State Consumer Disputes Redressal Commission
Konark Wood Panels Limited & One Another vs The New India Assurance Company Limited ... on 10 September, 2009
CONSUMER DISPUTES REDRESSAL COMMISSION CONSUMER DISPUTES REDRESSAL COMMISSION MAHARASHTRA STATE CONSUMER COMPLAINT NO.29/1995 Date of Filing:- Date of Order:-10/09/2009 1) Konark Wood Panels Limited, 34/B Jolly Maker Chamber II, Nariman Point, Mumbai-400 002 2) Vardhaman Plyboard Industries Limited, 34/B Jolly Maker Chamber II, Nariman Point, Mumbai-400 002 Complainant -Versus- 1) The New India Assurance Company Limited, Tied Unit No.121200, Mittal Chambers, 2nd Floor, Nariman Point, Mumbai-400 021 2) State Bank of Saurashtra, Fort Branch, Gresham House, Near R.B.I. Sir P.M.Road, Mumbai-400 001 3) India Resins & Paints Limited 34/B Jolly Maker Chamber II, Nariman Point, Mumbai-400 002 Opponents Corum :- Mr.P.N.Kashalkar,Honble Presiding Judicial Member, Mrs.S.P.Lale, Honble Member. Present :- Mr.J.M.Baphna, Adv. for the Complainant Mr.C.T.Patel, Adv. for the O.P.No.1 None present for other O.Ps. O R D E R
Per Mr.P.N.Kashalkar,Honble Presiding Judicial Member
1) The complainants have filed this complaint against New India Assurance Company Limited and also against State Bank of Saurashtra, Fort and India Resins & Paints Limited alleging deficiency in service and unfair trade practice on the part of O.P./Insurance Company.
2) Complainants complaint against O.Ps is as under :
3) Complainants are associate companies carrying on business of manufacturing and selling timber products. O.P. is a public sector undertaking providing services of granting insurance to cover risk of various hazardous. According to the complainants, on 5/12/1988 the complainants purchased 475.0 Cubic Meters Keruing timber imported from Malaysia from one of their sister companies M/s.Omega Investments and Properties Private Limited who were importers and who had stocked the material at a log yard of M/s.P.V.Ramanmurthy & Sons. The said yard was located in Vizagapatnam opposite Jubilee Hospital. The said timber logs were kept there in 1987 since their delivery and were insured with Oriental Insurance Company Limited from 3/3/1987 to 9/12/1988. The said timber logs thereafter were insured by the complainants for a period of three months between 25/1/1989 to 24/4/1989 for a total value of Rs.32,72,500/- with O.P./Insurance Company and were mortgaged with Fort branch of State Bank of Saurashtra against LC issued by the bank. Therefore they were named as first insured party in the policy document. Complainants were carrying on the sale and dispatch of timber logs through M/s.P.V.Ramanmurthy & Sons and had given deliveries of logs to various parties till 11/3/1989. The balance of 26 logs was lying at the timber yard of M/s.P.V.Ramanmurthy & Sons as per record of complainants after 11/3/1989.
On 6/4/1989, at early hours of 2.00 A.M. a fire was reported in the yard of M/s. P.V.Ramanmurthy & Sons and complainants logs stored in the yards were reported to have caught fire. The watchman at the site informed this fact to the Managing Partner of M/s.P.V.Ramanmurthy. Fire brigade was summoned and they put off the fire within ten minutes. According to the fire brigades loss assessment report, fully or partly burnt logs were 18 in numbers. The complainant was informed about this fire on 8/4/1989 through a telegram sent by M/s. P.V.Ramanmurthy. They in turn informed to the O.P.No.1 on 10/4/1989. On 27/4/1989, Divisional Manager of O.P.No.1 sent telex message that they were arranging the preliminary assessment of loss caused to the complainants logs. According to the complainant, on 5/6/1989 claim form was submitted by the complainant to the O.P.No.1. The O.P.No.1 appointed surveyors for investigation. Complainants employees cooperated with the surveyor. Then there were queries from the insurance company. Those queries were replied by the complainant but still O.P.No.1 insurance company was giving evasive replies. Finally, by their letter dated 24/8/1994 O.P.No.1 repudiated the claim of the complainant. Complainant sent protest letter dated 12/9/1994 and urged O.P.No.1 to respond reasonably. Aggrieved by the repudiation, the complainant filed this complaint alleging that there has been unreasonable and unconstitutional delay in processing complainants claim which per se amounted to deficiency in service. The insurance company took more than five years since the fire to repudiate the claim and they had not given any reasons for this inordinate delay. This delay itself constituted deficiency in service on their part. According to the complainants, repudiation of the claim was not bonafide. The officers of the insurance company were simply voicing their suspicious about complainants claim without acting on their own surveyors report dated 2/9/1989. This negligence on the part of the O.P. constituted deficiency in service and therefore the complainants filed this complaint claiming compensation of Rs.6,89,414/- towards the fire claim submitted by it and it also requested that said amount should carry interest at the rate of 18% per annum from 30/6/1989 till the date of actual payment. The complainants also claimed Rs.2 Lakhs for the loss of reputation suffered by them because of negligence of O.P.
