National Consumer Disputes Redressal
Sbi General Insurance Co. Ltd. & 5 Ors. vs M/S. Tarai Constructions Lakhimpur ... on 23 October, 2025
IN THE NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
AT NEW DELHI
NC/FA/423/2015
(From the Order dated 06.04.2015 in CC No. 45/2014 of the
State Consumer Disputes Redressal Commission, U.P.)
SBI General Insurance Co. Ltd. & Ors. ... Appellants
Versus
M/s. Tarai Construction & Ors. ... Respondents
BEFORE:
HON'BLE MR. JUSTICE A.P. SAHI, PRESIDENT
HON'BLE MR. BHARATKUMAR PANDYA, MEMBER
Appeared at the time of arguments:
For Appellants : Mr. D. Varadarajan, Advocate
For Respondents - 1 & 2: Ms. Namrata Chandorkar, Advocate
Mr. Piyush Mani Tripathi, Advocate
Mr. Rajat Dabas, Advocate
For Respondent - 3 : Mr. Ayush Singhal, Advocate
PRONOUNCED ON: 23rd October 2025
ORDER
JUSTICE A. P. SAHI, PRESIDENT
1. The respondents nos. 1 and 2 M/s. Tarai Constructions and Mohd. Asif Khan are a firm and its Proprietor, who acquired a Business Package Insurance Policy from the appellant Insurance Company that was issued on 31.03.2013 for the period upto 30.03.2014. The dispute is about the coverage of the loss of stocks which according to the Insurance Company is not included in terms of the risk recital contained in the policy as the loss was stock in a Godown, whereas the policy provided a coverage / occupancy of NC/FA/423/2015 Page | 1 retail shop / Retail sale of Building material such as bricks, wood, sanitary equipments, etc. The goods which were claimed by the complainant to have been lost in the fire were none of these materials, as according to the complainants, the stocks that suffered losses were Nylon ropes and Plastic empty sugar bags (PVC bags) that melted in the fire that occurred on 17.07.2013. Thus, the claim was regarding a loss of bundles of nylon ropes and PVC bags only that were stated to have been completely gutted and melted in the fire.
2. The claim was therefore found to be inadmissible by the Insurance Company and was repudiated on 31.10.2013.
3. Aggrieved, the respondent complainant filed CC No. 45 of 2014 that was allowed by the State Commission on 06.04.2015 for a sum of Rs. 46,74,812/- payable by the Insurance Company within 30 days together with an interest @ 9% per annum from the date of filing of the complaint till the date of actual payment with a cost of Rs. 15,000/-.
4. The order impugned has therefore been challenged by the Insurance Company in this appeal on various grounds and we have heard Mr. Varadarajan, learned counsel for appellants, Advocate Ms. Namrata Chandorkar for respondents nos. 1 and 2 and Mr. Ayush Singhal, counsel for respondent no. 3, Bank.
5. This appeal was entertained and was admitted on 21.07.2015 and operation of the impugned order was stayed, subject to deposit of 50% of the NC/FA/423/2015 Page | 2 awarded amount with the State Commission that was to be retained in an FDR for a period of one year.
6. It may be pointed out that during the pendency of the complaint before the State Commission an interim order was passed on 14.07.2014 for making payments of Rs. 35 lakhs as an interim measure, and the same was sought to be enforced and executed, against which the Insurance Company filed F.A. No. 470 of 2014 before this Commission that was dismissed as infructuous on the statement made by the respondent that respondent shall not insist on the execution of the order dated 14.07.2014 and shall await the final outcome in the complaint where orders had already been reserved. The order dated 14.07.2014 is on record and the final order dated 09.02.2015 has been made available to us. Consequently, this appeal proceeded in the background above, but could not be taken up during the covid period, when the case came to be heard by us on 08.05.2025 when the preliminary submissions were raised by Mr. Varadarajan were recorded and an adjournment was sought by the respondents whereupon 24.09.2025 was fixed for the date of hearing. Accordingly, we have finally heard the matter and orders were reserved.
7. Mr. Varadarajan has catalogued his arguments systematically urging that the State Commission has misconstrued and inferred erroneous assumptions about the evidence on record, and has based its findings contrary to the weight of evidence that do not support the findings as recorded in the impugned order. We will deal with the submissions on this aspect later on, but at the outset the main thrust of the arguments of Mr. Varadarajan rests NC/FA/423/2015 Page | 3 on the contention that there is no coverage of the stocks of nylon ropes and PVC bags under the policy nor was the insurance coverage in any way extendable to the godown where the fire had occurred. Thus, according to him neither the godown fell within the description of the risk location nor did it match or conform to the description of the coverage under the policy that stood confined to the retail sale of building materials such as bricks, wood, sanitary equipments. The insurance coverage is clearly confined to the said nature of trade and therefore the stocks insured for a sum of Rs. 59 lakhs are stocks pertaining to the insured trade. His contention is that neither did the nylon ropes or the PVC bags that were consumed in the fire form part of the trade or covered under the terms of the policy and therefore the loss of such stocks was not indemnifiable. He submits that the terms of the policy are sacrosanct and the policy schedule did not contain the coverage of either a godown or the stated stocks of nylon ropes and PVC bags stored therein.
8. Mr. Varadarajan to substantiate his submission has urged that the policy schedule nowhere refers to any description of occupancy regarding nylon ropes and PVC bags kept in a godown at Eidgah, Lakhimpur Kheri. To the contrary, the description of occupancy is a retail sale of building material such as bricks, wood and sanitary equipments at Eidgah, Lakhimpur Kheri, and therefore, with this clarity of description, there was no coverage of the stocks as claimed by the complainant. He points out that the loss is reported to have occurred at a Godown located at Mohalla Sikatiya, near Durga Mandir, Lakhimpur which is not the risk covered location.
