State Consumer Disputes Redressal Commission
S.S.Palaniswamy,Proprietor,Sri ... vs The Senior Manager,Canara ... on 9 December, 2015
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IN THE TAMILNADU STATE CONSUMER DISPUTES REDRESSAL
COMMISSION, MADURAI BENCH.
Present: Thiru.A.K.ANNAMALAI, M.A.M.L.,M.Phil., Presiding Judicial Member
Thiru.M.MURUGESAN, B.Sc.,B.Ed., Member.
C.C.No.17/2013
WEDNESDAY, 09th DAY OF DECEMBER 2015.
Date of complaint filed : 26.02.2013
Date of orders pronounced : 09.12.2015
S.S..Palaniswamy,
Proprietor,
Sri Venkata Traders,
29 & 30, Abirami Layout,
M.V.M. Nagar,
Dindigul District. Complainant
-Vs-
1. Canara Bank,
Lyola Building, (Ground Floor
& 1st Floor),
Salai Road, Dindigul - 624003,
Represented by its Senior Manager. 1st Opposite Party
2. United India Insurance Company Limited,
Mithili Nivas, 54 A Palani Road,
Dindigul - 624 003,
Represnted by its Branch Manager. 2nd Opposite Party
Counsel for Complainant : M/s V. Shankar & B.Lavanya, Advocates.
Counsel for Opposite Party-1 : Mr.C. Jawahar Ravindran, Advocate.
Counsel for Opposite Party-2 : Mr.G. Prabhu Rajadurai, Advocate.
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This complaint coming before us for final hearing on 02.12.2015 and
on hearing the arguments of both sides and upon perusing the material records
this Commission made the following:
ORDER
THIRU. A.K. ANNAMALAI, PRESIDING JUDICIAL MEMBER.
1. The complainant filed this complaint under section 17 of the Consumer Protection Act, 1986 praying for direction against the opposite parties to pay a sum of Rs.63,00,000/- being the value of the goods that perished in fire with 12% interest and to pay a sum of Rs.5,00,000/- as compensation for mental agony and Rs.50,000/- as costs alleging deficiency in service against the opposite parties.
2. The gist of the complaint in brief as follows:-
The complainant had engaged cotton waste business purchasing cotton waste from Spinning Mills in the name of Sri.Venkata Traders and loading stocks in the complainant's godown for resale and hypothecated the goods with the 1st opposite party giving credit facilities to the complainant up to the sum of Rs.35,00,000/- from 19.05.2007 valid up to 18.05.2009 and the goods were insured with the 2nd opposite party through the 1st opposite party by paying premium of Rs.22,723/- for the period 2008-2009 and on 13.05.2009 which was declared as holiday due to election when the trade was closed, the complainant 3 received three loads of cotton bales of which 1871 bales had been stocked in the godown, out of which one load has been dispatched to Prabhu Spinning Mills and about 21.00 hours he came to know that a fire broke out in his godown and fire services began their operation within 20 minutes and some of the persons attached with 2nd opposite party were also present and fire was considerably spread of which the bundles to burst and spill out the cotton and the entire stock racked in the premise perished all the remained were burnt which was removed to contain the fire and mitigate the loss. The 2nd opposite party was informed to depute the surveyor who had visited seen of occurrence and to assess the loss with subsequent surveyor also and when the claim was made for the same it was repudiated on the ground that the fire was due to spontaneous combustion for which no claim could be made as per the terms and conditions of policy and thereby a consumer complaint came to be filed for the reliefs claimed as above.
3. The opposite parties denied the allegations of the complainant in their separate written version. The 1st opposite party admitted that they have given credit facilities to the complainant to the extent of Rs.35,00,000/-. On the basis of provision of statements regarding their stocks based on the periodical submissions of statements and as per the instructions of the complainant alone premium for the policy was debited and it is for the complainant to decide the nature of policy to be taken for the goods covered and in no way the 1st opposite party is concerned and the claim of the complainant that the 1st opposite party is also liable for the lapses cannot be accepted. The 2nd opposite party had bound to 4 assess the complainant premises goods to be insured value, etc., and the complainant cannot blame the 1st opposite party for above repudiation in the event not opting comprehensive coverage, hence the complainant to be dismissed as against 1st opposite party.
