National Consumer Disputes Redressal
M/S. Pride Coke Pvt. Ltd. vs New India Assurance Co. Ltd. on 21 February, 2024
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CONSUMER CASE NO. 587 OF 2020 1. M/S. PRIDE COKE PVT. LTD. 1ST FLOOR, RAJDEEP COMPLEX, ABOVE HDFC ATM, F.A.ROAD, KUMARPARA, GUWAHATI, ASSAM-781001 ...........Complainant(s) Versus 1. NEW INDIA ASSURANCE CO. LTD. REGD OFFICE AT: NEW INDIA ASSURANCE BUILDING 87, M G ROAD, FORT MUMBAI ,MAHARASHTRA-400001 2. M/S NEW INDIA ASSURANCE CO.LTD ISSUING/ CORPORATE OFFICE AT: KALIKA DAS ROAD, NEAR NUTAN BAZAR, COOCHBEHAR,WEST BENGAL-736101 ...........Opp.Party(s)
BEFORE: HON'BLE MR. BINOY KUMAR,PRESIDING MEMBER HON'BLE MR. JUSTICE SUDIP AHLUWALIA,MEMBER
FOR THE COMPLAINANT : MR. ABHISHEK AWASTHI, ADVOCATE. FOR THE OPP. PARTY : MR. SALIL PAUL, ADVOCATE
MR. SAHIL PAUL, ADVOCATE.
Dated : 21 February 2024 ORDER
JUSTICE SUDIP AHLUWALIA, MEMBER
This Consumer Complaint has been filed by "Pride Coke Pvt. Ltd." against "New India Assurance Co. Ltd." under Section 21(a)(i) of the Consumer Protection Act, 1986, alleging deficiency in service and unfair trade practice on the part of the Opposite Party, and seeking the claimed amount along with other ancillary reliefs.
2. The Complainant owns a Rice Mill superstructure located at 12th Mile, Jorhat, Village - Amber, Kamrup, Assam, comprising of Plinth Foundation valued at Rs. 9,54,15,000/-, erection commissioning valued at Rs. 1,40,02,500/-, stock of rice product valued at Rs. 10,00,00,000/-, stock of rice burn spontaneous combustion CAT-II valued at Rs. 1,00,00,000/-, and a tanker valued at Rs. 2,01,760/-. To mitigate the impact of potential mishaps, the Complainant procured an insurance policy from the Opposite Party. On 18.06.2019, the previous Standard Fire and Special Perils Policy for the Rice Unit (Unit-II Rice Mill) (Policy No. 51230611180100000032) expired, and on 19.06.2019, a new Standard Fire and Special Perils Policy (Policy No. 51230611190100000046) was issued, valid until the midnight of 18.06.2020. On 23.08.2018, a severe flood occurred in Assam, affecting the Rice Unit. Despite the Complainant's efforts to safeguard the stocks during heavy rainfall, the storm drain overflowed, inundating the premises and causing significant damage to the stored goods. The Complainant promptly notified the Opposite Party about the incident through an official letter dated 24.08.2018, highlighting the insurance coverage. Subsequent to an initial survey on 25.08.2018 by Surveyor Mr. Asok Mohanta and a final spot survey on 27.08.2018 by Surveyor Mr. B. R. Poddar, the Complainant has faced delays in receiving the survey report despite numerous requests. The Complainant, through an RTI letter dated 26.02.2020, sought the Survey Report from the Senior Divisional Manager of the Opposite Party. Despite a certificate from the Food Safety Officer confirming the unsuitability of the stocks for human consumption, the Complainant did not get the claim amount even after 20 months from the flood incident. The Complainant, on 27.09.2018, formally requested imprest payment of Rs. 4,00,00,000/- against the claimed amount of Rs. 10,02,25,698/-, but neither the imprest payment, nor the full claim amount was disbursed by the Opposite Party. On 27.12.2018, the Complainant submitted a Claim Bill of Rs. 3,19,27,337/- for the Rice Unit to the Opposite Party. Additionally, an official letter dated 14.10.2019 from the Guwahati Municipal Corporation informed the Opposite Party's Regional Manager about the Complainant's allowance for the disposal of damaged Paddy and Rice at the GMC disposal yard. Despite these efforts, the Opposite Party failed to fulfil its obligations. The Complainant, in a letter dated 04.12.2019, sought assistance from the Insurance Ombudsman, but its complaint was dismissed, since the same fell outside the Ombudsman's pecuniary jurisdiction. The Opposite Party's unjustifiable conduct and failure to disburse the full claim amount, despite the Complainant's compliance with all requirements, have resulted in considerable financial loss and undue expenditure of over Rs. 20.75 lakhs, undermining the Complainant's working capital.
