National Consumer Disputes Redressal
Wilhelm Textiles India Pvt. Ltd. vs Oriental Insurance Co. Ltd. on 1 May, 2017
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CONSUMER CASE NO. 163 OF 2016 1. WILHELM TEXTILES INDIA PVT. LTD. VILLAGE KHANDSA, BEHRAMPUR ROAD, GURGAON, HARYANA-122001 ...........Complainant(s) Versus 1. ORIENTAL INSURANCE CO. LTD. HEAD OFFICE: A-25/27, ASAF ALI ROAD, NEW DELHI-110002 ...........Opp.Party(s)
BEFORE: HON'BLE MR. JUSTICE V.K. JAIN,PRESIDING MEMBER
For the Complainant : Mr. Nishant Datta, Advocate
Mr. Pradeep Bhardwaj, Advocate For the Opp.Party : Mr. K.K. Bhat, Advocate with
Mr. P.K. Gupta, Sr. Divisional Manager
Mr. Subhash Ahuja, Asstt. Manager
Dated : 01 May 2017 ORDER
JUSTICE V.K. JAIN, PRESIDING MEMBER
The complainant company which is engaged in business of manufacturing technical textiles, obtained two Standard Fire & Special Perils Policies and one Standard Fire & Special Perils Floater Policy from the opposite party namely Oriental Insurance Co. Ltd. The Floater policy, according to the complainant covers property which is easily movable and provides flexible coverage which normal insurance policies do not provide. Policy No. 215300/11/2012/385 provided coverage of Rs.2.30 crores for the plant and machinery which the complainant had installed in its factory at Behrampur Road, Village Khandsa, Gurgaon, Policy No. 215300/11/2013/9 provided coverage to the extent of Rs.9.00 crores for the stock, Rs. 80,00,000/- for other contents, Rs.5.50 crores for the building and Rs.7.70 crores for the plant and machinery at Behrampur Road, Village Khandsa, Gurgaon. The policy No. 215300/11/2013/33 which was a Floaters Policy provided coverage of Rs.1.00 crore in respect of the material stored in godown and a silos. However, the particulars such as addresses of the godown and silos were not given in the insurance policy. The address of the insured in this policy was given as Behrampur Road, Village Khandsa, Gurgaon.
2. In a fire which broke out at the factory of the complainant on 10.4.2012, building, stock, plant and machinery etc. are alleged to have been damaged / destroyed. On the intimation being given to the insurer, the loss is stated to have been assessed by the surveyor at Rs.6,75,97,500/-. In the opinion of the surveyor, the stock had been got underinsured by the complainant to the extent of 29.22%, its value being Rs.14,12,80,005/- as against the sum insured at Rs.10.00 crores. The value of the stock taken by the surveyor included the value of the material worth Rs.2,07,71,917/- at the godown of the complainant at Behrampur Road, Village Khandsa, Gurgaon and stock valued at Rs.1,65,94,158/- lying at the premises of various job workers, whom the complainant had engaged.
3. Vide email dated 15.12.2014, the insurer informed the complainant that the competent authority had approved its claim to the extent of Rs.6,75,00,000/- and requested it to submit discharge voucher and KYC form. Vide an email sent on the same date; the complainant submitted the requisite documents including the discharge voucher. The amount of Rs.6,75,00,000/- was then credited to the bank account of the complainant on 29.12.2014.
4. Vide letters dated 13.1.2015 and 20.2.2015, the complainant expressed its disagreement that the amount paid to it by the insurer and claimed an additional amount of Rs.2,50,88,333/-. Vide its letter dated 06.3.2015, the insurer informed the complainant that it had given unconditional acceptance and discharge voucher and that no further amount was admissible under the claim. Being aggrieved from the stand taken by the insurer, the complainant is before this Commission, seeking payment of Rs.2,50,88,333/-, along with interest on that amount, thereby making an aggregate of Rs.2,92,27,908/-.