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9. He then emphasized that this policy was acquired on 31.03.2013 and then an endorsement was sought for change of "communication address"
voluntarily by the complainant that was issued on 01.07.2013. This endorsement for change of "correspondence address" was allowed and endorsed by the Company in the terms referred to in the endorsement. The endorsement was only with regard to the change of "correspondence address"
which stood altered to Mohalla Sikatiya near Durga Mandir, Lakhimpur and not for change or endorsement relating to risk location that remained unaltered.
10. Mr. Varadarajan contends that the policy schedule was issued under the letter dated 28.03.2013 that has been filed on record and which recites that the proposal of the complainant for the policy has been accepted with a request to verify and confirm that the documents are in order. Along with the letter, the policy schedule, policy clauses and wordings, premium receipts and grievance redressal letter were enclosed. He submits that the policy was accordingly received by the complainant which became effective from 31.03.2013. He submits that no alteration of either the risk location or the description in the policy was claimed to be incorrect. To the contrary, the policy was accepted, and the only change that was sought after almost 4 months of the policy on 01.07.2013, was the change in the "correspondence address". The contention of Mr. Varadarajan is that had the complainants any doubt about the description of the nature of the trade or the stocks as mentioned in the policy schedule or the risk location, the complainants could NC/FA/423/2015 Page | 5 have sought any alteration or modification by way of an endorsement to rectify any error, moreso in the background that the change sought by them was only for the correspondence address. No grievance was ever raised about any incorrect recital in the policy about the description as contained therein.
11. Mr. Varadarajan then points out to the important note contained in the document of premium computation that formed and stood attached as part of the schedule which categorically recited that the insured may examine the policy including its attached schedule and annexures and in the event of any discrepancy, the office of the Company be contacted immediately or else the policy shall be considered entirely in order. Mr. Varadarajan submits that this recital was once again a reminder to the complainants to intimate any discrepancy in the recital of the policy or any of its documents, but no such intimation or complaint was made by the complainants at any stage and hence there is every reason to presume that the complainants had accepted all the recitals regarding the coverage of the risk in the insurance policy and did not wish for any change therein. He submits that had any such change been required, the same could have been intimated when the complainants after four months had sought a solitary change only of the "correspondence address". No other change was requested and therefore in the absence of any coverage of the loss of the stocks claimed by the complainants as per the terms of the policy, the claim has been appropriately repudiated and the State Commission has committed a manifest error by allowing the complaint without even discussing the aforesaid description of the policy.
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12. He then submits that the repudiation letter categorically takes this ground for the purpose of repudiation in the letter dated 31.10.2013. The complainants did not take any objection regarding the recitals and the terms of the policy even after repudiation when the matter was taken up by the Grievance Redressal Committee before whom the representation of the complainants was placed for review. Mr. Varadarajan has invited the attention of the Bench to the communication dated 16.01.2014 whereby the review was declined once again reiterating the reasons in the repudiation letter clearly stating that the occupancy claimed by the complainants for the purpose of indemnity was that of a godown whereas the package policy covered only the retail sale of building material such as bricks, wood and sanitary equipments which were the stocks insured. Even at that stage, no such objection was raised to the recitals contained in the policy schedule.
13. He then submits that once again the matter was agitated by the complainants and various documents and clarifications were sought and again the matter was reviewed and the same was declined on 31.03.2014, where also there was no challenge raised to urge that the recitals in the policy schedule were incorrect. The said letter is also on record.
14. Mr. Varadarajan points out that in spite of all these opportunities, no such plea questioning the recital in the schedule were raised and not only this, a perusal of the narration in the complaint that was filed long thereafter contain any challenge to the recitals of the policy. He therefore submits that in the absence of any challenge to the terms and conditions and the description NC/FA/423/2015 Page | 7 in the schedule, the conditions prescribed therein had been accepted by the complainants with open eyes and with no objections and therefore in such circumstances, once the policy does not contain any risk coverage for the godown or the stocks kept therein located at Mohalla Sikatiya, then the claim was neither indemnifiable nor was there any coverage of the risk on the basis whereof the loss was sought to be indemnified.
15. Mr. Varadarajan then urged that the other grounds of repudiation have been erroneously dealt with by the State Commission. He submits that the survey report categorically indicates that the attempt to locate the address of the suppliers was made by the Surveyor by sending a registered A.D. letter to M/s. V.S. Traders from whom the complainants had alleged the purchases. The said letter was returned back with the recital that the addressee was not at the mentioned address and the original returned letter formed part of the report of the Surveyor. He further submits that on asking for the details of any bank transacted payments, the complainants replied that all the transactions worth Rs. 60,27,000/- through three invoices had been negotiated by cash payments. Mr. Varadarajan submits that such a huge amount of transaction only in cash was not only doubtful but was severely suspicious in the background that an attempt to enquire into the same had turned futile as the letter was returned back with the intimation that the addressee was not available at the given address.
16. He then urges that the given address was also visited by the Surveyor and the Surveyor in his report under clause 10 of the verification had indicated NC/FA/423/2015 Page | 8 and confirmed these facts. Additionally when information was sought from the VAT Department at Greater Noida, the VAT returns filed by M/s. V.S. Traders were categorically showing "Nil" for any amount. The said returns were also filed by the Surveyor. The claim of purchase of huge stocks was therefore not established.
17. Mr. Varadarajan also contends that the findings recorded by the State Commission on this count reciting that no cogent material evidence was adduced by the Insurance Company is incorrect and hence, the impugned order is vitiated.
18. Mr. Varadarajan then points out that the lorry receipts tendered by the complainants for confirming the delivery of the goods purchased and the material stocked at the godown was investigated and it was found that the transporter could not be located. It is urged that the trucks in which the materials were reportedly being delivered were found to be non-existent as the address given of the transporter on the lorry receipt was not located and on verification, one of the trucks, which was allegedly utilised for the supply of the material was found not to be registered at the concerned Transport Authority. It is submitted that even this evidence has been discarded by the State Commission by simply stating that merely because the truck which unloaded the goods is not registered with the Registration Authorities does not render the transaction to be manipulated or fabricated. He submits that this finding of the State Commission is perverse without there being any proof NC/FA/423/2015 Page | 9 regarding the transportation of the goods on any vehicle. The repudiation on this ground was also valid.