3. Hence, the Complainant approached this Commission and filed the present Complaint. The Complainant has prayed as follows -
"(a) Direct the Respondent to pay the Complainant Rs. 3,19,27,337/- as per the Standard Fire and Special Perils Policy bearing policy no. 51230611190100000032 for the Rice Unit and
(b) Direct the Respondent to pay compensation of Rs. 11 Crore for loss of business and money as mentioned in Schedule I along with compensation for mental pain and agony caused to the Complainant due to unfair trade practice and deficiency in service by the Respondent, and
(c) Direct the Respondent to pay the cost of litigation, and
(d) Pass such Order or Orders as this Hon'ble Commission may deem fit and proper in favour of the Complainant."
4. The Opposite Party filed Reply to resist the present Complaint. It has at the outset denied all material averments made in the Complaint. The Opposite Party has also raised the following objections -
a. That the Complainant is not a consumer within the meaning of Section 2(1)(d) of the Consumer Protection Act, 1986. The Complainant obtained the Policy under this Complaint for commercial purposes i.e for earning profit. Thus, the Complaint deserves to be dismissed;
b. That the present Complaint is barred by pecuniary jurisdiction. The Complainant has claimed Rs. 3,19,27,337/-. The Complainant has further claimed Rs. 11 Crore as compensation for loss of business and for compensation for mental pain and agony. The claim for mental pain and agony is frivolous and not maintainable in the eyes of law;
c. That the Opposite Party on the receipt of the claim intimation about the loss/damage to the plant, machinery and stock on 23.08.2018, immediately appointed its Surveyor Mr. Ashok Mohanta. The said Surveyor submitted his Preliminary Report dated 10.09.2018. Thereafter, the Opposite Party appointed its Final Surveyor Mr. B. R. Poddar, who submitted his Final Survey Report dated 23.02.2019. But the Complainant had proceeded to dump the affected stock worth Rs. 45,26,077/- without taking prior permission from the Opposite Party - Insurer/Final Surveyor. Thus, the Complainant has breached Condition No. 7 of the Policy, and so, the claim is not payable, since the flood affected rice and paddy could also fetch a sizeable salvage value. Therefore by not affording the Opposite Party an opportunity to undertake salvaging operations of the damaged stock, the salvage value, which could have been realized otherwise, could not be factored into the loss assessment;
d. That the Complainant has not even submitted the Audited Provisional Trading and Profit & Loss Account as on the date of loss citing cost constraints, which is a breach of terms and conditions of the Policy;
e. That the issue involved in the instant Complaint is contractual in nature and as such cannot be decided by the Consumer Commission set up under the Consumer Protection Act. The dispute can be adjudicated only in a Civil Suit by following exhaustive trial procedure. The Complaint requires appreciation of evidence in detail and cannot be dealt with in a summary fashion;
f. That the Complainant intentionally destroyed 1353 metric tons of alleged damaged stock in the Municipality Dumping Yard on the very next day of loss i.e. on 25.08.2018 and that too without keeping any weighment record and photographs of the dumped stocks and without the presence of the Opposite Party and the Surveyor. Even the advice of the Preliminary Surveyor was not adhered to by the Complainant, who had clearly stated to the Complainant to preserve the affected stock of all variety until further advice by the Surveyor or the Opposite Party.
