National Consumer Disputes Redressal
Tarun Kanti Chowdhury vs Oriental Insurance Co. Ltd. on 5 October, 2020
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI FIRST APPEAL NO. 398 OF 2013 (Against the Order dated 21/03/2013 in Complaint No. 42/2009 of the State Commission West Bengal) 1. TARUN KANTI CHOWDHURY A Partnership firm, 24, Raja Peary Mohan Road, Uttar para, Hooghly, West Bengal ...........Appellant(s) Versus 1. ORIENTAL INSURANCE CO. LTD. Oriental House, Post Box No.7037, A-25/27, Asaf Ali Road, New Delhi-110 002. 2. The Oriental Insurance Co. Ltd, Having its Divisional Office at : P-4, Dobson Lane, 4th Floor, Howrah-711 101 West Bengal ...........Respondent(s) FIRST APPEAL NO. 399 OF 2013 (Against the Order dated 21/03/2013 in Complaint No. 56/2009 of the State Commission West Bengal) 1. TARUN KANTI CHOWDHURY 2. The Oriental Insurance Co. Ltd, Having ists Divisioal Office At : P-4, Dobson Lane, 4th Floor, Howrah-711 101 ...........Appellant(s) Versus 1. ORIENTAL INSURANCE CO. LTD. ...........Respondent(s)
BEFORE: HON'BLE MR. JUSTICE V.K. JAIN,PRESIDING MEMBER
For the Appellant : Mr. Shiv Shankar Banerjee, Advocate
Ms. Anupa Banerjee, Advocate &
Ms. Madhurima Ghosh, Advocate. For the Respondent : Mr. Ajay Singh, Advocate.
Dated : 05 Oct 2020 ORDER
JUSTICE V.K.JAIN (ORAL)
1. The complainant/appellant was awarded works by Hooghly Zila Parishad for construction of a road from Chhatarsal Bazar to 24 Purbazar and Muchigata to Nadippur. Two different works were awarded to the complainant/appellant for constructing two different portions of the road. The appellant/complainant was also required to maintain the road so constructed by it for a period of five years. The complainant/appellant obtained two separate policies from the respondent in respect of the afore-said works entrusted to him by the Hooghly Zila Parisahd.
2. The road constructed by the complainant/appellant got damaged on account of floods during August-September, 2007 and the case of the complainant is that the road got damaged, due to heavy rains and floods, was repaired by him at his own costs. The claims for reimbursement in terms of the insurance policy taken by him were submitted by the complainant to the insurer. A surveyor was appointed to assess the loss alleged to have been sustained by the complainant. Vide his report dated 10.03.2018 Partha Choudhary who was the surveyor appointed by the insurer assessed the loss to the complainant at Rs.462428/- in respect of one portion of the damaged road and Rs. 2359778/- in respect of another portion of the damaged road. The first report is dated 10.03.2008 and the other report is dated 15.03.2008. The claim, however, was repudiated by the insurer vide its letter dated 13.03.2009 which to the extent it is relevant reads as under:-
"The contract of insurance is based on utmost good faith and every fact of materiality and all material facts must be disclosed at the time of obtaining insurance cover. On happening of loss you are under policy condition liable to furnish required documents/papers as may be reasonably required by the Company. It has been observed that by not furnishing the 'Contract Data', copy of Contract separately, if any, for maintenance contract, concealment of the material fact has been done. Likewise in the Proposal Form you have declared that there is no river/nullah/drain or water body near the insured 'property' and there was no flood /inundation since last five years. Your kind attention is drawn to your own statement in the Claim Form where main reason for flood has been given by you is release of water from two number of dams, the surveyor's report corroborated the same.
On examination of the available papers with us, we can say that you did not have insurable interest in terms of Clause 11.1, 12.1 And 13.3. The insured may be interested in the property as owners, lessor, lessee, mortgagee, mortgager, vendor, purchaser, trustees etc. You were obliged to provide in terms of Clause 13.3 the insurance cover in the joint names of yourselves and your Employer from the date of completion to the end for defect liability period in the amounts and deductibles staled in the 'Contract Data' for the following events. Further this clause binds you to forward insurance policies and certificate to your employer for his/her approval.
The property is not owned by you nor you possess in any of the capacity mentioned above.
