State Consumer Disputes Redressal Commission
Arvind Agrawal & Anr. vs National Insurance Co. Ltd. on 24 August, 2012
CHHATTISGARH STATE
CONSUMER DISPUTES REDRESSAL COMMISSION
PANDRI, RAIPUR
Complaint Case No.11/2010
Instituted on 06.10.2010
1. Arvind Agrawal, S/o: Shri Dayaram Agrawal,
Proprietor- M/s Arvind Industries,
Address: S.K.S.Plot, Phase -2,
Nr. Baldev Allies, Siltara, Raipur (C.G.)
Office: E/6, I.G.V.P.Pandri,
RAIPUR (C.G.)
2. M/s Arvind Industries.
Through: Proprietor- Arvind Agrawal,
Address: S.K.S.Plot, Phase -2,
Nr. Baldev Allies, Siltara, Raipur (C.G.)
Office: E/6, I.G.V.P.Pandri,
RAIPUR (C.G.) ... Complainants.
Vs.
National Insurance Co. Ltd.,
Through: Branch Manager,
Naveen Bazar, G.E.Road,
RAIPUR (C.G.) ... Opposite Party.
PRESENT: -
HON'BLE JUSTICE SHRI S.C. VYAS, PRESIDENT
HON'BLE SHRI V.K. PATIL, MEMBER
COUNSEL FOR THE PARTIES: -
Shri Bhupendra Jain, for complainants.
Shri V.K. Bajpai, for Opposite Party.
ORDER
Dated: 24/08/2012 PER: - HON'BLE JUSTICE SHRI S. C. VYAS, PRESIDENT This is a complaint filed under section 17 of the Consumer Protection Act 1986 for seeking directions against the OP / insurance company for payment of remaining amount of compensation Rs.36,80,731/- along with Rs.2,00,000/- as compensation for damages // 2 // to the boundary wall, Rs.2,000/- against notice charges and Rs.15,000/- against the fees paid to the engineer and also for seeking directions for payment of Rs.2,00,000/- as compensation for financial, physical and mental agony and further Rs.2,00,000/- as compensation for deficiency in service and additional compensation of Rs.1,00,000/-.
2. The complainant No.1 is the Proprietor of the firm complainant No.2, which on the given address manufactures and supplies P.V. foams, foam sheets, mattresses and P.U. foams. An insurance policy was purchased by the complainant from the OP / insurance company to insure the factory shed, office, godown, foam manufacturing unit, its boundary wall, plot and machinery, electrical installation, foam manufacturing raw material stock in process and finished goods under the Standard Fire and Special Perils Policy for total sum assured of Rs.1,86,50,000/- for the period between 22.06.08 to 21.06.09. Later on the sum assured for the factory shed, office, godown, boundary wall and civil construction was increased from Rs.25,00,000/- to Rs.75,00,000/-. As per the case of the complainant on 13.06.09 when it was 4:30 of evening, there was wind, storm with heavy rains continuously for many hours resulting in extensive damages to the shed of the industry, cement asbestos sheet, the steel frames and ridges over which the cement and asbestos sheets were fixed. Rains continued for 2-3 days resulting in water logging and inundation of // 3 // finished stock as well as the raw materials kept there. The whole of the shed collapsed over the materials kept which became useless. There were very extensive damages to the finished fresh, finished S.S.T. foam sheets, chemicals, raw materials under process and the stock as well as factory building, electrical equipments, machinery and boundary wall and labour quarters. The insurance company was immediately reported on phone, on 13.06.09 in the evening and on account of public holidays on 13 and 14.06.09, written intimation was sent on 15.06.09 with the information that the approximate loss was of Rs.1,45,00,000/-. Then surveyor was appointed by the insurance company to assess the loss. The complainant requested the insurance company again and again to complete the process in respect of the preferred claim of Rs.46,11,525/- out of which there was claim of damages to the stock of finished goods and raw material etc. of Rs.34,02,975/- and compensation for damages to the shed and building etc. of Rs.12,08,550/-. All necessary bills and documents, as demanded by the surveyor, were also provided to him, but the insurance company has not properly dealt with the claim of the complainant and without providing any details, settled the claim for a sum of Rs.9,30,794/- and offered payment of that amount. The payment was received by the complainant under protest, but as the insurance company has not settled the claim fully and properly and has not apprised the reasons of settlement on a lesser amount, so it has been alleged as deficiency in // 4 // service on the part of the insurance company. As the complainant was in intense need of money, therefore the amount offered by the insurance company as compensation was accepted by the complainant under protest along with a letter on 25.05.10 with clear mention that the complainant was not satisfied with such settlement and demanded copy of report of the surveyor, but neither the copy of surveyor report was provided nor the claim was settled to satisfy the complainant. So this complaint has been filed by the complainant for seeking remaining amount of compensation and compensation on different heads.
