State Consumer Disputes Redressal Commission
M/S Shivam Petro Chemicals Private ... vs United India Insurance Company on 30 May, 2012
2nd Bench
STATE CONSUMER DISPUTES REDRESSAL COMMISSION, PUNJAB,
DAKSHIN MARG, SECTOR 37-A, CHANDIGARH.
Consumer Complaint No.17 of 2006
Date of institution: 6.7.2006
Date of Decision : 30.5.2012
M/s Shivam Petro Chemicals Private Ltd., Village Balian, Rural Focal Point,
District Sangrur, through its Managing Director Vinod Kumar son of Late Amar
Nath.
....Complainant
Versus
United India Insurance Company through its Senior Divisional Manager, Dhuri
Road, Sangrur.
........Opposite party.
Consumer Complaint under Section 17 of the
Consumer Protection Act, 1986.
Before:-
Shri Inderjit Kaushik, Presiding Member.
Shri Piare Lal Garg, Member.
Present:-
For the complainant : Sh. Mukand Gupta, Advocate For the opposite party: Sh. V. Ram Swaroop, Advocate PIARE LAL GARG, MEMBER:
This is an original complaint filed by the complainant-M/s Shivam Petro Chemicals Pvt. Ltd. under Section 17 of the Consumer Protection Act, 1986(hereinafter called 'the Act').
2. Brief facts of the case are that the complainant Company is doing the business of producing Organic Solvent and Thinner at Village Balian, District Sangrur. The complainant vide cover note dated 24.6.2003 insured his plant and machinery, including generator set, electronic installations, laboratory equipment and underground storage tank, transformer, furniture & fixtures and fittings etc. from 26.6.2003 to 25.6.2004 for Rs. 1.27 crore by paying premium of Rs. 43,891/-.
Consumer Complaint No. 17 of 2006 2
3. Vide second cover note dated 25.7.2003, stocks of Naphtha, Benzene, Tolvena, MTO, Sulphus and other solvent as well as finished and unfinished stocks, stored and lying in the petrochemical plant including boundary wall was insured from 25.7.2003 to 24.7.2004 by paying premium of Rs. 39,744/-. It is alleged that the opposite party did not supply the insurance policies to the complainant till date.
4. It is pleaded by the complainant that on 8.9.2003, huge fire took place in the premises of his factory and due to fire the stocks, plant, machinery and building of the factory were destroyed. The information of this incident has been given at Police Station, Kotwali, Sangrur, Fire Brigade, Municipal Council, Sangrur and Insurance company i.e. opposite party. The stocks lying in the premises of the factory were under the control of Central Excise Department, as such, information and intimation regarding the loss suffered by the complainant was also given to the Excise Department.
5. The claim of Rs. 115.00 lacs was lodged with the opposite party but details of the claim of Rs. 1,06,67,684/- was furnished to the Surveyor and this fact was also informed by the complainant to the opposite party vide letter dated 9.9.2003.
6. Complainant had started its business by raising loan of Rs. 180 lacs from State Bank of Patiala and Rs. 2.00 lacs was being paid as interest to the bank by the complainant. Due to fire, the production was stopped and as such, the complainant was unable to pay the loan installment and became defaulter. It is alleged that the opposite party did not settle the claim.
7. On receiving intimation regarding the fire incident, opposite party appointed M/s SGA Surveyor, who immediately visited the spot. He has collected all the registers/record maintained by the complainant. Consumer Complaint No. 17 of 2006 3 Thereafter, another Surveyor S. Soni & Co. was deputed to assess the loss.
8. The Surveyor had sought some clarification vide letters dated 9.2.2004, 15.3.2004 and 4.5.2004 and the same were replied by the complainant vide letters dated 16.2.2004, 12.4.2004 and documents were also supplied by the complainant to the Surveyor which were demanded by the Surveyor of S. Soni & Co., who assessed the loss to the tune of Rs. 45,93,508/- vide his report dated 11.3.2005 but the loss was assessed on very lower side. The copy of the Surveyor's report was not supplied by the opposite party to the complainant despite his repeated requests. Then the complainant obtained the report of the Surveyor dated 11.3.2005 under Right to Information Act on 15.5.2006. The opposite party even had not paid the loss of Rs. 45,93,508/- as assessed by the Surveyor for the reasons best known to the officials of the opposite party.
9. The opposite party again vide letter dated 30.5.2005 made a demand of some documents i.e. lay out plan of the factory, process charts, copies of the G.Rs. and gate passes etc.. The complainant made a request to the Chairman of the opposite party vide letter dated 8.6.2005 for the payment of the claim so that he could start the business and can repay the loan amount to the bank. The opposite party vide its letter dated 7.11.2005 informed the complainant that the opposite party was not convinced/agreed with the report of Surveyor of S. Soni & Co. and the documents of claim were handed over to Sh. O.N. Chhabra unilaterally. Some clarifications were also sought by the insurance company from the Surveyor vide its letter dated 12.8.2005 and the Surveyor had duly submitted the clarifications to the company vide his letter dated 18.8.2005 stated that loss was correctly assessed by him; but no claim amount was paid by the opposite party even after clarifying the assessment of loss from the Surveyor, who was appointed by the opposite party itself. Consumer Complaint No. 17 of 2006 4
10. Sh. O.N. Chhabra without visiting the premises of the complainant made a wrong report by which a loss of Rs. 17,42,620/- was assessed by him without any basis, documents and without the inspection of the spot. The opposite party vide its letter dated 7.11.2005 informed the complainant that Sh. O.N. Chhabra had assessed the loss to the tune of Rs. 17,42,620/- on the basis of his technical opinion.
