State Consumer Disputes Redressal Commission
M/S Manjushre Strech Film Pvt Ltd., vs The National Insuance Co., Ltd., on 22 April, 2013
BEFORE A.P STATE CONSUMER DISPUTES REDRESSAL COMMISSION AT HYDERABAD C.C.NO.105 OF 2012 Between: M/s Manjushree Strech Film Pvt Ltd., Rep. by its Director Madhusudhan Kakani S/o S.N.Kakani, Age 52 years, Occ: Business R/o D.No.7-4-102, Gaganpahad R.R.Dist Hyderabad-323 Complainant A N D The National Insurance Co.Ltd., Rep. by its divisional Manager D.O.No.IV, Begum Bazar Branch 5-5-677/78, 101, 1st Floor, Sana Plaza, Opp.Police Lane Hyderabad Opposite party Counsel for the Appellant M/s K.Anoop Kumar Counsel for the Respondent M/s V.Sambasiva Rao QUORUM: SRI R.LAKSHMINARASIMHA RAO, HONBLE MEMBER
AND SRI THOTA ASHOK KUMAR, HONBLE MEMBER MONDAY THE TWENTY SECOND DAY OF APRIL TWO THOUSAND THIRTEEN Oral Order (As per Sri R.Lakshminarasimha Rao, Honble Member) ***
1. The complaint is filed claiming an amount of `35,88,296/-with interest @18% p.a. and `1,00,000/-
towards compensation for suffering mental agony and costs.
2. The averments of the complaint are that the complainant-company engaged in doing business of Stretch Films in premises bearing number 7-4-102 situate at Gaganpahad, Ranga Reddy District and premises was taken on lease for the purpose of using it as godown and the property belongs to one of the directors of the complainant-company. The complainant-company used to obtain Fire Claim Policy from the opposite party for several years and it had obtained the Fire Claim Policy bearing number 551703/11/08/3100000694. The complainant-company furnished particulars of the business and those of the property to the opposite party which issued the insurance policy covering risk for plant and machinery for an amount of Rs.55 lakh and stock in process for Rs.50 lakh.
3. A fire accident took place on 29.05.2009 in the business premises of the complainant-company due to which the stock was gutted. The Authorities of Fire Department extinguished the fire. The complainant-company intimated the opposite party about the fire accident and lodged claim for a sum of `35,88,296/-.
The complainant had furnished details sought for by the opposite party. The complainant-company clarified all queries of the surveyor, M/s Professional Surveyor and Loss Adjudicators Pvt Ltd. The surveyor assessed the loss at `24,18,403/-. The opposite party assured the complainant that it would settle the claim and after 1 years, the opposite party appointed an investigator, M/s Zubair &Company and the complainant-company objected that after a long gap of accident, investigator cannot be appointed.
4. The investigator raised frivolous issues such as the complainant-company has no insurable interest and the godown does belong to any others and basing on the report, the opposite party raised several objections in the letter dated 14.03.2011. The complainant-company in its reply had given point wise observation and subsequently, the opposite party had taken plea that the door number of the premises was in question and claim was said to have been made under one insurance policy instead of the other insurance policy. Several other firms in the vicinity of the complainant-companys godown obtained several insurance policies and repudiation of the claim is motivated and contrary to the terms of the insurance policy.
5. The Fire and Emergency Department issued certificate showing the fire accident taking place at the premises of the complainant-company. The complainant-company filed application before the opposite party under RTI Act to furnish copy of investigation report. The opposite party refused to furnish copy of the report stating that personal information cannot be furnished. The complainant-company got issued notice dated 22.03.2012 and the opposite party issued reply on frivolous grounds.
6. The opposite party resisted the claim on the premise that the complaint is not maintainable and the matter involved in the complaint cannot be decided in summary proceedings and the complainant-company approached this Commission by way of misperception, misrepresentation and non-disclosure of material facts basing on false declaration. The opposite party issued standard fire and special perils policy bearing number 551703/11/08/3100000694 in the name of the complainant-company valid from 15.12.2008 to 14.12.2009. The complainants manufacturing process takes place at Door Number 7-4-102,Gagan Pahad, Ranga Reddy District and not as claimed at Godown. The fire affected Block/Section is part of the building showing door number 6-48/1,Gagan Pahad, Ranga Reddy District where there is no insurable interest to the complainant-company.
