National Consumer Disputes Redressal
M/S. East India Cotton Manufacturing ... vs M/S. New India Assurance Co. Ltd. on 11 September, 2015
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CONSUMER CASE NO. 229 OF 2006 1. M/S. EAST INDIA COTTON MANUFACTURING CO. LTD. 18, NETAJI SUBASH ROAD, KOLKATTA ...........Complainant(s) Versus 1. M/S. NEW INDIA ASSURANCE CO. LTD. DIVISIONAL OFFICE AT 5 R/2, B.K. CHOWK, NIT FARIDABAD - 121 001. HARYANA ...........Opp.Party(s)
BEFORE: HON'BLE MR. JUSTICE V.K. JAIN, PRESIDING MEMBER HON'BLE DR. B.C. GUPTA, MEMBER
For the Complainant : Mr. R.K. Kohli, Advocate
Mr. S.B. Singh, Advocate For the Opp.Party : Mr. P.K. Seth, Advocate
Dated : 11 Sep 2015 ORDER
JUSTICE V.K. JAIN, PRESIDING MEMBER
The complainant company was engaged in the manufacture and processing of yarn and fabrics in its factory at Faridabad (Haryana). A lock out in the factory of the complainant was declared in the year 1996. Since then, the complainant company had been obtaining insurance policies, excluding the loss due to flood and inundation, from the opposite party New India Assurance Company Ltd. However, while obtaining renewal with effect from 01.5.2000, risk due to flood and inundation was also got covered by the complainant. The complainant obtained as many as seven insurance policies from the opposite party for the year 2000-2001, covering damage inundation on account of storm, cyclone, typhoon, tempest, flood and inundation. The case of the complainant is that on 15/16.08.2000, there was a severe rainstorm in the area where the processing unit of the complainant was located in Faridabad, which damaged the roof and windows of the building and water broke into the processing facility, which got inundated and flooded with rainfall, causing severe damage to the building, plant and machinery and the stock lying in the factory. This is also the case of the complainant that vide letter dated 06.09.2000; they had requested the opposite party to appoint surveyor for assessing the loss. The said letter is alleged to have been followed by reminders dated 13.10.2000, 22.01.2001, 19.03.2001 and 25.5.2001. In the meanwhile, the insurance policies issued by the opposite party were duly renewed in March, 2001. It is further alleged that another rainstorm caused severe rains in Faridabad on 26.5.2001, further perpetrating the loss to the complainant and an enhanced claim of Rs.10-12 crore was lodged with the insurance company vide letter dated 28.5.2001. It is also alleged that yet another severe rainstorm struck on 29.5.2001 and the estimate of the loss was revised to Rs.12-13 crore, vide letter dated 30.5.2001 sent to the insurance company. In June, 2001, the insurance company appointed M/s. J. Basheer & Associates to assess the damage to the factory, stores and stocks of the complainant. Since no payment was made to the complainant, the company is before this Commission, seeking the following reliefs:
Sl. No.
Description
Amount
1.
Towards the plant and machinery
Rs. 3,08,58,150/-
2.
Towards the building
Rs. 19,00,080/-
3.
Towards the stock including raw material, finished and unfinished stock, stock in progress and stock of colour and chemicals (own and held in trust)
Rs. 4,88,35,219/-
4.
Towards colour and chemicals
Rs.39,23,263/-
Rs. 8,55,17,712/-
5.
Interest w.e.f. August, 2000 at 18% p.a. on Rs.8,55,17,712/- for six years
Rs. 9,62,07,426/-
6.
Compensation for harassment
Rs.3,00,00,000/-
7.
Costs
Rs. 2,00,000/-
2. The complaint has been resisted by the insurance company on several grounds. It is inter-alia stated in the reply that the intimation of the alleged loss was received by the concerned Divisional office for the first time on 02.06.2001 vide letter of the complainant dated 28.5.2001 and M/s. J. Basheer & Associates Surveyors Pvt. Ltd. was appointed to carry out the survey and also investigate into the cause of the loss. Due to non-cooperation from the complainant, the surveyor could complete their survey and investigations only by 14.1.2004. It was reported by the surveyors that the damage to the material would have occurred due to seepage of rain water over a period of time directly onto the cloth through cracked/broken Asbestos Corrugated Cement sheets of the roof and transparent plastic sheets on the roof, meant for lighting, ventilator glasses and window glasses and the choking of drains / shutters of the plant due to poor maintenance with the compounding factor of aging of the cloth, which was lying on the machines and in open, in non-conducive condition for a considerable period of about five years.
