State Consumer Disputes Redressal Commission
Goel Spinning & Weaving Mills vs United India Insurance Co. Ltd. on 5 April, 2022
C. NO. 157/2010 D.O.D. : 05.04.2022
GOEL SPINNING & WEAVING MILLS VS. UNITED INDIAN INSURANCE CO. LTD.
IN THE DELHI STATE CONSUMER DISPUTES REDRESSAL
COMMISSION
Date of Institution: 12.03.2010
Date of hearing: 28.02.2022
Date of Decision: 05.04.2022
COMPLAINT CASE NO.- 157/2010
IN THE MATTER OF
M/S GOEL SPINNING & WEAVING MILLS
Regd. Office: CFF-1, Dilkhush Industrial Estate
G.T. Karnal Road, Azadpur
Delhi 110033.
(Through: Nandwani & Associates)
...Complainant
VERSUS
1. UNITED INDIA INSURANCE CO. LTD.
LIC Building, GT Road,
New Delhi.
2. REGIONAL MANAGER
United India Insurance Co. Ltd.
SCO No. 123-124
Sector 17-B
Chandigarh.
(Through: S. Ghosh, Advocate)
...Opposite parties
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C. NO. 157/2010 D.O.D. : 05.04.2022
GOEL SPINNING & WEAVING MILLS VS. UNITED INDIAN INSURANCE CO. LTD.
CORAM:
HON'BLE DR. JUSTICE SANGITA DHINGRA SEHGAL
(PRESIDENT)
HON'BLE SH. RAJAN SHARMA, MEMBER (JUDICIAL)
Present: None for the Parties.
PER: HON'BLE DR. JUSTICE SANGITA DHINGRA SEHGAL
(PRESIDENT)
JUDGMENT
1. The present Complaint has been filed before this Commission under Section 12 of the Consumer Protection Act, 1986, by the Complainant alleging deficiency in service and Unfair Trade Practice on the part of Opposite Parties and has prayed for the following reliefs:
"Direct the Opposite Party to pay an amount of Rs. 69,82,987/- with interest as per the Insurance Regulatory Development Authority (in short IRDA) on account of damages due to fire and with further compensation to the tune of Rs. 10 lacs on account of physical as well as mental agony suffered due to the inaction of the Opposite Party."
2. Brief facts necessary for the adjudication of the present complaint are that the Complainant had taken the insurance cover against fire and other allied perils, vide policy no. 112000/11/1538/2000 and 112000/11/1539/2000 for a sum insured a total of Rs. 3 crores for a period starting from 30.1.2001 to 29.1.2002 from the Opposite Parties. The insurance cover included building, plant, machinery and stocks whilst lying or installed at its aforesaid premises. A fire ALLOWED PAGE 2 OF 12 C. NO. 157/2010 D.O.D. : 05.04.2022 GOEL SPINNING & WEAVING MILLS VS. UNITED INDIAN INSURANCE CO. LTD.
broke out on 15.12.2001 in the premises of the complainant mill and wide spread damage to the stocks lying there and building took place. Thereafter the Complainant duly reported the incident to the police and fire brigade agency in regard to lodge its claims from the Opposite Parties under the said policy. The Complainant computed its loss to the tune of Rs. 69,82,987/-. To investigate the said claim the Opposite Parties changed over three surveyors namely M/s Duggal Gupta & Associates, Mr. Ashish Behl and lastly M/s R.K. Singhal & Co. over the period of time.
3. Meanwhile, the claim made by the Complainant on account of loss to building was settled by the other branches of the Opposite Parties by which the policy regarding the building was issued. As the Complainant was suffering on account of losses due to fire as well as the attitude adopted by the Opposite Parties in not settling the claim despite several requests, a complaint regarding the present issue was made to the Insurance Regulatory & Development Authority.
4. Consequently, the Opposite Party repudiated the claim of the complainant without assigning any cogent reasons for the same vide letter dated 17.11.2003. Thereafter, a legal notice dated 15.12.2003 was served upon the Opposite Party but no reply was given by the Opposite Party against the said legal notice. The Complainant also wrote a letter dated 03.09.2004 to the Opposite Parties raising certain debatable points in respect of the reports and conduct of the surveyors and a request was made to settle the claim of the Complainant immediately but was of no avail.