19. He then submits that various clarifications that were necessary had been sought through mails and letters which could not be provided by the complainants and therefore the Insurance Company, in spite of having reviewed the matter twice at the instance of the complainants, could not find any error in the conclusions drawn. He submits that no material worth the name was brought forth before the State Commission to allow the complaint.
20. He then points out that the Surveyor carried out a volumetric analysis to gauge the loss which also indicated that the amount and the quantum of loss as claimed by the complainants did not match with the size of the godown and consequently the claim was not only exaggerated, but the figures of the same had been manipulated. Mr. Varadarajan then urged that with the huge stocks as claimed by the complainants, there was no corresponding consumption or sale and therefore the impugned order cannot be sustained that has failed to take notice of these facts. He therefore contends that the approach of the State Commission was erroneous that proceeded to allow the complaint on a totally incorrect assumption of facts and law and consequently the order cannot be sustained.
21. He has urged that the State Commission proceeded in a manner as if it was heavily inclined to grant relief to the complainants which is also evident from the fact that the State Commission presided over by the President had passed an interim order on 14.07.2014 that ran in more than 12 pages NC/FA/423/2015 Page | 10 virtually allowing the complaint and directing payment of Rs. 35 lakhs at the interim stage itself. The findings in the said interim order are somewhat similar on some of the points which reflect that the State Commission was determined to allow the complaint. He submits that the interim order was successfully challenged before this Commission in F.A. No. 470 of 2014 that was dismissed as infructuous when the counsel for the respondent conceded that they shall not execute the said order and will await the final decision of the complaint. He submits that the impugned final order is nothing else but a reflection of the matter having been decided by an interim order. He therefore submits that the impugned order cannot be sustained and deserves to be set aside. He has also tendered written submissions that have been perused by us.
22. Responding to the said submissions, learned counsel for the respondents nos. 1 and 2, Ms. Namrata Chandorkar urged that there was no point of seeking any coverage of bricks, wood, sanitary equipments etc. that too even through a retail sale of building material, in as much as, the complainants did not have any such business at all. She submits that it was stated before the State Commission that the policy had been issued by the Insurance Company after a pre-inspection that was conducted through its officials. She submits that it was the godown with the stocks at Sikatiya, Lakhimpur that was subject matter of insurance and it is the stocks kept inside the said godown that was hypothecated to the State Bank of India where the complainants were availing cash credit facility. It was thus the said stocks NC/FA/423/2015 Page | 11 which were intimated as the stocks under hypothecation and the Bank had extended the facilities of cash credit on the said stock of PVC bags and nylon ropes. She submits that this was the trade of the appellant, who is a AA class Contractor of the Government and he had to keep in stock these materials as it was awarded contracts for securing embankments during floods by the Irrigation and PWD Department of the Government being a Contractor of that trade. The complainant had set up his godown and had stocked this material against which all the banking facilities were extended. There was no material for retail sale or building material at all. The Bank had nowhere hypothecated any such retail building material and to the contrary, it was the stocks of PVC bags, nylon ropes and the like material that was utilised by the complainant for the purpose of his contract with the Government which was his disclosed trade that was subject matter of hypothecation.
23. Learned counsel submits that there was no material even remotely suggesting the retail business as recited in the policy schedule, which according to her is an incorrect recital. On the other hand, she submits that the correct recital is "the stocks pertaining to the insured trade" and which was understood as the stocks kept in the godown which was also the subject matter of hypothecation with the Bank. Thus neither the Bank nor the Insurance Company nor the complainant had either envisaged or even opted for insurance regarding retail sale of building material as narrated against the column of description of occupancy in the policy schedule. In essence the argument of the learned counsel is that such wrong recital is contrary to the NC/FA/423/2015 Page | 12 stock pertaining to the trade of the insured and nowhere did the Insurance Company ever call upon the complainant to clarify this or cast any doubt about the nature of the trade of the complainants. The contention is that all parties including the Bank were fully aware of the nature of the trade that was existing when the policy was taken and which were stocks pertaining to the contract of the complainant which he had with the governmental departments for carrying out piecemeal contracts as and when the requirement arose either during floods or otherwise. It is urged that the State Bank of India has also verified the stocks in the statement of the stocks hypothecated to the Banks which documents are on the records of the objections filed to F.A. No. 470 of 2014. She has produced one of the statement of stocks issued by the State Bank of India dated 25.06.2013 consisting of nylon sugar bags worth Rs. 20,80,000/-, nylon ropes of Rs. 12,60,000/- and Rs. 24 lakhs with the specific quantities thereon against which the cash credit facilities had been extended to the complainants. She therefore submits that the whole story of not having located the supplier or the goods having not been transported to the godown was absolutely an imagination of the Surveyor and was not based on correct facts. The Banks had duly verified the stocks which confirms the existence of stocks worth Rs. 60,27,000/-. It is submitted that this clearly was commensurate to the sum insured of Rs. 59 lakhs that was the insurance coverage given by the Insurance Company and this clearly reflects that the Insurance Company was fully aware of the nature of the trade of the complainant, the quantity of the NC/FA/423/2015 Page | 13 stocks and the same being stacked at the godown that existed in the given address at Sikatiya near Durga Mandir, Lakhimpur Kheri.
24. She submits that there is no other godown nor any place where such goods could be stocked. She therefore submits that the whole story of this change of location is absolutely incorrect and she submits that this is not even the recital contained in the letter of repudiation that there was any change of location.
