National Consumer Disputes Redressal
M/S Anuj Textiles & Anr., vs National Insurance Co. Ltd. & 2 Ors., on 9 July, 2020
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CONSUMER CASE NO. 237 OF 2014 1. M/s ANUJ TEXTILES & ANR., Through its Proprietor, Shri N. K. Saraogi, 14, Amratola Street, Police Station-Burrobazar, 2nd Floor, KOLKATA - 700001. ...........Complainant(s) Versus 1. NATIONAL INSURANCE CO. LTD. & 2 ORS., Division XXII, Ground Floor, National Insurance Building, 8, India Exchange Place, KOLKATA - 700001. 2. National Insurance Co, Ltd., CRO-2, National Insurance Building, 8, India Exchange Place, KOLKATA - 700001. 3. National Insurance Co. Ltd., Head Office: 3, Middleton Street, KOLKATA - 700001. ...........Opp.Party(s)
BEFORE: HON'BLE MR. C. VISWANATH,PRESIDING MEMBER
For the Complainant : Mr. Joydeb Kumar Das, Advocate with
Mr. Somnath, Advocate For the Opp.Party : Mr. Debajit Dutta, Advocate
Dated : 09 Jul 2020 ORDER
C.VISWANATH
1.Complainant No.2 is the Director of M/s Anushree Textiles Pvt. Ltd. and Proprietor of its division, Anuj Textiles, which prints and sells sarees in the brand name of "Anu." It stocks all types of sarees and thans at their godown at 3, Cossipore Road, 1st Floor, Kolkata-700002. According to the Complainants, the Opposite Parties/Insurance Company insured their godown, alongwith goods, vide policy No.154400/11/09/00000831 for a sum of Rs.1.5 crores. Insurance policy was for the period from 26th March, 2010 to 25th March, 2011 mid-night. Fire broke out on 21.02.2011 at 8.00 am in the adjacent plastic factory due to which the godown of the Complainants was also affected. On informing the Fire Department, fire extinguishers reached the godown and extinguished the fire. Opposite Parties/Insurance Company was also informed of the fire. Opposite Parties appointed a surveyor, vide letter dated 22.02.2011, who inspected and assessed the loss due to fire. The surveyor checked several documents and sought clarifications from the Complainants which were duly replied. Final survey report was submitted on 10.05.2011 to settle the claim at Rs.1,42,50,000/-. Thereupon the Opposite Parties appointed an investigator, vide letter dated 31.01.2012, who assessed the loss on 14.03.2012 at Rs.59,16,024.92. The claim, however, was repudiated by the Opposite Party, vide letter dated 18.10.2012. According to the Complainants, the Opposite Parties, not depending on the surveyor's/investigator's report, simply to harass the Complainants did not settle the claim on one pretext or the other. Hence Complaint was filed before this Commission with the following prayer: -
"a) In the premises above and in the interest of equity, it is therefore prayed that the Hon'ble Commission may be pleased to award a sum of Rs.1,42,50,000.00 as assessed by the appointed surveyor as settlement of the claim of the complainants and the Surveyor's charges Rs.
b) Interest from the date of fire till realization @ 15% on payment. c) Award compensation of Rs.50,000.00 for harassment and Mental torture caused to complainants. d) Advocate's fees & cost as your Honour deem fit and proper. e) All payments to be made within the one month from the date of the receipt of this Hon'ble National Commission order and as ordered by this Hon'ble Commission."
