National Consumer Disputes Redressal
Dnyana Yogi Shri Shivakumar Swamiji ... vs The New India Assurance Co. Ltd. on 8 October, 2015
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CONSUMER CASE NO. 118 OF 2008 1. DNYANA YOGI SHRI SHIVAKUMAR SWAMIJI SUGARS LTD. THROUGH ITS JOINT MANAGING DIRECTOR, SHRI. BALASAHEB S/O. SANGANAGOUDA PATIL, R/O. HIREBEVANUR, TQ: INDI, BIJAPUR ...........Complainant(s) Versus 1. THE NEW INDIA ASSURANCE CO. LTD. THROUGH ITS CHAIRMAN-CUM-MANAGING DIRECTOR, 87, MAHATMA GANDHI ROAD, MUMBAI 2. THE NEW INDIA ASSURANCE COMPANY LTD., 10-2-7, P.B. NO. 12, II FLOOR, SANGAMESHWAR NAGAR, S.B. TEMPLE ROAD, GULBARGA KARNATAKA 3. THE NEW INAID ASSURANCE COMPANY LTD., THE BRANCH MANAGER, HANAMASHETTY BUILDING, GURUKUL ROAD, BIJAPUR KARNATAKA ...........Opp.Party(s)
BEFORE: HON'BLE MR. JUSTICE V.K. JAIN, PRESIDING MEMBER
For the Complainant : Mr. S.K. Sharma, Advocate with
Mr. I.S. Kohli, Advocate and
Mr. A.K. Sharma, Advocate For the Opp.Party : Mr. A.K. Raina, Advocate
Mr. A.K. Kaul, Advocate
Dated : 08 Oct 2015 ORDER
JUSTICE V.K. JAIN, PRESIDING MEMBER
The complainant company which is engaged in the production of sugar in Karnataka obtained an insurance policy from the opposite party to the extent of Rs.8,00,00,000/- in respect of the stock of sugar, gunny bags etc., kept in godown situated in the factory compound at Shri Siddheshwar Nagar, Hirebevanur Taluka, Distt. Bijapur of Karnataka. The aforesaid policy was issued on reinstatement basis for the period from 24.4.2007 to 23.4.2008. In the evening of June 06, 2007, the roof of the godown in which sugar had been stored got lifted due to heavy hailstorm with strong wind rain and came to rest on the sugar bags. As a result, rainwater entered the godown and damaged the stock of sugar. On intimation being given to the insurance company, Mr. Dhananjay Kumar was appointed as a surveyor to inspect the site. He visited the site on 07 June, 2007, along with one Mr. B.M. Patil. Subsequently, M/s. Bhaskar Associates were appointed as the surveyor to carry out the final survey. M/s. Bhaskar Associates visited the site on 08.6.2007. A claim for Rs.4,67,96,870/- was submitted by the complainant to the insurance company. However, no payment was made to the complainant which then served a legal notice upon the insurance company. The insurance company responded to the legal notice on 17.4.2008, stating therein that the matter had been referred to the competent authority for settlement. The insurance company thereafter sent a letter dated 28.4.2008 to the complainant, seeking to settle the claim at Rs.73,41,507/-. The complainant however, did not accept the aforesaid offer and has approached this Commission, seeking payment of the principal amount of Rs.4,67,96,870/-, along with interest, travelling and other expenses, Rs.10.00 lacs as compensation for the loss of reputation and Rs.10.00 lacs as compensation for mental agony and harassment, thereby making a total claim of Rs.5,83,22,259/-. The break-up of the principal amount of Rs.4,67,96,870/- is as under:
A.
Total sugar weight loss
18685 Qtls.
Rs.2,19,54,875/-
B.
Sugar loss due to leakage
11009 Qtls.
Rs.1,29,35,575/-
C.
Loss due to reduction in rate while marketing damaged stock of sugar
34176 Qtls.
Rs.99,11,040/-
D.
Process loss due to stoppage of production
300 Qtls.
Rs.3,12,500/-
E.
Labour charges for segregation of sugar
Rs.1,80,880/-
F.