3. The OP / insurance company while refuting the allegations of the complainant has averred that immediately after filing claim by the complainant Mr. Navin Jain, Surveyor from Navi Mumbai was appointed by the insurance company without loss of any time. The said surveyor inspected the spot and assessed the loss and the complainant remained with the surveyor on all the times on spot. Had there been any mistake on the part of the surveyor in assessing the loss, then the complainant would have raised objections in that regard immediately before the insurance company or before the surveyor directly, but no such action was taken by the complainant, which shows that the work was nicely performed by the surveyor with the consent of the complainant. It has also been averred that after considering each and every aspect of the damages, the surveyor // 5 // assessed loss of Rs.9,30,886/- and the insurance company has on merits agreed with that amount and simply deducted mandatory amounts towards some other heads and sent discharge voucher of the remaining amount to the complainant for signature. The complainant without any objection signed that discharge voucher and no protest was made on the voucher itself after receiving the cheque in full satisfaction of the claim. Later on, on 25.05.10, the complainant sent a letter to show that the amount of claim was received by him under protest and then after two months the advocate of the complainant sent a legal notice seeking Rs.36,80,731/-, which was merely an afterthought and such demand could not be entertained by the insurance company as the demand was raised after getting the amount of claim in full satisfaction. It has also been averred that the surveyor Mr. Navin Jain has not at all committed any mistake in assessing the loss and no objection was ever raised by the complainant, so there remained no occasion for anyone to interfere with the report of the surveyor or to see that the loss was wrongly assessed by the surveyor. It has also been denied that the surveyor has not inspected the spot and had given report without any inspection. It has been averred that the entire spot was inspected in presence of the complainant. It has also been denied that the insurance company had ever instructed the complainant to provide report of some civil engineer in respect of damages to the construction of the factory shed and the building or // 6 // that the report of civil engineer Mr. Prakash Upadhyay was ever provided by the complainant to the surveyor as well to the insurance company. It has been averred that as stated by the complainant such report was made available on 05.07.10 whereas the claim was already settled and amount was paid on 24.05.10. On these pleadings, it has been prayed that the complaint preferred by the complainant has got no substance and it be dismissed.
4. We have heard arguments advanced by both parties and have gone through the documents which have been filed by them including the affidavits and reply of questionnaire in the form of affidavit submitted by the Surveyor and Officers of the insurance company.
5. The only question for consideration is whether the report of the surveyor is acceptable and whether the surveyor and loss assessor has properly assessed the loss in his report or whether any more amount is payable to the complainant by the insurance company on and above the amount which has been already paid.
