National Consumer Disputes Redressal
Louis Dreyfus Company India Private ... vs New India Assrance Company Ltd. on 18 April, 2023
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CONSUMER CASE NO. 259 OF 2012 1. LOUIS DREYFUS COMPANY INDIA PRIVATE LIMITED RNM Centre,
68/2, Janpath New Delhi - 110 001. ...........Complainant(s) Versus 1. NEW INDIA ASSURANCE CO. LTD. & 2 ORS. 87, M.G. Road,
Mumbai - 400 001. 2. The New India Assurance Co. Ltd. S.C.O 36-37, Sector 17-A Chandigarh -160 017 3. The New India Assurance Co. Ltd. Divisional Office-II, S.C.O 104-106 Sector 34-A, Chandigarh - 160 022. ...........Opp.Party(s) CONSUMER CASE NO. 396 OF 2014 1. LOUIS DREYFUS COMPANY INDIA PRIVATE LIMITED RNM CENTRE,
68/2, JANPATH, NEW DELHI-110 001 ...........Complainant(s) Versus 1. NEW INDIA ASSRANCE COMPANY LTD. 87, M.G. ROAD, MUMBAI-400 001 2. - - - 3. NEW INDIA ASSRANCE COMPANY LTD. REGIONAL OFFICE
S.C.O. 36-37,
SECT0R-17A, CHANDIGARH-160017 4. NEW INDIA ASSRANCE COMPANY LTD. DIVISIONAL OFFICE-II,
S.C.O. 104-106,
SECTOR-34A, CHANDIGARH-160022. ...........Opp.Party(s)
BEFORE: HON'BLE MR. C. VISWANATH,PRESIDING MEMBER HON'BLE MR. SUBHASH CHANDRA,MEMBER
For the Complainant : Mr. Joy Basu, Senior Advocate with
Mr. Saurajay Nanda, Advocate
Mr. Kanak Bose, Advocate
Mr. NamanKhatwani, Advocate
Ms. Alexandra Celestine, Advocate
Ms. Rishieka Ray, Advocate For the Opp.Party :
Dated : 18 April 2023 ORDER
1. As the facts and dispute involved in both the Consumer Complaints are same, both Consumer Complaints are disposed of by a common order treating CC/259/2012 as the lead case.
2. The Complainant is a Private Limited Company engaged in the business of import and export of commodities. Opposite Party No.1 is an Insurance Company with head office at Mumbai. Opposite Parties No.2 & 3 are Regional Office and Divisional Office of Opposite Party No.1 respectively. Complainant obtained "Marine Cargo Annual Turnover Policy No.350200/21/09/14/00000369 from Opposite Parties for Annual Sales Turnover Policy Expected Turnover of Rs.1200 Crores (Premium on Half Yearly Basis)", valid from 01.01.2010 to 31.12.2010. Special condition No.4 of the Policy provided that the "premium is subject to the annual turnover and will be charged as per actual turnover in the Policy period." The Complainant paid the premium in January, 2010 and July, 2010 as per condition of the Policy.
3. The Complainant exported cotton bales from Pipavav to China, Thailand, Taiwan, Indonesia etc. On 07.11.2010 at about 2.50 pm, the Security Guard noticed smoke emerging from the heap of cotton bales stored in open near the warehouse. He informed the CFS staff who attempted to extinguish the fire by using portable dry powder and water. Fire was controlled in many areas, but the cotton bales kept in the containers continued burning. The Complainant intimated the Insurance Company same day, who appointed M/s Subash Chander & Associates (SCA) as Surveyors for assessment of loss. The Surveyor visited the site on 10.11.2010. The Complainant provided all information and documents as sought by the Surveyor. Final Survey Report was submitted by the Surveyor on 25.11.2011 observing that the loss caused by fire was covered under the Policy. In order to ascertain the Complainant's sales turnover, the Insurance Company appointed a second Surveyor, M/s Parimal R. Shah & Co., who observed that the Insured's cargo had crossed the total sum insured of Rs.1200 crores in July, 2010 itself and the fire occurred on 7th November, 2010. The Surveyor SCA, vide Final Survey Report dated 25.11.2011, assessed the net loss at Rs.22,01,29,271/ The Opposite Parties, however, neither admitted nor denied the claim for a long time. The Opposite Parties constantly assured the Complainant that payment would be made in a timely manner. The Opposite Parties, however, vide letter dated 27th July 2012, repudiated the claim on the ground that there were significant discrepancies in the actual and expected turnover. Aggrieved by the repudiation of the claim and alleging deficiency in service on the part of the Opposite Parties, the Complainant filed Consumer Complaint with the following prayer: -
"It is therefore submitted that the Hon'ble Commission may be pleased to:
a) Direct that the Opposite Party rendered deficient service to the Complainant.