7. The fire accident occurred at Godown on 29/30-5-2009 and not at the place where manufacturing process takes place and the stock in process is situated in respect of which the insurance policy was issued. The opposite party issued three insurance policies Standard Fire and Special Perils Policies in the names of (1) M/s Manjusree Stretch Films (P) Ltd., 7-4-102, Gagan Pahad, R.R. District bearing policy No.551703/11/08/3100000694 covering risks on Plant/Machinery and Accessories for sum insured `55 lakhs and on Stock and Stock in Process for sum insured `50 lakhs, (2) M/s International Cans Pvt Ltd., 6-48/1 (Part), Gagan Pahad, R.R. District bearing Policy No.551703/11/08/3100000299, covering risks on Plant/Machinery including accessories and Electrical installations for sum insured `60 lakhs and on Stock and Stock in Process for sum insured `200 lakhs; (3) M/s Govind Industries, 6-48/1, Front Portion Side, Gagan Pahad, R.R.District bearing Policy No.551703/11/08/3100000754 covering risks on Plant/Machinery for sun insured Rs.3 lakhs and on Stock and Stock in process `2 lakhs; and (4) M/s Manjusree Polymers (P) Ltd., Part of 6-48/1, Rear Middle Portion, Gagan Pahad, R.R. District bearing policy NO.551703/11/08/3100000695 covering risks on Plant/Machinery and accessories for sum insured `14 lakhs and on Stock and Stock in process for sum insured `16 lakh.
8. The industries though existing in one single area with a compound wall, they obtained separate insurance policies specifically mentioning and covering their risk. The complainant-company under the guise of different insurance policies taken advantage and claimed where there was no insurable interest. The complainant-company claimed the amount stating that the policy in question was issued to the complainant by covering risk on plant/machinery for an amount of `55 lakh and on stock in process for `50 Lakh and not on the stock at Godown.
9. The complainant has no insurable interest and the insurance policy is void for non-disclosure of material particulars. The Godown belongs to Madusudan Kakani who is one of the members of undivided members of Hindu Undivided Family. As per clause 6(ii) of the terms of the insurance policy, the claim should be made subject matter of pending action or arbitration before expiration of 12 months from the date of happening of loss. The claim is not maintainable. As per clause 6 (ii) of the terms of the insurance policy, the claim should be made subject of pending action or arbitration within 12 months from the dated of disclaimer and as such the complainant is not entitled to any amount.
10. The surveyor assessed the loss and submitted his report on 9.03.2010 without prejudice to the right of the opposite party and the surveyor observed that the description of properties and situation/occupation of the premises of the insured mentioned in the policy was matching with the properties of the insured in all respects in view of the confusion since all the companies are situated at the same area. The surveyor stated that the fire occurred in a shed occupied by the insured as Godown for storing raw material and finished goods which is contrary to the claim of the insured that the accident occurred at manufacturing unit and the complainant declared in its letter that they do not have any Godown in the premises and in the circumstances the opposite party was constrained to appoint investigator.
11. The investigator observed that the fire accident occurred in plastic bag manufacturing unit ,M/s Govind Industries(6-48/1, Gaganpahad owned by the wife of Madusudan Kakani and not in the godown of the complainant company . The Fire Department issued letter dated 4.06.2009 showing at Column No,10 that the 50/60 shed in which finished unfinished raw materials, old records, electric wiring etc, burnt in fire accident which shows that the fire accident occurred on 29/30-05-2009 at the Godown and not at manufacturing process unit of the complainant . As per the letter of the Deputy Electrical Inspector the accident occurred in the Godown due to electric short circuit in the Godown due to aged lighting wire and the fire was spread immediately catching inflammable plastic materials.
12. As per the letter of the Inspector of Factories, the fire accident took place in the Godown measuring 60x50 ft lean to roofing with A/C sheets. The finished goods and raw materials are stored in Godown. He observed that there is a single phase lighting load with four tube lights which shows that the accident had not occurred as stated by the complainant. The complainant did not submit the required documents in time. The claim is not genuine. Hence, the claim was repudiated.
13. The Director of the complainant-company filed his affidavit and the documents, ExA1 to A8. On behalf of the opposite party-insurance company, its Divisional Manager filed his affidavit and the documents, Ex B1 to B15. Affidavits of Licensed Surveyor and Loss Adjusters and the Investigator/licensed Surveyor are filed.
14. The counsel for the opposite party has filed written submissions.
15. The points for consideration are:
i) Whether the fire accident occurred at the premises mentioned in the insurance policy?
ii) Whether the claim is maintainable after stipulated period?
iii) Whether there is deficiency in service on the part of the opposite party?
iv) To what relief?
