State Consumer Disputes Redressal Commission
M/S. Athens Labs Limited vs The Oriental Insurance Company Limited ... on 2 August, 2013
BEFORE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM SOLAN, H H.P. STATE CONSUMER DISPUTES REDRESSAL COMMISSION, SHIMLA. Consumer Complaint No.07/2011 Date of Presentation: 06.07.2011 Date of Decision: 02.08.2013 .. M/s. Athens Labs Limited, Head Office, A-33, National Market, Peeragarhi, New Delhi, Manufacturing Plant at Village Rampur Jattan, Nahan Road, Kala Amb, District Sirmaur, H.P., Through its Director-cum-Authorized Signatory, Shri Anil Sharma. .......... Complainant Versus (1) The Oriental Insurance Company Limited, Registered Office, Oriental House, Asaf Ali Road, New Delhi-110 002, Through its Managing Director. (2) The Branch Office, The Oriental Insurance Company Limited, The Mall, Nahan, District Sirmaur, H.P., Through its Branch Manager. .......... Opposite Parties Coram Honble Mr. Justice (Retd.) Surjit Singh, President Honble Mr. Chander Shekhar Sharma, Member Whether approved for reporting?[1] For the Complainant: Mr. Peeyush Verma, Advocate For the Opposite Parties: Mr. V. Ramswaroop, Advocate with Mr. Ameet S. Kanwar, Advocate. O R D E R:
Justice (Retd.) Surjit Singh, President (Oral) Complainant, in this case, is a Private Limited Company and has filed the present complaint against the opposite parties, who are Insurance Company and one of its functionaries, seeking issuance of a direction to them to pay insurance money for the damage caused to its insured building and boundary wall, besides seeking compensation and litigation expenses.
2. Complainant is engaged in manufacture of pharmaceutical products at Kala Amb. It has constructed a building for its factory, which was insured with the opposite parties for the period from 18.10.2007 to 17.10.2008 in the sum of `2,00,00,000/- (`1,70,00,000/- for factory building and `30,00,000/- for boundary wall).
3. According to complainant in the months of July and August 2008, there were continuous heavy rains in the area, where factory building is located and because of such rains, cracks developed in the building, causing huge loss. Opposite parties were apprised of the damage telephonically, on 26.08.2008. But when there was no response, a communication was addressed on 01.09.2008 in response to which a surveyor deputed by opposite parties visited the spot on 03.09.2008. The name of that surveyor was Pankaj Goel. Thereafter a regular Surveyor-cum-Loss Assessor was deputed on 12.01.2009. He sought some information from the complainant, vide letter dated 20.01.2009, which was made available on 17.02.2009 together with various documents, which are marked Annexures A-4 to A-9. The documents included estimate, indicating the amount of money that was required for reconstruction of the building and the money so required, as per that estimate was `3,02,78,000/-. The said Surveyor-cum-Loss Assessor then asked for estimated loss on repair basis.
Accordingly, Annexure A-11 repair-based estimate was submitted.
4. According to the complainant, the Surveyor-cum-Loss Assessor informed its functionaries that the loss had been assessed at `86,00,000/-, when nothing was heard from the opposite parties for quite some time, the complainant addressed a couple of letters to the opposite parties, calling upon them to settle the claim and to pay the insurance money, without loss of further time.
5. Opposite parties repudiated the claim, vide communication dated 12.01.2010. Complainant made a representation to the opposite parties, explaining that the repudiation was not justified and explanation with respect to every ground of repudiation was submitted, in writing, through letter dated 03.12.2010, copy Annexure A-14. Opposite parties did not respond to the aforesaid representation.
Complainant then filed the present complaint on 06.07.2011, seeking issuance of a direction to the opposite parties to pay a sum of `86,00,000/- with interest at the rate of 18% per annum from the date of filing of the complaint, `10,00,000/- as compensation for mental torture, harassment etc. and `75,000/- as litigation expenses.
6. Opposite parties have contested the complaint. Their plea is that complainant being a Company and as such engaged in commercial activity, is not a consumer. On merits, it is stated that while filling in proposal form, the complainant suppressed material fact with regard to previous insurance claim, which it (the complainant) had lodged with another Insurance Company, who had insured the building earlier and thus it had committed breach of a condition of policy, which says that the policy would be voidable, in case some material information is suppressed. Also, it is alleged that building was already damaged and cracks etc. had been filled by cosmetic repairs at the time, when pre-insurance inspection was carried out and this amounted to an act of deception, on the part of complainant. They have justified the repudiation of claim.
