State Consumer Disputes Redressal Commission
M/S. Dhanera Diamonds vs United India Insurance Co. Ltd. on 24 January, 2013
BEFORE THE HON'BLE STATE CONSUMER DISPUTES REDRESSAL
BEFORE THE
HON'BLE STATE CONSUMER DISPUTES REDRESSAL
COMMISSION, MAHARASHTRA, MUMBAI
Complaint
Case No. CC/05/91
M/s. Dhanera Diamonds
Off. at 115, Shreeji Chambers, Opp. Prasad Chambers,
Opera House, Mumbai 400 014.
...........Complainant(s)
Versus
United India Insurance Co. Ltd.
Divisional office No. 14, Mehta House, 3rd floor,
P.B.No.950, Mumbai Samachar Marg, Fort, Mumbai 400 001.
Reg. & Head Off. United India
House, 24, Whites Road,
Chennai 600 014
............Opp.Party(s)
BEFORE:
HON'BLE Mr. S.R. Khanzode PRESIDING MEMBER
HON'BLE MR. Dhanraj Khamatkar Member
PRESENT:
Mr.Vishal Talsania-proxy advocate for Motiwalla
& Co. Advocate
for the complainant
Mr.A.S.Doctor-proxy advocate for Narichania & Narichania
Advocate
for opponent
ORDER
Per Honble Mr.S.R.Khanzode, Presiding Judicial Member This consumer complaint refers to alleged deficiency in service on the part of opponent United India Insurance Co.Ltd. (Insurance Co. in short) in repudiating the insurance claim pertaining to theft of diamonds.
2. It is the case of complainants that since from the year 1999 they are taking Jewellers Block Insurance policy to obtain the insurance cover for their stock, etc. Each year said policy was renewed and the last policy which covers the event was valid for the period 00.00 hrs. on 10/04/2003 to midnight of 09/04/2004. On 05/11/2003 against the two receipts 254.15 carats diamonds were entrusted to broker Mr.Chandrakant V. Shah through his son Mr.Anand Chandrakant Shah for being shown to the prospective customers.
Those diamonds were issued against the Jangad receipts. Said broker delivered those diamonds to London Star Diamond Company ( India) Ltd. (referred as second broker) since they had come to know that some foreign party was visiting the said company.
3. On 05/01/2004, the second broker informed to the complainants about theft of those diamonds, the fact of second broker lodged a police complaint and which was registered as FIR No.296/2003 at Dr.D.B.Marg police station, Mumbai. FIR was registered on 15/12/2003, and advised the complainant to lodge an insurance claim. Consequent to it, immediately, the Insurance Company was informed about the said loss by the complainant and also an insurance claim was lodged for `27,00,000/- towards the price of the lost diamonds plus `2,70,000/- as 10% of the said price total amounting to `29,70,000/-.
4. On 13/01/2004 Insurance Company repudiated the claim referring to exclusion clause 8(c) of the policy. Further correspondence ensued between the Insurance Company and complainant and, ultimately, this consumer complaint was filed on 16/07/2005.
5. Opponent/Insurance Company filed their written version and tried to justify their repudiation.
Besides this, it is further contended referring to clause no.19 of the policy, that the right of the complainant to make and enforce insurance claim got extinguished. The insurance company also questioned the status of the complainant as a consumer alleging that the insurance policy was issued to Saraswat Co-op. Bank Ltd. and there is no privity of contract between the complainant and it.
6. Copy of the insurance policy placed on record as well as correspondence between the parties including copy of FIR are not in dispute. Besides this, complainant relied upon affidavit of Mr.Rishab K. Jhaveri a director of the second broker and who lodged FIR as well as that of Pinal D. Shah, a Sales Manager of the complainant. Both the affidavits of Anand Shah, son of first broker, filed on 13/10/2011 and 13/04/2012, which contains due verification, are also relied upon.
7. Opponent/Insurance Company placed its reliance on the affidavit dated 05/12/2011 of its Divisional Manager Mr.Pukhraj Hinger. As far as affidavit of Mr.Pukhraj Hinger-Divisional Manager is concerned, he is obviously speaking from the record and at the relevant time when the incident had occurred, he was not in-charge as a Divisional Manager dealing with the claim in question. Besides that, his affidavit is also not verified and, thus, it affects the evidentiary value of the said affidavit. A useful reference on this aspect can be made to decision of the Apex Court in the matter of A.K.K.Nambiar v/s. Union of Indian and others AIR 1970 SC 652.
