National Consumer Disputes Redressal
M/S. Soami Handloom Shawls vs United India Insurance Company Ltd. & ... on 22 May, 2015
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI FIRST APPEAL NO. 289 OF 2008 (Against the Order dated 15/05/2008 in Complaint No. 01/2007 of the State Commission Chandigarh) WITH IA/902/2014,IA/2758/2014 1. NEW INDIA ASSURANCE CO. LTD. D.O. V-361 700, Opposite Fire Brigade Station, G.T. Road, Miller Ganj Ludhiana Punjab 2. THROUGH DY. MANAGER New India Assurance Co. Ltd., Jeevan Bharti Building, Tower II, 5th Floor, Connaught Place New Delhi - 110 001 Delhi ...........Appellant(s) Versus 1. M/S. SOAMI HANDLOOM SHAWLS Kailash Nagar Road, Nanda Colony, Near Village Bajra Road Ludhiana Punjab ...........Respondent(s) FIRST APPEAL NO. 299 OF 2008 (Against the Order dated 15/05/2008 in Complaint No. 01/2007 of the State Commission Chandigarh) WITH
IA/902/2014,IA/2758/2014 1. M/S. SOAMI HANDLOOM SHAWLS Kailash Nagar Road, Nanda Colony, Near Village Bajra Road, Ludhiana Punjab ...........Appellant(s) Versus 1. THE NEW INDIA ASSURANCE COMPANY LTD. D.O.V.-361700, Opposite Fire Bridgade Station, G.T. Road, Miller Ganj Ludhiana Punjab ...........Respondent(s) FIRST APPEAL NO. 300 OF 2008 (Against the Order dated 15/05/2008 in Complaint No. 10/2007 of the State Commission Chandigarh) WITH IA/902/2014,IA/2758/2014 1. M/S. SOAMI HANDLOOM SHAWLS Kailash Nagar Road, Nanda Colony, Near Village Bajra Road, Ludhiana PUNJAB ...........Appellant(s) Versus 1. UNITED INDIA INSURANCE COMPANY LTD. & ANR. Regd. & Head Office 24, Whites Road, Madras 2. BRANCH MANAGER, UNITED INDIA INSURANCE COMPANY LIMITED Branch Office, Mata Rani Road, Ludhiana PUNJAB ...........Respondent(s) BEFORE: HON'BLE MR. JUSTICE D.K. JAIN, PRESIDENT HON'BLE MR. VINAY KUMAR, MEMBER For the Appellant : For M/s Soami Handloom Shawls : Mr. Kulwinder Kumar, Advocate For New India Assurance Co. Ltd. : Mr. S. M. Tripathi, Advocate For the Respondent : For United India Insurance Co. Ltd.: Mr. Kishore Rawat, Advocate with Mr. Mayank Sharma, Advocate Dated : 22 May 2015 ORDER
1. Three appeals have been filed in this Commission against the common order of Punjab State Consumer Disputes Redressal Commission in two separate complaints by the same complainant against Oriental Insurance Co., in one case and New India Insurance Co, in the other. The State Commission has allowed both complaints. In CC NO.1 of 2007, compensation of Rs.10,70,000/- has been awarded with 9% interest from the date of repudiation of the claim i.e. 1.12.2005. CC NO.10 of 2007 has also been allowed with Rs.7,76,821/- as compensation and 9% interest from the date of repudiation i.e. 26.4.2006.
2. FA 289 of 2008 is filed by OP/New India Assurance Company Ltd. against the order in CC NO.1 of 2007. FA 299 of 2008 is the cross appeal by the complainant, seeking enhancement of compensation against New India Assurance Co. The 3rd appeal is FA No.300 of 2008, against Oriental Insurance Co, seeking enhancement of compensation on the ground that the award is not commensurate with the loss. Appellant/Complainant has contended that the State Commission wrongly based the award on the assessment of loss done by the Surveyor appointed by the OP. The prayer of the Complainant is for enhancement from Rs.7.76 lakhs to Rs.21.61 lakhs.
3. The appeal of the Complainant has been filed with delay of 11 days which has been condoned. The records submitted by the two sides have been carefully considered and their counsel heard at length. Advocates Mr. Kulwinder Kumar for the Complainant/Soami Handlooms & Shawls, Mr. S.M. Tripathi for OP/New India and Mr. Kishore Rawat for OP/United India have argued their respective appeals.
4. As seen from the record, Complaint No.1 of 2007 arose from a policy of insurance of plant and machinery taken from New India Assurance Company Ltd. The claim in the other Consumer Complaint arose from the same incident of fire, but in two polices, taken from Oriental Insurance Company for stocks of raw materials, semi-finished and finished goods. Both claims were repudiated, one by New India on 1.12.2005 and in the other, by the Oriental Insurance on 26.4.2006.
5. We do not propose to go into the contention of OPs relating to admissibility of the complaint alleging that the Complainant, being a manufacturer of woollen shawls, was in a 'commercial' business for earning profits and should therefore not be treated as a 'Consumer' within the meaning of Section 2(1)(d) of the Consumer Protection Act, 1986. On this issue, this Commission has consistently followed the view taken by it in Harsolia Motors Vs. National Insurance Co. Ltd., I (2005) CPJ 27 (NC). It was held that when an insurance policy is taken to cover the envisaged risk i.e. for indemnification of loss, the insured is a consumer. The question of any profits being earned from such insurance would not arise. Therefore, this objection merits rejection at the threshold itself.
