National Consumer Disputes Redressal
Avalon Cosmetics Pvt. Ltd. vs Oriental Insurance Co. Ltd. & Anr. on 1 November, 2019
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI FIRST APPEAL NO. 609 OF 2014 (Against the Order dated 24/06/2014 in Complaint No. 01/2014 of the State Commission Himachal Pradesh) 1. AVALON COSMETICS PVT. LTD. THROUGH ITS DIRECTOR, MR. SAMEER KOTHARI, FACTORY 58-59, INDUSTRIAL AREA, PAONTASAHIB, DISTRICT-SIRMOUR HIMACHAL PRADESH ...........Appellant(s) Versus 1. ORIENTAL INSURANCE CO. LTD. & ANR. THROUGH ITS MANAGING DIRECTOR, REGISTERED OFFICE, ORIENTAL HOUSE, A-25/27, ASAF ALI ROAD, NEW DELHI-110002 2. THE BRANCH MANAGER, THE ORIENTAL INSURANCE CO. LTD., THROUGH ITS BRANCH MANAGER, NAHAN DIST. SURMUR, HIMACHAL PRADESH ...........Respondent(s)
BEFORE: HON'BLE MR. PREM NARAIN,PRESIDING MEMBER
For the Appellant : Mr. Atul Jhingan , Advocate For the Respondent : Mr. Kishore Rawat, Advocate with
Mr. Prashant Bhardwaj, Advocate
Dated : 01 Nov 2019 ORDER
Challenging the order dated 24.06.2014 of the State Consumer Disputes Redressal Commission, H.P. (in short 'the State Commission') passed in CC No.01/2014, whereby the complaint of the complainant has been dismissed, the present appeal has been filed.
2. Brief facts of the case are that complainant a private limited company had a factory at Ponta Sahib. The building, the raw material and the entire stock of complainant, available at the factory at Ponta Sahib, was insured with the opposite parties for the period from 08.02.2009 to 07.02.2010. A fire broke out in the factory premises of the complainant in November, 2009. A claim was lodged with the opposite parties for the loss caused due to the said fire incident. When the said claim was still pending, complainant in the month of January, 2010, approached the opposite parties for insuring the factory, the raw material and finished goods for a further period from 08.02.2010 to 07.02.2011. Opposite parties insured the building, which was under construction, because of its having been damaged due to earlier incident of fire, as also the goods kept therein for a sum of Rs.10.81 crores, for the period from 08.02.2010 to 07.02.2011. On 13.02.2010, another accident of fire took place, when a shed was being re-constructed. It resulted in huge loss which according to the complainant was to the tune of Rs.2.5 crores. A report was lodged with the police by the Personnel Manager of the complainant. Opposite party was also informed on that very day. A spot surveyor deputed by the opposite parties visited the spot on the very day of incident and submitted his report on 10.08.2010. A final surveyor deputed by the opposite parties, visited the spot in March, 2010 but submitted the report on 09.07.2013. According to the complainant, the surveyor assessed the loss at Rs.91,00,000/-. Consent of the complainant to accept the amount of Rs.81,23,481/- was obtained by the surveyor and submitted to the opposite parties along with his report. Opposite parties, however, repudiated the claim, vide letter dated 30.10.2013, on the ground that complainant caused breach of condition No.3 as it had stored packing material in the shed, which was under construction and in which welding of iron trusses and girders was going on and the welding process increased the risk of loss of insured building and property, by fire. The State Commission dismissed the complaint on merits.