25. She further submits that the facts relating to the existence of M/s. V.S. Traders has been unnecessarily raised, in as much as, the State Commission has found that all the VAT documents were in order and there was no reason to deduce any adverse inference when the firm had been allotted a TIN number and not only this, the firm was registered with VAT otherwise the Surveyor could not have obtained the copies of the returns which the Surveyor has alleged to be showing "Nil". The said issue has been categorically dealt with and it has been found that the firm was in existence and the transaction had occurred with the said firm. She submits that the Accounts Register and the other documents maintained by the firm clearly indicate that the payments to the said firm were by way of cash and there was no reason to doubt the same merely because it was a cash transaction.
26. She therefore contends that the allegation that there was no cash trail found from the books of Accounts is a totally erroneous conclusion drawn which is unsustainable and against the weight of the evidence on record.
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27. She then submits that repetition all the time that no documents were supplied is absolutely incorrect, in as much as all queries of the Surveyor have been answered and consequently, there was no reason for the Insurance Company to have repudiated the claim.
28. Thus, the conclusions drawn by the State Commission are fully justified and the impugned order does not call for any interference on the grounds raised by the Insurance Company.
29. Mr. Ayush Singhal appearing for respondent no. 3, State Bank of India (OP-1 in the original complaint) states that a written statement had been filed before the State Commission and the complainant's counsel had conceded that it does not seek any relief against the Bank and consequently, the appellant cannot now raise any grievance against the Bank in this appeal nor any relief deserves to be considered as against the Bank. No other arguments were advanced and learned counsel for the parties concluded their arguments by relying on their written submissions as well.
30. We have considered the contentions raised and at the outset, it may be appropriate to mention that the State Commission has recorded the filing of the written statement by the respondent no. 3, State Bank of India (OP-1 in the original complaint) as follows:
The opposite party no.1 State Bank of India filed the written statement stating therein that the complainant is the borrower of the opposite party and has not claimed any relief against the opposite party in the complaint. It is further stated that the Cash Credit account being an account for commercial purposes is beyond the jurisdiction of the Consumer Protection Act, as such the complainant is not a consumer of the opposite party. It is NC/FA/423/2015 Page | 15 stated that the SBI General Insurance Company Limited and the State Bank of India are separate body Corporate and the State Bank of India the opposite party no.1 is not responsible for the acts of the other opposite parties. It is also pleaded that the instant complaint has not been filed with clean hands and the claimed amount is not fixed by the complainant which may be beyond the pecuniary jurisdiction of this Commission, hence the instant complaint is liable to be dismissed with costs.
31. While considering the objections raised by the Bank with regard to the nature of the services, the discussions were made by the State Commission, but it declined to consider any such contentions in view of the concession made by the learned counsel for the complainant. However it went on further to observe that "there is no controversy on these facts that the insurer had insured the business of the complainant". To appreciate the observations of the State Commission in so far as the Bank is concerned, the recital contained in the impugned Order is extracted:
So far the question of this submission of the complainant is concerned that the State Bank of India is a statutory authority established under State Bank of India Act, 1955 and under Section 5(b) of the Banking Regulation Act, 1949 the bank has been entrusted a task of lending or investment of deposits of money from the public repayable on demand or otherwise, but gradually in the course of time the Banking Companies also got involved in playing active role in Insurance Sector and thus the objection of commercialization of service raised by the State Bank of India is baseless for which reliance is also placed on Standard Chartered Bank Limited versus Dr. B.N.Raman reported in (2006) 5 SCC at page 727 and Harsolia Motors versus National Insurance Company Limited reported in 1 (2005) CPJ 27 (NC) and that the logo of the State Bank of India is used by the SBI General Insurance Company Limited and this name is derived by the State Bank of India from Section 3(1) of the State Bank of India Act, 1955 and the logo is duly registered under the Copyright Act, 1957 and that the State Bank of India is permitting the SBI General Insurance Company to use its NC/FA/423/2015 Page | 16 Logo in order to believe the consumers that the SBI General Insurance Company is a sister concern of the State Bank of India, no doubt, such facts and circumstances are available on record but looking into these facts too on record that the disputes on record are pertaining to the loss by fire for the goods alleged to have been insured to be deal with the insurer and not with the bank and complainant's counsel too conceded that complainant does not seek any relief against the bank and there is no controversy on these facts that the opposite parties/insurer have insured the business of the complainant, we found no need to consider the above facts for any finding on above facts being irrelevant for the purpose of deciding the controversy of loss to the complainant and compensation to be paid by the insurer, despite the facts on record stated that the premium amount was debited directly from the complainant account and the premium of Rs.12840/- was remitted the bank to that effect the Insurance company also issued receipt to the bank.
32. A perusal of the said recital reflects that the State Commission did not find it necessary to consider any of the said facts for recording any findings being irrelevant for deciding the controversy of loss to the complainant and any compensation to be paid by the insurer. It however recorded that the premium was debited directly from the complainant's account and a sum of Rs. 12,840/- was remitted to the Bank and the premium of Rs. 12,840/- was received that was remitted. The Insurance Company also issued a receipt to the Bank.
33. In our considered opinion, this would be somewhat relevant while dealing with the nature of the policy and the contents thereof, in as much as, a dispute is raised through the letter of repudiation about the risk location as also the coverage of any stocks that are claimed to have been lost to be NC/FA/423/2015 Page | 17 different from the items covered under the policy in a godown as per the repudiation in the letter dated 31.10.2013.
34. These facts have to be kept in mind as the contention on behalf of the complainant by learned counsel is that the clear intention and the object of insurance was not building material or bricks, but were the stocks kept in the godown. It is this aspect which has been vehemently contended by Mr. Varadarajan, learned counsel for the Insurance Company to urge that the claim about the stocks in the godown was neither the subject nor the object of the insurance as per the recital in the policy and therefore the repudiation has been based declining the claim on this ground as well.
