National Consumer Disputes Redressal
M/S. Baspa Organics Ltd. vs United India Insurance Co. Ltd. on 21 July, 2015
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CONSUMER CASE NO. 48 OF 2004 1. M/S. BASPA ORGANICS LTD. Through Its Chairman Cum Managing Director Shri. Mohanlal S. Agarwal,
Registered Office at:- T - 131 MIDC, Tarakpur- 401 506 Thane ...........Complainant(s) Versus 1. UNITED INDIA INSURANCE CO. LTD. United India House,
24, Whites Road, Chennai - 600 014. 2. M/s. Mehta And Padamsey Surveyors Pvt. Ltd. Suite No. 21, 4th Floor "Anands" 303 (Old No. 194/30) Poonamallee High Road, Kilpauk Chennai - 600 010. 3. M/s. S.B. Nalluri and Associates Hornby ;Building 2nd Floor, Office No. 9, 172 D.N. Road Fort, Mumbai - 400 001. 4. The Chairman, Insurance Regulatory and Development Authority "Parishrama Bhavan," 3rd Floor 5/9 58-B, Bashir "B" Hyderabad - 500 004. 5. Union Of India Ministry Of Finance Insurance Division Parliament Street, New Delhi - 110 001. ...........Opp.Party(s)
BEFORE: HON'BLE MR. JUSTICE AJIT BHARIHOKE, PRESIDING MEMBER HON'BLE MRS. REKHA GUPTA, MEMBER
For the Complainant : Mr J A Udaipuri, Advocate along with
Mr Amit Khurana, Proxy Counsel for
Mr Vipul Raheja, Advocate along with
Mr Mohan Lal Aggarwal, MD of the
Complainant Company IN PERSON For the Opp.Party : Mr Vineet Malhotra, Advocate with
Mr Vishal Gohri, Advocate
Dated : 21 Jul 2015 ORDER
The facts of the case as per the complainant are that his factory premises situated at T-131 MIDC, Tarapur - 401506 at Distt. Thane was a sick unit and the complainant had taken over the said factory in an auction through Maharashtra State Financial Corporation (MSFC).
2. The previous company namely M/s Shrirang Agro Chem. Pvt. Ltd. was manufacturing the chemical known as CYPER METHNIC ACID CHLORIDE (CMAC) which is an intermediate produce used for cash crops which is an expensive chemical. The previous company had taken an insurance coverage from the opposite party no.1 and the complainant continued their insurance coverage after taking over through the opposite party no.1 and the complainant had also continued with the manufacturing of the same chemical, namely CAMC in the said factory, premises.
3. The factory premises were purchased by the complainant for a sum of Rs.Four crores from MSFC in auction, pursuant to an advertisement in the Economic Times Newspaper (Bombay Edition) dated 7.3.2001. The said factory premises were completely renovated and upgraded by the complainant at the cost of above three crores, in which the plant and machinery was replaced and modern safety equipments were installed at the cost of the complainant.
4. The bidding of the said factory took place on 14.3.2001 and the complainant had been declared the highest bidders on 15.3.2001 by the MSFC, as the complainant had quoted Rs.4 crores towards the total coast of the said factory premises and the second highest bidder was Rs.1,79,000/-. A sum of Rs.16,22,000/- was paid by the complainant towards the stamp duty and registration charges and sale deed was executed by the said MSFC with the complainant. A further sum of Rs.40,00,000/- was deposited by way of 10% value of the bid with MSFC as per the condition of MSFC in order to prove the financial worthiness of the complainant.
5. The said factory premises were insured against the fire and special perils policy from 12.11.2001 to 11.12.2001 as per the scheme with the opposite party no.1 and they paid a sum of Rs.65,835/- towards the monthly premium. A further sum of Rs.65,835/- was paid towards the insurance coverage for a further period with effect from 12.12.2001 to 11.1.2002. The complainant had commenced their production in Nov., 2001 and in the 1st month of their production the complainant had produced 30 tons of CMAC which was the optimum capacity of the said plant and the finished goods as well as its by-products were worth Rs.1,86,65,680/- within a record period.
6. The respondent no.1 had inspected the plant, machinery and the production and after being satisfied with all the requirements the opposite party no.1 had issued the insurance coverage policy on monthly basis for total Rs.12 crores and fifty lakhs, out of which a sum of Rs.2 crores were claimed for raw material, goods in process and finished goods and a sum of Rs.10 crores fifty lakhs were claimed for the plant and machinery.
7. In the year 1996, the complainant had given raw material worth Rs.50 lakhs to the old owners of the said factory premises namely M/s Shri Rang Agro Chem Pvt. Ltd. and then subsequently from time to time the complainant had given the raw material to the tune of Rs.4,22,00,000/- and because of failure on the part of previous owners in making the payments of the complainant, they had filed criminal case No.1463/2003 under Section 138 and 141 of NI Act against the Director of the said M/s Shri Rang Agro Chem. Pvt. Ltd. and later on, it was declared as a sick unit, which was taken over by the MSFC, due to defaults in payment of their over dues in terms of the principle amounts alongwith the interest thereon.
8. The Chairman-cum-Managing Director, Mr.Mohanlal Agrawal suddenly had to rush to New Delhi for medical treatment of his brother at Apollo Hospital, New Delhi. Meanwhile, being at New Delhi, Mr.Mohanlal Agrawal himself fell sick and he had also undergone medical checkup in New Delhi at Apollo hospital.
9. On 3.1.2002 at about 11.37 a.m. huge fire broke out in the factory premises of the complainant and the matter was immediately reported by the duty staff at the said factory premises to various authorities including chief fire officer and local police station and immediately the firefighting team came on the spot and said fire had resulted due to electric spark/short circuit in one portion of the plant as revealed by various investigating agencies as result of which in a short span of time the entire factory premises was an engulfed in fire. The said factory premises had about 18000 sq.ft. constructed area which was covered and the rest of the portion was an open area and the said plant was fully operational on 24 hrs. basis. It had a huge quantity of raw material, stock in process and finished goods worth Rs.2 crores and the said finished goods were worth Rs.550/- per kg in the in the Indian market.
10. During the fire, no blast took place in the said factory premises since after renovation of the said factory by the complainant, modern equipments were installed with 'A' grade quality in reactors/furnaces section of the said factory premises. The General Manager, Mr. P.V.Tokade, who reported about the fire incident to the firefighting department, who within minutes of breaking out of fire, came at the scene of fire and the firefighting operation continued, which lasted till 8.00 p.m. on 3.1.2002, since huge material was stocked in the said factory and the storage area of Hexane, being highly inflammable material, the same was totally intact since it was underground having top grade fire proof system.
