State Consumer Disputes Redressal Commission
M/S Simpolo Ceramics vs United India Tns. Co. Ltd on 31 January, 2022
Details DD MM YY
Date of Judgment 31 01 2022
Date of filing 08 05 2014
Duration 23 08 07
IN THE CONSUMER DISPUTES REDRESSAL COMMISSION,
GUJARAT STATE AT AHMEDABAD.
CC/113/2014
Court No.1
M/s. Simpolo Ceramics
Old Ghantu Road, Morbi-363642. ...Complainant
Vs.
United India Insurance Co. Ltd.
DO-1, Sugar House, Opp. Trikonbaug,
Rajkot-360001. ...Opponent
Complainant- Learned advocate Mr. P. R. Joshi
Opponent-Learned advocate V. P. Nanavaty
Coram :Hon'ble Mr. Justice V. P. Patel, President
Order by Hon'ble Mr. Justice V. P. Patel, President
1.The complainant has filed the consumer complaint u/s. 17 of the Consumer Protection Act, 1986 (For short "The Act") against the opponent insurance company claiming main relief in terms of para 19 (B) which reads as under:
(B) Your Hounour will be pleased to held that the opponent company has erroneously disallowed the claim of Rs. 95,57,367/- and further be pleased to direct the opponent company to pay remaining claim of Rs.
95,37,367/- with interest to complainant.
1.1 This case is arised from the deduction of claim amount of damages under standard fire and special peril policy.
2. Heard ld. advocate Mr. P. R. Joshi for the complainant and ld. advocate Mr. Darshil Parikh, for Mr. V. P. Nanavaty, ld. advocate for the opponent.
Facts of the complaint:
3. Short facts giving rise to the present complaint that the complainant is engaged in the business of manufacturing of ceramics and sanitary wares from the office situated at Morbi. The said premises M. B. Desai CC-14-113 Page 1 of 29 were insured by the opponent being standard fire and special perils policy No. 066100/11/9/11/0002197 for the period between 24.12.2009 to 23.12.2010. During the above existence of the policy on 17.11.2010 there was sudden cyclonic wind started with hail storm in around 3 Kms area of Old Ghantu Road and due to impact the same roofing sheets of the factory building were flown up, broken into pieces and rain water entered and fell on the working plant, machinery and electronic/electronic panel board. That the stock and stock in process were completely damaged. The hail drops with high speed was reportedly weighing around 0.5 KG. That the wall nearby factory was collapsed and fell down and labourer was also died under the same and many tress, electric poles, hording etc in the area were uprooted and damaged. That the complainant immediately informed the opponent about the said incident. The surveyor of the opponent has attended the factory premises and assess the loss and submit his report on 1.2.2012. After the receipt of the report and after scrutiny it was found by the complainant that the claim was disallowed and therefore, complainant has requested the opponent to reconsider the claim vide letter dated 2.7.2012. That the total claim was submitted for Rs. 1,33,69,916/- against this opponent has only allowed the claim of Rs. 38,12,549/-.Therefore, complainant has no other alternative except to file the present complaint for Redressal of his grievances to get remaining amount of claim Rs. 95,57,367/-.
Defense of the opponent:
4. The notice was duly served to the opponent insurance company. It appeared through ld. advocate and filed written version in their defense. It is stated in the written statement that all the contentions, claim, demands, allegations and averments of the complaint are denied except which are specifically admitted. That the complaint is not maintainable under the Consumer Protection Act as the complaint requires leading of voluminous oral as well as documentary evidence and the nature of the complaint is as suit for taking accounts. That the opponent has appointed duly licensed and qualified surveyor. The surveyor has visited the insured place and prepared the survey report in detail. The details were duly discussed with the representative of the complainant during the process of survey and assessment of loss. The surveyor has counted M. B. Desai CC-14-113 Page 2 of 29 the actual damage to the corrugated roof sheets and accordingly assessed the loss for replacement of the corrugated roof sheets of 3601 numbers only. The physical verification and inspection of the damage sheets were confirmed by the representative of the insured. That the surveyor has assessed the loss after due verifications of each and every item as available from the record of the complainant. The surveyor has also found that the complainant has taken policy and it is under-insured therefore, value under-insurance was deducted. That the complainant has taken another policy from New India Assurance Co. for amount of Rs. 9,11,550/-. That the surveyor has assessed the loss at the amount of Rs. 33,44,489/-. That the complaint was intimated and the claim disbursement voucher of Rs. 33,30,900/- was forwarded to the complainant with a letter dated 2.1.2013 with a request to discharge the same. The complainant has disputed the same vide letter dated 23.4.2013.
4.1 That the surveyor was appointed under the Provision of Section 64 UM of insurance Act, 1938 with applicable regulations. Therefore, the report issued by the surveyor as got statutory value.
4.2 The opponent has also submitted that the State Commission has no pecuniary jurisdiction to try and decide the complaint as the complainant has declared the claim amount in the claim form for sum of Rs. 1,62,30,871/- whereas complainant has allegedly lodged the claim of Rs. 1,33,69,916/- but the complainant has lodged the claim of Rs. 95,57,367/- to get the jurisdiction of this Hon'ble State Commission. That the complainant has not shown deficiency of service rendered by the insurance company therefore, complaint is not maintainable and it is prayed to dismiss the complaint in toto.
Argument of the complainant:
5. Ld. advocate for the complainant has submitted the written submission in 30 pages wherein from para 1 to 6 are the repetation of the facts of the complaint. Thereafter from para 7 and 8 it is narrated that how the judgment rendered by the opponent party is not relevant.
M. B. Desai CC-14-113 Page 3 of 295.1 It is further argued that the surveyor has prepared survey report not in good faith, without application of mind, with error and ill-motive. The survey report containing many infirmities. The said facts reflected in the reply of the interrogatories submitted by the surveyor.
5.2 It is also submitted that the surveyor has prepared survey report in favour of the insurance company to oblige them and there are certain reasons for not to believe the survey report. That the surveyor was appointed by the opponent insurance company and surveyor fees is paid by the opponent. That the surveyor was work for United India Ins. Co. That the survey was not carried out by verifying each item and damage suffered by the complainant. That the surveyor has not carried out inspection of premises meticulously. The same is reflected in the reply to the interrogatories submitted by the surveyor. That the surveyor has wrongly reported number of damage roofing sheets. Ld. advocate for the complainant has requested this Commission to refer answer of the question No. 9,10,11,13,14,17,18,19,20,21,22,23 and ors. which are narrated in the written submission. It is also argued that in such answers reveals the defect of survey report and survey report is not carried out considering the each and every item meticulously. He has requested to allow this complaint and award as prayed for.
