State Consumer Disputes Redressal Commission
Jsk Steels Private Limited vs The United India Insurance Company ... on 11 February, 2014
FIRST ADDITIONAL BENCH
STATE CONSUMER DISPUTES REDRESSAL COMMISSION,
PUNJAB,
DAKSHIN MARG, SECTOR 37-A, CHANDIGARH.
Consumer Complaint No.20 of 2011.
Date of Institution: 08.03.2011.
Date of Decision : 11.02.2014.
JSK Steels Private Limited, through its duly Authorized Signatory, Plot
No.185, Industrial Area, Phase-I, Chandigarh, UT-160 002.
....Complainant.
Versus
The United India Insurance Company Limited, through its Divisional
Manager, Divisional Office-II, above Allahabad Bank, near Clock Tower,
Katchery Road, Post Box No.98, Ludhiana-141 008, Punjab.
....Opposite Party.
Consumer Complaint U/s 17 of the
Consumer Protection Act, 1986.
Before:-
Shri Inderjit Kaushik, Presiding Judicial Member.
Shri Jasbir Singh Gill, Member.
.................................................... Present:- Sh. N.P. Sharma, Advocate, counsel for the complainant.
Sh. D.P. Gupta, Advocate, counsel for the Opposite Party.
........................................................................... Consumer Complaint No.20 of 2011 2 INDERJIT KAUSHIK, PRESIDING JUDICIAL MEMBER JSK Steels Private, Plot No.185, Industrial Area, Phase-I, Chandigarh, complainant (hereinafter called "the complainant") has filed the present complaint U/s 17 of the Consumer Protection Act, 1986, through its duly Authorized Signatory.
2. Briefly stated, the facts are that the complainant got insured its Engineering Workshop, including structural steel fabricators, sheet metal fabricators, hot/cold rolling, pipe extruding, stamping, pressing, forging mills, metal smelting, foundries, galvanizing works, metal extraction, ore pressing (other than Aluminum, copper, zinc) with its detailed risk from the opposite party vide 'Standard Fire & Special Perils Policy' bearing No.110201/11/07/11/00000233 for the period 24.08.2007 to 23.08.2008 for a total risk coverage of Rs.5,50,00,000/- (Rupees Five Crores and Fifty Lacs only) and paid a premium of Rs.46,350/-. No claim was lodged during the currency of the said policy and the same was renewed on 26.08.2008 for the period 26.08.2008 to 25.08.2009 vide policy No.200800/11/08/11/00000520. However, while assuming the risk under the said policy coverage without any fresh proposal form, the opposite party enhanced the description of risk from the earlier description to the present being "On Entire Plant & Machinery" and the opposite party insured the plant and machinery for the risk coverage value of Rs.6,47,00,000/- and a consolidated premium of Rs.46,997/- was paid.
3. The enhancement of the risk coverage from the earlier Rs.5.50 Crores to Rs.6.47 Crores was occasioned on account of the addition of 35 Metric Ton Oil Fired Bell Type Furnace which was purchased by the complainant on 12.03.2008 for a sum of Rs.32,19,317-00 vide Retail Invoice No.389. The said furnace was Consumer Complaint No.20 of 2011 3 received by the complainant at Chandigarh on 13.03.2008 and was installed and made fully functional well before the commencement of the insurance policy in question.
4. On 16.04.2009 at about 8.15 A.M., a major fire broke out in the furnace area and a DDR was lodged at Illaqa Police Station, bearing No.10 on 16.04.2009 and the Fire Occurrence Report dated 09.07.2009 was issued by the Chief Fire Officer, Municipal Corporation, Chandigarh. A written intimation was given to the opposite party on the same day. The opposite party appointed M/s N. Kumar Surveyor Private Limited of Chandigarh for the spot survey as well as for final survey and the said surveyor sent a letter dated 04.05.2009 to the complainant, seeking details qua the various assets and firm constitution, in order to assess the loss. The surveyor submitted the report dated 09.07.2009. The surveyor in the report assessed the loss to the tune of Rs.30,51,849/- after adjusting the salvage as well as depreciation and compulsory excess clause deductions. The surveyor in the report mentioned that the furnace was not covered under the policy and the claim was not payable. The opposite party repudiated the claim vide letter dated 21.07.2009 on the ground that the loss was not covered and the claim was considered as "No Claim".
5. On receipt of letter of repudiation, the complainant wrote a number of letters dated 27.07.2009, 02.12.2009, 22.12.2009 and 15.02.2010 to the opposite party, but the opposite party refused to pay any claim. The act of the opposite party amounts to unfair trade practice and deficiency in service.