2. According to the Opposite Parties, a Standard Fire and Special Perils Policy was issued in the name of M/s Anuj Textiles to cover stock of sarees and textiles kept in the godown. The location of the stock was mentioned as "godown of M/s Tirupati Empore, 3, Cossipore Road, Kolkata." The entire stock was reported damaged by the alleged fire accident which took place on 21.02.2011 at the adjacent plastic godown and spread to the godown of the insured. Surveyor was appointed, vide letter dated 22.02.2011, to survey and assess the loss. The surveyor, without considering the relevant factual position and documentation, vide report dated 10.05.2011, assessed the net loss at Rs.1,49,90,000/-. On close scrutiny of the survey report and documents like audit report, bank particulars, stock details, proof of insurable interest etc. ambiguity was found under the following heads: -
"a) Ownership of location of risk (insured godown); b) Ownership of the premises in question; c) Insurable interest of the stock in question; d) Non-disclosure of facts and circumstances material to the risk (viz. non-disclosure of multiple occupancy of the location of risk); e) Ownership/proprietorship as per audit books and bank statement; f) Quantity of stocks damaged; g) Quantity of stocks recovered and salvage value and finally h) Net assessment of loss."
3. Despite clarifications sought by the Opposite Parties, the surveyor failed to provide any satisfactory explanation for the assessment made. The Opposite Parties, therefore, appointed an investigator, vide letter dated 31.01.2012, to look into the cause of loss, insurable interest, quantum of loss and genuineness of the claim. The investigator, vide report dated 14.03.2012, brought out gross violations of policy conditions as mentioned below: -
"a) Location of Risk; b) Absence of insurable interest; c) No non-disclosure/misrepresentation of facts (multiple occupancy) material to risk; d) Right of subrogation."
4. In view of the aforesaid violations on the part of the Complainants the investigator assessed the loss to a tune of Rs.59,16,025/- on non-standard basis. He, however, left the decision of settlement of the claim to the Opposite Party. The Opposite Party, vide letter dated 18th October 2012, repudiated the claim of the Complainants on the following grounds: -
"a) The Complainants could not establish their insurable interest on the materials allegedly destroyed by fire at 3, Cossipore Road, Kolkata;
b) The Complainants have suppressed/misrepresented to the Opposite Party the facts and circumstances, material to the risk, such as the location of risk, nature of the location of the risk, multiple occupancy of the declared premises including the existence of plastic product manufacturing unit and oil mill at the declared premises which had the effect of enhancing the risk.
c) The Complainants had not observed good faith and committed breach of warranties- both express and implied, under the subject policy."
5. It was submitted that the relevant terms and conditions contained in the policy have been violated by the Complainants, which read as follows: -
"General Condition No.1-THIS POLICY shall be voidable in the event of misrepresentation, mis-description or non-disclosure of any material particular.
General Condition No.6 (b)- The insured shall also at all times at his own expense produce, procure and give to the company all such further particulars, plans, specifications books, vouchers, invoices, duplicates or copies thereof, documents, investigation reports (internal/external), proofs and information with respect to the claim and the origin and clause of the loss and the circumstances under which the loss or damage occurred, and any matter touching the liability or the amount of the liability of the company as may be reasonably required by or on behalf of the company together with a declaration on oath or in other legal form of the truth of the claim and of any matters connected therewith.
General Condition No.8- If the claim be in any respect fraudulent, or if any false declaration be made, or used in support thereof or if any fraudulent means or devices are used by the insured or anyone acting on his behalf to obtain any benefit under the policy or if the loss or damage be associated by the willful act, or with the connivance of the insured, all benefits under the policy shall be forfeited."
6. It was submitted that the claim was manipulated, fabricated and bogus. A contract of insurance is a contract of ubberima fides based on good faith. If the claim of the insured is fraud, it is sufficient ground to repudiate the claim. The Complaint is bad for non-joinder of parties as the owner of the location "3 Cossipore Road, Kolkata-700002"being Dalmia Laminates Ltd., a Public Limited Company and the proprietor of Shri Kesari Nandan Printing Works, being Mr. Robin Saraogi had not been made parties. In absence of the same, the Complaint deserved to be dismissed for non-joinder of parties. It was submitted that there were serious allegations of disputed ownership of location of risk and multiple occupancy which required detailed evidence both oral and documentary. It is a well settled principle of law that matters of complex nature requiring detailed and critical examination of the evidence and cross-examination cannot be dealt under the summary jurisdiction of the Consumer Forum. In view of the above, the present Consumer Complaint was not maintainable.
