National Consumer Disputes Redressal
M/S. Shah Desai & Co. vs National Insurance Co. Ld. on 4 April, 2018
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI FIRST APPEAL NO. 169 OF 2011 (Against the Order dated 24/01/2011 in Complaint No. 32/2006 of the State Commission Gujarat) 1. M/S. SHAH DESAI & CO. M/S.shah Desai & Co.partnership firm filed through partner havingtheir adress at menpura,Tal.thasara, KHEDA GUJARAT. ...........Appellant(s) Versus 1. NATIONAL INSURANCE CO. LD. national insurance Co.Ltd. Division Office Harikrupa building ,station Road ,Anand-388001. ...........Respondent(s) FIRST APPEAL NO. 171 OF 2011 (Against the Order dated 24/01/2011 in Complaint No. 33/2006 of the State Commission Gujarat) 1. M/S. SWASTIC TOBBACO CO. M/S.Swatic Tobbaco Company Through its partner Village Menpura Dhasra Kheda Gujrat ...........Appellant(s) Versus 1. NATIONAL INSURANCE CO. LTD. National Insurance Co.Ltd.Division Office Harikrupa Building,Station Road Anand 388001 ...........Respondent(s)
BEFORE: HON'BLE MR. JUSTICE D.K. JAIN,PRESIDENT HON'BLE MRS. M. SHREESHA,MEMBER For the Appellant : For the Appellant : Mr. Ankit Shah, Advocate Mr. Vivek Mohanty, Advocate Ms. Priyadarshini, Advocate For the Respondent : For the Respondents : Mr. Kishore Rawat, Advocate Dated : 04 Apr 2018 ORDER
1. These two First Appeals, under Section 19 of the Consumer Protection Act, 1986 (for short "the Act"), by two Partnership Firms, namely, M/s. Shah Desai & Co. and M/s. Swastik Tobacco Company, through their one and the same Partner, namely, Navinchandra Chimanlal Shah, are directed against two separate orders, both dated 24.01.2011, passed by the Gujarat State Consumer Disputes Redressal Commission at Ahmedabad (for short "the State Commission") in Complaint Cases No. 32 and 33 of the 2006.By the impugned orders, while holding that there was no deficiency in service on the part of the Respondent herein, namely, National Insurance Company Ltd. (for short "the Insurance Company") , the sole Opposite Party in the Complaints, in repudiating the claims preferred by the Appellants, the State Commission has dismissed both the Complaints.
2. Since both the Complaints, between the same parties, involving common substantive issues in almost similar factual background, except for minor variations in some of the dates and events; details relating to the insurance policies in question; claims made thereunder etc, have been disposed of by the State Commission on identical lines, though by separate orders, we deem it expedient to dispose of both these Appeals by this common order. Nonetheless, we shall briefly refer to the factual matrix, in each of the Appeals.
FIRST APPEAL NO. 169 OF 2011
3. The Complainant, a Partnership Firm, namely, M/s. Shah Desai & Co., by way of self-employment, was engaged in the business of purchasing tobacco from farmers, processing it and then selling the Bidi-Patti etc., for the last 35-40 years. It had raised loan from Balasinor Nagrik Sahakari Bank Ltd. (for short "the Bank"). In order to secure the tobacco stocks and stock in process, lying at the godowns or the place mentioned in the policy, the Bank had been obtaining the insurance policy from the Insurance Company in the name of the firm since the year 1998. The last renewed policy was for the assured sum of Rs.1.50 Crores. It was valid for the period 12.02.2005 to midnight of 11.02.2006. The address of the Insured was mentioned as "PO: Menpura, DI: Kheda, Dist. Anand, Gujarat". The property was stated to be situated at : "AA-388001 ('AA' stands for 'As above' and Pin Code is of Post Office, Menpura). Unfortunately, on 30.06.2005 a devastating fire broke out in the godown insured and hypothecated with the Bank. Stocks lying in the godown were extensively damaged. On being intimated about the accident, the Insurance Company deputed a Surveyor to assess the loss caused to the insured goods. After carrying out physical verification and on consideration of the terms and conditions of the policy as also the documents, sought for from the insured, the Surveyor, vide his report dated 19.09.2005, assessed the loss at ₹77,19,269/-. According to the Complainant, its consent for the said amount had been obtained by the Surveyor on 25.09.2005, on affidavit. When the said amount was not released by the Insurance Company, within the expected reasonable period of two months, the Complainant enquired about the status of its claim.He was informed that same was under process. Even after a lapse of about four months thereafter, the amount claimed was not paid to the Complainant. Ultimately, vide its letter dated 20.03.2006, the Insurance Company repudiated the claim, stating as under:-
"In reference to the aforesaid claim lodged by you under the said policy.
