State Consumer Disputes Redressal Commission
Mohan Breweries And Distilleries Ltd., ... vs M/S. Reliance General Insurance ... on 22 June, 2023
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Date of filing : 22.03.2011.
IN THE TAMILNADU STATE CONSUMER DISPUTES REDRESSAL
COMMISSION, CHENNAI.
Present: Hon'ble THIRU. JUSTICE R. SUBBIAH : PRESIDENT
Thiru R VENKATESAPERUMAL : MEMBER
C.C.No.30 of 2011
Thursday, the 22nd day of June 2023
Mohan Breweries and Distilleries Ltd.,
rep. by its Chief Financial Officer
-cum-Company Secretary
Mr.T.Krishnamoorthy
No.158 Rayala Towers
II Floor, Anna Salai
Chennai - 600 006. .. Complainant
- Vs -
M/s.Reliance General Insurance
Company Ltd.,
Rep. by its Director
Reliance House, IV Floor,
No.6 Haddows Road
Nungambakkam
Chennai - 600 006. .. Opposite Party
Counsel for the Complainant : M/s. C.S.K. Sathish
Counsel for the Opposite party : M/s. Elveera Ravindran
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This complaint has come before us for final hearing today,
on 22.06.2023 and on hearing the arguments of the counsel for the
complainant and the counsel for the opposite party and on perusing
the material records, this Commission made the following :-
ORDER
R.SUBBIAH J., PRESIDENT [Open Court] This complaint has been filed by the Complainant under Sections 17 of the Consumer Protection Act, 1986 praying for the following directions to the opposite party:
1. To pay a sum of Rs.43,67,150/- with interest @ 18% p.a from 03.03.2009 the date of lodging the claim till the date of realization;
2. To award a compensation of a sum of Rs.25,00,000/-
towards the loss of profit due to the deficiency in service by the opposite party; and
3. To pay the cost of the complaint.
2. In brief, the case of the complainant as projected in the Complaint is as follows:
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The complainant is a company, which commenced its business in the year 1982, manufacturing beer and other liquor products with a brand name "Golden Eagle Beer" and "Old Monk Rum" which are of high demand in the market. The complainant has its factory at Venpakkam P.O (Chengalpattu), Valasarawalkam (Chennai), Pallur P.O (Chittoor A.P) and the factory of its glass division at Mettupalayam (Puducherry U.T). The complainant's glass factory was established on 15.11.1990 to manufacture bottles. There are substantial number of employees working in this unit. The company's plant capacity is 140 tons per day and the production is carried on round the clock. The finished products in the glass division are totally supplied to their own liquor factory and it is a captive unit. While so, the complainant was approached by the opposite party with an offer to provide an "Industrial All Risk Insurance Policy" insuring all its assets in various locations. The complainant lured by the promises of the opposite party, availed "Industrial All Risk Insurance" policy and paid a premium of Rs.44,58,801/- towards the said policy. The policy was renewed on 31.05.2008 and the risk period commenced from 01.06.2008 to 31.05.2009. It is a comprehensive policy covering the assets against all risks and perils. The coverage includes physical loss or 4 damage to buildings, plant and machinery, furniture & fixtures, fittings and electrical installation, stocks etc. The said policy is issued with an extended insurance protection covering any equipment and/or machineries sent for repairs outside the premises for a period of 60 days. The policy also covers the complainant's movement of any of its assets against transit risks within the factory premises. The indemnity provided under the policy is on reinstatement value basis. In the event of any loss or damage to any one of the insured item, except stock of goods, the complainant shall pay the current replacement cost of new machinery and if repairable the cost of repairing the same to its original position prior to the event. The complainant having availed the insurance protection is entitled to