Loss of Gunny Bags
34000 Nos.
14,62,000/-
2. The complaint has been opposed by the insurance company. It is stated in the reply that after inspection by the surveyor, the complainant was requested to segregate the affected goods from the unaffected gods and informed that the claim would be restricted only to the affected stock. The complainant, however, expressed its inability to segregate the stock and claimed that they were required to reinforce the roof which rested upon 100 kg. bags. They also claimed that they did not have any other godown to shift the stock and intended to dispose of the affected stock in respect of reprocessing the same. The complainant was informed that the loss under the policy would be restricted to the reprocessing cost of the affected stock and loss due to dissolution of the stock. The removal of the stock was completed by the complainant only on 29.7.2007, which resulted in aggravation of the loss. It is also stated in the reply that when the surveyor visited the site on 02.7.2007, it was noticed that the complainant had removed only the stock kept at the rear end of the godown in 50 kg. bags but the stock kept in 100 kg. gunny bags had not been touched. Oozing of the wet sugar bags also affected the stock kept at the bottom.
According to the insurance company, the average loss of 17.5% was applied for the sugar kept in 100 kg. gunny bags, whereas average loss 8.75% was applied for the sugar kept in 50 kg. bags. Since the water affected stock had not been segregated only cost of processing was allowed which came to Rs.69.50 for a 100 kg. gunny bag and Rs.64.87 for a 50 kg. bag. According to the insurance company, the dissolution loss for the sugar kept in gunny bag was Rs.38,66,589 whereas, the reprocessing cost for such sugar was Rs.9,55,695/- thereby, making a total loss of Rs.48,22,284/- in respect of 100 kg. bags. The dissolution loss in respect of the sugar kept in 50 kg. bags came to Rs.17,29,600/-, whereas reprocessing cost in respect of the sugar in such bags came to Rs.8,93,325/-, thereby making a total loss of Rs.26,22,925/- in respect of the sugar kept in 50 kg. bags. After taking salvage value of 75%, the loss from the gunny bags was quantified at Rs.3,78,250/-. Since there was some under insurance, the loss on pro-rata basis came to Rs.77,27,902/-. After deducting the policy excess of 5%, the balance amount came to Rs.73,41,507/- which was duly offered to the complainant but was not accepted by it.
3. A perusal of the Minutes of the meeting held on 08.6.2007, and attended by the surveyors Bhaskar Associates, and the Joint Managing Director of the complainant company, would show that in the aforesaid meeting, it was agreed that for assessing the loss, cost of production will be taken as the basis and the cost of production would mean statutory minimum price for 2006-07 plus processing cost. Shri B.S. Patil, Joint Managing Director of the complainant company observed during the meeting that the weight loss was likely to vary from 10 to 25%. It was also agreed in the aforesaid meeting that the maximum liability payable by the insurance company would be the processing charges. It was also agreed in the aforesaid meeting that weight loss due to rainwater will be stablished by the weighment of bags. For instance 5 bags of 50 kg. should weigh 250 kg. and any resultant weight loss will be taken as loss of sugar.
4. It transpired during the course of hearing that the surveyor did not determine, of his own, the loss due to dissolution of sugar. He simply went by the estimate given made by the Joint Managing Director of the complainant in the meeting held on 08.6.2007 to the effect that the weight loss was likely to vary between 10% to 25%. In my view, the surveyor was not justified in going by the assessment made by the Joint MD of the complainant company, and should have independently assessed the loss to the complainant on account of the dissolution of the sugar. It is rather strange that the insurance company also did not impress upon the surveyor to independently assess the loss due to dissolution of sugar and accepted the estimate of the loss given by the Joint MD of the complainant company. Since the affected sugar has since been sold, it is not possible to direct a reassessment of the loss sustained by the complainant on account of dissolution of sugar.
