for trial and testing  and when it was opened on 16.7.88 it was found that complete  structure  of kiln furniture with  insulators  had collapsed  on  kiln car and various items of kiln  furniture were  damaged.  A claim of Rs.  5,73,397.43 was lodged  with the  respondent and the surveyors assessed the damage at Rs. 4.66,873.   As  the  claim was not settled a  complaint  was filed before the State Commission alleging negligence on the part  of the respondent and claiming the amount assessed  by the surveyor with interest.  ..

     The respondent - Insurance Company in the reply to the complaint  filed  before the State Commission  pleaded  that damaged  property  was not covered by the insurance  policy. The  State  Commission  after considering the  materials  on record  rejected the plea of the respondent and directed the respondent  to indeminify the loss by making payment of  Rs. 4,66,873/- with interest (@).  18% per annum.

     An  appeal  was  filed before  the  National  Consumer Disputes  Redressal Commission and in the grounds of  appeal it  was  stated  that the appellant violated the  terms  and conditions of the policy by using used kiln furniture.  This was denied by the appellant.

     The   appellant  also  urged   betore   the   National Commission  that  only  the cover note and the  schedule  of insurance   policy  were  supplied   and  other  terms   and conditions   including  the  exclusion   clause   were   not communicated.  According to the appellant the above document supplied  did  not contain the exclusion clause.   The  said

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exclusion clause runs as follows:

     "In   the  case  of   second  hand/used  property  the insurance hereunder shall, however, cease immediately on the commencement of the test"

     The  National  Commission  asked the parties  to  file affidavits  to  prove  That the exclusion  clause  was  duly communicated  to the appellant.  We have been taken  through the  affidavits  filed and we find in the affidavit  of  the appellant  the  letter  received by the appellant  from  the Branch  Manager of the respondent was referred to wherein it was  confirmed that appellant was supplied only with a cover note and the schedule of the policy.  So the other terms and conditions  containing  the above exclusion clause were  not communicated.    In  the  reply   affidavit  filed  by   the respondent  it  was  not  specifically  mentioned  that  the exclusion clause was also communicated to the appellant..

     The  National  Commission was of the view that "it  is equally  responsibility of the respondent to call for  these terms  and  conditions  even if they were not  sent  by  the appellant  as  alleged,  to understand the extent  of  risks covered under the policy and the associated aspects."

     It  is the fundamental principle of insurance law that utmost  good  faith  must  be observed  by  the  contracting parties   and   good   fath   forbids  either   party   from non-disclosure  of  the lads which the parties  known.   The insured  has a duty to disclose and similarly it is the duty of  the  insurance company and its agents to  disclose  .ill material  facts in their knowledge since obligation of  good faith applies to both equally.

     In view of the above settled position of law we are of the  opinion  that  the  view   expressed  by  the  National Commission  is  not  correct.   As   the  above  terms   and conditions  of  the  standard policy wherein  the  exclusion clause  was included, were neither a part of the contract of insurance  nor disclosed to the appellant respondent cannot. claim the benefit of the said exclusion clause.  Therefore.. the finding of the National Commission is untenable in law.

     We may refer to the next ground on which appeal has to be allowed.  It is settled position of law that in an appeal the  parties  cannot urge new facts.  From the pleadings  of the  respondent before the State Commission it is found that respondent  pleaded  that  the  property  damaged  wa.s  not covered  under the insurance policy.  This plea was given  a go  by  before  the National Commission and a new  plea  was taken  up  in  the  grounds of appeal  that  the  terms  and conditions  of  the  insurance policy were violated  by  the appellant  by  using  used  kiln  furniture.   The  National Commission  accepteu this new ground and allowed the appeal, which in our opinion is not sustainable in law.

     For  the reasons stated above we hold that the present appeal has merits.

     In the result, appeal is allowed.  The judgment of the National  Commission  is set aside and the judgment  of  the State Commission is restored.

     Considering the fects and circumstances of the case we direct the parties to bear their own cost.

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