16. POINT Nos. 1 to 3: The complainant-engaged is in the business of Stretch Films in the premises bearing number 7-4-102, Gaganpahad, Ranga Reddy District. The complainant-company obtained insurance policy, Standard Fire and Special Perils Policy bearing number 551703/11/08/31000000694 to the complainant-company. The premises covered under the insurance policy is shown as D.No. 7-4-102,(an area of 833.89 sq.yards) bounded by East: staff quarters of G.Gopal & sons ; west; Neighbors property; North: NH-7 , south: Neighbors property Gagan Pahad, Ranga Reddy district. The insurance policy was issued for the period from 15.12.2008 to 14.12.2009. The fire accident occurred on 29/30-05-2009. The insurance policy was issued covering risk on plastic goods manufacturing unit and stock in process at manufacturing unit. The parties are at dispute as to the place where the fire accident occurred. The opposite party repudiated the claim on the premise that the fire accident occurred at the Godown of the complainant-company which is not covered by the terms of the insurance policy.
17. The opposite party based its conclusion as to place of occurrence of fire accident on the reports of the Deputy electrical inspector, Inspector of factories, investigator, surveyor and the lease deed. The surveyor observed in his report that the fire accident occurred in a shed occupied by the complainant-company as Godown for storing raw materials and finished goods which is contrary to the claim of the complainant-company that the accident occurred at manufacturing unit.
18. The investigator submitted his report ot the opposite party stating that the fire accident occurred in the plastic manufacturing unit of M/s Govind Industries (6-48) owned by one of the directors of the complainant-company. The letter dated 4.06.2009 of the Fire Department would show that the fire accident occurred in the shed wherein finished and unfinished raw materials, old records, switch boards etc. were burnt. The observation of the Fire Department would show that the accident occurred at Godown and not at the manufacturing unit of the complainant-company.
19. The inspector of factories, Ranga Reddy district found that the accident occurred in the Godown due to electrical short circuit in the Godown. He observed in his letter dated 6.07.2009 that:
M/s Manjunath Strecth Film Pvt Ltd., situated in Gaganpahad consists of manufacturing shed and Godown. The fire accident took place in the godown, measuring 60 ft(L) x 50 ft (width) x 14 (ht) lean to roofing with A.C.Sheets.
The finished goods and Raw material are stored in godown. There is a single phase lighting load withy 4 tube lights controlled by a 4 switches in a switch board in the godown.
20. According to the observation of the Deputy Electrical Inspector, the power supplied to the premises where the accident occurred is through single phase lighting load with four tube lights controlled by four switches in a switch board in the Godown. Hence, it cannot be said that a single phase power connection would be sufficient to run a manufacturing unit. In his letter dated 6.03.2009 he observed:
On visit to the site of accident for investigation on 24.06.2009, it was found that all the electrical wires, switch gears and unused old machines and connected items were in burnt condition due to fire.
On further investigation, it is learnt that the accident occurred in the godown, due to electrical short circuit in aged lighting wire because of insulation failure, the fire was spread immediately catching inflammable plastic materials. Total fire spread all over the godown, the raw materials, finished goods, old machines and switch boards of electrical circuits might be burnt due to to sparks/fire generated at the time of accident.
21. The sketch map of the location where the godown and manufacturing unit were situated would make it clear that the fire accident occurred at the which is not covered by the terms of the insurance policy. The investigator observed that the complainant-company tampered with the SSI certificate by inserting door number 7-4-102. At page 20 of his report, he noted:
The year in which the said SSI certificate issued was 1998. At that time, new door number 7-4-102 was not allotted and as per the version of the Insured it was allotted in the year 2000.
Then we do not understand how the alleged new number 7-4-102 was clearly mentioned in the address of the Insured in certificates that was in 1998 by MCH? This shows that the Insured had even gone to the extent of tampering with the Government Certificates to confuse the Insurer and other Government Agencies.