5. As noted earlier, relying upon the estimate given by the Joint MD of the complainant company, the assessor computed the loss due to dissolution of sugar to be 17.5%, which was the mean figure of 10% to 25% given by the Joint MD of the complainant company. However, while computing the weight loss due to dissolution of sugar kept in 50 kg. bags, the surveyor reduced the weight loss by further 50% thereby, taking such weight loss to be 8.75%. The learned counsel for the insurance company submitted that since 100 kg. bags were gunny bags and 50 kg. for HDPE bags and the dissolution of sugar kept in HDPE bags will always be much less as compared to weight loss of the sugar kept in gunny bags, the surveyor was justified in taking the weight loss of the sugar kept in HDPE bags at 8.75%. He also submitted that the HDPE bags were kept in that portion of the godown which was less affected by the rainwaters, as compared to the portion where the gunny bags had been stored. In my view, there was no rationale behind further reducing the weight loss in respect of the sugar kept in HDPE bags by 50%, when the surveyor had not independently assessed the loss of sugar kept in gunny bags and the loss of sugar kept in HDPE bags. There can be no quarrel with the proposition that the weight loss in respect of the sugar kept in HDPE bags will be much lower as compared to weight loss of sugar kept in gunny bags, but, then, the surveyor, instead of acting upon the estimate given by the Joint MD of the complainant company, should have independently assessed the loss due to dissolution of the sugar. Had the surveyor independently assessed the loss due to dissolution of the sugar kept in gunny bags at 17.5% and then reduced the loss of the sugar kept in HDPE bags by 50%, there could have been justification for the weight loss computed by him in respect of the sugar kept in HDPE bags. But, if he was going solely by the estimate given by the Joint MD of the complainant company, he ought to have taken the said estimate as a whole instead of making further reduction in respect of the sugar kept in HDPE bags. I find merit in the contention of the learned counsel for the complainant that when the Joint MD of the complainant company estimated the weight loss to vary between 10% to 25%, he had taken into account the fact that part of the sugar was stored in HDPE bags whereas, the remaining part was stored in gunny bags and that is why, he estimated the loss to vary between 10% to 25%. Considering that the estimate of weight loss given by the Joint MD of the complainant company, in the meeting held on 08.6.2007, was not restricted to the sugar kept in 100 kg gunny bags and in fact, the above referred Minutes expressly referred to 50 kg. bags, the rationale given by the learned counsel for the complainant for estimating the weight loss between 10% to 25% appears to be logical. Therefore, in my view, the surveyor should have taken the loss due to dissolution of sugar at 17.5% even in respect of the sugar kept in the HDPE bags.
6. A perusal of the report of the surveyor would show that the loss due to dissolution, at the rate of 8.75% comes to Rs.17,29,600/- in respect of 1841 qtls. of sugar kept in 50 kgs bags. If the dissolution loss is taken at 17.5%, as against 8.75%, the loss to the complainant would increase by Rs.17,29,600/-. After making an additional adjustment for the marginal under insurance, the above referred amount comes to Rs.17,08,474/-. After making further 5% deduction on account of policy excess, the aforesaid amount comes to Rs.16,23,051/-. The complainant is entitled to the aforesaid additional amount from the opposite party.
7. As regards the damage to the gunny bags, a perusal of the report of the surveyor shows that he assessed the salvage value of the gunny bags to be 75%. There is no evidence on record to show that the salvage value of the gunny bags was less than 75%. In case, the complainant was dissatisfied with the salvage value taken by the surveyor, he ought to have produced evidence to prove that the market value of the affected gunny bags was more than what was assessed by the surveyor. Therefore, the assessment made by the surveyor with respect to the damage to the gunny bags cannot be faulted with.
8. A perusal of the Minutes of the meeting held on 08.6.2007 would show that it was agreed in the aforesaid meeting that maximum liability of the insurance company will be the reprocessing charges. In view of the agreement, in the aforesaid meeting, the assessment based on the reprocessing charges cannot be said to be arbitrary, irrational or faulty. It was also agreed in the aforesaid meeting that for assessing the weight loss cost of production will be as the basis and the cost of production would mean statutory minimum price for the season 2006-07 plus processing cost.