4. The 2nd opposite party in their written version contended that the complainant having entered into policy for the period from 24.05.2008 to 23.05.2009 for which the 2nd opposite party agreed to indemnify the stock of waste to be kept in the premises as mentioned for value of Rs.63,00,000/- any destruction to the property by its own fermentation, natural heating or spontaneous combustion is not to be covered and that the parties to the insurance are bound by terms and conditions of the policy and since the fire in this case happened due to spontaneous combustion which is not covered as per the terms and conditions in exclusion clauses the claim was repudiated. The surveyor report dated 12.01.2010 stated that the complainant made it impossible to assess the actual damage by removing the entire stock and took it elsewhere and dumped in a manner so as to deny the possibility of identification and quantification of loss and no such stock statement was submitted to the bank and last statement was dated 30.06.2008 and the statement submitted to the bank was not having DP mark and not acknowledged by the bank. The complainant was not truthful in the submission of records and such false declaration would amount to breach of policy condition hence the claim was repudiated rightly and hence the complaint to be dismissed.
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5. Both sides have filed their proof affidavits and on the side of the complainant documents Exhibits A1 to A15 are marked and on the side of opposite parties documents Exhibits B1 to B3 are marked.
6. The following points are for consideration:
(1) Whether the complainant is not a consumer having business of commercial transaction?
(2) Whether there is no deficiency on the part of the opposite parties 1 & 2 in settling the claim of the complainant?
(3) Whether the complainant is entitled to a sum of Rs.63,00,000/-
towards the loss of goods due to fire under the coverage of insurance?
(4) Whether the complainant is entitled for a sum of Rs.5,00,000/- as compensation and for costs?
(5) To what relief?
POINT No: 1
7. In this complaint enquiry, even though the opposite parties claim that the complainant dealing cotton waste business by way of commercial transaction, the complaint is not maintainable under the provision of under section 2 (1) (d) Consumer Protection Act 1986. On perusal of the averments of the complaint and upon other details the claim of the complainant is availed on the insurance policy under which the goods of business covered for the purpose of safeguarding the goods from any perils as per standard fire & special perils 6 insurance policy to be perils policy and thereby the coverage of policy is only to protect the goods for which by paying a sum of Rs.22,723/- per year as premium through the 1st opposite party bank cannot be considered as any profit derived from that transaction it is only for the purpose of safeguarding the goods. Hence the contentions that the complainant is not a consumer under section 2 (1) (d) is not acceptable and this point is answered accordingly.
8. The 2nd opposite party relied upon the precedent report in FIRST APPEAL NO.277 OF 2009 in the National Commission dated 10.06.2009 as follows:
"Vinodkumars death did not occur on account of accident, but he was murdered and his income was only Rs.55,000/- p.a. It was further submitted that insurance for huge sum was taken by insured with malafide intention and claim involves complicated and complex questions of fact which cannot be adjudicated in summary proceedings and prayed for dismissal of complaint".
"Having heard the learned counsel for the parties in the light of the facts, circumstances, materials on record and the legal aspects of the case, we may state at the outset that the claim under the above policy of insurance involves complicated and complex question of fact, which are pregnant with meaningful suspicion and, therefore, the complaint based on such facts, cannot be adjudicated in summary proceedings and the complainant is to be relegated to seek remedy as is available to him according to law from a competent court of civil jurisdiction".
"Looking to the various aspects to be considered while deciding complaint learned State Commission rightly dismissed complaint and directed complainant to seek remedy from competent court of civil jurisdiction".
The above ruling is not applicable in this case, in view of the discussion made as above.