35. There is yet another aspect which needs to be mentioned before we delve into the merits and the same is, that before the State Commission, an interim application was moved by the complainant for a relief of the payment of Rs. 46,74,812/- which was the Net Loss Assessed by the Surveyor. This interim application was allowed commenting on the merits of the matter in a 13 page detail order with a finding that the complainant had established a primafacie case of loss of goods and therefore the Net Assessed Loss by the Surveyor deserves to be disbursed to the complainant. In the said order, observations were made also about the stocks having been hypotheticated by the State Bank of India and were also verified by the statements issued on 25.06.2013. Therefore the said circumstances were also taken into account to allow the interim application and a sum of Rs. 35 lakhs was directed to be released within a month. The amount was to be retained by the complainant to NC/FA/423/2015 Page | 18 be dealt with at the time of final arguments. The said order dated 14.07.2014 has been also made the basis for the arguments advanced by Mr. Varadarajan to urge that the final relief was almost granted by the State Commission through an interim order and reflected a decision as if the State Commission had already made up its mind to allow the complaint. The submission of Mr. Varadarajan is that the same logic and reasons have been mirrored for finally allowing the complaint. With this background of the allegation, it would be apt to produce the interim order dated 14.07.2014, which is extracted hereinunder:
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36. A perusal of the order indicates that most of the issues were answered in favour of the complainant and the evidence was also discussed while passing the interim order. The Insurance Company aggrieved, challenged the same in F.A. No. 470 of 2014 and an order was passed on 28.01.2015 to place and list the case on 09.02.2015 before the Circuit Bench at Lucknow for further proceedings. Accordingly, it appears that the appeal was heard at Lucknow by the National Commission where in view of the concession made by learned counsel for the complainant, following order was passed:
Learned counsel for the respondents states that this appeal against the interim order of the U.P. State Consumer Disputes Redressal Commission, Lucknow dated 14.7.2014 in CC/45/2014 pending before the State Commission has become infructuous for the reason that the State Commission has heard final arguments in the matter and the judgment has been reserved. Thus, it is prayed that the appeal be dismissed as infructuous.
Learned counsel for the respondents undertakes that if the appeal is dismissed as infructuous, the respondents shall not insist on execution of the impugned order and wait for the final outcome of the complaint.
In view of the undertaking given by learned counsel for the respondents and the fact that the State Commission has already reserved the judgment in the complaint, we dismiss this appeal as infructuous. It is made clear that the respondents shall be bound by the undertaking given by their counsel in the Court.
The record of the State Commission, if summoned, be returned.
37. As a result of the said interim order, no amount was disbursed to the complainant and then the complaint came to be allowed finally vide the NC/FA/423/2015 Page | 33 impugned order dated 06.04.2015 disbursing the entire amount as assessed by the Surveyor to the tune of Rs. 46,74,812/- with 9% interest from the date of the complaint with a cost of Rs. 15,000/- on the Insurance Company. We do not propose to go into the arguments of Mr. Varadarajan on this issue for the simple reason that we have gone through the entire record and the submissions raised on the merits of the claim, but we have referred to the order only with a view to indicate that the State Commission had also reflected on the evidence and the material on record and has also commented upon the Surveyor's methodology of calculating the loss.
38. We may point out that the fire occurred on 15.07.2013. The fire brigade report dated 24.07.2013 is also on record and the Surveyor was also appointed promptly who conducted the survey and sought the documents that were available with the complainant as well as some other documents which were demanded by it in this regard. The papers, according to the complainant, were provided. It would be relevant to refer to the communication made by the Surveyor before submitting the report. One of the communications dated 18.07.2013 tendered to the complainant after having visited the site on 16.07.2013 dated 18.07.2013 is extracted hereinunder:
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39. The Surveyor submitted his report on 08.10.2013 after having communicated with the complainant through mails and from the said mails it appears that the documents relied on by the complainant were demanded again insisting that all the documents as desired by the letter dated 18.07.2013 be sent. As noted above, the Surveyor tendered his report on 08.10.2013 referring to the clarifications given by the complainant and also his own assessment which he additionally carried out by resorting to volumetric analysis. In the "remarks" column, the Surveyor categorically stated that the material claimed was not in existence, the doubt being on the bills of purchase of the supplier M/s. V.S. Traders. The Surveyor also doubted the status of transport in the trucks as the same was not fortified. What is noticeable is that the Surveyor had sent the query dated 18.07.2013 extracted above where at item no. 12 it had called upon the complainant to file an affidavit on a stamp paper that the complainant had only one godown at Mohalla Sikatiya and that he had no other shops or godowns for the stocks along with a copy of the rent deed, if any, with the landlord. It seems that some documents were sent which are referred to in the mails that have been exchanged between the Surveyor and the complainant and therefore in the survey report, the Surveyor has in the "remarks" column under clause 14 mentioned that the fire had taken place in the godown which is evident from the damage caused to the building. Along with the same, the photographs, the lay outs and the other documents including the affidavits of the complainant have been referred to.
40. The Survey report dated 08.10.2013 is extracted hereinunder:
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41. Before the repudiation of the claim, the Insurance Company was requested by the complainant to clear the amount and the Insurance Company on 09.09.2013 sought clarifications and information vide a letter dated 09.09.2013, that was replied to by the complainant on 13.09.2013. The said reply is extracted hereinunder:
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42. The complainant also raised a protest before the State Bank of India alleging harassment by the Insurance Company. It is also alleged by the Appellant Insurance Company that they had sent more communications on 20.09.2013, 23.09.2013, 17.10.2013 and 18.10.2013 referring to the status of coverage and occupancy as mentioned in the policy as retail sale of building material such as bricks, wood and sanitary equipments whereas the incident had occurred in the location occupied as godown. The Insurance Company has alleged that since no valid clarification or documents were provided in that regard, the claim was repudiated on 31.10.2013. The repudiation letter is extracted hereinunder:
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43. Aggrieved by the repudiation, the complainant staked his claim before the Grievance Redressal Committee of the Insurance Company that was also declined on 16.01.2014 reiterating that the complainant had failed to provide documents as desired by the Company and in the absence of any relevant and substantive clarification, the repudiation was rightly intimated to the complainant. The intimation dated 16.01.2014 is extracted hereinunder:
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44. The letter once again recites that the policy had been taken for retail sale of the building material such as bricks, wood and sanitary equipments whereas the occupancy was found of that of a godown thereby questioning the claim on that ground. Other issues answered in the repudiation were again reiterated.