Argument of the opponent:
6. Ld. advocate for the opponent has argued that complainant has taken two policies one is for building, plant and machinery and stock and other is for building only. That the insurance company has appointed M/s. Paresh Shah and Associates as Surveyor under Section 64UM of insurance Act, 1938 to carry out the survey and assessment of the loss. That the surveyor has visited the premises on 18.11.2010, 3.1.2011 and 24.3.2011. That the surveyor has inspected building, plant and machinery, raw materials and stocks and submitted its report wherein, assessed net loss to the tune of Rs. 33,44,489/-. It is further argued that the surveyor has narrated in his report each and every item i.e. building, plant and machinery, stocks, etc. That the surveyor has considered under-insurance 48.07% of the building, 41% under-insurance of plant and machinery and 10% under-insurance of stock. That the insurance M. B. Desai CC-14-113 Page 4 of 29 company has considered the survey report and agreed to pay the amount of Rs. 33,30,000/- and issued claim disbursement voucher. That the complainant failed to produce any documentary evidence on record which could even remotely suggest that the assessment done by the surveyor was incorrect. That the complainant has to prove his case with sufficient and cogent evidence, without such proof the claim cannot be allowed. That the complainant has not intimated IRDA for independent surveyor for assessment of loss. Though the complainant has filed closing pursis thereafter, the Commission has reopened the stage of oral evidence and granted opportunity but the complainant has not lead evidence of expert to disprove the contents of the survey report. That the affidavit filed by the complainant witness Mr. Jignesh Kakadiya is required to be discarded as the contents of the same are not proved and not supported by the documentary evidence. That the complainant has not established any deficiency in service on the part of opponent insurance company. It is further argued that considering the jurisdiction of the complaint, complaint is not tenable before the State Commission. That the complainant has failed to prove the unfair trade practice on the part of insurance company. In absence of any proof the compliant is liable to be dismissed. He has requested to dismiss the complaint. He has relied upon certain judgments which will be discussed hereinafter.
Merits of the case:
7. Pecuniary Jurisdiction: One of the defense of the opponent is that complainant is barred by the pecuniary jurisdiction. It is submitted by the ld. advocate for the insurance company that the complainant has purchased two policies one is for building sum insured Rs. 2,25,00,000/, plant and machinery for Rs. 75,00,000/- and stocks for Rs.
1,70,00,000/- total amount of Rs. 4,70,00,000/- and second policy of sum insured of Rs. 30,00,000/- for building. So total sum insured of two polices is Rs. 5,00,00,000/-. Further it is submitted that as per the clam form, the loss of Rs. 1,33,69,916/- which is more than the amount of Rs. 1,00,00,000/-. The State Commission has jurisdiction to deal with case wherein, claim exceeds Rs. 20,00,000/- but does not exceeds Rs. 1,00,00,000/-. Therefore, complaint is barred by pecuniary jurisdiction. He has relied upon judgment reported in CC No. 1612/2017 in the M. B. Desai CC-14-113 Page 5 of 29 matter of M/s. Qualitat Products (India) vs. Bank of India and Anr. dated 23.4.2018 delivered by Hon'ble National Commission.
7.1 Hon'ble National Commission has held in case No. 1612/2017, M/s. Qualitat Products (India) (Supra) wherein, it is observed as under:
"3. On perusal of the prayer clause it transpires that the complainant is seeking claim amount of Rs.40.20 lakhs alongwtih 18% interest p.a. from the date of actual loss of the insured goods besides Rs.10 lakhs as compensation for mental agony and harassment. It is the stand of the complainant that insured goods were stolen on the night intervening 16/17 September, 2015. The complaint has been filed on 2.6.2018. As the complainant has claimed 18% interest p.a. from the date of loss the interest component claimed would be somewhere around 46% of the claim amount. Thus, if the interest component is added to the claim of Rs.44.20 lakhs, the claim of the complainant would not exceed Rs.66 lakhs. Further, if sum of Rs.10 lakhs claimed as compensation for harassment is added to the value of the claim including the interest claimed, value of the relief would amount to Rs.76 lakhs (approximately) which is much less than Rs.1 crore. Thus, in my view, in view of Section 21 (1) (a) of the Consumer Protection Act, 1986 this Commission does not have jurisdiction to entertain this complaint and the case falls within the pecuniary jurisdiction of the State Commission.
4. It may be argued on behalf of the complainant that since the value of the policy is Rs.2,25,00,000/-, the value of the service which is claimed to be deficient is more than Rs.1 crore.
5. The above issue is no more res integra. The Coordinate Bench of this Commission in RP No. 1794 of 2017 M/s Maharani of India through Yudhishthira Kapur, Partner Vs. Branch Manager, United India Insurance Co. Ltd., while dealing with the same issue has observed as under:
"The question which arises for consideration in this petition is as to what would be the value of the service hired or availed by the petitioner/complainant. In CC No.97 of 2016 Ambrish Kumar Shukla & Ors. Vs. Ferrous Infrastructure Pvt. Ltd. dated 7.10.2016, a three- Members Bench of this Commission observed that if for instance a person purchases a machine for more than 1 crore a manufacturing defect is found in the machine and the cost of removing the said defect is Rs.10 lakhs, it is the aggregate of the sale consideration paid by the consumer for the machine and compensation if any claimed in the complaint which would determine the pecuniary jurisdiction of the consumer forum. It was further observed that if, for instance, a house is sold for more than Rs.1 crore, certain defects are found in the house and the cost of removing those defects is Rs.5 lakhs, the complaint would have to be filed before this Commission, the value of the service itself being more than Rs.1 crore. Thus this Commission took the view that the consideration agreed to be paid by the consumers should be taken as the value of the goods or the M. B. Desai CC-14-113 Page 6 of 29 services as the case may be and for the purpose of determining the pecuniary jurisdiction the amount of compensation as claimed in the complaint needs to be added to the agreed consideration.
When an insurance policy is taken by a person he pays a premium to the insurer for hiring or availing its services. It is the premium paid by the insured to the insurer and not the extent of the sum insured which constitutes the agreed consideration and therefore in my opinion, it is the premium paid to the insurer which when added to the compensation claimed in the complaint would determine the pecuniary jurisdiction of this Commission. The extent of the sum assured would have no bearing on determination of the pecuniary jurisdiction of a consumer forum."
6. I do not find any reason to differ with the aforesaid judgment. In view of the reasons discussed above, I am of the opinion that the instant case falls within the pecuniary jurisdiction of the National Commission. Complaint is accordingly rejected making it clear that this order, however, will not come in the way of the complainant to avail of its remedy by filing consumer complaint in a Fora of competent jurisdiction."
7.2 Against this ld. advocate for the complainant has stated that he has prayed Rs. 95,57,367/- before the State Commission. Therefore, the claim is made within the pecuniary jurisdiction of this State Commission that is upto Rs. 1,00,00,000/-.
7.3 Complainant has claimed Rs. 95,57,367/- with interest, but rate of interest is not specified. Further the interest for the period before the filing of complaint is not claimed. Therefore, only the amount of Rs. 95,57,367/- is required to be considered for the pecuniary jurisdiction. The cited judgment is not applicable to the present case because in the cited judgment the amount of interest before the filing of the complaint 18% was prayed and that was calculated further the compensation as cost of Rs. 10,00,000/- was prayed but here in this case, no specific amount for compensation is prayed. Therefore, we have considered the claim amount of Rs. 95,57,367/- which is within the pecuniary jurisdiction of this State Commission. Thus, we find no substance in argument advanced by the ld. advocate of the opponent as regards to the pecuniary jurisdiction.
8. Deficiency of service: Ld. advocate for the opponent has argued that the complainant has not produced any documentary evidence on record which could even remotely suggest that the assessment was done by the M. B. Desai CC-14-113 Page 7 of 29 surveyor was incorrect. That the complainant has to established the deficiency of service.
8.1 Ld. advocate for the complainant has submitted he has produced the documentary evidence from page 10 to 41 and from page 412-415 which containing following documents.
Sr. Particulars Page
1 Copy of policy No. 060100/11/9/11/0002197 10-11
2 Copy of policy No. 060100/11/9/11/0002217 12-13
3 Copy of final survey report 16-36
4 Copy ofletter dated 3.7.2012 by complainant to opponent 37-38
5 Copy of letter dated 4.8.2012 by complainant to opponent 39
6 Copy of reply by opponent dated 2.1.2013to complainant 40
7 Copy of letter dated 11.10.2013 by complainant to opponent 41
8 Copy of additional affidavit of Jayeshbhai T. Aghara 412-415
9 Copy of damage list 417-421
10 Copy of affidavit of Jignesh Kakadiya 426-428
11 Copy of affidavit of Dipak M. Gami 429-430
8.2 Further, insurance company has produced documentary evidence from page 53-410 and the same evidence is relied upon by the complainant.
