National Consumer Disputes Redressal
Shree Ganesh Metal Industries vs Oriental Insurance Co. Ltd. on 2 November, 2015
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CONSUMER CASE NO. 103 OF 2002 1. SHREE GANESH METAL INDUSTRIES A/6, Neel Shanti Niketan,
CST Road, Opposite Kalina University Campus, Santa Cruz (East), Mumbai - 440 098 ...........Complainant(s) Versus 1. ORIENTAL INSURANCE CO. LTD. Through Divisional Manager,
Division No.9, 10, Homi Mody Street, Fort, Mumbai - 400 023. ...........Opp.Party(s)
BEFORE: HON'BLE MR. JUSTICE J.M. MALIK, PRESIDING MEMBER HON'BLE DR. S.M. KANTIKAR, MEMBER
For the Complainant : Mr. Madhurendra Kumar, Advocate For the Opp.Party : Ms. Savita Singh, Advocate
Dated : 02 Nov 2015 ORDER
JUSTICE J. M. MALIK, PRESIDING MEMBER
1. Shri Ganesh Metal Industries, the complainant, is a partnership firm with Shri Geharilal D. Sanghvi (HUF), Shri Dinesh G. Sanghvi, Shri Manoj G. Sanghvi and Mrs. Basantiben G. Sanghvi, as partners. The complainant firm transacts the business of manufacturing of aluminium ingots, shots, alloys, extrusions, powder, dross etc. The factory is situated at Thane. The complainant/firm obtained two fire policies from Oriental Insurance Company Ltd./OP. for a sum of Rs.40 lakh and Rs.35 lakh, respectively. Copies of policies have been placed on record as annexure A & B. Both these policies also cover special Perils. The complainant/firm has another sister concern viz. Sanghvi & Sons, which also stores its material/stock in the godown belonging to the complainant firm. The sister concern has separate insurance policies covering their own stocks, from the OP.
2. Unfortunately, the insured's properties of the both the above said concerns were heavily damaged due to storm and rainwater on 23rd and 24th August, 1997, during the subsistence of the insurance policies. The OP was immediately informed vide annexure Ext. C. Subsequently, the formal claim in the prescribed form estimating the losses at Rs.23,40,860/77 was also filed vide Ext. D. The sister concern also lodged the separate claim with the OP. The OP appointed M/s C. P. Mehta & Co., as Surveyor to assess the losses/damages suffered by the complainant firm. Several queries were raised by the Surveyor, which was replied by the complainant vide Ext. 'E'.
3. However, the OP repudiated the claim on the ground that Surveyor is of the opinion that the losses suffered were not due to storm and that the loss was possible due to some rain water damage. The OP also alleged on the basis of the Surveyor's report that the claim was grossly and fraudulently exaggerated and vide condition No. 8, the OP was not entitled to any amount. The letter of repudiation was annexed with the complaint as Ext. 'F'. The claim of the sister concern was also repudiated on the same ground.
4. It is alleged that the OP failed to furnish the copy of the Surveyor's report. The complainant protested the repudiation of the claim. They challenged that the Surveyor did not give the valid reasons for repudiating the genuine and reasonable claim of the complainant firm. It is explained that a storm followed by heavy rains occurred on 23rd and 24th August 1997 in "Dahanu" and other places in Maharashtra. The complainant has produced newspaper clippings from the Times of India and Indian Express and also a certificate from the Sarpanch of Ganjad Gram Panchayat dated 23.8.1997. Gram Panchayat certified that at about 11.30 p.m. there was stormy wind, the cement/aluminium corrugated sheets on the roof of the Godown were found blown off, due to continuous heavy rains aluminium foils and aluminium dross were damaged due to the said stormy winds and rain-water. Five adivasis natives staying near the said Godown have given their written declarations that they have witnessed abnormal cyclonic winds and storm over their area. The Deputy Director General of Meteorology, Mumbai has furnished Weather Report for 23rd and 24th August, 1997 confirming all the above said facts. It was stated that the cyclone was so strong over North Maharashtra port and local cautionary signal No. III hoisted at all ports from Dahanu to Jaigaid for squally weather (sudden violent stormy wind). There was rough sea. A warning was issued to Maharashtra Coast with advice not to venture into sea. All this evidence was ignored. In the report of Regional Meteorology Centre, the storm has been defined as:
"The Term Storm is commonly used for any violent atmospheric phenomenon such as gale, thunder storm, line squall, rain storm, dust storm and snow storm. In synoptic meteorology the term is applied to active center of low pressure with which gales, precipitation etc. are associated".