b) Award a sum of Rs.22,01,29,271/- being the claim due to the Complainant together with interest at 18.25% per annum from 25th December, 2011 till the filing of the Complaint and further to pay this sum with interest at 18.25% per annum from the date of this Complaint till the date of realization.
c) Award costs connected with these proceedings to the Complainant.
d) Such other and further orders as may be necessary in the interest of justice."
4. The Complaint was contested by the Opposite Parties by filing the written statement. It was stated that the Insurance Policy was obtained by the Complainant for commercial purpose. The Complainant was, thus, not a Consumer under Section 2 (1) (d) of the Consumer Protection Act, 1986. Otherwise also, the Consumer Complaint was not maintainable as the dispute could not be decided without adducing elaborate evidence, which was not possible in summary jurisdiction of this Commission and the appropriate Forum is a Civil Court.
5. On merits, it was stated that initially the premium paid by the Complainant got exhausted as and when the turnover of the Company exceeded Rs.1200 crores. In order to keep the stocks insured, the Complainant was required to pay further premium. The turnover of the Complainant exceeded Rs.600 crores in the beginning of May, 2010, thereby the first installment of premium was exhausted in April, 2010 itself. The Complainant paid first installment of premium covering turnover of Rs.600 crores on 31.12.2009. The second installment of premium was paid on 01.07.2010 for another sum insured of Rs.600 crores, which also got exhausted on 10.07.2010, when the turnover of the Complainant Company exceeded Rs.1200 crores. The incident of fire took place on 07.11.2010, when the stock of the Complainant was not covered for want of premium payment. The turnover of the Complainant from 01.04.2009 to 31.12.2009 was Rs.16.4950 crores. The annual turnover from 01.01.2010 to 31.12.2010 could not be less than the preceding year. The Complainant deliberately and intentionally did not disclose the correct figure of the annual turnover and obtained the insurance for a low figure of Rs.1200 crore. The Opposite Parties were not bound by any unauthorized act done by the Divisional Manager on their behalf. The Opposite Parties, therefore, rightly repudiated the claim and the Complaint was liable to be dismissed.
6. Heard the Learned Counsel for the Complainant and Learned Counsel for the Opposite Parties and carefully perused the record. Learned Counsel for the Complainant submitted that as per Special Condition 4 of the Policy, premium was to be paid subject to annual turnover in the Policy period. At the time of issuing the Policy, the Opposite Parties did not raise any question regarding expected annual turnover of Rs.1200 crore. There was no mention in the Policy anywhere that after surpassing the expected turnover of Rs.1200 crore, the Policy would not cover any risk. Additional premium of the Policy whether payable or refundable was dependent on the actual turnover at the end of the Policy period. The Complainant raised certain queries regarding operation of the Policy after crossing turnover of Rs.1200 crores. The broker, vide letter dated 15th May 2010, forwarded the queries to the Opposite Parties. The Opposite Parties, vide letter dated 17.05.2010, replied that after payment of the second installment, all the transits were covered till the expiry of Policy even if it crossed 1200 crores. The Opposite Parties, vide email dated 14th December 2010, sought payment of additional premium as Company's turnover had increased. By that time, the Complainant had already submitted two claims under the Policy. In response to email dated 14th December, 2010, the Complainant made payment of additional premium of Rs.86,86,125/- for the excess turnover of Rs.1500 crores. The Opposite Parties accepted the premium without any demur and an endorsement was also issued to this effect acknowledging payment of additional premium. After accepting additional premium and issuing endorsement, the Opposite Parties were bound by the principle of estoppel. Learned Counsel further submitted that the Opposite Parties appointed second Surveyor without approval of IRDAI or any intimation to the Complainant. Second Surveyor observed that the Complainant did not pay any premium at the end of third quarter ending 30th September, 2010. Insured paid the premium after the loss on 17.02.2010. Admittedly, premium was to be paid on half-yearly basis and there was no requirement of paying premium on quarterly basis. After assessment of loss by the Surveyor, the Opposite Parties kept the Complainant in dark stating that the claim would be paid in a timely manner. The Complainant held meetings with the officers of the Opposite Parties on 27th December, 2011, 22nd February, 2012, 28th June, 2012 and 11th July, 2012. The Complainant also sent letters dated 29th December, 2011, 20th March, 2012, 9th May, 2012 and 13th July, 2012. Despite the above meetings and letters, the Opposite Parties, vide letter dated 27th July, 2012, repudiated the genuine claim of the Complainant. Learned Counsel relied on the judgment in National Insurance Co. Ltd. vs. National Cooperative Consumer Federation of India Ltd., AIR 2009 Del 173 wherein it was held that "if the Insurance Company wanted some additional premium, it should have asked for the same. It never did so. That is the obvious reason why in the written statement, the defence taken is that the respondent failed to pay the premium on demand which plea of the appellant has been falsified."