6. Report of surveyor Mr. Navin Jain is document Annexure NA-2, which is in total 13 pages. In this report Mr. Navin Jain has stated that under the instructions of the insurance company the surveyor visited Raipur to survey and assess the loss to the insured and the survey // 7 // continued on subsequent days also. He had assessed the loss to the insured M/s. Arvind Industries at Raipur due to the damage to their godown shed and to stocks of P.U. foams in their Factory on 13.06.09. In column No.11 it has been stated that the date of survey was 16.06.09 and subsequently on 09.09.09 by Mr. Nilesh Jain, the deputy of Mr. Navin Jain. Thus, it appears that Mr. Navin Jain himself conducted survey on 16.06.09 and thereafter some of the survey was conducted by his deputy surveyor Mr. Nilesh Jain on 09.09.09. A legal objection has been raised by the complainant in this regard and it has been argued that Mr. Navin Jain was appointed by the insurance company to conduct survey, but later on another surveyor was appointed by that surveyor and who also conducted survey and that person conducted survey without any authority and without any knowledge of the complainant. Questions were asked to Mr. Navin Jain in this regard by the complainant and it has been clarified by Mr. Navin Jain, surveyor that Mr. Nilesh Jain was sent by him to the insured premises on September 2009 and Mr. Nilesh Jain is not his brother and he has got no family relation with Mr. Nilesh Jain. It has also been cleared by him that Mr. Nilesh Jain is working with him as his deputy for last 15 years and is well experienced in this profession. He himself is an IRDA Licenced Surveyor. Mr. Navin Jain had sent him for inspection of damaged stocks and steel members of the shed after dismantling and it has also been averred by him that he has also explained the insured // 8 // about the requirements of information and documents. It has also been stated by him that when Mr. Nilesh Jain inspected the insured premises, then Mr. Arvind Agrawal and his father Mr. Dayaram Agrawal, both were present. Both those persons were also present when on 16.06.09, Mr. Navin Jain himself inspected the insured premises and the insured property. It has also been clarified by him that no difficulties were faced by him due to water logging in the course of inspection of damages or in approaching the site of loss. Mr. Navin Jain is M.Tech. in Chemical Engineering and was appointed in this case by the insurance company. He requested vide letter dated 16.06.09, 16.10.09 and 29.10.09 to submit some documents and information. Several discussions and emails were also sent for explaining the requirements and for obtaining required information from the insured. Copies of all those letters have also been enclosed by him. Documents which were received from the insured have also been enclosed by him. He has clearly stated that on physical inspection of the losses, discussions / inquiries made with the insured and similar trade persons and after scrutiny of relevant Books of accounts / bills of the insured as well as by experience of the surveyor in this profession, the assessment was done. He has also clarified that deductions were made by him on the basis of physical inspection of the affected materials. It has also been averred that the average weight of the foam sheets was taken from the sale invoices of the insured foam, given to // 9 // the surveyor by the insured. He has also enclosed the copies of those invoices at Annexure-6 of his survey report. He has also clarified that in his report it has been mentioned about the losses to sheets and losses to loose foam sheets that they were taken into consideration and those losses have also been included in the loss assessment calculations.
7. From this affidavit, we are satisfied that the insurance company has appointed one surveyor and no second surveyor was appointed. Mr. Nilesh Jain who has also inspected the premises of the insured was merely an assistant of the Surveyor Mr. Navin Jain and he was assisting the main surveyor in the whole process and if assistant of the surveyor has assisted in inspection of the premises of the complainant then no separate instructions by the insurance company was necessary, when the loss was assessed by the surveyor appointed by the insurance company.
8. Considering the aforesaid aspect, we find that the case of M/s. Jagannatha Pultries Vs. New India Assurance Co. Ltd. Through its Branch Manager, 2012 (1) CPR 242 (NC), is of no help to the complainant.
9. In the report of the surveyor Annexure NA-2 it has been mentioned that he has not found any breach of warranties of the // 10 // insurance policy at the time of survey. It has also been mentioned by him that, the manufacturing was done in the shed constructed of brick plastered walls: A.C. sheet roofing on steel pipe trusses and purlins. After cutting Foam sheets the resulting finished goods of foam sheet bundles and foams are stored mainly in godown shed. These foam sheets are also kept by the insured in a shed of about 3,000 sq.ft. which is adjoining their production area shed. Then it has been stated that this shed, where the finished foam sheet bundles are stored, is of 9,360 sq.ft. area and it is having a centre height of about 20 ft. with working storage height of about 16 ft. That shed was constructed of A.C. sheet roofing and A.C. sheet wall cladding on steel pipe trusses/purlins/supporting structures. The flooring was of cement- concrete. It has also been stated that on the front side of the godown shed adjacent to the front side boundary wall, there were labour quarters of area about 2,500 sq.ft., constructed of A.C. sheets and cement-mortar blocks.