5. Again, the complainant/firm has produced the opinions from the Indian Aluminium Co. Ltd. and as per these two technical opinions dated 2.12.2000 and 18.12.2000, they have concluded that the aluminium can deteriorate due to rain water exposure. The opinions given by two experts viz. Shri Atrawalker, Manager (R.D.) holding qualification as B.E. (Metallurgy) and the opinion given by Shri J. M. Gautam, Suptd. Of Research & Development Dept of Indian Aluminium are enclosed herewith as Ex-H and I. The Surveyor also opined that the loss is not due to storm but it is possible due to some rain water damage. It is explained that the General insurance Corporation of India has laid down the interpretation of 'policies' which runs as follows:
"Contracts of Insurance are expressed in writing and the policies are drafted by Insurance Co. These policies have to be interpreted according to certain well-defined rules of construction or interpretation which have been established by case-law. The most important rule of construction is that the intention of the parties must prevail and this intention is to be looked for in the policy itself. If the policy is worded in an ambiguous manner, it will be interpreted by the Courts in favour of the insured and against the insurer on the general principle that the policy was drafted by the latter."
6. Ultimately, this complaint was filed with the prayer that the OP be directed :-
To settle the complainant firm's claim of Rs.23,40,860/77 in full and further pay interest @ 18% p.a. from 1st December 1997 till realization.
The Hon'ble Commission may also be pleased to direct the OP to pay Rs. 2 lakhs to the complainant-firm to compensate for the business losses suffered by it on account of inordinate delay and consequent unjustifiable refusal to settle the claim
The OP may also be directed to pay adequate cost for pursing this case.
Any other relief, as the Hon'ble Commission may deem fit. The OP may be directed to pay all the above amounts within one month from the date of the order, failing which the OP may be directed to pay further interest @18% p.a.
DEFENCE
8. It is contended that loss occurred on 23rd and 24th August, 1997. The complaint, which was filed on 14.3.2002, is clearly barred by time. As a matter of fact, there was neither any storm nor any heavy rainfall on 23/24.8.1997. The alleged loss was not occasioned by any of the risks covered by the insurance policy. The main question pertains to the percentage of aluminium content in aluminum dross/ skimming / aluminum foil. The rain water cannot damage the aforesaid materials. The books of accounts of the complainant are not true. The closing stock position and the inventories shown in the book are not true. These questions can be decided by a civil court. The complainant more than doubled the insurance a short while before the alleged loss. Huge inventories of the goods, equal to the figure of annual turnover were shown in the books apparently to support the false claim. The claim of the complainant is false grossly exaggerated and fraudulent attracting condition No. 8 of the policy. The policy does not come into play merely because of rain water.
8. The complainant has described the breeze (wind velocity less than 35 K.M.P.H.) as a storm in order to bring the loss within the purview of the insurance. It is only when the wind velocity exceeds 89 K.M.P.H., it is properly considered as a storm. The breeze was not real cause of displacement of the sheets. The light shower (1.9 mm) accompanied by the breeze, allegedly fell through the gap and wetted the aluminum dross/skimming/foil. Such damage was not at all covered by the insurance. Several letters were sent to the complainant by the Surveyor but the complainant did not properly give correct and full information sought for by the Surveyor. Consequently, the Surveyor could complete the assessment and submit their report only on 25.10.2000. Certain damage was caused by rain water falling through the gap of 2 or 3 roofing sheets, which were allegedly displaced by the breeze. The complainant apologized for levelling certain baseless allegation vide their letter dated 16.4.1999. The loss occurred in 1997 but the complainant themselves could prepare their claim only on 26.8.1998 i.e. more than 16 months. The displacement of roofing might have happened due to faulty fixing or poor repairs of the building. A breeze of the speed of about 34 km/h could not have displaced the sheets. The Surveyor came to the conclusion that the premises did not indicate any of the severe damage caused by the storm. The C.I./aluminum sheets which were claimed to have been loosened by the wind could be placed back. At best some labour charges for straightening etc. could be considered, which could be Rs.5,000/-. The letter dated 24th April, 1999 sent by the complainant as quoted by the Surveyor is crucial. The report of Surveyor runs as follows:
"The Insured's letter of 24th April '99 in this connection, regarding their contention of "Storm" is reproduced in Annexure "F"
6.4.1 In this letter, the Insured have again contended:
"You have stated that we have not sustained that the loss is occurred due to storm. We may point out that on 23rd and 24th August, '97 there was cyclone atmosphere in all over Maharashtra and it was announced by Government that cyclone may come in Mumbai and Suburbs during this period.