7. Learned Counsel for the Opposite Parties submitted that the Policy covered turnover of Rs.1200 crores. Premium paid by the Complainant got exhausted after exceeding the turnover of Rs.1200 crores. After exhausting turnover of Rs.1200 crore, it was necessary for the Complainant to pay premium for keeping the stocks insured/covered under the Policy. First installment of premium paid on 31.12.2009 got exhausted at the end of April, 2010 after exceeding turnover of Rs.600 crores and second installment paid on 01.07.2010 got exhausted on 10.07.2010 after exceeding turnover of Rs.1200 crores. As the second installment got exhausted on 10.07.2010, the loss was not covered thereafter. Fire occurred on 07.11.2010, the date on which loss was not covered under the Policy for want of payment of insurance premium. It was the duty of the Complainant to pay/maintain the premium since it was the Complainant only who had the information of its turnover and not the Opposite Parties. Section 64-VB of the Insurance Act, 1938 mandates that "no risk to be assumed unless premium is received in advance." On the date of incident as no premium was available in advance with the Opposite Parties, risk was not covered under the Policy. Learned Counsel submitted that any act of an employee of the Opposite Parties exceeding his authority was not binding on the Opposite Parties under Section 237 of the Contract Act, 1872. Even the email sent by the employee of the Opposite Parties was not sent from official email id but from personal email id. Endorsement for further premium of Rs.86,86,125/- clearly stated that this would be with effect from 17th December, 2010. The Opposite Parties deputed M/s Subash Chander & Associates, Surveyors and Loss Assessors for assessment of loss, who submitted Final Report dated 25.11.2011. In order to ascertain the turnover position, the Opposite Parties appointed Parimal R. Shah & Co. as Chartered Accountant and not as second Surveyor. Premium deposited by the Complainant got adjusted against each transaction. Resultantly, second installment of premium paid on 01.07.2010 got exhausted in July, 2010 itself as confirmed by the verification report dated 29.07.2011 of Parimal R. Shah, Chartered Accountant. Further, assessment of loss made by the Surveyor does not mean that claim was admissible. The Surveyor's Report is not binding on the Insurer. The Opposite Parties repudiated the claim, vide letter dated 27.07.2012, giving detailed reasons and there was no deficiency in service on their part. Learned Counsel relied on the judgment in National Insurance Co. vs. Seema Malhotra &Ors. (2001) 3 SCC 151 and submitted that Section 64-VB of the Insurance Act, 1938 mandates that "no risk to be assumed unless premium is received in advance." On the date of incident as no premium was available in advance with the Opposite Parties, risk was not covered under the Policy. In Polymat India (P) Ltd. vs. National Insurance Co. Ltd. (2005) 9 SCC 174 it was held that since the risk was not covered under the Policy, the Opposite Parties were not liable to indemnify the loss. In Oriental Insurance Co. Ltd. vs. Sony Cheriyan (1999) 6 SCC it was held that the Complainant cannot claim anything more than what is covered by the Policy. Learned Counsel also relied on the judgment in State of Orissa vs. United Insurance Co. Ltd. (1997) 5 SCC 512 and submitted that any act of an employee of the Opposite Parties exceeding his authority was not binding on the Opposite Parties under Section 237 of the Contract Act, 1872.