5. The complaint has been resisted by the insurer which has taken a preliminary objections that (i) in view of the General Condition No. 6(ii) of the policy, the complaint is not maintainable and (ii) the complainant having accepted payment in full and final settlement of the claim, nothing more was due to legally payable to it. On merits, the insurer has justified the payment made to the complainant.
6. The first question which arises for consideration in this case is as to whether the complaint is barred in terms of Clause 6 (ii) of the insurance policy. The said clause reads as under:
"6 (ii) In no case whatsoever shall the company be liable for any loss or damage after the expiry 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 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 all purpose be deemed to have been abandoned and shall not thereafter be recoverable hereunder".
It would be seen that the aforesaid clause has two parts. The first part takes away the liability of the insurer in a case where no claim is either pending consideration before it or is made subject matter of arbitration within twelve months from the date of loss or damage to the insured. The second part applies to a case where the insurer disclaims its liability for any claim under the insurance policy and the said claim is not made subject matter of a suit, within twelve calendar months from the date of the disclaimer. In that case, the insured is deemed to have abandoned the claim and there is an embargo on the recovery of such a claim after twelve months from the date of the disclaimer.
7. An identical clause came up for consideration of the Hon'ble Supreme Court in Himachal Pradesh State Forest Company Limited Vs. United India Insurance Company Limited (2009) 2 SCC 252. In the case before the Hon'ble Supreme Court, the complainant allegedly suffered heavy losses due to rains in September, 1988. This fact was conveyed to the insurer vide several letters between 03.10.1988 and 31.3.1989. The insurer refuted its liability to pay on 13.10.1988, on the pretext that the policy had been issued for a period of eight months only starting from 06.11.1987 and ending on 05.7.1988. The matter having been agitated before this Commission by way of a consumer complaint, this Commission dismissed the complaint on the ground that it had been brought after expiry of the period fixed by Clause 6 (ii) of the insurance policy. Being aggrieved from the dismissal of the complaint, the complainant approached the Hon'ble Supreme Court by way of an appeal and contended that the above referred clause could not been sustained in view of Section 28 of the Contract Act, 1872. The contention was however, rejected by the Hon'ble Supreme Court referring to its earlier decision in National Insurance Co. Ltd. Vs. Sujir Ganesh Nayak & Co. & Anr. (1997) 4 SCC 366. The Hon'ble Supreme Court noted that in in Sujir Ganesh Nayak (supra) it had held that such a contractual provision was not hit by Section 28 of the Indian Contract Act, 1872, as the right itself had been extinguished. The learned counsel for the appellant before the Hon'ble Supreme Court sought reconsideration of the decision in Sujir Ganesh Nayak (supra) relying upon certain observations made in Food Corporation of India Vs. New India Assurance Co. Ltd. (19940 3 SCC 324. The Hon'ble Supreme Court however, found no merit in the plea noticing that Food Corporation of India (supra) had been specifically considered in Sujir Ganesh Nayak (supra) which had also relied upon another decision in Vulcan Insurance Co. Ltd. Vs. Maharaj Singh & Anr.(1976) 1 SCC 943.
8. In view of the binding decision of the Hon'ble Supreme Court in Himachal Pradesh State Forest Company Limited (supra), there is no escape from the conclusion that Clause 6 (ii) of the insurance policy is legally valid and is not hit by Section 28 of the India Contract Act, 1872. Following the above referred decision of the Hon'ble Supreme Court, an identical view was taken by this Commission in Global Ispat Ltd. Vs. Oriental Insurance Company Ltd. IV (2014) CPJ 270 (NC).
9. As noted earlier vide email dated 15.12.2014, the insurer informed the complainant that the competent authority had approved the claim for Rs.6,75,00,000/- and requested it to submit the documents including discharge voucher for Rs.6,75,00,000/-. Since the claim lodged by the complainant was for a higher amount, the rest of the claim was clearly rejected by the insurer, by conveying approval of the claim to the extent of Rs.6,75,00,000/-. Requiring the complainant to execute a discharge voucher, accepting the amount of Rs.6,75,00,000/- in full and final settlement of its claim, the insurer left no doubt in this regard and therefore, the email dated 15.12.2014 clearly amounted to rejection of the rest of the claim. The complaint therefore, ought to have been filed within 12 months of the receipt of the aforesaid email, which admittedly was received on the same day. Having been filed on 11.2.2016, the complaint is clearly barred in terms of Clause 6(ii) of the insurance policy since the complainant is deemed to have abandoned its claim to the aforesaid extent.