5. Affidavit in Evidence has been filed by Mr. Amit Agarwal on behalf of the Complainant; Affidavit in Evidence has been filed by Mr. Mahatma Tudu on behalf of the Opposite Party.
6. Ld. Counsel for Complainant has argued that the Opposite Party has not disputed the occurrence of the inundation of the premises and that damage had been caused; That the Preliminary Survey Report assessed the damage to be Rs. 2,61,25,000/- and the Final Survey Report by Mr. B. R. Poddar assessed the loss to be R. 2,11,33,412/-. Further, an addendum was issued by Mr. Poddar dated 20.06.2019 revising the loss payable to the Complainant to Rs. 2,06,26,814/-, and another second addendum was issued revising the loss to Rs. 1,84,19,577/-; That the Regulation 15 of the IRDAI (Protection of Policy holders' Interests) Regulations, 2017 states that the Interim and Final Survey Report should be furnished to the Insured if he so desires. The regulation stipulates that the Insurer is required to settle the claim within 30 days on receipt of the Final Survey Report and the relevant documents. The regulation further states that in the event of the claim not being settled within 30 days from the date of last document called for from the Insured till actual payment, the Insurer is required to pay interest at a rate of 2% above the Bank Rate; That the stocks were destroyed as per the oral advice of the Senior Food Safety Officer Kamrup Municipality that was subsequently confirmed in writing on 28.08.2018. The damaged stock that was removed was unfit for human consumption as per stringent FSSAI standards and both the Surveyors were fully aware of the removal and disposal of the damaged stock and have reflected the same in their reports; That as per Para 16 of the Reply of the Opposite Party, a sample of the dumped stock was sent by the Insurer to the State Public Health Laboratory, Guwahati and in its certification dated 10.10.2018 it was clearly brought out that the sample was not suitable for human consumption as per FSSAI regulations; That in exceptional circumstances, the damaged items may be destroyed without intimating the Insurance Company in view of the decisions in "Shri Venkata Padmavathi Raw & Boiled Rice Mill v. The New India Assurance Co. Ltd. and Anr, I (1993) CPJ 120 (NC)" and "M/s Isnar Aqua Farms v. United India Insurance Co. Ltd., Civil Appeal No. 1077 of 2013".
7. Ld. Counsel for the Opposite Party has argued that the Opposite Party's officials had advised the Complainant to preserve the rest portion of the affected stock of all variety of Rice products until further advice; That the Complainant had proceeded to dump the damaged stock without taking the prior permission from the Opposite Party or the Final Surveyor thereby breaching Condition No. 7 of the Policy; That it is a settled legal proposition that while construing the terms of a contract of insurance, the words used therein must be given paramount importance, and it is not open for the Court to add, delete or substitute any words. Ld. Counsel for Opposite Party has relied upon the following decisions in support of his contentions - "Industrial Promotion & Investment Corporation of Orissa Ltd. v. New India Assurance Co. Ltd. and Anr., IV (2016) CPJ 11 (SC)", "Export Credit Guarantee Corp. of India Ltd. v. Garg Sons International, II (2013) CPJ 1 (SC)", "Suraj Mal Ram Niwas Oil Mills (P) Ltd. v. United India Insurance Company, IV (2010) CPJ 38 (SC), United India Insurance Co. Ltd. v, Harchand Rai Chandal Lal, IV (2004) CPJ 15 SC", "Deokar Exports Pvt. Ltd. v. New India Assurance Co. Ltd., I (2009) CPJ 6 SC" and "Vikram, Greentech (I) Ltd. v. New India Assurance Co. Ltd, (2009) 5 SCC 599".