The Surveyor has in his reply vide his letter dated 13th September 2008 to the then Divisional Manager has said that accepting liability is the discretion of the insurer. Where insurable interest is not there, the surveyor can make the assessment of loss but the same is 'Without Prejudice' Your kind attention is also drawn to the surveyor's Report in which he has stated that the loss of or damage to the 'Road' was caused by flood due to extremely heavy and continuous rainfall measuring 400 mm per day in average during July. August, 2007 onwards. The above statement shows that condition of the road must have already been in a deplorable condition in July, August 2007 itself. .In this respect we needed to know the date of completion of the road duly certified by the concerned authority and the starting date of the maintenance cover for defect liability period. The insurance cover was obtained by you on and from 22.08.2007 during the peak period of rainy season and date of the captioned loss is 25.9.2007. In this respect we sought a clarification from the surveyor by our Registered Letter dated 27th February 2009. The surveyor received the letter on 4th March 2009 which he confirmed verbally over phone but as said by him he is unable to reply before May 2009.
You neither submitted the required papers/information nor you interacted with the concerned authority for good number of months which would have facilitated in disposing off your claim much earlier. Instead Suddenly and abruptly after 9-10 months you started putting pressure on newly joined Division In-charge for settling the claim. Reference of your letter dated i 6.2.2009 may be taken in this regard by which you chose to hold Division in-charge personally responsible for liability of interest that may entail due to delay in settlement of claim. Such personal attack is unwarranted and uncalled for. Your Bid Document dated 3rd August 2005 was accepted by your Employer vide his letter dated 25th November 2005 for execution of work of 'Road' construction and Defect Maintenance for five years of the work. You were responsible for 'defect liability' and were specifically exempted from a loss caused by natural calamities among other risks for maintenance period under Clause 13.3 side by side during execution period under Clause 11.1 & 12.1 of the Bid Document.
As per Clause 11.1 & 12.1 and 13.3 embodied in Bid Document dated 3'"'' August 2005 read together, the contractor will not be responsible for any loss or damage to the work 'Road' arising from act of Natural Calamities among other risks mentioned in the clauses for which you have been specifically exempted from responsibility.
Since the actual case of loss is not in consistence with liability to your employer, we regret to inform that your reported claim is not payable and as such the claim is repudiated by the competent authority."
3. It would thus be seen that the claims were repudiated on the following grounds:-
(1) As per the terms of the contract executed between the complainant and the Hooghly Zila Parishad the insurance policy was required to be taken in the joint names of the complainant and the Corporation but it was taken in the sole name of the complainant.
(2) While taking the insurance policy the complainant had concealed a material fact that there was a river nearby the site where the work was to be executed by him.
(3) As per the bid documents the complainant was not responsible for any loss or damage whatsoever arising out of the natural calamities.
(4) The complainant did not have an insurable interest in the subject matter of the insurance
4. Being aggrieved from the repudiation of the claim the complainant approached the concerned State Commission by way of two separate consumer complaints. The complaints were resisted by the insurer primarily on the grounds on which the claims had been repudiated.
5. The State Commission having dismissed the consumer complaints the complainant is before this Commission by way of these two separate appeals.
6. Though it is alleged in the repudiation letter that there was a river nearby and it is also evident from the case of the complainant that it was the water released from the dam which had damaged the road, there is no evidence of the existence of any river near the site where the work was executed by the complainant. There is a reference to the survey report in the repudiation letter but the Ld. Counsel for the insurer has not been able to draw my attention to any part of the survey report stating therein that a river existed near the site where the work was executed by the complainant. Therefore, it would be difficult to accept that the complainant had concealed a material fact in the proposal form by declaring that no river/nullah/drain/water body existed near the insured property. It is also stated in the repudiation letter that in the proposal form the complainant had declared that there was no flood/inundation in last 5 years. But there is no evidence of any actual floor or inundation in five years before the proposal was submitted to the insurer.
7. The Ld. Counsel for the insurer submits that the complainant had deleted storm/tempest/flood/inundation (STFI) in clause 11 of the proposal form. However, this is not one of the grounds given by the insurer for the repudiation of the claim. In view of the decision of the Hon'ble Supreme Court in Galada Power and Telecommunication Limited Vs. United India Insurance Company Ltd. & Anr. (2016) 14 SCC 161, the insurer cannot be allowed to travel beyond the ground given in the repudiation letter. Since the insurer did not reject the claim on the ground that flood and inundation were not one of the perils insured against, the submission made by the Ld. Counsel for the insurer cannot be considered. In any case, the insurance policy indicates that it did not cover 5% of the claim arising out of any STFI, subsidence and landslide meaning thereby that 95% of the loss arising of STFI was covered under the policy. STFI was altogether not excluded while issuing the insurance policy.