10. As noted earlier, the complainant had submitted a discharge voucher dated 15.12.2014, accepting the amount of Rs.6,75,00,000/- in full and final settlement of the loss and / or damage caused to it on or about 10.4.2012. The case of the complainant is that since it was in financial difficulty at that time and the insurer had refused to release payment of Rs.6,75,00,000/- unless the discharge voucher was executed and submitted, it had no option but to submit the said voucher which cannot be said to have been executed voluntarily and with a free will. The learned counsel for the insurer however, pointed out that there was absolutely no protest from the complainant on receipt of email dated 15.12.2014 conveying the approval of Rs.6,75,00,000/- and the discharge voucher was executed and sent on the very same day on which the offer of Rs.6,75,00,000/- in full and settlement of the claim was made. He also pointed out that even after the aforesaid amount had been credited to the account of the complainant on 29.12.2014, there was no immediate protest from it and the first demand of the additional claim was made after fifteen days, on 13.1.2015.
11. The learned counsel for the complainant relying upon a circular dated 24.9.2015 issued by Insurance Regulatory & Development Authority of India contended that in view of the aforesaid circular the claim cannot be resisted by the insurer on the ground that a discharge voucher had been executed by the complainant in its favour. The learned counsel for the insurer however, submitted that the circular dated 24.9.2015, was later modified by IRDA vide Circular dated 08.6.2016. The above-referred circulars to the extent they are relevant read as under:
" Circular dated 24.09.2015
The insurance Companies are using 'discharge voucher' or 'settlement intimation voucher' or in some other name, so that the claim is closed and does not remain outstanding in their books. However, of late, the Authority has been receiving complaints from aggrieved policy holders that the said instrument of discharge voucher is being used by the insurers in the judicial fora with the plea that the full and final discharge given by the policy / holders extinguish their rights to contest the claim before the Courts.
While the Authority notes that the insurers need to keep their books of accounts in order, it is also necessary to note that insurers shall not use the instrument of discharge voucher as a means of estoppel against the aggrieved policy holders when such policy holder approaches judicial fora.
Accordingly insurers are hereby advised as under:
Where the liability and quantum of claim under a policy is established, the insurers shall not withhold claim amounts. However, it should be clearly understood that execution of such vouchers does not foreclose the rights of policy holder to seek higher compensation before any judicial fora or any other fora established by law.
All insurers are directed to comply with the above instruments".
" Circular dated 08.6.2016
This refers to the circular No. IRDA/NL/Cir/ Misc./173/09/2015 dated 24.9.2015 on the captioned subject. Since then insurers, on various occasions, have submitted that the above circular is not in the line with the IRDA (protection of policyholders interests) Regulations, 2002 (PPI Regulations) and the Indian Contract Act.
The Authority has reviewed the matter taking into consideration the provisions of the Contract Act, PPI Regulations and Apex Court Judgements. Taking equal cognisance of the legal rights of the policy holders and insurers, the Authority hereby further directs that:
Wherever there are no disputes by the insured/s or claimant/s to the amount offered by the insurer towards settlement of a claim, the present system of obtaining the discharge voucher may be continued.However, the insurers must ensure that the vouchers collected must be dated and complete in all respects while obtaining the signature/s of the insured/s or claimant/s.
If the amount offered is disputed by the insured/s or claimant/s, insurers would take steps to pay the amount assessed without waiting for the voucher discharged by the insured/s or claimant/s.
Under no circumstances the Discharge vouchers shall be collected under duress, by coercion, by force or compulsion".