Please note, we had deputed Surveyor M/s. Mehta & Padamsey P. Ltd. and were are in receipt of his Survey Report along with all the papers submitted by you in support of your aforesaid Fire Claim. We had also investigated into the matter and report of the Investigator was also received by us. We had forwarded the file to our Regional Office as the claim falls beyond my authority. Please note that the competent authority has repudiated the said claim on the ground that the said location i.e. plot No. 721 at Timba na Muvada is beyond the scope of cover under the said policy" (underlined for ready reference)
4. Alleging that the claim had been wrongly and arbitrarily repudiated, inasmuch as the Surveyor had already assessed the loss at ₹77,19,269/-, to which the Complainant had given its consent, a request was made by the Complainant to the Insurance Company for re-consideration of the claim but without any success. Left with no option, after getting a legal notice dated 21.07.2006, issued to the Insurance Company, which also did not evoke any response, the Complaint, leading to the present Appeal, was filed. Though the claim was not honoured by the Insurance Company by the Complainant cleared the dues of the Bank and also received "No Dues Certificate" from the Bank.
FIRST APPEAL NO. 171 OF 2011
5. In this case, the last policy, renewed by the Insurance Company, was in the assured sum of ₹1.00 Crore and it was valid between the period 23.08.2004 and 22.08.2005. In this case also, claim was preferred by the insured for the loss to the insured goods, due to the same fire incident on 30.06.2005. On intimation, the Surveyor appointed by the Insurance Company assessed the loss at ₹26,57,988/- and obtained the Consent of the insured, as in the earlier case. However, the Insurance Company, vide its letter dated 06.02.2006, repudiated the claim, stating thus:-
"In reference to the aforesaid claim lodged by you under the said policy.
Please note, we had deputed Surveyor M/s. Mehta & Padamsey P. Ltd. and we are in receipt of his Survey Report along with all the papers submitted by you in support of your aforesaid Fire Claim. We had also investigated into the matter and report of the Investigator was also received by us. On going through both the reports of the Surveyor as well as Investigator and all papers submitted by you, we have come to conclusion that the premises/godown i.e. Godown No. 721 at Timba na Muvada where the Fire took place and Stock of Tobbacco was damaged does not fall under the scope of the policy"
We regret to inform you that the claim is repudiated by the Competent Authority as the policy does not cover the said Godown which was taken on Rent/Lease in 2003 which was not intimated to the Insurance Company and which is not covered under the said policy.(underlined for ready reference)
6. In the said background, alleging deficiency in service and unfair trade practice on the part of the Insurance Company in repudiating both the claims made under the policies in question, on identical grounds, the afore-noted complaints came to be filed before the State Commission. The Complainants had prayed for a direction to the Insurance Company to pay to them the amounts as assessed by the Surveyor, under both the policies, along with interest @ 12% p.a. from the date of obtaining their consent till realisation, as also ₹25,000/- towards litigation expenses, in each of the Complaints.
7. Upon notice, the Complaints were contested by the Insurance Company, by filing identical Written Versions in both the Complaints. Besides raising preliminary objections about the maintainability of the Complaints under the Act, the policy being for commercial purpose and disputing any kind of consent, it was pleaded that only those stocks which were stored in the godown situated at P.O. Menpura, Taluka: Thasra, District Kheda were covered under the policy but the fire had taken place at the godowns of the insured situated at Plot No.721/Part, Timba Na Muvada, Menpura Road, Taluka, Thasra, Distt. Kheda and hence it was not covered under the policy. It was also stated that on receipt of claim/intimation, M/s. Mehta & Padamsey Pvt. Ltd. was appointed as the Surveyor to assess the loss; who had submitted their reports in both the cases on 20.09.2005; as per Section 64 UM of the Insurance Act 1938, a Surveyor is appointed to assess and quantify the loss and its appointment is not an admission of any liability by the Insurance Company. However, in order to investigate further into the matter, on 15.11.2005, an Investigator, namely, M/s. Gee Bee Investigators, was appointed, whose reports revealed that the Complainants had two places of business, one at Menpura and the other at Timba Na Muvada, Menpura, Thasra, about one Km. away from Menpura, where the fire had taken place. Since the insurance policies in question were issued by the Insurance Company for the property/stocks lying in the godown situated at Menpura, Thasra, District Kheda and the incident of fire having taken place at some other place, i.e. Timba Na Muvada, Menpura, Thasra, which had been taken on rent by the Complainant on 01.04.2002, which fact was not disclosed to the Insurance Company and, therefore, the claim was rightly repudiated.