10. The surveyor further observed that the damages occurred in the above mentioned godown shed of about 9,300 sq.ft. and the cause of loss was heavy wind followed by heavy rain. It has also been taken into consideration that the insured has handed over many relevant documents in support of the incident to show that there was heavy wind followed by rain, particularly copy of the Meteorological // 11 // Department reports which clearly states that on 13.06.09, there were thunderstorm starting from 1612hrs, with squally winds having wind speed reaching to 62 kms per hour with rains upto 1847 hrs. and subsequent 24 hrs rains next day on 14.06.09. For the dates, 5 & 7.06.09 also i.e. eight and six days before the loss, wherein they have reported wind speeds of 94 kms per hour and of 65 kms per hour respectively. Thus, from this description it is clear that the cause of loss was heavy winds followed by rains, which can also be termed as thunderstorm.
11. The surveyor on inspection and physical verification has found that the steel pipe trusses had fallen, their fastening bolts and nuts had got broken. Those fallen shed pipes had pressed the foam sheet bundles. The ensuing rain had made those bundles wet. Rain water shad also got collected at the floor upto 6 inches level and the foam sheet bundles in the godown had got inundated in those collected waters. It has also been observed that a few A.C. roofing sheets of labour quarters also had got blown away, apart from the damages to the godown shed. In the damaged godown shed there were about 1,050 bundles of Foam sheets and loose sheets. Out of which a few foam bundles at the top of stack had got pressed and few bundles at the bottom of stack had got wet in water. The bundles were stacked mainly in a stack of four bundles vertically. In the shed it was found that there were storming foam sheets of first as well as of second // 12 // quality. No difference was found physically in the sheets of first and second quality and therefore the surveyor adopted process on the basis of average price of first and second quality sheets, for working out the losses. It was also found that the insured was not maintaining separate stock records for the stock of foam sheets in the godown. They were maintaining stock records for the whole factory and the same are attached along with the survey report as Annexure-4. It has also been observed that the foam sheets which had got pressed and torn by steel members of the shed from the top side had got wet and water marks lower their marketability / equality considerably. At the bottom water were dirty and hence the dirty marks come on the foam sheets. Moisture remains inside the foam sheets and this moisture does not go out for a very long time and keeps on oozing out gradually and subsequently bad smell starts coming. It has been considered that the claim of the complainant was that of Rs.33,61,275/-, as per the statement attached at Annexure-5. Out of which Rs.32,47,609/- were for foam and Rs.1,13,666/- for packing material i.e. wrapping HDPE/PP, woven clothes, which had got spotted by water marks. It has also been stated that shifting charges was also claimed, but the surveyor has considered it on the basis of physical inspection and discussions / inquiries with the people of the same trade and the surveyor has ultimately allowed the losses of about 262 Nos. bundles for the top layer of the stacks in the godown. It has been clarified that // 13 // 2,096 nos. sheets including loose sheets were at the top layer i.e. 1050/4 nos. stacks vertically. The weight of the same worked out to 10,480 kgs (262 x 8 nos. sheets per bundle x 5 kg. per sheet). Similarly, losses at the bottom layer of the stacks in the godown were calculated and remaining layers of the stacks in the godown were also calculated. So far as the rate is concerned it has been observed that selling rate of the goods of the first quality material near the time of loss was about Rs.160-165/- per kg. and for the second quality material was about Rs.90-100/- per kg. The insured has declared those goods to their Bankers @ about Rs.120/- per kg. as per their Bank statement for the month of May, 09 and the insured has claimed @ Rs.119.82 being their average cost price i.e. average cost price of first quality and second quality goods. However, the surveyor has considered the rate of Rs.118/- per kg for their average cost price of goods based on their average stock value as per Annexure-4. Annexure-4 is on the letter head of the complainant having seal and signature on behalf of the complainant, in which it has been stated that Rs.118.30 is the average rate per kg. After going through this letterhead Annexure-4, we are satisfied that the surveyor has correctly assessed the average price of the foam.