The position emerging on a combined reading of above referred two circulars seems to be that though, there can be no objection to the insurer obtaining a discharge voucher where there is no dispute by the insured to the amount offered by the insurer, such a discharge voucher should not be insisted where the amount offered by the insurer is disputed by the insured. Therefore, the question would be whether the amount of Rs.6,75,00,000/- was disputed by the complainant or not. The case of the complainant in this regard is that on perusing the contents of the discharge voucher they contacted the Regional Office of the insurer and enquired whether the assessed amount would be released if the voucher was signed under protest but Mr. Nagendra Rai, DGM in the Regional office informed that the admitted amount will not be released by the insurer unless the voucher was signed without any modification. This is also the case of the complainant that since it was under extreme financial duress it had no other option except to take the admitted amount on execution of the discharge voucher. The learned counsel for the complainant also submitted in this regard, that despite the concerned officer having been named in the complaint the insurer has not filed the affidavit of Mr. Nagendra Rai to rebut the aforesaid allegation. However, according to the learned counsel for the insurer, no such allegation referring to the conversation with Mr. Nagendra Rai was made by the complainant either in its letter dated 13.1.2015 or in its letter dated 20.2.2015. He submitted that the reference to the alleged conversation with Mr. Nagendra Rai is only an afterthought. He also contended that had the complainant executed the discharge voucher on account of the insurance company having declined to release the assessed amount without execution of the discharge voucher, it would have sent a protest letter to this effect immediately after the amount of Rs.6,75,00,000/-had been credited to its bank account on29.12.2014. The total silence on the part of the complainant for two weeks after receiving the aforesaid amount of Rs.6,75,00,000/- from the insurer according to the learned counsel for the insurer, is a clear indicator that the discharge voucher was executed voluntarily and without raising any dispute as to the quantum of the amount acceptable to the complainant. He also pointed out that though extreme financial duress has been pleaded by the complainant, no evidence of the alleged financial duress has been submitted to this Commission.
12. The learned counsel for the complainant relied upon the decision of this Commission dated 10.02.2016 in Ramdas Sales Corporation Vs. New India Assurance Company Ltd. Consumer Complaint No. 79 of 2007. The above referred decision was rendered before the circular dated 08.6.2016 came to be issued by IRDA. Though an appeal against the decision of this Commission, being Civil Appeal No.3929 of 2016 was dismissed by the Hon'ble Supreme Court vide its order dated 10.03.2017, the question of law on the interpretation of the circulars dated 24.09.2015 and 08.06.2016 was left open. It was contended by the learned counsel for the OP that since vide circular dated 08.6.2016 IRDA itself has allowed the insurer to obtain a discharge voucher, where there is no dispute to the amount offered by the insurer towards settlement of a claim, the decision of this Commission in Ramdas Sales Corporation (supra) would not apply to this case. However, I need not take a conclusive view on the implications of the execution of the discharge voucher in the facts and circumstances pointed out hereinabove, as the complaint is otherwise bound to fail in terms of clause 6(ii) of the insurance policy.
13. On merits of the claim, the main dispute between the parties is as to whether there was any under insurance of the stock or not. The plea of under insurance is based primarily upon the stock amounting to Rs.2,07,71,917/- which had been kept in the godown at Behrampur Road and stock worth Rs.1,65,94,158/- kept at the premises of various job workers. Obviously, under insurance can be claimed only if the stock kept in the gowdown at Behrampur Road and at the premises of the job workers was covered under the insurance policy. The risk details given in Policy No.215300/11/2013/33 reads as under:-
"RISK DETAILS
1.Risk Description :
Material stored in Godown and Silos - Storage of Non-hazardous goods subject to warranty that hazardous goods of Category I, II, III, Coir waste, Coir fibre and Caddies are not stored therein SMI Desc Nature of Stock Sum Insured Stock 1,00,00,000.00"
It was contended by the learned counsel for the insurer that the aforesaid policy was issued pursuant to cover note issued by them to the complainant and in the cover note, the stock kept at the premises of the job workers was expressly included besides the stock kept in the Behrampur Road godown of the complainant. The cover note to the extent it is relevant, reads as under:-
"Type of Insurance/Perils Covered & Warranties : Std. Fire Policy (Fire EQ) Floater Policy Period of insurance : From: 2.4.2012 To : 1.4.2013 Description of Risk:-
The property insured is situated at : Behrampur Road Village Khands, Gurgaon (HR) The building is of 1st class construction Sum(s) insured are as under: Renewal of policy no.11/2012/108 Rs.1,00,00,000 (Rupees one crore only) on stock of all type of raw material used for fusing and laminating cloth including (finished and semi-finished goods) and goods of similar nature, packing material lying and or kept and or held in trust or on commission basis for which the insured is legally liable at the time of loss in the above insured's premises built of 1st class const. and other parties for job work. The insured named above having the day proposed in effect the insurance and having paid and deposited furnished a bank guarantee for the premium stated above, the risks hereby insured, subject to the usual forms and conditions of the companies standard policy."