8. Heard Ld. Counsel for the parties and perused the material available on record.
9. That there was inundation on the relevant date due to unprecedented rainfall and huge loss suffered by the Insured is not in dispute. The only reason for repudiation, however, is stated to be violation of Clause 7 of the Insurance Policy which is set out as below -
"7. On the happening of loss or damage to any of the property insured by this Policy, the Company may
a) enter and take and keep possession of the building or premises where the loss or damage has happened.
b) take possession of or require to be delivered to it any property of the insured in the building or on the premises at the time of loss or damage.
c) keep possession of any such property and examine, sort, arrange remove or otherwise deal with the same.
d) sell any such property or dispose of the same for account of whom it may Concern.
The powers conferred by this condition shall be exercisable by the Company at any time until notice in writing is given by the insured that he makes no claim under the policy, or if any claim is made, until such claim is finally determined or withdrawn, and the Company shall not by any act done in the exercise or purported exercise of its powers hereunder, incur any liability to the Insured or diminish its rights to reply upon any of the conditions of this policy in answer to any claim.
If the insured or any person on his behalf shall not comply with the requirements of the Company or shall hinder or obstruct the Company, in the exercise of its powers hereunder, all benefits under the policy shall be forfeited.
The Insured shall not in any case be entitled to abandon any property to the Company whether taken possession of by the Company or not."
10. By relying on the aforesaid Clause, it is the contention of the Opposite Party/Insurance Company that the Complainant by destroying/dumping the damaged/decayed rice deprived the Insurance Company of the said property. But a careful reading of the entire text of Clause 7 above, would go to show that there is no explicit condition to the effect that the insured is bound to keep custody of damaged property for any indefinite period whereas the Insurer has arrogated to itself the rights to enter, take, and keep possession of the building or premises or take delivery of any Insured property or to keep possession of any such property, and examine, sort, arrange remove or otherwise deal with the same or to even sell such property or dispose off the same, whereas the insured has been debarred to "abandon any property to the Company whether taken possession of by the Company or not".
11. But, in the present case, it is not a situation simpliciter of the Complainant/Insured, having "abandoned any property to the Company", since here it was constrained to do so on account of the direction of the concerned Authorities/Food Safety Officer who had directed immediate destruction of the damaged paddy.
12. That the paddy was damaged and had become badly rotten was noted by both the Surveyors in their respective reports. The first Surveyor, Mr. Ashok Mohanta, in his report had noted -
"OBSERVATIONS: During the period of survey it was observed that the incident of loss is true and the insured's industry for both the Rice Mill unit & Coke unit including whole industries premises of insured's industries were badly affected by the said incident of flood occurred on 23/14.08.2018 night. On A/c. of Rice Mill unit, it was observed that good quantum of all type of stock and were affected badly and the machineries of the plant which became contacted with the flood water are also affected partially. I took the photographs of the spot and also prepared the inventory of affected/damaged stock of Rice in packed condition, Paddy in packed condition and by-product of rice, which are attached here with. Clay/Lump of mud are found in the paddy godown and different portion in the rice mill areas. A portion of paddy were found in mixed with water and clay in the premises and a portion of loose rice were found in mixed with water and clay in the industries premises. Maximum height of water was found from 1 ½ ft. 4 ½ ft. in the different places of insured's industry, mainly Paddy godown & different stored point of Rice are found badly affected. A portion of Rice and major portion of Rice Bran were found in badly damaged/ rotten condition. Good quantum of stored rice and Paddy became wet/drenched by the flood water. At paddy godown the stored paddy up to a height of three bags and rice of 25 kg packed each, up to a height of five packet were found in affected condition. The flood water became stagnant in the industry premises near about 5 to 5 ½ hour. Thus the loss became increase. All most all the chemicals of water treatment of rice mill industries were found in damaged condition."