service from the opposite party and thus becomes a Consumer of the opposite party. Apart from the above policy, the complainant has also insured Plant and Machinery under 'Reliance Erection All Risk Insurance Policy' in No.1201382212100009 dated 10.10.2008 and insured its stock and finished goods under 'Reliance Standard Fire and Special Peril Policy' in Policy No.1201072111000014. Thus the complainant had availed three policies from the opposite party. Whileso, on 11.12.2008, an unfortunate fire accident happened at 5 bottling plant of the complainant. The staffs of the complainant and a fire brigade from Dhanvantri Nagar brought the fire under control, after a great struggle. The complainant intimated the opposite party about the accident over phone and through an email dated 11.12.2008. Subsequently, the complainant lodged a valid claim with the opposite party. The opposite party appointed M/s.Cunningham Lindsey Pvt. Ltd., an independent licensed surveyor. Upon inspection, the surveyor had assessed the gross loss towards Plants & Machinery and the stocks including value of bricks (after deduction of salvage value @ 3%) at Rs.30,01,319.17 and submitted the report on 05.01.2010. The opposite party has not given a copy of the surveyor report to the complainant, though the same was requested by its letter dated 14.06.2010. The opposite party by their letter dated 21.12.2008 requested the complainant to submit the documents as required by the Surveyor along with fire brigade report. Hence, the complainant by its letters dated 23.02.2009 and 22.08.2009 submitted the Stock Statement, Certificate dated 05.09.2009 issued by the Chartered Accountant supported by the details of material replaced, goods issue receipt from stores, purchase bill, repair charges incurred by the complainant etc. Inspite of the same, the opposite party by its 6 letter dated 22.02.2010 had wrongly closed the claim of the complainant stating that it is closing the claim due to non-receipt of
(i) Fire Brigade report (ii) Payment proofs in originals pertaining to the claim preferred (iii) Bill for IS Machine overhauling and repair for Rs.1 lac. But, the complainant had given all the documents requested by the opposite party except fire brigade report. The complainant had also informed the opposite party by its letter dated 17.03.2010 that the fire brigade report has to be obtained by the opposite party since it is given only to the insurer directly and not to insured. But the opposite party by its letter dated 19.05.2010 reiterated its stand for closing the complainant's claim.
Hence, the complainant caused a lawyer notice dated 11.01.2011 to the opposite party calling upon them to pay a sum of Rs.43,67,150/- towards loss suffered by the complainant, with interest @ 18% p.a., from 13.10.2008. However, the opposite party failed and neglected to comply with the said demand. The wrongful closure of the insurance claim by the opposite party is bad in law and amounts to deficiency in service, as envisaged under the Consumer Protection Act, 1986. The said deficiency in service had caused not only loss of machines and materials but also loss of production, resulting in loss of profit during the relevant period, 7 which the opposite party is bound to make good. The Form ER-1 filed by the complainant, under the Central Excise Rules, 2002 and Rule 7(5) of CENVAT Credit Rules, 2002 to competent authorities for the period July 2008 to May 2009 regarding the production of glasses at the bottling plant would show the quantum of production and corresponding loss suffered by the complainant due to wrongful closure of the insurance claim lodged by the complainant. Due to the fire accident, the complainant was unable to carry on production at its factory, thereby causing loss of turnover to a tune of Rs.25,00,000/-, which the opposite party as per the policy is bound to indemnify the complainant. Hence, the complainant had filed the complaint against the opposite party, for the reliefs stated supra.
