Insurance policy forfeiture clauses and strike-loss exclusions were enforced according to their plain contractual effect.
An insurance policy clause that extinguishes the insured's right unless a claim is asserted within the stipulated period is enforceable, because it operates as a forfeiture provision rather than a mere curtailment of limitation under section 28 of the Contract Act; clause 19 was therefore valid. The strike and riot endorsement also did not cover the claimed loss, because special condition 5(i)(b) excluded damage arising from total or partial cessation of work, interruption, or stoppage of any process or operation. The strike-induced stoppage and obstruction of movement of goods brought the claim within that exclusion, so the loss was not recoverable under the policy.
Issues: (i) Whether clause 19 of the insurance policy was void under section 28 of the Contract Act for limiting the time to enforce the insured's rights. (ii) Whether the loss claimed for damage caused during the strike was excluded by special condition 5(i)(b) of the riot and strike endorsement.
Issue (i): Whether clause 19 of the insurance policy was void under section 28 of the Contract Act for limiting the time to enforce the insured's rights.
Analysis: A distinction was drawn between a clause which merely shortens the statutory period for enforcing a contractual right and a clause which makes the right itself cease if no claim is made within the stipulated time. A term that curtails limitation is hit by section 28, but a term that provides for extinction or forfeiture of the right itself on expiry of the stipulated period is enforceable. Clause 19 stated that the insurer would not be liable after twelve months from the loss unless the claim was already the subject of pending action or arbitration. It was treated as a forfeiture clause requiring the claim to be asserted within time, not as a mere limitation clause.
Conclusion: Clause 19 was not void under section 28 and operated to extinguish the insured's right after the stipulated period.
Issue (ii): Whether the loss claimed for damage caused during the strike was excluded by special condition 5(i)(b) of the riot and strike endorsement.
Analysis: The endorsement covered riot and strike damage, but special condition 5(i)(b) excluded loss or damage resulting from total or partial cessation of work or from the retarding, interruption, or cessation of any process or operation. The claimed damage arose from the strike-induced stoppage of work and obstruction of movement of goods, bringing the loss within the exclusion. On that basis, the claim was outside the risk covered by the policy.
Conclusion: The claim was excluded by special condition 5(i)(b) and was not recoverable under the policies.
Final Conclusion: The policy terms were enforced according to their plain effect, and the insured could not recover for the claimed loss.
Ratio Decidendi: A contractual clause in an insurance policy is valid if it extinguishes the insured's right unless the claim is asserted within the stipulated period, but it is void if it merely curtails the statutory period for enforcing that right.
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