13. Thereafter, the Second Surveyor, Mr. B.R. Poddar, noted in his report -
"....Having suffered losses in the manner stated here-in-above and in terms of the nature of merchandise being a generally consumable commodity, the Insured took very active step of shifting the sound stock of paddy from the next day clearly morning itself to a godown situated nearby and resorted to sell stock of rice as far as possible. This was reportedly considered necessary to save the stock in upper stakes to avoid probability of collapse due to burst & loosening of bags kept in lower stakes having badly come in contact of heavy and fast current of inundated (flood) water.
This was considered to be a wise decision towards loss minimization.
Inspection revealed that the whole unit was in a very bad shape since very bad & unbearable smell was coming out from the affected area although the Insured had initiated measures to clear water & mud. However inundated water & mud was still lying inside:
On measurement the inundation level was found above 4'ft. Thus the stock upto a stake of 3 to 5 bags of paddy, rice & other items were badly affected. My confidential enquiry revealed that the speed of flood water was very very high due to the western side boundary wall collapsed since it could not resist the pressure of speedy muddy water stream. This led to tall of staked stock. Substantial stock was blown away with current of water & mud. Local witnesses also confirmed this fact as correct. The Boiler section, Reverse Osmosis (RO) section, Insulation, Panels, turbines, Elevator & Paddy Pit were all found to have been badly affected due to flood water. These all required proper check up by experts before re-starting. Since it was supposed to take time I asked the Insured to take photographs after dismantling of all these affected units in presence of experts. This was complied with.
As stated, with prior verbal permission followed by written order/advise of Food Safety Officer & Guwahati Municipal Corporation Official (copy enclosed), the Insured took steps for destruction of damaged stock (since these started emitting very foul smell) through dumpers at dumping yard of municipality after weighment in a Weigh Bridge nearby. Sizeable quantity of damaged stock had already been destroyed on 26th & also on 27th before I reported for survey of the claim on 27th. Labourers were seen loading affected stock in dumpers for destroying at GMC Dumping Ground & sound stock of paddy in trucks for shifting to nearby godown on backside. Selling of rice by loading into trucks was also noticed. Photographs of the godown where the sound stock of paddy was shifted were clicked by me. Sizeable stock of paddy & rice was also kept at their own godown during and after cleaning operation.
Since the affected items were essential goods for mass consumption, the Insured did not agree to keep these as sound stock. Therefore I did not consider it advisable to press the Insured for manufacturing & to sell the product manufactured therefrom due to inherent risk viz-a-vis their goodwill.
The incident of flood & its aftermath was widely taken care of by Media & broadcasted on Television also.
On spot inspection, in terms of circumstantial evidences, as per my confidential enquiry, nature of merchandise, as per certificate of Guwahati Municipal Corporation, taking into consideration satisfactory moral hazard of the Insured, as per findings of the Prel. Surveyors I am of the considered opinion that in so far as the Insured are concerned, they have suffered genuine losses due to heavy flood/ inundation duly covered as an insured peril under the parameters of the policy held by them.
ABOUT AUTHENTICATION AND ASSESSMENT OF LOSS:
On being satisfied about the moral hazard, after establishing the genuineness of the incident and as per adequacy of the subject matter at the material time I asked the Insured to submit papers and informations relevant to substantiate the claim for loss."