3. It is also stated in the reply that the letters dated 06.9.2000, 13.10.2000, 22.1.2001, 19.3.2001 and 25.5.2001 were not received by the concerned Divisional Office of the insurance company. According to the insurance company, the complainant committed breach of the policy conditions by not giving immediate intimation of the alleged loss to the insurer. It is also stated in the reply that due to poor financial state, high production cost due to outdated machinery etc., the complainant company was in poor financial state and that is why it had declared lock out in its factory w.e.f. 12.9.1996. The insurance company denied that there was severe rainstorm on 15/16.8.2000 in the area where the factory of the complainant is situated and water had broken into the processing facility damaging the building, plant and machinery and stock lying in the factory. It is claimed that there was no storm or cyclone during the aforesaid period in the area where the said unit is situated. It is further stated in the reply that the Executive Engineer of the Municipal Corporation, Faridabad had informed the surveyor vide his letter dated 29.8.2002 that there was no blockage of sewer lines in 17-H, Industrial Area, Faridabad and no flooding on 15,16 and 17.8.2000.
4. Some of the terms of the insurance policies taken by the complainant company read as under:
"6. (i) On the happening of any loss or damage the insured shall forthwith give notice thereof to the company and shall within 15 days after the loss or damage, or such further time as the company may in writing allow in that behalf, deliver to the company.
A claim in writing for the loss or damage containing as particular on account as may be reasonably practicable of all the several articles or items or property damaged or destroyed, and of the amount of the loss or damage thereto respectively, having regard to their value at the time of the loss or damage not including profit of any kind.
8. If the claim be in any respect fraudulent, or if any false declaration be made or used in support thereof or if any fraudulent means or devices are used by the insured or any one acting on his behalf to obtain any benefit under the policy or if the loss or damage be occasioned by the wilful act, or with the connivance of the insured, all benefits under this policy shall be forfeited".
It would thus be seen that the complainant was under a contractual obligation to give immediate notice of the alleged loss to the opposite party and also submit a claim within fifteen days after the loss or damage, unless the time for submitting the claim is extended by the insurance company.
5. It is settled legal proposition that the terms of the insurance policy are binding on the parties and a Court is not competent to ignore the said terms. The term requiring the insured to give immediate notice of the loss to the insurer is not a mere formality but is mandatory in nature.
6. In The Oriental Insurance Co. Ltd. Vs. Parvesh Chander Chadha, Civil Appeal No.6739 of 2010 decided on 17.8.2010, the Hon'ble Supreme Court, inter-alia observed as under:
"In terms of the policy issued by the appellant, the respondent was duty bound to inform the theft of the vehicle immediately after the incident. On account of delayed intimation, the appellant was deprived of its legitimate right to get an inquiry conducted into the alleged theft of the vehicle and make an endeavour to recover the same.
Unfortunately, all the consumer foras omitted to consider this grave lapse on the part of the respondent and directed the appellant to settle his claim on non-standard basis. In our view the appellant cannot be saddled with the liability to pay compensation to the respondent despite the fact that he had not complied with the terms of the policy".
In Suraj Mal Ram Niwas Oil Mills (P) Ltd. Vs. United India Insurance Co. Ltd. & Anr. 2011 CTJ 11 (SC) (CP), the Hon'ble Supreme Court, inter-alia observed that the terms of contract of insurance have to be strictly construed and no exception can be made on the ground of equity.
In United India Insurance Co. Ltd. Vs. Harchand Rai Chandan Lal, 2004 CTJ 1018 (SC) (CP), the Hon'ble Supreme Court held that the terms of the policy to be construed as it is and we cannot add or subtract something".
"The purpose of requiring the insured to give immediate intimation of the loss/ damage to the insurance company is to give an opportunity to the insurer to investigate the claim without any loss of time and before an unscrupulous insured gets opportunity to temper with the evidence which is available immediately on occurrence of the loss / damage. The possibility of tempering with the evidence cannot be ruled out in a case where there is an abnormal delay in intimating the loss / damage to the insurance company and at the same time, there is no plausible explanation for the said delay".
