State Consumer Disputes Redressal Commission
New India Assurance Co. Ltd. vs Interweave Fashions (P) Ltd. on 17 September, 2012
IN THE STATE COMMISSION : DELHI (Constituted under Section 9 of the Consumer Protection Act, 1986) Date of Decision : 17.09.2012 First Appeal 695/2009 (Arising out of the order dated 15.5.2009 passed by the District Forum( New Delhi), Barracks Kasturba Gandhi Marg, New Delhi in complaint case No. 1133/2006) New India Assurance Co. Ltd., H-65, First Floor, Connaught Circus, New Delhi-110 001 H.O. At-87, Mahatma Gandhi Marg, Fort Mumbai, Mumbai-400001 .........Appellant VS M/s Interweave Fashions (P) Ltd., B-294, Okhla Industrial Area, Phase-I, New Delhi ...Respondent JUSTICE BARKAT ALI ZAIDI, PRESIDENT 1.
The facts of the case are, that the Complainant Company, the Head Office of which is at Kasturba Gandhi Marg, New Delhi, and its building (property) being B-294 at Okhla Industrial Area, Phase-I, New Delhi wherein the complainant has its plant machinery and accessories, fittings, ACs, Fridge, Office Equipment etc. and stock of garment material finished and semi finished goods accessories, packing material etc. is engaged in the business of manufacturing of garments and their export. The company is hypothecated with Punjab National Bank, Bara Khamba Road, New Delhi and the Bank obtained an insurance policy w.e.f. 6.5.2005 to 5.5.2006 from the O.P. New India Assurance Co. Ltd. for the complainant, covering the risk of Fire earthquake and shock etc. its insured sum being Rs.92 lac, bifurcating it, for building insured sum being Rs.22 lac, for machinery and accessories & fittings Rs.10 lac, and for the abovementioned stock Rs.60 lac. The complainant was regularly sending monthly stock statements to the Punjab National Bank.
2. On 23.9.2005 at 4.30 p.m. a fire broke open in the building of the complainant which resulted in two causalities and causing damage to the readymade garments amounting to Rs.15,22,991/-, to plant and machinery worth Rs.48,000/-, to the building worth Rs.70,000/- totaling to Rs.16,40,991/-.
3. On an intimation of this incident given at Police Station, Okhla Industrial Area, New Delhi an FIR (copy annexure P-2) was registered on 23.9.2005 u/s 285, 304A/43 Indian Penal Code and on an intimation on phone received by Fire Service Station on 23.9.2005 at 16.55 hours, Fire Brigade arrived at the spot, extinguished the Fire. On demand of the complainant, copy of the Fire Report (Annexure A/12) given by the Delhi Fire Service Station on 4.10.2005, is as below:-
Fire in a room on the IInd floor of the building in which two persons were completely burnt including washing machine packing materials solvents electric fitting & fixture wall and ceiling of the room damaged.
The garments and lace fabrics in front of the room damaged due to smoke and heat Subsequently the Divisional Officer, Delhi Fire Service issued another report (Annexure A-14) on 3.2.2006 in supersession of its earlier report dated 4.10.2005, mentioning therein, damage also to the garments in response of a letter written to him by the complainant that in his letter dated 23.9.2005 sent to Fire Station, damage to garments was also mentioned, which was missing in Fire report dated 4.10.2005.
4. On 26.9.2005 the complainant gave an intimation (copy annexure P-3) to the Punjab National Bank stating therein that the actual damage cannot be assessed as the factory has been sealed by the Police and that the O.P. Insurance Company be informed accordingly forwarding its copy also to the O.P. Company. The OP Insurance Company then appointed a Surveyor Atul Kapoor & Co., to assess the loss and the Surveyor went to the spot on 27th Sept., 2005 but as it was locked by the Police, the Surveyor made the final inspection in presence of both the parties on 30th Sept., 2005, whose report dated 5.6.2006 is annexure A-10, according to which the loss of stock of garments was, of, Rs.4,44,626/- as of against garments of Rs.15,22,991/-, of plant and machinery - Nil against Rs.48,000/-, of building Rs.28,471/- against Rs.70,000/- as claimed by the complainant. The Surveyor, as mentioned in his report discovered the total value of stock apparently higher than the sum insured, and for that, as provided in the Insurance Agreement applying its Average clause in respect of `under Insurance and calculating the adjusted loss at Rs.2,30,750/- assessed the loss of Rs.2,20,339/- towards the Company.