11. On the basis of the report of Sh. O.N. Chhabra, the opposite party made a payment of Rs. 17,42,620/- only as the claim submitted by the complainant was of Rs. 1,06,67,684/- after a lapse of 1-½ years whereas the loss was assessed to the tune of Rs. 45,93,508/- was assessed by the Surveyor, which was appointed by the opposite party. The complainant received the amount of Rs. 17,37,112/- by deducting Rs. 5,508/- as premium, which was accepted by the complainant under protest in the compelled circumstances as due to non-payment of the claim, the complainant became defaulter of the bank from where he had taken the loan to run his business.
12. On receipt of the part payment, the complainant served a registered notice upon the opposite party vide which it was mentioned that the claim amount was accepted by the complainant under protest and he will file the complaint for the recovery of remaining amount of the claim to the tune of Rs. 90 lacs from the opposite party with interest. The complainant hired the services of the opposite party by paying the premium/consideration of the policies vide which the material as well as the building of the factory was insured by the opposite party. The detail of the stocks, material as well as the price of the plant and machinery and building is also given by the complainant in his complaint in support of his version regarding the loss which he had suffered due to fire in the factory.
13. The complaint was filed with the prayer that the complaint may be allowed and the opposite party may be directed to pay a sum of Consumer Complaint No. 17 of 2006 5 Rs. 89,30,572/- to the complainant on account of the loss suffered by the complainant alongwith interest and Rs. 10,000/- as litigation expenses.
14. Upon notice, the opposite party filed its written statement by taking preliminary objections that the complainant is not covered under the definition of 'consumer' as the factory was running for commercial purpose, the complainant has suppressed the material facts and submitted a false claim, amount was received with consent, as such, he is estopped from filing the present complaint. On merits, it was admitted that cover notes were issued to the complainant regarding the insurance of his factory as well as machinery and material/articles lying in the factory. It was denied that the policies were not delivered to the complainant, the same were delivered to the complainant with terms and conditions of the policy. The occurrence of fire and lodging of FIR/DDR was not denied. Information regarding the incident vide letter dated 8.9.2003 was also admitted by the opposite party. It is admitted that after receiving the intimation, S.G.S. Surveyor was appointed by the opposite party, who visited the spot and took the registers maintained by the complainant including all details in his possession. No instructions were given by the opposite party to the Surveyor to assess the loss on the lower side but they are independent to assess the loss on the basis of the record produced by the insured. The Surveyor had sought some clarifications from the complainant but he suppressed the same inspite of number of letters written by the Surveyor to the complainant. It is admitted that the Surveyor has assessed the loss of Rs. 45,93,508/- excluding excise duties vide his report dated 11.3.2005. The copy of the Surveyor's report was supplied to the complainant when he applied under R.T.I. Act, 2005. It is also admitted that the complainant had submitted the claim of Rs. 1.6 crores but the surveyor had assessed an amount of Rs. 45,93,508/- as loss suffered by the complainant but on scrutiny and inspection/verification of the record it was found by the Consumer Complaint No. 17 of 2006 6 opposite party that the Surveyor had assessed the loss on higher side and there were some major discrepancies in the assessment of the Surveyor. The matter was referred by the Divisional Office, Sangrur to the Regional Office, Chandigarh with the comments that the report of the Surveyor was not convincing and on the reference of the Divisional Office, Sangrur the matter was referred by the Regional Office to Sh. O.N. Chhabra, Retired Engineer, National Fertilizer's Limited for technical opinion, who after going through the complete docket come to the conclusion that no fire had taken place in the underground storage of the company. He also sought some clarifications from the Surveyor vide his letter dated 12.8.2005 which were replied by the Surveyor vide his letter dated 18.8.2005. It was mentioned in the report of the Surveyor that the fire took place at 2.30 a.m. but the fire brigade was called at 4.45 a.m. and no comments were given by the Surveyor in his report why the fire brigade was called with the delay of 2.15 hours. The loss was assessed by the technical expert in view of Clause 8 of the policy and rightly assessed the loss of Rs. 17,42,670/- and an amount of Rs. 17,37,112/- was paid to the complainant after deducting Rs. 5,508/- which was due on account of re-instatement premium as per the terms and conditions of the policy. The complainant had given his consent vide letter Ex. C-20 and on the basis of his consent an amount of Rs. 17,37,112/- was paid to the complainant vide pay order dated 28.2.2006, which was encashed by the complainant as per his consent. The details of technical report are also mentioned/pleaded in the reply by the opposite party vide which the technical expert assessed the loss to the tune of Rs. 17,42,220/- amending the assessment of loss assessed by Surveyor of Rs. 45,93,508/-. It was prayed that the complaint of the complainant may please be dismissed with costs in the interest of justice.