Admittedly, the factory of the complainant as well as an independent godown both are situated on Behrampur Road, though they are separate properties. Admittedly, there is a godown inside the factory premises as well. It was contended by the learned counsel for the complainant that the stock kept in the godown in the factory of the complainant and not the stock kept in the independent godown of the complainant was sought to be got insured under the aforesaid insurance policy and, therefore, the stock kept in the independent godown could not have been considered by the surveyor, in order to return a finding of under insurance. I, however, do not find any merit in the contention as far as the stock kept in the independent godown is concerned. The complainant had obtained a separate policy being Policy No.215300/11/2013/9 in respect of the stock to the extent of Rs.9 crore, giving the address as Wilhelm Textiles India Pvt. Ltd., Behrampur Road, Village Khandsa, Gurgaon. The stock kept in the factory godown, in my view, was covered under the aforesaid policy. There could be no occasion to obtain a separate policy in respect of the stock kept in the factory godown to the extent of Rs.1 crore when the complainant had already obtained another policy in respect of the stock in the factory to the extent of Rs.9 crore. Therefore, Policy No.215300/11/2013/33, in my view, pertained to the stock kept in the independent godown at Behrampur Road, Village Khandsa, Gurgaon, Haryana.
14. As far as the stock kept at the premises of the job workers is concerned, two aspects are important. Firstly, there is absolutely no reference to the job workers premises in the insurance policy. Secondly, admittedly, no particulars of the premises of the job workers were ever supplied by the complainant to the insurer. In a floater policy, the goods kept at the premises of the job workers cannot be said to be insured unless the particulars of such premises are given to the insurer before the loss actually happens. A contrary interpretation may result in gross abuse of such a policy at the hands of unscrupulous insured persons, who may try to take reimbursement in respect of uninsured goods by claiming the same to be the goods lying at the premises of the job workers, based upon false documents showing storage of the goods of the insured at the premises of the job workers. This issue came up for consideration of this Commission in M/s Orient Clothing Company Ltd. Vs. M/s Bajaj Allianz General Insurance Co. Ltd. - Consumer Complaint No.26 of 2008 decided on 13.7.2015. In the aforesaid case, the complainant had obtained a floater policy covering four plots in addition to 20 processors. The complainant, however, had furnished the list of only 16 processors to the insurer at the time of submitting the proposal. A fire having broken out at a plot which the complainant claimed to be the plot of one its processors and the stock kept there having been destroyed, a claim for reimbursement of the loss was lodged by the insured. The claim, however, was not paid on the ground that the aforesaid plot was not a specified location. Being aggrieved from the stand taken by the insurer, the complainant approached this Commission by way of a consumer complaint. The complaint was resisted by the insurer which submitted that as per the terms and conditions of the Standard Fire and Special Perils Policy formulated by the Tariff Advisory Committed, constituted under the Insurance Act, 1938, which are binding on all the insurance companies in India, floater policy could be issued only for the stocks at specified locations and the insurance at unspecified locations was not allowed. Rejecting the complaint, this Commission interalia held as under:-
"5. The primary issue which arises for our consideration in this case is as to whether the complainant was required to disclose the location of all the 20 processors for which the insurance cover was taken under the floater clause attached to the policy as is claimed by the insurance company or it could seek reimbursement in respect of any location of its any processor so long in case the goods damaged or destroyed in the fire belonged to the complainant.