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GOEL SPINNING & WEAVING MILLS VS. UNITED INDIAN INSURANCE CO. LTD.
5. Thus, left with no other option, alleging deficiency of service and unfair trade practice on the part of the Opposite Parties, the Complainant approached this commission.
6. The Opposite Parties have contested the present case and had raised preliminary objection as to the maintainability of the complaint case. The counsel for the Opposite Parties submitted that the Complainant is not "Consumer" as he purchased the insurance for commercial purposes. The Opposite Parties further contended that in view of the terms and conditions of the policy, there exists an arbitration clause in the insurance policy, the parties should be referred to arbitration and this commission is barred from exercising its jurisdiction.
7. The counsel for the Opposite Parties submits on merits that the loss computed by the Complainant is fictious as no surveyor or investigator had assessed the loss of the Complainant to the tune of Rs.69,82,987/- for which present complaint has been filed. It further contended that as per the surveyors report the Complainant failed to establish the cause of loss and has not furnished proper records to capitulate the actual loss. Thus, the Opposite Parties have the right within its capacity to repudiate the claim of the Complainant. Pressing the aforesaid contentions, the counsel appearing on behalf of the Opposite Parties prayed that the present complaint should be dismissed.
8. The Complainant has filed the Rejoinder rebutting the written statement filed by the Opposite Parties. Both the parties have filed ALLOWED PAGE 4 OF 12 C. NO. 157/2010 D.O.D. : 05.04.2022 GOEL SPINNING & WEAVING MILLS VS. UNITED INDIAN INSURANCE CO. LTD.
their Evidence by way of Affidavit in order to prove their averments on record.
9. We have perused the material available on record and heard the counsel for the parties.
10. The fact that the Complainant had bought insurance vide policy no.
112000/11/1538/2000 and 112000/11/1539/2000 for a sum total of Rs. 3 crores from the Opposite Parties is evident from records and on the night of 15.12.2001, fire broke out in the premises of the Complainant and the Complainant suffered losses due to the incident is evident from the surveyor reports attached with the present complaint.
WHETHER COMPLAINANT FALLS UNDER THE DEFINITION OF 'CONSUMER' UNDER THE CONSUMER PROTECTION ACT, 1986?
11. The first and the preliminary contention raised by the Opposite Parties that the Complainant is not 'Consumer' as defined under the Consumer Protection Act, 1986 as he was using the insurance for commercial purpose. To resolve this issue, we deem it appropriate to refer to M/S. Harsolia Motors vs M/S. National Insurance Co. Ltd, I (2005) CPJ 27 (NC) wherein it is held as under:
"In Regional Provident Fund Commissioner Vs. Shiv Kumar Joshi, (2000) 1 SCC 98, the Court elaborately considered the provisions of Section 2(1)(d) and 2(1)(o) as well as earlier decisions and held that the combined reading of the definitions of consumer and service under the Act and looking ALLOWED PAGE 5 OF 12 C. NO. 157/2010 D.O.D. : 05.04.2022 GOEL SPINNING & WEAVING MILLS VS. UNITED INDIAN INSURANCE CO. LTD.
at the aims and object for which the Act was enacted, it is imperative that the words consumer and service as defined under the Act should be construed to comprehend consumer and services of commercial and trade-oriented nature only. Thus, any person who is found to have hired services for consideration shall be deemed to be a consumer notwithstanding that the services were in connection with any goods or their user. Such services may be for any connected commercial activity and may also relate to the services as indicated in Section 2(1)(o) of the Act."
12. In the present case, the Opposite Parties has merely made a statement that the Complainant took the insurance cover for commercial purposes and therefore, it should not be considered as 'consumer' under the definition of consumer. On relying on the above-mentioned dicta by National Consumer Commission, which says that, if the commercial purpose is used by the purchaser himself for the purpose of earning his livelihood by means of self- employment, such purchaser of goods will come under the definition of a consumer. In the present case, it is clear that the Complainant had bought the insurance policy for the purposes of protecting and securing his livelihood, thereby he will fall within the definition of consumer under the Consumer Protection Act, 1986. Consequently, the objection raised on behalf of the Opposite Parties is answered in the negative.