11. The Boisar police station had carried out the Panchnama on 3.1.2002. The complainant submits that the Chief fire fitting officer also prepared a report as regard to the fire and the said report had also appeared in the local newspaper. The opposite party no.1 had handed over the matter for investigation to the opposite party no.2, that in M/s C.P. Mehta and Co. in the month of Jan., 2002, who carried out the intensive investigation and assessed the damages for the purpose of settlement of insurance claim of the complainant for that purpose intensive inspection were carried out. Meanwhile, the opposite party no.1 had handed over the matter to M/s Mehta Padamsee Surveyors Pvt. Ltd., who had started their investigation and submitted their findings to the opposite party no.1 on 27.11.2001 and the opponent no.1 had further appointed surveyors namely M/s S.B.Nalluri and Associates, who in turn carried out the inspection as regard to the licences and assessment of damages and subsequently the opposite party no.1 had appointed M/s Mehta and Padamsee Surveyors Pvt.Ltd., who again carried out another independent investigation and survey of the said factory premises and submitted the reports to the opposite party no.1. The arbitrary appointment of so many surveyors as aforesaid caused confusion and such overlapping reports were illegal and unlawful and the same were against the public policy. Further, the reports/findings of the opposite parties No.2 to 4 were kept secret till now.
12. The entire renovation of the said factory premises was done by the complainant without availing any financial assistance from any banking institution by managing through the independent resources of the complainant themselves, their friends and relatives, hence, the complainant had put their entire stakes in the modernization of the said factory premises, which was giving 36 tons of production every month and the products were sold like hot cakes in the markets and money circulation with faster being a quality product.
13. The complainant averred that it was false to state that the claim of the complainant was taken for excessive value of Rs.12 crores without any basis. The fact remained that the Tariff Advisory Committee has estimated the losses at Rs.8,50,00,000/- and the Loss Prevention Association of India Ltd. had assessed the losses of Rs.9 crores twenty lakhs and the Deputy Director of Industrial safety and health Vasai had also estimated the loss about Rs.9 crores.
14. The opposite party no.1 had falsely stated that without licence under petroleum rules for storage and use of Hexane, the said factory was manufacturing the product known as CMAC, whereas it had been clearly made understood to the opposite party no.1, vide Ministry of Petroleum order dated 21.11.2001 that no such licence was required for storage and use of 20 KI Hexane and inspire of showing such rules, still the opposite party no.1 had decided to repudiate the claims of the complainant without any basis. The State Bank of India had deputed their technical expert committee, who in turn agreed to provide the term loan of Rs.7 crores to the complainant, which means that the value of the said factory premises would be more than ten crores in any event.
15. The complainant submits that on 25.2.2004, they have filed a writ petition No.894 of 2004 before the High Court of Bombay under Article 226 of the Constitution of India and the said writ petition came to be dismissed on 20.4.2004 on the ground that the writ jurisdiction did not lie and suit was required to be filed in such matters. They are in the process of filing special leave petition before the Apex Court of India interalia challenging the impugned order dated 20.4.2004. The complainant would rely upon the documents. The complainant, therefore humbly prayed as under :-
The National Commission may be pleased to order the opposite party no.1 to release the insurance claim of Rs.12,50,00,000/- in favour of the complainant alongwith the commercial interest @ 24% p.a. w.e.f. 3.1.2002 till the realization of entire insurance claim in favour of the complainant. The National Commission may be pleased to order to the opposite party no.1 for release the ad-hoc payment of Rs.10 crores in favour of the complainant, pending the hearing of the above complaint. The National Commission may be pleased to further order to opposite party no.1 to pay a sum of Rs.20,00,000,00/- to the complainant in addition to the interest @ 24% p.a. on the said amount, w.e.f. 3.1.2002.
16. In their written statement, the opposite parties stated that this Commission had no jurisdiction to entertain and to try the present claim as the complainant is a commercial/business organization and had obtained the insurance policy for the purpose of its business, therefore the complainant does not fall within the definition of "Consumer" as defined under the Consumer Protection Act, 1986. As the complainant does not fall under the definition of "Consumer" as defined under the C.P.Act, therefore, this Commission has no jurisdiction to entertain the present complaint. The opposite party prayed that the issue of jurisdiction was a preliminary issue and should be decided as a preliminary issue without first referring to or going into the merit of the case as the complainant had already instituted a suit.
17. The complaint filed by the complainant for claiming the alleged loss under a fire insurance policy, was totally illegal, bad in law, false, frivolous vexatious and made with ulterior motives. The claim arising out of alleged breach of contract is the subject matter of a civil suit, filed before Bombay Civil Court by lodging No.6081/2003 requiring appreciation of documentary and other evidence, examination of witnesses and experts could not be filed before this Commission. As the claim filed by the complainant is already subject matter of a suit, this Commission has no jurisdiction in the matter. The complainant had already chosen a remedy and will not be permitted to pursue this complaint. In this regard, the complainant had earlier filed a writ petition before the High Court. The suit had been filed much prior to filing of the present complaint and, therefore, the present complainant is not maintainable. The complainant had earlier filed a writ petition before the High Court of Bombay at Mumbai. The said petition was dismissed by the Bombay High Court.
18. The opposite parties state that it is true that the insurance was taken by the insurer for a period of one month from 12.12.2001 to 11.1.2002 vide policy no.120200/11/01/01317 for the total sum insured of Rs.12.50 crores. The insurance policy was based on the proposal form dated 12.11.2001 in respect of policy No.1225/01. This policy was taken for the first time on 12.11.2001 even though the complainant admittedly purchased and was in possession of the factory since 17.10.2001 and which was renewed from 12.12.2001, for a further period of one month and the same was issued subject to the terms, conditions, exclusions and stipulations of the fire policy as laid down by the All India Fir Tariff (AIFT) formulated by the Tariff Advisory Committee, Govt. of India.
19. The complainant deliberately and intentionally did not disclose to the opposite party at the time of taking the insurance policy that the factory of the complainant was a Sick Unit which had been taken over through auction from MSFC. The complainant also never disclosed to the opposite party that the factory was closed or that the entire plant and machinery and equipments were un-used for a period of about 10 months. The complainant at the time of taking insurance policy also did not disclose that the machinery was unused and not fit for regular and normal working. This fact was deliberately concealed and not disclosed in the proposal form submitted by the complainant.
