National Consumer Disputes Redressal
Grahak Parishad Surat vs United India Insurance Company Ltd. on 17 February, 2010
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI ORIGINAL PETITION NO.266 OF 1999 Grahak Parishad Surat A registered society of consumers registered Under the Societies Registration Act; having its office at : 2/4452, Shivdas Zaveri Street, Sagrampura, Surat Complainant No.1 Yash Textiles A sole proprietorship concern having Shri Anil Chawla 301, Sakruti Apartment, Opposite Party. Uma Bhavan, Bhatar Road, Slurat. Complainant no.2 Vs. United India Insurance Company Ltd. 24, United House, White Road Chennai 600 014 Opposite Party no.1 & United India Insurance Company Ltd. DOI Supreme Chamber Ring Road, Surat Sr. Divisional Manager United India Insurance Company Ltd. 24, United House, White Road, Chennai 600 014. Opposite Party no.2 BEFORE: HON'BLE MR. JUSTICE K.S. GUPTA, PRESIDING MEMBER HON'BLE MR. JUSTICE R.K. BATTA, MEMBER For the Complainant : Mr. Anil Chawla, Complainant No.2 in person For the Opposite Party : Mr. S.M. Tripathi, Advocate Dated : February, 2010 ORDER
PER MR. JUSTICE R.K. BATTA, PRESIDING MEMBER The Complainant had taken fire policy to the tune of Rs.35,00,000/- on plant and machinery and another fire policy of Rs.10,00,000/- towards stock of goods.
During the currency of the said policies, fire took place on 10.8.1997 between 2 a.m. to 3 a.m. According to the Complainant, finished goods of the value of Rs.4,09,015/- and semi-finished goods of the value of Rs.9,00,000/- apart from the machinery were burnt and damaged. FIR was immediately lodged with the Police Station on 10.8.1997 itself wherein the total loss was stated to be Rs.37,80,000/- By letter dated 11.8.1997 Complainant informed the Respondent that damage and loss to the machinery was 20 lakhs and loss on stocks was to the tune of Rs.5.7 lakhs. The Complainant was informed vide letter dated 26.7.1999 by the Opposite Party that the total loss on machinery and accessories was to the tune of Rs.21,89,073/- but after depreciation @ 50% and without excise duty, the depreciation comes to Rs.10,42,291/- and after deduction of salvage amount of Rs.24,000/- and policy excess of Rs.2500/- as well as reinstatement premium of Rs.5749/-, the amount payable is Rs.9,51,884/-. The surveyor had not recommended any loss to the stocks since no residue of burn stock was found.
Likewise, the surveyor has not recommended to any loss to the stocks of colours and chemicals as the Complainant had not submitted detail of the stocks. The Opposite Party had appointed surveyor and on 7.9.1999 the Opposite Party had sent a disbursement (claim) voucher for Rs.9,51,884/- towards full and final discharge of the claim. The Complainant did not accept the offer of Rs.9,51,884/- and filed claim of Rs.35,29,000/- with this Commission. On the said amount, 18% p.a. interest was claimed and further compensation of Rs.10,00,000/- lacs for mental and physical harassment.
The claim of the Complainant was contested by the Opposite Party wherein it was stated that the Complainant had himself restricted the loss to the machinery at Rs.20,00,000/- and loss to the stock at Rs.5,70,000/- as per letter dated 19.8.1997. According to the Opposite Party the stocks consisted of synthetics textiles and even though the same may be highly inflammable, yet it would leave traces of burnt fabrics in the shape of lump of nylone/polyester cloth. However, no such residue was found by the surveyor at the time of conducting survey. In respect of the damage to the machinery it was stated that insurance policy was issued on depreciated value basis and since the affected machinery was old/second hand, duly reconditioned, surveyor had correctly applied depreciation at 50%.
It was also contended that the machinery was found to be under insured by 5.71% which had to be taken into consideration and in this connection, clause 10 of the Policy Conditions was pressed into service which speaks of ratable proportion of loss to be borne by the insured in case of under insurance. It is further contended in the written statement that the Complainant had themselves given the value of the new machinery at Rs.74,24,000/- as per letter dated 5.9.1997. The Opposite Party justified the calculations made by the surveyor and especially 50% deduction.
We have heard the Complainant Shri Anil Chawla who appeared in person. He urged before us that the matter was reported to the Police immediately after the fire had broken out wherein the loss was stated to be Rs.37,80,000/-. It was further submitted by him that the insurance of the machinery had been done on the depreciated value and further depreciation of 50% made by the surveyor has no basis whatsoever. In respect of the stock it was urged that the records relating to stock have burnt during fire on account of which books pertaining to stocks could not be produced but in this connection, reliance is placed by him on letter dated 12.12.1997 Annexure D at Page-22 of the record by which the said stocks were assessed by the Superintendent of Central Excise at Rs.13,09,051/-. According to Complainant, highly inflammable stocks would not leave any residue and even if there was any residue, it was washed away into the gutter due to force of water used during extinguishing the fire by the fire department. He, therefore, submitted that the claim sought in the complaint be allowed.
On the other hand, Learned Counsel appearing on behalf of the Opposite Party has, in addition to written statement, submitted before us that since no residue was found in respect of the stocks said to have been burnt, no claim can be paid for the same.
