National Consumer Disputes Redressal
Modi Dyeing & Bleaching Works vs National Insurance Company Ltd. on 29 October, 2021
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CONSUMER CASE NO. 434 OF 2016 1. MODI DYEING & BLEACHING WORKS (THROUGH PARTNER)
232/234 CHAMBER BHAVAN, 1ST FLOOR, R. NO. 16/17, KALBADEVI ROAD, MUMBAI-400002 ...........Complainant(s) Versus 1. NATIONAL INSURANCE COMPANY LTD. DIVISION V, 4TH FLOOR, ROYAL INSURANCE BUILDING, 14 J.N. TATA ROAD, CHURCHGATE, MUMBAI ...........Opp.Party(s)
BEFORE: HON'BLE MR. C. VISWANATH,PRESIDING MEMBER HON'BLE MR. JUSTICE RAM SURAT RAM MAURYA,MEMBER
For the Complainant : Mr. Ashok Mathur, Advocate For the Opp.Party : Mr. Yogesh Malhotra, Advocate
Dated : 29 Oct 2021 ORDER
1. Heard Mr. Ashok Mathur, Advocate, for the complainant and Mr. Yogesh Malhotra, Advocate, for the opposite party, through video conferencing.
2. Modi Dyeing & Bleaching Works (the complainant) (hereinafter referred to as the Insured) filed aforementioned complaint, for directing National Insurance Company Ltd. (the opposite party) (hereinafter referred to as the Insurer) to pay Rs.35578289/- as balance insurance claim, under Insurance Policy No.261300/11/11/3300000513, (hereinafter referred to as Policy No. 513), interest at the rate of 18% per annum on the said amount and any other or further relief which may deem fit and proper in the circumstances of the case.
3. The facts as been stated in the complaint and emerged from the documents attached with the complaint are as follows:-
(a) The Insured was a partnership firm and engaged in the business of dyeing and bleaching of grey cloth at its factory situated at 43/2, Amina Compound, Dhamankar Naka, Bhiwandi, district Thane, Maharashtra since 1964. Initially it was a hand pressing unit. In 1993, it was converted into a power processing unit. The Insurer was a Public Insurance Company and engaged in business of providing Insurance Services. The Insured used to obtain Standard Fire and Special Peril Policy from the Insurer since 2008. The Insured obtained Standard Fire and Special Peril Policy i.e. Policy No. 513, on 12.09.2011, which was valid from 12.09.2011 to midnight of 11.09.2012, extending total coverage of Rs.155900000/-. The list of the properties insured was attached with the policy.
(b) On 13.01.2012, at about 4:40 hours, the workers engaged in steam sender on the first floor of Unit-1, observed a flaming cloth bale from the upper second floor level, falling through the goods well opening between the floor levels at the north-west end, over the trolley at stented take up end. Due to which bales of loose cloth in trolley on first floor were ignited. On checking, it was found that a stack of fabric bales stored at the second floor under hot air exhaust duct was burning. Fire engulfed at third floor also. The security guard immediately informed, nearest Fire Service Station at Dhamankar Naka, from where fire tenders were sent on the spot. Within 15 minutes fire tenders from Nizampur and Bhiwandi also reached on the spot. They could extinguished the fire at about 5:15 hours on 13.01.2012. As 13.01.2012 was Friday, which weekly holiday of the factory as such it was closed at 8:00 hours. On 13.01.2012, at about 23:30 hours, Security Guard Ramdhari Tiwari, observed smokes and flames emanating from second floor of Unit-1. He immediately informed Fire Service Station at Dhamankar Naka, from where fire tender was sent on the spot and fire was extinguished within 10 minutes. The incident was reported to jurisdictional police station, who later on recorded Panchnama.
(c) The Insured informed the Insurer about the fire incident at his business place on 13.01.2012, on which, the Insurer appointed Sunil J. Vora & Associates, Surveyors, Assessors & Valuers, Mumbai, for survey and assessment of the loss. The Surveyor visited the spot on 13.01.2012 at 17:00 hours and remained there till 20:15 hours. He verified the damages, took photographs/videography and prepared inventories. The Surveyor again inspected the spot on 15.01.2012, 16.01.2012 and 01.02.2012. The Surveyor took statements of the witnesses in writing and time to time collected necessary papers from the Insured. However, his report was delayed unreasonably.
