State Consumer Disputes Redressal Commission
United India Insurance Company Ltd. vs M/S. Paruchuri Ice Plant on 4 June, 2012
BEFORE THE A.P STATE CONSUMER DISPUTES REDRESSAL COMMISSION AT HYDERABAD. FA 1359 of 2010 against C.C. 15/2008, Dist. Forum, Guntur Between: The Branch Manager United India Insurance Company Ltd. D.No. 6-42/1, Ward No. 5 Dr. Ullaki Street, Salipet Tanali, Guntur Dist. *** Appellant/ O.P. No. 1 And 1) M/s. Paruchuri Ice Plant Rep. by its proprietor P. Ramesh Babu R/o. Bethapudi Village Repalle Mandal Guntur Dist. *** Respondent/ Complainant 2) The Branch Manager Andhra Bank, Repalle Branch Opp. Taluq Office, Repalle Guntur Dist. *** Respondent/ O.P. No. 2 Counsel for the Appellant: M/s. E. Venugopal Reddy Counsel for the Respondent: M/s. V. Gourishankar Rao (R1) M/s. K., Sridhar Rao (R2) CORAM: HONBLE SRI JUSTICE D. APPA RAO, PRESIDENT & SMT. M. SHREESHA, MEMBER
MONDAY, THE FOURTH DAY OF JUNE TWO THOUSAND TWELVE Oral Order: ( Per Honble Justice D. Appa Rao, President) ***
1) This is an appeal preferred by the insurance company opposite party No. 1 against the order of the Dist. Forum directing it to pay Rs. 2 lakhs towards damages with interest @ 9% p.a., from the date of repudiation till the date of realization together with costs of Rs. 2,000/-.
2) The case of the complainant in brief is that he has been running an ice plant under the name and style of M/s. Parchuri Ice Plant at Bethapudi village. He got the building insured for a sum of Rs. 8,50,000/- and the stocks for a sum of Rs. 29,50,000/- covering the period from 22.9.2006 to 21.9.2007 under standard fire and special perils policy. The plant is situated near sea coast and cyclone prone zone. While so, there was heavy rain between 28.10.2006 and 1.11.2006 due to which the plant was inundated. The compound wall on the northern side and western side as well as protected wall were damaged besides certain machinery. Immediately he informed the same to the insurance company. He also obtained technical report who assessed the loss at Rs. 4,82,000/-. The certificate issued by Sarpanch, M.R.O. besides bank officials were enclosed while claiming a sum of Rs. 4,82,000/- as estimated. Despite the fact that the claim had to be settled within 45 days as per the IRDA guidelines the insurance company did not settle the claim. On that he got issued a registered notice for which the insurance company repudiated belatedly on 21.5.2007 without any basis. The surveyors report was not enclosed. Therefore he claimed Rs. 7,52,035/- under various heads together with costs viz., loss of building and plant, loss of income, compensation for mental agony etc.
3) The insurance company the appellant resisted the claim. While admitting issuance of policy it denied that the damage was extensive, and entitled to the claims made by him. A surveyor was appointed who visited the premises and noted that there was delay on the part of complainant in informing about the alleged damage. For the first time he informed on 3.11.2006 for the damage occurred in the last week of October, 2006. Initially Sri N. Vinay Kumar a surveyor was appointed. He observed that it was a sick industry since September, 2002 and was not functioning. Power supply was also stopped about four months ago. Final survey was made on 28.1.2007 and the same was duly submitted on 20.3.2007 and assessment of loss was at Rs. 2,300/-. The estimate made by the complainant was highly exorbitant. The peril complained was not covered. Therefore it prayed for dismissal of the complaint with costs.
4) Op2 bank also resisted the claim. It alleged that it was un-necessarily impleaded as a party. It had no liability to pay the amount towards damage sustained. The insurance company informed that the claim was repudiated, and therefore prayed for dismissal of the complaint with costs.