6. It was prayed that the opposite party may be directed to make the payment of the loss assessed by the surveyor, being a sum of Rs.30,51, 849/- alongwith interests @ 15% p.a. w.e.f. 08.08.2009 till Consumer Complaint No.20 of 2011 4 realization, to pay Rs.10.00 lacs as compensation for harassment and Rs.33,000/- as costs of litigation, including Rs.2,000/- paid alongwith the complaint.
7. In the written version filed on behalf of the opposite party, it was submitted that the complainant earlier got insurance cover from Branch No.II, Sector-35, Chandigarh and that policy was for the period 24.08.2007 to 23.08.2008 and the risk coverage was Rs.5.50 Crores. The said policy was a reinstatement policy. Reinstatement policy means that the company undertakes to pay the reinstated value of the machinery for the damaged property i.e. market value of such new machinery on the date of loss. It was admitted that the said policy was renewed by the office at Ludhiana and the reinstatement value of the risk was proposed at Rs.6.47 Crores and the premium for the same was paid. The complainant proposed that due to depreciation of the price of machinery insured, the reinstatement price of the machinery and other items insured under the earlier policy would be now to the tune of Rs.6.47 Crores instead of Rs.5.50 Crores. It was a renewal of earlier policy for all purposes. No additional item for covering the risk was included. If any new item was to be added, then it would not have renewed the earlier policy. It was further submitted that increase of sum insured from Rs.5.50 Crores to Rs.6.47 Crores was not on account of addition of 34 Metric Ton Oil Fired Bell Type Furnace alleged to have been purchased on 12.03.2008. As per the complainant, the price of the said furnace was Rs.32,19,307/- and if the intention of the party was to cover the risk of the said furnace, then the said amount would have been added to Rs.5.50 Crores. When the said furnace was purchased on 12.03.2008, the earlier policy of sum assured of Rs.5.50 Crores was in operation. The complainant could have got an endorsement in the Consumer Complaint No.20 of 2011 5 said policy on the date of purchase of said furnace by adding coverage of the said furnace in the said policy, but the endorsement was not got done. It shows that the complainant never wanted to get risk of the said furnace covered in the insurance policy. It was admitted that M/s N. Kumar Surveyor Private limited was appointed for assessment of the loss. The said surveyor sought documents and information from the complainant for the assessment of the los and pointed out in the report that the risk of the furnace was not covered under the insurance cover. The surveyor assessed the loss to the furnace to the tune of Rs.30,15,849/-, but the same was not covered and he recommended the liability of the company as Nil. On receipt of the letters, the complainant was informed that the claim has already been considered and found not payable. The policy of insurance and the cover note issued to the complainant are to be read together. In the description of property, the said furnace was not included. The present policy was only a renewal of earlier policy. Other allegations were denied and it was prayed that the complaint may be dismissed with costs.
8. Learned counsel for the complainant tendered affidavit of Sh. M.L. Aggarwal, Authorized Signatory & General Manager of the complainant as Ex.CA alongwith documents Ex.C-1 to Ex.C-15.
9. Learned counsel for the opposite party tendered affidavit of Sh. Rajender Arora, Manager of the opposite party as Ex.RW-A alongwith documents Ex.R-1, Ex.R-1/A and Ex.R-2.
10. We have heard the arguments advanced by the learned counsel for the parties and have perused the entire record minutely.
11. Learned counsel for the complainant argued that the first policy Ex.C-3 was taken and the period of insurance was from 24.08.2007 to 23.08.2008 and the description of the risk was mentioned Consumer Complaint No.20 of 2011 6 in the same. The said policy was for Rs.5.50 Crores. No claim under that policy was taken. Thereafter, the policy Ex.C-4 was taken which covered the period from 26.08.2008 to 25.08.2009 and the sum assured was Rs.6.47 Crores and the description of the risk was on "Entire Plant & Machinery". Vide invoice Ex.C-5 dated 12.03.2008, Oil Fire Bell Type Furnace was purchased for a sum of Rs.32,19,317/- and at the time of taking the present policy, the said furnace was also included. There was no proposal form filled when the policy was again taken and the fire broke out in the premises and DDR Ex.C-6 was lodged. Ex.C-7 is the Fire Occurrence Report. The intimation was immediately given and the opposite party appointed the surveyor, who gave the report Ex.C-11 dated 09.07.2009 and assessed the loss to the tune of Rs.30,51,849, but the claim was repudiated vide letter Ex.C-12 dated 21.01.2009 by the opposite party on the report that the said furnace is not covered. It has been contended that the said furnace was included in the insured risk and all Plant & Machinery was insured. It has been argued that the claim has been wrongly repudiated and the opposite party is liable to pay the same.