7POINT Nos: 2 & 3
9. In this case, the complainant claimed a sum of Rs.63,00,000/- towards loss of goods due to fire under the coverage of policy under Ex.A4 Policy No: 090703/11/08/11/00000082 for the occurrence on 13.05.2009 and the claim was repudiated by the 2nd opposite party, on the basis of surveyor reports under Exhibits A10 & A11 alleging that the fire was due to un-combustion and own fermentation, under the terms and conditions of policy which are excluded as per the condition Nos.6 & 8 by claiming false representations and aggrieved the same the complainant contended that the 1st opposite party which had given credit facility to the extent above Rs.35,00,000/-. On the basis of stock statement then and there and also the surveyor who had visited the spot collected the statements of stocks up to the recent one and since the 1st opposite party failed to taken the policy along with "add-on condition" covering combustion also for the mistake committed by the 1st opposite party, the complainant shall not be made to suffer and the 1st opposite party contended they have extended only the credit facilities on the basis of stocks and it's the discretion of the complainant to choose the type of policy which is in no way concerned with the bank. While considering both sides aspects and upon perusal of the report of the surveyor under Ex.A11 in its report under the head "physical verification" in points Nos: 1.1. Immediately on intimation of the loss by the insured, a preliminary surveyor was appointed. He reached the premises within two hours of the intimation. 1.2. On reaching the premises, it was found that the entire subject matter of claim was 8 being removed, taken elsewhere and dumped in a manner so as to deny any possibility of identification and quantification of the loss. 1.4. On submission of an estimate of loss, the insurance company appointed me as the final surveyor and within 24 hours of receipt of instructions, I arrived at the affected location and found that the entire subject matter of claim has been removed, taken elsewhere and dumped in a manner so as to deny any possibility of identification and quantification of the loss. 1.5. No photographic evidence has been offered in support of the quantum of loss suffered. 1.7. The physical evidence at the affected location enabling establishment of quantity and extent and/or value has also been destroyed. 1.8. No reasonable and justifiable circumstances exist for the same. 1.9. It was also found that equally hazardous material said to belong to the insured was kept very close to the premises and without relocation. 1.10. From the above, it is an inescapable conclusion that removal of stock was with a view to denying a fair and reasonable opportunity to prevent quantification of loss and assessment of value, if any. 1.14. In response to a letter to the bank on 06 October 2009, the bank has respondent on 15th October 2009 enclosing three stock statements dated as follows. 1.14.1. 30.09.2008 with an ack dated 07.10.2008 signed by P.Geetha for the borrower. 1.14.2. 31.03.2008 with an ack dated 4 (not legible) by V. Geetha for the bank and the proprietor for Venkata Traders. 1.14.3. 31.03.2009 with a signature for Venkata Traders and dated 32.03.2009, this has not been acknowledged by the bank. There is no Dp marked on it and was also not available/furnished at the time of our visits. 1.14.4. It is 9 hence submitted that all the above documents are only an afterthought and do not in any manner stand the scrutiny as a bonafide submission. 1.14.5. In consideration of any or all of the above, the undersigned is left with no alternative except to submit a report in which it will be stated that "No loss has occurred within the terms, conditions and exceptions of the insurance policy" and as per these reports its clear, even though the complainant said to have failed to provide stock statements after 11.04.2008 the bank has provided the statement on 06.10.2009 with three stocks statements for the period 30.09.2008, 31.03.2008 and 31.03.2009 which is having signature for complainant traders date 31.03.2009, even though not acknowledged by bank and no DP marked was found.
10. These documents are not produced before the Commission for scrutiny and the complainant side marked them as Exhibits A12 to A14 and as per the contentions of the 2nd opposite party the complainant shifted the goods after fire to some other place to make it inconvenient to assess the loss it is not in dispute that the fire was taken place in which the goods of the complainant were destroyed due to fire only question arised is regarding the quantum of estimate of the goods. The complainant alleged on 12.05.2009 they had received 3 loads of bales which are stocked in godown of which 1871 bales were stocked of which one load had been dispatched to one Prabhu Spinning Mill for which the documents are received as per Exhibits A5 to A7 and also pointed out in Ex.A11. Instead of assessing the actual loss simply because the surveyor reported that the 10 fire due to self-combustion as per exclusion clause the claim was repudiated and nowhere it is stated how the combustion was occurred and for this the entire claim was rejected cannot be accepted, in view of the surveyor report alone.
