State Consumer Disputes Redressal Commission
United India Insurance Company Ltd. ... vs M/S. Laxmi Narayan Contractors, ... on 8 February, 2012
A A.P. STATE CONSUMER DISPUTES REDRESSAL COMMISSION AT HYDERABAD. FA 870 of 2010 against C.D. 12/2009, Dist. Forum, Kurnool. Between: 1) United India Insurance Company Ltd. Rep. by its Branch Manager 18/310, Upstairs, Besides Syndicate Bank Adhoni, Kurnool Dist. 2) United India Insurance Company Ltd. Rep. by its Divisional Manager 11/170, 1st Floor, Madam Mansion Ananthapur-515 001. *** Appellants/ Ops. And M/s. Laxmi Narayan Contractors 5/134, Kamsali Street Stone House-pet, Nellore. Rep. by its Power of Attorney General M. Madidileti Reddy S/o. Murahari Reddy H.No. 1-47, Mallapuram Village Guduru Mandal Kurnool Dist. *** Respondent/ Complainant. Counsel for the Appellant: M/s. V. Sambasiva Rao Counsel for the Respondent: M/s. V. Gourishankara Rao CORAM: HONBLE SRI JUSTICE D. APPA RAO, PRESIDENT & SMT. M. SHREESHA, MEMBER
WEDNESDAY, THE EIGTH DAY OF FEBRUARY TWO THOUSAND TWELVE Oral Order: (Per Honble Justice D. Appa Rao, President) *****
1) This is an appeal preferred by the insurance company against the order of the Dist. Forum directing it to pay Rs.20 lakhs with interest @ 9% p.a., from the date of complaint till the date of payment together with costs of Rs. 500/-.
2) The case of the complainant in brief is that it is a construction company carrying minor irrigation projects for Government of Andhra Pradesh. The complainant was a successful bidder for construction of minor irrigation tank across Pedda Vanka near Munagala village of Gudur mandal in Kurnool Dist. It entered into an agreement with Superintending Engineer, Minor Irrigation Works on 2.5.2005 for Rs.73,45,300/- and subsequently a supplementary agreement on 3.3.2006 for Rs. 8,01,352/-. It had obtained Contractors all risk policy from the appellant insurance company for two stages viz., 1st stage was construction covering the period from 3.5.2005 to 2.5.2006 and the 2nd stage was maintenance covering the period from 3.5.2006 to 2.5.2008. It had completed the construction as per schedule.
While so when it was under maintenance period on the midnight of 22.6.2007 there was heavy rain at the works spot thereby causing flood water entering into the tank beyond its capacity. There were breaches at five places. It had reconstructed the damaged portion as the damage occurred within two years from the date of completion of works as per the terms of the contract. When the said fact was informed the insurance company had appointed a surveyor Mr. T. Srinivasan of Ananthapur. The officials of the irrigation department also visited the spot and estimated the damage at Rs. 24,77,000/-. However, the surveyor of the insurance company did not release his report. On the other hand it has issued a questionnaire as to why it had quoted 15% less to the proposed estimations of the department, and without waiting for its reply, the appellant had repudiated the claim. Earlier it had filed a complaint in C.C. No. 112/2008 however the same was withdrawn.
The appellant had advised to take a separate policy under Civil Constructions Completed Policy. Alleging deficiency in service in not settling the claim it had claimed Rs. 20 lakhs with interest @ 24% p.a., and costs.
3) The insurance company resisted the case by filing written version. Earlier complaint was withdrawn when in the written version it has pointed out that special power of attorney did not authorise the complainant to file the complaint. The said special power of attorney dt. 10.7.2008 was created for the purpose of laying complaint. It would not cure the defect by filing another complaint. The special power of attorney dt. 22.10.2006 filed in C.C. 112/2008 contains the seal of the company attested by notary. It alleged that after receiving intimation of loss it has deputed a surveyor for conducting survey. As per the terms and conditions of the policy the risk of construction was covered from 3.5.2005 to 2.5.2006 which had already expired. The insurance policy taken for maintenance covered from 3.5.2006 to 2.5.2008 was already started, and therefore the peril of loss would not cover the construction policy as flood had occurred on 22.6.2007. It was only in the maintenance period the flood was occurred, confirmed by the surveyor, and the same was informed to the insured on 23.1.2008. Since the peril was not covered by terms of the policy the claim was not maintainable.
The Superintending Engineer is the competent authority to supervise the construction work, while in progress, and issue completion certificate, and therefore he is a necessary party. Alleging that when the policy does not cover the peril it was not liable to pay any amount, and therefore prayed for dismissal of the complaint with costs.
4) The complainant in proof of its case filed the affidavit evidence of M. Maddi Reddy, Power of Attorney and examined K. C. Narayana, Deputy Superintending Engineer, Irrigation Department as PW1, and got Exs. A1 to A12 marked while the appellant insurance company filed the affidavit evidence of its Divisional Manager and got Exs. B1 & B2 marked.
5) The Dist. Forum after considering the evidence placed on record opined that since the damage to the tank was caused on 22.6.2007 due to heavy floods, and the exclusion clause does not exclude the damage due to floods, the insurance company had to compensate the loss towards damage, and therefore an amount of Rs. 20 lakhs was directed to be paid with interest @ 9% from the date of complaint till the date of payment together with costs of Rs. 500/-.
6) Aggrieved by the said decision, the insurance company preferred the appeal contending that the Dist. Forum did not appreciate either facts or law in correct perspective. It ought to have seen that damage caused to the tank on 22.6.2007 was during the maintenance period and the said peril was not covered by terms of the policy, and therefore the order of the Dist. Forum is liable to be set-aside.