12. It has been summarized by the surveyor in his report that the damages to the stocks of the finished goods are as under : -
// 14 // "The damages to stocks of the finished goods are summarized as follows:
Damage Place Qty. found Rate value % of Loss Value of affected (Avg.) in allowed Loss (Rs.) (Rs.) (Rs.) _______________________________________________________________ At top Layer
(a) Pressed / Torn 1,600 kgs. 118/- 1,88,800/- 50% 94,400/-
(b) Water Drenched 1,020 kgs. 118/- 1,20,360/- 40% 48,144/-
At Bottom Layer Water Inundated 2,020 kgs. 118/- 3,09,160/- 40% 1,23,664/- Remaining water 36,760 kgs. 118/- 43,37,680/- 10% 4,33,768/-
affected (7,860 kgs
(at top)
+
7,860 kgs
(at bottom)
+
21,040 kgs) ---------------------------
Sub Total 6,99,976/-
Add: 1% of loss for damage to Packing 6,999/-
Material which was water damaged / spotted
(After adjusting its salvage value) ---------------------------
Total 7,06,975/-
Value of Stocks at Risk as on the Date of Loss
The insured have informed that total value of their stocks as on the date of loss has been worked to 1,19,40,449/-. (see Annexure - 4) for their Foam stocks."
13. Apart from it loss to the godown shed was also taken into consideration by the surveyor. It has been found that the shed of 9,360 sq.ft. was completed by the complainant in March, 2009 and copy of the valuation report of M/s. Amit Associates has been provided, in which it has been shown that it was a new shed having value of Rs.34,91,250/-. This value was accepted by the surveyor. It has further been mentioned that the shed had collapsed completely and // 15 // the insured had given repairing estimate of M/s. Prakash Upadhyay, Civil Engineer, for reconstruction of the damaged shed for a total value of Rs.12,08,550/- after adjusting the salvage of the damaged steel members and Annexure-8 has been attached along with the survey report.
14. It has further been observed by the surveyor in the column loss to steel members that the estimate of the complainant was that of Rs.7,96,250/- including the costs of steel structures as well as fabrication and erection costs. However, on inspection it was found that 50% of these materials were unaffected, safe and reusable and therefore the loss was allowed to the fallen steel structures for Rs.3,98,125/-. The insured had offered salvage value of those steel structures @ Rs.10/- per kg. i.e. @ about 20% of their erected value. However, on inspection and market inquiries it was found that the salvage can fetch value @ 40% of their erected value. Hence, the value of loss allowed to steel structures works out to Rs.2,38,875/- (i.e. 60% of Rs.3,98,125/-) . Similarly, loss to the A.C. Sheets & Ridges has also been assessed for Rs.2,21,977/- against the claim of Rs.3,11,550/- because it was found that 25% of the materials were unaffected, safe and reusable and the salvage value of these items was also estimated @ 5% and was deducted and then total loss was calculated.
// 16 //
15. It has also been observed by the surveyor that the value of the stock on the date of loss was Rs.1,19,40,449/- as per the Annexure-4 and the stock statement submitted to the Bankers in the month of May, 2009 shows that the stock on 31.05.09 was of Rs.1,20,20,398/-. Trial Balance Sheet, duly certified by C.A. as on 13.06.09 indicates stock of Rs.1,21,39,455/-, including stock of packing bags and plastic covers and the opening stock as on 01.04.09 was Rs.1,34,24,635/-. The surveyor found that keeping all these facts in view the value at risk at the time of loss would be about Rs.1,25,00,000/- against sum insured of Rs.1,20,00,000/-.
16. We do not agree with this methodology adopted by the surveyor. When as per Annexure-4 on the date of loss the stock was of Rs.1,19,40,449/-, then it must be treated as the value of stock on the date of loss, which was much below than the sum insured Rs.1,20,00,000/-, so there was no necessity of coming to the conclusion that it is a case of under insurance. Similarly, so far as the loss to the shed and building is concerned, the surveyor has observed that the sum insured was Rs.50,00,000/- whereas the value of the building was Rs.74,21,155/- but the insurance policy Annexure NA-1 shows that initially the insurance cover for the Factory Shed, Office, Godown Building, Boundary Wall of the Foam Manufacturing Unit was obtained for Rs.25,00,000/- sum insured and the endorsement effected // 17 // from 03.03.2009 on the insurance policy shows that there was increase in sum insured for the Factory Shed, Office Building, Godown Building, Boundary Walls and other Civil Construction Works of Rs.50,00,000/- only. So, when there was increase in sum insured of Rs.50,00,000/- then the total sum insured becomes Rs.75,00,000/- and not Rs.50,00,000/-. As the word 'increase' has been used in this document, so the insurance cover of Rs.50,00,000/- was required to be added in the original sum insured of Rs.25,00,000/- and so the total sum insured becomes Rs.75,00,000/-. In this view if the value of the building was Rs.74,21,155/- then it was well within the limit of sum insured and there was not necessity on the part of the surveyor to reduce the amount of loss on the reasoning of underinsurance.
