'Date Of Repudiation Of Claim The Cordial Knot To Determine Limitation, Mere Requests For Reconsideration Won't Grant A Fresh Lease Of Limitation': Madras High Court

While dismissing the suit on Tuesday, a single-judge Bench of Justice G. Jayachandran underlined that, when even after repeated correspondence, the defendant has not reconsidered the stand regarding repudiation of claim, the said correspondence won't grant a fresh lease of limitation for filing the suit.

Factual Background:

The three defendants in the suit were Bharathi AXA General Insurance Company Ltd, Waterbury Farrel and Steel Authority of India Ltd respectively. The second defendant, Waterbury Farrel and Shriram EPC formed a consortium and then entered into an agreement with the third defendant, Steel Authority of India, for the supply and erection of 20 Hi Sendzimir Mill. The mill-housing equipment that was shipped from Canada by Waterbury Farrel was received by the plaintiff and transported via road from Chennai Port. As a result of an accident en route on 06.05.2010, the equipment was severely damaged. The validity of the Marine Insurance policy taken by the plaintiff and Steel Authority of India with Bharathi AXA General Insurance Company was valid from 09.12.2008 to 08.01.2011.

The plaintiff lodged a claim of over 11 crores with the first defendant, i.e, Bharathi AXA General Insurance Company, along with supporting documents. The first defendant rebutted the claim made by the plaintiff based on its surveyor's report that finalised a de-rated amount of approximately Rs. 24 Lakhs and alleged breaches of warranty in securing the shipment by the plaintiff that negates the claim as a whole on 17.05.2011. The plaintiff has afterwards sent many letters to Bharathi AXA, beginning from 28.06.2011 requesting to make good the loss suffered and denying the allegation of breaches of warranty by the plaintiff.

The suit was instituted in 2015 and afterwards determined as a commercial dispute in 2020. The application to pass a summary judgment dismissing the suit on grounds of limitation was filed by the defendants under Order XIII-A Rule 2 & 3 of C.P.C as amended under the Commercial Courts Act.

Submissions Made By Parties

The plaintiff, represented by Advocate M.B.Raghavan submitted that after it intimated in one of their letters about the charge sheet filed and punishment imposed on the truck driver who transported the shipment, the insurance company demanded the documents along with the district court judgment. After these details were sent, there was no reply from the insurance company which prompted Shriram EPC to issue a pre suit notice on 04.06.2012 and it was only after that communication, the insurance company finally repudiated the claim in its reply notice dated 12.07.2012.

The affidavit filed by the respondent along with the preliminary objection on the grounds of limitation affirmed that the cargo of the plaintiff was insured with the defendant, however, the policy claim of the plaintiff was repudiated by the Insurance Company on 17.05.2011 itself due to breach of warranties.

The defendant counsels, Advocates Vishnu Mohan and Gautam S. Raman pointed out the three-year limitation period under Section 44 (b) of Limitation Act and claimed that the final repudiation had occurred on 17.05.2011 itself and hence the suit instituted in 2015 is time-barred.

In response, the plaintiff counsel claimed that the cited letter was not meant to inform about the repudiation of claim, but only an intimation of claim assessment to which the plaintiff duly replied, and from where the correspondence was carried on further till the repudiation of claim in the reply notice to the plaintiff's pre-suit notice. Until then, the claim was kept alive since the Insurance Company sought further documents from the plaintiff for further assessment.

Court's Observations

Justice G. Jayachandran, before going into the merits, noted in his order as follows:

"The cordial knot of the case to determine limitation is the date of repudiation of claim."

The court noted that on a policy of insurance under Section 44 (b), the limitation period of three years will be counted from the "date of the occurrence causing the loss, or where the claim on the policy is denied either partly or wholly, on the date of such denial."

The court noted that the Insurance Company has denied the claim of plaintiff on 17.05.2011 itself even on a de-rated basis.

"The subsequent correspondences from the 1st defendant also reiterated the repudiation of the claim expressed in its letter dated 17.05.2011 and there is no document to show that the 1st defendant, at some point of time, thereafter, expressed his intention to re-consider the repudiation."

Though the plaintiff's claim is that the Insurance Company sought the court judgment and other documents related to the accident in subsequent correspondence, the company makes its stand clear in that same letter as given below :

"We once again inform you that the surveyors had assessed the loss for an amount of Rs.24,29,450/- on the basis of documents submitted to us as well to other Government Authorities but because of the breach of warranties applicable to the policy, the same was not admissible and hence the decision was communicated vide our letter dated 17th May, 2011."

The court, after examining these aspects, clarified that even the plaintiff concurs that after the reply dated 22.08.2011, the defendant has not given anything to the effect of reconsideration, and the exchange of pre-suit notice by Shriram EPC after 8 months won't result in a fresh lease of limitation. Hence, the limitation period must be reckoned from 18^th May, 2011.

"Ever since 17.05.2011, the 1st defendant had not admitted the liability and expressly repudiated the same on the ground that there is breach of warranty by the plaintiff. In spite of repeated request from the plaintiff, the 1 st defendant had never changed his stand. The letter of the plaintiff also indicate that, they are aware of the fact that the 1 st defendant has repudiated the claim through the letter dated 17.05.2011. What the plaintiff was requesting in their letters, is to reconsider the same."

Concerning the submission that the suit filed to pass summary judgment under Order XIII-A of C.P.C has not been in the appropriate format, the court opined that even if it's not in the desired format, 'the court never give primacy to format at the cost of substance.'

"By no stretch of imagination, the prospect of the plaintiff succeeding the case will get improved if the parties are allowed to let oral evidence. Article 44(b) of the Limitation Act, prescribes 3 years limitation for filing the suit from the date of repudiation of the claim. In the instant case, the factum of repudiation by the 1st defendant consistently mentioned as 17.05.2011. Whereas, the plaint is presented along with the leave to sue petition on 10.07.2015."

The court, after recording the above reasons in its order, dismissed the original civil suit as time-barred.

Case Title: M/s. Bharti AXA General Insurance Co.Ltd v. M/s. Shriram EPC Ltd. & Ors.

Case No: A.No.2512 of 2021 in C.S.No.604 of 2015