6. On merits, the case of the Complainant was that on the night intervening 23/24th of April 2005 a major fire had broken out in the factory premises of the Complainant. The stocks of goods were destroyed and expensive plant and machinery was damaged. Due to this, claims under the relevant policies were lodged. In the policy for plant and machinery, the Surveyor appointed by New India Assurance Company assessed the loss of the order of Rs.14,60,000/-. But, the claim was repudiated on the ground that these were old machines, purchased only for Rs.17,35,000/- but insurance policy was obtained for Rs.80 lakhs, with ulterior motive. The letter also stated that the power supply to the factory had been disconnected and therefore, the question of the fire having been caused by electrical short circuit would not arise. Even the power cable connected to the two machines had not burnt. Therefore, the insurer held it to be a case of deliberate act of the insured with fraudulent motive. Similarly, the other claim for total damage to the stock was repudiated by the United India Insurance Company in a letter of 26.4.2006, on the basis of the report of the surveyor, Loss Prevention Association Engineer and of the Investigator appointed by the Company.
7. The State Commission has held repudiation of the claims in entirety to be bad and unjustified. Commenting on the reports of the Surveyors and Investigators, it has observed that--
"21. All these reports have been made by the investigator/surveyor/persons authorized by the respondents. All these reports are based on conjectures and imaginations and to some extent are even contradictory. For example, Satish Mahendru in his report dated 18.5.2005 submitted by him to the investigator has reported that the fire in any part of the factory due to short circuit of electricity is ruled out. Similar opinion is also given by Mittal Surveyors (Pvt.) Ltd. in their report dated 22.8.2005 that there was no possibility of fire by electric short circuit but the investigator in his report dated 24.5.2005 has concluded that it is established that the fire at the first stage did break out in the factory around 10.30 P.M. in wool stock room and its main but there was no possibility for the fire to travel at four different places. Therefore, these reports are contradictory even about the break out of the fire.
22. Since the respondents are interested in repudiating the claim they are placing reliance on these reports. Satish Mahendru who has submitted his report dated 18.5.2005 is a retired official. He has submitted the report to the investigator who again is a private person appointed by the respondents. The complainants do not have the infrastructure at their disposal to appoint the investigators/experts to secure reports/documents/ affidavits from them in their favour by spending of lacs of rupees.
23. The fact remains that the fire incident had taken place in the night intervening 23/24.4.2005. The fire brigade had to be called to extinguish the fire. The fire re-erupted and again the fire brigade was called and the fire was extinguished."
We are in agreement with the logic behind these observations in the impugned order. Moreover, neither the Memorandum of appeal filed by OP/New India nor arguments of its counsel have pointed to any evidence to the contrary.
8. Further, on the question of inflated valuation in the policies, the State Commission has observed that--
"The respondents are estopped from raising this question at this stage by their own conduct. If the value of the machines was only Rs.17,35,000/- then they should not have insured the same for an amount of Rs.80 lacs. Moreover, it was for the respondent Insurance Company to ask for the documents at the time of issuing the insurance policy by which these machines were purchased by the complainant firm and the source of income from where the money was withdrawn by the complainant firm to make the payment of Rs.80 lacs. The respondents sat silent on this aspect and happily charged the premium for an amount of Rs.80 lacs without asking for the documents showing the value/price of these machines. It amounts to blow hot and cold at the same time. After all, there should be some ethics and principles which should be equally applicable to both the parties. Therefore, this submission of the learned counsel for the respondents is liable to be rejected."
We would like to add that the OPs cannot be permitted to absolve themselves from liability for inflation of insurance coverage. The Policy for Plant and Machinery clearly shows that it was for coverage of "reconditioned machinery". It is thus not a case of old machines having been deceitfully insured as new. As for their valuation, the State Commission has accepted the figure computed by the Surveyor appointed by the insurer and has rejected the figure claimed by the complainant. We therefore, agree with the State Commission that repudiation of the claim in both cases was not justified.
9. Coming to the claim of the complainants for enhancement of compensation, we find it necessary to observe that--
The policy for plant and machinery was taken on 24.3.2005, which was just one month before the incident of fire of 23.4.2005. Similarly, in the case of the United India Insurance Company, the policy incepted on 4.11.2004 i.e. just about 5 and half months before the incident of fire. These dates do put a question mark on the veracity of the claims under the policies.
The report of the Surveyor (Mittal) has pointed out that the entire project cost, including the VAMATEX looms, was given to the financing bank as Rs.21 lakhs. Therefore, the question of the value of plant and machinery being Rs.80 lakhs would not arise at all.
There is no explanation how the alleged purchase value could be Rs.80 lakhs when the entire term loan sanctioned by the State Bank of Patiala was only Rs.15 lakhs.
10. We therefore, find no merit in the claim for enhancement of the amount awarded in the impugned order. In the result all three appeals are dismissed for want of merit. No orders as to costs.
......................J D.K. JAIN PRESIDENT ...................... VINAY KUMAR MEMBER