12. On the other hand, learned counsel for the opposite party has contended that as per cover note Ex.R-1/A, the description of the property was given and the furnace was not covered in it. The furnace was purchased in March, 2008 and the value was around Rs.32.00 lacs, but this value was not added and the reinstatement value means the value of the machinery prevailing in the market on the date of loss. The insurance amount was enhanced, considering the market value of the same machinery which increased in the next year. The cover note Ex.R-2 proves that the previous machinery was covered and the policy Consumer Complaint No.20 of 2011 7 was only renewed. The surveyor has rightly pointed out that the furnace was not covered and the complaint deserves to be dismissed.
13. We have considered the rival contentions of the parties and have thoroughly scrutinized the entire record and other material placed on the file.
14. The important question to be decided in the present case is whether at the time of renewal of insurance, 35 Metric Ton Oil Fired Bell Type Furnace (in short "Furnace") was covered, or not?
15. Admittedly, the complainant has taken the Standard Fire & Special Perils Policy for the period 24.08.2007 to 23.08.2008, covering the risk of Rs.5.50 Crores and the same is Ex.C-3 and the risk covered was mentioned and perusal of the same shows that different parts were covered, including the Engineering Workshop. The second policy Ex.C4 was taken by the complainant, known as "Standard Fire & Special Perils Policy" and the period of insurance was from 26.08.2008 to 25.08.2009 and the risk covered were the Engineering Workshop and other parts and under the head "Description of Risk", it was mentioned as follows:-
"On Entire Plant and Machinery."
16. The fire broke out and the surveyor was appointed and the surveyor assessed the loss vide survey report Ex.C-11 to the tune of Rs.30,51,849/-, but recommended 'Nil' liability on the grounds that the loss is confined to annealing furnace No.2 only, but the risk covered is in respect of tube mill only. The opposite party has placed on file the Fire Cover Note Ex.R-1/A of the first policy and as stated above in this, the various parts insured were mentioned. The fire cover note Ex.R-2 of the present policy shows that it is a renewal policy. The cover note Consumer Complaint No.20 of 2011 8 cannot override the provisions mentioned in the policy. The argument of the counsel for the opposite party that the amount was enhanced from Rs.5.50 Crores to Rs.6.47 Crores as per the reinstatement value, is not tenable because the furnace was purchased and installed during the subsistence of the previous policy and at the time of taking the policy Ex.C-4, the Description of Risk was "On Entire Plant & Machinery"
which itself proves that the furnace was included in the 'Entire Plant and Machinery'. Under the head 'Description of Property is given as "On Entire Plant & Machinery", including parts and/or, all other machinery connected with the insured trade as per previous cover note whilst fitted and/or installed at the above address being their own property and/or held on trust and/or on commission basis and/or on joint A/C.
17. Thus, from the description, it is clear that whatever was installed being owner or held on trust or on commission basis or on joint account was also covered. The furnace was purchased by the complainant and the complainant was its owner and, as such, it was covered and the sum assured was enhanced from Rs.5.50 Crores to Rs.6.47 Crores and for that, extra premium was paid. Even otherwise, a prudent man, such like complainant, who has taken the insurance policy for huge amount of Rs.5.50 Crores and got the furnace installed during the subsistence of the previous policy, why will not get the same insured in the next policy. Entire plant and machinery denotes that the furnace was insured and for that reason, the amount was enhanced from Rs.5.50 Crores to Rs.6.47 Crores.
18. The opposite party insurance company has just relied upon the report of the surveyor and repudiated the claim vide letter Ex.C-12, just relying upon the concluding lines of the report of the surveyor. The repudiation of the claim by the opposite party insurance company was Consumer Complaint No.20 of 2011 9 not, at all, justified as the furnace was also covered under the insurance policy and the opposite party insurance company is liable to pay the damages to the complainant as per the report of the surveyor. The surveyor has declared the 'Net Adjusted Damages' after detailed discussion in its report, to the extent of Rs.30,51,849/- after making various deductions and the opposite party insurance company is liable to pay this amount to the complainant.
19. Accordingly, the complaint is accepted and the opposite party insurance company is directed to pay Rs.30,51,849/- to the complainant alongwith interest @ 7.5% Per Annum from the date of repudiation i.e. 21.07.2009 till realization and to pay Rs.20,000/- as litigation expenses.
20. The opposite party insurance company shall pay the entire amount to the complainant within 45 days of the receipt of copy of the order.
21. The arguments in complaint were heard on 30.01.2014 and the order was reserved. Now the order be communicated to the parties.
22. The complaint could not be decided within the stipulated timeframe due to heavy pendency of court cases.
(Inderjit Kaushik) Presiding Judicial Member (Jasbir Singh Gill) Member February 11, 2014.
(Gurmeet S)