7. Parties have tendered in evidence a number of documents, besides tendering affidavits of several persons.
8. We have gone through the entire record and heard learned counsel for the parties.
9. Legal objection raised on behalf of the opposite parties that the complainant is not a consumer, is not sustainable. Undoubtedly, the complainant is a Company and is engaged in commercial activity of manufacturing pharmaceutical items, but the services of insurance availed of by it from the opposite parties was not for any commercial activity. It was for the purpose of insuring the assets of the Company against various perils. It is more than clear from a bare reading of the definition of consumer that only those availers of services have been excluded from the definition of consumer, who avail such services for any commercial purpose. Therefore, the plea that complainant is not a consumer, because it is engaged in commercial activity, in our considered view, cannot be accepted.
10. Coming to the merits of the case, proposal form which had been filled in, on behalf of the complainant at the time of seeking insurance of its assets with the opposite parties, has been relied upon by the opposite parties. The same is Annexure R-3 at page 73 on the record of complaint file. The portion, upon which emphasis is laid, is reproduced below:-
17a) Whether in the past the risk proposed for insurance was declined by any insurer.
No
b) Give details of Past insurances
(i) Claim experience for the past five years:
New India Ass. Manimajra.
CHD 11107/159.
Exp. 20/9/07 Rs. 80 lacs.
Premium Claims Paid Claims O/S 18 Please state distance from the nearest take/reservoir/ river/Sea-
Names and particulars to be given.
Nil 19 Whether any loss occurred due to operation of Storm, Tempest, Floods, Inundation in the last 5 years, if so say loss incurred.
New
11. It is submitted on behalf of the opposite parties that building was insured with National Insurance Company Limited in the year 2006 and a claim had been lodged with the said Insurance Company for damage caused to the building and this fact had been suppressed, while answering poser 17 (b) (i) above. It is not denied by the complainant that earlier the insurance policy had been purchased from National Insurance Company Limited and a claim was also lodged in the year 2006, but its plea is that at that time, building was under construction and damage caused had been set right in the course of construction process and it was thereafter that construction of building completed and the policy that was purchased from the opposite parties was in respect of constructed building.
12. The aforesaid plea of the complainant is admitted to be correct by one of the witnesses of opposite parties, namely Shri R.S. Kalra (OPW-6), whose affidavit was relied upon by the opposite parties and who was cross-examined by the complainant on 11.06.2013. The witness very categorically admitted that claim, which was lodged with National Insurance Company Limited in the year 2006, was in respect of the building, in question, but at that time the building was under construction, while the insurance policy that was purchased from the opposite parties, was in respect of completed structure. Claim was lodged with National Insurance Company Limited in the year 2006.
13. During the course of investigation of claim of the complainant, surveyors engaged by the opposite parties recorded statements of some of the workers, who were employed in the construction of the building.
Copies of those statements have been tendered in evidence. The same are Annexures R-24 to R-32. All these witnesses stated that cracks in the building appeared, after the construction had been completed and two of them stated that cracks appeared in the year 2006, one of them has stated that cracks appeared in the year 2007 and three of them have stated that cracks appeared in the year 2008, or say the same year in which the building after insurance with the opposite parties, was damaged. Case of the complainant is that cracks had developed in the year 2008 during rainy season.
14. Before accepting the proposal for insurance, opposite parties had got the building inspected from one S.K. Agrawal, Surveyor and Loss Assessor and the said surveyor reported that factory was well built and fit for insurance, as is made out from Annexure R-5(b), which the opposite parties wrote to him on 23.12.2009. Through the aforesaid letter Annexure R-5(b) said surveyor S.K. Agrawal was asked to explain about his report, because after the loss was reported by the complainant and claim was lodged, investigation was made and it was revealed that earlier also a claim with respect to the same building had been lodged with National Insurance Company Limited, in the year 2006. The said surveyor, vide Annexure R-5(a), which he wrote to opposite parties, within three days of the date of Annexure R-5(b), informed them that it was quite likely that damaged portion of the building was not shown to him or that the complainant might have covered the cracks by patch work.
