State Consumer Disputes Redressal Commission
P. Murali Mohan Krishna,Maruthi ... vs The Divisional Manager,The New India ... on 25 February, 2010
A A.P. STATE CONSUMER DISPUTES REDRESSAL COMMISSION CIRCUIT BENCH AT TIRUPATHI F.A. 503/2008 against C.C. 94/2007, Dist. Forum, Tirupathi. Between: P. Murali Mohan Krishna S/o. P. Seshaiah, D.No. 20-1-471/B2 Maruthi Nagar Korlagunta, Tirupathi. *** Appellant/ Complainant. And 1) The Divisional Manager The New India Assurance Company Ltd. 1/164, Prakasam Road Tirupathi. 2) The Punjab National Bank Rep. by its Branch Manager Tirupathi. *** Respondents/ Ops. Counsel for the Appellant: M/s. Kalpana Kilaru Counsel for the Resp: M/s. K. Aruna. (R1) CORAM: HONBLE SRI JUSTICE D. APPA RAO, PRESIDENT & SMT. M. SHREESHA, MEMBER
THURSDAY, THE TWENTY FIFTH DAY OF FEBRUARY TWO THOUSAND TEN Oral Order:
(Per Honble Justice D. Appa Rao, President) *****
1) Unsuccessful complainant is the appellant.
2) The case of the complainant in brief is that he has been doing business in the building bearing No. 7-6-232, Mitta Street, Tirupathi. He availed a loan of Rs. 10 lakhs from R2 bank and on its advice he had taken two polices under fire and special perils for the shop and building separately commencing the risk originally from 18.12.2003 to 17.12.2004 and renewed the same from 23.8.2005 to 27.8.2006 for a sum of Rs. 10 lakhs. While so on 2.11.2005 fire accident took place in the said premises wherein the entire building, stock in trade were burnt into ashes. After coming to know, he informed the matter, on which the insurance company appointed a surveyor Sri V. V. Sridhar and later Sri A. C. Rami Reddy, Surveyor & Loss Assessor to assess the loss. It was repudiated by its letter Dt. 13.10.2006 alleging that the residence is being used for storing stocks violating clause 3(a) of the policy. The premises is being used both for godown as well as residence and this fact was known to the insurance company. The surveyor assessed the loss at Rs. 4,11,071/- however recommended for Rs. 87,836/- . Therefore he filed the complaint claiming Rs. 4,11,071/- together with compensation of Rs. 50,000/- and costs of Rs. 2,000/-.
3) The insurance company resisted the case. It denied each and every allegation made in the complaint. However, it admitted issuance of policy. The insurance policy covers the risk of residential premises. The complainant was doing wholesale business of camphor, incense sticks by bringing the camphor blocks from its manufacturers and made them into camphor tablets and sold them in retail. While availing the loan he mortgaged his house property in favour of the bank as a collateral security. The bank being the financier insured the stock in trade and took mortgage of the house. It was not aware that the said building/insured premises was used as godown for the stocks mentioned above till they got a report from the surveyor as well as fire brigade report. On receipt of claim, it had appointed a surveyor Sri V. V. Sridhar to conduct preliminary survey after receipt of the same appointed another surveyor Sri A. C. Rami Reddy who in turn assessed the loss at Rs. 87,836/-. In both the reports the fact that building was used for godown and camphor and incense manufacturing unit was mentioned. The record including the fire brigade report, FIR show that the complainant has been using the premises for manufacturing purposes not covered by the terms of the policy. The guarantor mortgaged the building as collateral security to the financier. He insured it as dwelling house, however it was used for altogether different purpose. Since it is violation of clause 3(a) of the terms and conditions of the policy it had repudiated. The complainant is not entitled to any amount towards loss or any compensation. The repudiation was just and there was no deficiency in service on its part and therefore prayed for dismissal of the complaint with costs.
4) Subsequently R2 bank was impleaded. It contended that the complainant had availed a loan of Rs. 10 lakhs on 3.11.2003. In order to cheat the bank the proprietor of the complainant gave a false declaration by way of executing an indemnity bond declaring that the original document was lost. He has given his own property as collateral security and created equitable mortgage by way of depositing original partition deed. It is a self acquired property of his father. By creating fresh mortgage over the scheduled property the mortgage created by T. G. Kusuma was discharged. She has offered her property as collateral security. Subsequently fire accident took place where the entire stock was damaged.
In fact, earlier the complainant had created equitable mortgage in favour of Andhra Bank and deposited the title deeds in the name of P. Seshaiah along with relinquishment deed in favour of the complainant without disclosing the schedule. They had all conspired. It could know the creation of mortgage in favour of Andhra Bank when possession notice given by Andhra Bank was published in Andhra Jyothi. Subsequently the bank could recover Rs. 11,70,000/- on settlement of claims and the remaining balance was paid by the complainant. At any rate it was not a necessary party as no claim was made against it.
5) The complainant in proof of his case filed his affidavit evidence and got Exs. A1 to A5 marked, while the insurance company filed Exs. B1 to B10.
6) The Dist. Forum after considering the evidence placed on record opined that the complainant had insured his residence, mentioned it as dwelling house, however using the building as godown for storing camphor as well as manufacturing incense sticks and therefore violated condition No. 3(a) of the policy. At no time he had taken steps to use it as manufacturing unit or godown. Since the camphor and incense sticks are hazardous in nature and highly inflammable and the premises is not insured the insurance company is not liable to pay compensation, and therefore dismissed the complaint.