20. As per the office record, one M/s Shrirang Agro Chemical Pvt. Ltd. had insured their factory by name M/s Shrirang Agro Chemical Pvt. Ltd. having their factory at T/131, MIDC Tarapur, Maharashtra as Agro Chemical manufacturing unit for the period of 1997-98, 1998-99, 1999-2000 and for three months from 4.4.2000 to 3.7.2000. This insurance was issued to M/s Shrirang Agro Chemical Pvt.Ltd. subject to terms, conditions and stipulations of the policy. The complainant did not disclose to the opposite party the facts and/or circumstances under which the said premises were taken over by the complainant. The opposite party was also not aware of the fact as to when the complainant started manufacturing and whether the factory premises was renovated by the complainant and that the said factory premises was in perfect running condition as claimed by the complainant.
21. The complainant never informed and the opposite party was not aware that the said factory had been purchased by the complainant for an amount of Rs.4 crores as alleged. It is denied whether the payment of Rs.4 crores had been made or that it was the full and final payment. It is denied that the complainant had any insurable interest in the factory premises. It appeared from the documents submitted by the complainant that only a part payment of Rs.1.40 crores had been made to MSFC by the complainant.
22. It is denied that the complainant spent an amount of Rs.3 crores or that it replaced the plant and machinery. The complainant was put to strict proof of the averments made in the said paragraph. However, the amount of Rs.4 crores stated by the complainant goes to prove that the real and actual market value of the property as claimed by the complainant, who was the highest bidder was only Rs.4 crores.
23. The complainant had taken the policy initially for the period of one month only i.e. from 12.11.2001 to 11.12.2001 and the same was subsequently renewed for a further period of one month i.e. from 12.12.2001 to 11.1.2002. The monthly premium of the said insurance for the said sum insured was Rs.65,835/- inclusive of service tax. The fire policy was usually taken for the period of one year and only in rare case, the insured took the insurance for one month only, which may be due to the reasons like coinciding the expiry date of all other policies with the fire policy or for coinciding the expiry date of the policy with the close of the financial year. The complainant had taken the policy for a period of one month initially and even subsequently for the period of one month. The intention of the complainant was malafide and not genuine to cover the risk of the factory for a longer period. The premium chargeable for a short period rate for the period of one month is 15% of the annual rate (which is almost more than 7% of the prorate monthly premium) if the policy is taken for the whole one year.
24. It is alleged that the complainant commenced their production in November, 2001 or that in the 1st month of their production the complainant has produced 30 tons of CMAC or that this was the optimum capacity of the said plant. The finished goods as well as its bye products were worth Rs.1,86,65,680/- as alleged. It is denied that the said factory was fully operational in three shifts or that it had all the infrastructure as per the norms laid down by the Industrial Safety Department and that the opposite party had inspected the plant/machinery and/or the factory premises. It is submitted that the insurance is a subject matter of utmost good faith and only relying upon the representations made in the proposal form submitted by the insurer and the sum insured mentioned by the insurer therein, the policy was issued.
25. It is denied that the plant was fully operational or that it had huge quantity of raw material, stock in process and finished goods worth Rs.2 crores or that the said finished goods were worth Rs.550/- per kg in the Indian market. It is denied that the fire resulted due to the electric spark/short circuit in one portion of the plant. It is submitted that the root cause of spreading of the huge fire was due to illegal storage of hexane to the tune of 90,852 liters. This chemical was a highly explosive chemical with flash point of -22.7 degree C, having an auto ignition temperature of 260C. This chemical is highly hazardous, flammable and very dangerous to fire risk. This opposite parties relied upon Exhibit-N, which is the detailed enquiry report issued by the Joint Director, Industrial Safety and Health and in which it is clearly established that the occupier had contravened the provisions of Rule-73-C (1), (II) (ii) & (III) (i) of Maharashtra Factory Rules. For procurement use and storage of this chemical, which is treated as an explosive, appropriate license from the Ministry of Petroleum and Natural Gas as well as from the Controller of Explosives, Department of Explosives, Govt. of India, Nagpur was a must. According to the rules, Department of Explosives, Govt. of India, Nagpur, and referred at Appendix III at page 143 in his letter dated 17.6.2003 addressed to Investigator M/s S.B.Nalluri & Associated clarified that the requirement of license is a must and it is stated that it was illegal to procure and store hexane in any premises without the licence under Petroleum Rules, 2002.
26. It is denied that there was huge material stocked in the factory, and the storage area was intact. The appointment of investigators was made with a view to ascertain the facts of the case and circumstances, leading to the alleged loss due to fire and the detailed investigations and report in this regard always helps to take a suitable decision in the matter. There was no ulterior motive in appointing the investigators or surveyors and it is within the norms and practice followed by the insurers in the world. It is denied that the investigation reports are illegal and unlawful or that the same are against the public policy. (It is submitted that during the period when this claim arose, there were number of bomb blasts in the city of Bombay at various places like Gateway of India, Zaveri Bazaar where there were huge loss of life and property, it was found that explosives like RDX or dynamite were used in these places and it was a general feeling that the requirement of license for procurement, storage and use of any kind of explosive should not be waived by the Government Authorities under any circumstances. This insurer being a Government organization has to comply with these general requirements and anybody violating the same should not be condoned or taken lightly). It is also submitted that any industrial use of explosives or hazardous material should not be permitted without proper monitoring and licensing to avoid Bhopal tragedy like incidents to be repeated. It was also found that there were specific allegations in the local newspaper "Jagat Bhart" regarding the operation of the insured's/complainant unit without valid licence. This led the opposite parties to appoint the investigator M/s S.B.Nalluri & Associates to investigate into the truth, in detail. The complainant cannot have any possible objection to the appointment of an Investigator.
27. The investigation reports and the survey reports are not public documents and are issued by the respective professionals only to help and assist the insurance company in taking decisions. It is denied that the complainant had fully cooperated with all investigating agencies or that the opposite parties have ever assured or promised the complainant to make any ad-hoc payment by way of oral promises as alleged. After the receipt of final survey report and investigation report, it was decided by the Competent Authority that the claim was not admissible. There was no question of making any oral promises or giving any assurance to the complainant.