17. Thus, we find that though the surveyor has taken great pains to assess the loss and has taken into consideration all the aspects after many inspections, discussion and perusal of the document regarding damages caused to the property and the assessment of such damages but has unnecessarily reduced the assessed amount on the reasoning of under insurance.
18. The complainant in his affidavit has stated that the surveyor has not assessed some of the foam bundles which were in loss condition and which were kept here and there in the factory premises. It has also // 18 // been stated by him that weight of the foam which was 6 to 7 kgs was wrongly assessed as 5 kgs and wrong weight of the foam was taken. It has also been stated by him that when the surveyor came for inspection then there was inundation on the spot and water was logged here and there, so the inspection could not be completed. Later on surveyor himself had not come and had sent his assistant for remaining inspection. When that assistant came at that time the spot position was altogether changed and thus proper survey was not conducted by the surveyor or his assistant.
19. The complainant has filed many affidavits in support of the complaint. First affidavit of the complainant is dated 01.10.2010. In that affidavit it has been stated that in the godown shed foam having weight of 6 to 7 kgs were arranged in stacks in different lines and there was 4 bundles in one line. Every bundle was containing 7 sheets. It has also been stated that only in the damaged lines 2 bottom sheets in different lines was claimed by him. Thus, the claim was only of 50% of the damages. Similarly, the first two sheets on the top of average lines in the stacks were damaged on account of fall of shed and the claim was made in that regard only. Thus, in sum and substance the complainant wanted to say that the weight of the foam sheets which were damaged were of 6 to 7 kgs and not the 5 kgs as assessed by the surveyor in his report. So far as the weight of the sheet is concerned in // 19 // the report of the surveyor as stated that no remarkable difference was seen between first quality and second quality of foam sheets and he has considered one average price, calculated as per the information given by the complainant. Documents which have been filed by the complainant nowhere show that what was the actual weight of stacked sheets of foam. We believe on the report of actual inspection of the surveyor, in comparison to the statement of the complainant who wanted to claim more money from the insurance company. Therefore, so far as the calculation of loss on the basis of weight of damaged sheet is concerned we are agree with the calculation of surveyor. Similarly, in respect of godown shed and building also the complainant has raised many objections, but we find that the surveyor has taken into consideration the report of the Engineer who actually erected the shed. The report of the Engineer is regarding repairing and reconstruction of the shed and the amount estimated has been accepted by the surveyor in respect of damages to the shed. Thus the report of the surveyor cannot be said faulty in this regard.
20. So far as the report of Mr. Prakash Upadhyay is concerned, this report has already been taken into consideration by the surveyor in his survey report and the amount has already been allowed against reconstruction cost.
// 20 //
21. Therefore, after having considered the affidavits of the complainant and the document which have been filed by the complainant before surveyor and before this Commission and the report of the surveyor, we are satisfied that the amount assessed by the surveyor against the loss to the property of the complainant was appropriate but the deduction on the pretext of "underinsurance" was unnecessary.
22. Therefore, the complaint succeeds in part and is allowed. The insurance company is directed to pay Rs.1,65,507/- {Rs.11,54,001 - 57,700.05 (policy excess @ 5%) - Rs.9,30,794 (the amount already paid to the complainant) = 1,65,506.95p. i.e. Rs.1,65,507/-} along with interest @ 6% p.a. from the date of filing of the complaint till the date of payment and Rs.5,000/- as cost of litigation. Rest of the claim of the complainant is disallowed.
(Justice S.C.Vyas) (V.K. Patil)
President Member
/08/2012 /08/2012