WHETHER THE EXISTENCE OF ARBITRATION CLAUSE IN THE INSURANCE POLICY BARS JURISDICTION OF THIS COMMISSION?
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GOEL SPINNING & WEAVING MILLS VS. UNITED INDIAN INSURANCE CO. LTD.
13. The next preliminary objection raised by the Opposite Parties is that since there exists an arbitration clause as per Clause no. 13 of the insurance policy agreement, where it was provided that the parties should be referred to Arbitration and this commission is barred from exercising its jurisdiction. To deal with this issue, we deem it appropriate to refer to Oriental Insurance Company Limited vs. M/s Narbheram Power and Steel Pvt. Ltd., AIR 2018 SC 2295 wherein it has been discussed as follows:
"The language used in the second part is absolutely categorical and unequivocal in as much as it stipulates that it is clearly agreed and understood that no difference or disputes shall be referable to arbitration if the company has disputed or not accepted the liability."
14. Further, we deem it appropriate to reproduce Clause 13 of the insurance policy agreement which states that:
"13. If any dispute or difference shall arise as to the quantum to be paid under this policy (liability being otherwise admitted) such difference shall independently of all other questions be referred to the decision of a sole arbitrator to be appointed in writing by the parties to or if they cannot agree upon a single arbitrator within 30 days of any party invoking arbitration, the same shall be referred to a panel of three arbitrators, comprising of two arbitrators, one to be appointed by each of the parties to the dispute/difference and the third arbitrator to be appointed by such two arbitrators and arbitration shall be ALLOWED PAGE 7 OF 12 C. NO. 157/2010 D.O.D. : 05.04.2022 GOEL SPINNING & WEAVING MILLS VS. UNITED INDIAN INSURANCE CO. LTD.
conducted under and in accordance with the provisions of the Arbitration and Conciliation Act, 1996.
It is clearly agreed and understood that no difference or dispute shall be referable to arbitration as hereinbefore provided, if the Company has disputed or not accepted liability under or in respect of this policy.
It is hereby expressly stipulated and declared that it shall be a condition precedent to any right of action or suit upon this policy that the award by such arbitrator/ arbitrators of the amount of the loss or damage shall be first obtained."
15. From the aforesaid clause, it flows that even if there exists an arbitration clause in the insurance agreement, no dispute shall be compulsorily be referred to arbitration in case the insurance Company disputes or does not accepted liability under or in respect of this policy.
16. From the said clause, it can be interpreted that the language used in the insurance contract dealing with arbitration stipulates that no disputes shall be referable to arbitration if the company did not accepted the liability of a claim. Hence the Complainant is not obliged to go for arbitration if the Opposite Parties has repudiated their claims and is free to approach this commission and this commission is authorised to adjudicate the present case and the existence of an arbitration clause in the agreement does not affect the jurisdiction of this commission.
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GOEL SPINNING & WEAVING MILLS VS. UNITED INDIAN INSURANCE CO. LTD.
WHETHER THE OPPOSITE PARTY IS DEFICIENCT IN PROVIDING SERVICES BY REPUDATING THE CLAIM OF THE COMPLAINANT?
17. Having discussed the preliminary objections raised on behalf of the Opposite Parties, the next issue which arises is whether the Opposite Parties are actually deficient in providing its services to the complainant by repudiating the claim of the Complainant vide its letter dated 17.11.2003 and stated in its letter that it has repudiated the claim of the complainant based on the preliminary investigation conducted and the reports of the surveyors.