28. The opposite parties were not aware of any such letters written by the complainant and the same is denied. The complainant might have resorted to such tactics only with a view to exert undue political pressure on the opposite parties. The claim of the complainant had been duly repudiated by the competent authority vide letter dated 30.1.2004 and hence, there was no question of any liability of the opposite parties for making payment of the claim and interest thereon as claimed by the complainant. It is denied that there is any deficiency of service. The opposite parties again submitted that this Forum has no jurisdiction to admit, try and decide this complaint as the complainant is not a bona fide consumer. It is also submitted that the complainant had not approached this Forum with clean hands. The complainant is a limited company engaged in commercial and business activities. The complainant had first filed the writ petition before the Mumbai High Court which was dismissed by the said court vide its order dated 20.4.2004. In this complaint, WP (Civil) No.894 of 2004 filed by the complainant and it was clearly decided and ordered by the High Court that :-
"remedy to the petitioner is to file civil suit for recovery of insurance claim. Surely such a claim cannot be investigated in writ jurisdiction under Article 226 of Constitution of India. The petition, therefore is dismissed."
29. The complainant had also approached the Bombay City Civil Court by filing a civil suit No.593 of 2004. It is denied that there is any deficiency of service. It is submitted that this Commission has no jurisdiction to entertain and try the present complaint as the complainant is not a "consumer" under the meaning of C.P.Act. The complainant had concealed this fact from the Commission that it had filed a civil suit in as much as the complainant had not mentioned the said fact in the present complaint. The complaint is liable to be dismissed on ground of deliberate and intentional concealment of material facts.
30. It is submitted that even though the final survey report and investigation report were issued on 27.11.2002, investigation report of M/s S.B.Nalluri and Associates - Investigators was issued on 4.7.2003. Further, investigation was carried out for the purpose for ascertaining certain facts from various Govt. Authorities which were relevant and necessary processing the claim. After receipt of this report the claim was processed at various levels like Divisional Office, Regional Office and Head Office of the company. After consideration of report, the claim was repudiated on 30.1.2004 which goes to show that the opposite parties have carefully considered all the aspects of the claim at various levels and a collective decision in the matter which was in the best interest of the company. It is denied that there is any miscarriage of justice.
31. The claim of the complainant was taken for excessive value of Rs.12 crores. The claim of the complainant was without any basis. The assessment of loss by the Tariff Advisory Committee, Loss Prevention Association of India and Dy. Director of Industrial Safety and Health has nothing to do with the actual loss as it is normally done for technical and statistical purposes. The assessment has to be made on the scientific basis by the duly licensed surveyor, licensed by the IRDA only and hence, the assessment amount mentioned in this paragraph by the complainant is not relevant. This loss was assessed by the license surveyor M/s Mehta and Padmsey Surveyor Pvt. Ltd., Chennai and their assessment, findings and report are considered as final and relevant.
32. It is reiterated that the complainant required a license under Petroleum Rules for storage and use of Hexane as the factory was manufacturing the product known as CMAC. The opposite parties referred to the said rules of the Ministry of Petroleum and Controller of Explosives for the true meaning and correct interpretation of the same by this Commission. It is denied that the value of the said factory premises is more than ten crores. It is submitted that without prejudice to the above mentioned submissions, insured had himself stated in para 13 that the insurance coverage was taken for 2 crores for raw material goods in the process and finished goods and a sum of Rs.10.50 crores for plant and machinery. However, under para 9, the complainant had stated that he paid amount of Rs.40 lakhs only to the MFSC by way of 10% of the bid/value of the factory. In view of this, it cannot be said that the complainant had suffered a loss of Rs.12.50 crores in principal. It appears that the complainant wants to pay his balance liability to MSFC, out of the insurance claim and make neat profit of the balance amount remaining with him. The claim of the complainant for further interest @ 24% on this amount was highly exaggerated. It is submitted that as the claim itself was not payable therefore, there was no question of any interest. It is submitted that in view of the decision of the High Court in the writ petition and the fact that the complainant had earlier filed a civil suit which fact has been deliberately concealed by the complainant, this Commission has no jurisdiction to entertain the present complaint.
33. It is admitted by the complainant that they have moved from one court to other and having failed in its plan to extract money from this opposite parties, have now finally approached this forum to further pressurize the opposite parties. They are even further threatening by stating that they are in the process of filing a special leave petition before the Apex Court i.e. Supreme Court of India.
34. Learned counsel for complainant has contended that their claim for Rs.12 crores was unfairly repudiated vide opposite party's letter dated 30.1.2004. The grounds on which it has been rejected are as follows :-
"The policy has been availed for a sum of Rs.12 crores. But it appears that you had purchased the property on auction by Maharashtra State Finance Corporation for Rs.4 crores and subsequent valuation by M/s N.G. Vaidya Associates had fixed value at Rs.7.45 crores. The policy had thus taken for excessive value of Rs.12 crores without any basis.
It has also been ascertained that the unit was functioning without the requisite license under the Petroleum rules for storage and use of hexane at the factory. The said material is found to be essential component of process of the factory for which due licence was not available but had not been disclosed at the time of availing the policy. It amounts to non-disclosure of a very material fact.
For all the above and related reasons, it is found that you have committed various violation of conditions no.1 and 8 of the policy. In such circumstances, we are entitled to avoid the policy itself and the claim is not admissible. Accordingly, the claim is hereby repudiated."
35. We have heard the counsels for the complainant and opposite party.
36. Learned counsel for the complainant contended that the rejection of the claim for Rs.12.50 crores was unfair. The opposite party was bound to pay out the claim of the insurance policy on reinstatement basis as per the insurance taken for Rs.12.5 crores as per break up given in the policy. Further, it was clearly written in the policy that Warranties Nos.1, 6 as per form FVC attached, Earthquake Fire and Shock Risks Clause, Agreed Bank Clause, Reinstatement value clause. Hence, their claim of Rs.12.5 crores should be paid. The opposite party unfairly appointed multiple surveyors. The first surveyor was Mehta Padamsee Surveyors Pvt. Ltd. who gave their report on 3.1.2002. The second surveyor was M/s C.P.Mehta & Co., who gave their report on 5.1.2002. The opposite party then appointed as investigator S.B.Nalluri & Associates who gave their report on 4.7.2003. The appointment of the surveyors/ investigators were only an attempt to deny their just claim. Counsel for complainant argued that though they had bought the plant in an auction for Rs.4 crores they have spent 3 crores on renovation. A valuation was done by N.G.Vaidya & Associates in March 2001 to evaluate the fair market value. As per their opinion, the fair market value of the fixed assessed of the plant on "as is where is basis" was Rs.7,45,65,000/-. Thereafter, they had spent about 3 crores from their own resources to renovate the plant. The plant was in working condition and manufacturing CMAC at the time of incident took place and hence, the opposite party was wrong in saying that the value of the complaint was overvalued while insuring the same.