15. Replication/rejoinder is filed by the complainant to the written statement filed by the opposite party. It is averred in the replication that the Consumer Complaint No. 17 of 2006 7 paras of the complaint are correct and the paras of preliminary objections as well as reply on merits are not correct.
16. The parties produced documents to prove their versions, which were perused by us and also gone through the pleadings of the parties.
17. We have to decide:-
(i) Whether the complaint is entitled for the claim amount of Rs.
1.6 crores minus the amount already paid by the opposite party to the complainant or not?
(ii) Whether the complainant is entitled for an amount of Rs.
45,93,508/- minus the amount already paid by the opposite party to the complainant as assessed by Sanjeev Soni Surveyor of S. Soni & Co.?
(iii) Whether the opposite party was liable to pay the amount of claim as assessed by O.N. Chhabra, Technical Expert?
(iv) Whether any consent for acceptance of claim amount as assessed by Technical Expert was given by the complainant to the opposite party as lumpsum of the claim?
(v) Whether there is any deficiency in service on the part of the opposite party and liable to pay compensation etc. to the complainant?
18. There is no dispute between the parties that the building, plant, machinery, stock, generator set, electronic installations, laboratory equipments, underground storage tank, transformer, furniture, fixtures, fittings installed lying and fitted in the premises to be used for Naphtha Distillation unit, steel frame shed, office as well as security office were insured with the opposite party vide policies Ex. R-1 and R-2 for the period of 26.6.2003 to 25.6.2004 for an amount of Rs. 1.27 crores and 25.7.2003 to 24.7.2004 for an amount of Rs. 1.15 crores and paid the requisite premium to the opposite party by the complainant.
Consumer Complaint No. 17 of 2006 8
19. There is also no dispute between the parties that during the night of 8.9.2003 at about 4.00 a.m. fire took place in the premises of the factory and the complainant immediately informed regarding the incident to the Fire Brigade of the Municipal Committee, Sangrur, Police Station, Sangrur and also to the opposite party.
20. It is also admitted case of the parties that Surveyor of S.G.S. Surveyors and Consultants Pvt. Ltd., Sangrur was appointed for the preliminary survey of the incident. The Surveyor visited the premises of the complainant on 8.9.2003 and submitted his report dated 29.9.2003 to the Divisional Manager, United India Ins. Co. Ltd., Sangrur to the effect that "there is loss to the raw material and finished stock in the storage section. On 8th Sept. at the time of Survey, we noticed a heat near the storage section area. The production manager told that it is not safe to open the storage tanks of Raw Material and Finished Goods and we must wait till next day morning so that the storage tanks may get cooled. On 9th Sept. we again visited the insured premises and all the storage tanks of Raw Material and Finished Goods were opened. We noticed the marks of fire in all the storage tanks. We took the photographs of the face of all the storage tanks which are enclosed herewith. We took the dip in all the storage tanks to measure the remaining stock in the tanks after the fire. Separate Annexure A is enclosed herewith showing the stock as per stock registers and physical stock as per dip taken in our presence after the incident.", which is at page No. 326 of the complaint file(hereinafter referred only as 'page No.').
21. There is also no dispute that Mr. Sanjeev Soni, Surveyor & Loss Assessor of S. Soni & Company was appointed by the opposite party to assess the actual loss suffered by the complainant due to fire in the premises of his factory, who assessed the loss of Rs. 82,55,005/- vide his report dated 11.3.2005, which is at page No. 66. The opinion of the Consumer Complaint No. 17 of 2006 9 Surveyor regarding the assessment of loss, which is at page No. 103 is reproduced:-
"OUR OPINION In our opinion, the loss assessment of Rs. 45,93,508/- including excise duty on raw material and Rs. 42,55,005/- excluding excise duty on raw material is a fair indemnity to the Insured and which is payable to the Insured subject to the following:
1. Including the excise duty on raw material if the Insured will provide the documents, which shows the reversal of Cenvat Credit taken by them otherwise excluding the excise duty on raw material.
2. Terms and conditions of the Policy.
This report is issued without prejudice."
22. The version of the opposite party is that there were some discrepancies in the report of Surveyor Sh. Sanjeev Soni and his report was not conclusive and for the said reason, the case was sent by the opposite party to the Regional Office to take technical opinion.
23. Sh. O.N. Chhabra, B.Sc. B.E. (Chem.) Consultant, Evaluator, Surveyor and Loss Assessor was appointed to give the technical opinion regarding the loss suffered by the complainant due to fire in his factory, who vide his technical report dated 5.7.2005 submitted his report to the Divisional Manager of the opposite party vide covering letter dated 5.7.2005, which are at page No. 352 & 353.
24. On receipt of the technical report the Divisional Manager of the opposite party assessed and offered an amount of Rs. 17,42,620/- to the complainant as loss of building and machinery and sent a letter dated 7.11.2005 to the complainant, which is at page No. 173 vide which his undertaking was sought. The relevant para No. 4 of the letter is reproduced:-
"4. You were also asked certain clarification i.e. delay in calling fire brigade, proof of presence of workers at the time of loss vide our registered letter No. 2984/05 dt. 7.10.2005 but till date no response has been received at your end. Thus according to provisions of para 8 of general conditions of the standard fire and special perils policy which is reproduced as under Consumer Complaint No. 17 of 2006 10
"If the claim be in any respect fraudulent or if any false declaration be made or used in support thereof, 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 willful act, or with the connivance of the insured, all benefit under this policy shall be forfeited."
your claim, therefore, is likely to be out rightly rejected. However, keeping in view the fact that loss of building and machinery is established and as such we are agreed to consider the same and offer you the following full and final settlement.