3. Hence the present appeal.
4. Heard the learned counsel for the appellant. The claim was repudiated by the Insurance Company vide letter dated 30.10.2013 on the ground that the risk was increased without any intimation to the Insurance Company or without any permission from them. The surveyor has given report that the fire might have been caught by the spark generated from the welding machine as the welding work was going on in the shed that was under construction and packing material was also stored there in large quantity. Learned counsel stated that the fire may have been caused due to short circuit and not due to spark generated from the welding process. It was further stated by the learned counsel that the claim was also repudiated by the Insurance Company on the ground that there was violation of condition no.3 of the terms and conditions of the policy, according to which, the Insurance Company is not liable to pay any claim, if change in the nature of the building has been done without any approval from the Insurance Company, which increases the risk. In this regard, learned counsel stated that it was a godown where the packing materials were already stored. However, as the building shed collapsed, the same was being rebuilt. In fact, no new activity was taken up in the godown, it remains a godown for packing material. Thus, there was no requirement of giving any intimation to the Insurance Company or to take approval from the Insurance Company. The surveyor after assessing the loss sought consent of the complainant, which was given vide letter dated 09.7.2013 of the complainant. However, the Insurance Company finally repudiated the claim. The Insurance Company has relied upon the statement of Mr. Avanish Kumar Punja, GM- Operations, wherein the GM has mentioned that the probable cause of the fire is the spark from the welding process. Learned counsel further stated that the complainant had not received the copy of the terms and conditions of the policy and only cover note was received, therefore, the claim cannot be repudiated on the ground of condition no.3 of the terms and conditions of the policy. The State Commission has also observed that the Insurance Company has not adduced any evidence to prove that the terms and conditions were supplied to the complainant. Still the State Commission has not given any benefit of not receiving the terms and conditions of the policy to the complainant. Even in the written statement submitted by the opposite party, nothing has been mentioned in respect of the supply of terms and conditions of the policy to the complainant that when was the same supplied. Learned counsel for the complainant further argued that if there is any contributory negligence on the part of the insured, the total claim cannot be rejected, rather the claim may be reduced and a reduced claim may be allowed. In respect of his argument, learned counsel referred to the judgment of this Commission in M/s. Western Tobacco Limited Vs. United India Insurance Co. Ltd. & Ors., 2015 2 CPR (NC) 880, wherein the claim was reduced to 2/3rd of the assessment given by the surveyor.
5. Learned counsel for the appellant stated that even the GD Entry No.48 (A) dated 13.03.2010 reveals that the police has also accepted after investigation that cause of fire was short-circuit.
6. It was further argued by the learned counsel that the surveyor report is not the gospel truth and it is not necessary to accept the same. The Insurance Company has relied upon the report of the investigator that the cause of fire was sparking due to welding work and also accepted that the risk was increased as the welding work was going on in the godown where the packing material was stored, whereas the Insurance Company has not allowed the same as observed by the surveyor. In support of the argument, learned counsel for the appellant relied upon the judgment of the Hon'ble Supreme Court in New India Assurance Company, Limited Vs. Pradeep Kumar, New India Assurance Co. Ltd. Vs. Pradeep Kumar, IV (2009) CPJ 46 (SC). It has been held that
15. 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). 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."
7. On the other hand, learned counsel for the respondents/insurance company stated that it has been revealed during the investigation that the godown was under construction and the packing material was stored in large quantity there. The welding work was going on in that godowon and therefore, the spark emitted from the welding work caused the fire as the whole godown was filled with the packing material, which was highly inflammable. It was further argued that the GM Operations of the complainant company has stated that the cause of fire was the spark from the welding work that was going on under the shed where packing material was stored in large quantity. As the GM Operations is an employee of the complainant and looking after the actual operations in the factory, his statement needs to be believed. The investigator has also found that most probable cause of fire was spark from the welding work that was going on in the building under construction wherein large quantity of packing material and other raw material was stored. The surveyor in his report has also taken evidence from some of the witnesses, who have stated that probable cause of fire may be spark due to welding work. When the conditions were so conducive for the spread of fire, there can be no two opinions about the cause of fire that the cause of fire was definitely spark due to welding work falling on the packing material and spreading the fire damaging the building and stored material.