3. Resisting the said complaint, the opposite party had filed a version stating that the complainant is a Commercial Enterprise and the insurance policy is taken by the complainant in such capacity for covering commercial losses. Therefore, the complaint is not maintainable. The complainant had availed an "Industrial All Risk Insurance" policy bearing No.1201082112000001 for the period 01.06.2008 to 31.05.2009 8 covering various items of building, plant and machinery, stocks, furniture, fixtures & fittings at different locations for the sum assured, as detailed in the policy. The complainant lodged a claim for damage to furnace at Pondicherry Glass Bottle manufacturing unit on 11.12.2008. Hence the opposite party appointed an independent duly licensed surveyors M/s. Cunningham & Lindsey International Pvt. Ltd., who had conducted due inspection and submitted a detailed report dated 05.01.2010 assessing the value of damage at Rs.14,11,482.69. The IAR policy contemplates payment on reinstatement value basis. It was therefore necessary for the complainant to substantiate the cost of reinstatement incurred by submission of proof for payment towards reinstatement. On examination of the claim the opposite party found that there was no proof available in regard to the same. Hence, the opposite party had called for proof of payment and also the Fire Brigade report, which is relevant for confirming the cause of damage. But the complainant evaded from furnishing the documents. Hence, the opposite party repudiated the claim on 22.02.2010. The decision of the opposite party on the claim made by the complainant, was inevitable and fully justified in facts and circumstances of the case. There is no negligence or deficiency in 9 service on the part of the opposite party. The complaint is wholly misconceived and it is nothing but an abuse of Consumer Protection Act. Further, the reference to loss of profit is untenable. No such loss is covered by the policy. The certification of the cost by the auditors of the complainant is specifically disputed and denied. Any such certification can neither be recognized nor is binding. Therefore, there is no deficiency in service on the part of the opposite party Insurance Company and thus they sought for dismissal of the complaint.
4. In order to prove the case, the complainant along with proof affidavit, has filed 20 documents and the same were marked as Ex.A1 to A20. On the side of the opposite party along with proof affidavit 3 documents have been filed and the same were marked as Ex.B1 to B3.
5. Heard the submissions made by the counsel for the complainant and the opposite party and we have carefully gone through the entire material placed on record. 10
6. The main submission of the counsel for the complainant is that a contract of insurance is contract of indemnity. Therefore, there is no question of commerce in obtaining insurance coverage. The services of insurance rendered by the opposite party is covered under Section 2(o) of the Consumer Protection Act, 1986 as amended by Act 62 of 2002. Therefore, merely because the complainant is carrying on commercial activities, it cannot be stated that the insurance policy taken by it is also for commercial purpose. In this regard, counsel for the complainant has also relied upon Harsolia Motors Vs. National Insurance Company Ltd. reported in (2006) 5 CPR 1 (NC). It is the further submission of the counsel for the complainant that the opposite party in all fairness ought to have given a copy of the surveyor report to the complainant. But, inspite of the specific request made by the complainant, the opposite party has not come forward to furnish the copy of the surveyor report. In the instant case, despite the fact that the surveyor had assessed the loss suffered by the complainant, the opposite party has not settled the loss and had closed the claim. Therefore, there is deficiency of service on the part of the opposite party and sought to allow the complaint.
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7. Countering the same, counsel for the opposite party submitted that the complainant had taken policy for Rs.76,20,00,000/- towards plant & machinery and for Rs.5,00,00,000/- towards stocks. However, the value of the things at the time of loss was found to be Rs.11,60,666,320/- and Rs.12,39,97,137.37 respectively. Therefore, there was under
insurance in respect of both plant & machinery and stocks. The policy being subject to condition of average, the surveyor had adjusted the loss to Rs.14,11,482.69. However, as no proof for actual expenses incurred was submitted, the assessed loss was not payable and the claim was correctly repudiated. Therefore, there is no deficiency of service on the part of the opposite party.
8. Be that as it may, it is an admitted fact that the complainant had insured all its assets situated at various places including the glass factory at Mettupalayam, Puducherry U.T, for a sum of Rs.695.58 crores, with the opposite party under 'Industrial All Risk Policy'. Whileso, the unfortunate fire accident took place on 11.12.2008. Hence, a claim was made by the complainant to the 12 opposite party. An independent licensed surveyor M/s.Cunningham Lindsey Pvt. Ltd., was appointed by the opposite party. The surveyor in his report had admitted the occurrence and had assessed the loss on the basis of the "actual cash value of such items immediately before the loss, destruction". The surveyor by his letter dated 17.12.2008, marked as Ex.A5, had requested the complainant to supply the following documents under item 16 and 17:
"16. Restoration cost details after reinstatement is effected with evidence.