Building Rs. 00,73,305.00
P&M/C Rs. 16,79,315.00
Total Rs. 17,52,620.00
(-) Excess clause Rs. 00,10,000.00
Net loss after adjustment of salvage Rs. 17,42,620.00
Should you agree the above full and final settlement please send us your undertaking to the effect that you are receiving the aforesaid amount as full and final settlement of the claim."
25. The opposite party vide their covering letter, which is at page No. 175 sent a pay order of Rs. 17,37,112/- to the complainant. The covering letter is reproduced:-
"With reference to above claim, as per your consent letter dt. 27.2.06 agreed for full and final payment of above said claim for Rs. 1742620=00, accordingly please find enclosed herewith a cheque bearing No. 219727 dt. 28-02-06 for Rs.
1737112/- drawn on PNB, Sangrur (main) after deducting the amount of Rs.
5508/- towards reinstatement premium as per policy terms & conditions."
26. The amount of Rs. 17,37,112/- was encashed by the complainant under protest as per letter dated 9.3.2006 written by the complainant to the Divisional Manager of the opposite party, which is at page No. 177 of the complaint file.
27. The complainant had not submitted the report of any loss assessor or surveyor in support of his version that he had suffered a loss of Rs. 1.6 crores due to fire on 8.9.2003 in the premises of his factory. Consumer Complaint No. 17 of 2006 11
28. We have perused the report of Sanjeev Soni, Surveyor, who assessed the loss which was suffered by the complainant due to fire. The report of Sanjeev Soni is very exhaustive and he had discussed all the relevant pros and cons at the time of assessment of the loss. After receiving the report of Sanjeev Soni, Surveyor on 11.3.2005, no copy of the same was supplied by the opposite party to the complainant which is required to be supplied as per Insurance Regulatory and Development Authority (Protection of Policy Holder's Interest's) Regulation, 2002(hereinafter referred as 'the Regulations, 2002).
29. The copy of assessment of loss by Sh. Sanjeev Soni was obtained by the complainant under RTI Act but after receiving the same, no objection to the assessment report of Sh. Sanjeev Soni was raised by the complainant. Not raising/filing any objection to the report of Sanjeev Soni, Surveyor and not even challenging the same in the complaint, we are constrained to take the inference that the complainant had accepted the report of Sh. Sanjeev Soni, Surveyor by which the loss was assessed by the Surveyor.
30. Sh. D.N. Saha, Deputy Manager, T.I. of Tariff Advisory Committee, Luckhnow Divisional Office also inspected the factory premises of the complainant on 18.9.2003 on receipt of letter No. BS-AD-655-02 dated 9.9.2003, which was addressed to Regional Office of the Tariff Advisory Committee from the Regional Office of the opposite party situated at Chandigarh regarding the major fire broke out in the insured premises of the complainant. The report of the Deputy Manager (T.I.) dated 24.9.2003 is at page No. 158. He assessed the extent of damage as under:-
"EXTENT OF DAMAGE -
Themopac boiler, condenser, Industrial Process Chiller were damaged inside the process block. Electrical Generator, Gas Generator, Main electrical panel were damaged inside the utility block. The entire raw material and finished material stored inside the underground tanks were completely burnt by fire."Consumer Complaint No. 17 of 2006 12
31. The Regional Office of the opposite party also informed regarding the fire to Loss Prevention Association of India Ltd., New Delhi vide letter dated 9.9.2003. On receipt of information, LPA Officer Sh. Vinay Gupta visited the site on 26.9.2003 alongwith Sh. M.L. Garg, Administrative Officer(Development) of the opposite party and submitted his report, which is on the file and the following observations were made by Sh. Vinay Kumar Gupta, Officer of Loss Prevention Association of India Ltd., which are reproduced:-
"The following observations were made during the site-inspection:-
a) The asbestos-sheet roofing of the utility-shed had shattered at some points.
b) Nitrogen plant panel is all right.
c) Severe smoke - deposit was observed on the walls of the Utility-shed
d) Generator control-panel had got totally damaged.
e) Severe burn marks and damage was observed in the main - panel.
f) The trusses have got bend. Severe burn - marks were noticed on the
utility building outer side.
g) Bonding had been provided at the flanges. Earthing had been provided to
the tanks. - Positive feature.
h) In the process-area there is no damage to the Receivers.
i) The insulation of the Boilers have got damaged.
j) Two Process circulating pumps and motors have got damaged.
k) Boiler-Panel had got totally damaged.
l) The generator had got totally damaged. It was found to be dismantled
during the site-visit.
m) The insulation at the Industrial Process Chiller had got damaged. The
meters at the panel will need replacement.
n) Apart from this electrical cables, overhead pipeline between main process
area and utility shed, lights, instruments etc. have also got damaged.
