State Consumer Disputes Redressal Commission
Jyoti Candle Works (Industries), vs National Insurance Company Limited on 19 September, 2008
IN THE STATE COMMISSION:DELHI IN THE STATE COMMISSION: DELHI (Constituted under Section 9 of The Consumer Protection Act, 1986) Date of Decision: 19-09-2008 Complaint No . C-64 / 2000 1. M/s Jyoti Candle Works (Industries), -Complainants Plot No.5, Industrial Area, Near HMT Watch Factory, Zarina Kote, SRI NAGAR, J&K STATE. 2. Smt. Parmeshar Kaur Bali, C-24, Raksha Kunj, Paschim Vihar, NEW DELHI-1100 63. Versus 1. The Divisional Manager, -Opposite Party No.1 M/s National Insurance Company Limited, Division No.IX, (Opposite Rivoli Cinema), 3/90 Connaught Circus, New Delhi-1100 01. 2. The Regional Manager, -Opposite Party No.2 M/s National Insurance Company Limited, SCO No.337-340, Sector 35-B, CHANDIGARH (U.T.). 3. M/s K.N. Sethi & Company, -Opposite Party No.3 Surveyors & Assessors, House No.3189, Sector 28-D, CHANDIGARH (U.T.). 4. The Chairman-cum- -Opposite Party No.4 Managing Director, M/s National Insurance Company Limited, Registered Office: 3 Middleton Street, CALCUTTA-7000 71. 5. The Secretary & Controller of Insurance, Ministry of Finance, Government of India, Department of Economic Affairs, Lok Nayak Bhawan, New Delhi-1100 11. CORAM: Justice J.D. Kapoor, President Ms. Rumnita Mittal, Member
1. Whether Reporters of local newspapers be allowed to see the judgment?
2. To be referred to the Reporter or not?
JUSTICE J.D. KAPOOR, PRESIDENT (ORAL) The complainant No.1 is a proprietary Firm and the complainant No.2 is its sole proprietor.
The said Firm was running a Factory for manufacturing candles and other wax related products, and the same was insured with the Opposite Party No.1 for Rs. 4,00,000/- (Rs. Four Lakhs only) only against Loss or Damage due to Fire, Lightning Explosions/Implosions, Riots, Militant Activities, Strikes and Malicious Damage, Impact by Vehicle or Animal, Aircraft or other Aerial or Space Vehicles, Storms, Subsidence and Landslide, Earthquake etc. vide Fire Policy A No.350900/11/110/008 issued by the Opposite Party No.1, initially covering a period from 07.01.1989 to 06.01.1990. The said Policy has since been kept operative and alive by renewing it on the yearly basis from its inception till 07.01.1999.
2. The details of the subject matter thus insured are as under:-
(a) Rs. 2,50,000/- (Rs. two and a half lakhs only) :: Building (above plinth level only).
(b) Rs. 1,00,000/- (Rs. one lakh only) :: on Plant & Machinery.
(c) Rs. 50,000/- (Rs. fifty thousand only) :: on Stock of Parafine Candle lying at the factory.
3. During 1991, the situation created by the militants with rampant terrorist activities at Srinagar became so acute and serious that for the security of their lives, the complainant with all her family members had to flee, escape and migrate to Delhi. Sometime during the month of August, 1993 and in the absence of the complainant, the aforesaid factory including its stocks, plant, machinery and the building were destroyed by the mob of militants and terrorists. They reportedly decamped with most of the moveable property lying in the aforesaid factory.
4. The complainant learnt about the loss, damage and destruction of her factory including stocks, machinery, buildings etc. at Srinagar from her nearest relatives. After getting firm confirmation about the actual destruction of the factory, immediately, she submitted her claim to OP No.2 on 23.08.1993. On 06.10.1993, she sent an FIR by post to the SHO, Kumbirwari Chhatabal Police Station, Srinagar (J&K) vide postal Registration Receipt No. 0435 dated 06.10.1993 (Ropar Sectt. Post Office) with a copy to the Director General Police, Srinagar. Two reminders were sent to the aforementioned SHO on 01.12.1993 (vide postal registration receipt No. 0550 dated 03.12.1993) and 29.12.1993. The said OP was further requested to depute a Surveyor to assess the loss of the factory including the building. All the relevant documents were enclosed with the said claim. The OP No.2 appointed the OP No.3 as the surveyor for the purpose.