8. The case of the insurer, as noted earlier is that any damage to the work on account of natural calamities was to be suffered by the employer of the complainant i.e. Hooghly Zila Parishad and not by the complainant/insured. A reference in this regard is made to clauses 11.1, 12.1 and 13.3 of the bid document dated 03.08.2005. The bid document has nokt been filed either by the insurer or by the complainant but the Ld. Counsel for the complainant has drawn my attention to the letters dated 29.10.2007 and 25.03.2009 written by Hooghly Zila Parishad to the complainant. The letter dated 29.10.2007 to the extent it is relevant reads as under:-
"The above job was entrusted to you vide our memo No. 422 dt. 30/10/06 and you have completed the work as on 18.07.07 as per contract.
Please note that during the recent devastating flood the road was in submergence condition and thus it has got severely damaged which was intimated to you vide our Memo. No. 1032A dated 28/09/07. Now, as you have not yet taken up the repair work till date which you are liable as per agreement, I would once again request you to kindly do the needful for making good of the damaged road otherwise the Department may revoke the performance guarantee for realization of the cost for repair. In such case the repairing will be done by engaging any other agency through tendering."
9. The letter dated 25.03.2009 to the extent it is material reads as under:-
"This is further to the letter No. 1032A dt. 28.09.07, I further state that you have made good all the damages after the devastating flood of 2007 as per the contract.
Now, as per contract data Insurance are to be done in the joint names with the Agency and the Employer which will be valid during execution of work only and the clause mentioned in the contract data has no impact except routine maintenance during defect liability period i.e. upto 5 years after the date of completion of work.
Under a situation like this I would request you to take up the routine maintenance work, if any, at the earliest."
10. It is evident from a perusal of these letters that the stand taken by Hooghly Zila Parishad was that it was for the complainant to repair the damaged road. Hooghly Zila Parishad had gone to the extent of threatening the complainant with revoking the performance guarantee for realizing the cost of repair in case the repairing work was not done by the complainant and another agency had to be engaged for the purpose. It also appears from the letter dated 25.03.2009 that the damaged road had been repaired by the complainant to the satisfaction of Hooghly Zila Parishad.
11. As noted earlier this is also the case of the insurer that the policy was required to be taken in the joint name of the complainant and his employer i.e. Hooghly Zila Parishad. Had the policy been taken in the joint name of the complainant and Hooghly Zila Parishad and had the complainant not been responsible for repairing the damage caused to the road on account of a natural calamity such as flooding caused by release of excess water from the dam, the insurer would have been liable to reimburse Hooghly Zila Parishad for the expenses incurred in repair of the damaged road. In another words, had the policy been taken in the joint name of the complainant and the Hooghly Zila Parishad the insurer would still have been liable to reimburse for the expenditure incurred in repair of the damaged road. The reimbursement would have been made to Hooghly Zila Parishad if the complainant was not required to repair the damaged road at his own cost and the cost would have been reimbursed to the complainant if he was required to repair the damaged road at his own cost. Either way the insurer would have been liable as far as the cost of repairing the damage was concerned. Therefore, it would make no difference as to whether the cost of repair was to be borne by the complainant or it was to be borne by Hooghly Zila Parishad. For this very reason, the failure of the complainant to join Hooghly Zila Parishad as a co-insured would be immaterial in the facts and circumstances of the case. It is not as if the insurance policy was to be taken in the sole name of the employer of the complainant. The case of the insured is that the policy was to be taken in the joint name of the complainant and his employer Hooghly Zila Parishad. Therefore, it would be difficult to say that the complainant did not have an insurable interest in the subject matter of the insurance. This is more so, considering the stand taken by Hooghly Zila Parishad which required the complainant to repair the damaged road at his own cost and even went to the extent of threatening to recover the cost of repairs from the performance guarantee submitted by the complainant in case another agency had to be engaged by Hooghly Zila Parishad for repair of the damaged road.
12. For the reasons stated hereinabove I am of the considered view that repudiation of the claims was not justified provided that the complainant is able to satisfy the insurer that the cost of repair was borne by him and not by Hooghly Zila Parishad.
13. The impugned orders are, therefore, set aside and the consumer complaints are disposed of in terms of the following directions:-
(i) The insurer shall verify from Hooghly Zila Parishad that the cost of repair of the roads which were subject matter of the claims filed by the complainant were borne entirely by the complainant and not by Hooghly Zila Parishad.
(ii) If it is confirmed that the cost of repair of the roads were borne entirely by the complainant and not by Hooghly Zila Parishad the insurer shall pay an amount of Rs. 4,62,428/- in the CC No. 42 of 2009 subject matter of FA No. 398/2013 and an amount of Rs. 23,59,778/- in the CC No. 56 of 2009 subject matter of FA No. 399/2013 to the complainant/appellant, within three months from today along-with interest on that amount @ 8% p.a. w.e.f. the date of institution of the consumer complaint till the date of payment. The first appeals stand disposed of.
......................J V.K. JAIN PRESIDING MEMBER