12.20 PROBABLE CAUSE OF THE FIRE The precise cause of this fire could not be established. However, based on the observations made during the site visit, information made available to LPA about the situation prevailing at the site at the time of the fire-occurrence an attempt was made to ascertain the probable cause of this fire. It was informed during the site visit that "No Smoking" regulations are strictly enforced in the factory premises. Furthermore cigarettes, beedis cigarette- lighters, match-boxes are collected at the main-gate and the employees are educated and enlightened about the hazards of smoking in the premises. Considering the prevailing culture and the practice followed in the unit, the occurrence of fire due to careless discarding of lighted ends can be rules out. Consumer Complaint No. 17 of 2006 13 As per the eyewitness, a flash was observed at the circulation - pump located in the process area. It is suspected that there was some leakage of Naphtha at the circulation-pump and the vapours of Naphtha were present in that area. Naphtha is a very flammable, colourless, volatile liquid. The fire-properties of Naphtha are as follows:-
Flash-point - -48.3°C
Flammable Limits - 1-6%
Since the flash-point of Naphtha is very low and the Lower Flammable Limit is 1.0 (very low) Naphtha vapours get ignited very easily even by a small spark. It is suspected that the vapours got ignited due to some spark at the motor of the circulation pump. It was claimed by the insured that the Motor of the pump is flameproof but if it is not maintained properly the flameproof property of the motor is lost.
13.00 LOSS EXPERIENCE It was informed during the site-visit that there was no fire-loss since the inception of the unit. However there was an inundation loss in July 2003. The estimate of that loss is Rs. 2.0 lacs and the claim of that loss has still not been settled. 14.00 RECOMMENDATIONS 14.10 ESSENTIAL
i) Cables may be coated by suitable fire-retardant compounds confirming to IEC:331 to retard the spread of fire. For fire-safety of cables IS:12459-1988 may be followed.
ii) All the electrical wiring inside the factory premises should be as per IS:732-1989 code of practice for electrical wiring installations.
iii) All the electrical - system including the earthing should be checked atleast once in a year by authorized competent electrical person.
iv) It was informed during the site visit that flameproof electrical fittings and motors were provided in the affected area. Even after the installation of such special apparatus, adequate care must be paid in their maintenance as deficiencies like existence of openings around the point of cable entry in motors, switches etc. could lead to fire-hazards. The installation and maintenance of flameproof electrical-fittings should be as per IS:2148-1981.
v) Proper maintenance schedules for equipment, pipelines, instruments, motors and electrical installation must be drawn out and rigorously followed to prevent failures leading to fire/explosion situations.
vi) Proper bonding and earthing of pipelines and equipments are essential to avoid accumulation of static charges.
vii) Although it was informed during the site-visit that "NO SMOKING"
regulations are strictly enforced, a close watch can be maintained to ensure compliance with this regulation. Meanwhile workers can be informed, educated and enlightened about the hazards of smoking in the premises.
viii) Portable fire extinguishers can be provided as per the guidelines given in Indian Standard IS:2190-1979 Code of practice for selection, installation and maintenance of portable first-aid fire-extinguishers/guidelines issued by the TAC.Consumer Complaint No. 17 of 2006 14
Care needs to be taken to install appropriate type of fire extinguishers. It is also advisable to maintain these appliances periodically.
ix) The fire-hydrant system may be upgraded as per TAC norms and foam- pourers may be provided in the storage-tanks.
x) Any jobs done in the process area must be under the supervision of a responsible qualified person.
xi) Standard operating procedures should be laid down and they should be strictly adhered to.
xii) All the employees must be given proper and continuing training to handle fire emergency situations.
xiii) Detailed fire emergency procedure should be prepared specifying the role of every individual including that of the person who notices the fire and details on medium to be used for fire-fighting during emergencies. 14.20 ADVISORY
a) All the employees must be made aware of the fire/explosion hazards associated with the chemicals being handled / stored in the premises.
b) The insured may get their premises audited from the fire safety angle and take remedial measures before they restart their operations.
32. We have also perused the Technical Report of Er. O.N. Chhabra dated 5.7.2005 at page No. 350 to 352. The Technical Expert made the report on the basis of queries/Docket sent by Divisional Office, Sangrur vide dated 31.5.2005 of the opposite party. The technical expert has given the technical opinion without inspecting the factory of the complainant after the lapse of about 1-¾ years; where the fire took place. The report of the Technical Expert is based only on the doubts which were raised by the Divisional Office of the opposite party and the technical expert had not given any opportunity to the complainant to explain the quantum of loss suffered by him. Even he had not inquired from Sh. Sanjeev Soni, who assessed the loss to the tune of Rs. 45,93,508/-. The opinion of the expert is only based on surmises and conjectures and without any physical verification of the spot. In our view, the report submitted Technical Expert is totally un-reliable and is tailor made with regard to the loss suffered by the insured on the basis of the suggestions made by the Regional Office, Sangrur of the opposite party. The opposite party is not justified in taking the technical opinion after the lapse of 1-¾ years of the occurrence of the Consumer Complaint No. 17 of 2006 15 fire. In the present case, the whole purpose of taking the insurance policies for protection of loss is frustrated. The insurance companies are bound to follow the regulations framed by the I.R.D.A. strictly so that unjustified action and delays can be avoided.