8. As far as status of the complainant as a consumer is concerned, it could be seen from the policy document itself that the same is issued showing the insureds name as Saraswat Co-op. Bank Ltd. A/c M/s.Dhanera Diamonds. This fact is not in dispute. It is the contention of the complainant that it is they through the bank obtained the said policy and the premium is also paid by them. Under the circumstances, mentioning the name of Saraswat Co-op. Bank Ltd. does not dislodge the complainant with its status as a consumer since the policy is for the benefit and offering the insurance cover to the property belonging to the complainant. Premium is also paid by the complainant. Under the circumstances, objection raised by the Insurance Company that the complainant is not a consumer and there is no privity of contract with them is devoid of any substance.
9. Another question which is tried to be raised by the Insurance Company is about dealing with the issues in a summary proceeding of a consumer dispute since it involved leading complicated nature of evidence and/or requiring great deal of evidence, both oral and documentary. We find this argument is also without any substance and a useful reference on the point can be made to a decision of the Apex Court in the matter of Dr. J.J. Merchant & Ors. vs Shrinath Chaturvedi AIR 2002 SC 2931.
10. It is revealed from the material placed on record and the evidence led that on 05/11/2003, in the course of their business, complainants had entrusted packet containing diamonds in question to its broker Mr.Chandrakant V. Shah through his son Mr.Anand Shah (first broker) for being shown to the prospective buyers.
This is witnessed by Jangad receipt dated 05/11/2003, copy of which is placed on record and it finds corroboration from the affidavit of Mr.Anand Shah to whom actually packet was entrusted as first broker. It is also revealed that the first broker entrusted those diamonds to second broker since they have an American buyer interested in those kind of diamonds.
If the diamonds were sold then the first broker as well as second broker were to get commission from the complainant, who is the manufacturer of those diamonds. Those diamonds were found stolen on 08/11/2003 from the office of second broker. They suspected one Mr.Riddesh Gandhi and Mr.Prakash Shah connected with H. Riddesh & Co. and some unknown persons as the suspected culprits and, accordingly, lodged a police complaint after making efforts to get recovered those stolen diamonds. Initially the police, though complaint was received, did not register the crime.
But only after getting approval from their superiors, FIR no.296/2003 was registered on 15/12/2003.
Event of the theft and lodging police complaint is in detail described by Mr.Rishabh Jhaveri in his affidavit. It also explains as to why they suspected Mr.Prakash Shah and Mr.Riddesh Gandhi. Their such belief on the circumstances narrated, prima facie, cannot be said as unfounded considering the inconsistent replies or answers received from those two suspects. Thus, the factum of theft is well established.
11. Second broker for the first time intimated to the complainant about the theft on 05/01/2004 and advised them to lodge the insurance claim. Accordingly, within 24 hours of such knowledge of theft, the complainants informed to the Insurance Company and also lodged their insurance claim. In this backdrop referring to clauses of the insurance policy, particularly, clause no.13(a) which place the obligation on the insured to give notice to the police and the Insurance Company within 24 hours (of the theft) and take all practical steps to discover guilty person and to recover property lost or stolen and to prosecute and obtain the conviction of such person or persons for the offence; it is submitted on behalf of the Insurance Company that since the insured failed to discharge their such obligation of intimating in time, the claim would defeat. We find that the insured, namely, the complainant for the first time came to know about theft through the second broker on 05/01/2004 and, thereafter, took the necessary steps to intimate the Insurance Company within 24 hours from them. The police complaint was already lodged with the police by the second broker and the said complaint was also persuaded by the second broker to its logical end by even inviting attention of the superior police officers to ensure proper investigation.
Under the circumstances, per se, there is no breach or failure on the part of the complainant to discharge its obligation within the meaning of clause 13(a) of the Insurance policy.
Therefore, objection taken to this effect by the Insurance Company is without any substance.
12. Insurance company also refers to exclusion clause 8(c) from the insurance policy to repudiate the insurance claim and it reads as under:-
8. Loss or damage occasioned by theft or dishonesty or any attempt thereat committed by or where such loss or damage has been expedited or in any way sustained or brought about by :
(a).
(b)
(c) any customer or broker or their customer or angadias or cutters or goldsmiths in respect of the property hereby insured entrusted to them by the Insured, his or their servants or agents.
13. The theft in question is not by the second broker or their employee but by third parties to whom mention is made in the FIR and some unknown persons name mentioned in the FIR. Outcome of the police investigation is not known but as it appears, no culprits were brought to book till today. This felonious act in question is not by one of the persons named in the above referred exclusion clause to whom the said property said to have been entrusted or any servant or agents to the second broker. Therefore, above referred exclusion clause will not be attracted in the instant case. A useful reference on the issue of entrustment is rightly made to the decision of the Apex Court in the case of National Insurance Co.Ltd. v/s. Ishar Das Madan Lal (2007) 4 SCC 105.
