National Consumer Disputes Redressal
Manmandir Synthetics Pvt. Ltd. vs New India Assurance Co. Ltd. on 27 April, 2005
Equivalent citations: IV(2005)CPJ6(NC)
ORDER
B.K. Taimni, Member
1. Complainant, Manmandir Synthetics Pvt. Ltd., has filed this complaint alleging deficiency in service on the part of the opposite party, New India Assurance Co. Ltd.
2. Undisputed facts of the case are that the complainant had a live and existing policy covering risk of fire etc. for a period between 31.12.1998 to 30.12.1999. There is also no dispute that there was a fire episode on the night of 14th and 15th January, 1999 resulting in loss of stock of yarn as also 'grey' material. Upon the episode of fire, fire brigade was called and it helped to the extent it could to extinguish the fire. But as per the complainant himself, the Fire Brigade authority stated, "it is difficult to control the fire and if water is thrown, the ceiling of building may fall on looms...." The matter was reported to the Insurance Company as also to the Police. Consequent upon the episode, claim form was also submitted.
3. Upon receiving intimation of the fire, the Surveyor was appointed by the opposite party, who after primary survey, suggested to the opposite party to appoint an Investigator' who was appointed and subsequently the Surveyor was provided with whatever material/information was sought from complainant, yet the claim was not getting settled despite repeated requests orally as well as in writing. It is in these circumstances, this complaint has been filed praying for compensation of Rs. 27,00,000/- being the cost of material being loss in fire along with interest @ 18% and Rs. 2,00,000/- for trauma and torture.
4. Written version was filed by the opposite party after a gap of almost 1 1/2 years. Besides raising primary objections on the point of such a complaint being dealt by Consumer Forum in view of its complicated nature and non-joinder of parties, i.e., making the bank with which the goods were hypothecated by the party, main ground taken in the written version is even though the Surveyor has assessed the loss at Rs. 8,48,500/- but it was subject to terms and conditions of the policy and the Surveyor had left it to the discretion of the opposite party to decide on admissibility of claim thereunder. As per the opposite party, the claim after examination within organisation was found to be not (*sic matter) under the policy, (2) the room in question where the stocks were kept could not be termed as a godown, (3) the complainant had not exercised reasonable care in using the room in question for cooking purpose as well, and (4) the fire brigade report showed that the building was not of first class construction as held out by the complainant in the proposal form. Finally, their plea is at best the opposite party is not liable to pay as compensation in excess of the sum of Rs. 8,48,500/- as assessed by the Surveyor. A copy of the Investigator Report as also the Surveyor Report was also attached.
5. Rejoinder to this was filed as late as 15th April, 2005, whereas evidence by way of affidavits had been filed by both the parties earlier than filing the rejoinder, which was filed on the direction of this Commission.
6. We heard the learned Counsel for both the parties at considerable length. There is no disputing the fact that the fire episode had taken place on 15.1.1999 and the claim was repudiated by the O.P. vide its letter dated 7.5.2001, even when the report of the Surveyor is dated 22.3.2000.
7. We reproduce below the letter of repudiation in full:
"We refer to the above claim and the document submitted by you for settlement of your alleged claim do not inspire confidence on us, regarding the genuineness of the claim.
Under the circumstances, we closed your file as "NO CLAIM for the following reasons:
1. In the proposal form you are clearly intended to insure "Stock & Stock in process of yarn/grey". The total coverage is given for stock & stock in process of the value of Rs. 30,00,000 / - only. The stock in godown is totally blank. So the stock in godown is not covered in the policy.
2. The place of fire is a room having 100 feet height only. So, where the stock is said to be stored is a room situated at first floor and that it cannot be termed as godown. It is very much important to note that in the same room cooking was also done.
3. In the proposal form the said property is described by you as "1st Class Construction" whereas in the letter written by you on 28.1.1999 at the end of third para, it is written that "after viewing the situation Fire Brigade informed that it is difficult to control the fire and if water is thrown the ceiling of the building may fall on looms. The said statement clearly reveals the bad condition of the said building. In short you have made false statement in proposal form regarding the condition of the said building."