33. We have also perused letter dated 7.11.2005 vide which the Divisional Manager of the opposite party offered an amount of Rs. 17,42,620/- as loss suffered by him in fire. But no basis were mentioned in the said letter, how the Divisional Manager had assessed the loss of Rs. 17,42,620/-. No reason was also mentioned in the said assessment that how he rebutted the report of Sanjeev Soni, who had assessed the loss of Rs. 45,93,508/-. In the said letter, it was also asked to give his consent so that the said amount could be paid to him. As per letter Ex. C-20, a pay order of an amount of Rs. 17,37,112/- was sent to the complainant and in the said letter it is mentioned that vide letter dated 27.2.2006, the complainant agreed as full and final payment of the claim on the payment of Rs. 17,42,620/- and after deducting Rs. 5508/- towards re-instatement premium. But no consent letter dated 27.2.2006 was produced by the opposite party to prove that the complainant agreed to accept Rs. 17,37,112/- as full and final payment of his loss, which he had suffered in the fire.
34. An application was made by the complainant for the cross examination of Sh. O.N. Chhabra. An undertaking was given by the learned counsel for the opposite party in the Commission on 12.7.2010 that he will produce Sh. O.N. Chhabra in the Commission on 12.8.2010 at 2.00 p.m. but on 12.8.2010 it was submitted by the counsel for the respondent that Sh. O.N. Chhabra is admitted in the hospital and prayed for time. The case was adjourned for 27.10.2010 for the cross examination of Sh. O.N. Chhabra. On 27.10.2010, again Sh. O.N. Chhabra was not produced by the opposite party for his cross examination and requested for Consumer Complaint No. 17 of 2006 16 adjournment. The case was adjourned for 15.12.2010 but on 15.12.2010 he was again not produced for cross examination. It was stated by the counsel for the opposite party that he is in Comma as his son was died in blast but no certificate of any hospital was produced by the opposite party in support of its version. Sh. O.N. Chhabra was not produced by the opposite party after availing so many opportunities and non-producing him infers that he was not ready to face cross examination as his report was not based on any evidence. As such, the technical report of Sh. O.N. Chhabra is liable to be ignored as the same is without any basis.
35. It is also admitted case of the opposite party that Sh. Sanjeev Soni submitted the report of assessment of loss to the opposite party on 11.3.2005 but no copy of the same was supplied by the opposite party to the complainant. It was the duty of the opposite party that if the report was incomplete in any respect or there were any discrepancies on some points, he may request to the Surveyor under intimation to the insured to furnish an additional report on certain specific issues as required by the insurer but the opposite party has not made any letter to the Surveyor under intimation to the insurer. The complainant has obtained the copy under RTI Act after depositing the requisite fee when it was obligatory upon the opposite party/insurer to supply the same to the insured and not offered any amount to the insured-complainant within 30 days for the settlement of the claim, which was required under IRDA Regulations,2002 which deals the procedure to settle the claim of the insured. The relevant Regulation No. 9, which relates to the claim procedure in respect of General Insurance Policy, which is fully applicable to the present dispute is as under:-
"9. Claim procedure in respect of a general insurance policy.
(1) An insured or the claimant shall give notice to the insurer of any loss arising under contract of insurance at the earliest or within such extended time as may be allowed by the insurer. On receipt of such a communication, a general insurer shall respond Consumer Complaint No. 17 of 2006 17 immediately and give clear indication to the insured on the procedures that he should follow. In cases where a surveyor has to be appointed for assessing a loss/ claim, it shall be so done within 72 hours of the receipt of intimation from the insured.
(2) Where the insured is unable to furnish all the particulars required by the surveyor or where the surveyor does not receive the full cooperation of the insured, the insurer or the surveyor as the case may be, shall inform in writing the insured about the delay that may result in the assessment of the claim. The surveyor shall be subjected to the code of conduct laid down by the Authority while assessing the loss, and shall communicate his findings to the insurer within 30 days of his appointment with a copy of the report being furnished to the insured, if he so desires. Where, in special circumstances of the case, either due to its special and complicated nature, the surveyor shall under intimation to the insured, seek an extension from the insurer for submission of his report. In no case shall a surveyor take more than six months from the date of his appointment to furnish his report.
(3) If an insurer, on the receipt of a survey report, finds that it is incomplete in any respect, he shall require the surveyor under intimation to the insured, to furnish an additional report on certain specific issues as may be required by the insurer. Such a request may be made by the insurer within 15 days of the receipt of the original survey report.
Provided that the facility of calling for an additional report by the insurer shall not be resorted to more than once in the case of a claim.
(4) The surveyor on receipt of this communication shall furnish an additional report within three weeks of the date of receipt of communication from the insurer.
(5) On receipt of the survey report or the additional survey report, as the case may be, an insurer shall within a period of 30 days offer a settlement of the claim to the insured. If the insurer, for any reasons to be recorded in writing and communicated to the insured, decides to reject a claim under the policy, it shall do so within a period of 30 days from the receipt of the survey report or the additional survey report, as the case may be.