8.3 As narrated above evidence produced on record by the complainant as well as opponent, it cannot be said that the complainant has not produced any documentary evidence in support of their claim. The appreciation of the documentary evidence will be done hereinafter but the argument advanced by the ld. Advocate as regards to the no documentary evidence is produced by the complainant on record to show deficiency of service to prove his case has no force.
9. Survey report: Complainant has submitted that the assessment of loss mentioned in the survey report is not according to law. The survey report is without application of mind, with prejudice, with ill- motive and not in a good faith. Therefore, it cannot be relied upon.
9.1 Ld. advocate for the complainant has relied upon the judgment reported in (2009) 7 SCC 787: New India Assurance Co. Ltd. vs. Pradeep Kumar, wherein, it is held as under:
M. B. Desai CC-14-113 Page 8 of 29"21..... The object of the aforesaid provision is that where the claim in respect of loss required to be paid by the insurer is Rs.20,000/- or more, the loss must first be assessed by an approved surveyor ( or loss assessor) before it is admitted for payment or settlement by the insurer. Proviso appended thereto, however, makes it clear that insurer may settle the claim for the loss suffered by insured at any amount or pay to the insured any amount different from the amount assessed by the approved surveyor (or loss assessor).
22. In other words although the assessment of loss by the approved surveyor is a pre-requisite for payment or settlement of claim of twenty thousand rupees or more by insurer, but surveyor's report is not the last and final word. It is not that sacrosanct that it cannot be departed from; it is not conclusive. The approved surveyor's report may be basis or foundation for settlement of a claim by the insurer in respect of the loss suffered by the insured but surely such report is neither binding upon the insurer nor insured."
10. Per contra, ld. Advocate for the insurance company has argued that insurance company has appointed the surveyor or loss assessor under Section 64UM of the insurance Act and surveyor has assessed the loss by visiting the place and observing each and every item and made the assessment of the loss. The amount of Rs. 38,12,549/- assessed as loss is approved by the opponent insurance company. The insurance company is ready to pay the amount of Rs. 38,12,549/- therefore, no further demand can be made by the complainant. It is further submitted that the complainant has not applied for second survey to the IRDA, therefore, whatever the survey was made by the surveyor under the statutory provision is required to be considered by the Commission.
10.1 Ld. advocate for the insurance company has relied upon the judgment reported in 2021 CPJ 1 (SC): Khatema Fibers Ltd. vs. New India Assurance Co. Ltd. wherein, it is held as under:
"32. It is true that even any inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law or which has been undertaken to be performed pursuant to a contract, will fall within the definition of the expression „deficiency‟. But to come within the said parameter, the appellant should be able to establish (i) either that the Surveyor did not comply with the code of conduct in respect of his duties, responsibilities and other professional requirements as specified by the regulations made under the Act, in terms of Section 64UM(1A) of the Insurance Act, 1938, as it stood then; or (ii) that the insurer acted arbitrarily in M. B. Desai CC-14-113 Page 9 of 29 rejecting the whole or a part of the Surveyor‟s Report in exercise of the discretion available under the Proviso to section 64UM(2) of the Insurance Act, 1938.
34. But the Proviso to subsection (2) of section 64UM also recognized the right of the insurer to pay any amount different from the amount as assessed by the approved surveyor or loss assessor. The proviso reads as follows:
"Provided that nothing in this sub section shall be deemed to take away or abridge the right of the insurer to pay or settle any claim at any amount different from the amount assessed by the approved surveyor or loss assessor."
35. This is why the law is settled that the surveyor‟s report is not the last and final word. It has been held by this Court in several decisions, that the surveyor‟s report is not so sacrosanct as to be incapable being departed from. A useful reference can be made in this regard to the decision of this Court in New India Assurance Company Limited vs. Pradeep Kumar.
37. Two things flow out of the above discussion, They are (i) that the surveyor is governed by a code of conduct, the breach of which may give raise to an allegation of deficiency in service; and (ii) that the discretion vested in the insurer to reject the report of the surveyor in whole or in part, cannot be exercised arbitrarily or whimsically and that if so done, there could be an allegation of deficiency in service.
11. Considering the above principle established in referred judgments we have to scrutinize the survey report and find whether the assessment and loss is done proper and based on legal principle? It is pertinent to note here that the survey report can be considered as an expert evidence. The conclusion of the survey report cannot be accepted without going into ground for that the conclusion. Complainant has alleged that complainant should be awarded Rs. 95,57,367/- which was disallowed by the surveyor. We are endeavoring to scrutinize reasons for the rejection of assessment of loss and the ground stated in the survey report.
Damage caused to the complainant/compensation entitlement:-
12. It is not dispute that the complainant has taken two policies of Standard and Special perils of policy as under:
Policy No. 066100/11/09/11/00002197
Period 24.12.2009 to 23.12.2010
Insured M/s. Simpolo Ceramics
Sum Building- Rs. 2,25,00,000/- Plant & Machinery- Rs.
M. B. Desai CC-14-113 Page 10 of 29
Insured 75,00,000/- Stock- Rs. 1,70,00,000/-
Location Old Ghantu Road, Morbi
Policy No. 066100/11/09/11/00002217
Period 24.12.2009 to 23.12.2010
Insured M/s. Simpolo Ceramics
Sum Building- Rs. 30,00,000/-
Insured
Location Old Ghantu Road, Morbi
13. The insurance company has appointed the surveyor under Section 64UM of the insurance Act, 1938 to carry out the survey and assessment of loss. The surveyor has prepared report of loss assessment and submitted to the insurance company. The copy is provided to the complainant which is produced at page 16-36 and the same is also produced by the opponent at page 66-87. Moreover, insurance company has produced documentary evidence submitted by the complainant to the surveyor, photograph taken by the surveyor from the site and other documentary evidence in support of the conclusion at page 88-410. There is no dispute about the date on which the event happened, damage is caused to the insured property. The surveyor has narrated the primary damage caused to the (A) building, (B) plant and machinery and (C) stock. The surveyor has also narrated the same thing in detail at page 70-75.
(A) ASSESSMENT OF LOSS TO THE BUILDING:-
14. The complainant has submitted the bills of their loss to the building due to the storm to Rs. 34,81,176/-. The surveyor has assessed the loss of building Rs. 9,57,054/-. The surveyor has deducted following amounts in the survey report at page 81.
Gross Assessed Loss amount Rs. 34,81,176.00
Less: Disallowed plain cement sheet cement plain Rs. 19,908.00
sheet of 12 mm. thick, 6'*4' & 8'*4' (item no. 5 of invoice no. 604, 622) Rs. 9820.00 &Rs. 10,088.00 Total Rs. 34,61,268.00 Less: Disallowed of 4348 pcs. ACC roofing sheets Rs. 15,68,300.00 due to excessive quantity claimed i.e. 45.31% of above item Total Rs. 18,92,968.00 Less: Salvage Value Rs. 50,000.00 Total Rs. 18,42,968.00 M. B. Desai CC-14-113 Page 11 of 29 Less. Under-insurance of 48.07% Rs. 8,85,914.00 ASSESSED LOSS AMOUNT-I Rs. 9,57,054.00 14.1 Surveyor has deducted Rs. 19,908 under the head of Less:
Disallowed plain cement sheet cement plain sheet of 12 mm. thick, 6'*4' & 8'*4' (item no. 5 of invoice no. 604, 622) Rs. 9820.00 &Rs. 10,088.00. The surveyor has nothing stated in detail how the said amount is deducted therefore, we disallowed the deduction amount of Rs. 19,908/- made by the surveyor.