8. We like to deal with these 3 grounds of repudiation one by one.
9. The first ground of repudiation is that the "stock in godown is not covered by the Policy".
10. We have seen the policy as also the written version filed by the opposite party. In the written version in para 1 itself, the opposite party clearly states that the opposite party thus issued a fire policy 'C' insurance cover in favour of the complainant in respect of stocks and stock in process in their factory and godown and plot No. 209-6, Mandvi Road, Village Karnng, Taluk Mandvi, District Surat, Gujarat, for a sum of Rs. 30,00,0007- for the period from 31.12.1998 to 30.12.1999. [Emphasis supplied]
11. We have also seen the Policy issued; two entries in the Policy are important. The word what has insured is "including of Clause I/II of which height/floor exceeds, does not exceed 22 metres in height kept as 'Factory and Godown". In the Policy it is clear that under the heading description of property insured entry is "stock and stock in process for Rs. 30,00,000/-." The harmonious reading of this is that what was insured was -Stock and Stock-in-process in the Factory and Godown of the insured at the address given in the Policy which is the same as given in the written version filed by the opposite party. In our view, no further discussion is required as in the written version the opposite party has themselves admitted that the stock in the godown was insured. Hence, we see no merits in this ground of repudiation which we find totally misconceived.
12. The second ground of repudiation is "the room situated at first floor, cannot be termed as godown. It is very much important to note that in the same room cooking was also done". We are surprised at the imaginativeness and a perverse creativity on the part of the opposite party to invent ground for repudiation. What was insured was a property in factory and godown as per the terms of the Policy, whether it be measuring 10 feet in height or its measuring 100 feet height cannot be made a ground now to repudiate the claim. If they are so concerned about the dimensions of the godown then they should have exercised this discretion before issuing the Policy. There is no reference to this in the proposal form or in the Policy issued. As far as second part of this ground of repudiation is concerned, this is not borne out by any material on record. We have very carefully gone through the report of the Investigator, which makes a reference to this, i.e., cooking in the room, under the column 'Cause of Fire' including 'Conclusion' which is important hence reproduced below:
"Cause of Fire During my investigation, Mr. Chandmal told that fire may be due to short circuit but I don't agree with Mr. Chandmal statement because wiring is at the height of 100 feet and there was no electric short circuit mark on the wall.
Second thing that came into my notice during my investigation that there were some half burning wood logs in the left side of the godown. I have examined for the finger prints but there was no finger print available on the logs. This may be the reason for cause of fire."
13. The Surveyor has also taken up the thread from there and made a passing reference on this point. The very fact that no finger print was seen on the logs nor any one examined, nor any affidavit evidence produced, we are unable to sustain the secondary ground of repudiation as well especially when both the Surveyor and Investigator have clearly and categoric-lily stated that the 'origin of fire is unknown'. The ground of repudiation should be only which is supported by any firm evidence. The Insurers should not forget that they are dealing with the lives and livelihood of very large number of people.
14. The third ground of repudiation is that the building was not of first class construction referred to in the proposal form for which they heavily relied upon the report of Fire Brigade which stated "after reviewing the situation fire brigade informed that it is difficult to control the fire and if the water is thrown, the ceiling of the building may fall on looms. There is no finding returned either by the Surveyor or by the Investigator on this point that this was not first class construction. In the rejoinder filed by the complainant, he clearly makes two points, (1) that despite the temperature rising very high-a fact admitted by the Investigator and the Surveyor-yet, walls did not crack, itself is a proof that it was the first class construction. In the affidavit filed by the complainant, there is a certificate issued by Raman Lal Dave & Sons, Architects, Interior Designers and Valuers giving the details of the construction and material used, which states that the first floor building is RCC frame construction with RCC columns beam and slab and the other details are also given in this affidavit, which goes unrebutted by any other affidavit or material brought on record by the opposite parties, that it was not a first class construction. Nowhere any report of the Fire Brigade or any other evidence has been brought on record by O.Ps., in support of this point whereas, the complainant has produced the certificate from an architect, in view of which we are unable to agree with this ground of repudiation as well.
15. The above discussion also covers the four grounds of repudiation mentioned in the written version filed by the opposite party.