37. M/s Mehta Padamsey Surveyors Pvt.Ltd. in their report dated 3.1.2003 had also assessed, the loss on Reinstatement value basis as Rs.6,18,52,668/- and Rs.5,31,71,093/- on Indemnity basis.
38. Learned counsel for the complainant insisted that as per letter dated 21.11.2001 issued by the Ministry of Petroleum and Natural Gas, Union of India, it was clear that any unit having the minimum stock of 20 kilo liters of hexane did not require any license to show explosives, but as a matter of caution, the plaintiffs/complainant vide their letter dated 22.10.2001 had applied for an explosive license from the Controller of Explosive, Nagpur for complying with all the requirement of site and installation as approved vide letter dated 5.11.2001, which is reproduced as under :-
"The following documents which are necessary in connection with the grant of licence in Form "XIII" of the Petroleum Rules, 1976 for the above installation may please be submitted to this office for, further action in the matter.
An application in Form "VIII" (enclosed) duly filled in and signed.
A Bank draft for Rs.350/- being the requisite licence fee. The bank draft should be drawn on any Nationalized Bank in favour of the Chief Controller of Explosives, Nagpur payable at Nagpur. Four copies of each of the approved plans Safety and test certificate required under rule 130 and 126 of the Petroleum Rules, 1976 issued by a competent person. A original "No Objection Certificate" from the local District Authority together with site plan duly endorsed by him with his office seal thereon. Specimen signature of the person authorized to sign the correspondence intended for this Department in connection with a copy to the Jt. Chief Controller of Explosive, West Circle, Mumbai.
Please follow the requirement/provision of solvent, Rafinate and Slop (Acquisition, Sale, Storage and Prevention of use in Automobiles) order 2000 notified by Government of India, Ministry of Petroleum & Natural Gas, vide GSR 519 (E.) dated 5.6.2000."
39. Learned counsel for the opposite party, on the other hand contended that the complainant while taking the insurance had concealed two facts, one, that they had purchased the plant only for Rs.4 crores and paid only Rs.1.4 crore at the time of taking insurance and yet he took insurance for Rs.12.5 crores. Even as per his own affidavit before the Mumbai High Court, the value was less than Rs.4 crores. Secondly, the complainant had not mentioned that there were storing and using hexane without a license. Hence, they had given false a declaration and had not disclosed all material facts while taking the insurance. Further, they did not disclose that they had bought the factory which was not in working condition as well as they were guilty of concealment of this fact. It is an admitted fact that the complainant had purchased a factory in an auction for Rs.4 crores which according to them was the auction value of the factory and not the market value.
40. As per the complainant, market value of the factory was much higher and not less than Rs.10 crores. The factory was renovated and upgraded at the cost of Rs.3 crores and the factory had commenced production from Oct., 2001 and produced optimum capacity of CMAC in the period of one month. The National Commission had also awarded interim relief of Rs.5.3 crores along with interest of 10% vide their order dated 9.2.2007 w.e.f. 27.11.2002. Opposite party had hence deposited Rs.8,83,94,970/- vide order dated 3.5.2011, the amount was released to MSFC towards the one time re-allotment between the complainant and MSFC. The complainant was still insisting for the entire amount on reinstatement basis. The alleged loss was suffered by the complainant due to illegal production of the claim of the insurance company. The claim was, hence, rejected on the ground of over assessment of value and loss as also the fact that the complainant was running the factory without licence under the Petroleum Rules, 1976.
41. The opposite party/insurance company in their written arguments stated that the complainant prior to the filing of the present compliant had filed Writ Petition No.894 of 2004 and the same was dismissed by the High Court of Bombay holding that the remedy to the complainant is to file a civil suit for recovery of the insurance claim. The High Court vide its order dated 20.4.2004 observed as under :-
"The insurance company has repudiated the claim of the petitioner on various grounds. The remedy to the petitioner is to file civil suit for recovery of insurance claim. Surely, such a claim cannot be investigated in writ jurisdiction under Article 226 of the Constitution of India.
Petition therefore, is dismissed with liberty to the petitioner to adopt appropriate proceedings in accordance with law."
42. They further stated that the claim of the complainant was not payable for the ground in the repudiation letter which already mentioned above in para 43. The complainant had not disclosed in his complaint that the complainant had, in fact, filed Civil Suit before the Bombay High Court seeking declaration that the plaintiff had complied with all requirements under the Petroleum Rules, 1976 and there was no requirement for the complainant to obtain a licence for storage of hexane. The complainant has now claimed to have withdrawn the suit after the repudiation of the insurance claim of the opposite party. This fact further established that the opposite party has rightly repudiated the claim for the reasons as stated in the repudiation letter dated 31.1.2004.
44. Further, investigator appointed by the opposite party i.e. M/s S.B.Nulluri & Associates in their letter dated 4.7.2003, which has also formed the basis of the repudiation had clearly stated and concluded as under :-
"Conclusion As per Controller of Explosive, Government of India, Department of Explosive the insured had not submitted any documents for obtaining licence under the Petroleum Rules for storage of hexane in the said installation and it is illegal to procure and store hexane in any premises without a license under Petroleum Rules for storage of hexane exceeding 300 litres."
45. It is submitted that admittedly the complainant had obtained the insurance by a valuation whereby the insured was valued at 12.50 crores. The complainant at the time of obtaining the insurance did not deliberately and intentionally disclose that it has purchased the property in auction for an amount of Rs.4 crores. The complainant also did not disclose that the Unit was functioning without the requisite licence under the Petroleum Rules for storage of Hexane at the factory. The material is an essential component of the process of the factory. The complainant did not obtain and have a licence for storage of hexane. This fact was not disclosed at the time of obtaining insurance. Conditions no.1 and 8 of the insurance policy in this regard and provide as under :-
1. This policy shall be voidable in the event of mis-representation, mis-description or non-disclosure of any material particular.
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 any one acting on his behalf to obtain any benefit under the policy or if the loss or damage be occasioned by the willful act, or withy the connivance of the insured, all benefits under this policy shall be forfeited."
46. That non-disclosure of the aforesaid facts and misrepresentation of the value of the property insured clearly amounts to a fraud. The complainant has insured clearly amounts to a fraud. The complainant has deliberately made a false declaration of the value at the time of obtaining the insurance. Insurance company, is, therefore, not liable and the claim is liable to be dismissed on this ground alone.
47. The two issues to be decided by us are whether the complainant obtained the insurance policy by misrepresenting the value of the factory and secondly, whether they had required a licence for the use and storage of hexane under the Petroleum Rules and whether they had applied for the same.