11. The 2nd opposite party relied upon ruling report in (2009) 8 Supreme Court 507 and regarding acceptance of the surveyor report in which it is stated as follows:
"However, if report is prepared in good faith, with due application of mind and in the absence of any error or ill motive, insurance company cannot reject report of surveyors".
"Popularly known as loss surveyor, is deputed who assesses the loss and issues report known as surveyor report which forms the basis for consideration or otherwise of the claim. Surveyors are appointed under the statutory provisions and they are the link between the insurer and the insured when the question of settlement of loss or damage arises. The report of the surveyor could become the basis for settlement of a claim by the insurer in respect of the loss suffered by the insured".
"There is no disputing the fact that the surveyor/surveyors are appointed by the insurance company under the provisions of the Insurance Act and their reports are to be given due importance and one should have sufficient grounds not to agree with the assessment made by them. We also add, that, under this Section the insurance company cannot go on appointing surveyors one after another so as to get a tailor-made report to the satisfaction of the officer concerned of the insurance company; if for any reason, the report of the surveyors is not acceptable, the insurer has to give valid reason for not accepting the report".
12. For which the complainant relied upon ruling II 2015 CPJ 274 National Commission in which it is observed as follows:
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" Consumer Protection Act; 1986 - Sections 2(1)(g), 14 (1)(d), 21(a)(i) - Insurance - Fire accident - Goods destroyed - Surveyors appointed - Loss assessed - Claim repudiated - Deficiency in service - Report of first Surveyor appears to be quite reasonable and just - Panchnama did not take into account the loss sustained due to damages but included items which were not excisable items - Compensation @ Rs.2.04 crores awarded on basis of first Surveyor's report - Interest @ 9% awarded from date of filing of complaint - Compensation @ Rs.2,00,000/- awarded towards harassment, mental agony and costs".
13. From these two reliance relied upon by either side we are of the view both are relevant at this case and in this case in the Supreme Court report of the case in para No.31 and 32 it is observed as follows:
"In the result, we have no hesitation to accept the report of the first Surveyor. The same is reliable and just. The Op has raised copious objections for the sake of cavil. We, accordingly, make the first Surveyor's report as basis of compensation to be awarded to the complainant".
"The complaint is hereby allowed and a sum of Rs.2.04 crores is awarded, with interest @ 9% p.a. from the date of filing of this complaint (i.e. 9.3.2005) payable by the Op-Insurance Company to the complainant, within 90 days from the date of receipt of this order, otherwise, after expiry of said 90 days', it will carry interest @ 12% p.a., till its realization. We also award compensation in the sum of Rs.2,00,000/- towards harassment, mental agony and costs of the case, payable by the Op- Insurance Company to the complainant, within 90 days' from the date of receipt of this order, otherwise, after expiry of said 90 days , the same shall be paid with interest @ 9% p.a., till the realization of the said amount".12
In this case also since the 2nd opposite party denied the repudiation on the basis of surveyor report have the wrong consideration this rule relied upon by either side taken in to consideration.
Under Ex.A15 circular issued by New India Assurance Company Limited dated 09.12.1981 regarding settlement of fire losses arising out of spontaneous combustion it is stated "(1) Losses occurring to the stocks when the material is stored in bags or in the form of bales".
14. From this circular it is clear while assessing such loss due to spontaneous combustion, surveyor must segregate the actual fire caused to the bales with original spontaneous combustion and the bales which become fired due to spreading of fire from such spontaneous combustion and in this case no such segregation was made by the 2nd opposite party though the surveyor and considered the entire loss only due to spontaneous combustion fire which is wrong in view of circular under Ex.A15. Even though the complainant claimed for Rs.63,00,000/- toward loss due to fire the 1st opposite party had extended credit facilities only to the extent of Rs.35,00,000/- and having details from Exhibits A12 to A14 statements of stock, we are of the view for the entire loss due to combustion fire and as well as fire spread from that combustion fire to other bales that were destroyed of 50% of the claim could be considered and in view of the facility extended to the complainant for Rs.35,00,000/- alone by 1st opposite party we are inclined to restrict the claim amount for Rs.30,00,000/- which would justify both ends. Accordingly it is decided that the complainant is entitled for 13 Rs.30,00,000/- towards loss of goods due to fire which is liable to be paid by the 2nd opposite party through the 1st opposite party subject liabilities towards the 1st opposite party and the balance shall be paid to the complainant and these points are answered accordingly.