15. As already noticed damage which was reported in the year 2006 and with respect to which claim had been lodged with National Insurance Company Limited had taken place, when the building was under construction. Damage would not have been allowed to persist when the building was still under construction and the presumption is that the same must have been set right before the roof was laid and construction was completed. In any case, there is no technical evidence indicating that, damage which had been caused in the year 2006, when the building was still under construction, was allowed to remain and construction was completed.
16. No material has been brought on record on behalf of the opposite parties, showing that damage with respect to which claim had been lodged in the year 2006 was similar to the damage, which was noticed by its surveyor, who visited the spot in September, 2008, in response to report of damage lodged by the complainant.
17. Inspection was carried out by the surveyor in September, 2008 in the company of a Structural Consultant from the Department of Civil Engineering, Government Polytechnic Nilokheri. A separate report was given by the said Consultant, which forms part of report of the surveyor. Report of surveyor is Annexure R-19 and Structural Consultants report is Annexure-VIII to the said report Annexure R-19. The Structural Consultant in his report did not point out that some earlier cracks, or damage to the structure had been cosmetically repaired, or any such damage or cracks existed, prior to the damage, which were noticed during the course of his inspection. The report, thus, gives credence to the complainants plea that damage which was caused to the building, when it was under construction in the year 2006, had been set right before the construction was completed.
18. Now, coming to the cause of damage for which claim was lodged by the complainant with the opposite parties, the surveyor in his report, Annexure R-19 as also the Structural Consultant associated by him, in his report, Annexure-VIII to Annexure R-19 stated that the causes were (a) most probably piping effect on account of existence of a pond in the vicinity, which had damaged the adjoining building also; (b) usage of lower grade cement and high spacing between footing and tie beam; and (c) use of poor material and inadequate design. The net loss was assessed by the surveyor at `85,29,171/- per report, Annexure R-19. Thereafter an addendum to the report was submitted by the surveyor, which is marked Annexure R-22 and as per this addendum, the net amount was worked out at `79,07,909/-. From this addendum, it is more than clear that the loss that has been worked out, takes into account the factors of use of poor material and inadequate designing.
19. In the letter of repudiation, Annexure R-1, another ground raised by the opposite parties is that the building was constructed upon a made up ground and, therefore, the strata was loose. The plea cannot be accepted, because the Surveyor-cum-Loss Assessor in his report, Annexure R-19, very categorically reported in the pre-mishap status sub head, copied from geotechnical investigation report dated 16th August, 2005, that;
(a) the site under investigation was almost a flat land.
(b) no water table was encountered upto 5 mtr. depth from natural ground level.
(c) field moisture content was on higher side ranging between 8.3 & 17.2%, higher moisture content shows that the strata was quite pervious.
(d) the strata is quite safe for concrete & reinforcement.
(e) on the basis of all above, laboratory tests & field investigations, a net safe bearing capacity of 7.0 Ton/SQM for Square Footing & 6.0 Ton/SQM for Strip Footing at 2.0 Mtr. depth from natural ground level is recommended for designing the foundations.
20. The surveyor reported that the foundations were designed on strip footing. The depth was four metres, as against two metres recommended by the Geotechnical Investigator, thus, providing better structural stability and reinforcement designing and spacing indicated that the net bearing capacity of foundations was more than six tonnes/SQM. In view of the fact that site was found to be a flat land and the strata was quite safe for concrete and reinforcement by Geotechnical Investigator, opposite parties cannot be heard to say that structure stood on a made up ground.
This is particularly so, when there is absolutely no evidence to this effect and their (opposite parties) own evidence negates the plea as demonstrated, hereinabove.
21. In view of what we have discussed and observed, hereinabove, complaint is allowed and the opposite parties are directed to pay `79,07,909/-, equivalent to net amount worked out by the surveyor in an addendum, Annexure R-22 to report Annexure R-19, with interest at the rate of 9% per annum from the date of filing of the complaint, i.e. 06.07.2011 to the date of payment of the aforesaid amount of money and also to pay `1,00,000/- as compensation and `20,000/- as litigation expenses. The order be complied with within one month from today.
22. A copy of this order be sent to each of the parties, free of cost, as per Rules.
(Justice Surjit Singh) President (Chander Shekhar Sharma) Member August 2, 2013 *dinesh* [1] Whether Reporters of the local papers may be allowed to see the order?