45. The complainant thereafter filed the complaint CC No. 45 of 2014 that was entertained in April, 2014 and notices were issued on 09.05.2014. A copy of the complaint has been filed on record and for the purpose of the issues raised, it would be apt to quote paragraphs nos. 4 and 6 of the said complaint:
4. That the opposite parties deputed their engineers to visit the premises of the complainants where the stocks were kept and after satisfying themselves regarding the feasibility of the coverage of NC/FA/423/2015 Page | 53 insurance and after verifying the stocks which were to be insured calculated the premium and thereafter the complainant was informed about the premium to be paid in order to purchase the policy, however the report of the engineers who visited the premises of the complainant was never provided to the complainants, this was internal arrangement between the Bank and the insurance company.
5. ...xxx...
6. That the complainant is also having a cash credit account with the opposite party no. 1 and the bank along with the opposite party nos. 2 to 4 has a corporate agency arrangement by virtue of which the opposite party no. 1 use to get the insurance coverage to its customers from the opposite party nos. 2 to 4 only, accordingly the policy schedule bears the name of the financer also. The Insurance Company inspected the entire documents pertaining to position of stock in accordance with the loan sanctioned by the bank prior to issuing policy and after satisfying itself cover the risk and calculate the premium amount. Since in the instant case the physical verification of the godown was done by the Insurance Company on the behest of the Bank and the coverage was granted after satisfying themselves regarding the physical situation of the godown, thus all the opposite parties were well aware about the business and the position of the available stock of the complainants.
46. The said paragraphs have been denied in paragraphs 17/18 of the reply of the Insurance Company and paragraph 20 of the said reply which are extracted hereinunder:
17. That the contents of the Para-4 of the complaint are specifically denied. No engineer or any other person was ever deputed for verification of stock of the complainants. No verification was ever done by the answering opposite parties. Further under section 64 UM of Insurance act, the surveyor has to be engaged for assessing and quantifying the loss and further it is to be noted
18. that the complainant did not produce all the required documents to the surveyors for the proper assessment of loss and the surveyors were constrained to accompany their assessment based only on the basis of NC/FA/423/2015 Page | 54 scanty materials and guesstimates, further under section 64 UM of the Insurance Act, it is up to the insurance Company to accept the surveyors report or settle or reject the claim and thus the untimate right is on the insurer based on the policy terms and conditions from our warranties, exclusions and exceptions.
In the matter in hand from whatever from been averred in this reply it is beyond any modicum of doubt that the so called Consumer is abusing the process of Law by feigning innocence and ignorance and putting up false and frivolous claim by seeking to convert fortuitous event in to an opportunity for gaining unjust enrichment at the cost of the Insurance Company and its genuine policy holders.
The IRDA protection of policy holders regulations also state unequivocally about the truthfulness of the Consumer, the relevant regulations would be erged at the time of arguments.
It is settled consumer jurisprudence as settled down by Hon'ble Supreme Court and the Hon'ble National Commission that the terms and conditions of the policy have to be construed strictly and that there cannot be extra liberalism in construction of policy in favour of the consumer which would amount to pre-writing of policy terms and conditions which the parties were insurance contract have not bargained for. 19 ...xxx...
20. That the contents of Para-6 of the complaint are not admitted as averred. Answering opposite parties issued the policy after confirming that the complainants have the cash credit limit with the state bank of india. Insurer/answering opposite parties have not made any physical verification of Godown/availability of stock before issuing the policy since contract of insurance is based on the principle of UTMOST GOOD FAITH.
47. The reply filed by the respondent no. 3 Bank is not available on record, but it is at this stage that we may point out to the stand taken by the Bank as recorded in the impugned order and quoted hereinabove. The stand of the NC/FA/423/2015 Page | 55 Bank was not considered for being taken into account by the State Commission in view of the concession made by the complainant that no relief had been claimed against them. It is necessary to delve into this issue, in as much as the complainant has alleged in the paragraphs quoted above that the insurance was granted after a pre-inspection of the premises that was physically carried out by the Insurance Company at the behest of the Bank and the coverage was granted after satisfying themselves about the physical situation of the godown. We have therefore extracted the replies given by the Insurance Company clearly denying of having sent any Engineer or any other person deputed for carrying out physical verification. It has been categorically stated that the Insurance Company had not made any physical verification of the godown before issuing the policy as such contracts are made at the principle of utmost good faith. We may point out that there is no material on record to establish any such physical verification or report to that effect and paragraph 4 of the complaint recites that this was an internal arrangement between the Bank and the Insurance Company and the report of the Engineers was not provided to the complainant. Since the same had been categorically denied in the reply, there cannot be any presumption raised about a pre-inspection being conducted before the issuance of the policy. In the absence of any such evidence, the argument on behalf of the complainant that the policy was issued after a pre-inspection was carried out in order to verify the status of the location as well as the godown and the stocks therefore has to be rejected.
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48. There is one more aspect which needs mention, namely the hypothecation agreement with the State Bank of India which has not been brought on record. Such a document could have indicated the location of the premises or the existence of a godown to match it with and compare it with the insurance policy. The complainant or the Insurance Company has nowhere brought on record the proposal form to corroborate the same. It can be presumed that the Bank was seeking an insurance coverage of the goods that were hypothecated to it and the stocks, the statement whereof was provided on 25.06.2013. This statement of stocks even though was not brought on record in this appeal, we could trace it from the record of F.A. No. 470 of 2013 that was summoned by us and the same is extracted hereinunder:
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49. Even assuming that the said stocks were verified by the Bank and were hypothecated, we find that they recite Nylon sugar bags and Nylon ropes which is also the claim of the complainant that comprised of the lost goods NC/FA/423/2015 Page | 58 that melted in the fire and was kept in the godown. The said stock nowhere indicates any reference to any recital of the description of the risk in the policy relating to retail building material of bricks, wood and sanitary equipments. We are pointing out towards these facts keeping in view the contention raised about the risk location as well as the items covered under the insurance policy and the occupancy status thereof.