POINT NO: 4
15. In view of the findings above in point Nos. 1 to 3 since the 2nd opposite party denied the entire claim on wrong assumption and since, we are inclined to order for interest at the rate of 6% to the claim to be settled as per the point Nos: 2 & 3, we are of the view that there is no need for any separate compensation to be awarded in this regard and this point is answered accordingly.
POINT No: 5
16. In view of the foregoing reasons, in point no.4 the complaint is allowed in part. The 2nd opposite party shall pay a sum of Rs.30,00,000/- with 6% interest from the date of repudiation of the claim till realization to the complainant and the amount shall be paid through the 1st opposite party and the 1st opposite party on receipt of the same shall return the balance amount if any to the complainant after adjusting liabilities of complainant to the 1st opposite party bank relating to their business transactions in this case.
17. In the result, the complaint is allowed in part, 14 (1) The 2nd opposite party shall pay a sum of Rs.30,00,000/- with 6% interest from the date of repudiation of the claim till realization to the complainant through the 1st opposite party towards the insurance policy claim.
(2) The 1st opposite party on receipt of the same shall return the balance amount if any to the complainant after adjusting liabilities of complainant to the 1st opposite party bank relating to their business transactions in this case.
(3) The opposite parties 1 and 2 jointly directed to pay a sum of Rs.5000/- as costs to the complainant.
(4) The directions shall be complied within six weeks from the date receipt of copy of this order.
M.MURUGESAN, A.K.ANNAMALAI,
MEMBER. PRESIDING JUDICIAL MEMBER.
ANNEXURE
List of Complainant Documents
Ex.A1 03.01.2007 Certificate of Registration issued by Commercial Taxes Department, Government of Tamil Nadu.
Ex.A2 19.05.2007 Communication addressed by the 1st Opposite Party. Ex.A3 02.06.2008 Statement of A/c issued by the 1st Opposite Party. Ex.A4 ---- Insurance policy for the period 2008-2009, issued by the 2nd Opposite Party.
15Ex.A5 12.05.2009 Invoice raised by Supreme Cot Spinning Mills (India)Ltd., Ex.A6 12.05.2009 Invoices raised by B.V.Fabrics Private Limited.
(Series)
Ex.A7 13.05.2009 Freight charges paid by the complainant to the
(Series) transporters.
Ex.A8 11.08.2010 Claim form submitted by the complainant with the 2nd
opposite Party.
Ex.A9 23.08.2010 Communication addressed by the 2nd opposite party
repudiating the complainant's claim.
Ex.A10 16.05.2009 First information Report dated issued by the 2nd
opposite party's surveyor.
Ex.A11 12.10.2010 Final survey report dated 12.10.2010 issued by the 2nd
opposite party's surveyor.
Ex.A12 31.03.2008 Stock statement submitted by the complainant to the
1st opposite party.
Ex.A13 30.09.2008 Stock statement submitted by the complainant to the
1st opposite party.
Ex.A14 31.03.2009 Stock statement submitted by the complainant to the
1st opposite party.
Ex.A15 09.12.1981 Circular issued by the 2nd opposite party.
List of Opposite Parties Documents
Ex.B1 09.09.2009 The 1st opposite party issued Sanction Memorandum to the
Complainant.
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Ex.B2 23.08.2010 The 2nd opposite party repudiation claim letter issued to the
Complainant.
Ex.B3 22.09.2010 The complainant claim on loss of fire letter to the
2nd opposite party.
M.MURUGESAN, A.K.ANNAMALAI,
MEMBER. PRESIDING JUDICIAL MEMBER.
INDEX: YES/NO
AMS/Mdu.Bench/Orders- 2015/Dec.
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