5) The complainant in proof of his case filed his affidavit evidence and got Ex. A1 to A30 marked while the insurance company filed the affidavit evidence of its Asst. Manager and got Ex. B1 to B9 marked. Op2 the bank filed the affidavit evidence of its Branch Manager and did not file any documents.
6) The Dist. Forum after considering the evidence placed on record opined that the complainant could establish the loss by filing estimate given by an approved engineer besides purchase bills for bricks, cement, cost of labour etc., under Ex. A15 to A29, and that report of surveyor was not only belated but also palpably incorrect, and therefore directed the insurance company to pay Rs. 2 lakhs towards damages with interest @ 9% p.a., from the date of repudiation till the date of realization together with costs of Rs. 2,000/-.
7) Aggrieved by the said order, the insurance company preferred the appeal contending that the Dist. Forum did not appreciate either facts or law in correct perspective. It ought to have seen that the policy did not cover the loss. Even otherwise, the loss comes to below Rs. 10,000/-, and that the surveyor appointed by them has categorically submitted that the loss was not due to cyclone, and therefore repudiation was just.
8) The point that arises for consideration is whether the order of the Dist. Forum is vitiated by mis-appreciation of fact or law?
9) It is an undisputed fact that the complainant got his ice plant insured with the appellant insurance company viz., building for a sum of Rs. 8,50,000/- and stocks for a sum of Rs. 29,50,000/- in all Rs.
38 lakhs covering the period from 22.9.2006 to 21.9.2007 vide policy Ex. A1. It is also not in dispute that there was cyclone between 28.10.2006 and 1.11.2006 and there was inundation of rain water. The complainant asserts that northern side and western side wall were collapsed causing structural cracks rendering the structure unsuitable. An approved engineer estimated the damages to the plant at Rs. 2,49,000/- giving in detail the structures that were damaged mentioning the measurements of damages, walls etc. He also estimated the damage to the machinery at Rs. 4,82,000/- vide report Ex. A8. The complainant after taking certificates from the Sarpanch as well as M.R.O under Ex. A3 and A4 submitted his claim for Rs. 4,82,000/- enclosing the estimate issued by approved engineer.
10) The insurance company equally got the surveyor Sri N. Vinay Kumar appointed on receipt of intimation and claim under Ex. B2 and Ex. B3 respectively. The said surveyor by his belated report dt. 20.3.2007 admitted that there was cyclone, and that he visited the premises on 3.11.2006. In the survey report under the heading cause of damage there was a categorical mention due to Ogni cyclone with heavy rains. According to him the damaged area was 120 cft. He calculated at Rs. 42/- per cft and arrived at Rs.
5,400/-. He gave depreciation of Rs. 2,700/-and after deducting salvage value of Rs. 400/- and finally determined at Rs. 2,300/-. Alleging that there was policy excess which he estimated at Rs. 10,000/- observed that net loss was (-) Rs. 7,700/-. Basing on his report the insurance company repudiated the claim on 21.5.2007 that too only after receipt of registered notice issued by the complainant. The report of the surveyor is undoubtedly belated. He did not give any reason for estimating the damage at 120 cft or assessing the amount at Rs. 42/- per cft.
11) He gave a queer reason by stating that he came to know that insured property of ice plant was not functioning since 9th month of 2002 onwards, and it is learnt from competent authority of ERO, APSPDCL, Repalle. At the time of Ogni cyclone they have been carrying out repairs on electrical motors, cooling pipes, condenser pipes were completely dismantled.
As such I have taken snaps on the above said electrical motors, cooling pipes, condenser pipes.
Unfortunately the Ogni cyclone occurred.
Gas condenser pipes inlets and outlet valves bolts and nuts were removed as shown in the photographs. Further western strip of production shed floor is sunk and cracked due to wear and tear of water stagnant long period. As the insured premises is five feet higher than the western side ground level, there is no water entered into the insured production building premises at the time of my inspection on 3.11.2006 or there is no water marks as the flood water entered into the production building due to flood and inundation owing to that Ogni cyclone. I have taken few snaps on damaged walls of stored building, gas condenser pipes and cooling pipes, electrical motors which were completely dismantled and lay on the ground as shown in the photographs, and also taken few snaps in different view in the premises along with Mr. P. Ramesh and his friend. Later after two months again on 28.1.2007 he visited the premises and found that the south, and north walls were reconstructed with necessary required bricks and material which are allowed in my assessment report. According to him it would cost around Rs. 2,300/-.
