State Consumer Disputes Redressal Commission
Lodha Impex S.P.L. Through Prop. Dalpat ... vs Icici Lombard Gen. Ins.Co. Ltd on 25 May, 2017
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BEFORE THE STATE CONSUMER DISPUTES
REDRESSAL COMMISSION, RAJASTHAN BENCH NO.2,
JAIPUR.
COMPLAINT NO.67/2010
1. Lodha Impex SPL-E-100 Garment Zone, EPIP
Sitapura Industrial Area, Tonk Road, Jaipur
through its Proprietor Shri Dalpat A. Lodha.
...Complainant
Vs.
1. ICICI Lombard General Insurance Company
Limited, Zenith House, Kesavrao Kharve Marg,
Mahalaxmi Mumbai - 400034
......Respondent/Non-Complainant.
Date of Order - 25.05.2017
Before:
Hon'ble Mr.Vinay Kumar Chawla - Presiding Member
Hon'ble Mrs. Meena Mehta - Member
Present:
Shri Gopal Shastri, Counsel for the Complainant.
Shri Vizzy Agarwal, Counsel for the Respondent/Non-
Complainant.
ORDER
PER MR.VINAY KUMAR CHAWLA (PRESIDING MEMBER) 2
1. The brief facts giving rise to this complaint are that complainant is a Readymade Garment Exporter having its registered office at Bombay. A manufacturing unit of the company is situated at Sitapura Industrial Area, Tonk Road, Jaipur. On 29.10.2009 a container of the Indian Oil Corporation exploded followed by massive fire in the Indian Oil Corporation Storage Depot. Fire flames engulfed entire area causing damage to industrial units situated in the vicinity. The complainant's unit also contacted fire and factory building, machinery, stock in process, semi-finished goods got damaged.
2. The company had taken a fire insurance from the opposite party as under:
i) building sum assured at Rs.1.73 Crore;
ii) Machinery and Accessories sum assured at Rs.1.25 Crore;
iii) Stocks sum assured at Rs.10.3 Crores.
3. The company intimated the insurance company of the losses sustained by the factory. The opposite party appointed M/s. 3 Cunningham Lindsey International Private Limited as Surveyor for assessing the losses sustained by the complainant. The Surveyor submitted its final report on 30.06.2010 assessing the loss at Rs.87,46,029/- and after providing for under insurance salvage, excess clause Rs.43,18,306/- were found payable. This amount was paid by the opposite party to the complainant who accepted this amount under protest and filed this complaint on the ground of service deficiency and claim balance Rs.89 lakhs and interest thereon.
4. The complainant alleged that under the policy conditions no amount towards under- insurance of the building can be deducted.
5. The complainant alleged that the Surveyor has not allowed the claim for 4000 pieces of sample garments costing to Rs.16 lakhs which were destroyed in the fire. The complainant further alleges that 2 lakhs numbers of Swatches costing Rs.10 lakhs have not been allowed which were destroyed in the fire.
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6. The complainant has further alleged that as the claim for 3.25 lakhs pieces which were ready for export were destroyed in the fire but they were not allowed. The complainant alleged the deficiency on the part of the opposite party.
7. The opposite party resisted the complaint.
Preliminary objections with regard to pecuniary jurisdiction of this Commission was raised. It was also submitted that the opposite party had assessed the claim and paid the amount to the complainant and further remedy is available with the civil court and not with the consumer foras. It has also raised objections with regard to non-joinder of Karnataka Bank Ltd. who are the financer of the complainant. It was submitted that total replacement value of the building was found at Rs.4.09 Crores whereas the complainant had taken insurance for Rs.1.73 Crore. Thus the building was under insured and ratable proportion of loss will have to be borne by the complainant. It was also submitted that 4000 pieces of sample garments and 2 5 lakhs pieces of Swatches were not covered under the policy. Hence the complaint be dismissed.
8. The complainant has filed an affidavit in support of its complaint a counter affidavit has been filed by the opposite party along with report of Surveyor and other connected voluminous documents connected with this claim viz. bills, claim forms estimate etc.
9. The ld. counsel for the complainant submits that under the policy conditions the amount with regard to under insurance cannot be deducted. He further submitted that Surveyor has not discharged his duty as per the requirement of Code of Conduct. Certain items were disallowed on the ground that opposite party confirmed that these were not covered under the policy. The ld. counsel has submitted that it was not the duty of the Surveyor to interpret the clauses of the policy. He was supposed to assess the losses. The ld. counsel for the opposite party has submitted written submissions.
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10. With regard to pecuniary jurisdiction the ld. counsel submits that the complainant's total claim is for Rs.1,47,03,092/- which exceeds the pecuniary jurisdiction of the State Commission. The second submission is that since the claim has been assessed and paid to the complainant there is no question of any service deficiency. Further remedy if any is available only with the civil court. He submits that this policy is subject to the endorsement No.FC-01- "agreed bank clause" hence the Karnataka Bank is a necessary party. He submits that loss has been assessed on reinstatement value basis. He submits that the expression "market value" as appearing on page 17 of the Surveyor's report was an inadvertent error. It was total reinstatement value of the building and thus the building was under insured and 65.35% amount was deducted under the average clause. He also submitted that 4000 pieces of sample items are not stock items, similarly swatches are not covered unless the coverage has been included. 7 These items were not reflected in the stock statement. It is also submitted that glass shards were found at the time of survey to have fallen on stock that was in process, only upper level of cloth had come in contract with the glass shards and lower layers were intact and hence the Surveyor had rightly disallowed the amount on that count. It is further submitted that not only the building but the stock was also under insurance and under clause 10 of the policy the average clause would apply and deduction has to be made. We have heard both the ld. counsels and have perused the record.