5. The OP Insurance Company paid this amount of Rs.2,20,339/- to Punjab National Bank, which the bank accepted in full satisfaction and discharge of his claim upon the OP Company under the Insurance Policy vide Settlement Intimation Voucher (Annexure A/16) dated 24.7.2006. The complainant vide his letter (Exhibit P-13) dated 28th July, 2006 sent to O.P. protested the payment of Rs.2,20,339/- by the OP to the Bank and its acceptance by the Bank saying that the O.P. without his consent has paid Rs.2,20,339/- to his Banker Punjab National Bank, and which is not acceptable to the Complainant, as his loss amounts to Rs.16,40,991/-. The OP did not send any response to it.
6. The complainant then alleging the above mentioned facts, attributing deficiency in service and negligence on the part of the OP, filed a complaint against the OP, before the District Forum, praying that the OP be directed to pay the Complainant Rs.14,20,652/- towards the residual amount of loss to the complainant, along with interest @ 18% p.a. on this amount and on Rs.2,20,039/- as mentioned above from the date of Surveyor Report till the date of actual payment, Rupees three lakh as compensation and Rs.50,000/- as the litigation costs.
7. The OP opposed the claim and filed the written statement, alleging therein that on receipt of letter dated 26.9.2005, copy Annexure R-6, with regard to loss of the complainant, the OP had appointed the Surveyor who had requested the complainant vide letters dated 17.10.2005, 16.11.2005, 8.2.2006 and 12.4.2006 to furnish the requisite documents to the Surveyor which he did not fully comply.
The Surveyor after the survey, and assessing the adjusted loss of stock and building and also deducting some sum from compulsory excess, assessed the net loss of Rs.2,20,750/-. The OP alleged that the complainant Company had not maintained any record of the stocks in the Dry Cleaning Section. The OP alleged that the Fire Service Station issued amended report on 3.2.2006 without giving any clarification for it.
The OP on 24.7.2006 had settled the claim with the insurer Banker Punjab National Bank in full and final satisfaction paying a sum of Rs.2,20,399/- vide the receipt(Annexure A-16) issued by the Punjab National Bank in his favour, as is also provided in `Agreed Bank Clause of annexure A of the Policy. The OP alleged that this receipt of the bank is in complete discharge of the OP, and is binding on the company insured here, and therefore the OP, is not guilty of any deficiency in service or negligence. The Insurance Policy was issued subject to `Agreed Bank Clause. The OP alleged that the claim estimated by the complainant was highly exaggerated and excessive.
8. The District Forum, on consideration of evidence of both the parties and after hearing them, held that the Surveyor had not mentioned the reason for reducing the claim of the complainant, to such a meager amount and such report has no binding effect. The Forum found that the Complainant provided all the documents relating to the loss on account of Fire incident and the monthly statement of stock, verified by the Bank to the OP. The District Forum, thus, found the loss of Rs.15,22,991/- of the readymade garments, Rs.48,000/- of the Plant & Machinery, Rs.70,000/- of the building, total loss of an amount of Rs.16,40,991/- and ordered the OP to pay the complainant balance amount Rs.14,20,652/- subject to clearance of the hypothecation of the bank, Rs.1 lakh towards compensation and Rs.10,000/- towards the litigation costs.
9. That is what brings the OP Insurance Company in appeal before this Commission.
10. We have heard Shri Cecil Philip, Counsel for the appellant and Shri Manoj Singh, Counsel for the respondent in this appeal.
11. The District Consumer Forum has overlooked the Report of the Surveyor Atul Kapoor and Company and has given no proper and precise reason for not accepting the same.
The Report is clearly exhaustive and does not appear to be one sided. However we seem disinclined the statement of the Surveyor regarding under insurance of stock as well as the building. The Surveyor has given no particulars, no details and no reasons as to shy the concluded that there has been under Insurance. In order to establish under Insurance it should have been clarified and specified, as to what items and to what extent, have been under insured. The result is that the inference of the Insurance Surveyor for calculated adjusted loss at Rs.2,20,750/- is based on assumption. We would, therefore, fix the amount of Rs.4,73,097/- as arrived by the Surveyor excluding the under Insurance Amount Rs.2,20,750/- as determined by him. The respondent complainant will therefore, be entitled to Rs.2,52,758/-.