48. To begin with, we will deal with the reports on file regarding the incident and resulting loss. In the first report of the Office of the Joint Director, Safety and Health, Thane, he had given a detailed account of how the accident occurred. It is apparent from the report that during maintenance as they loosened the bolts of the bottom flange joint of the vessel T-19 the liquid started leaking out. They opened all the bolts of 2" PVC pipe line and found that liquid was flowing out with full capacity. Mr.Datta, being experienced identified the leaked liquid as hexane mother liquor (M.L.) More than one drum hexane M.L. flowed out and spread all over and into the plant drain.
49. During inquiries, it was found that the tank T-13 had developed a leak. It was found that a Tank T-19 located at ground floor on south west side of the process plant was used for the storage of mother liquor containing hexane. The crack leakage was identified about a month before almost from the initial starting days of the plant. The Tank T-19 used for storage of Mother Liquor containing hexane and organic liquid residue. The residue was highly acidic Ph 3.5 to 4.00. The vessel T-19 was serious and it was by passed from the process. However, since leakage was from the cylindrical shell side it contained about 2 drums of hexane containing M.L. in the bottom dished end. During investigation, it was also found that there was no isolation valve in between the dished end of the vessel and bottom flange.
50. Inquiries revealed that about five drums of mother liquor were generated every day and it was collected in old M.S. drums and stored in the factory. Thus, it was found that about 25 such drums were kept stored in the open yard on south west side an almost equal number of drums were stored in the plant, near T-19.
51. Inquiries revealed that the manufacturing involved the large-scale use of solvent in hexane almost in all stages of process. In fact that the factory had provided for the bulk underground storage of solvent n-hexane (12KI) & Acrylonitrile (12 KI). It is well-known that n-hexane solvent is extremely flammable having flash point temperature as less than 0 degree Celsius, and boiling point temperature of 69 deg. Celsius. The flammable range is 1.2% .5% v/v and the minimum ignition energy is just 0.24 milijoules, which is lowest compared to other hydrocarbons. Thus, it is a sure and serious fire hazard in the event of spillage.
52. Inquiries revealed that when Mr.Ashok Kumar Datta & Mr.Parmeshwar Varma opened the flanged joint at the bottom of the tank T-9 and the highly flammable hexane and M.L. came out. Inquiries revealed that there was no system of safety work permit in the factory for opening of the equipment's or pipelines containing inflammable liquids. The vessel T-19 was not flushed by the process department to empty it an the incharge of process department and engineering department did not verify personally that the tank T-19 was empty and it was free of flammable hexane liquid. Thus, by allowing an requiring the injured two workers namely Mr.Ashok Kumar Datta & Mr.Parmeshwar Varma to open the bottom pipeline flanged joint at the tank T-19 without:
Issuing them a written safety work permit and certifying after due test that the tank T-19 is free of any flammable hexane containing M.L. Ensuring that the supervisor in charge of process department was duly flushed the vessel of its residual flammable hexane and personally verified the same. Ensuring that the supervisor in charge of engineering department has satisfied himself about the non-existence of the flammable vapors.
And therefore, the occupier has contravened the provisions of Rule 73-C(1), (II) and (III) (i) of MFR 1363."
53. It further emerged that Mr.Ajay Pawar was removing corrosion scale and rust by chipping with an iron plate (patti) near tank T-19. It appeared the spark produced inadvertently ignited hexane vapors resulting into the fire. This report however, did not assess the quantum of loss.
54. The next report was that of the Tariff Advisory Committee, Mumbai. In this report dated 12.2.2002, it was mentioned that the insured had commenced production from October, 2002. The estimated loss as per this report was Rs.8.56 crores. Further, the report noted that the factory did not have any firefighting system other than hand appliances. This contributed to the spread of the fire. Further, it noted that the fire was mostly confined to the plant building only. The office section including laboratory, canteen, stores and utility section like D.G.Room/boiler house/chilling plant/effluent treatment plant/raw materials/tank farm etc. were not affected by fire. The contributory factors for excessive loss are that :
"Accumulation value was high The equipments, reactors, vessels etc. were installed very close to each other in a congested manner. In many places effluent channels were not covered.
No flame trap was provided in the effluent channel.
No fixed fire protection like hydrant, water spray or detection system was installed. The nature of chemicals used were inflammable."
55. The report also questioned why short period policies were issued in two consecutive months.
56. In the report filed by M/s Mehta and Padamsey Surveyors Pvt. Ltd. 3.1.2002, they mentioned that during the investigation, the insurance company had received a complaint regarding the incident of fire and they had specifically requested them to thoroughly investigate the claim with specific reference to the following :
Cause of loss Sale of the factory for an amount much less than the sum insured proposed for insurance Seeking insurance cover on monthly basis with malafide intention to defraud/filing fictitious claim. The incidence of fire is an act of the present MD and Manager The above facts were made known to the Senior Divisional manager and no action was taken. Shri H.P.Shetty, Development Officer knows the background of the complaint.
Any other matter relevant to the investigation.
57. They assessed the loss as under :-
Particulars Loss on RIV basis (in Rs.) Loss on Indemnity basis (Rs.) Building 55,77,561/-
45,22,786/-
Machinery & Accessories 4,51,18,300/-
3,74,91,500/-
Stocks of all description 1,11,56,807/-
1,11,56,807/-
Total 6,18,52,668/-
5,31,71,093/-
58. M/s C.P.Mehta & Co. gave a preliminary loss figure in their report dated 5.1.2002. As per their assessment, the estimated damage and loss was Rs.8.56 crores with the following break-up. It may be mentioned here that thereafter C.P.Mehta & Co. appears to have given no final report on the loss or it was not produced before the Commission. The main factory building and contents were gutted. Presently, a rough estimate, based on sums insured, is as under :-
Item Sum insured Rs. In Crores Estimated loss Buildings 1.25 0.50 Furniture Fixtures & Fittings 0.40 Nil Plant & machinery 8.30 7.00 Boiler .20 .01 Transformer .10 Nil D.G.Sets .25 .05 Stocks 2.00 1.00 TOTAL 12.50 8.56
59. Investigation report of M/s S.B.Nalluri & Associates dated 4.7.2003 has been placed on record. This report was issued in connection with the instructions received by them from the opposite party to investigate the specific allegations made in a local newspaper "Jagat Bharti" regarding operations of the insured unit without a valid licence.