22. The Divisional Manger of the opposite party has stated that the insurance policy is void as the complainant-company misrepresented the material facts. He has stated that:
I humbly submit that as per the terms and conditions of the Policy in question at (B) General Conditions (1) the Policy shall be voidable in the event of misrepresentation, mis-description or non-disclosure of any material particulars by the Insured, I the present case as per the policy in question there is no insurable interest since the alleged fire accident occurred on2 9/30.5.2009 in the intervening night at alleged Godown situated at 6-48/1, where there is no policy issued by the opposite party insurance company. It is humbly submitted that the complainant to cvoer up their latches for their unlawful claim created the story of the alleged Godown (D.No.6-48/1) where the alleged fire accident occurred, under lease (no document furnished by the complainant) belongs to Hindu Undivided property of the family members belongs to one of the Firm Sri Madhusudan Kakani where there is no insurable interest made a present claim unlawfully and accordingly the opposite party is not liable to the amounts claimed in the complaint as per the terms and conditions of the policy.
23. The opposite party repudiated the claim on 01.07.2011. The learned counsel for the opposite party has submitted that the claim in terms of the insurance policy should be subject of pending action or arbitration within 12months of disclaimer and the complaint is filed beyond 12 months from the date of repudiation. In paragraph 11 of his affidavit, the divisional manger stated It is humbly submitted that as per the terms and conditions of the Policy in question at (B) General Conditions (6)
(ii) in no case whatsoever shall be company be liable for any loss or damage after the expiration of 12 months from the happening of the loss or damage unless the claim is the subject of pending action or arbitration; if the being expressly agreed and declared that if the company shall disclaim liability for any claim hereunder and such claim shall not within 12 calendar months from the date of the disclaimer have been made the subject matter of a suit in a court of law then the claim shall for the purposes be deemed to have been abandoned and shall not thereafter be recoverable hereunder and accordingly the complainant is not entitled any amounts as claimed in the above complaint from this Honble Commission.
Condition 6(ii) of the Insurance policy reads as under:
(ii) In no case whatsoever shall be Company be liable for any loss or damage after the expiration of 12 months from the happening of the loss or damage unless the claim is the subject of pending action or arbitration; it being expressly agreed and declared that fit he Company shall disclaim liability for any claim hereunder and such claim shall not within 12 calendar months from the date of the disclaimer have been made the subject matter of a suit in a court of law then the claim shall for the purposes be deemed to have been abandoned and shall not thereafter be recoverable hereunder.
24. The complaint is filed on 31.07.2012 beyond 12 months from the date of repudiation of the claim. Therefore, the claim cannot be maintainable. In H.P. State Forest Co. Ltd. Vs. United India Insurance Company Ltd., reported in 2009 ACJ 684 it was held:
In view of the above observations, we find that the second issue with regard to the implications of clause 6 (ii) of the policy vis-`-vis Section 28 is really academic, but as the learned counsel for the parties have addressed us on this score, we have chosen to deal with it as well. We see from the order of the Commission that it has relied upon Sujir Ganesh Nayak's case (supra) to hold that the complaint could not be entertained as being time barred. The counsel for the appellant had, however, argued before the Commission as before us, that as Section 28 of the Contract Act had undergone significant amendments, the aforesaid judgment required a re-appraisal. This submission had been rejected by the Commission by observing that it was bound by the judgment in Sujir Ganesh Nayak's case and that the appellant could agitate the question as to its correctness before the Supreme Court. The matter was, accordingly, adjourned by us to enable the parties to find out if the amendment had, indeed, been made and, if so, to what effect. During the resumed hearing, the learned counsel for the appellant candidly admitted that the amendment had been made but had thereafter been repealed and the matter would, thus, have to be examined under Section 28 of the Contract Act, as originally placed. We have, accordingly, chosen to deal with this matter under that provision. 7. It would be clear from the above prefatory note that the discussion would involve an appreciation of Clause 6(ii) of the Policy and Section 28 of the Contract Act. Both these clauses are reproduced below:
In no case whatsoever shall the company be liable for any loss or damage after the expiration of 12 months from the happening of the loss or damage unless the claim is the subject of pending action or arbitration: it being expressly agreed and declared that if the company shall declaim liability for any claim hereunder and such claim shall not within 12 calendar months from the date of the disclaimer have been made the subject matter of a suit in a court of law then the claim shall for all purposes be deemed to have been abandoned and shall not thereafter be recoverable hereunder.
Section 28 Agreements in restrain of legal proceedings void-
Every agreement, by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights, is void to that extent.
Savings of contract to refer to arbitration dispute that may arise Exception 1 - This section shall not render illegal a contract, by which two or more persons agree that any dispute which may arise between them in respect of any subject or class of subjects shall be referred to arbitration and that only the amount awarded in such arbitration shall be recoverable in respect of the dispute so referred. Savings of contract to refer questions that have already arisen.