12. It was pointed out by the Counsel for the appellant, that the Bank which was the mortgagee of the respondents stock has taken and accept on 24.7.2006 Rs.2,20,339/- as determined by the Insurance Surveyor and the same will be binding on the respondent complainant and the respondent complainant cannot contend that the Bank had no right or authority to accept the amount on behalf of the respondent complainant in full and final satisfaction of his claim. The matter stands foreclosed by the view of the National Commission in the case of M/s Target Plywood Industries Ltd. vs. Senior Divisional Manager and Ors. Original Petition No.426 of 2000 decided on 19th July, 2006 wherein it was observed as hereunder:-
That if an whenever any notice shall be required to be given or other communication shall be required to be made by the Company to the insured or any of them in any matter arising under or in connection with this policy, such notice or other communication shall be deemed to have been sufficiently given or made it given or made to the Bank.
That any adjustment, settlement, compromise or reference to arbitration in connection with any dispute between the Company and the insured or any of them arising under or in connection with this policy if made by the Bank shall be valid and binding on all parties insured hereunder but no so as to impair the rights of the Bank to recover the full amount of any claim it may have on other parties insured hereunder.
In our view, the Agreed Bank Clause would not debar the insured (owner) from contending that he has suffered a loss which was much more than what is paid to the banker.
This clause would have no binding effect on the insured (owner). If the Agreed Bank Clause is interpreted, as contained by the Complainant, it would mean that the owner has not only hypothecated the goods but also his right to reimbursement of the loss suffered by him. Further, this clause cannot be interpreted to mean that if the Bank commits obvious error, knowingly or unknowingly, or intentionally or unintentionally with a view to project its business interests only. It would be binding on the owner, for whose benefit the insurance policy is taken. Such an interpretation would be totally unjustified and would be repugnant to principles of justice as the insured would be condemned without knowledge and hearing. Therefore, this Agreed Bank Clause would bind the bank, but not the owner.
In any case, this clause is to be interpreted reasonably and in terms of the words used in the clause. It only provides that in case any monies becoming payable under this policy the Insurance Company shall pay the same to the Bank. This would mean that in a case where the amount is crystallized/settled between the parties i.e. the insured and the insurer and on finalization of payment, if any monies are required to be paid under the policy, the same is to be paid to the bank so that banks interest is fully protected. It also provides that if the money payable is in excess of the amount payable to the bank, then the bank shall receive the same as an agent of the insured. In such case, he receipt given by the bank would be binding on the insured. This clause would have no effect, if the amount payable is under dispute. First the dispute is required to be settled, then monies become payable. Without settling any dispute, as contended by the insured, if the Bank receives the same, this Agreed Bank Clause would have no effect. In any case, if the Bank receives the amount, it would be for satisfaction of its dues, but it would not mean that the amount payable to the insured for the loss suffered by him is extinguished. Clause (d) specifically provides that if any dispute arises between the Company and the insured, the dispute is required to be settled and thereafter that settlement could be binding. Settlement by ignoring the insured and his interest, cannot bind the insured.
13. We would according hold that the amount of Rs.1,20,339/- accepted by the Bank on behalf of the respondent complainant cannot be said to be the fill and final satisfaction.
14. The result is that the respondent complainant is entitled to only Rs.4,73,097/-. The appellant Insurance Co. has already paid Rs.2,20,339/- to the Bank which will be deducted from this amount and the amount thus comes to Rs.2,52,758/- (Rupees Two lakh fifty two thousand seven hundred fifty eight only) on this amount the respondent complainant is also entitled to interest @ 10% p.a. from the date of lodging of the complaint till the date of payment.
15. The District Forum has also awarded Rupees one lakh as compensation. This is not the kind of a case where the compensation is to be granted and only interest has to be granted. No order as to costs. Appeal decided accordingly.
(Justice Barkat Ali Zaidi) President (Mrs. Salma Noor) Member Arya