8. Upon consideration of the evidence adduced by the parties before it, including the letter dated 15.11.2004, written by the Complainants, informing the Bank that they were keeping their stocks at Menpura godwon and also at the Timba Na Muvada godown, as also bearing in mind the fact that: the latter premises was being included by the Complainants in the insurance policies, got issued after the accident in question, the State Commission has come to the conclusion that the Complainants had not adhered to the General Exclusions in the policies in question, inasmuch as they had not intimated to the Insurance Company about the said premises having been taken on rent in the year 2002. Accordingly, the State Commission has held that there was no deficiency in service on the part of the Insurance Company in repudiating the claims and has, thus, dismissed both the Complaints with the following identical observations (except the policy number and the period of validity) :-
First Appeal No. 169 of 2011" From the above discussion, it has been transpired that, the fire which has been caused to the stock of the Complainant that was happened due to causing of fire in the godown situated at Survey No.721 of the Timbana Muvada Village and no damage caused to the stock at the godown at Menpura place and from the letter dated 15.11.2004 of the said very complainant he was keeping the stock at Menpura place and at the Timbana Muvada both godowns.
13. Here the fact also noteworthy that, the incident of fire which has been happened that was happened on date 30.06.2005 and then only for the period from the dated 22.08.2006 to 10.02.2007 the policy was renewed wherein (page no.52) the survey No.721, Timbana Muvada has been included in the policy for the period from 11.02.2007 to 10.02.2008 (sic) the godown at Timbana Muvada has been included and the said fact also support the opponent's case or defence that both the places are different.
14. As mentioned herein above, the letter dated 15.11.2004 which has been written by the policy holder to Balasinor Nagrik Sahakari Bank Ltd. and stated that they are keeping the stock an Menpura godown and also at the Timbana Muvada godown and it has not been transpired form the record that the insurance company has been informed in that regard and the terms and conditions of the policy also required to be examined in that regard and on page no.3 of the policy under the General Exclusion Clause have been mentioned wherein it has been mentioned as under:-
"Loss or damage to property insured if removed to any building or place other than in which it is hereinstated to be insured except machinery and equipment temporarily removed for repairs, cleaning, renovation or other similar purpose for a period not exceeding 60 days.
And while examining the said facts for date 15.11.2004 and with reference to the policy there is a reason to believe that the opponent has rejected the claim under the terms and conditions of the policy."
10. Hence, the present Appeals.
11. The short question falling for consideration in both the Appeals is whether the Insurance Company was justified in repudiating the subject claims on the afore-stated sole ground viz. the premises affected by the fire were different from the one mentioned on the policy?
12. At the outset, we may note that on our insistence, one of the proposal forms for obtaining the policy in the name of M/s. Shah Desai & Co., (Appellant in First Appeal No. 169/2011) was submitted by the Balasinor Nagrik Sahakari Bank Ltd. and the address of the godown was stated as "at Menpura, TA-Thasara" and no other particulars of the premises/godown are mentioned. Similarly, as already noted above, the policy also mentioned the address of the insured and the property as: "P.O. Menpura DI: Kheda, Distt. Anand, Gujarat". The stand of the Appellants/Complainants is that in both the policies, which were being obtained by the Banks from year to year since 1998, only the aforesaid particulars of the premises were mentioned and the godowns affected by the fire are situated in the area falling within the territorial limits of P.O, Menpura. We do not find any material on record in rebuttal to the said factual averment.
13. It is trite that the insurance policy between the insurer and the insured represents a contract between the parties and, therefore, its terms have to be construed strictly without altering the nature of the contract as it may affect the parties adversely. It is equally well settled that since the insurer undertakes to compensate the loss suffered by the insured on account of risks covered by the insurance policy, the terms of the agreement have to be strictly construed to determine the extent of liability of the insurer. (See: Oriental Insurance Co. Ltd. Vs. Sony Cheriyan - (1999) 6 SCC 451 and United India Insurance Co. Ltd. Vs. Orient Treasures Pvt. Ltd. - (2016) 3 SCC 49. However, the question for consideration in the present cases is when the Insurance Company had been consistently issuing the policies for the past over five years, from the date of the incident in question, recording on the policy the address of the insured premises as "P.O. Menpura", can they be permitted to reject the claims solely on the ground that the precise description of the premises/godown (Plot No.721 at Timba Na Muvada) stated to have been hired by the Complainants in April, 2003, though falling within the territorial jurisdiction of Post Office Manpura, had not been disclosed by the Complainants. In our opinion, having accepted the proposal forms wherein except for the description of the Post Office (Menpura), no precise details of the godown/property were mentioned, and issuing the policies with the same description, without asking for any more particulars about the property and incorporating the same on the policy, the Insurance Company cannot be permitted to repudiate the claims on the stated ground, when the subject premises is stated to be falling within the jurisdiction of Post Office Menpura. Having issued the policies in respect of the property at "PO Menpura", in our view, disclosure of premises at Timba Na Muvada was of no consequence in so far as the alleged violation of the terms and conditions of the policies is concerned.