Exception 2 - Nor shall this section render illegal any contract in writing, by which two or more persons agree to refer to arbitration any question between them which has already arisen, or affect any provision of any law in force for the time being as to references to arbitration.
8. In Sujir Nayak's case (supra) to which primary reference has been made by the learned counsel for the parties while dealing with an identical situation where a contract contained a provision prescribing a period of limitation shorter than that prescribed by the Limitation Act, it was held that the contractual provision was not hit by Section 28 as the right itself had been extinguished.
9. Mr. Sharma has, however, submitted that in view of the observations in some paragraphs in Food Corporation of India's case, the observations in Sujir Nayak's case were liable to reconsideration. We, however, find no merit in this plea for the reason that in Sujir Nayak's case, Food Corporation of India's case (supra) has been specifically considered and Vulcan Insurance Company's case (supra) too had been relied upon. In Sujir Nayak's case, this Court was called upon to consider condition 19 of the policy which was in the following terms:
19. - In no case whatever shall the company be liable for any loss or damage after the expiration of 12 months from the happening of loss or the damage unless the claim is the subject of pending action or arbitration.
10.While construing this provision vis-`-vis Section 28 of the Contract Act and the cases cited above and several other cases, in addition, this is what the Court ultimately concluded:
From the case-law referred to above the legal position that emerges is that an agreement which in effect seeks to curtail the period of limitation and prescribes a shorter period than that prescribed by law would be void as offending Section 28 of the Contract Act. That is because such an agreement would seek to restrict the party from enforcing his right in Court after the period prescribed under the agreement expires even though the period prescribed by law for the enforcement of his right has yet not expired. But there could be agreements which do not seek to curtail the time for enforcement of the right but which provide for the forfeiture or waiver of the right itself if no action is commenced within the period stipulated by the agreement. Such a clause in the agreement would not fall within the mischief of Section 28 of the Contract Act. To put it differently, curtailment of the period of limitation is not permissible in view of Section 28 but extinction of the right itself unless exercised within a specified time is permissible and can be enforced. If the policy of insurance provides that if a claim is made and rejected and no action is commenced within the time stated in the policy, the benefits flowing from the policy shall stand extinguished and any subsequent action would be time-barred. Such a clause would fall outside the scope of Section 28 of the Contract Act. This, in brief, seems to be the settled legal position.
25. For the foregoing reasons, the complaint is liable to be dismissed.
26. In the result, the complaint is dismissed. There shall be no order as to costs.
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MEMBER Dt.22.04.2013 కె.ఎం.కె* APPENDIX OF EVIDENCE WITNESSES EXAMINED For complainant for opposite parties NIL NIL EXHIBITS MARKED For complainant Ex.A1 Copy of policy Ex.A2 Copy of Fire Service Attendance Certificate dt.4.6.2009 Ex.A3 Copy of letter dt.14.03.2011 of OP to complainant Ex.A4 Copy of letter dt.20.04.2011 of complainant to OP Ex.A5 Copy of letter dt.01.07.2011 of OP to complainant Ex.A6 Copy of legal notice dt.22.3.2012 Ex.A7 Copy of reply dt.17.4.2012 Ex.A8 Copy of Memorandum and Articles of Association of Complainant.
For opposite party Ex.B1 Standard Fire and Spl.Perils Policy No.551703/11/08/3100000694 dt.15.12.2009 Ex.B2 Standard Fire and Spl.Perils Policy No.551703/11/08/3100000299 dt.20.7.2009 Ex.B3 Standard Fire and Spl.Perils Policy No.551703/11/08/3100000754 dt.09.01.2009 Ex.B4 Standard Fire and Spl.Perils Policy No.551703/11/08/3100000695 dt.15.12.2008 Ex.B5 Letter dt.30.0.2009 of complainant to OP Ex.B6 Claim form Ex.B7 Preliminary Survey Report dt.3.6.2009 Ex.B8 Final Survey Report dt.9.3.2010 Ex.B9 Letter dt.6.7.2009 by Dy. Electrical Inspector to CI Ex.B10 Letter dt.4.7.2009 by Inspector of Factories to CI Ex.B11 Certificate of complainant Ex.B12 Letter dt.13.8.2010 by Surveyor to OP Ex.B13 Lease Deed dt.1.4.2008 Ex.B14 Repudiation letter dt.01.07.2011 Ex.B15 Investigation Report dt.28.6.2011 Sd/-
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