On these days there was unusual wind blow in Dahanu area. The wind was blowing @ 34 k.m. per hour which is definitely more than the usual rate @ 5 km per hour in Dahanu area.
Since wind was blowing at more than usual rate @ 34 km per hour which is high, we strongly conclude that the loss has occurred due to this high speed of wind blow i.e. storm".
9. As per the meteorological certificate produced by the complainants themselves the rain fall during those days was 6.2 mm on 23.8.1997 and 1.9 mm on 24.8.1997. It also transpired that the goods were damaged by fire. The Surveyor reported :
"The fire was mysterious. No body was aware when it started, how it started, duration of the fire, when and how it was extinguished. There is no explanation as to how a fire continued in spite of "rain". No eyewitness account of the fire was available."
The report of Material Technology Development Center obtained by the Surveyor runs as under:
"Aluminum dross exposure to water will and can deteriorate. The amount of deterioration can vary and is difficult to quantify theoretically. Also the recoverable aluminum from undamaged dross will vary from 25% minimum to 65% maximum of original dross content in kilograms i.e. 25 kgs. to 65 kgs. aluminum out of 100 kgs. of original dross depending on the quality and source of dross."
Again, about aluminum foil scrap based on the report of Material Development Center, the Surveyor has observed as follows:
"Kindly note, in our opinion these cannot be destroyed/damaged by exposure to rainwater. Infect 2S type aluminum used in lamp shades and utensils for cooking
B. Laminated Aluminum Foil Scrap
1) Paper laminated aluminum foil) Invoice No. 267,
2) Poly laminate aluminum foil) 436,486,688,648 &
791 and letter No. 13-1-1999.
Kindly note, in our opinion it is not possible to segregate the melt of this at M/s Shree Ganesh Metals Industries and pour aluminum ingots from these.
Furthermore, this aluminum too cannot deteriorate in rainwater exposure".
10. The Surveyor assessed the loss of stock at Rs.1,75,052/-. As per the weather code (1982) Office of the Deputy Director General of Meteorology, (Weather Forecasting), Pune, the surface velocity, as per the beaufort scale, for storm is as follows:
"When trees get uprooted, considerable structural damage occurs, for instance kutcha houses blown down and speed of the wind is 89 km/h to 102 km/h.
And the specification of the breeze as follows:
"Trees get swayed, crested wavelets form on the inland water speed of wind above 10 mtrs. Above ground 28 km/p 38 km/p average 34 km/p."
11. According to OP, the correct facts given in the opinion of an expert, Shri Atrawalkar, Manager (R.D.) BE Metallurgy, furnished by the complainant, themselves are as follows:
"Dross contains a 25% aluminum in metallic globule form where as the skimming contain 65% aluminum in metallic form."
It is alleged that the complainants fraudulently gave the aluminum content as 80% to 90% in dross and skimming. There was no flooding of the premises of the insured or any surrounding area. Regarding the closing stock, the Surveyor gave the following report:
"The values of the closing stock in relation to the sale are inordinately high. No logical explanation could be given by the complainant for this. The insured did not have any bank finance. The inventories appear to be funded by Sundry Creditors. Strangely there is very little interest charged in the accounts. The insured were apparently making loss during the previous 3 years though this appears to have been concealed by not accounting for interest. The company does not appear to be in good financial condition."
12. The purchase bills only indicate aluminum dross and skimming. There is no indication of the aluminum content therein. The purchases are shown at uniform rates. The allegation of 80 to 90% of aluminum content in the dross is fraudulently exaggerated. The correct fact is that the dross was of substantially lower quality and the aluminum content therein could be only in the range of 25% and not more. The Surveyor obtained various expert opinion and technical evaluation, such as, report from MTDC on 24.10.2000.
SUBMISSIONS AND FINDINGS
13. We have heard the learned counsel for the parties and perused their written synopses. Learned counsel for the complainants has invited our attention towards the various newspapers. We have seen newspaper cutting of the Indian Express dated 23.8.1997 with the heading 'Rains, depression cut off Mumbai'. There is also another newspaper clipping dated 25.8.1997 with the heading 'State flounders as wet spell continues'. He has also filed another newspaper clipping of 'The Times of India' dated 23rd August, 1997 with the heading 'Deluge brings life in city to a standstill'. Clipping of newspaper, 'the Sunday Times' dated 24.8.1997 mentions "Torrential rains take toll of six lives in city'. Clipping of newspaper, 'The Indian Express' dated 24.8.1997 reports "Two days of torrential rains claim 15 lives, injure 27 and Army moved to the rescue in Pune. Newspaper clipping of 'the Times of India' dated 25th August, 1997 mentions '16,000 evacuated as flash floods hit Pune' However, it may be mentioned here that there is no word of cyclone or storm.