14.2 Acc Roofing Sheets:- The surveyor has deducted amount of Rs.
15,68,300/- and stated that "disallowed of 4383 pcs ACC roofing sheets to excessive quantity claim i.e. 45.31% in the above item."
14.2.1 The surveyor has given reason at page 76 which reads as under:
"The loss of building was worked out after considered the actual quantity (disallowed 47% of claimed amount) of affected roofing sheets, with its material and labour rate as per market inquiry, allowed taxes as in civil items set off taxes were no0t enjoyed by insured, reasonable deduction of salvage etc. 14.2.2 The survey report at page 80 complainant has shown total number of sheets damaged are 7949. The insurance company has produced statement at page 333-334 submitted by the complainant for number of sheets damaged in the storm. On perusing the statement at page 333 one of the column is "number of sheets damage." At page 334 grant total is done wherein, it is shown that the 3269 big sheets and 332 small sheets are damaged out of total sheets 7949. Therefore, total damaged sheets are 3601 and remaining sheets 4348 was not damaged. It means out of 7949 the 45.31% sheets are not damaged.
The insurance company has deducted Rs. 15,68,300/- as disallowed 4348 pcs of ACC roofing sheets due to excessive quantity claim i.e. 45.31%. of the above item. Whether this calculation is correct or not? It can be calculated as under:
Rs. 34,81,176(amount claimed) *45.31% (Sheets not damaged) 100 = Rs. 15,77,320/- are required to be deducted.M. B. Desai CC-14-113 Page 12 of 29
14.3 Salvage Rs. 50,000/-: The surveyor has deducted Rs. 50,000/- as a salvage value. He is stated reason at page 79 which are as under:
"For the damage in building (broken ACC sheets) there was no salvage value as the same could be used for any other intended purpose. Although we have considered Rs. 50,000/- as scrap value."
14.3.1 The salvage value is not to be deducted because the item which was damaged due to storm and it is opined that the same cannot be used for any purpose. The said deduction cannot be considered because one cannot purchase the damage item. The salvage are required to be remove from the site for which the complainant has to incurred expenditure. The surveyor has also stated that for the damage of building (ACC sheets) there was no salvage value as the same not be used for intended purpose. So we are of the opinion that this amount is wrongly deducted.
14.4 Under-insurance:- The surveyor has deducted Rs. 8,85,914/- for under-insurance of 48.07%. The surveyor has stated reason for that at page 78 which reads as under:-
"The Insured's have declared the building, for reinstated value S.I. of Rs. 2,55,00,000/- including both policy which ascertained to be around (Rs. 3,63,58,879.00, Gross block as per C.A certificate and added 35% of escalation Rs. 1,27,25,607.00 i.e.Rs. 4,90,84,486.00) Say, Rs. 4,91,00,000/-. Therefore, under insurance of 48.07% is applied."
14.4.1 Ld. advocate for the opponent has relied upon the judgment reported in I (2018) CPJ 6 SC in case of I. C. Sharma vs. Oriental Insurance Co. Ltd. wherein, it is held as under.
"8. The only legal issue which arises for consideration is "what is under-insurance - and the effect thereof?". Under-insurance basically means that the insured has taken out an insurance policy in which he has valued the insured items for a sum which is less than the actual value of the insured item. In a country like India this is normally done to pay a lesser premium. This is, in fact, harmful to the policy holder and not to the Insurance Company because even if the entire insured property is lost, the policy holder will only get the maximum sum for which the property has been insured and not a paisa more than the sum insured. To give an example, in case a person takes out the householder policy covering fire insurance and gives the value of the structure of his house and goods stored therein at Rs.50,00,000/- even though the value of the same is Rs.1,00,00,000/- then even if the entire house and goods are completely lost in a fire, he cannot get an amount above Rs.50,00,000/- even though the value may be more.M. B. Desai CC-14-113 Page 13 of 29
9. If all the insured goods are lost then there is no problem. The insured is entitled to the amount for which the goods were insured even if that be less than the actual value of the goods. In case a person gets a painting insured for Rs.1,00,000/- though the value of the same is Rs.10,00,000/-, if the painting is lost the insured is entitled to Rs.1,00,000/- only. If all the insured goods falling under one head are stolen or lost then the insurance company cannot apply the principle of averaging out because, though the loss may be Rs.10,00,000/-, the claimant will get only one Rs.1,00,000/-as per the value assessed and the insurance premium paid by him.
10. The Insurance Company can however apply the principle of averaging out when all the goods are not destroyed. Supposing the entire house was insured for Rs.50,00,000/-, but on valuation it is found that the value of the structure and the goods was Rs.1,00,00,000/- and if the policy holder claims that he has suffered loss of Rs.40,00,000/- then he will be entitled to only Rs.20,00,000/-, by applying the principle of averaging out. What this means is that if the value of the goods is more than the sum for which they are insured then it is presumed that the policy holder has not taken out insurance policy for the un-insured value of the goods. The claim is allowed by applying the principle of averaging out, i.e. the insured is paid an amount proportionate to the extent of insurance as compared to the actual value of the goods insured.
11. To clarify the matter further, we may give another example. Supposing, the insurer owns two paintings of Rs.5,00,000/- each but pays premium for insurance cover of Rs.1,00,000/- for both the paintings. If one painting is lost, even though the value of the painting may Rs.5,00,000/- he will not get Rs.1,00,000/- but will get only Rs.50,000/-, as proportionate amount. Therefore, when a group of items is insured under one heading and only some of the items and not all items are lost/stolen then the principle of under- insurance will apply. However, if all or most of the items of value covered under the policy are stolen, then the insurance company is bound to pay the value of the goods insured."
14.4.2 No doubt that the value of the sum insured of building is Rs. 2,55,00,000/- for both the policies. The policy was issued for the period between 24.12.2009 to 23.12.2010. The certificate for the gross block issued by the Chartered account of the complainant is produced at page 145 wherein, the value of construction stated as Rs. 3,63,58,879/-. The surveyor has taken the said value for valuation of building and he has added 35% escalation Rs. 1,27,25,607/- . This escalation is not required to be added because the policy was taken on 24.12.2009 and the certificate of value of Rs. 3.,63,58,879/- is shown as on 9.5.2011. The surveyor has considered 35% escalation. No rules, criteria, justification appears in the survey report for this escalation amount of Rs.
M. B. Desai CC-14-113 Page 14 of 291,27,25,607/-. No value of depreciation is consider while calculation of building. We disapprove the deduction based on such 35% escalation. We are disagree with the deduction of 48.07% of under-insurance.
15. Thus, complainant is entitled for Rs. 19,03,856/- as compensation for damage caused to the building as under:
Gross Assessed Loss amount by insured Rs. 34,81,176.00 Allowed deduction made by the surveyor of 4348 Rs. 15,77,320.00 pcs. ACC roofing sheets due to excessive quantity claimed i.e. 45.31% of above item Total Rs. 19,03,856.00 Surveyor has allowed Rs. 9,57,054/- but claimant is entitled additional amount of Rs. 9,46,802/- (19,03,856-9,57,054) for the loss of building.
(B) PLANT AND MACHINERY:-
16. As per the survey report at page 83 complainant has claimed of gross assessed loss Rs. 91,27,441/- for the plant and machinery. The surveyor has assessed loss and allowed only Rs. 21,02,117/- as under:
Gross Assessed Loss amount Rs. 91,27,441.00
Less: Disallowed, of above, Rs. 54,14,530.00
A) 95% of, Rs. 14,11,8600.00 i.e. Rs. 1341267.00 B/1) 400 Amp ACB items of bill no. 97- Rs.