4) The O.P. No.1 insurance company filed written statement pleaded that complainant is not a consumer since they had stored the timber logs for consideration i.e. for selling them in the market. So, the present complaint according to it is not maintainable under Consumer Protection Act, 1986. The insurance company further pleaded that on receipt of information of fire on 10/4/1989, the O.P./insurance company asked complainants to give estimate of loss to enable it to appoint surveyor either from Bombay or from Visakhapatnam. According to the insurance company at the time of fire only 26 wooden logs were lying at the timber yard out of which only 18 numbers were affected by fire as confirmed by Station Fire Officer, Visakhapatnam. The insurance company further pleaded that total number of logs insured with it were 147 and insured sum was Rs.32,72,000/- and since 18 logs were totally damaged the maximum loss would be less than Rs.4,00,653/- under any circumstances. The non cooperation of complainants in giving estimate of loss resulted in the delay of appointing the surveyor. The insurance company further pleaded that it had appointed independent surveyor M/s.Reliance Surveillance from Visakhapatnam to conduct the primary assessment of loss. Surveyor after inspecting the damaged logs physically found that 5 logs were fully burnt, 4 logs were partially burnt and 5 logs were burnt in bits and estimated loss was about Rs.1,20,000/-. Thereafter, the insurance company asked surveyor to carry out detailed survey and submit survey report accordingly. The surveyor submitted detailed survey on 2/9/1989 to it assessing loss by fire at Rs.6,89,414/- as against there original estimate of loss of Rs.1,20,000/-.
5) The insurance company pleaded that despite knowing the fact that only 18 logs were affected by fire complainants submitted a claim form dated 4/6/1989 claiming Rs.20 Lakhs as a loss by fire to their timber logs insured with it. After examining survey report, claim form and final assessment of loss which was five times more than estimated loss, the O.P./insurance company made certain queries to the complainant as well as to the surveyor seeking clarification on the assessment of loss. In the addendum given by the surveyor the amount of loss was reduced to Rs.5,27,102/- in place of Rs.6,89,414/-. The insurance company pleaded that it was convinced that loss has been highly exaggerated by both the complainants and said surveyor because fire was extinguished within 20 minutes. Again, query was made to complainants and surveyor about the latest assessment of loss made by them. Surveyor then submitted another addendum with his letter dated 17/7/1992 reducing the amount of loss from Rs.5,27,102/- Rs.3,85,172/-. Again, this reduction was doubted by the insurance company since the claim was not genuine and quantum of loss has been exaggerated. So, it appointed Shri N.Ram Chandra Prasad of Visakhapatnam as investigator to investigate the loss. Investigation report dated 6/7/1992 was in due course submitted to it by the investigator and looking to the circumstances, the insurance company decided to repudiate the claim on various reasons mentioned by it in para 6(p) of its written statement. The insurance company tried to justify the delay occurred in processing the claim of the complainant and ultimately in repudiating the said claim by letter dated 24/8/1994. The claim was primarily repudiated under condition no.8 of fire policy c. Since, claim was found to be fraudulent one and it was so made to receive all the benefits under the policy by willful act defraud the insurance company. It pleaded that it had rightly repudiated the claim in terms of condition no.8 of the policy and therefore nothing is payable to the complainant under the said policy. It therefore prayed that complaint should be dismissed with cost.
6) A rejoinder was filed by the complainant to the written statement of O.P.No.1 insurance company disputing averments made in the written statement.
7) The complainant also filed affidavit of Shri B.Ramarao who was working for M/s.P.V.Ramanmurthy & Sons, Visakhapatnam who confirm that out of 26 logs kept in the yard of M/s.P.V.Ramanmurthy & Sons, on 5/4/1989 18 logs belongs to M/s. Konark Wood Panels Limited and on early hours of 6/4/1989 in the fire 18 logs were partially and fully burnt as per their record and 8 logs were in sound condition. Another person by name Shri M.Satyanarayana Rao who was also working with M/s.P.V.Ramanmurthy & Sons, Visakhapatnam also filed affidavit like the one filed by Shri B.Ramarao.
8) The O.P.No.2 filed written statement on affidavit but it is not concerning the pleading of the complainant. The bank simply pleaded that complainant fully and finally settled the banks outstanding by paying Rs.18 Lakhs to their bank as per one time compromise settlement dated 27/1/2001 in terms of R.B.I. scheme.