8. It is admitted that the Complainant took Policy 350200/21/09/14/00000369 from the Opposite Parties. The Policy was valid from 01.01.2010 to 31.12.2010. It is also admitted that incident of fire occurred on 07.11.2010 at about 2.50 pm. during the validity of the Policy. The Complainant intimated the Insurance Company and the same day M/s Subash Chander & Associates (SCA) was appointed as Surveyors for assessment of loss. The Surveyor visited the site on 10.11.2010. The Complainant provided all information and documents sought by the Surveyor. The Surveyor submitted Final Survey Report on 25.11.2011 that the loss was caused by fire which was covered under the Policy. The Surveyor SCA, vide Final Survey Report dated 25.11.2011, assessed the net loss at Rs.22,01,29,271/-. In order to ascertain the Complainant's turnover, the Insurance Company appointed M/s Parimal R. Shah & Co. who observed that the Insured's cargo had crossed the total sum insured of Rs.1200 crores in July 2010 itself, while fire occurred on 7th November, 2010. The Opposite Parties repudiated the claim on the ground that the Complainant failed to pay the premium in advance and non-declaration/mis-declaration of material information at the time of taking the Policy.
9. The Opposite Parties raised objection that the Policy was obtained by the Complainant for commercial purpose. The Complainant was, therefore, not a Consumer. This Commission in Harsolia Motors v National Insurance Company Ltd. [I (2005) CPJ 26 (NC)] held that a contract of insurance is a contract of indemnity and, therefore, there is no question of commercial purpose in obtaining insurance coverage. In view of law laid down by Hon'ble Supreme Court, the Complainant is a "Consumer" and the Complaint is maintainable.
10. The Opposite Parties also alleged that the Complaint contained complicated facts and it cannot be adjudicated in a summary proceeding under Consumer Protection Act, 1986. Hon'ble Supreme Court in CCI Chambers Coop. HSG. Society Ltd. v. Development Credit Bank Ltd., Appeal (Civil) 7228 of 2001 observed as follows:
"It cannot be denied that Fora at the national level, the State level and at the district level have been constituted under the Act with the avowed object of providing summary and speedy remedy in conformity with the principles of natural justice, taking care of such grievances as are amenable to the jurisdiction of the Fora established under the Act. These Fora have been established and conferred with the jurisdiction in addition to the conventional Courts. The principal object sought to be achieved by establishing such Fora is to relieve the conventional Courts of their burden which is ever-increasing with the mounting arrears and whereat the disposal is delayed because of the technicalities. Merely because recording of evidence is required, or some questions of fact and law arise which would need to be investigated and determined, cannot be a ground for shutting the doors of any Forum under the Act to the person aggrieved."
11. From the facts and circumstances of the case, it is seen that there are no complicated questions of facts and law involved in this case, which cannot be decided by this Commission. Moreover, as held above by Hon'ble Supreme Court, involvement of some questions of fact and law cannot be a ground for shutting the doors of any Forum under the Act to the person aggrieved. This Commission is, thus, competent to adjudicate the instant Consumer Complaints.
12. It is admitted that the loss was caused due to fire. It is also admitted that the Policy was valid from 01.01.2010 to 31.12.2010 and the premium was to be paid half yearly. The only issue is whether on the date of the incident i.e. 07.11.2010, the Policy covered the risk or not. The Opposite Parties repudiated the claim on the ground that the Complainant failed to pay the premium in advance and non-declaration/mis-declaration of material information at the time of taking the Policy. Learned Counsel for the Complainant submitted that as per terms & conditions of the Policy, premium was payable subject to annual turnover and there was no provision for advance payment of premium. Reliance is placed on special condition No.4 of the Policy, which reads as follows: -
" Special Condition No.4.Premium is subject to annual turnover and will be charged as per the actual turnover in the Policy period."
Special condition No.4 clearly stipulated that premium was to be paid on the basis of the actual turnover during the Policy period. Additional premium whether payable or refundable, was to be estimated on the basis of actual turnover achieved during the Policy period. The Opposite Parties claimed that the Complainant Company exceeded turnover of Rs.1200 crore in July, 2010. The premium paid was, therefore, exhausted in July, 2010 itself. The Opposite Parties further stated that the premium paid would be continuously adjusted against each transaction. As soon as the premium was exhausted by the Complainant, they were required to pay additional premium.
We have carefully gone through the Policy. Nowhere in the Policy is it mentioned that the additional premium was to be paid immediately after exceeding turnover of Rs.1200 crore. The Opposite Parties have wrongly interpreted the terms & conditions of the Policy to the effect that the premium was to be paid immediately after crossing the turnover of Rs.1200 crores, while the first page of the Policy clearly stipulated that the premium was payable on half yearly basis.