(d) The Insured submitted his application on 14.01.2012 to the Insurer, showing tentative damages of Rs.13.75 crores. Later on a Claim Form on printed proforma was submitted on 25.01.2012 and another Claim Form on printed proforma was submitted on 04.04.2012, with a list showing total damage of Rs.8 crore.
(e) The Insured moved applications for on-account payment, dated 06.03.2012, 04.05.2012, 23.08.2012, 06.11.2012, 17.12.2012 and 16.05.2013, for want of report of Surveyor but nothing was done. It is alleged that Surveyor submitted his Interim Report dated 12.08.2012, recommending for payment of Rs.3 crores, as interim payment of damages, without sending any copy of it to the Insured, but the Insurer has not passed any order. When the Insured came to know that the Surveyor had submitted his report, he wrote letters dated 05.07.2013 and 03.10.2013 for the settlement of the claim.
(f) The Surveyor submitted Final Report dated 24.01.2014, in which he found cause of fire was due to insured peril. He assessed total loss to Rs.63655503.80. After deduction of 5% from it, he recommended for payment of Rs.60472729/-. The Insured moved applications dated 24.02.2014, 21.08.2014 and 20.12.2014, for settlement of the claim. The claim was settled as full and final for Rs.55512582/- on 23.03.2015, through bank and money was deposited in the account of the Insured. The Insured moved an application on 11.08.2015, for payment of difference amount and interest for delayed payment. Thereafter, he gave a legal notice dated 25.09.2015, for payment of difference amount and interest for delayed payment. The Insured took ground that (i) the Surveyor has illegally and arbitrarily deducted Rs.1901433/- from the loss on Stock and Stock in Process. (ii) 5% of the amount from the claim has been deducted twice without any reason although this policy was a renewed policy of Policy No. 250500/11/08/3300001013 dated 12.09.2008 and original terms and condition will continue to apply. (iii) Regulation 9 of The Insurance Regulatory and Development Authority (Protection of Policyholder's Interest) Regulations, 2002 directs the Surveyors to submit their Survey Report within 30 days and in any case within six months, from the date of his appointment. After six months, the claimant would be entitled for interest. In the present case, the Surveyor was appointed on 13.01.2012 as such the Insured is entitled for interest at the rate of 18% per annum till the actual payment of the claim. On these allegations, complaint was filed on 04.03.2016.
4. The Insurer filed its written reply and contested the complaint, in which the material facts have not been denied. It has been stated that as the Insured used to dye the clothes of various merchants as such Stock and Stock in Process took time in its verification from the individual merchant. As such Surveyor took time in submitting his Report. On verification of Stock and Stock in Process, the Surveyor deducted Rs.1901433/-, towards its loss for the want of verification. The law does not recognise Interim Survey Report, as such, no payment was made on the basis of Interim Survey Report dated 01.08.2012 or on-account payment. Insurance Policy No. 513 provides as "Total Sum Insured Rs.155900000/- Non-AOG Excess 5% and AOG Excess 5% (subject to minimum excess for each account to Rs.25000/-). No reliance can be placed on previous policy, which term had already been expired. The Surveyor in his Report dated 24.01.2014 has deducted only 5% from the net loss calculated by him as such 5% amount was again deducted by the Insurer at the time of full and final settlement. Full and final settlement has been accepted by the banker (Thane Janta Sehkari Bank Ltd.) of the Insured. There was bank clause in the Policy No. 513 as such the Insured is not entitled to challenge full and final settlement of the claim. In any case, Clause-13 of the Terms and Condition of the Policy contains "Arbitration Clause" as such the complaint is not maintainable. Technical plea that the Insured was doing commercial activities and is not a consumer, by making exorbitant claim of interest, the complaint was filed before National Commission although actual claim was below the pecuniary jurisdiction of this Commission and Thane Janta Sehkari Bank Ltd. has not been impleaded in the complaint, although it was necessary party, have been raised.