(Emphasis added)
14. The only ground on which the claim was repudiated by the Insurance Company was the supposed non-compliance on the part of the Complainant/Insured of Clause 7 of the Insurance Policy, which allegedly deprived from taking possession of the damaged stock of paddy on account of its dumping by the Complainant. It is not at all the case of the Insurance Company that such damaged/rotten paddy was fit for human consumption, nor it had become so damaged as a consequence of the flooding which occurred on the relevant date is under dispute. On the other hand, the Insurance Company essentially seeks to take a technical defence that by allowing such rotten to be destroyed, instead of being handed over to the Insurer, Clause 7 of the Insurance Company had been violated by the Insured. But as already noted above, there was no explicit condition to the effect that the insured was bound to keep custody of the damaged stock for any indefinite period, on account of which, the applicability of the circumstances which constrained the insured to get rid of the rotten paddy stock cannot be ignored or brushed aside simply to repudiate its genuine claim of damage on such a hyper-technical as also ambiguous interpretation of Clause 7 which has already been re-produced earlier. It needs to be noted that destruction of the rotten paddy stock was not due to the own violation of the insured. Even the Surveyor, Mr. B.R. Poddar in his report had noted that the whole unit of the Insured "was in a very bad shape since very bad & unbearable smell was coming out from the affected area although the Insured had initiated measures to clear water & mud" and such unbearable smell on the date of inspection which was well before the date of destruction of the rotten stock, was on account of such rotten stock remaining in the premises. The insured nevertheless was practically forced to have such rotten stocks to be dumped in compliance of the direction of the concerned Authority/ Food Safety Officer, since retention of such stock, which in any case was unfit for human consumption posed a massive public health hazard. This becomes clear from the letter dated 27.8.2018 issued by the Executive Engineer, Incharge of Conservancy Cell & Garage Branch of the Guwahati Municipal Corporation, which had directed the insured to dispose off the damaged goods i.e. "rotten paddy stock" at the dump site of the GMC, for which the insured was also required to transport the same at its own responsibility, and also to pay a disposal fee of Rs. 300/- per truck after completion of the disposal, which was to be done as directed by the Site Supervisor, and the insured inspite of its written request, was also not permitted to take any photographs of the dumping site of the process of disposal. The letter issued on behalf of the insured on the same date (27.8.2018) also indicates clearly that the Complainant unit had been directed to dump the unhealthy and non-consumable goods at the dump site from 26.8.2018 onwards, and the Complainant had also requested permission to take photographs of the dumping concerned yard, which permission was eventually denied to it. Further, on 1.9.2018, the Complainant/Insured deposited the amount of Rs. 36,300/- regarding disposal of the damaged stock at some dumping site of GMC on 1.9.2018 in compliance of the direction of the Guwahati Municipal Corporation in its earlier letter dated 27.8.2018, and the relevant letter alongwith the original receipt showing deposit of the aforesaid amount was also produced by the insured. Even otherwise, the Senior Food Safety Officer, Kamrup Metropolitan District, Guwahati, under his own seal and signatures on 28.8.2018 had issued the Certificate that paddy, rice, rice bran and broken rice measuring 839, 374, 70 & 60 MT respectively, which had been badly damaged due to heavy rain fall, at the unit of M/s. Pride Coke Pvt. Ltd. Unit-II (Rice Mill), Jorabat, Guwahati-22, had been physically verified on 25.8.2018, and the same having not been found fit for consumption, the Complainant had been directed to destroy the same in a safe place. Even the Police report in this regard was issued by the Officer-in-Charge of Jorabat, Police Out-Post, Guwahati City arising out of GD No. 621 dated 24.8.2018. All these documents are also part of the Final Survey Report of the Surveyor- B.R. Poddar, dated 23.2.2019.