5. The complainant again sent a representation dated 05.08.1994 to OP No.2 which was acknowledged vide his letter No.CHRO:II:GR. CELL: 0070-A:63:94 dated 10.08.1994 for non-settlement of her fire claim No.350900/11/93-94/12 under Policy No.350900/11/1101008 for her property covered by the above mentioned policy. The OP No.2 in his aforesaid letter further stated : In view of the contents, we are referring the matter to the concerned Branch/DO to deal with your case on merits promptly and advise you the latest status directly. We trust you would be hearing from them in the matter shortly. The OP No.2 also endorsed the aforesaid letter to OP No.1 and further stated : We enclose herewith a copy of the complaint as received from the insured and request you to kindly look into the matter on merits to dispose of the matter expeditiously under intimation to us while writing a suitable letter to the complainant. The OP No.1 in their letter No.350900 dated 30.11.1994 stated that the matter is pending before the Grievances Cell of the Company and they are hard pressed to take immediate action in settlement of this claim. But thereafter inexplicably, they have shoved the case under their carpet.
6. While appreciating the serious predicament and sufferings of the J&K migrants, the Joint Secretary to Govt. of India and Controller of Insurance, Ministry of Finance, Department of Economic Affairs, Lok Nayak Bhawan, New Delhi-1100 01 vide his letter dated 08.04.1992 had already streamlined the process to facilitate the easy and expeditious settlement of Insurance claims of the J&K migrants and declared that the Rules have been relaxed. Two of such rules streamlining the process of settlement of insurance claims are pertinent on this aspect which say:
(iii) Police reports and Fire-Brigade reports which are required in respect of claims have been waived so long as circumstantial evidence relating to the cause of fire are found satisfactory by the surveyor. They have been instructed to release their reports without waiting for the Police and Fire-Brigade reports.
(iv) Where the quantum of loss cannot be immediately assessed for whatever reason, the surveyors have been instructed to recommend on account payment to provide immediate provisional relief to the insured.
7. Despite crystal clear instructions of the Ministry and relaxation of the rules to mitigate the sufferings of the victims of militancy in the Kashmir, the OP No.1 has been unnecessarily whiling away the time and dilly-dallying the matter on one pretext or the other, this time ostensibly for an illegible FIR vide their letter No.350900/FIRECLAIMS/97. The original FIR has been received by them again on 02.12.1997, yet there is no sign of any will on their part to settle the claim.
8. There had been an eerie silence of the proverbial sphinx. Five years have elapsed since the claim was preferred by the complainant. She or her representatives sent 20 representations and 10 reminders and made almost 125 personal visits to the offices of the OPs No.1 to 3, but of no avail till date. All the requirements were fulfilled, but the claim of the complainant is yet to be settled.
9. Being aggrieved, 60-days legal notices dated 17.06.1998 were served on all the OPs by Speed Post A/D No.513, 414, 415, 416, 417 & 418, all dated 17.06.1998. All the parties received the above said legal notices within 3 days. The OP No.1 denied their liabilities of claim through their Counsel, Sh. Kishore Rawat, Advocate vide his letter dated 20.07.1998. The OP No.2 informed the counsel of the complainant vide their letter No.VHTjO.II CSRD: HO:
JM:U: 97: 207 dated 21/27.07.1998 that since the policy was issued by the OP No.1, as such claim filed cannot be pursued from OP No.2 and requested the complainant to be in touch with OP No.1.
11. The OPs have in keeping with their usual work culture subjected the claimant to mental torture and agony and have subjected her to humiliations and indignities and therefore seeks the following reliefs:-
(a) Claim amount of Rs. 4,00,000/- (Rs. Four lakhs) only plus interest @ 18% per annum under the above-noted Insurance Policy, still lying unpaid since 23.08.1993.
(b) Compensation of Rs. 5,00,000/- (Rs. Five lakhs only) for loss of business and non-resettlement after migration solely due to withholding of cash flow by the OPs since 23.08.1993.
(c) Compensation of Rs. 3,00,000/- (Rs. Three lakhs only) for consequential loss of business reputation since 23.08.1993.
(d) Compensation of Rs. 2,50,000/- (Rs. Two lakhs and Fifty thousand only) for mental agony, sufferings and anxiety since 23.08.1993.
