State Consumer Disputes Redressal Commission
H.P. State Forest Development ... vs United India Insurance Co. Ltd. on 11 May, 2015
H.P. STATE CONSUMER DISPUTES REDRESSAL COMMISSION,
SHIMLA.
Consumer Complaint No.20/2014
Date of Presentation: 26.08.2014
Date of Decision: 11.05.2015
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H.P. State Forest Development Corporation Limited,
Through its Divisional Manager,
Forest Working Division, Rampur,
District Shimla, H.P.
........... Complainant.
Versus
United India Insurance Company Limited,
Through its Divisional Manager, Shimla,
Timber House, Cart Road, Shimla.
........ Opposite party.
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Coram
Hon'ble Mr. Justice Surjit Singh, President
Hon'ble Mrs. Prem Chauhan, Member
Hon'ble Mr. Vijay Pal Khachi, Member
Whether approved for reporting?1 Yes.
For the Complainant: Mr. Rajender Singh Thakur, Advocate.
For the Opposite Party: Mr. Vivek Negi, Advocate.
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O R D E R:
Justice Surjit Singh, President (Oral) Complainant, H.P. State Forest Development Corporation Limited, is a State Government owned Body. It is engaged in the 1 Whether Reporters of the local papers may be allowed to see the order? H.P. State Forest Development Corporation Ltd. Vs. United India Insurance Co. Ltd.
(Consumer Complaint No.20/2014) ________________________________________________________________________________ extraction, carriage and sale of timber/fuel wood. It gets its stocks insured with various Insurance Companies. It entered into an insurance agreement with the opposite party for its stock of timber and fuel wood extracted and stacked at different sites in three Forest Working Divisions, including Forest Working Division, Rampur. On 09.12.2011, a policy effective for a period of one year, commencing on 09.12.2011 was issued against payment of a premium of `9,32,234/-. The total sum insured was `19,35,82,289/-.
2. On 08.11.2012, a fire broke out at Bajwa Depot, in which stack No.2 of Lot No.4/2010-15, was completely destroyed. The stack consisted of timber of Kail, Rai/Fur and fuel wood. According to the complainant, the total value of destroyed timber and fuel wood was `78,22,231/-. Report of fire incident was lodged with the police promptly. Opposite party was also apprised of the fire incident, soon-after it occurred. A Surveyor, deputed by the opposite party, visited the site on 20th November, 2012. Information was sought from the functionaries of the complainant Page 2 of 10 H.P. State Forest Development Corporation Ltd. Vs. United India Insurance Co. Ltd.
(Consumer Complaint No.20/2014) ________________________________________________________________________________ by the Surveyor, through various letters. Complainant supplied the requisite information. Correspondence regarding seeking of information by the opposite party and supply of the same by the complainant continued till October, 2013. Finally, a sum of `53,96,170/- was deposited in the account of the complainant by the opposite party.
3. Complainant is aggrieved by the quantum of money paid, on account of indemnification for the loss of timber and fuel wood. According to the complainant, loss sustained by it, is to the tune of `78,22,231/-, but the opposite party has wrongly and contrary to the terms & conditions of the policy reduced it to `53,96,170/-, by applying 5% cut on account of dead wood, 10% cut on account variation in the stock and around 14% cut by applying average clause. Complainant's further grievance is that its functionaries had not been apprised of the terms & conditions of the policy at the time of its purchase. Not only this, the terms & conditions were not made available even upto the date of incident of fire. With these allegations, complainant has approached this Page 3 of 10 H.P. State Forest Development Corporation Ltd. Vs. United India Insurance Co. Ltd.
(Consumer Complaint No.20/2014) ________________________________________________________________________________ Commission, seeking a direction to the opposite party to pay `19,09,000/-, on account of difference between the actual loss and the amount paid by the opposite party, with interest at the rate of 18% per annum; to refund a sum of `18,645/-, which it charged by way of excess premium; to pay a sum of `1,42,956/-, on account of interest for non-payment of 50% of the amount of loss, within fifteen days of the lodging of report, which was agreed between the parties at the time of contract of insurance; a sum of `1,80,000/-, on account of refund of premium against declaration of stock every month; a sum of `2,00,000/-, as damages for harassment and a sum of `50,000/-, as litigation expenses.
4. Complaint has been contested by the opposite party. It is alleged that 5% cut has been made, on account of dead stock, as the wood, particularly the fuel wood had been stacked in the open and it was subject to decay and loss, on account of effects of extreme weather conditions. Further, it is stated that 10% cut has been made, on account of variation in the stock, because the agreement which Page 4 of 10 H.P. State Forest Development Corporation Ltd. Vs. United India Insurance Co. Ltd.
(Consumer Complaint No.20/2014) ________________________________________________________________________________ the complainant made with the contractor, engaged for extraction of timber contains a clause that there could be 10% variation. As regards the cut made, on account of average clause, it is stated that complainant claimed a sum of `64,53,000/-, on account of fuel wood, but actually for the purpose of insurance, in monthly declaration for October, 2012, value of fuel wood was declared `53,94,200/- and since the value of the fuel wood, which was claimed to have been destroyed in the fire exceeded the sum, in which the insurance was taken for the months of October & November (viz. `53,94,200/-), average clause was applied and against 100% indemnification, 86.43% indemnification was allowed.