7. The case of the complainant is that the first loss to the building, plant and machinery and stocks took place on 17.8.2000. The intimation of the loss, therefore, should have been given to the insurance company on 18.8.2000 itself. This is not the case of the complainant that it had intimated the alleged loss to the insurer on 18.8.2000 or even soon thereafter. According to the complainant, the intimation of the loss was given to the insurer for the first time by way of a letter dated 06.9.2000. The aforesaid letter dated 6.9.2000, according to the complainant was followed by letters/reminders dated 13.10.2000, 22.1.2001, 19.3.2001 and 25.5.2001. Thus, the complainant, as per its own case intimated the loss to the insurer after a delay of nineteen days. There is absolutely no explanation as to why the alleged loss was not intimated to the insurance company on 18.8.2000 or immediately thereafter, despite both the parties being situated in the same town. Though, it is vaguely alleged in the complaint that the complainant was in touch with the Divisional Manager of the insurer, there is no evidence to substantiate the aforesaid allegations and even the name of the Divisional Manager has not been given in the complaint. In none of the letters sent to the insurer, the complainant alleged that it was in touch with the Divisional Manager of the insurer is soon after the loss had taken place on 17/18.8.2000. Therefore, we are not inclined to accept the bald allegations made to this effect in the complaint. Thus, the complainant, as per its own case, contravened a mandatory term of the insurance policy by not intimating the alleged loss to the insurer for nineteen days. Consequently, the insurer lost an opportunity to inspect the site of the alleged incident immediately after the incident had happened and verify the cause of the loss claimed by the complainant, the insurer therefore, stood relieved of all its obligations to reimburse the insured under the terms of the insurance policies and this by itself is a sufficient ground to reject the claim altogether.
8. As noted earlier, the case of the insurance company is that the information by way of the letters dated 06.9.2000, 13.10.2000, 22.1.2001, 19.3.2001 and 25.5.2001 were never received by the concerned Divisional offices. The case of the complainant on the other hand is that the aforesaid letters were sent by registered post.
9. There is no explanation in the complaint as to why the aforesaid letters were sent by registered post instead of being delivered by hand, despite the fact that the office of the complainant as well as the concerned divisional office of the insurer are situated in the same city. During the course of arguments, learned counsel for the complainant contended that no one in the office of the insurance company accepts the letters sought to be delivered by hand and that is why they had to send the aforesaid letters by registered post. However, there is no averment to this effect in the complaint and in the absence of such an averment in the complaint, we cannot accept the contention advanced by the learned counsel for the complainant. More importantly, the complainant itself claims to have delivered the letter dated 19.3.2001 in the office of the insurer though, of course, the receipt of the aforesaid letter has been expressly denied by the opposite party. We have perused the postal receipt, whereby the aforesaid letters are alleged to have been sent to the opposite party. The postal receipt dated 7.9.2000 does not bear complete address of the concerned divisional office. Therefore, we do not know, whether complete address of the insurer was given or not, on the envelope, in which the said letter was allegedly sent. Unless complete address is given to the post office, it will not be possible to serve the letter to the addressee. The letter dated 13.10.2000, is alleged to have been sent under postal certificate. There is no explanation as to why this letter was not sent by registered post when the letter dated 6.9.2000 was allegedly sent by registered post A/D. The same is the position with respect to the letter dated 22.1.2001. The letter dated 19.3.2001 bears a rubber stamp of New India Assurance Company dated 05.4.2001. However, there is no signature of any of the employee of the insurance company or any diary number on the stamp appearing on the office copy of this letter. Though, this letter purports to have been sent by registered A/D, no postal receipt has been placed on record. It is also not explained why the letter written on 19.3.2001 was delivered in the office of the insurance company after seventeen days, on 5.4.2001. The postal receipt whereby the letter dated 25.5.2001 is alleged to have been sent does not bear the name of the insurance company. The address given on this document is Senior Divisional Manager, NIT, Faridabad. The letter dated 28.5.2001, of course, was received by the insured though according to them, it was received only on 02.6.2001. Despite the insurance company having denied receipt of these letters, no attempt was made by the complainant to obtain a certificate from the concerned post office, certifying that the above referred letters were delivered to the addressee.
A very import aspect in this regard is that in the letter dated 28.5.2001, which admittedly was received by the insured, there is absolutely no mention of any of the previous letters alleged to have been sent by the complainant to the insurer. In the ordinary course, the complainant while writing the letter dated 28.5.2001 would certainly have referred to the previous letters alleged to have been sent to the insurer. There is no averment in this letter that the alleged loss had already been intimated to the insurer. No grievance was expressed in this letter about the failure of the insurer to appoint a surveyor to assess the loss despite several letters allegedly written by the insured to the insurer. The appointment of surveyor, being obligatory, and no surveyor having been appointed prior to June, 2001, had the complainant actually sent the above referred letters, the least it would have done was to give a written complaint, by hand, in the office of the insurance company.