Taking dissolution loss at 17.5% for gunny bags and 8.75% for HDPE bags, the surveyor computed the gross loss to the complainant as under:
"Dissolution loss at 17.5% for gunny bags and 8.75% for PP bags:
Cost of production for gunny bags - 958.50 for PP bags 940.00 (cost difference between 100 quintal gunny bags to 100 quintal pp bag - 44.50 and 50 kgs Rs.26 per quintal (Rs.13x2)
Reprocessing cost - 69.50 for 100 kgs. bags and 64.87 for 50 kg bags
For 100 kgs gunny bags affected stock after removal of previous loss and old stock (23820/31174)*5279 = 4034 qtls.
Sl.No.
Description
Qty. Qtls.
Rate
Value Rs.
1.
Dissolution loss as per inv (17.5%) (5279 qtls.) 4034 958.50 38,66,589
2. Reprocessing cost allowed for sugar sold 13751 69.50 9,55,695 Total loss in 100 kgs bags (1+2) 48,22,284 Total 50 kgs. bags held at the time of loss = 35,930 qtls (bags:75930 godown + 3350 factory) 50 kgs. bags affected due to rain = 21,765 qtls at godown (43530 bags) Qty. claimed as dissolution = 4990.5 (22.92%) Dissolution allowed 8.75% = 1841 qtls (no previous loss in 50 kgs. bags and no old stock held) Reprocessing allowed = 13771 qtls * after removing stock of sugar sold at full value Sl. No. Description Qty.
Rate Value Rs.
2. Dissolution loss as per inv. 8.75% (1840.74) 1840 940.00 17,29,600
4. Loss of value due to distress sale 13771* 64.87 8,93,325 Total loss in 50 kgs. bags (1+20 26,22,925 Except to the extent, that he was not justified in allowing dissolution loss of the sugar kept in 50 kgs. bags at 8.75%, the assessment made by the surveyor appears to be justified, logical and rationale. There is no evidence on record to show that the actual loss, excluding the consequential loss on account of delay in shifting / sale of the stock to the complainant was more than what has been allowed by the surveyor. The surveyor has allowed reprocessing cost for the sugar sold by the complainant. This was in line with the agreement reached in the meeting held on 08.6.2007. Therefore, no ground for interfering with the above referred assessment, except to the extent indicated hereinabove, is made out.
9. 5% deduction made by the surveyor was assailed by the learned counsel for the complainant on the ground that there was no provision in the policy for such a deduction. We however, find no merit in the contention. Clause 1 of the General Exclusions contained in the policy, reads as under:
" GENERAL EXCLUSIONS This policy does not cover (not applicable to policies covering dewellings)
1. (a) The first 5% of each and every claim subject to a minimum of Rs.10,000/- in respect of each and every loss arising out of 'Act of God Perils" such as Lightning / STFI / Subsidence, Landslide and Rock Slide covered under the policy
(b) The first Rs.10,000/- for each and every loss arising out of other perils in respect of which the insured is indemnified by this policy.
The Excess shall apply per event per insured".
In view of the above referred provision contained in the insurance policy, the surveyor was justified in deducting 5% of the amount assessed by him.
10. For the reasons stated hereinabove, I hold that in addition to the amount of Rs.73,41,507/- offered to it by the insurance company, the claimant is also entitled to a sum of Rs. 16,23,051/-.
11. The incident of rainwater entering the godown of the complainant happened on 06.6.2007. The claim with the insurance company was lodged on 29.8.2007, though intimation of the loss had been given on 06.6.2007 itself and the survey had been carried out on 08.6.2007. The insurance company, in my view, was not justified in taking more than six months from the date of lodgement of the claim in settling the claim. The insurance company utilized the amount of Rs. 73,41,507/- till it was paid to the complainant on 09.3.2010 in compliance of the order of this Commission dated 15.12.2009. I therefore, direct the opposite party to pay interest @ 10% per annum on the amount of Rs. 73,41,507/- with effect from 01.3.2008 i.e. six months from the date of lodgement of the claim till 09.3.2010 when the aforesaid amount was paid to the complainant. I also direct the insurance company to pay the additional amount of Rs. 16,23,051/ - along with interest @ 10% per annum with effect from 01.03.2008 till the date on which the aforesaid amount is paid to the complainant. The payment, in terms of this order shall be calculated and made within six weeks from today. The consumer complaint stands disposed of accordingly.
......................J V.K. JAIN PRESIDING MEMBER