15. The facts and circumstances of the present case are strikingly similar to those in the case of "Sri Venkata Padmavathi Raw & Boiled Rice Mill Vs. The New India Assurance Co. Ltd. & Anr." which was decided by a Larger Bench of this Commission on 10.4.1992, in Original Petition No. 43 of 1991. In that case also, a huge stock of rice and paddy kept in the Complainant's rice Mill had been destroyed following a cyclone, heavy rains and floods during the period between 8th to 13th May, 1990. On 9.5.1990, the Insurance Company had immediately appointed a Surveyor who submitted a Preliminary Report, in which it was mentioned that the cause of damage was cyclone followed by heavy downpour of rain (heavy gale blew off asbestos sheet roofling, the rain water fell directly on the paddy and rice bags and on the rice kept for drying). The stocks got submerged in water, and the entire paddy, rice and broken rice became wet and unsuitable for human consumption, and started emitting a foul smell. On 13.5.1990, the Executive Officer, Gram Panchayat Turangi, had sent a Notice to the Complainant/ Insured that the paddy, rice, bran etc. stocked at the Mill had been wetted by cyclone and flood and were damaged and were emitting foul smell and there was possibility of an attack of cholera spreading to the village, on account of which he wanted the paddy rice etc. to be shifted immediately outside the village. On 29.5.1990, the Executive Officer issued the Certificate about the dumping of the damaged stocks in the Salt Canal from 16.5.1990 onwards. Prior to that on 13.5.1990, the Revenue Divisional Officer, Kakinada, had issued the Certificate of the damage to the paddy and rice stocks. On 15.5.1990, the Health Supervisor, Primary Health Centre, Panduru, had issued a notice that the paddy and the rice stocks wetted in floods and emitting foul smell posing threat to the public health should be shifted therefrom, and he subsequently issued the Certificate of dumping of the damaged stocks on 26.5.1990. It transpires that the Complainant's own Surveyor had assessed the actual loss to be around Rs. 24.50 lakhs, while the Insurance Company had offered to fully and finally settle the claim at Rs. 14.16 lakhs, which amount itself was however withheld by the Insurance Company on account of which the Complainant filed its independent complaint seeking full compensation by contending that it was no longer bound by any agreement of full and final settlement which itself had not been honoured by the Insurer. The Insurance Company in its reply stated that the claim could not be settled on account of the complaint from the Central Bureau of Investigation to the Vigilance Department of the Insurance Company to make investigation in the matter, as they suspected some foul play in the claim, which was found to be false, and was repudiated on 18.9.1991. This Commission found that the contentions and defence raised by the Insurance Company in the aforesaid case were altogether untenable and satisfactory, and consequently allowed the complaint by directing the Insurance Company to pay an amount of Rs. 23.30 lakhs towards the loss sustained by the complainant against the Insured's stocks. The relevant extracts from the order passed in the aforesaid complaint by this Commission, which are very material in the facts and circumstances of the present complaint as well, are set out as below -
"15. It (i.e. the Insurance Company) took the stand that the letter of the complainant insured dated 10th May, 1990 intimating about the loss and for a surveyor being appointed and said to have been sent or delivered by the complainant to the respondent's Branch Manager is forged and fabricated by the complainant, that the respondent received only telephonic communication from the complainant and appointed the first surveyor to undertake preliminary survey. The Opposite Party also stated that the Revenue Divisional Officer had no occasion or official responsibility to inspect the mill premises and to issue the said certificate and the same was got fabricated by the complainant. Further, that the certificates from the Gram Panchayat and from the Health Officer were got issued by the complainant so as to remove the goods alleged to have been damaged by floods in collusion and connivance with the said Gram Panchayat and Health Officer so that the condition of goods and the loss might not be got properly checked, verified and assessed by the surveyors. The Opposite Party Insurance Company averred that this action of the complainant in removing and destroying the damaged goods by throwing them into canal was unjustified, unreasonable and illegal.
16. The investigator appointed in the wake of the communication from C.B.I. by the Insurance Company, Shri Ratna Rao, Retd. Superintendent of Police, to investigate the matter stated on 3rd September, 1991 that there could not be any damage to the roof of the godowns because the core of the cyclone was only at Machilipatnam, when it crossed the coast and affected the coastal parts of Krishna and Guntur Districts, and that Kakinada only experienced heavy rains under the influence of the cyclone inundating certain area and that the recorded highest wind velocity was only 40 kms. as against 150/200 kms. velocity claimed by the complainant. He further stated that there was no falling of trees and collapse of huts in the nearby area that level of floods varied from 2 to 3 feet and therefore only rice bags lying up to this level could have been damaged by flood water; that there was only limited damage in the four godowns of Civil Supplies Corporation identically situated and having rice stocks. He also made other comments casting doubts on the authenticity of the flood damage sustained. The Investigator's finding was that there was no hurricane winds to blow off roof top asbestos sheets, for rain water to pour in from above and drench the stocks from above, and that the dumping of stocks in the canal was an out and out fabrication. The Opposite Party Insurance Company stated that the complainant was trying to play fraud on the respondent company by submitting exaggerated and false details, that the complainant was not entitled to receive any amount of the claim in question.