14. The complainant filed an application during the pendency of this case as the complaint number etc. mentions:
"i. Govt of India Meterological Department, office of the Dy. Director General of Meterological Centre, Certificate bearing No. 691/TE-03(INS) Dt 01.11.1999 Sub : Supply of metdata at Dahanu. "The Station Dahanu not equipped with Autographic Wind Instrument hence maximum wind in gust cannot be supplied"
15. The learned counsel invited our attention towards letter from Govt. of India Meterological Department office of the director General of Meterology Regional Meteorological Centre No. ACWC-407/99 dt.05.11.1999.
23.08.1997 Strong to Vigorous monsoon condition prevailed over North Maharashtra Coast".
Wind : Westerly 30-35 knots gusting to 40 knots in rain/shower.
24.08.1997 Strong Monsoon conditions prevailed over north Maharashtra Coast
Wind : Wasterly 28-32 knots gusting to 35-40 knots rain/shower.
Low pressure system over Indian Region are classified as per the associated maximum sustained windspeed as given below
System Wind Speed
Cyclonic Storm 34 to 47 knots on wind speed.
7. From the letter of India Metrological Dept. dt. 05.11.2009 its clear that there was stormy winds on 23rd and 24th August, 1997.
16. Our attention was drawn towards the report of Government of India, India Meteorological Department. Report from Government of India is reproduced as follows:
23-8-97
Synoptic situation : Strong to vigorous monsoon conditions prevailed over North Maharashtra coast.
Wind : Westerly 30-35 kts gusting to 40 kts in rain/shower
Weather : Widespread rain/thundershower with isolated squall (estimated)
Visibility : Poor becoming very poor in thundershower and squall.
Sea : Very rough to high
Port Warning : Local cautionary signal NO. III hoisted at all ports from Dahanu to Jaigad for squally weather and very rough sea with Beaufort scale 7-8
Warning if any : Issued for Maharashtra coast with advice not to venture into sea.
24-8-97
Synoptic situation : Strong monsoon conditions prevailed over North Maharashtra coast.
Wind : Westerly 28-32 knots gusting to 35-40 kts in rain/shower
Weather : Widespread rain/thundershower with thunderssquall (estimated)
Visibility : Moderate becoming poor in shower and very poor in thundersquall
Sea : Very rough
Port Warning : Local cautionary signal NO. III hoisted at all ports from Dahanu to Jaigad for squally weather and very rough sea with Beaufort Scale 6-7
Warning if any : Issued for Maharashtra coast with advice not to venture into sea.
17. Low pressure system over Indian region are classified as per the associated maximum sustained windspeed as given below:-
System Wind Speed
Low pressure Less than 17 knots
Depression 17 to 27 knots
Deep depression 28 to 33 knots
Cyclonic storm 34 to 47 knots
Severe Cyclonic storm 48 to 63 knots
Very Severe Cyclonic Storm 64 to 119 Knots
Super Cyclonic storm More than 120 knots
"(1 knot = 1.853 k./hour)"
Thunderstorm : Thunderstorm is a storm containing lightning and thunder. Sometimes it produced gusty surface winds with heavy rain and hail. The storm itself may be a single cumulonimbus cloud, a cluster of them or even line of clouds that in some cases extends for more than 100 km.
18. The learned counsel for the complainant has cited an authority reported in New India Assurance Co. Ltd. vs. Pradeep Kumar IV (2009) CPJ 46 (SC). In that case, it was held that the surveyor's report is not the last and final word. It may be the basis for settlement of claim but neither binding upon the insurer nor insured.