6. The floater policy, which forms part of Indian Fire Tariff, to the extent it is relevant, provides that floater policies can be issued to cover stocks kept at various locations under one sum insured but unspecified locations shall not be allowed. Therefore, it is not permissible for an insurance company to issue an insurance policy in respect of unspecified locations i.e. the locations which are not brought to its knowledge by the insured.
The floater clause which was attached to the insurance policy issued to the complainant to the extent it is relevant reads as under:
"In consideration of Floater Extra charged over and above the policy rate the S.I. in aggregate under the policy is available for any one, more, or all locations as specified in respect of movable property."
It would, thus, be seen that though an insurance policy could cover more than one location the said locations have to be specified before the benefit of the insurance can be claimed.
The insurance certificate inter alia reads as under:
"Comments: Locations Covered - As per the annexure attached herewith."
It would, thus, be seen that the said policy covered only those locations which were mentioned in the annexure attached thereto. A perusal of the aforesaid annexure would show that it specified only 16 locations, though the complainant could have specified as many as 20 locations. Plot No.749 was not amongst the locations specified in the annexure to the insurance certificate. It is quite evident from a perusal of the floater policy, floater clause attached to the policy issued to the complainant as well as locations specified in the annexure attached to the insurance certificate that plot No.749 was not one of the locations covered by the floater policy issued to the complainant. If the complainant wanted to cover the aforesaid location it ought to have informed the insurance company accordingly, before the stock kept at the aforesaid location allegedly got damaged or destroyed. That having not been done I have no hesitation in holding that the stock of the complainant kept at plot No.749 was not covered under the insurance policy taken by it.
7. I cannot accept the contention that it was not necessary for the insured to disclose the location of its processors to the insurance company. The insurance at an unspecified location, in my view, cannot even be conceived of. If the complainant wanted to cover its goods kept at plot No.749 against fire, etc., it ought to have informed the insurance company accordingly and only then it would have been entitled to reimbursement for the damage sustained on account of the fire at the said location. In fact the requirement of disclosing the locations to the insurer is also evident from the fact that the complainant itself had disclosed 16 locations to the insurer, at the time of taking the policy. If I accept the contention that the insured is not required to disclose the location to the insurance company, that may result in a situation where an insured keeping its goods at a large number of locations seeks to take benefit of the insurance in the event of loss at any of the said locations, even though it may have taken insurance cover for a lesser number of locations. In other words, if I accept this contention, in a case where the insured is keeping its goods say at 50 locations and it obtains insurance cover for 20 locations, it may in the event of loss by fire at any of its locations claim benefit of insurance despite the fact that the insurance cover was taken by it for 20 locations and not for all the 50 locations. Moreover, such an interpretation will also enable the insured to claim benefit of insurance even in respect of locations where it was not keeping its goods at the time of taking the insurance policy and which were never brought to the knowledge of the insurer. Such an interpretation, in my view, would not only be unreasonable but also illogical and absurd. I am of the opinion that in a floater policy the benefit of insurance can be claimed by the insured only in respect of loss at those locations which are disclosed to the insurance company before the loss actually occurs. Since the plot No.749 was not one of the locations disclosed to the insurance company either at the time of taking policy or at any time thereafter, the complainant is not entitled to reimbursement of the damage suffered by it on account of fire which took place at the aforesaid location. The complaint, therefore, is liable to be rejected."
Therefore, on merit I am of the view that though the stock kept in the independent godown at Behrampur Road was required to be considered, the stock kept at the premises of the job workers, particulars of which were never disclosed to the insurer was not required to be considered for the purpose of deciding whether there was an under insurance or not.
15. For the reasons, stated hereinabove, the complaint is dismissed being barred under clause 6(ii) of the insurance policy. In the facts and circumstances of the case, there shall be no order as to costs.
......................J V.K. JAIN PRESIDING MEMBER