13. Learned Counsel for the Complainant submitted that in order to clarify payment of additional premium, they made certain queries from the Opposite Parties, vide letter dated 16th December, 2009, which reads as follows:-
"Our Specific queries are as per below • Do we need to enhance our STOP policy if we cross 600 crores before six months.
• Our all transits are covered till six months whether our turnover crosses 600 crores in six months.
• Enhancement can be done any time before consuming 1200 crores."
Divisional Manager of the Opposite Parties, vide letter dated 17th May, 2010 intimated the Complainant as follows: -
"Against point no.one we want to clarify that we are taking premium in two instalments hence we have to increase the sum insured to 1200 crores by paying 2nd instalment i.e. in the month of July, 2010. After the payment of 2nd instalment, all the transits are covered till the expiry of policy even if it crosses 1200 crores.
If we take total premium in advance, then there is no need to enhance the sum insured during the currency of the policy provided the sum insured is based on last years balance sheet."
The Complainant acted as per advice of the Divisional Manager of the Opposite Parties. The Opposite Parties took the plea that they were not bound by the wrong advice given their Divisional Manager. The Opposite Parties may not be bound by the advice of their Divisional Manager but they are bound by the terms & conditions of the Policy. The advice of the Divisional Manager was in consonance with special condition No.4 of the Policy. Special condition No.4 of the Policy clearly stipulates that additional premium would be charged on the basis of actual turnover in the Policy Period.
14. It is admitted that the premium was payable on half yearly basis. It is also admitted that the Complainant paid first installment at the time of taking the Policy in January, 2010 and the second installment in July, 2010. The Policy was valid from 01.01.2010 to 31.12.2010. Fire occurred on 7th November, 2010 during the currency of the Policy. The Surveyor assessed the net loss at Rs.22,01,29,271/- payable to the Complainant. The Opposite Parties stated that the Surveyor's Report was not binding on them. The Opposite Parties had not mentioned anything either in the written statement or in the argument as to what was wrong with the Surveyor's Report. The report submitted by a Surveyor is an important piece of evidence and has to be given due weight, though it is not sacrosanct and can be ignored, provided there is cogent evidence otherwise.
15. CC/259/2012 In the present case, the Surveyor assessed the loss at Rs.22,01,29,271/-.The Complainant did not lead any evidence disproving the report submitted by the Surveyor. In the absence of any evidence to the contrary, the report submitted by the Surveyor of the Insurance Company is accepted. The Complainant had not challenged the assessment made by the Surveyor and prayed for payment of the amount as assessed by the Surveyor. The Complainant is, therefore, entitled to the loss as assessed by the Surveyor amounting to Rs.22,01,29,271/- along with interest.
16. CC/396/2014 In this case, the Complainant claimed an amount of Rs.1,39,33,610/- for damage of 2650 cotton bales in the fire accident. The Complainant also claimed 10% additional amount of the total claim as per terms & conditions of the Policy. The Surveyor observed that as identification of damaged cotton bales was not possible, they adopted First In First Out (FIFO) method for determining the quantification of loss. Applying FIFO method, the Surveyor observed that 100 cotton bales were damaged in fire and not 2650 as claimed by the Complainant. The Surveyor also observed that 10% additional amount was not payable as the Complainant had not incurred any expenses towards shipping charges to save the material, to minimize the loss. The Surveyor, after depreciating the salvage, assessed the net loss at Rs.1704796.58. The Complainant did not lead any evidence disproving the report submitted by the Surveyor. In the absence of any evidence to the contrary, the report submitted by the Surveyor of the Insurance Company is accepted. The Complainant is, therefore, entitled to the loss as assessed by the Surveyor.
17. In view of the foregoing discussion, the Complaints are partly allowed. In CC/259/2012, the Opposite Parties are directed to pay a sum of Rs.22,01,29,271/-to the Complainant alongwith interest @ 6% p.a. from the date of filing the Complaint till the date of actual payment, after adjusting the premium amount payable on the basis of actual turnover.
18. In CC/396/2014, the Opposite Parties are directed to pay a sum of Rs.1704796.58 to the Complainant alongwith interest @ 6% p.a. from the date of filing the Complaint till the date of actual payment, after adjusting the premium amount payable on the basis of actual turnover. There shall be no order as to costs. The order be complied in 8 weeks.
...................... C. VISWANATH PRESIDING MEMBER ...................... SUBHASH CHANDRA MEMBER