50. The entire case of the complainant therefore is of a fire in the godown situate at Sikatiya near Durga Mandir, Lakhimpur Kheri, whereas the policy refers to the location address at Eidgah, Lakhimpur Kheri, which is admittedly a different place. It is also admitted to the complainant that the godown was situate at Sikatiya and not at Eidgah and it is for this reason that the Surveyor had obtained the affidavit from the complainant about the existence of only one godown and no other place for housing the stocks of the Nylon sugar bags (PVC bags) and ropes.
51. There is therefore a clear difference of the location of the godown which is at Sikatiya and not at Eidgah. There is also a clear difference in the recital of the risk items covered under the policy which are retail building materials comprising of bricks, wood and sanitary equipments etc. The recital is not of PVC bags or Nylon ropes nor they are even near to being defined as retail building materials. It is also the contention of the learned counsel for the complainant that there was no point in taking an insurance coverage of retail building material in a shop when the entire goods hypothecated and the trade in question was of flood control material that was intended in the policy.
NC/FA/423/2015 Page | 59 Learned counsel for the complainant has urged that the insurance coverage was clearly recited as "stock pertaining to insured trade". Thus, the types of assets that were clearly intended to be insured for a sum of Rs. 59 lakhs were nothing else but the PVC bags and the Nylon ropes, the stock value whereof was verified by the Bank to be Rs. 60,27,000/- as per the statement of hypothecated stocks verified by the Bank dated 25.06.2013. Learned counsel for the complainant has urged that no other meaning can be assigned to the description of the assets in the policy except the goods that were hypothecated to the Bank and hence, the description of occupancy mentioning the retail sale of building material such as bricks, wood and sanitary equipments was totally out of context and was never intended to be the risk covered items under the policy. It is also urged that there was only one godown at Sikatiya and there was no reason to construe the insurance coverage for any other purpose.
52. On a perusal of the said facts, there can be a presumption raised that the Bank had secured the insurance coverage, but in the instant case even though some allegations had been made against the Bank, yet no relief was claimed and the complainant had conceded to this effect as indicated above. In view of this, nothing can be construed to be wanting or deficient against the Bank in having accepted the policy with the coverage of the description in the "occupancy" column as retail sale of building material such as bricks, wood and sanitary equipments. The abovementioned assets description of stocks pertaining to the "insured trade" therefore in our opinion cannot be construed NC/FA/423/2015 Page | 60 divorced from the description of occupancy to mean PVC bags and Nylon ropes. It is more than obvious that the stocks claimed by the complainant are not of retail sale of any building material such as bricks, wood or sanitary equipments. It is correct that the sum insured of Rs. 59 lakhs is somewhat close to the value of the goods hypothecated with the Bank as indicated in the stock statement of the Bank, but the same cannot be supplanted to read the description in the policy, which is entirely different in its nature and content.
53. There is one more reason for us to arrive at that conclusion as after the policy was issued, an endorsement was sought regarding the change of an address. Learned counsel for the complainant has urged that the said change of address was not only for the purpose of the location of the office but to confirm that the address of correspondence should be of the same location for which the insurance coverage was sought, namely the Godown at Sikatiya. According to the learned counsel for the complainant, the said change of address to the location of the godown was allowed on 01.07.2013.
54. In order to appreciate the said arguments, it would be appropriate to produce the description of the policy schedule as well as the change of address that was endorsed on 01.07.2013. The policy was taken on 31.03.2013 and the first page of the policy schedule is extracted hereinunder:
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55. A perusal thereof clearly describes the risk location address at Eidgah, Lakhimpur and the description of occupancy categorically recites retail sale of building material such as bricks, wood and sanitary equipments. The assets NC/FA/423/2015 Page | 62 description recites stock pertaining to insured trade. As already mentioned above, the word "godown at Sikatiya" is nowhere mentioned in this policy schedule nor are the items of coverage referred to as PVC bags or Nylon ropes. Mr. Varadarajan has emphasized that the endorsement was not for change of risk location or any change of the description of the items referred to in the insurance policy. The policy is the business package insurance policy and therefore according to Mr. Varadarajan the recitals contained in the policy are confirmed. The endorsement which has been obtained on 01.07.2013 only for correspondence is extracted hereinunder:
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56. The arguments advanced by the learned counsel seeking advantage according to their contentions has therefore has to be resolved on a perusal of the said document of endorsement dated 01.07.2013. A perusal of the column "endorsement wordings" admits of no ambiguity. It begins with a non-obstante clause clearly reciting that at the request of the insured, it is the "correspondence address" that was being altered in place of what is stated to be in the policy. This is supported by the column of "endorsement reason"
which further fortifies the same stating change of the communication address only. The clarity of this endorsement dated 01.07.2013, which is after four months of the policy, is as clear as a windowpane. The endorsement has been sought only for a change in the communication / correspondence address and not either with regard to the description of occupancy, the asset description or even mentioning a godown with stocks of PVC bags and Nylon ropes. This endorsement therefore cannot be construed in any way to be a change of the risk location address of Eidgah to Sikatiya. It is only an endorsement regarding change of correspondence and communication address and nothing further. The terms cannot be added, modified or altered or even interpreted to communicate any other intent. If the Bank or the complainant were intending to introduce any other endorsement regarding the recitals in the policy schedule, the same ought to have been requested for and we do not find any such request on record. The only conclusion therefore is that the endorsement dated 01.07.2013 cannot be construed to qualify any NC/FA/423/2015 Page | 65 change in the risk location address or referring to the godown with the stock of PVC bags or Nylon ropes even if the Bank had hypothecated these goods.