7) The point that arises for consideration is whether the order of the Dist. Forum is vitiated by mis-appreciation of fact or law?
8) It is an undisputed fact that the complainant had obtained Contractors all risk policy from the appellant insurance company for two stages viz., 1st stage was construction covering the period from 3.5.2005 to 2.5.2006 and the 2nd stage was maintenance covering the period from 3.5.2006 to 2.5.2008 for a sum of Rs. 20 lakhs. It is also not in dispute that there is a breach in the tank on 22-6-2007 due to heavy floods causing damage which the complainant quantified at Rs. 20 lakhs. The complainant contends that the peril covers the policy while the insurance company contends that the very project was not completed and the question of maintenance policy would not commence, and the contractor having not extended the policy beyond the construction period it was not liable to pay any amount towards said damage. It also contends that said peril is not covered during maintenance period.
9) Ex. B1 is the Contractors All Risk Insurance Policy
10) The terms of the policy did not exclude the loss due to floods etc. What all was excluded was damage due to war, invasion, acts of terrorism etc. It also excludes wilful act or wilful negligence of the insured or his representative, cessation of work whether total or partial.
In fact memo No. 8 - Major perils/AOG perils reads as follows:
The major peril/acts of god claims shall mean claims arising out of:
a) Earth quake fire and shock
b) Landslide/Rockslide/Subsidence
c) Flood/Inundation
d) Storm/Tempest/Hurricane/Typhoon/Cyclone/ Lighting or other atmospheric disturbances.
e) Collapse
f) Water damage for wet risks i.e., contract involving works in rivers, Canals, lakes or sea.
Therefore the damage caused due to flood and inundation is covered by terms of the policy. The other contention is that the said inundation was occurred during the maintenance period, and not during construction period. Ex-facie, we are of the opinion that it makes no difference since in the policy, two periods are mentioned to cover the perils while in construction from 3.5.2005 to 2.5.2006 and the other during maintenance period from 3.5.2006 to 2.5.2008. No doubt if the construction has not been completed the insurance company need not pay any amount if any peril is occurred. The contention was that the construction was not completed therefore it does not cover the first period i.e., from 3.5.2005 to 2.5.2006 and the policy for maintenance did not commence, and therefore they need not pay any amount.
10) The complainant in proof of its case examined Sri K. C. Narayana, Deputy Superintending Engineer, Irrigation Department as PW1. In the chief Examination he stated In the year 2004 our office called for tenders for construction of minor irrigation tank across Pedda Vanka near Munagala village. M/s. Lakshminarayana contractors was the contractor for the work since he was the successful bidder. Maddilety Reddy was representing on behalf of M/s. Lakshminarayana contractors.
Work had to be completed within one year from the date of agreement. The date of agreement was 15.3.2005. The contractor completed the work within the time. By 22.6.2007 the work was under
maintenance period. There were floods on 22.6.2007 and 23.6.2007. On the request of the contractor, myself along with Deputy Executive Engineer, Asst. Engineer visited the work spot estimated the damage of the construction work to the tune of Rs.24,77,000/-Insurance surveyor also accompanied us to the work spot. The insurance surveyor also estimated the damage caused due to floods.
11) In the cross-examination he mentioned As per the terms of the agreement the period of the construction was one year from 15.3.2005. The construction of the tank was not completed by the contractor within one year from 15.3.2005. On the request of the contractor the period of work was extended. But I do not know the date on which time was extended. The contractor completed the construction of the work in November, 2006.
I have no personal knowledge about the policy taken by M/s. Lakshminarayana contractors of Nellore.
. By the date of floods the construction of the tank was completed. We submitted the report for the loss occurred due to the floods. He denied the suggestion that he was giving false evidence to help the complainant.
12) After receipt of claim, the insurance company appointed a surveyor & loss assessor Mr. T. Srinivasan. He admitted that there was heavy rain fall 30.3 cm in the month of June, 2007 (23.6.2007) in their area. The tank filled with flood water from the catchments area of the tank. Due to heavy floods the newly constructed M.I. tank breached bund at five locations and washed out up-stream revetment. The wearing coat C.C. laid over solid apron was damaged and guide bank was eroded due to over flow of the flood water. He noted the following facts;
The newly constructed MI tank got damaged due to floods received from the catchments are.
I have inspected the site and found the damages to bund, surplus wear and guide bank.
I have measured the damaged portion of the structure.
13) From the above, it is beyond doubt that the complainant had completed the construction of the tank. The insurance company though raised a plea that the construction was not made and time was extended by the Government of Andhra Pradesh for one more year, correspondingly he did not take the policy covering the risk during completion of construction, and therefore it was not liable, no evidence was let in. Now the appellant intends to raise a contention that the contractor did not furnish the completion certificate from the irrigation department, proof of approval of final bill etc., and therefore it has to be presumed that the construction was not completed. However, the insurance company surveyor did not say so nor furnished any evidence to that effect. When their own surveyor having visited and found that the tank was damaged due to floods, and there was no whisper that he did not complete the construction, the insurance company is not entitled to raise this plea. This contention is wholly misconceived. We do not see any mis-appreciation of fact or law by the Dist. Forum in this regard.
We do not see any merits in the appeal.
14) In the result the appeal is dismissed with costs computed at Rs. 10,000/-. Time for compliance four weeks.
1) _______________________________ PRESIDENT
2) ________________________________ MEMBER 08/02/2012 *pnr UP LOAD O.K.