19. The story remains opakque (unclear) despite explanations. The case of the complainant bristles with number of question marks. We attach no importance with the report submitted by Gram Panchayat or the evidence of the adivasis. Such like evidence can be procured at any time. The reports of the experts filed by the complainant do not go to support his case fully. He has not come to the Commission with clean hands. His account books and stock statement create a flim of doubt. Under these circumstances, it is difficult to prove that the loss was caused due to storm. This is a border line (storm) case. It is also difficult to fathom why there was a fire. The report of fire was not lodged. The Surveyor reported that the fire was mysterious. Nobody would be aware when it started, how it started, the duration of the fire when and how it was extinguished. There is no explanation as to how fire continued instead of rains. This fact goes a long way to mislead the Surveyor. Why the burnt articles were not specified. Was it an attempt to pull the wool in the eyes of law. There was neither police complaint nor fire brigade report available. There was no eye witness of the fire. The report of Gram Panchayat and all adiviasis are conspicuously silent about the fire. The value of the incident further evanesces. There is no report on paper cutting pertaining to the incident at Dahanu. Again, the insured statement of heavy rains on 23rd and 24th August, 1997 appears to be not correct. The meteorological certificate shows that on 22.8.2097 rain was 24.8 mm. but on 23rd and 24th August, 1997, there was rain of 6.7 mm. and 1.9 mg., respectively. On 25.8.1997, there was rain of 26.4 mm. but the last date of rain may be called bit heavy.
20. The Surveyor further reported :
The Insured have claimed their loss due to spoilage of the stock of "Aluminium paper poly foil" after it became wet, due to rain water from the roof. Strangely, though part is described as "Burnt" material, there is no description about the fire.
21. According to the complainant, the windspeed was 34 K.M.P.H. It must be borne in mind that 34 to 47 knots are different because each knots makes 1.85 K.M.P.H. 34 knots will have the speed of 34 knots X 1.853 K.M. P.H. = 63.002, that means more than 63 K.M.P.H. The complainant himself admits that wind speed was of 34 K.M.P.H. By no stretch of imagination, it cannot be said to be storm but definition storm means, a wind must blow at the speed of 60 K.M.P.H.
22. Consequently, we concur with the report given by the Surveyor. The Surveyor further mentioned :
"10.3.1.1. A examination of the premises did not indicate any of the severe damage caused by a "Storm".
10.3.2The Weather Bureau report of Dahanu submitted by the Insured indicated a maximum wind speed of 34 kph. This, in our opinion, will not be considered as a "Storm".
The Surveyor report further reads:-
3) Time of India cutting date 16/05/1998 indicating wind blow at speeds of over 25 K.M. per hour hit Mumbai on Friday evening taking the city by storm. From this cutting we conclude that when there is wind blow at 34 K.M. per hour it should be known as storm."
The report further mentions:
"The stocks were in old gunny bags and/or loose, in stack/heaps. There was no visible signs of either drenching by rain water or any damage as such.
"A. Aluminium Foil Scrap Aluminium in chips form - invoice 7188 and 6717 Aluminium in 2S Type Foil - Invoice 714 & 1180
Kindly note, in our opinion, these cannot be destroyed/damaged by exposure to rain water. In fact 2S type aluminium used in lmp shades and utensils for cooking."
"Furthermore, this aluminium too cannot deteriorate in rain water exposure".
"Three. The Insured has stated that the melting of the Dross/Foil was carried out in the presence of the Excise Inspector. It must be noted that in the so called "Excise Documents", there is no signed confirmation from the Excise Inspector that he has supervised the process.
10.12.5. The insured have a crude process of melting the scrap in a crucible, over an open coal fire. They do not have any refinery. Our enquiries have not revealed any system by which the laminated foil, shown above, can be melted and only the Aluminium be recovered."
23. We have already held that it is a border line storm case. We see no reason to discard the report of Surveyor. See the law laid down in United India Insurance Company Limited and others vs. Roshan Lal Oil Mills and others 2000(10) SCC 19 and the recent judgment decided by a bench headed by Hon'ble Mr. Justice Ashok Bhan in D.N. Badoni vs. Oriental Insurance Co. Ltd. I (2012) CPJ 272 (NC). Therefore, we partly allow the complainant's claim and direct the OP to pay a sum of Rs.1,75,052/-, the loss assessed by the Surveyor with interest @9% per annum from the date of filing of this complaint till its realization. The opposite party is required to dispose of the claim petition within six months. They have taken enough time to send the repudiation letter. Consequently, we impose Rs.50,000/- for delaying the matter, which will be inclusive of the costs of the case and the costs of litigation. The said amount be paid within 30 days from the date of receipt of a copy of this order, otherwise, the said amount will carry interest @ 9% per annum till its realization.
24. The complaint stands disposed of.
......................J J.M. MALIK PRESIDING MEMBER ...................... DR. S.M. KANTIKAR MEMBER