(e) Interest @ 18% on the aforesaid outstanding amounts w.e.f.
23.08.1993 till the realization of the said amounts.
(f) Reasonable cost of Legal notice and this litigation.
12. In their defence the OP came up with the following pleas:-
(i) That the complainant without her family members flee, escaped and migrated to Delhi. However, the claim of the complainant was repudiated not once but twice after due consideration. There are no traces of terrorist activity involved in their property.
The FIR although lodged after 4 years also does not reveal any terrorist activity as the FIR was lodged under Section 457/380 IPC.
(ii) That the complainant did not insure the plant and machinery against the theft, the building was insured under the fire policy. Hence, the complainant has no case before this Honble Commission against the present OP. The complainant ought to have insured under the burglary policy (Business Premises) to cover the risk of theft or burglary for any claim as per the FIR in the year 1993 since there exist no other such policy, the claim of the complainant was rightly repudiated.
(iii) That the FIR presented before the Insurance Company was in the year 1997 after the gap period of 4 years. The FIR was lodged only on 25.06.1997 much after the alleged occurrence.
(iv) That the surveyor was immediately deputed to assess the loss of the factory including the building under the fire policy. But it is denied that all the relevant documents were enclosed with the suit claim. No FIR was sent to the present OP, hence, the complaint be dismissed with cost.
(v) That the matter was duly examined and the reply was sent to the insured. The claim of the complainant was repudiated on the basis of the policy; therefore, the complainant had no cause of action.
(vi) That there is no deficiency of service and negligence on the part of present OP, the matter was investigated thoroughly. The insured was not covered under the theft and burglary policy but covers under fire policy.
(vii) That it is denied that due to the work culture, as alleged, has caused mental torture and agony to the complainant. It is also denied that the attitude of the company was deplorable. There was no delay in deputing the surveyor and it was on the basis of the report of the surveyor and the investigation carried out, the claim of the complainant was repudiated. The Insurance Company cannot pay the complainant, which is not within the ambit of the contract. The privity of contract was to pay the claim under the Fire Policy and not theft/burglary. There is no policy and privity of contract to cover the theft or burglary. Hence, question of compensation does not arise. The claim is Rs.
2.50 lacs towards mental torture and agony is baseless and, hence, denied.
13. The complainant filed rejoinder and reiterated that the Policy of Fire issued to the complainant also covers loss or damage to the property covered due to riot/militant activity. It is totally false to say that as per the circumstantial evidence procured by the investigators, the bricks were stolen from the building and there are no traces of fire in the building. It is also denied that the loss was on account of theft and burglary, which is not covered by the policy. The OPs have not filed any evidence in support of their above contentions except making a mere false statement.
14. We have accorded careful consideration to the rival contentions of the counsel of the parties.
15. The OPs in their own statement accepted the fact that there was extensive loss to the property of the complainant. It is further admitted that FIR was for loss and damage but asserted that it was for theft and burglary and that it was delayed. Delay was due to the prevailing circumstances at the relevant time and it was not known to the complainant at the time of filing of the FIR whether the loss and damage was due to the theft or otherwise. However, it is the conclusive finding of the Police as well as the official surveyor of the Defendants that the loss of property to the extent of Rs. 15 lacs was due to the terrorists (external anti-State elements) from outside the State. This was also the finding of the Official Investigator and Surveyor of the OPs.
16. Thus rejection of the claim was unjustified and uncalled for and amounts to deficiency in service which means any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertake to be performed by a person in pursuance of a contract or otherwise in relation to any service.
17. The insurance cover for the plant and machinery was for Rs. 1 lac and Rs. 50,000/- for the stock of paraffin candle lying at the factory.
18. In view of the peculiar facts of the case and in view of the report of the surveyor the complaint is allowed in the following terms:-
(i) OP shall pay Rs.
1.5 lacs towards insurance amount with 12% interest from the date of filing of the complaint till the date of realization.
(ii) OP shall also pay Rs.
50,000/- as compensation for the mental agony and harassment, which shall include cost of litigation also.
19. Payment shall be made within one month from the date of this order.
20. Complaint is allowed and disposed of in aforesaid terms.
21. A copy of the order as per the statutory requirements be forwarded to the parties free of charge and thereafter the file be consigned to Record Room.
22. Announced on 19th September, 2008.
(Justice J.D. Kapoor) President (Rumnita Mittal) Member jj