8. Heard learned Counsels for the parties and carefully perused the record. Learned Counsel for the Complainants submitted that Opposite Parties were informed of the fire incident well in time and Opposite Parties also appointed their surveyor to assess the loss. The Surveyor assessed a loss to the tune of Rs.1,42,50,000/- Parties instead of paying the assessed amount to the Complainant, appointed an investigator who assessed the loss at Rs.59,16,024.92. Thereafter also Opposite Parties did not pay any amount to the Complainants and repudiated the insurance claim, in order to harass the Complainants. Based on these arguments, counsel for the Complainants submitted that the Complaint be allowed and Opposite Parties be directed to pay the amounts prayed in the Complaint.
9. Learned Counsel for the Opposite Parties submitted that Standard Fire and Special Perils Policy was taken by the Complainants in the name of M/s Anujj Textiles to cover the stocks kept in godown of M/s Tirupati Empore, 3 Cossipore Road, Kolkata. In the investigation it was found that there was no entity in the name of M/s Tirupati Empore in the said location. It was also submitted that the claim of the Complainants was repudiated as Complainants violated important terms and conditions of the insurance policy. Complainants also failed to establish their insurable interest in the insurance policy. Complainants also supressed material facts such as location of risk, multiple occupancy of declared premises including existence of plastic product manufacturing unit and oil mill in the insured premises. It was also submitted that Complainants violated the principle of uberrima fides. Therefore, the Insurance Company was perfectly justified in repudiating the claim. Learned Counsel for the Opposite Parties submitted that the Complaint be dismissed.
10. Standard Fire and Special Perils Policy was taken by the Complainants from the Opposite Parties/Insurance Company in the name of M/s Anuj Textiles to cover stock of sarees and textile goods kept in the godown. The location of stock was mentioned as godown of M/s Tirupati Empore, 3, Cossipore Road, Kolkata. Entire stock was alleged to have been damaged by the fire accident which broke at 8.00 am on 21.02.2011 at the adjacent plastic godown and spread to the godown of the insured. The incident of fire was reported to the fire department as well as the Opposite Parties. The Opposite Parties appointed surveyor vide letter dated 22.02.2011, who inspected and assessed the loss caused due to fire. On 16th April, 2011 the Complainants submitted the fire claim form to the Opposite Party claiming an amount of Rs.1,66,91,694/-. Final survey report was submitted on 10.05.2011 to settle the claim of Rs.1,42,50,000/-. Not satisfied with the report of the surveyor an investigator was appointed, vide letter dated 31.01.2012. The investigator assessed the loss on 14.03.2012 at Rs.59,16,024.92. The report of the investigator pointed out several discrepancies and gross violations of the policy conditions, namely, (a) location of risk (b) absence of insurable interest (c) non-disclosure/misrepresentation of fact (multiple occupancy) material to risk (d) right of subrogation. The Fire and Special Perils Policy was subject to location clause. The premises and holding were owned by Dalmia Laminates Ltd. In the policy, the location was recorded as M/s Tirupati Emporium SCLP, 3 Cossipore Road, Kolkata 700002. However, on record M/s Kesari Nandan Printing Works existed at 3, Cossipore Road. This was a separate corporate body from Anuj Textiles. Existence of a company named M/s Tirupati Emporium was not authenticated. Kesari Nandan Printing Works was a trading unit as per the letter head. As per the bank audit's report it was a factory undertaking packing & cutting jobs. As per trade license it was a non-food item unit for saree packing and cutting. The premises and holding was indeed a factory and not a godown having an electricity connection. The proprietor of Kesari Nandan Printing Press was Mr. Robin Saragoi whereas the proprietor of M/s Anuj Textiles was Mr. Narendra Saragoi. The location risk must confirm the address written in the policy. It may be seen from the above that the address where the stock was intended to be covered was recorded as godown of Tirupati Emporium SCLP whereas there was no such unit in the holding number which amounted to violation of the terms & conditions of the insurance policy. The location 3, Cossipore Road mentioned in the policy, the investigator clearly brought that the ground floor of premises was occupied by the plastic factory (Balaji Polypack) which had a wooden roof where Kesari Nandan Printing Works was located. The holding number had