7) Aggrieved by the said decision, the complainant preferred the appeal contending that the Dist. Forum did not appreciate the facts in correct perspective. In fact he noted in the proposal form pertaining to his house that he has been doing business by keeping the stocks in it. He also submitted another proposal form for the stocks which he kept in the house. Accordingly it had issued two policies having serial numbers on the same day, prepared and signed by one person. They have knowledge about the use of the house as business premises as well as manufacturing purpose. Now they cannot say that the policy was not covered for the house of the complainant which was being used for business and manufacturing purpose. The insurance company issued the policies after inspection of the house. The insurance company ought to have awarded amounts as per the estimation made by the investigating officers. Therefore he prayed that the appeal be allowed.
8) The point that arises for consideration is whether the order of the Dist. Forum is vitiated by mis-appreciation of fact and law?
9) It is an undisputed fact that the complainant had taken standard fire and special perils policy in his name covering the risk of his residential building for Rs. 10 lakhs evidenced under Ex. B7 covering the period from 18.12.2003 to 17.12.2004 and later renewed from 23.8.2005 to 27.8.2006. R2 is named as banker/financier. The complainant is running a business under the name and style of M/s. Srinivasa Agencies. He borrowed loan from R2 bank and kept his residential house as collateral security. The complainant was dealing in Goderj tea, Everest masala, coils, bulbs, perfumes, camphor and other items. He procures camphor blocks from its manufacturers and with the help of machine he makes the camphor blocks into camphor tablets in the building and supplies to various shops so also incense sticks.
10) It is not in dispute that he locked the residential building and went to Chennai along with his family members.
On 3.11.2005 when he was in Puttaparthy he came to know that there was fire accident to the above said building wherein the building as well as the entire stocks were gutted. Reports were given to the police, fire brigade and also claim to the insurance company. The fact that these camphor blocks, incense sticks and other material along with machines were kept in the residential building when the accident took place was not in dispute. While he alleges that he has been using the premises both for his residential purpose as well as for keeping the stock in trade, the fire brigade in its report Ex. B5 mentioned that The building ceiling is collapsed due to fire accident because of old building. At present the building is not fit for occupation.
11) Sri V. V. Sridhar the surveyor who was appointed to find out the cause of fire and the amount of loss noted that Being used as godown for keeping various stocks of tea powder, incense sticks, mosquito coils, electrical bulbs, SK sons products, Everest Masala products, Abiram perfumes, idly rava and camphor. The risk covered is for a residential building as per the policy. Whereas the said premises is being used as both godown and residential purpose. Addition to that camphor processing machines were also kept in the same premises. Since camphor is hazardous by nature and it is highly flammable. Due to the accidental electrical short circuit the fire became very huge and high due to the fire of the various types of goods and camphor which were kept in the said residential building premises.
(emphasis ours)
12) In view of the above report Sri A. C. Rami Reddy, Surveyor & Investigator was appointed who after investigation assessed the value of the building. He mentioned that the insured asked Mr. A. Madhusudan, licensed engineer, TUDA, Tirupathi to make an estimate to reconstruct the building. Mr. A. Madhusudhan gave an estimate for Rs. 4,11,071/- to reconstruct the super structure of the entire building. The estimate given by the Mr. A. Madhusudhan is enclosed. Since he thought that the estimation was on higher side and only front portion of the building was damaged he assessed the loss at Rs. 87,836/-. The insurance company however repudiated the claim on the ground that there was violation of condition No. 3(a) of the policy. Condition No. 3(a) reads as follows :
3. Under any of the following circumstances the insurance ceases to attach as regards the property affected unless the insured before the occurrence of any loss or damage, obtains the sanction of the company signified by endorsement upon the policy by or on behalf of the company.
(a) If the trade or manufacture carried on to be altered, or if the nature of the occupation of or other circumstances affecting the building insured or containing the insured property be changed in such a way as to increase the risk of loss or damaged by insured perils.
13) It is not the case of the complainant hat he had informed that his residential premises is being used for storing stock and for manufacture of camphor tablets and incense sticks. Undoubtedly the nature of occupation had been changed viz., a portion of the residential premises into a manufacturing unit thereby increasing the risk of loss or damage. He has been keeping camphor, incense sticks, perfumes etc. in the said house using it as a godown. He has also been manufacturing camphor tablets by procuring camphor blocks from the wholesale dealers. This is evident from very fire brigade report. Since the complainant without informing the insurance company not only altered the nature of the premises but also user of the premises for storing the stock in trade violating the terms and conditions which would entail the insurance company to repudiate the policy. The complainant having taken the policy for residential building cannot convert the building into a godown and manufacturing unit thereby exposing it to fire. The complainant could not prove that there was another policy wherein he had taken two policies one for shop and another for residential building. At any rate the policy that was taken for residential purpose was destroyed as he was keeping camphor, incense sticks and other material and using it as godown besides he was manufacturing camphor tablets from said stocks which resulted in fire accident. The Dist. Forum after considering the entire evidence placed on record has come to a correct conclusion that the complainant was not entitled to any amount, he having violated the terms of the policy. The repudiation was just. We do not see any merits in the appeal.
14) In the result the appeal is dismissed. No costs.
1) _______________________________ PRESIDENT
2) ________________________________ MEMBER Dt. 25. 02. 2010.
*pnr