14. On behalf of the Insurance Company further reference is made to condition no.19 of the policy, which reads as under:-
If any difference shall arise as to the quantum to be paid under this policy, (liability being otherwise admitted) such difference shall independently of all other questions be referred to the decision of an arbitrator, to be appointed in writing by the parties in difference, or if they cannot agree upon a single arbitrator to the decision of two disinterested persons as arbitrators of whom one shall be appointed in writing by each of the parties within two calendar months after having been required so to do in writing by the other party in accordance with the provisions of the Arbitration Act 1940 as amended from time to time and for the time being in force in case either party shall refuse or failed to appoint arbitrator within two calendar months after receipt of notice in writing requiring an appointment, the other party shall be at liberty to appoint sole arbitrator, and in case of disagreement between the arbitrators, the difference shall be referred to the decision of an umpire who shall have been appointed by them in writing before entering on the reference and who shall sit with the arbitrators and preside at their meetings.
It is clearly agreed and understood that no difference or dispute shall be preferable to arbitration as herein before provided, if the company has disputed or not accepted liability under or in respect of this policy.
It is hereby expressly stipulated and declared that it shall be a condition precedent to any right of action or suit upon this policy that the award by such arbitrator, arbitrators or umpire of the amount of the loss or damage shall be first obtained.
It is also hereby further expressly agreed and declared that if the company shall disclaim liability to the insured for any claim herein under and such claim shall not, within 12 calendar months from the date of such disclaimer have been made the subject matter of suit in a court of law, than the claim shall for all purposes be deemed to have been abandoned and shall not thereafter be recoverable herein under.
15. We find that in view of section 28 particularly its second part of the Indian Contract Act 1872, said condition no.19 is not enforceable and there is no forfeiture of the right to defeat the claim in the instant case.
Insurance Company made a reference to the decision of the Apex Court in the matter of National Insurance Co.Ltd. v/s. Sujir Ganesh Nayak & Co. and another, AIR 1997 Supreme Court 2049 and Himachal Pradesh State Forest Co.Ltd. (2009) 2 SCC 252. However, said decision proceeds on the assumption based upon the statement made at Bar that the amendment to section 28 was repelled. But such is not the case. This was further considered by the Punjab & Haryana High Court in the matter of Sunil Goyal v/s. Haryana State Agriculture Marketing Board & Others, 2011(2) Arbitration Law Reporter at page 251.
16. Thus, we find that condition no.19 of the policy, supra, will not come in a way to file this consumer dispute. As far as limitation is concerned, the consumer complaint since filed within two years from the date of event i.e. around 08/11/2003, is not time barred. Thus, we find that Insurance Company arbitrarily repudiated the insurance claim and, as such, the deficiency in service on the part of Insurance Company within the meaning of section 2(1)(g) of Consumer Protection Act, 1986 (Act for brevity) is well established.
17. Next question therefore would come as to what should be the compensation which should be awarded for such deficiency in service on the part of Insurance Company within the meaning of section 14(1)(d) of the Act. Complainant claimed that the stolen diamonds were valued at `27,00,000/-
and lodged the insurance claim referring to it. Referring to the Jangad receipt dated 05/11/2003 the description of the stolen diamonds, its carats and the price per carat in US dollar is mentioned and the price mentioned is US dollar 520 per carat. Diamonds were weighing 254.15 carat. We are at the loss to know what was the exchange rate at the relevant time to convert the value of the stolen diamonds in INR i.e in Indian rupees. Second broker while lodging FIR mentioned the price at `22,50,000/-. Referring to section II(b) to the insurance cover offered for the stolen diamonds which prescribed for limit for any one loss, when the theft had taken place from the premises, outer cap is `3 crores. Complainant in the affidavit of its Sales Manager Pinal Shah also affirmed that the total value of the diamonds were of `27 lakhs, which is well within the insurance limit for the loss in question. There is no evidence led to establish contrary about valuation of the stolen diamonds as assessed by the complainant. Hence we accept it and complainant is, therefore, entitled to get the said amount. Therefore, insurance company is liable to indemnify the complainant to the extent of the loss i.e. `27,00,000/- plus 10% of the value of the stolen diamonds i.e. `2,70,000/- as per terms of the policy regarding basis of valuation. Thus, complainant is entitled to compensation of `29,70,000/-. Since the claim is arbitrarily repudiated, we find it proper to award interest @ 9% p.a. over the amount of compensation from the date of repudiation i.e.13/01/2004 till its realization.
We hold accordingly and pass the following order:-
ORDER
1.
Complaint is partly allowed.
2. Opponent/Insurance Company do pay `29,70,000/- to the complainant company along with interest @ 9% p.a. w.e.f.13/01/2004 till its realization.
3. Opponent/Insurance Company to bear its own costs and pay `25,000/- as costs to the complainant.
Pronounced on 24th January, 2013.
[HON'BLE Mr. S.R. Khanzode] PRESIDING MEMBER [HON'BLE MR.
Dhanraj Khamatkar] Member Ms.