65508.00 &Rs. 12,066.00 B/2) 50% as Ceramic Industries atmosphere of, Rs. 48,43,637.00 i.e. Rs.24,21,818.00 B/5) 50% as Ceramic Industries atmosphere of Rs.
1,58,600.00 i.e. Rs. 79,300.00
C) 95% of, Rs. 15,10,075.00 i.e. 1434571.00
D) Computer &Modern - Rs. 35,000.00
Total Rs. 37,12,911.00
Less: Salvage Value Rs. 1,50,000.00
Total Rs. 35,62,911.00
Less. Under-insurance of 41% Rs. 14,60,794.00
ASSESSED LOSS AMOUNT-II Rs. 21,02,117.00
16.1 Complainant has pleaded in para 11 as under:
"The complainant humbly submits that the complainant has claimed the amount of Rs. 75,16,647/- towards lose/damages to plant and machinery. Against which, the opponent company has allowed the claim of Rs. 21,02,117/-. The opponents have erroneously and without basis disallowed the claim of Rs. 54,14,530/-."
16.2 The surveyor has stated at page 76 that the insured had estimated their loss to the plant and machinery due to the storm Rs. 86,13,702/-.
M. B. Desai CC-14-113 Page 15 of 29The insurance company has produced a certificate of CA of complainant for the loss of plant and machinery at page 335-336. At page 336 the total loss is shown as 86,13,702/- therefore, we have considered the claim amount for the plant and machinery is Rs. 86,13,702/- which is supported by documents and calculation. The amount of Rs. 86,13,702/- as divided in five parts (A to E) which is narrated at page 81-83 of the survey report.
16.3 Surveyor has deducted the amount under different head (A to E) of plant and machinery at page 83 as under:
Sr. Head Amount claim (Rs.) Deduction Amount deducted (Rs.) 1 A to A3 14,11,860/- 95% 13,41,267/-
2 B1 1,54,586/- 66.40 1,02,574/-
3 B2 48,43,637/- 50% 24,21,818/-
4 B3 1,27,050/- - -
5 B4 32,403/- - -
6 B5 1,58,600/- 50% 79,300/-
7 B6 16,710/- - -
8 C1 to C6 15,10,075/- 95% 14,34,371/-
9 D1, D2 35,000/- 100% 35,000/-
10 E 8,37,027 - -
Total 54,14,330/-
16.4 The surveyor has deducted 95% of the cost of item No. A and C of plant and machinery and given reasons at page 76 as under:
"The loss of plant and machinery was worked out after considering the actual damages and repairs/replacement cost of the A.C. drive, Salvage, etc. The Kiln with size of 100 mtrs. length, with width of 2.6 mtrs. and height of 1.8 mtrs. It consists of electrical control panel with PID meter, and AC drive and combustion system include burner tube gas train system at center area of Kiln while brick lining was at heating area. The Kiln was insulated by cera wool to maintain the temperature. As per the insured's view, due to accidental entry of rainy water in working condition, Burner tube, Gas train system, Combustion system, major part/surface of the insulation beneath cladding, and refractory ceramic bricks, Gas pipe of Kiln got wet and completely damaged. But in view of physical damaged condition & nature of roofing sheet and construction & situation of equipment/parts material, the claimed items were imaginary and exaggerated only. And moreover as per our view, it would also repairable damages which were affected due to impact of hail and rain water. The insured was also not able to provide proper evidence or justification. So, we had disallowed 95% of the cost of item as mentioned in below assessment part vide (A) & (C)."M. B. Desai CC-14-113 Page 16 of 29
16.5 Ld. advocate for the opponent has drawn attention of this court to the reply of the interrogatories of the complainant at page 475 where the question No. 24 and 26 and its answer as under:
Que. 24. What is the Kiln Combustion System ?
Ans. Kiln Combustion system from where moulded of raw material mixed tiles entered by conveyor which become dried with the help of heat and the same is covered by insulation and cladding work.
Que. 26. How you come to the conclusion that 5% damage is caused to system due to hail storm and not other damage is caused due to rain and storm ?
Ans. It was claimed by the insured‟s representative that the Kiln was totally damaged due to hail storm and rain water, however, upon through inspection of the Kiln it was noted that the Kiln was not totally damaged. Moreover, it was noted that there was o internal damage due to the hail storm and there was minor damaged to the external part of the Kiln. I was also observed that the damage to the few parts of the Kiln were in repairable condition and few parts were required to be replaced and therefore, I had observed in any survey report that the claimed items were from the roofing sheet could have fallen on the Kiln only at particular area which could not have damaged the entire Kiln system and therefore I had considered only 5% of the cost of items and disallowed 95% of the claimed items.
16.6 Further, ld. advocate for the opponent has drawn attention at photograph 117 and submitted that this photograph support the finding of the surveyor.
16.7 It is further argued that the deduction stated in part A to C of the plant and machinery by surveyor, neither the evidence is produced nor any expert is examined by the complainant. He has relied upon the judgment reported in III (2010) CPJ 14 (SC) in case of United India Ins. Co. Ltd. Vs. Kantika Colour Lab.& others. Wherein it is held as under:
"19. Contracts of Insurance are generally in the nature of contracts of indemnity. Except in the case of contracts of Life Insurance, personal accident and sickness or contracts of contingency insurance, all other contracts of insurance entitle the assured for the reimbursement of actual loss that is proved to have been suffered by him. The happening of the event against which insurance cover has been taken does not by itself entitle the assured to claim the amount stipulated in the policy. It is only upon proof of the actual loss, that the assured can claim M. B. Desai CC-14-113 Page 17 of 29 reimbursement of the loss to the extent it is established, not exceeding the amount stipulated in the contract of Insurance which signifies the outer limit of the insurance company's liability. The amount mentioned in the policy does not signify that the insurance company guarantees payment of the said amount regardless of the actual loss suffered by the insured. The law on the subject in this country is no different from that prevalent in England; which has been summed up in Halsbury's Laws of England - 4th Edition in the following words:
"The happening of the event does not of itself entitle the assured to payment of the sum stipulated in the policy; the event must, in fact, result in a pecuniary loss to the assured, who then becomes entitled to be indemnified subject to the limitations of his contract. He cannot recover more than the sum insured for that sum is all that he has stipulated for by his premiums and it fixes the maximum liability of the insurers. Even with in that limit, however, he cannot recover more than what he establishes to be the actual amount of his loss. The contract being one of indemnity only, he can recover the actual amount of his loss and no more, whatever may have been his estimate of what his loss would be likely to be, and whatever the premiums he may have paid, calculated on the basis of that estimate."
16.8 Ld. advocate for the insurance company has drawn attention of this Commission on copy of bills produced by the complainant to the surveyor at page no. 287, 288 and 289. The details of bills are as under:
Sr. Page Item Amount Date of Time and date
invoice of Removal
1 287 Combustion 12,34,866/- 17.11.2010 17.11.2010
Systems for consist 13.05 PM
component
2 288 Gas Train System 1,46,672/- 20.11.2010 20.11.2010
8.15 AM
3 289 Burner Tube 30,322/- 4.12.2010 4.12.2010
6.50 AM
It is submitted that incident was taken place on 17.11.2010. Item No. 1 and 2 were dispatched from Ahmedabad on 17.10.2010 at 1.05 p.m. therefore, the items mentioned in the bills were not reached and installed at the factory. Wrong claim is put forward by the complainant. Further, these items were not available at the time of taking policy.