11. This is not in dispute that this policy is for reinstatement value. Under this policy the payment to be made is the cost of reinstatement of the building or the cost of replacement of the machinery. Thus under this policy it is possible to recover the cost of the replacement of the damaged property by a new property of some kind and not depreciated value. If the property is damaged then the cost of 8 making good that property. In ordinary fire policy sum assured is the market value of the property, while in this policy the reinstatement or replacement is the sum insured. In the event of property being destroyed or damaged the basis upon which the amount shall be calculated will be the cost of the replacement or reinstatement of similar property.
12. The memorandum attached along with policy states as follows :
"If at the time of replacement or reinstatement the sum representing the cost which would have been incurred in replacement or reinstatement if the whole of the property covered had been destroyed, exceeds the Sum Insured thereon or at the commencement of any destruction or damage to such property by any of the perils insured against by the policy, then the insured shall be considered as being his own insurer for the excess and shall bear a ratable proportion of the loss accordingly. Each item of the policy (if more than one) to which this this memorandum applies shall be separately subject to the foregoing provision."
Now it is abundantly clear when the whole of the property covered has been destroyed and the reinstatement exceeds the sum insured only in that case the insured shall bear a ratable proportion of loss. 9
13. In this case the property was insured for Rs.1.70 crores and the Surveyor assessed the loss of the damaged portion at Rs.21,39,674/-. We cannot understand where is the question of complainant bearing a ratable portion of loss in this case. The loss assessed does not exceed the sum insured and the company is liable to make good the loss sustained by the building.
14. The question of 4000 pieces of readymade garments kept as samples and 2 lakhs pieces of Swatches have been found not covered within the policy. The Surveyor in its report submits that it was given to understand by the opposite party that these items were not covered. Now who gave this explanation or understanding to the Surveyor is not on record. Whether the Surveyor had made any quarries orally or any written quarries were made and who had replied these quarries is not on record.
15. We are in agreement with the arguments of the ld. counsel for the complainant that Surveyor was not supposed to seek any such clarification of coverage from the 10 company. His duty was to physically inspect and assess the loss. The argument of the ld. counsel that these items were not shown in the statement of stocks cannot be allowed so far as no stock statement has been produced and exhibited in the evidence. Even if it is admitted that this was not shown in the stock statement the Surveyor or the opposite party has not denied that there was no loss to these items. These items were part of the stocks. The sample goods and finished goods are the part of the stocks similarly the Swatches cannot be excluded from stocks. There was no exclusion in the policy. These items ought not to have been disallowed.
16. We may observe that Surveyor's report is not above board and is not fair. The Surveyor was absolutely wrong in applying average clause and deducting major portion of the amount assessed under this clause. Similarly he was not justified to exclude Swatches and samples on the ground of out- 11 side coverage as given to understand by the company.
17. However, with regard to the assessed amount for loss to 3.25 lakhs pieces on which the glass shards had been fallen we do not wish to interfere and explanation given by Surveyor for assessment seems to be reasonable.
18. We are convinced that it is a matter of service deficiency and additional claim of the complainant is not merely accounting matter. When the amounts were deducted from the assessed amount which were found not deductible as per the terms and policy condition is certainly a service deficiency.
19. The objection with regard to the pecuniary jurisdiction is also not tenable. Suits and complaints are valued on the basis of the relief claimed therein. In the present complaint the complainant has prayed for payment of RS.89 lakhs plus interest. Even if a suit would have to be filed it would have been valued at Rs.89 lakhs and not at Rs.1.37 Crore as argued by the ld. 12 counsel. Why would plaintiff pay court fees on 1.37 Crore when in suit relief claim is for Rs.89 lakhs. Same analogy applies in complaints.
20. We think that complaint was properly valued and is within the jurisdiction of this Commission.
21. The financers Karnataka Bank Ltd. is not a necessary party, however as "agreed bank clause" payment of claim shall be made after obtaining NOC from the financers.
22. In view of the above discussions, we allow this complaint and direct the opposite party to pay 65.35% sum deducted by way of under insurance from the amount assessed for damage to building.
23. It is also directed that loss with regard to the sample pieces and Swatches shall also be assessed and paid by the opposite party to the complainant. This amount shall carry interest @ 9% from the date of presentation of complaint and shall be paid within one month from the date of this order. The opposite party is further directed to pay Rs.3 lakhs as compensation 13 for mental agony and harassment. The cost of prosecution at Rs.31,000/- shall also be paid to the complainant.
(MRS. MEENA MEHTA) (VINAY KUMAR CHAWLA)
MEMBER PRESIDING MEMBER
R.C. KHATRI, PS