National Consumer Disputes Redressal
United India Insurance Co. vs Suraj Mal Ram Niwas Oil Mills (P) Ltd. on 12 July, 2002
Equivalent citations: I(2003)CPJ82(NC)
ORDER
B.K. Taimni, Member
1. This appeal arises out of an order passed by the State Commission allowing the complaint against the appellant Insurance Company.
2. Very briefly the facts of the case are that the complainant had obtained an open policy for Rs. 10 lakhs, which was extended from time to time and at the relevant period the covered amount stood at Rs. 1 crore. Subject matter covered was 'all type of edible oils in tins..... and covered its transportation by Rail/Road -to be declared. On 14.8.1992 the complainant dispatched 1194 tins of oil valued at Rs. 5,84,790/- by Rail from Jaipur to Dharam Nagar and by road from Dharam Nagar to Agartala. The railway wagon by which it was sent met with an accident causing damage to the consignment. Without intimating the fact of the accident at this stage, the consignment was carried forward by road to Agartala. It is at this stage that the consignee reported the matter to the appellant's company office. The road carrier also reported the matter to the Jaipur office of the appellant. Surveyor was appointed who assessed the loss at Rs. 4,39,178/- out of which loss at Dharam Nagar was assessed at Rs. 71,130/- only. An Investigator was also appointed by the appellant who reported total dispatches of Rs. 1,43,59,303/- against the policy cover of Rs. 1 crore -- whereas dispatches of only Rs. 91,22,778/- had been declared by the insured. The claim of the complainant was repudiated on the following three grounds by the appellant:
(1) As per the terms and conditions of the policy, you were supposed to declare each and every dispatch. From 10.4.1992 to 14.8.1992, you have dispatched goods worth Rs. 1,43,59,303/- while you have only declared, as per your record, goods worth Rs. 91,22,778/-. Out of these declarations, a number of declarations have not reached the company's office. Even considering it to be correct, as the dispatches have exceeded Rupees one crore long back, the policy has not continued to cover the dispatch in question, and thus your claim cannot be entertained.
(2) You have further violated the terms and conditions of the policy by removing the goods from the rail accident site without survey of the loss having been done by the Insurance Company's Surveyor immediately after the accident, and (3) You have aided in increasing the losses knowingly that the goods dispatched from the rail accident site to Agartala were not properly packed, and carrying of the oil in damaged tins, is clear-cut violation of the terms and conditions of the policy and the normal conduct of behaviour. From the Surveyor's Report, it is evident that the losses which have been quantified on the basis of the certificates while the rail authorities, are to the tune of Rs. 71,130/- while the rest of the damages have occurred during the transhipment from the rail accident site to Agartala in damaged tins by M/s. Paul Brothers, the road carriers. It is also not disputed that during the carriage of the goods by road from rail accident site to Agartala, there was no accident, and these losses are contributed to your own fault, negligence and want of proper care to carry the oil only after transferring the oil from tins damaged as a result of the rail accident, into new tins.
3. Being dissatisfied with the repudiation, thus issued by the appellant, the complainant filed a complaint before the State Commission alleging deficiency in service on the part of the appellants and praying for direction to the appellant to pay Rs. 5,50,798/- comprising of loss as estimated by the Surveyor, compensation and costs along with interest @ 24% p.a. The State Commission after hearing both the parties allowed the claimed amount along with interest @ 12% p.a. from 1.1.1993 till the date of payment, hence this appeal.
4. It is argued by the learned Counsel for the appellant that the State Commission erred on two points. Firstly, that the fact of loss by rail accident was not reported so as to enable the appellant to assess the loss. The appellants alleged before the State Commission that more loss to the consignment was caused during its transportation by road without repacking or careful handling of the damaged consignment. This is a violation of the terms of the policy. Had the complainant reported the matter, loss would have been kept to the minimal, thus minimising the liability of the appellants. There is wilful negligence on the part of the complainant which cannot be lost sight of. Secondly, this is an open policy. Special terms of the warranty are 'Each and every consignment must be declared immediately before the dispatch of Goods'. The Investigator's report is quite categorical that the complainant had dispatched consignment worth Rs. 1,43,59,303/- but had declared dispatches worth Rs. 91,22,778/- which is a violation of terms of the policy. The State Commission failed to appreciate the fact that 'Policy' is a contract between the parties, whichever party violates the terms of the policy, does so at his own risk. The terms of the policy are quite clear. It leaves no leeway with the complainant on the point that every consignment had to be declared before dispatch -- which was not done. On both these counts, the appellant was justified in repudiating the claim of the complainant. The State Commission failed to appreciate the merit, the grounds of repudiation and arrived at a wrong conclusion on a wrong interpretation/assumption of the terms of the policy, hence the order of the State Commission need to be set aside.
Respondent/complainant, in spite of notice remained unrepresented.
5. We have seen the material on record and heard the arguments. Undisputed facts are that the complainant had an 'Open Policy' for Rs. 1 crore valid on the date of accident. There is no disputing the fact that there was a rail accident at Dharam Nagar Railway Station involving the wagon carrying the complainant's consignment of 1194 tins of oil. It is also not in dispute that this fact of accident was not reported immediately. It is interesting to note that the first report of the loss was made by the consignee to the appellants' office in Agartala. We fail to appreciate as to how he could do that as he has no insurable interest. This was not a condition/ terms of the policy.
6. Not reporting the matter of accident at Dharam Nagar Railway Station to the appellant by the complainant, upto which period loss is estimated at Rs. 71,130/- would clearly falls under negligence on the part of the complainant. Had the tins/contents been repacked in safer containers and then transported by road to Agartala, there is no doubt in our mind that loss would have been minimal. We see no merit in the observation of the State Commission "that the liability of the opposite parties will not be affected by the reason that survey was not got made immediately after the unloading of the goods at Dharam Nagar Railway Station or that the remaining goods were not transferred to other tins before being carried out by road through truck to Agartala". Surely, had the complainant reported the fact of Rail accident in time, Surveyor would have assessed the loss first hand and secondly losses could have been minimised. Damaged material could not have been removed without giving the Surveyor a chance to assess the loss. This prejudices the interest of the insurer.
7. We also see that it is admitted position that the total dispatches of the complainant far exceed the insured amount of Rs. 1 crore. Special conditions of the policy on record clearly stipulate -- "Each and every consignment must be declared immediately before dispatch of goods". It is settled law that policy is a contract between the parties and is an instrument of good faith. It is not disputed that between the relevant period dispatches worth Rs. 52,36,525/- were not declared which on the fact of it is violative of the terms of the policy. We are unable to appreciate the reasoning of the State Commission when it states that the effect of non-declaration of these consignments could only be that they were not covered by the insurance. In our view the insured had no such choice. He had to declare each and every dispatch as per terms of the policy. He could not pick and choose. We do not wish to go into the hypothesis of any loss occurring to such a dispatch and the follow up action taken by the insured. He surely would not have remained silent. His case is that in the case of undeclared dispatches, it is the consignee who had asked it not to be insured. There is no material on record to substantiate this plea. The insured's failure to report the loss caused by rail accident and removal of consignment without giving Surveyor a chance to assess the loss at first hand and on the contrary aggravating the loss on account of improper care while transporting it by road after the initial damage as well violating the terms of the policy by not reporting each and every dispatch as per terms of the policy prejudices the interest of the appellant and in our view repudiation by the appellant was in order.
In view of above discussions, we are unable to sustain the order of the State Commission and is hereby set aside. The appeal is allowed. No order on costs.