16.9 Ld. advocate for the complainant has not shown any documentary evidence to condemn the reasons stated by the surveyor for 95% deduction in the items enumerated in A and C of plant and machinery.
M. B. Desai CC-14-113 Page 18 of 2916.10 In view of the discussion as above and the ratio laid down by Hon'ble Supreme Court in above referred case, we agree to reasons stated in the survey report for deducting 95% of cost of items as mentioned in assessment part A to C of plant and machinery.
17. As per survey report at page 82, the claimant has claimed Rs. 53,32,886/- for Item No. B of the plant and machinery. This part B is again dividing in six parts (B1 to B6). The surveyor has approved the claim of the complainant under head of B3, B4 and B6 of plant and machinery but the surveyor has disallowed upto certain extent the claim of B1, B2 and B5.
18. It is stated in survey report that claimant has claimed Rs. 1,54,486/- under the head of B1 of plant and machinery at page 83 the surveyor has deducted the amount of Rs. 1,02,574/-. For this purpose, the surveyor has given reason as under:
"The insured also claimed A.C.B. & other transformer related items like structural post accessories fuse etc. which were replaced with damaged transformer of Gujarat Electricity Board. The transformer was installed in open to sky and exposed to atmosphere so its related damaged were not considered as mentioned in below assessment part vide(B)1."
18.1 The insurance company has produced retail invoice dated 17.3.11 Rs. 25,000/- at page 290, retail invoice dated 15.3.11 for Rs. 65,508/- at page 291 and retail invoice dated 15.3.11 for Rs. 12,066/- at page 292 having total of Rs. 1,02,574/-. Ld. advocate of the insurance company has drawn attention at the preamble clause of terms and conditions of page 56 of the policy which reads as under:
"In consideration of the insured named in the schedule hereto having paid to the United Indian Insurance Company Limited (herenafter called the company) the premium mentioned in the said schedule. THE COMPANY AGREES. (Subject to the conditions and exclusions contained herein or endorsed or otherwise expressed hereon) that if after payment of the premium the property insured described in the said schedule or any part of such property be directly destroyed or damaged by any of the perils specified hereunder during the period of insurance named in the said schedule or of any subsequent period in respect of which the insured shall have paid the company shall have accepted the premium required for the renewal of the policy, the company shall pay to the insured the value of the property at the time of happening of the M. B. Desai CC-14-113 Page 19 of 29 destruction or the amount of such damage or at its option reinstate or replace such property or any part thereof."
18.2 Ld. advocate for the insurance company has argued that the rain water is not covered but only the storm is covered and the amount of damage is required to be paid by the customer only.
18.3 Considering the reasons stated in survey report, terms and conditions of the policy and in absence of any evidence on behalf of the complainant to condemn the ground stated in survey report, we are satisfied that the surveyor has rightly deducted the amount of Rs. 1,02,576/- under the head of para B1 of plant and machinery.
19. A. C. Drive - B2 of the plant and machinery:- As per the survey report at page 82 complainant has claimed of Rs. 48,43,637/- for damage caused to the A.C. drive item no. B2 of the plant and machinery.
19.1 As per the survey report at page 83 the surveyor has disallowed the claim 50% of Rs. 48,43,637/- to Rs. 24,21,818/- as ceramic industries atmosphere.
19.2 The surveyor has stated reasons for disallowing the loss at page 77 which reads as under:
"Moreover, electrical panel containing items viz. motor, AC drive etc. also burnt 1st damaged. The plant machinery was fully equipped and controlled by electronic panel board with AC drives of each motor/motive power. The AC drive was used to save the electric power and absorb the power fluctuations. As per insured's opinion due to entry of water and short circuiting, 16 nos. AC drives were damaged, but we had considered the cost after disallowing 50% loss in view of dusty ceramic industrial atmosphere of which would be highly effective in electronic such items after detailed discussion with supplier/repairer of AC drive. Moreover, the AC drives were more sensitive and get damaged even by nominal contact with water, moisture & dust. The insureds have replaced the AC drives by purchasing new from supplier."
19.3 Ld. advocate for the insurance company has drawn attention of answers of the question no. 32 and 34 of the interrogatories of the complainant at page 476 for this A. C. Drive which reads as under:
Q.32 What the use of A.C. Drive in combustion system, do you know?M. B. Desai CC-14-113 Page 20 of 29
Ans. An AC drive is a device used to control the speed of an electrical motor in order to: enhance process control, reduce energy usage and generate energy efficiently, decrease mechanical stress on motor control applications.
Q. 34 How do you come to the conclusion that the damage is caused to A. C. Drive due to Ceramic Industries atmosphere?
Ans. Each A. C. drive manufacturer prescribes that it should be installed in clean atmosphere or in casing while the said industry found operating in fully dusty & moist atmosphere and not installed as per the manufacture‟s guideline.
Ld. advocate for the insurance company has argued that one has to take reasonable care as if the items are uninsured. Complainant has not taken due care to protect the A. C. Drive from the moist and dusty atmosphere.
19.4 The complainant has examined the witness Mr. Jignesh Kakadiya who has filed an affidavit in support of the complainant. The insurance company has asked the question no. 15 for this A. C. Drive at page 490 of the answer of the interrogatories as under:
Q.15. It is correct that the A. C. Drive is wet and water in the panel board?
Ans. It is process system.
This answer is not complete/perfect answer to the question. The complainant has also examined Mr. Deepak Gami. The insurance company has given interrogatories but interrogatories are not answered by the said witness therefore, his affidavit cannot be considered as an evidence. Mr. Jayesh Aghara has filed an affidavit at page 412. He has nothing specifically stated about the deduction of the loss to the A. C. Drive.
19.5 In view of the above discussion, we come to the conclusion that the surveyor has rightly disallowed the claim 50% for A. C. Drive due to ceramic industries atmosphere.
20. Ceiling Fan - B5 of the plant and machinery:- Ass per the survey report at page 82 the complainant has claimed of Rs. 1,58,600/- for supply of new ceiling fans of 130 numbers.M. B. Desai CC-14-113 Page 21 of 29
20.1 As per page 83 of the survey report the surveyor has disallowed the 50% amount of Rs. 79,300/- as ceramic industries atmosphere.
20.2 The surveyor has given reasons for disallowing the 50% of the claim amount for fan at page 77 f the survey report as under:
"The insured had claimed 130 nos. new ceiling fans and 137 nos. for rewinding/repairing of ceiling fans which were suspended below the roofing for drying the unfinished item of stock. In view of physical damage of roofing sheet nos., we had allowed 50% of the claimed amount in below assessment part vide (B) 5 & allowed fully for the repairing/rewinding fans."
20.3 The surveyor was asked the question no. 27 to 31 for fan. Answer to the Question no. 28 and 29 at page 476 are relevant for this purpose which reads as under:
Q. 28. Do you have inspected all 237 fans by removing from the top?
Ans. As per the claim bill certified by the Chartered Accountant it was claimed that in total 237 ceiling fans were damaged out of which 107 fans were repairable through rewinding and the remaining were not repairable. During my visit on 3.1.2011 and 24.3.2011 I had verified the damaged fans. I had observed that the fans were also damaged due to poor dusty atmosphere of ceramic industry as well as description was to be considered on the said fans.
Q.29. How do you come to the conclusion that 50% damage due to ceramic industries atmosphere?
Ans. After inspecting and verifying the fans damaged I had observed that due to poor dusty atmosphere of ceramic industry there was accumulation of dust on the internal parts of the fans which had reduced the life of the ceiling fan and therefore the damage to the ceiling fans was not only due to hail storm or rain water but due to dusty atmosphere of ceramic industry and therefore I had considered 50% of the claim amount.