9) The O.P.No.3 India Resins Limited filed written statement cum affidavit and pleaded that on the date of fire i.e. 6/4/1989 there was no stock belonged to Respondent No.3 (O.P.No.3) and what ever stock remained there belongs to complainant No.1 & 2 and as such Respondent No.3 (O.P.No.3) did not prefer any claim on account of fire with Respondent No.1 (O.P.No.3).
10) It must be stated here that this complaint was decided by this Commission by judgment dated 10/5/1996 and this Commission was pleased to dismiss the complaint at the stage of admission itself. This Commission had observed that after investigation made, O.P./Insurance Company repudiated the claim as it was bogus and false and repudiation was justified for the reasons given and on that count complaint was not entertained and was rejected. Against this order the complainant had filed appeal before Honble National Commission. In First Appeal No.552/1996 decided on 29/9/2005, the Honble National Commission set aside the impugned order of this Commission and remanded the complaint back to this Commission and directed that two other parties should be added and then it directed this Commission to decide the complaint afresh.
11) We heard submissions of Mr.J.M.Baphna, Adv. for the complainant and Mr.C.T.Patel, Adv. for the O.P.No.1/Insurance Company. None appeared for other O.Ps.
12) Now the following issues arise for our consideration. The issues and our findings thereon are as under :
Sr. No. Issues Findings
1) Whether the complainants prove that the insurance company was guilty of deficiency in service in belatedly appointing surveyor in insisting complainants to produce estimate of loss and in appointing investigator and also in repudiating the claim after a long time ?
Yes
2) Whether the complainants prove that its genuine claim was improperly repudiated or turned down by the insurance company without any basis whatsoever ?
Yes
3) What order if any ?
Complaint is partly allowed as per final order.
13) Issue No.1 :- It has come on record that complaint was having some logs kept at the yard of M/s. P.V.Ramanmurthy & Sons and total number 121 logs were sold and delivered to the various parties and 26 logs remained at the yard when fire occurred on the early hours of 6/4/1989 which was noticed by the watchman on duty. The yard owner contacted fire brigade immediately and fire brigade put off the fire within half an hour. The complainants was informed. Complainants officials went to Visakhapatnam and on 10/4/1989 the loss of wooden logs due to fire was intimated to the insurance company by the complainant. Then insurance company as per usual practice appointed Surveyor. He was asked to make primary assessment. Surveyor was belatedly appointed. He was appointed on 27/4/1989 whereas fire took place on early hours of 6/4/1989.
The grievance of the complainant is that there has been inordinate delay in appointing surveyor in the first instance. Second, grievance of the complainant is that the insurance company insisted complainants to submit estimate of loss and on that count they again further delayed the matter. After surveyor gave preliminary estimate the insurance company asked surveyor to again make detailed survey. After detailed survey report was submitted on 2/9/1989 the complainant and surveyor was again and again asked certain queries by the insurance company just to prolong settlement of the claim submitted by the complainants. Thus, O.P.No.1 took three years and three months to make flimsy queries by sending letter dated 3/12/1992. The very next day complainant explained the said query but even thereafter O.P. took one year nine months to repudiate the claim by its letter dated 24/8/1994. According to the complainants, in all there was total delay of five years in repudiating the claim presented by them to the O.P.No.1. We are fully in agreement with the contention made by counsel for the complainant on this count. It was not proper on the part of insurance company/O.P.No.1 to resort to such type of delaying tactics and ultimately to repudiating the claim after a period of five years. It was also not proper on the part of insurance company to appoint surveyor after the lapse of 14 days in a matter where fire claim was involved and wherein prompt action was expected of them in appointing surveyor to assess the extent of loss suffered by the complainants. It was also not proper on the part of insurance company to appoint investigator to find fault with the claim preferred by the complainants and the survey report submitted by the surveyor recommending payment of certain amounts to the complainants. From the record it is clearly established that insurance company by its whim and caprice acted irrationally and delayed the settlement of claim which claim was ultimately repudiated after lapse of five years citing condition no.8 of fire policy.