5. Parties have adduced evidence in the form of their affidavits, affidavit of Surveyor, report of Surveyor, copy of police report and various other documents.
6. We have heard learned counsel for the parties and gone through the record.
7. Opposite party does not deny in its reply that loss reported by the complainant was to the tune Page 5 of 10 H.P. State Forest Development Corporation Ltd. Vs. United India Insurance Co. Ltd.
(Consumer Complaint No.20/2014) ________________________________________________________________________________ of `78,22,231/-. Also, it is not denied that Surveyor accepted this figure of loss to be correct on the basis of entries in stock register and that an amount of `53,96,170/-, which stands paid to the complainant, has been worked out, by applying cuts, on account of dead wood, variation and average clause in the policy and, of-course, excess clause, per which initial 5% of loss is to be borne by the insured.
8. The stock which was destroyed in fire, was stacked at the launching site of ropeway. That means, the stock was in transit. When the stock is at a transit site, it never remains stacked at that point for too long a period to leave scope for loss due to vagaries of weather, or extreme weather conditions. The reason is that stock is kept at such places only for short period, from-where it is transmitted to another site. Therefore, we are of the considered view that opposite party was not justified in making cut at the rate of 5%, on account of dead wood. May be that such a cut would have been justified, if the wood was damaged at the end point, that is to say, ultimate Page 6 of 10 H.P. State Forest Development Corporation Ltd. Vs. United India Insurance Co. Ltd.
(Consumer Complaint No.20/2014) ________________________________________________________________________________ Sale Depot of the complainant, but not when it was at a transit site.
9. As regards cut of 10%, on account of variation in the volume, the opposite party seeks to draw strength from the agreement, executed between the complainant and the contractor, engaged for extraction of wood. The said agreement is available on the record as Annexure R-20. Our attention has been drawn to Clause-11 [a] of this agreement, which reads as follows:-
"11.[a] In case of volume of Khair Billets as mentioned in Schedule-A is not achieved and the Contractor (S)/LS Mate(S) is found at fault for the shortage, penalty of Rs.15000/- per M3 for the short fall in yield will be levied on the contractor(S)/LS Mate(S).
(Variation up to 10% will be approved by the D.M.)"
10. The aforesaid clause does not come to the rescue of the opposite party for a number of reasons. First, the clause pertains to only Khair billets. In the present case, the subject matter is Kail & Fur timber and fuel wood and not Khair billets. Secondly, the Page 7 of 10 H.P. State Forest Development Corporation Ltd. Vs. United India Insurance Co. Ltd.
(Consumer Complaint No.20/2014) ________________________________________________________________________________ variation spoken of is between the estimated volume of standing trees and the actual volume extracted by the contractor. In the present case, volume had been extracted and entered in the stock register. Therefore, there could not have been any question of variation in the volume. So, 10% cut made, on account of variation in volume, is also not justifiable.
11. Coming to the application of average clause, complainant's Divisional Manager submitted a declaration return for the month of October, 2012 to the opposite party, in which the value of fuel wood, in respect of lot, in question, i.e. Lot No.04/2010-15 Rmp. is declared to be `53,94,200/-. This figure represents the value of fuel wood stacked on the spot and not the amount in which fuel wood was insured. The amount in which the fuel wood in respect of this lot was insured, is shown to be as `1,43,96,749/- in this very declaration, which forms the part of the report of a Surveyor and is available at pages 208 & 209 of our file (see item No.21). That means, this was a case of not under insurance, but over insurance Page 8 of 10 H.P. State Forest Development Corporation Ltd. Vs. United India Insurance Co. Ltd.
(Consumer Complaint No.20/2014) ________________________________________________________________________________ and, therefore, question of application of average clause did not arise.
12. As a matter of fact, the Surveyor also in the initial report, which he submitted to the opposite party, did not make any cut, on account of average clause, as is clear from the last page of report, Annexure R-12 (Clause 16.0 page 159 of the record of this Commission). It was only after a reference was made by the opposite party to the Surveyor that he, vide report, Annexure R-15, applied the average clause and reduced the claim for fuel wood from 100% to 86.43%. As a result of the above discussion, we hold that average clause is not applicable and, therefore, the reduction made, on account of average clause is also not justifiable.
13. In view of what has been stated hereinabove, we hold that opposite party is liable to pay the entire amount of `78,22,231/- less 5%, on account excess clause and 2%, on account of extra overhead charges, in respect of which the complainant has not raised any grievance. Thus, the total amount payable by the opposite party comes to Page 9 of 10 H.P. State Forest Development Corporation Ltd. Vs. United India Insurance Co. Ltd.
(Consumer Complaint No.20/2014) ________________________________________________________________________________ `72,82,497/-, or say `72,82,500/-. Out of this, the opposite party has paid a sum of `53,96,170/-.
14. As a sequel to the above discussion and findings, complaint is allowed and the opposite party is directed to pay a sum of `18,86,330/-, with interest at the rate of 9% per annum, from the date of filing of the complaint, i.e. 26.08.2014, to the date of payment of the aforesaid amount of money by way of additional insurance money and also to pay `50,000/-, on account of compensation for deficiency in service and another sum of `20,000/-, on account of litigation expenses.
15. One copy of the order be sent to each of the parties, free of cost, as per Rules.
(Justice Surjit Singh) President (Prem Chauhan) Member (Vijay Pal Khachi) Member May 11, 2015.
*dinesh* Page 10 of 10