16. A passing reference was also made by the learned Counsel for the opposite party about the genuineness of the claim. He was candid enough to admit that the episode of fire cannot be denied but the loss of stock of yarn and grey is highly exaggerated and is not supported by the material on record. It was alleged by him that the claim is partly fraudulent, i.e., with regard to the claim of loss of 'grey', hence in view of condition 8 of the Policy, the repudiation was in order. We see some inherent contradiction in the conclusion arrived at by the Investigator in which he states that the total kilogram of grey cloth was 5,736.9 kgs. and the total number of boxes containing yarn was 578 boxes and goes to state that the capacity of the area in which boxes can be placed has been estimated at 1300. Two points go against the report of the Investigator-one that admittedly, against the place hx 1300 boxes 578 boxes contained yarn, extent to loss in this regard is placed at 14,432 kgs. by :he investigator but none for the 'Grey'. No grounu ..as been shown as to why and how has he arrived at this conclusion? Report is silent on the point. In a worst case, scenario what the Investigator states is that the 'damage of grey of 6 tonne is not at all possible'. Alright, but loss to a lesser quantity, could have been possible, thus, negating the plea taken by the learned Counsel for the OP that under condition 8 since part of the claim relating to grey was fraudulent, hence the OP was justified in repudiating the claim. On account of the above discussion, as well as not finding this ground in the letter of repudiation, we see no merit in the plea taken of applicability of condition 8 of the terms of the policy. Learned Counsel for the opposite party relies upon the second line of letter of repudiation "regarding the genuineness of the claim. The plea taken before us and the ground for repudiation even at the point of genuineness of the claim, in our view, do not match. Even the Surveyor and the Investigator have not denied the loss of yarn. In their letter of repudiation, OP has no where mentioned that the claim in respect of grey is not genuine. They left it as vague as their thinking is. They cannot be allowed to take advantage of their vacillating and uncertain disposition.
17. Having dealt with the grounds of repudiation as also the stand taken by the opposite party in its written version and having found no merit in these, we now go to the question of quantification of compensation.
18. As far as the quantification of the compensation is concerned, we have got 3 set of figures, one is the claim of Rs. 27,00,000 /-made by the complainant in its complaint. (In this regard, we like to mention that there is a reference by OP based on the correspondence between the Surveyor and the complainant that complainant was agreeable to reduce the claim to Rs. 14,00,0007- as per letter dated 11.3.1999 by the Surveyor but this has been completely repudiated by the complainant in its letter dated 26.3.1999 addressed to the Surveyor). The second figure in terms of quantity is 14,432 kgs. of yarn and twisting yarn and 3rd figure of the Surveyor who has assessed the loss based on 8,500 kgs. of yarn valued @ Rs. 101/kg.
19. As per the report of the Surveyor, he has taken pains to explain at page 44 of the paper book, the ground for arriving at the figure of loss 8500 kgs. This report became available to the complainant in mid 2001. All the details of break-up given by the Surveyor has not been dealt in by the complainant in the rejoinder filed by him as old as 16th April, 2005. The only ground taken in para 6 of the rejoinder is that it was the first Surveyor report which as per law should be allowed, which in this case was of that of the Investigator, who has assessed the loss of yarn of 14,432 kgs. We are not impressed with this. As held severally, the report of the Surveyor is an important document and there must be sufficient grounds to disagree with the finding of the Surveyor. In the absence of anything to the contrary pointed out that brought to our notice by the complainant, we are in no position to arrive at any different figure than the one arrived at by the Surveyor, especially, when under the Head 'Stock and Stock-in-process' the figure of 14,432 kgs. (same as arrived at by the Investigator) has been taken as the starting point. It is from this that certain stock has been taken of on account of Beam stocks, yarn on looms, on twisting machine as also on< warping machine. This point has not been rebutted or refuted by the complainant, hence we are left with no option but to agree with the loss assessed by the Surveyor.
20. Now, coming to the price at which the stock has been valued. Admittedly, as per Surveyor report, the rate per kg. works cut to Rs. 128/kg. which is taken on weight average basis from the bank statement. Whereas combining weighted average basis as also prevailing price, the Surveyor arrived at a figure of Rs. 101/kg. As per rejoinder filed by the complainant, they have given the purchase price as also the sale price. As per our calculation, the purchase made in November 1998, average price comes to Rs. 131/kg. and this figure has not been rebutted by the OP in any manner. Insurer has to indemnify the loss sustained by the insured. As per statement brought on record in the rejoinder filed by the complainant as also weighted average price, arrived at by the Surveyor at Rs. 128/kg. we could have given Rs. 128/kg. but in the rejoinder filed by the complainant, the complainant has placed the price at Rs. 125/kg. Thus, taking the price at Rs. 125/kg. and loss of 8500 kg. of Stock and Stock-in-process, as estimated by the Surveyor, the complainant shall be entitled to Rs. 10,62,500/-, which the opposite party is directed to pay along with interest @ 10% p.a. from two months after the Surveyor's report till the date of payment, which shall be made within 6 weeks of passing of this order, failing which the rate of interest shall go to 12% p.a. The complainant shall also be entitled to a cost which we fix at Rs. 10,000/-.
21. We refrain from grant of additional compensation for unnecessarily delaying the issue of repudiation letter for over two years from the date of fire incident and over one year from the date of receipt of Surveyor's report.
22. The complaint is allowed in above terms.