14) Surveyor is an independent agency recognized under Insurance Act. They are experts from the field. When they are making recommendations using their expertise normally insurance company is supposed to act upon such recommendations of the surveyor unless there are grounds to suspect the integrity of the surveyor. But, in the instant case the insurance company officials went on making queries after queries after surveyor submitted reports to the Insurance Company. Not satisfied with this high handed action, the insurance company also appointed investigator just with a view to condemn surveyors recommendations and to make a ground for turning down recommendations of the surveyor. Only with this sole purpose, investigator Shri N.Ram Chandra Prasad was appointed. In our view, the whole exercise on the part of the insurance company was specifically intended to condemn the complainant and to repudiate complainants claim by hook or crook. This attitude exhibited by the insurance company officials is highly deprecatory. The circumstances was brought on the record by the complainants leave us in no doubt that it was an calculated attempt on the part of insurance company officials to put complainants into financial trouble and to any how repudiate the claim, whole the exercise was undertaken by the insurance company and therefore we are constrained to hold that the insurance company did not act fairly, impartially in dealing with this case. They had deliberately consumed five years to repudiate the claim presented by the complainants. There was delay and delay on the part of the insurance company at every stage of claim settlement process gone into by the insurance company. So, agreeing with the contentions made by counsel for the complainants, we are inclined to hold that the insurance company was guilty of deficiency in service in deliberately delaying appointing of surveyor, in asking queries after queries to the complainants and surveyor, in appointing investigator and also in ultimately repudiating claim of the complainants on flimsy ground by citing condition no.8 of fire policy c. We, therefore, record our finding on issue no.1 in the affirmative.
15) Issue No.2 :- The insurance company had appointed surveyor. Surveyor gave initial estimated loss of Rs.1,20,000/- but then the same Surveyor was directed to make detailed survey assessing loss of the complainants logs due to fire. Surveyor then made detailed assessment of Rs.6,89,414/- by report dated 2/9/1989. The insurance company instead of paying this amount to the complainants made queries to the complainants as well as to the Surveyor. Then Surveyor reduced the claim to Rs.5,27,102/-. Thereafter, it was further reduced to Rs.3,85,172/-. It would be thus clear that insurance company anyhow did not want to pay anything to the complainants and therefore on or other pretext they asked clarifications, explanations and queries to the complainants and Surveyor and ultimately repudiated the claim of the complainants. We are thus finding that the insurance company was not fair enough to act upon the report submitted by the Surveyor either initially or after receiving first and second addendum from the same Surveyor. The insurance company thereafter appointed investigator to check sales invoices submitted by the complainants to the Surveyor. But this was an exercise in futility. What it pertinent to note is the fact that there were in all 18 wooden logs belonging to the complainants when fire broke out. Those 18 wooden logs were affected by fire. The fire brigade in its report mentioned that about 18 pieces of wooden logs were affected in the fire. The Surveyor assessed damage occasioned to the complainants at Rs.6,89,414/- in his report dated 2/9/1989. Then, at the request of insurance company he reduced it to Rs.5,27,102/- and again it was further reduced to Rs.3,85,172/-. Even this amount was not acted upon by the insurance company and they preferred simply to repudiate the claim citing condition no.8 of the policy as a ground of repudiation.
16) The insurance company in the written argument at one stage stated that even assuming that all the 18 number of logs were totally damaged by fire, maximum loss would have been less than Rs.4,00,653/- under any circumstances. It would mean that this amount is acceptable to the insurance company. The insurance company has no where mentioned what would have been salvage amount available to the complainants if partially burnt logs would have been sold in the market. In the absence of any such mention of salvage, we are of the view that the insurance company ought to have allowed the claim to the extent of 3,85,172/-. The repudiation of claim after five years of time was patently erroneous and bad in law because there was no dispute that in the fire broke out in the log yards of M/s.P.V.Ramanmurthy & Sons complainants had lost 18 wooden logs in the fire. So, in our view amount of Rs.3,85,172/- should have been given to the complainant by the insurance company instead of repudiation of claim on flimsy ground. The appointment of investigator after so many queries asked to the complainants and surveyor was uncalled for and unwarranted in law. So, report of investigator will have to be brushed aside because it was the ploy employed by the insurance company to negative the claim of the complainants. Therefore, we hold that complainants genuine claim was illegally and improperly and unjustly repudiated on very flimsy ground. We, therefore, record our finding on issue no.2 in the affirmative and as such we are inclined to allow this complaint partly to grant compensation of Rs.3,85,172/- to the complainant. The complainants are also entitled to get interest at the rate of 7% per annum on this amount from the date of repudiation till actual payment besides cost which we quantify at Rs.4,000/-. Hence, the following order.
O R D E R 1) Complaint is partly allowed as against O.P.No.1/Insurance Company. 2) The Insurance Company is
directed to pay amount of Rs.3,85,172/- as compensation with interest at the rate of 7% per annum from the date of repudiation of claim till its actual payment.
3) The insurance company is also directed to pay Rs.4,000/- as cost of the complaint to the complainants and shall bear its own cost.
4) This order shall be complied with within one month from the receipt of copy of this award or otherwise the amount mentioned above shall carry interest at the rate of 10% per annum from the date of order till its actual payment.
5) Copies of this order be sent to the parties free of cost. ( Mrs.S.P.Lale ) (P.N.Kashalkar ) Member Presiding Judicial Member Malve/-