Yet another aspect pointed out by the learned counsel for the insurance company was that not a single A/D card has been produced by the complainant. It is unlikely to be a mere coincidence that A/D card in respect of none of the letters alleged to have been sent by registered A/D was received back by the complainant. We cannot be oblivious to the fact that the insurer in this case is a Public Sector Company. It is extremely unlikely that despite repeated letters from the insured, lodging the claim of Rs.8-9 crores, the insurer would not appoint a surveyor to visit the site and verify the alleged loss to the insured. Had that been the intention of the insurer, it would not have appointed M/s. J. Basheer & Associates on receipt of the letter dated 28.5.2001 from the insured. The insurer had nothing to gain but something to lose by delaying the appointment of the surveyor since valuable evidence which would be available to the surveyor, if the site is inspected immediately after the loss, is likely to be lost with the passage of time.
10. For the reasons stated hereinabove, we have absolutely no hesitation in holding that the alleged loss was not intimated to the insurance company at any time prior to 28.5.2001 and therefore, the insurance company is not liable to reimburse the complainant for the loss alleged to have been suffered by it.
11. The case of the complainant is that vide letters dated 19.8.2000, 21.8.2000 addressed to the Commissioner, Faridabad Municipal Corporation, they had drawn his attention to the choked sewerage/ drain line near their factory and sought appropriate action in the matter. The aforesaid letters were purportedly received by an Assistant Engineer of Municipal Corporation, Faridabad. The surveyor, in order to verify whether the aforesaid letters were actually sent to the Municipal Corporation or not, visited the office of the Commissioner and made enquiry with respect to the alleged receipt of the aforesaid two letters. The letters bearing the stamp of Assistant Engineer were shown to Mr. T.S. Chhabra, Executive Engineer, who was unable to identify the signature on the aforesaid letters as the signature of any of the Assistant Engineers, working in the Municipal Corporation at that time. The surveyor also visited the Inwarding Section of the Commissioner's Office to verify whether the aforesaid letters were received or not and on going through the entries from 11.8.2001, 10.10.2000, he found that there was no entry of receipt of the aforesaid letters. He also noted that 19.8.2000 was holiday for the Corporation being a Saturday. Thereafter, the surveyor visited the Ballabgarh office of the Corporation and even there, the signature on this letters could not be identified as the signature of any of the Assistant Engineers of the Corporation. Inward register of the office at Ballabgarh was also checked but there was no entry with respect to the receipt of the aforesaid letters. The surveyor obtained from the office of the Corporation, a copy of letter written by one Shri Krishna Industries in order to verify the procedure adopted in the office of the Corporation on receipt of such letters and found that a rubber stamp, along with diary number and signature of the receiving person was noted in the letter. From diary number one could easily refer to the register to find out other details after making the above referred verification, the surveyor sent a letter to the Commission on 03.6.2002. He was informed by the Executive Engineer, Municipal Corporation, Faridabad that there was no blockage of sewer / drain of Municipal Corporation in 17-H, Industrial Area, Faridabad and there was no flood on 15/16/17.8.2000. He also informed surveyor that no letter dated 19.8.2000 or 21.8.2000 was received from the complainant company.
We have carefully perused the letters dated 19.8.2000 and 21.8.2000. The aforesaid letters do not bear any diary number. As per the procedure prevalent in the office of the Commissioner, had these letters been actually received, the diary number would have been given to them by the Receiving Official. The sample letter obtained by the surveyor from the office of the Commissioner clearly shows that the diary number used to be noted in the said office in a square shaped rubber stamp. The fact that there was no diary number on the letters alleged to have been sent by the complainant to the Commissioner clearly shows that a false averment in this regard has been made by the complainant with a view to set up a case of choking of sewer line. The letter of the Executive Engineer (T), Municipal Corporation, Faridabad, when read with the letters of the surveyor dated 01.6.2002 and 05.7.2002 clearly show that as per the record of the Corporation no letter dated 19.8.2000 and 21.8.2000 was received in Sector 25 sub division. The Executive Engineer further intimated the surveyor that there was no blockage of sewer on this line and there was no flooding in the area on 15/16/17.8.2000. Considering the aforesaid letter from the Corporation coupled with the fact that no diary number is given in the letters dated 19.8.2000 and 21.8.2000, we are satisfied that the aforesaid letters were not written by the complainant to Municipal Corporation, Faridabad and there was no choking of sewer lines in the area or around the factory of the complainant in Faridabad. The above referred letters obviously have been made only with a view to back up the case of heavy rainfall and choking of sewer lines.
12. Since the complainant used fraudulent means and devices by relying upon the letters which he never sent to Municipal Corporation, Faridabad, in order to obtain benefit under the policies, all the benefits available to it under the insurance policies stood forfeited. The benefits under the insurance policies also stood forfeited in terms of clause 8 of the policy on account of the complainant relying upon the letters dated 13.10.2000, 22.01.2001, 19.03.2001 and 25.5.2001, alleged to have been sent to the insurance company.