14. Support to the above view is lent by a decision, dated 06.02.2006, rendered by this Commission in M/s. Satayanarayan Jiwanram Vs. National Insurance Co. Ltd. - II (2006) CPJ 58 (NC). In that case, the decision of the Insurance Company repudiating the claim solely on the ground that there was discrepancy in description of the property inasmuch as the godowns which were affected by fire were not in a double story building, as mentioned in the proposal form, but were in a building which was having seven storeys, was set aside by this Commission observing thus:-
" Further, in our view, there is no justifiable reason not to accept the second survey report. The policy issued by the insurance company only mentions that godowns which belong to the complainant are covered by the insurance policies. Further, even if there is any vagueness in issuance of the policies, complainant should not suffer. It was for the insurance company to mention it clearly as to which premises are covered under the insurance policies. In case of ambiguity, in the terms of the policy, they are required to be interpreted in favour of the insured. The law on this subject is settled. Further, even in cases where two reasonable interpretations of the terms of the policy are possible, the Court in the case of Shashi Gupta (Smt.) Vs. Life Insurance Corporation & Anr., (1995) Suppl. 1 SCC 754, held that "we would accept the one which favours the policy-holder, as the same advances the purpose for which the policy is taken and would be in consonance with the object to be achieved for getting the lives assured [relied in Life Insurance Corporation of India Vs. Raj Kumar Rajgarhia & Anr. (1999) 3 SCC 465]"
To the same effect law on the subject is succinctly stated in Skandia Insurance Co. Ltd. vs. Kokilaben Chandravadan & Ors. (1987) 2 SCC 654, wherein the Apex Court observed:
"It is the statutory provision defining the conditions of exemption which is being interpreted. These must therefore be interpreted in the spirit in which the same have been enacted accompanied by an anxiety to ensure that the protection is not nullified by the backward looking interpretation which serves to defeat the provision rather than to fulfil its life-aim. To do otherwise would amount to nullifying the benevolent provision by reading it with a non-benevolent eye and with a mind not turned to the purpose and philosophy of the legislation without being informed of the ture goals sought to be achieved."
15. The said decision is on all fours to the facts at hand. If the stand of the Insurance Company was to be accepted, we fail to appreciate as to why, in the first instance, in the policies only the name of the village 'Menpura', as stated on the proposal forms, was mentioned as the address of the Insured as well as the description of the property/godown insured, without asking for complete description of the insured property. If the proposal forms were incomplete for want of the precise details of the godown/property, as is now being pleaded, the Insurance Company was under no obligation to issue the policies in question. In our opinion, having accepted the proposals as they were; the insurance premium and issued the policies, the Insurance Company cannot be permitted to take shelter under a hyper-technical objection and reject the claims on the afore-noted sole ground. Regard being had to the fact that the incident of fire in the godown, storing the insured goods, not being in dispute and no foul play on the part of the insured, was alleged by the Surveyors, appointed by the Company to investigate into the incident and to assess the loss, we are of the opinion that the Insurance Company cannot be absolved of its liability to indemnify both the Appellants for the loss suffered by them, on account of the fire, as assessed by its own Surveyor and Assessor.
16. Consequently, both the appeals are allowed; the letters dated 20.03.2006 and 06.02.2006, repudiating both the claims are set aside and the Insurance Company is directed to pay to the Appellants the amounts as assessed by its surveyor, vide reports, both dated 19.09.2005. The said amounts shall be remitted to the Appellants within four weeks from the date of receipt of a copy of this order, failing which the said amounts, shall carry interest @ 9% p.a. from the date of filing of the Complaints till actual realisation. No orders as to costs.
......................J D.K. JAIN PRESIDENT ...................... M. SHREESHA MEMBER