operations of two job works, namely, Shri Krishna Prints and Jitendra Prasad Polish Works. Their physical location was different and not affected by fire, as the name was not mentioned either in the fire brigade report or in the police report. The holding had another oil mill, namely, Tarakeswar Oil Mill as mentioned in the fire report. Rani Sati Hosiery unit was located in the mezzanine floor as shown in the police report which was found absent in the fire report. The insured did not inform the insurer about the multiple occupancy of the risk amounting to non-disclosure of material facts, which amounted to breach of location clause of the insurance policy. As declared by the Complainants the location was shown as a godown whereas it was indeed a factory having an electricity connection, which the investigator stated was also confirmed by the insured. The most serious risk factor was the plastic factory and oil mill being located in the same premises at 3, Cossipore Road, which called for a higher basic rate due to increased risk. According to the investigator, though the fire first started in the plastic unit, the insured had not legally moved to protect the subrogation right of the insurer. The investigator went on to record that though the above violations can make a contract voidable, he left it to the option of the insurer to settle the claim on non-standard basis.
10. As seen from the above, the policy was issued for a specific location with certain calculation of risk whereas the stock was located in another location having several other high risk causing units. The proprietors of the concerns were also different. No valid or credible material could be supplied, wherefrom it could be inferred that the goods which were destroyed by the fire at 3, Cossipore Road were owned by the Complainants. The Opposite Party/Insurance Company cited the bank audit's report that the entire hypothecated stock at the portion occupied by Sri Kesari Nandan Printing Works at 3, Cossipore Road was shown to be of M/s Anushree Textiles Pvt. Ltd. and not of the Complainants and no insurable interest could be proved in the stock that got destroyed in the fire. The claim was, therefore, repudiated by the Opposite Party/Insurance Company vide their letter dated 18th October, 2012 as no claim. The claim was rightly repudiated due to misrepresentation/mis-declaration regarding the location risk as well as non-disclosure of facts and circumstances material to the risk as was clearly and elaborately brought out by the investigator. No entity called M/s Tirupati Emporium was located, as described in the location in the policy in the 3, Cossipore Road. No document could also be supplied by the Complainants to show the existence of M/s Tirupati Emporium operation from the premises shown in the policy document. After the fire, the Complainants declared that the material was stored in the godown of Sri Kesari Nandan Printing Works located in the first floor at 3, Cossipore Road. The proprietor of Sri Kesari Nandan Printing Works was other than the proprietor of the Complainant firm. The Complainants had no existence at 3, Cossipore Road, Kolkata and no evidence could be provided by the Complainants to show that the goods destroyed by the fire at 3, Cossipore Road were owned by the Complainants. In the bank audits report, the entire hypothecated stock in the portion occupied by Sri Kesari Nandan Printing Works at 3, Cossipore Road was shown to be of M/s Anushree Textiles Pvt. Ltd. The claim of the Complainants further suffers due to misrepresentation not only of the location of the risk, but also non-disclosure of the factum of multiple occupancy at the declared location i.e. the existence of plastic goods unit and oil mill etc. as also the increased risk due to location of several units dealing with highly combustible and inflammable materials like plastic and oil etc. By supressing the material information relating to the risk involved, the Complainants had rendered the contract of insurance void. There was breach of warranties and enhancement of risk by supressing and misrepresenting the facts.
11. In view of the above discussion, I find that there is a gross violation, suppression and misrepresentation of material information regarding the location of the unit and the increased risk due to multiplicity of units in the same premises. The Opposite Parties/Insurance Company rightly repudiated the claim of the Complainant based on the detailed report of the investigator. The Complainants failed to establish any deficiency in service on the part of the Opposite Parties. I, therefore, find no merit in the Complaint and the same is hereby dismissed.
...................... C. VISWANATH PRESIDING MEMBER