8. Learned counsel for the Insurance Company further stated that the condition of the godown was changed where packing material was stored and welding work was undertaken without any intimation to the Insurance Company or without permission of the Insurance Company, whereas the same was required as per condition no.3 of the Terms and Conditions of the policy, which reads as under:-
'The insurance ceases to attach as regards the property affected unless the insured, before the occurrence of any loss or damage, obtains the sanction of the company signified by endorsement upon the policy by or on behalf of the company, if the trade or manufacture carried on the altered, or if the nature of occupation of or other circumstances affecting the building insured or containing the insured property be changed in such a way as to increase the risk of loss or damaged by insured perils.
9. From the above, it is clear that the complainant itself is responsible for the changing of the status of the insured building and that too without permission from the Insurance Company. Thus, clearly condition No.3 is attracted in the present case and violation of this condition will disentitle the complainant to get any insurance claim.
10. I have given a thoughtful consideration to the arguments advanced by the learned counsel for both the parties and examined the record. It is clear from the facts of the case and from the investigator's report that the fire was caused due to spark due to welding work which lighted the material kept in the godown under construction. This was a clear negligence on the part of the complainant that they did not take any precaution for segregating the packing material from the site of the welding work. A contract of insurance is like any other commercial contract and the terms and conditions are binding on both the contracting parties. It is true that the report of the surveyor may not be the last word, however, the facts given in the report have to be considered with all seriousness. Though the complainant has asserted that the cause of fire was 'short circuit', but as nobody has seen the actual cause of fire, the cause of fire has to be ascertained from the circumstances and probabilities. If the packing material is stored near a welding site, the most probable cause of fire may be the spark emanating from welding work falling on the packing material and then fire spreading due to combustible nature of the packing material. No report of any Electrical Engineer has been submitted by the complainant to prove that the cause of fire is from 'short circuit. In these circumstances, the most probable cause as ascertained by the surveyor/investigator has to be treated as the actual cause of fire.
11. The complainant has not given any plausible argument for not obtaining the approval from the Insurance Company for changing the nature and status of insured building and thereby increasing the risk. The reason given by the complainant that it was a godowon for packing material and the same was under construction as it fell down on some day and therefore, Insurance Company was not required to be given any intimation, does not justify the action of the complainant for not getting the approval for construction of the building. Moreover, the presence of packing material increased the risk when the welding work was going on in the godown which was under construction. Thus, there has been a violation of Condition No.3 of the terms and conditions of the policy.
12. The complainant has claimed that he did not receive the terms and conditions of the policy from the Insurance Company and only received cover note. The State Commission has dealt with this issue in the following manner.
"No-doubt, opposite parties have not adduced any evidence, indicating as to on which date and by what mode, the insurance policy allongwith its terms and conditions, was supplied to the complainant and, therefore, it can be said that the complainant had not been supplied the copy of insurance policy, but the complainant cannot be heard to say that its functionaries were unaware of the terms and conditions of insurance policy, because the insured factory of the complainant was insured with the opposite parties for the previous year also and it is not the complainant's case that insurance policy, alongwith its terms and conditions, in respect of previous year's contract of insurance, had also not been supplied."
13. Otherwise also, when an industrial unit/factory takes an insurance for the safety of the factory, the owners/management of the factory are supposed to understand the details of the insurance because the purpose of taking an insurance is not only a formality, but to insure that if a peril is attracted, factory gets indemnification. It was in the interest of the complainant to have asked the details of terms and conditions of the policy from the Insurance Company, if the same was not received. Otherwise also, the cover note has a short period of validity and beyond that period of validity, it is the policy that becomes operative along with its terms and conditions. Thus, I do not find any merit in the argument of the learned counsel for the appellant/complainant that the terms and conditions were not supplied to the complainant and therefore, Condition No.3 cannot be made applicable in the present case.
14. On the basis of the above discussion, I do not find any merit in the present appeal filed by the appellant and consequently appeal No.609 of 2014 is dismissed.
...................... PREM NARAIN PRESIDING MEMBER