(6) Upon acceptance of an offer of settlement as stated in sub-
regulation (5) by the insured, the payment of the amount due shall be made within 7 days from the date of acceptance of the offer by the insured. In the cases of delay in the payment, the insurer shall be liable to pay interest at a rate which is 2% above the bank rate prevalent at the beginning of the financial year in which the claim is reviewed by it."
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36. From the perusal of the above procedure, it is proved beyond doubt that the opposite party has violated the provisions of Regulation No. 9 of the I.R.D.A. Regulations, 2002.
37. It was held by the Hon'ble Supreme Court in case "Venkateswara Syndicate Vs. Oriental Ins. Co. Ltd.", 2009 (8) SCC 507, in para No. 22 as follows:-
The assessment of loss, claim settlement and relevance of survey report depends on various factors. Whenever a loss is reported by the insured, a loss adjuster, popularly known as loss surveyor, is deputed who assess 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 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 concerned officer 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. Scheme of Section 64-UM particularly, of sub-sections (2), (3) and (4) would show that the insurer cannot appoint a second surveyor just as a matter of course.
38. It was also held by the Hon'ble Supreme Court in the above judgment that:-
"We hasten to add, if the reports are prepared in good faith, due application of mind and in the absence of any error or ill motive, the insurance company is not expected to reject the report of the Surveyor's."
39. It was also held by the Hon'ble National Commission in case "National Insurance Co. Ltd. Versus Ganesh Trading Company", 2011 (4) CPR 340 (NC) that:-
"It is evident that the insurance company had completely ignored the assessment made by the two surveyors appointed by it and has chosen to rely on the report of the Investigator which is full of unsubstantiated assumptions receipt of an Consumer Complaint No. 17 of 2006 19 anonymous petition may, to an extent explain appointment of the Investigator, but cannot be the justification for rejection of reports of the Surveyors."
40. So from the above discussion, it is proved beyond doubt that the opposite party was bound to pay the claim to the complainant which was assessed by Sh. Sanjeev Soni, Surveyor and Loss Assessor appointed by the opposite party itself.
41. The version of the opposite party that payment of Rs. 17,37,112/- was made as the complainant was agreed to accept the same vide his letter dated 27.2.2006 but no such letter is produced by the opposite party in its evidence. Even no discharge voucher and acceptance of cheque of Rs. 17,37,112/- was produced by the opposite party to prove its version that the complainant has accepted the amount as lumpsum of his claim. On the other hand, the complainant has proved beyond doubt that he accepted the amount of Rs. 17,37,112/- under protest and under unavoidable circumstances as the bank from where he had taken the loan to establish the business was threatening for the recovery of the amount of loan by attaching and selling the property of the complainant.
42. In view of the above discussion, it is proved that the opposite party has badly failed to prove that the amount of Rs. 17,37,112/- was accepted by the complainant as lumpsum amount.
43. The version of the opposite party that the insurance policies were taken by the complainant for commercial purpose as such, he does not fall under the definition of 'consumer' is not correct. There is a wide definition of the 'consumer' given in the Consumer Protection Act and there are exclusions also in the definition of 'consumer'.
(i) It excludes a consumer who obtains such goods for resale or for any commercial purpose;
(ii) It also excludes a person who avails of services of any description ----
(i) free of charge; or
(ii) under a contract of personal service; and
Consumer Complaint No. 17 of 2006 20
(iii) for any commercial purposes
44. The Hon'ble National Commission in case "Harosila Motors versus National Insurance Co. Ltd.", I (2005) CPJ 27 (NC) has explained the distinction between availing of services and hiring of the services in paras No. 6 to 8 of the judgment. Para Nos. 6, 7 & 8 of the judgment are as follows:-
"6. Learned Counsel Mr. Sharma, appearing on behalf of the appellants drew further distinction in the use of phraseology in exclusion clause by contending that Legislature has provided exclusion with regard to availing of the services and not for hiring of the services. He pointed out that meaning of the words 'avail' and 'hire' is different. For this purpose, he referred to the meaning giving to these words which are as under:
"AVAIL - (Fr. Valoir, La. Valere, to be worth), profit of land (see Earl Jowitt's the Dictionary) 'avail oneself of' is stated to mean 'to take advantage of utilise'. The meaning given in Oxform Dictionary is also to the same effect.
In Webster's Dictionary makes, 'avail' synonymous with 'benefit', 'profit', 'use' and have availed himself of something only if he had taken advantage of profited by that thing or utilized it to his benefit. HIRE - In Collins English Dictionary, 'hire' has been defined as 'to acquire the temporary use of a thing or the services of a person in exchange for payment' or 'to provide something or the services of oneself or others for an agreed payment usually for an agreed period'."
7. In support of his submission, learned Counsel Shri Sharma, referred to the judicial dictionary meaning of the words 'commercial purpose' which is as under:
"The word 'commercial' according to the Oxford Dictionary means viewed as a matter of profit and loss. The word 'purpose' means 'object which is in view or for which is made' : 'aim' 'amend'. The word 'commercial purposes' would, therefore, cover an undertaking the object of which is to make a profit out of the undertakings. (Municipal Board, Unnao v. The State of U.P., 1957 All. L.J. 469 at 498)."