5. The Insured filed Rejoinder Reply on 29.03.2017, in which, the facts stated in the complaint have been reiterated. The Insured filed documentary evidence, i.e. Partnership deed (Ann-P-1), Insurance Policy dated 12.09.2011 (Ann-P-2), Insurance Policy dated 12.09.2008 (Ann-P-3), Insurance Policy dated 12.09.2009 (Ann-P-4), Claim Forms (Ann-P-5), Letter dated 13.02.2012 (Ann-P-6), Letter dated 06.03.2012 (Ann-P-7), Letter dated 21.03.2012 (Ann-P-8), Letter dated 04.05.2012 (Ann-P-9), Letter dated 14.07.2012 (Ann-P-10), Letter dated 17.08.2012 (Ann-P-11), Letter dated 23.08.2012 (Ann-P-12), Letter dated 31.10.2012 (Ann-P-13), Letter dated 06.11.2012 (Ann-P-14), Letter dated 10.12.2012 (Ann-P-15), Letter dated 17.12.2012 (Ann-P-16), Letter dated 11.03.2013 (Ann-P-17), Letter dated 16.05.2013 (Ann-P-18), Letter dated 05.07.2013 (Ann-P-19), Letter dated 03.10.2013 (Ann-P-20), Survey Report dated 24.01.2014 (Ann-P-21), Letter dated 24.02.2014 (Ann-P-22), Letter dated 07.05.2014 (Ann-P-23), Letter dated 21.08.2014 (Ann-P-24), Letter dated 20.12.2014 (Ann-P-25), Letter dated 11.08.2015 (Ann-P-26) and Legal notice dated 25.09.2015 (Ann-P-27), along with the complaint. Circular of Insurance Regulatory and Development Authority dated 24.09.2015 along with Rejoinder Reply.
6. The Insurer filed Insurance Policy dated 12.09.2011 (Ann-R-1), Preliminary Survey Report dated 14.01.2012 (Ann-R-2), Interim Survey Report dated 01.08.2012 (Ann-R-3), Final Survey Report dated 24.01.2014 (Ann-R-4), Discharge Voucher dated 23.03.2015 (Ann-R-5). Affidavit of Evidence of Indra Pal and Affidavit of Evidence of Sunil J. Vora. Both the parties filed their written submissions.
7. The counsel for the Insured submitted that the insurance service falls within inclusion clause of the "service" as defined under Section 2 (1) (o) the Act, 1986. Even a person, engaged in commercial activities can buy goods or avail service, for his personal use. Insurance Policy is always obtained for personal use and not for deriving profit by doing any business from it. This Commission in M/s. Harsolia Motors Vs. National Insurance Co. Ltd. I (2005) CPJ 27 (NC), has held that insurance service falls within the purview of Consumer Protection Act, 1986. Supreme Court in Biman Krishna Bose Vs. United India Insurance Company Ltd. (2001) 6 SCC 477, has been held that renewal of the policy extends the policy in same terms effective from a different date. Terms and Conditions of previous policy would remain effective. Without consent of the parties, Terms and Condition of previous policy cannot be changed. Supreme Court in National Insurance Company Ltd. Vs. Boghara Polyfab Ltd. (2009) 1 SCC 267, has held that obtaining signature on undated and blank voucher and utilizing it as a receipt towards full and final settlement of the claim, does not debar the claimant from challenging the settlement. Insurance Regulatory and Development Authority has also issued Circular dated 24.09.2015 in this respect. Regulation 9 of The Insurance Regulatory and Development of Authority (Protection of Policyholder's Interests) Regulation, 2002, provide 30 days' time for submitting surveyor's report from the date of his appointment and thereafter, the Insurer is granted 30 days' time for settlement. In the present case, the surveyor was appointed on 13.01.2012 and he submitted his report on 24.01.2014. Settlement for part claim was done on 23.03.2015. Supreme Court in United India Insurance Company Ltd. Vs. M.K.J. Corporation, (1996) 6 SCC 428, has directed for payment of interest for delayed payment.