20.4 The complainant has not produced any other evidence against 50% disallowing the claim of the ceiling fans. In view of the above we are agree with the 50% disallowed claim for the fans.
21. Computer and Modem -D:- As per the survey report at page 83 the claim of Rs. 35,000/- as cost of office equipments is disallowed by the surveyor. The surveyor has given reasons at page 77 that "we are disallowed the office equipments-computer system and modem of BSNL which is claimed in category of plant and machinery. No other reasons M. B. Desai CC-14-113 Page 22 of 29 stated. We are disagree with the reasons stated in the survey report for disallowing the claim of Rs. 35,000/- for computer and modem.
22. The claim for Item No. B3, B4, B6 and E are allowed by the surveyor therefore, there is no need to discussed these items.
23. Salvage:- The surveyor has deducted Rs. 1,50,000/- as salvage value. He has stated reasons at page 79 which reads as under:
"The insured had not offer any salvage value for the plant and machinery -damaged/replaced kiln items, AC Drive, electrical cable & other. However, we have considered Rs. 1,50,000/- as fair & reasonable scrap value."
Considering the nature of items, we are agree with the reasons stated for the salvage of the items for plant and machinery.
24. Under-insurance: Surveyor has deducted Rs. 14,60,794/- as under- insurance of 41% at page 83 of the survey report. He has given reasons at page 79 which reads as under:
"The insured‟s have declared the plant and machineries, for reinstated value S.I. of Rs. 75,00,000/- including both policy which ascertained to be around (Rs. 64,94,146/- gross block as per C.A. certificate and added @ 35% of escalation Rs. 22,72,951/- i.e. 87,67,097.00 and thereafter added mould cost for 4950 pcs. @ Rs. 781.36 pcs., Rs. 38,67,732.00 total cost Rs. 1,26,34,829/-) say. Rs. 1,27,00,000/-. Therefore, under-insurance of 41% is applied."
24.1 It is not disputed that the insured has declared value of the plant and machinery of Rs. 75,00,000/- and taken policy of the plant and machinery. As per the survey gross block of plant and machinery is Rs. 64,94,146/-. The surveyor has added 35% escalation of Rs. 22,72,951/-. Further, the surveyor has added cost of Rs. 38,67,732/- as a cost of mould for 4950 pcs at the rate of 781.36/- and come to the conclusion that the total cost is Rs. 1,27,00,000/-. Therefore, under-insurance 41% is applied and deducted Rs. 14,60,794/- The insurance was taken on 24.12.2009 and the certificate of value gross block given by the chartered accountant is dated 9.5.11. The surveyor has considered 35% escalation but he is not given reasons, justification for this escalation.
24.2 If we deduct the escalation of 35% as Rs. 22,72,951/- the figure will come Rs. 1,04,27,049/- Rs. 29,27,049/- (1,04,27,049-
M. B. Desai CC-14-113 Page 23 of 29
75,00,000=29,27,049) amount is less insured. Considering the
75,00,000/- sum insured value this is 28%
(29,27,049*100/1,04,27,049= 28.07%) under-insurance is required to be applied. The amount of Rs. 10,09,934/- (35,62,911+35,000=35,97,911) (35,97,911*28%=10,09,934) is required to be deducted as under- insurance of 28%. Considering the above discussion and calculation the complainant is entitled for the amount of Rs. 4.50.560/-.
24.3 Surveyor has deducted an amount of Rs. 14,60,794/- as 41% under-insurance. But under-insurance is only 28.07% therefore, claimant is entitled Rs. 4,50,860/- additional compensation for wrongly deducted for under-insurance. Thus, the claimant is entitled for the amount of Rs. 4,85,860/- as an additional compensation on the head of plant and machinery.
C. STOCK:
25. Complainant has pleaded in para 12 of the complaint about the compensation of stock as under:
"The complainant humble submits that the complainant has claimed the amount of Rs. 33,08,007/- towards raw material/finished gods. It is submitted that against the aforesaid claim, the opponent company has allowed the claim of Rs.9,11,515/- by disallowing the claim of Rs. 23,95,457/-. It is submitted that even while allowing the claim of raw material/finished goods, the opponent company has not considered the actual loss which is suffered by the complainant."
25.1 Complainant has filed an affidavit of Mr. Jayesh T. Aghara at page 412-414 wherein, he has stated in para 5 as under:
"I state and submit that claim towards finished goods is rejected mainly on the ground that the rates are excessive. I crave leave of the Hon‟ble Court to submit the rate chart of included and damaged items; prevailing rate at the time of this damage accrued. The copy of the same is annexed herewith and marked as Annexure-I."
25.2 The annexure I is produced at page 417-421. On perusing the said annexure this document is not signed by any person. It is not the case of the complainant that this documents was provided to the surveyor. The surveyor has filed an affidavit at page 422-424. The complainant has raised question and the surveyor has answered the question no. 60, 61 and 62 as regards to the stock nothing reflected in favour of the complainant from the answer by the surveyor.
M. B. Desai CC-14-113 Page 24 of 2925.3 As per the page 77 of the survey report it is stated that insured had claimed their loss of Rs. 46,92,580/- to the stock due to storm. The complainant has not shown any documentary evidence as regards to the loss to the stock. The surveyor has stated at page 84 about the gross assessed loss amount of Rs. 34,09,291/- for the stock and disallowed the amount of Rs. 23,96,457/- and allowed only Rs. 10,12,834/- as under:
Gross Assessed Loss amount Rs. 34,09,291.00
Less: Disallowed, of above, Rs. 23,96,457.00
A) Packing material- corrugated box of Rs.
29,072.00 as lying near seepage/wet wall and not in claim bill and other Rs. 44,442.00 not claimed to other surveyor, Total Rs. 73,514.00 B) Finished goods as excessive rate claimed, Rs.
4,33,759.00 C) unfinished stock as narrated above excessive quantity & rate Rs. 18,89,184.00 Total Rs. 10,12,834.00 Less: Salvage Value NIL Total Rs. 10,12,834.00 Less. Under-insurance of 10% Rs.1,01,284.00 ASSESSED LOSS AMOUNT-III Rs. 9,11,500.00 25.4 The surveyor has divided three pars for the loss assessment of stock.
(i) Raw materials
(ii) Stock in process
(iii) Finished goods.
He has given reason for disallowing the claim of the complainant in following terms:
Raw Material: The insured had claimed the loss of Rs. 41,583.00 against the damage of raw material. The cost of loss was worked out after considering the sheet of damaged item submitted to Mr. R. K. Sheth and cost of purchase value and rate of each item of raw material from furnished copy of bill.
Stock in process: The insured had claimed for unfinished / semi finished goods i.e. prior to glazing process of Rs. 22,49,049.00. The cost of loss was worked out after considering the stacking pattern at rack (each rack is having average 45 nos. of unfinished goods in 4 nos. of shelf lying at 4 nos. of location with total capacity of 52,875 nos.). After detailed discussion, we both surveyor had concluded in presence of insured that top row / shelf of rack consist 25% of total quantity i.e. 13,218 nos. and overall damaged nos. of total rack to 33% in view of proportion of roof i.e. 33% of 13,218 nos. comes to 4362 nos.M. B. Desai CC-14-113 Page 25 of 29
For the rate justification the insured had submitted rate analysis indicating name mixed material & its rate per piece and then total rate per piece with labour. On scrutiny of the said sheet we found that utilized each material quantity was very high. So, we had considered reasonable average cost of Rs. 82.50 (average rate of Rs.132.00, Rs.209.00 and Rs. 156.00, total Rs.165.00 and 50% in view of weight & rate) instead of claimed very high rate for goods. So, we considered 4362 pcs. @ Rs. 82.50 which arrive to Rs. 3,59,865.00.