8. According to Oxford dictionary, it means "viewed as a matter of profit or loss".
The word "commercial" is defined in the Concise Oxford Dictionary, New Edition of the 1990, at page 227, the word "commercial" is defined as 'having profit as a primary aim rather than artistic etc. value' (vide Dena Bank, Ahmednagar v. Prakash Birbhan Katariya, AIR 1994 Bom 343 at
345)."
Consumer Complaint No. 17 of 2006 21
45. The contract of insurance is contract of indemnity and therefore, there is no question of commerce in obtaining insurance coverage. It is discussed by Sh. Brij Nandan Singh on 'Contract of Indemnity', in paras No. 9 & 10 in New Insurance Law; as follows:-
"9. He submitted that the contract of insurance is contract of indemnity and, therefore, there is no question of 'commerce' in obtaining insurance coverage. For this purpose, he has referred to discussion on 'Contract of Indemnity' in New Insurance Law, by Brij Nandan Singh, which is as under:
Para 19 : "Contract of indemnity - The very foundation in my opinion of every rule which has been applied to the insurance law is that the contract of insurance contained in a fire or marine policy is a contract of indemnity and of indemnity only and that this means that the assured in the case of loss against which the policy has been made, shall be fully indemnified but never more than fully indemnified. That is the fundamental principle of insurance, and if ever a proposition is brought forward which is at variance with it, that is to say which either will prevent the assured from obtaining a full indemnity, that proposition must certainly be wrong "(Castellain v. Preston (1883) 11 QBD 380). Under such contracts the insurers undertake to indemnify the insured for the actual loss suffered by him as a result of the event insured against. "The principle that a contract of assurance (except life assurance and insurance against accident) is a contract of indemnity, leads the insured to be interested in the preservation of the thing insured and the desire for the happening of the event insured against becomes remote" (Mathey v. Curling (1922) 2 AC 180).
10. On the basis of the aforesaid purpose of the insurance policy, he contends that availing of the insurance policy is for indemnifying the loss which may be suffered by the assured; it is for protection and not for making any profit.
Therefore, it would be totally unjustified to arrive at a conclusion that as the Complainants are carrying on business/trading activity and as they have taken the insurance policy, they are not entitled to approach the consumer fora or that they are excluded as per Section 2(1)(d) of the Act."
46. It was held in para No. 13 as follows:-
"13. In Halsbury's laws of England, Vol. 24, 4th Edition, the origin and common principles of insurance is discussed and in paragraph 3 it has been mentioned that it is based on principle of indemnity. Thereafter, relevant discussion is to the effect that most of contract of insurance belong to general category of contracts of indemnity. In the sense that insurers' liability is limited to the actual loss which Consumer Complaint No. 17 of 2006 22 is, in fact, proved. The contract is one of indemnity and, therefore, insured can recover the actual amount of loss and no more.
47. In para No. 12 it was also held as follows:-
"12. Further, hiring of services of the Insurance Company by taking insurance policy by Complainants who are carrying on commercial activities cannot be held to be a commercial purpose. The policy is taken for reimbursement or for indemnity for the loss which may be suffered due to various perils. There is no question of trading or carrying on commerce in insurance policies by the insured.
May be that insurance coverage is taken for commercial activity carried out by the insured."
48. As per the above discussion, we are of the view that a person who takes insurance policy to cover the envisaged risk does not take the policy for 'commercial purpose'. Policies obtained only for indemnification and actual loss. It is not intended to generate profit. The version of the opposite party that the complainant does not fall under the definition of 'consumer' is without any merit and we are of the opinion that the complaint is maintainable.
49. The complainant has not filed any objection against the report of assessment of Sh. Sanjeev Soni, as such, we are of the view that the complainant has accepted the report of the Surveyor and he is not entitled for the claim excess than as assessed by Sh. Sanjeev Soni.
50. The claim was not paid by the opposite party within 30 days from the receipt of the survey report as per Regulation No. 9 (5) of the I.R.D.A. Regulations, 2002. As such, the opposite party is liable to pay the interest on the claim as assessed by Sanjeev Soni, Surveyor. No evidence was produced by the complainant regarding the rate of interest on which he has taken the loan from the bank, as such, we are of the view that the rate of interest @ 9% per annum will be appropriate.
51. In view of the above discussion, we partly accept the complaint of the complainant. The opposite party is directed to pay the amount of claim Consumer Complaint No. 17 of 2006 23 as assessed by Sh. Sanjeev Soni minus the amount already paid to the complainant with interest @ 9% per annum after one month of submitting the report by the Surveyor to the opposite party, till the payment of the claim.
52. The opposite party is also directed to pay Rs. 25,000/- as litigation expenses to the complainant.
53. The opposite party is directed to pay the amount of claim, interest and litigation expenses to the complainant within 30 days from the receipt of copy of the order.
54. The arguments in this Consumer Complaint were heard on 18.05.2012 and the order was reserved. Now the order be communicated to the parties.
55 The Complaint could not be decided within the statutory period due to heavy pendency of Court cases.
(Inderjit Kaushik)
Presiding Member
May 30, 2012. (Piare Lal Garg)
as Member
Consumer Complaint No. 17 of 2006 24