According to him, even in case of highly inflammable articles, residue in the shape of lump would be available, but no such residue was found either at the time of Police Punchnama or when the surveyor had inspected the factory. In respect of the damages, to the plant and machinery it is stated that the insurance policy on plant and machinery was issued at depreciated value basis; the affected machines were old/used/second hand, duly reconditioned and as such the surveyor had correctly applied depreciation @ 50% in his report. It is also pointed out that there was under insurance to the tune of 5.71% and as per condition no.10 of the insurance policy, the quantum admissible has to be reduced proportionately.
It is further pointed out that the valuation of the new machinery was stated to be Rs.74,24,000/- as per letter of the Complainant dated 5.9.1997. According to him, the working given by the surveyor after depreciation of 50% cannot be faulted and that the Opposite Party had in fact forwarded discharge voucher for Rs.9,51,884/- as per the report of the surveyor which was not accepted and as such there is no deficiency on the part of the Insurance Company.
We have gone through the record. Though the Complainant had initially reported to the Police that the damage sustained was to the extent of Rs.37,80,000/-, yet the Complainant vide his letter dated11.8.1997 had restricted the claim to Rs.20,00,000/-
in respect of the plant and machinery and Rs.5,70,000/- in respect of the stocks. Obviously, not much credence can be given to the valuation shown by the Police and the Punchnama since neither the Panchas used by the police were experienced in assessment of damage nor the police themselves. The surveyor had assessed the loss of machinery and accessories at Rs.20,84,581/- without excise duty which figure in the facts and circumstances and in view of letter dated 11.8.1997and Annexure A which is at page 65 of the record is accepted.
The bone of contention between the parties is relating to 50% depreciation made by the surveyor on the said amount of Rs.20,84,581/-. In this respect Learned Counsel for the Opposite Party has drawn our attention to Annexure R which is at page 66 of the record wherein the cost of the new machinery is shown by the Complainant at Rs.74,24,000/- and the depreciated value of the machinery at Rs.38,50,000/-. It is not disputed that the insurance policy for Rs.35,00,000/- was issued by the Insurance Company in respect of the plant and machinery on the basis of its depreciated value on account of the fact that the said machinery was old, second hand and reconditioned. This fact is stated in paragraph-10.1 of the written statement filed by the Opposite Party. The depreciated value of the said machinery is stated to be Rs.37,12,000/- as per report of the surveyor and obviously there is under valuation of the insurance by the Complainant on account of which condition no.10 of the policy would come into play which reads as under:-
If the property hereby insured shall at the breaking out of any insured peril, be collectively of greater value than the sum insured thereon then the insured shall be considered as being his own insurer proportion of the loss accordingly.
Even item if more than one of the policy shall be separately subject tot his condition.
In view of condition no.10, the ratable proportionate loss on account of under valuation has to be borne by the insured. Once the insurance company had accepted, the valuation of the plant and machinery at Rs.35,00,000/- which was depreciated value to the extent of 50% of the value of new machinery, we fail to understand as to how further depreciation of 50% has been recommended by the surveyor. No basis whatsoever for further deduction of 50% made by the surveyor has been given.
In the circumstances, we are of the view that the surveyor was not justified in making further deduction of 50% on the assessed loss of machinery to the extent of Rs.20,84,581/-. Of course, the salvage value, deductible franchise had to be deducted from the said amount as also the ratable proportion of loss to be borne by the insured on account of under valuation which according to Insurance Company was to the tune of 5.71%. Therefore, taking the assessed loss according to surveyor at Rs.20,84,581/-, the sum of Rs.24,000/- (salvage value), the sum of Rs.2500/- (deductible franchise) and 5.71% (ratable proportion of loss) to be borne by the insured, we are of the opinion that the Complainant would be entitled to compensation of Rs.19,39,052/- [Rs.20,84,581 -
5.71% = 1,19, 029/- + Rs.24,000/-
+ Rs.2500/-)] in so far as loss to the machinery and accessories is concerned.
Coming now to loss on account of stock, we are of the opinion that the Complainant has failed to prove the said loss. We are inclined to accept the contention of the Insurance Company that even in case of highly inflammable stocks, lump of such material would be still left as residue and the same cannot be washed away in gutter even with force of water during fire extinguishing operation. Reliance placed by the Complainant on letter dated 12.12.1997 of the Excise Department is misplaced since the said letter has been issued on the basis of statement made by the Complainant himself. The Complainant has failed to prove the position of stock, if any, at the time of fire. Moreover, it has to be borne in mind that the factory was closed at the time of fire and the workers were on strike. Therefore, unless stock position is established, we are not able to accept the contention of the Complainant with reference to the position of stock at the time of fire. Therefore, in our opinion, Complainant is not entitled to any compensation in respect of the stock.
In view of the above, the complaint is partly allowed and the claim of the Complainant is allowed to the extent of Rs.19,39,052/- with 9% interest on the same from two months after the date of survey report which is dated10.6.1999 since the Complainant was himself partly responsible for delay which contributed to delay in finalising the survey report.
..J (K.S. GUPTA) ( PRESIDING MEMBER) ..J (R.K. BATTA) (MEMBER) Sg.