12) A reading of the report of the surveyor would undoubtedly show that the surveyor while admitting the damage to the building etc. intended that the claim be repudiated on the ground that the plant was not working. Whether it was a sick unit or not, the claim was towards damage to the building and plant and machinery. Undoubtedly it has intrinsic value. The very insurance company after verifying the structures gave insurance policy for a sum of Rs. 38 lakhs commencing from 22.9.2006 to 21.9.2007. A cyclone hit on 28.10.2006. Within a month the cost of the building could not have been depleted to an extent of Rs. 2,300/- assuming that walls were only damaged. The insurance company ought to have filed the details of the estimates that were made at the time when the policy was issued. It knew full well that it could not have issued such a policy without estimation of the building. It is estopped from contending that unit became sick and that there was no value for the structures etc. It has become a routine for the insurance companies to take all un-necessary pleas to distract the attention from the real facts, and plead that it was not liable to pay the amount. After all the insurance company could afford to litigate by repudiating the claim basing on the surveyors reports which are prepared at their instance but for which the surveyor could not have given such an estimate. The surveyor having advantage of the report of approved engineer ought to have verified the said report, and pointed out where the said engineer went wrong. The surveyor ought to have examined the receipts that were filed by the complainant. He ought to have examined the persons who had issued the receipts. When the surveyor himself examined, and found that there was damage at the time when he visited the premises, and later when he gain visited the premises, and found that the wall was repaired, he must have verified the receipts that were produced by the complainant. The report of the surveyor does not stand to scrutiny. It is not worthy of any consideration. The Dist. Forum at length excerpted the report of the surveyor, gave reasoning as to why the said report cannot be accepted in the light of certificate issued by responsible government public servants viz., Sarpanch, and MRO.
13) The learned counsel for the insurance company contended that when admittedly the unit was not even functioning right from 9/2002 onwards the complainant was not entitled to any compensation. It is not known as to how such a contention could be taken when the policy was taken to cover the plant and machinery as well as building. It has nothing to do whether the plant was running or not. If the damage is to the plant and machinery necessarily the insurance company has to pay for the damage affected. The Dist. Forum relied various decisions of Honble Supreme Court and National Commission for the proposition that when the risk of inundation and cyclone are covered by insurance policy, the insurance company cannot get over payment of compensation. The Dist. Forum has rightly observed that the surveyor had taken unduly long period for submitting his report. Thereafter the insurance company repudiated the claim basing on the report, and such conduct cannot be approved. Neither the insurance company nor the complainant filed terms and conditions of the policy except office copy of the insurance policy.
The insurance policy does not cover the peril was not mentioned by the surveyor. There is no reason why the terms of the policy (attached to the policy) was not filed. In fact it admits that the policy covers the act of God perils such as lightning, STFI, subsidence, landslide and rockslide etc. covered under the policy. We may state that in the very affidavit the Asst. Manager of the insurance company admitted that the policy covers it is also true that there was cyclone (Act of God perils) named as Ogni occurred in the last week of October, 2006 in the area where the complainants ice plant is situated. Therefore the insurance company cannot plead that the said peril does cover the policy in issue.
14) The report of the surveyor of the insurance company is bereft of any details. He bent upon under value the peril in order to see that the complainant did not get any amount. In the light of Ex. A7, we are of the opinion that the complainant was entitled to the amount which the Dist. Forum granted. We do not see any mis-appreciation of fact or law by the Dist. Forum in this regard. We do not see any merits in the appeal.
15) In the result the appeal is dismissed with costs computed at Rs. 10,000/-. Time for compliance four weeks.
1) _______________________________ PRESIDENT
2) ________________________________ MEMBER 04/06/2012 *pnr UP-LOAD O.K.