Finished goods: The insured had claimed for the finished goods at Rs.10,74,217.00. Total stock of finished goods was 64,600 pcs. and out of which they claimed 5% i.e. 2898 pcs. which were reasonable but the rate which they claimed was very unrealistic. So, we jointly decided to arrive at costing by average rate (not practical to arrive at costing of each various designed item) of Rs.82.50 unfinished item and then added Rs.138.50 for the glazing activity & finishing process, totaling to Rs.221.00 per pcs. Hence, considered value of Rs. 6,40,458.00 against claimed of Rs. 10,74,217.00.
For the loss assessment of stock undersigned & Mr. R.K. Sheth had jointly assessed on 24th January,2012 and conveyed to insured who was not agreed for our assessment.
25.4 Under-insurance for stock:
The insureds have declared the stock for Rs. 1,70,00,000/- & in another policy of the New India Assurance Co. Ltd. Rs. 1,00,00,000.00, total S.I. Rs. 2,70,00,000.00 which ascertained to be around Rs. 3,00,00,000.00 (Basis of C.A. certificate, claim bill & joint assessment) as below:
Finished Goods : 64601 nos. @ Rs. 221 Rs. 1,42,76,861
Raw Material : - Rs. 1,12,82,271
Unfinished Goods : 52875 nos. @ Rs. 82.50, Rs. 43,62,187
Packing Material : - Rs. 81,400
Rs. 3,00,02,679
Say, Rs. 3,00,00,000
So, 10% under-insurance applied.
26. The complainant has taken another policy from the New India Assurance Co. Ltd. for the stock is concerned. The New India Assurance Co. Ltd. has appointed Elecon Surveyors and loss assessor under Section 64UM of the Insurance Act, 1938. The Elecon surveyor has submitted its report dated 25.1.12 which is produced by the insurance company at page 478-483 and signed copy of the said survey report at also produced at page 495-500. This surveyor has also assessed the loss of the stock. It is pertinent to note here that surveyor of the present opponent insurance company and New India Assurance Co. Ltd. have jointly surveyed the M. B. Desai CC-14-113 Page 26 of 29 loss and given the same conclusion. The reasons stated by the elecon surveyor by the New India Assu. Co. Ltd. as under:
Assessment of loss :
The Insured forwarded a claim of Rs. 30,60,309/- as under, which is enclosed:
A Raw Materials - Rs. 41,583.00
B Unfinished Goods 11301 pcs Rs. 10,62,294.00 C
Finished Goods 2898 pcs Rs. 10,74,217.00
D. Moulds. 1145 pcs Rs. 8,82,215.00
Rs. 30,60,309.00
The same is discussed below :
a) The claim included Rs. 8,82,215/- on account of Moulds. However, the Moulds are reusable items (used for casting), and not for converting into finished product for sale. Hence they are not part of stock & omitted.
b) The Insured claimed for 11301 pieces of Unfinished goods; which was found too high. As per my inspection & estimation. The quantity was 4362 pieces only. Further the Insured has applied average rate of Rs. 94/- for this item. However after verification of bill & costing, the average rate was calculated to be Rs. 82.50 per piece.
c) The quantities & Bills of raw materials were verified order. But claim account of packing materials (Rs. 29,072/-) was not allowed because it was caused due to seepage of water from the walls.
d) The total stock of finished goods in open was 64,600 pieces out of which about 5 % ( 2898pieces ) were found damaged/broken. The stock consisted of scores of varieties of goods and it was not practical to arrive at costing of each item. I have calculated average costing based on quantity of raw materials used and power & labour applied and arrived at average rate of Rs. 221/- per piece; against Rs. 370.67 claimed by the Insured.
e) The value of salvage was Nil. The unfinished goods had turned into sticky clay & got mixed & contaminated (as can be seen in photographs).
27. Ld. advocate for the insurance company has cited the judgment in case of United India Ins. Co. Ltd. Vs. Kantika Colour Lab.& others. (supra). As per the ratio laid down by Hon'ble Supreme Court in the said judgment that the happening of the event against which insurance cover has been taken does not by itself entitle the assured to claim the amount stipulated in the policy. The claimant has to given proof of the actual loss and the claim reimbursement of the loss to the extent it is established. Here in this case, the claimant has not established his M. B. Desai CC-14-113 Page 27 of 29 case by leading evidence about the loss of stock. Therefore, we are agree with the finding arrived by the two surveyor. For this claim after deducting 10% under-insurance amount of Rs. 1,01,284/-. Claimant is entitled for Rs. 9,11,500/- for the loss caused to the stock. We find that the surveyor has come to the right conclusion for disallowing the loss of stock. Therefore, we do not award additional compensation for the stock.
Other policy:-
28. The facts revealed that the claimant has taken another policy from New India Assu. Co. Ltd. for the stock. Ld. advocate for the claimant has filed a pursis dated 15.1.2022 at the time of argument wherein, it is stated as under:
"The complainant hereby declares that the complainant has not accepted any approved claim amount either from United India Ins. Co. Ltd. or The New India Assurance Co. Ltd. as a part of claim for the incident in question."
29. Thus, it appears that the complainant has not received any part claim amount for the incident in question from the New India Assu. Co. Ltd. The New India Assu. Co. Ltd. is not party before this Commission. The amount insured by the New India Assurance is considered for calculation of under-insurance therefore, there is no deduction is required from loss of compensation calculated and arrived. It is made clear that if any amount is claimed and paid by New India Assu. Co. Ltd. to the complainant, the said amount can be recovered from the claimant. The complainant shall refund such amount if paid to him. In view of the above discussion the claimant is entitled for the compensation as under:
Summary:-
Sr. Description Allowed by Additional Remarks surveyor amount (Rs.) entitled (Rs.)
1. Building Roofing Sheet, 9,57,054 9,46,802 Salvage, Under-
insurance
2. Plant & Computer and 35,000 Machinery 21,02,117 Modern 4,50,860 Under-insurance
3. Stock 9,11,500 -
Total 39,70,671 14,32,662
M. B. Desai CC-14-113 Page 28 of 29
Deductable 5%
1,98,534 71,633
excess amount
Final Total 37,72,137 13,61,029
30. We have considered the contents of the complaint, documentary evidence on record, objection raised in the written statement filed by the opponent, contents of affidavit and interrogatories and reply of interrogatories, arguments advanced by the ld. Advocate for the parties, ratio laid down in the above referred judgments and facts and circumstances of the case. In view of the above discussion we find that the claimant is entitled for Rs. 13,61,029/- as an additional amount of compensation from the disallowed amount of compensation Rs.95,57,367/- (claim amount as prayed) by the surveyor. Hence in the interest of justice following final order is passed.
ORDER
(i) The complaint No. 113 of 2014 is party allowed.
(ii) The Opponent is directed and ordered to pay Rs. 13,61,029/-
(Rupees Thirteen Lakhs Sixty One Thousand Twenty Nine only) out of the claim amount of Rs. 95,57,367/- with interest at the rate of 9% from the date of filing of the complaint till its realization to the complainant as additional compensation.
(iii) No order as to costs.
(iv) Certified copy of the judgment and order be provided to the parties
free of costs.
Pronounced in the open Court today on 31st January, 2022.
[Justice V. P. Patel] President M. B. Desai CC-14-113 Page 29 of 29