57. One could have moved further had the hypothecation deed been on record, but the same has not been produced as evidence by the complainant nor any such material was placed by the Bank against whom no relief has been claimed.
58. To arrive at this conclusion, there is one more argument of Mr. Varadarajan which needs to be recorded. When the Business Package Insurance Policy was acquired by the Bank, an important note was endorsed therein which is to the following effect:
IMPORTANT NOTE:
Please examine this Policy including its attached Schedules/ Annexure if any. In the event of any discrepancy please contact the office of the Company immediately, it being noted that this Policy shall be otherwise considered as being entirely in order.
Please refer the Claims Settlement & Grievance Redressal procedure document attached herein for ready reference.
59. Mr. Varadarajan is correct in his submission that the policy schedule if had any discrepancy, then it was the obligation of the Bank or the complainant to have intimated the same. The argument of the complainant is that they never intended to insure retail building material such as bricks, wood or sanitary equipments. If that was so, the window provided through the important note quoted above, could have been availed of. This has to be viewed from the angle that after four months, an endorsement had been sought with regard to change of communication address. It is not understood NC/FA/423/2015 Page | 66 as to why neither the Bank nor the complainant did make any such request when the policy schedule was explicit and it nowhere mentioned either the godown or the stocks of Nylon bags or Nylon ropes. There is no reason to presume that the Bank had not read the policy conditions or the complainant was unaware of the contents of the policy schedule.
60. Yet another argument of Mr. Varadarajan deserves to be accepted which appears from the letter dated 28.03.2013 that was sent to the complainant directly and is extracted hereinunder:
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61. A perusal of the said letter leaves no room for doubt that the important note discussed hereinabove was intimated to the complainant stating therein that all details of risk and cover as proposed be verified by the complainant and confirm that the documents are in order. There is no evidence on record to indicate that the complainant ever disputed the contents of the policy or any NC/FA/423/2015 Page | 68 recitals contained therein regarding risk coverage or the description of the location. In our assessment, this argument on behalf of the Insurance Company by Mr. Varadarajan seals the fate of the complainant and therefore the argument that the complainant never intended to insure any retail building material of bricks, wood and sanitary equipment is unacceptable and the argument is rejected.
62. This by now well settled that a consumer fora cannot alter or substitute the words of a policy to attribute a different meaning altogether to the contents of the policy. We have examined it from the point of view of the goods that were hypothecated with the Bank, but the Bank also did not in any way make an attempt to get the recitals modified. It may have been possibly an error on the part of the Bank, but that is not the case pleaded by the complainant and rather it was conceded in favour of the Bank as recorded hereinabove. We are therefore unable to attribute any mistake on the part of the Bank in order to analyse the argument of the complainant which may appear to be emanating from innocence and ignorance about the recital of the policy, but it cannot be appreciated so as to give an entirely different meaning to the policy schedule. The Insurance Company was therefore correctly confirmed in its opinion about the coverage part as recited in the repudiation letter dated 31.10.2013 and once again affirmed in its reply after consideration of the matter by the Grievance Redressal Committee vide a letter dated 16.01.2014.
63. The aforesaid discussion nowhere finds place in the impugned order in the perspective as explained above. The State Commission has proceeded to NC/FA/423/2015 Page | 69 examine the merits of the documents filed by the complainant and their probative value. We would have entered into the correctness or otherwise of the same, but on the facts recorded hereinabove, we find that the State Commission has erroneously construed the policy to cover the loss in the godown and the stocks therein. The impugned order reflects on the Insurance Company that it is the Insurance Company which ought to have verified the stock statements issued. This, in our opinion, is reversing the burden on the Insurance Company completely ignoring the recitals contained in the policy as discussed above.
64. The finding recorded by the State Commission is extracted hereinunder:
The complainant provided relevant particulars to the surveyor and since the bank was instrumental in purchasing the policy for the loan granted to the complainant and the same contains the hypothecation clause to and the bank statement and the stock was supposed to be duly verified by the insurance company prior to issuing the policy, page 87 annexed to the complaint case contains the statement of stocks hypothecated to the bank which is dated 25.06.2013 signed and verified by the bank and the incidence of fire was occurred on 15.7.2014, just after issued by Uttar Pradesh Commercial Tax Department which certified the name and address of the V.S.Traders. Thus, the stock which was gutted in fire stands accordingly to be considered for quantifying the loss taking in to consideration the entire other facts and circumstances on record.
65. The aforesaid finding recorded by the State Commission therefore is not justified as it was the duty of the complainant being the insured and the Bank to have sought any endorsement or clarification regarding the recital in the policy that was not done.
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66. Before parting, we may once again reiterate that the complainant has nowhere been able to demonstrate any recital regarding the error in the policy schedule about the coverage that has been argued by learned counsel for the complainant. The said argument is without any pleading or proof and as a matter of fact, no such claim was also set up to the effect that the policy schedule contained incorrect recitals by way of any paragraph in the complaint or even in the evidence that was led before the State Commission. Nonetheless, in view of the findings recorded hereinabove, it is evidently clear that the claim was at complete variance with the terms of the policy and consequently, there was no deficiency of service on the part of the Insurance Company.
67. The impugned order of the State Commission therefore for all the reasons stated hereinabove is untenable and the complaint cannot succeed. The impugned order dated 06.04.2015 is accordingly set aside and the appeal is allowed. The complaint stands dismissed. Any statutory pre-deposit made by the appellant or any deposit made by it pursuant to any orders shall be refunded to the appellant together with interest within one month from today.
.............................................
(A.P. SAHI, J) PRESIDENT .............................................
(BHARATKUMAR PANDYA)
MEMBER
Pramod/Court-1/CAV
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