60. The complainant was asked to produce various licences/permission/ NOCs which were obtained by him and were necessary as per the provision of law to run the factory before the occurrence on 3.1.2002. The complainant then produced various licences/permission obtained by him for the operations of unit. It was noticed from the list that no documents were produced as the licence to store and usage of hexane. After confirmation and verification of these documents, M/s S.B.Nalluri & Associates made inquiries with the relevant authorities. During such inquiries with the Controller of Explosives Nagpur, they gathered that they had issued an approval for the layout of installation dated 5.11.2001 but M/s Baspa Organics Ltd. had not submitted any documents for obtaining licence under the Petroleum Rules for storage of hexane in the said installation. The complainant informed that licence was not required for 20 KL or less solvents as per notification of the Ministry of Petroleum and Natural Gas, they visited there and sought further clarification in this matter. Written inquiry was also addressed to them. The Controller of Insurance after going through the letter dated 17.6.2003 that Hexane is a Petroleum of Class "A" as per Petroleum Act and Petroleum Rules and Licence is required for storage of hexane exceeding 300 litres from the Department of Explosive. The complainant had obtained prior approval under Petroleum Rules for installation of their proposed hexane facilities but had not submitted any documents for obtaining licence under the Petroleum Rules for storage of hexane in the said installation. It was illegal to procure and store hexane (exceeding 300 litres) in any premises without a licence under Petroleum Rules, 2002. Use of Petroleum products in any factory is not covered under Petroleum Act, Rules administered by the Department of Explosives.
61. After receiving the above referred letter, the complainant was asked to give his clarifications regarding the discrepancies observed. He did not submit any further clarification but maintained that no licence was required. S.B.Nalluri concluded that as per Department of Explosive, the insured had not submitted any documents for obtaining under the storage of hexane in the said installation and it was illegal to procure and store hexane in any premises without a licence under Petroleum Rules for storage of hexane exceeding 300 litres.
62. We now come to the valuation of the plant for obtaining insurance. In Writ Petition No.2209 of 2001 filed in the High Court of Bombay by MSTC. The complainant had categorically stated that as under :-
"6. The petitioner says that the bid made by the petitioner was highest. The respondent no.1 by its letter dated 16.3.2001 confirmed that the bid made by the petitioner was highest. The respondent no.1 also wanted to know as to whatever the petitioner is willing to increase the bid amount. Hereto annexed and marked as exhibit 'D' is the copy of the letter dated 16.3.2001 received from the respondent no.1. The petitioner says that as a matter of fact the factory and its assets is not worth Rs.4 crores but the petitioner has made commitment in the business and his materials supplied to the respondent no.3 are inside the factory."
63. They further stated in para 16 and 18 that the opposite party no.1 would not receive a better offer. It appears from the above that the complainant was well aware that the factory he had bought in auction not even worth Rs.4 crores. Thereafter, on an indemnity bond, he had sought permission (June, 2001) to enter the factory to renovate the same and he allegedly spent Rs.3 crores from his own money on the renovation. There is no evidence on record to show that he had spent Rs.3 crores to renovate the factory. Hence, we are of the view that the value of the factory was over assessed at Rs.12.5 crores while taking the insurance. There is nothing on record to show that the factory as and when it was insured was worth Rs.12.5 crores.
64. The complainant vide letter dated 22.10.2001 had written to the Chief Controller of Explosive, Nagpur. A reading of the letter makes it evident that this letter was not under any circumstances, written to obtain a license for storage and consumption of hexane but only to get approval of the tanks to be provided in the factory. The Department of Explosives vide their letter dated 05.11.2001 approved the installation of tanks subject to the condition that pump / motor are flameproof as per IS:2148 to be incorporated which is reproduced as under :-
"The following documents, which are necessary in connection with the grant of a licence in Form "XII" of the Petroleum Rules, 1976 for the above installation may please be submitted to this office for further action in the matter.
1. An application in Form "VIII" (enclosed) duly filled in and signed.
2. A Bank Draft for Rs.350/- being the requisite licence fee. The bank draft should be drawn on any Nationalised Bank in favour of the Chief Controller of Explosives, Nagpur payable at Nagpur.
3. Four copies of each of the approved plans.
4. Safety and Test certificate required under rule 130 and 126 of the Petroleum Rules, 1976 (enclosed) issued by a competent person.
5. A original "No Objection Certificate" from the Local District Authority together with site plan duly endorsed by him with his office seal thereon.
6. Specimen signature(s) of the person(s) authorized to sign the correspondence intended for this Department in connection with a copy to the Jt. Chief Controller of Explosives, West Circle, Mumbai.
Please follow the requirement/provision of Solvent, Raffinate and Slop (Acquisition, Sale, Storage & Prevention of use in Automobiles) Order - 2000 notified by Government of India, Ministry of Petroleum & natural Gas, vide G.S.R. 519(E) dated 05/06/2000."
65. It is clear from the above that at the time of incident, the complainant had not applied for a licence as envisaged under section 13 of the Petroleum Rules 1976 for a licence to store and use of hexane. This is also supported by the report of S.B. Nalluri & Associates as mentioned earlier. The record on the file also shows that during the manufacturer of production, which had been started in October 2001, the complainant had been using huge qualities of hexane for the production and hence was necessarily storing the same. Besides, the incident report of the department of safety and health also confirms that 50 drums of mother liquor containing hexane were stored in the premises.
66. When asked to explain why insurance has been taken by the complainant for a month at a time, which is not the normal practice, the complainant stated that it was due to lack of liquidity and shortage of funds and yet the complainant would have believed that he had been spent Rs.3 Crores on renovating the plant from his own funds without taking any Bank loan. Hence, the explanation of the complainant does not hold good and is not convincing.
67. Hence, in view of the facts mentioned above, we are of the view that the complainant had over stated the value of the factory while taking insurance. He further could not adequately explain the reasons for taking insurance for a month at a time at a higher premium rate. Further, he failed to take due precaution and care to prevent any mishap. He was operating the plant without a valid licence and also the firefighting equipments available in the factory were inadequate. The plant did not have a system and safety work permit in place before starting operation in October, 2001.
68. Learned counsel for the complainant has relied upon the list of Authorities, which are as under :-
Laxmi Engineering Works Vs. PSG Industrial Institute (1995) (2) CPR 11 (SC) Satyanarayan Jiwanram Vs. National Insurance Co.Ltd., 2006 NCJ 569 (NC).
Ajeet International Pvt. Ltd. Vs.United India Insurance Co.Ltd., 2006 (NC).
Rajendra Plastics Vs.New India Assurance Co.Ltd., II (2004) CPI 19.