8. The counsel for the Insurer submitted that the Insured was doing commercial activities and is not a consumer and the complaint is not maintainable. Insurance Policy contained "Bank Clause" and Thane Janta Sehkari Bank Ltd. has accepted full and final settlement of the claim and executed discharge voucher on 23.03.2015 as the Insured cannot challenge the settlement. The banker has not been impleaded in the complaint, although it was necessary party. The Insurer immediately appointed surveyor on information of the loss. The Surveyor delayed his report as delay was caused in verification of Stock and Stock in Process, from different merchants. The Surveyor assessed the loss, which was verified by him. The Insured could not show any illegality in it. Insurance Policy No. 513 provides as "Total Sum Insured Rs.155900000/- Non-AOG Excess 5% and AOG Excess 5% (subject to minimum excess for each account to Rs.25000/-). No reliance can be placed on previous policy, whose term had already been expired. The Surveyor in his Report dated 24.01.2014 has deducted only 5% from the net loss calculated by him as such 5% amount was again deducted by the Insurer at the time of full and final settlement. Supreme Court in United India Insurance Company Ltd. Vs. Ajmer Singh Cotton and General Mills, (1996) 6 SCC 400 and National Insurance Company Ltd. Vs. Boghara Polyfab Pvt. Ltd., (2009) 1 SCC 267, has held that execution of discharge voucher and acceptance of the claim would not stop the Insured from making further claim. Award of 18% interest per annum was justified for delay in settlement. In Union of India Vs. Master Constructions, (2011) 12 SCC 349, New India Assurance Company Ltd. Power Infrastructure Ltd., (2015) 2 SCC 424, United India Insurance Company Ltd. Vs. Antique Art Export Ltd., (2019) 5 SCC 362, Wapcos Ltd. vs. Salma dam Joint Venture, I (2020) SLT 81 has that the contractor after voluntarily accepting money of his bill cannot raise dispute and claim for appointment of the Arbitrator and Export Credit Guarantee Corporation of India Ltd. Vs. Garg sons International, (2014) 1 SCC 686, has held that Insurance agreement has to be read as a whole for harmonious construction.
9. We have considered the arguments of the counsel for the parties and examined the record. Supreme Court in Paramount Digital Colour Lab Vs. Agfa India Pvt. Ltd. (2018) 14 SCC 81 and Lilavati Kirtilal Mehta Medical trust Vs. Unique Shanti Developer, (2020) 2 SCC 265, has held that a person engaged in commercial activities can buy goods or avail services for his personal use and is within the scope of Consumer Protection Act, 1986. The insurance service falls within inclusion clause of the "service" as defined under Section 2 (1) (o) the Act, 1986. This Commission in M/s. Harsolia Motors Vs. National Insurance Co. Ltd. I (2005) CPJ 27 (NC), has held that insurance service falls within the purview of Consumer Protection Act, 1986. As such the present complaint is maintainable.
10. So far as "Bank Clause" under Insurance Policy is concerned, it authorises the Insurer to make payment to the Bank, in case claim is established. For determination of the claim, the bank is neither necessary nor proper party. Supreme Court in United India Insurance Company Ltd. Vs. Ajmer Singh Cotton and General Mills, (1996) 6 SCC 400 and National Insurance Company Ltd. Vs. Boghara Polyfab Pvt. Ltd., (2009) 1 SCC 267, has held that execution of discharge voucher and acceptance of the claim would not stop the Insured from making further claim. It has been held that obtaining signature on undated and blank voucher and utilizing it as a receipt towards full and final settlement of the claim, does not debar the claimant from challenging the settlement. Award of interest @ 18% per annum by Commission was justified for delay in settlement. Insurance Regulatory and Development Authority has also issued Circular dated 24.09.2015 in this respect. As such deposit of part of the claim in bank by the Insurer does not bar the complainant from claiming remaining amount. The cases cited by the counsel of the Insurer, relate to government contract, where the contractors have voluntarily accepted the less amount of their bill. These cases have no application in the present case.
11. In the complaint, Insured raised first point that the Surveyor has illegally and arbitrarily deducted Rs.1901433/- from the loss on Stock and Stock in Process. Finding of the Surveyor, in this respect is based upon verification of the stock from various customer of the Insured, whose stock was lying at the factory of the Insured, as well as bills and vouchers submitted by the Insured, relating to his stock and stock in process. No evidence has been adduced to prove that loss of Stock and Stock in Process as given in the claim form was fully verified from the documents of the Insured as well as from his customers. As such this Commission does not find any reason to interfere with the findings of Surveyor in this respect.