17. The stand taken by the Insurance Company is incomprehensible to us. What it amounts to is that the certificates of damage issued by the Revenue Divisional Officer, Turangi, the Executive Officer, Gram Panchayat, Panduru, the reports issued by the surveyors appointed by the Insurance Company (four surveyors) are all false. The notice issued by the Executive Officer of Turangi and Health Supervisor of Panduru etc. for removal of decaying stocks which posed health hazards were also false..........
22. ......It appears to the Commission that the communication of 18th April, 1991 from the C.B.I. to the Vigilance Department of the Opposite Party; which was primarily directed against the Officers of the Opposite Party, has been used to make fresh investigation and raise suspicion of collusion and fraud by the insured, and repudiate his claim. The Commission has come to the inescapable conclusion that the Opposite Party has adopted unfair means to defeat the claim of the claimant which had been established by four surveys by the Opposite Party none of which smelled any mischief and fraud. We are, therefore, satisfied that the complaint is bona fide and there has been deficiency in service on the part of the Opposite Party in settling the claim."
16. In the present case, however, the fact that huge damage had occurred to the rice paddy, bran and broken rice stock of the Complainant/Insured on account of the cyclone, after which it had become unfit for human consumption, is not disputed even by the Insurance Company. That the Insured was constrained to have the same destroyed in compliance of the direction of the Food Safety Officer of the Guwahati Municipality in support of which several documents in the form of letters, certificates, etc. and payment receipt for the dumping usage charges have been placed on record, makes the claim even more transparent. There is no allegation whatsoever, much less in any investigation, to the effect that the claim of the Complainant/Insured was false or fake. Consequently, destruction by way of dumping of the entire damaged/rotten stock by the Complainant which it was constrained to do in compliance of the direction of the Competent Authority/Senior Food Safety Officer cannot be a reason for denial of the genuine claim of damages, especially since the relevant Clause 7 of the Insurance Policy under which the Insurance Company seeks to take shelter, nowhere prescribes any time limit for the insured to hold on to the damaged stocks, and is totally silent on a situation as to what the insured can do if directed by the Competent Authorities to dispose off the rotten/damaged stock immediately, as its retention can pose a public health hazard. Consequently, we are of the opinion that repudiation of the Complainant's claim by the Insurance Company was not justified in the present case, in which even otherwise, the damaged/ rotten stock which was unfit for consumption and posed a risk to the public health, could not have fetched any 'salvage value' to the Insurer/Company. We are, consequently, of the opinion that repudiation of the Insurance Claim in the given circumstances was not justified.
17. The damage/loss assessed by the First Surveyor appointed by the Opposite Party/Insurance Company was to the tune of Rs. 2,29,75,000/- while according to the Final Surveyor it was to the tune of Rs. 2,11,33,412/- only, which is based on standard calculations by adopting a proper and authorised methodology, which has not been disputed even by the Insurance Company. We, therefore, allow the complaint by directing the Insurance Company to pay compensation of the reduced amount of Rs. 2,11,33,412/- as assessed by the Final Surveyor, to the Insured/Complainant alongwith interest @ 8% p.a. from the date of filing the original complaint. Such payment shall be made with interest upto date within two months from the date of this Order after which any outstanding amounts shall attract interest @ 10% p.a. till the date of final realisation.
18. Further, litigation costs assessed at Rs. 50,000/- are also awarded to the Complainant.
19. Pending application(s), if any, also stand disposed off as having been rendered infructuous.
............................ BINOY KUMAR PRESIDING MEMBER ......................................J SUDIP AHLUWALIA MEMBER