13. The case of the complainant is that there was a severe rainstorm and consequent flooding of their factory on 17/18.8.2000. The said flooding according to the complainant was contributed by choking of the sewer / drain lines. The surveyor on verification from the weather office came to know that there was no storm or cyclone in the area in which the factory of the complainant was situated. He was informed by the weather office that the wind speed was 30 km/hr on 15.8.2000 and 18 km/hr on 16.8.2000 which does not indicate any storm / cyclone. The wind at the speed of 18 km/hr is classified as gentle breeze, whereas the wind at the speed of 30 km/hr is classified as fresh breeze. No official from the weather office has been examined by the complainant to prove, before this Commission, that there was a severe rainstorm capable of damaging roof and windows of the building in NIT Faridabad on 15/16.8.2000. In our opinion, considering the stand taken by the insurance company and the information made available by the weather office to the surveyor, it was incumbent upon the complainant to produce evidence from the weather office to prove that the rainfall and / or the speed of wind on 15/16.8.2000 could be termed as rainstorm capable of severely damaging the roof and windows of the building. As per the weather report, accessed by the surveyor, the rainfall on 15.8.2000 was 20.6 mm in 24 hours whereas it was 52.1 mm in 24 hours on 16.8.2000. No expert evidence has been led by the complainant to prove that the rainfall to the extent of 15.21 mm in 24 hours coupled with rainfall of 20.6 mm in the previous 24 hours could have damaged the roof and windows of the building. We are therefore, satisfied that the complainant has failed to prove that the alleged loss occurred on account of heavy rainfall at NIT Faridabad on 15/16.8.2000.
14. The learned counsel for the complainant contended that the expressions 'storm and Tempest' have a special meaning when used in an insurance policy and a dictionary meaning cannot be given to these words. He placed reliance upon Special Perils Insurance by M.G. Eagle, wherein the following statement is made:
"All buildings and property in the open are subject to the harmful influence of the weather and, if properly designed, constructed and maintained, will not suffer damage by normal weather conditions. The abnormal conditions, and those alone, really merit the designation 'storm'. There are many other terms in general use to describe various kinds of storm, e.g. wind-storm, thunderstorm, rainstorm and snow-storm; all these terms have their own particular meanings, but the word which is not under consideration - 'storm' - must be held to embrace them all".
We however, find that in the case before us, the complainant has failed to establish abnormal conditions, which would merit the designation storm. Therefore, reliance on the aforesaid treatise, in our opinion, is misplaced.
15. The learned counsel for the complainant pointed out that the assets of the complainant were also insured against bursting/and or over flowing of water tanks, apparatus and pipes. Relying upon the Special Perils Insurance by M.G. Eagle, he submitted that though the wording appears to be designed to relate to the water supply and distribution service of a building, the damage could also be caused by water from other pipes and apparatus and such damage would not be excluded on account of the wording used in the policy. The aforesaid reliance, in our view, is wholly misplaced since the alleged damage did not take place due to the bursting or over flow of any pipes etc.
16. The surveyor, on inspection, of the site found that there was no tell-tale mark on the wall of the premises to indicate flooding / inundation, except water seepage / stains on the floor. Only slight water stagnation due to choking of drain / gutters was found in the premises number 22-B, New Industrial Township. Had there been inundation of the entire factory of the complainant, to the extent claimed by the complainant, the surveyor at the time of inspection by him, would certainly have found stains on the walls of the building, indicating accumulation and stagnation of water inside the building. This is another indication that there was no abrupt and sudden inflow of water inside the factory of the complainant on 17.8.2000 as is claimed by the complainant. A reference in this regard may be made to the statement of the Shivraj Singh, Security Personnel of the insured. In his statement to the surveyor, he expressly stated that since the roof and the glasses of the building had got broken, water used to regularly enter through windows and roofs thereby, rendering the cloth wet. He further stated that the cloth was getting spoilt for many years due to seepage of water through the roof and windows. The above referred statement coupled with the other facts and circumstances as discussed herein before clearly show that the claim made by the complainant is not genuine and the alleged loss to the complainant did not occur in the manner stated in the complaint.
17. For the reasons stated hereinabove, we are of the considered view that the complainant has failed to establish its claim. The complaint is accordingly dismissed with no order as to costs.
......................J V.K. JAIN PRESIDING MEMBER ...................... DR. B.C. GUPTA MEMBER