12. Second point is raised that 5% of the amount from the claim has been deducted twice without any reason although this policy was a renewed policy of Policy No. 250500/11/08/3300001013 dated 12.09.2008 and original terms and condition will continue to apply. In Insurance Policy No. 513, the coverage has been specified as "Total Sum Insured Rs.155900000/- Non-AOG Excess 5% (minimum excess for non AOG peril is Rs.25000/-) and AOG Excess 5% (minimum excess for AOG Peril is Rs.25000/-) (Act Of God). This coverage was not challenged earlier although policy was granted on 12.09.2011. Supreme Court in Biman Krishna Bose Vs. United India Insurance Company Ltd. (2001) 6 SCC 477, has held that renewal of an insurance policy means repetition of the original policy. When renewed the policy is extended and the renewed policy in identical terms from a different date of its expiration comes into force. In common parlance, by renewal, the old policy is revived and it is a sort of substitution of obligations under the old policy unless such policy provides otherwise. In the present case, the coverage has been differently provided. As such the case law relied upon by the counsel for the complainant does not help him. Further deduction of 5% by the Insurer at the time of settlement is in accordance with the coverage provided in the Policy No. 513.
13. Supreme Court in United India Insurance Company Ltd. Vs. Ajmer Singh Cotton and General Mills, (1996) 6 SCC 400 and United India Insurance Company Ltd. Vs. M.K.J. Corporation, (1996) 6 SCC 428, has directed for payment of 9% per annum interest for delayed payment and has upheld award of this Commission for payment of interest @ 18% per annum for delay in settlement of the claim, respectively. Regulation 9 of The Insurance Regulatory and Development Authority (Protection of Policyholder's Interest) Regulations, 2002 directs the Surveyors to submit their Survey Report within 30 days and in any case within 45 days, from the date of his appointment. The Insurer has been directed to make settlement within 30 days of receipt of Surveyor's report. Regulation 9 (6) provides as follows:
Regulation-9 (6). Upon acceptance of an offer of settlement as stated in sub-regulation (5) by the insured, the payment of the amount due shall be made within seven days from the date of acceptance of the offer of by the insured. In case of delay in the payment, the insurer shall be liable to pay interest at a rate which is 2 per cent, above the bank rate prevalent at the beginning of the financial year, in which the claim is reviewed by it.
14. After expiry of 82 days from the incident, the complainant will be entitled for interest on the amount of settlement. In the present case, the incident took place on 13.01.2012. 82 days expires on 06.04.2012. Prevalent rate of interest of the bank was high before November, 2016. Since the period of entitlement of the interest before November, 2016 and after November 2016 came about the same as such the complainant is entitled for interest @ 12% per annum from 15th April 2012 till 23.3.2015 on the amount of settlement and thereafter on the amount of interest till the date of payment.
15. It is being regularly noticed that the surveyors and the officers assigned with the duty for settlement of the claim are violating the provisions of Regulation-9 of The Insurance Regulatory and Development Authority (Protection of Policyholder's Interest) Regulations, 2002, although it related to the duties performed by them and mandatory in nature. Due to delay in settlement of the claim, extra burden for paying interest is being casted on the Insurer, which is a public sector. In such circumstance, we give liberty to the Insurer to file an application before Insurance Regulatory and Development Authority for cancellation of licence of the surveyor, if in the opinion of the Insurer, the surveyor has deliberately delayed the report. Insurer is also given liberty to realize the amount of interest from the officer responsible for delay in settlement of the claim.
O R D E R
In view of aforementioned discussions the complaint is partly allowed. The Insurer is directed to pay interest @ 12% per annum from 15.04.2012 till 23.03.2015 on settlement amount and thereafter on the amount of dues of interest till the date of actual payment, within 30 days from the date of the order.
...................... C. VISWANATH PRESIDING MEMBER ......................J RAM SURAT RAM MAURYA MEMBER