17. Your estimate of loss in respect of the damage stock along with cost supporting documents viz., procurement bill of the involved raw materials cost of manufacture etc., "
The complainant by its letter dated 05.09.2009 had submitted the stock statement and the certificate dated 05.09.2009 issued by the Chartered Accountant, supported by details of material replaced, goods issue receipt from stores, purchase bill, repair charges incurred by the complainant. It is the contention of the opposite party that the complainant has not filed any proof with regard to 13 the purchase of damaged materials. But, we find from the letter dated 17.03.2010, Ex.A11, the complainant had informed the opposite party that the damaged materials have been drawn from their own stores. This fact has also not been denied by the surveyor. In fact, the surveyor had vouched about restoration of the damaged machinery parts in his report. Furthermore, there is no prohibition in the policy for reinstatement of parts from the own stores of the insured. There is no exclusion on this aspect in terms of the policy. Therefore, we are of the opinion that the complainant is entitled for the claim, even as per the surveyor's report. The complainant has made a claim for Rs.43,67,150/- but the surveyor in his report, had assessed the actual loss as Rs.14,11,482.69. Hence, we are of the considered opinion that the complainant is entitled for the amount of Rs.14,11,482.69, as assessed by the surveyor with interest @ 7.5% per annum from the date of complaint till the date of payment; along with the sum of Rs.5000/- for litigation expenses.
9. In the result, the Complaint is allowed in part.
The opposite party is directed to pay a sum of Rs.14,11,482.69 to the complainant, with an interest of 14 7.5% per annum from the date of complaint till the date of payment; along with the sum of Rs.5000/- for litigation expenses.
R VENKATESAPERUMAL R.SUBBIAH, J.
MEMBER PRESIDENT
LIST OF DOCUMENTS MARKED ON THE SIDE OF THE COMPLAINANT Sl.No. Date Description of Documents Ex.A1 Board Resolution Ex.A2 31.05.2008 Insurance policy issued by the opposite party Ex.A3 11.12.2008 Mail sent by complainant to Opposite party About the accident Ex.A4 12.12.2008 Opinion furnished by the furnace expert Ex.A5 17.12.2008 Letter by the surveyor to the complainant Ex.A6 21.12.2008 Letter by the opposite party to the complainant Ex.A7 23.02.2009 Letter by complainant to surveyor with Annexure Ex.A8 03.03.2009 Claim lodged by the complainant to the Opposite party Ex.A9 22.08.2009 Letter by complainant to Bharath Reinsurance Ltd.
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Ex.A10 05.09.2009 Certificate issued by the complainant's
Auditor
Ex.A11 List of material drawn from the
complainant's store, bills and invoices for the materials purchased towards repairing the damaged machinery Ex.A12 22.02.2010 Letter by Opposite Party to complainant repudiating claim Ex.A13 17.03.2009 Letter sent by the complainant to the opposite party Ex.A14 22.04.2010 Letter sent by the complainant to the opposite party Ex.A15 19.05.2010 Letter sent by the opposite party to the Complainant Ex.A16 14.06.2010 Letter sent by the complainant requesting Survey report Ex.A17 07.08.2010 Letter sent by the complainant to the opposite party Ex.A18 11.01.2011 Lawyer notice Ex.A19 10.10.2008 Reliance erection all risk insurance policy Issued by the opposite party Ex.A20 July 2008 to Form E. R-1 under Central Excise Rules May 2009 2002 and Rule 7(5) of CENVAT Credit Rules 2002.
16LIST OF DOCUMENTS MARKED ON THE SIDE OF THE OPPOSITE PARTY Ex.B1 Policy of Insurance Ex.B2 Terms and conditions of the policy of Insurance Ex.B3 Survey Report R VENKATESAPERUMAL R.SUBBIAH MEMBER PRESIDENT Index : Yes/ No AVR/SCDRC/Chennai/Orders/June/2023