18. On perusal of the records and documents, we noted that the final surveyor report filed by R.K. Singhal & Co. Private Limited dated 20.05.2003 has made the following observation in its report:
a. Firstly, in the evidence section, the surveyor company has mentioned the relevant para from the fire brigade report which reproduces as:
"The Fire Brigade have issued their Report No. 187 dated 15.12.2001 mentioning that the type of fire was 'A' and they have consumed about 7 hrs. to extinguish the fire. Stock worth Rs. 75 Lacs and the Building of godown No. 2 were burnt."
b. Secondly, in the evidence section, the L.P.A. report which tells about the extent of loss in the present case has been reproduced by the Surveyor in his report which states as:
"Extent of loss: LPA has stated that walls collapsed & asbestos roof sheets shattered stock of cotton bales & cotton ALLOWED PAGE 9 OF 12 C. NO. 157/2010 D.O.D. : 05.04.2022 GOEL SPINNING & WEAVING MILLS VS. UNITED INDIAN INSURANCE CO. LTD.
waste in bags lying in the godown were completely burnt. Total loss amounted to Rs. 70 lacs."
c. Thirdly, the relevant para of the Investigation report which has been quoted by the Surveyor in his report dated 20.05.2003 reproduces as follows:
"We have scrutinised the complete purchase & sales records and found in order. Insured uses same Weighing slip book for inward &outward entries. As stated by insured' officials all the inward entry in the Unit is weighed and slip is made. However, for outward entries slips are sometimes left blank as the stocks already weighted and packed in unit before dispatch.
Though it was a wrong practice, but since all other books of accounts & stock found in order hence in our opinion the underwriter's same would not effect on the status of claim and liability.
Regarding consumption/yield we have already explained under in detail in our Verifications sub-head "Detail of last 3 years Production/yield" which is self-explanatory. As far as higher claim bill is concerned, this is a normal phenomenon that whenever a loss occurs, the claim bill is always on higher side. It is the duty of surveyor to analyse the real suffered loss."
19. After the assessment of respective reports from all these authorities, the Surveyor Mr. R.K. Singhal & Co. has stated in its Claim Admissibility clause which reproduces as:
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GOEL SPINNING & WEAVING MILLS VS. UNITED INDIAN INSURANCE CO. LTD.
"Claim Admissibility: The proximate cause of fire is well under the Fire Policy. We are convinced that the claim is admissible under the Policy issued by the underwriters"
20. From the aforesaid relevant submissions in the surveyor report, it is clear that the Surveyor Report accepted that the claims made by the complainant are genuine and is well covered within their insurance policy.
21. In the given fact and circumstances, we hold that the Insurance Company was not justified in repudiating the claim of the Complainant as the surveyor report dated 20.05.2003, admitted the claim of the insured. However, the Opposite Parties wrongly repudiated the claim of the Complainant. Hence, is liable for Deficiency of Service.
22. Keeping in view the facts of the present case, we allow the following reliefs as prayed for by the Complainant:
I. We direct the Opposite Party to pay an amount of Rs. 69,82,987/- along with interest as per the following arrangement:
A. An interest @ 6% calculated from 17.11.2003 (being the date on which the claim was repudiated) till 05.04.2022 (being the date of the present judgment); B. The rate of interest payable as per the aforesaid clause (A) is subject to the condition that the Opposite Party pays the entire amount on or before 04.06.2022;
C. In case the Opposite Party fails to refund the amount as per the aforesaid clause (A) on or before 04.06.2022, the ALLOWED PAGE 11 OF 12 C. NO. 157/2010 D.O.D. : 05.04.2022 GOEL SPINNING & WEAVING MILLS VS. UNITED INDIAN INSURANCE CO. LTD.
entire amount is to be refunded with an interest @ 9% p.a. calculated from 17.11.2003 (being the date on which the claim was repudiated) till the actual realization of the amount.
II. In addition to the aforesaid and taking into consideration the facts of the present case, the Opposite Party is also directed to pay to the Complainant a sum of Rs. 3,00,000/- as cost for mental agony and harassment to the complainant.
23. Applications pending, if any, stands disposed of in terms of the aforesaid judgment.
24. A copy of this judgment be provided to all the parties free of cost as mandated by the Consumer Protection Act, 1986. The judgment be uploaded forthwith on the website of the commission for the perusal of the parties.
25. File be consigned to record room along with a copy of this Judgment.
(DR. JUSTICE SANGITA DHINGRA SEHGAL) PRESIDENT (RAJAN SHARMA) MEMBER (JUDICIAL) Pronounced On:
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