New India Assurance Co.Ltd. Vs. Protection Manufacturers Pvt.Ltd., 2010 (7) SCC 386. Roshan Lal Oil Mills Pvt. Ltd. Vs. United India Insurance Co.Ltd.
State of Punjab Vs. Nestle India Ltd. & Anr., 2004 VI AD (SC) 87.
Protection Manufacturers Pvt. Ltd. Vs. New India Assurance Co.Ltd., IV (2005) CPJ 230 (NC). Sahyadri Starch & Industries Co.Ltd. Vs. National Insurance Co.Ltd. & Ors., I (2009) CPJ 47 (NC).
10.Gammon India Ltd. Vs. New India Assurance Co.Ltd., I (2004) CPJ 10 (NC).
11. Adarsh Chemicals & Fertilizers Ltd. Vs.United India Insurance Co.Ltd. in OP No.398 of 2000 dated 5.9.2013.
12. United India Insurance Co.Ltd Vs. Satish Aggarwal, II (2009) CPJ 282 (NC).
69. He argued that as per citation no.1 i.e., Laxmi Engineering Works to support his contention that the complainant is a "consumer". Opposite party has not pressed their objection on this issue. Citation No.2 is not relevant to the facts of the present case. Citation nos.3 and 4 are regarding deficiency in service due to delay in settling the claim and delay in processing the claim. These are not relevant issues in the instant case. Citation nos.5, 6 and 7 are also not relevant to this particular case.
70. Citation nos.8, 10 and 11 are regarding the appointment of multiple surveyors. This issue has been dealt with at length and it is seen that all the three surveyors were not appointed to assess the loss. Whereas, citation no.9, it is not relevant to the present case and Citation no.12 is regarding renewal of policy, which is not relevant in the instant case.
71. Learned counsel for the opposite party has cited a judgment titled "Satwant Kaur Sandhu Vs. New India Assurance Co.Ltd., (2009) 8 SCC 316," to argue that the complainant had concealed material fact from the insurer and hence, the insurance contracts was null and void. He brought to our attention to the following paras of the judgment :-
"19. In United India Insurance Co. Ltd. Vs. M.K.J. Corporation, this Court has observed that it is a fundamental principle of insurance law that utmost faith must be observed by the contracting parties. Good faith forbids either party from non- disclosure of the facts which the party privately knows, to draw the other into a bargain, from his ignorance of that fact and his 19believing the contrary.
20. MacGillivray on Insurance Law (Tenth Edition) has summarised the assured's duty to disclose as under:
"...the assured must disclose to the insurer all facts material to an insurer's appraisal of the risk which are known or deemed to be known by the assured but neither known nor deemed to be known by the insurer. Breach of this duty by the assured entitles the insurer to avoid the contract of insurance so long as he can show that the non-disclosure induced the making of the contract on the relevant terms."
21. Over three centuries ago, in Carter Vs. Boehm, Lord Mansfield had succinctly summarised the principles necessitating a duty of disclosure by the assured, in the following words:-
"Insurance is a contract of speculation. The special facts upon which the contingent chance is to be computed lie most commonly in the knowledge of the assured only; the underwriter trusts to his representation, and proceeds upon confidence that he does not keep back any circumstance in his knowledge to mislead the underwriter into a belief that the circumstance does not exist. The keeping back such circumstance is a fraud, and therefore the policy is void. Although the suppression should happen through mistake, without any fraudulent intention, yet still the underwriter is deceived and the policy is void; because the risqui run is really different from the risqui understood and intended to be run at the time of the agreement...The policy 3 would be equally void against the underwriter if he concealed...Good faith forbids either party, by concealing what he privately knows, to draw the other into a bargain from his ignorance of the fact, and his believing the contrary.
Having said so, as noted above, the next question for consideration would be as to whether factum of the said illness was a "material" fact for the purpose of a mediclaim policy and its non-disclosure was tantamount to suppression of material facts enabling the Insurance Company to repudiate its liability under the policy?"
22. The term "material fact" is not defined in the Act and, therefore, it has been understood and explained by the courts in general terms to mean as any fact which would influence the judgment of a prudent insurer in fixing the premium or determining whether he would like to accept the risk. Any fact which goes to the root the contract of insurance and has a bearing on the risk involved would be "material".
23. As stated in Pollock and Mulla's Indian Contract and Specific Relief Act:
"any fact the knowledge or ignorance of which would materially influence an insurer in making the contract or in estimating the degree and character or risks in fixing the rate of premium is a material fact."
24. In this regard, it would be apposite to make a reference to Regulation 2(1)(d) of the Insurance Regulatory and Development Authority (Protection of policy-holders' interests) Regulations, 2002, which explains the meaning of terms "material". The Regulation reads thus :
2.Definitions - In these Regulations, unless the context otherwise requires
(a) - (c) (d) "Proposal Form" means a form to be filled in by the proposer for insurance, for furnishing all material information required by the insurer in respect of a risk, in order to enable the insurer to decide whether to accept or decline, to undertake the risk, and in the event of acceptance of the risk, to determine the rates, terms and conditions of a cover to be granted.
Explanation: "Material" for the purpose of these regulations shall mean and include all important, essential and relevant information in the context of underwriting the risk to be covered by the insurer." Thus, the Regulation also defines the word "material" to mean and include all "important", "essential" and "relevant" information in the context of guiding the insurer to decide whether to undertake the risk or not.
25. The upshot of the entire discussion is that in a Contract of Insurance, any fact which would influence the mind of a 1 2 prudent insurer in deciding whether to accept or not to accept the risk is a "material fact". If the proposer has knowledge of such fact, he is obliged to disclose it particularly while answering questions in the proposal form. Needless to emphasise that any inaccurate answer will entitle the insurer to repudiate his liability because there is clear presumption that any information sought for in the proposal form is material for the purpose of entering into a Contract of Insurance."
72. In view of the above, we are convinced that the opposite party/insurance company was justified in repudiating the claim of the complainant as they had committed various violations of the terms and condition of the policy and in the circumstances, the insurance policies were also rendered null and void and the claim was not admissible. Hence, the complaint is dismissed. Further, the amount of Rs.8,83,94,970/- deposited by the opposite party with this commission and which was released to MSFC on behalf of the complainant vide order dated 31.5.2011 may be restituted back to the insurance company by the complainant to respondent no.1 with an interest at 9% w.e.f., the date on which the same was released to MSFC.
......................J AJIT BHARIHOKE PRESIDING MEMBER ...................... REKHA GUPTA MEMBER