National Consumer Disputes Redressal
M/S. Shivram Chandra Jagarnath Cold ... vs National Insurance Company Ltd. & Ors. on 10 April, 2015
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CONSUMER CASE NO. 169 OF 2008 1. M/S. SHIVRAM CHANDRA JAGARNATH COLD STORAGE The Managing Partner Mr. Surendra Singh Village & Post Sidhwal Mau U.P. 2. MR. Surendra Singh Village + Post-Sidhwal, Mau U.P. ...........Complainant(s) Versus 1. NATIONAL INSURANCE COMPANY LTD. & ORS. Registered Office at-3, Middleton Street Kolkatta -700071 Tamilnadu 2. MR. SURENDRA SINGH Village& Post Sidhwal Mau U.P 3. REGIONAL MANAGER NATIONAL INSURANCE CO. LTD. Jeevan Bhawan Phase -II Nawal Kishore Road Hazratganj Lucknow U.P 4. DIVISIONAL MANAGER NATIONAL INSURACE CO. LTD . Dev Bhawan Near Jeevan Ram Inter Collage Bhiti Road Mau U.P 5. BRANCH MANANGER, NATIONAL INSURANCE CO. LTD Dharmshalla Raod Bishunipur Ballia U.P 6. CENTER BANK OF INDIA Center Office Chandramukhi Nariman Point Mumbai Maharashtra 7. REGIONAL MANAGER CENTER BANK OF INDIA Regional Office Lanka Varanasi U.P 8. BRANCH MANAGER CENTRAL BANK OF INDIA Branch Office Ardauna Mau U.P ...........Opp.Party(s)
BEFORE: HON'BLE MR. JUSTICE V.K. JAIN, PRESIDING MEMBER HON'BLE MR. DR. B.C. GUPTA, MEMBER
For the Complainant : Mr. Sanjeev Kumar, Advocate For the Opp.Party : Mr. S. L. Gupta, Advocate
Mr. Ram Ashray, Advocate
Dated : 10 Apr 2015 ORDER JUDGMENT
JUSTICE V.K.JAIN, PRESIDING MEMBER (ORAL)
The complainants, who were running a cold storage at village Sidhwal in District Mau, which is being used to store potatoes, obtained an insurance policy from the opposite party, National Insurance Co. Ltd., through Central Bank of India, in respect of 30,000 qtls of potatoes at the rate of Rs. 200/- per qtl. The policy was obtained for the period from 30.03.2007 to 29.10.2008. On 28.07.2007, the motor driving refrigerant compressor of the cold storage broke down and was got repaired within two weeks. During the period of break down, the cold storage was being run using a 75 HP motor driving a 3 cylinder refrigerant compressor to maintain the temperature inside the chambers of the cold storage. A claim was lodged with the Insurance Company in this regard and a sum of Rs. 1,07,176/- was paid to the complainants. On 04.10.2007, the 100 HP motor again broke down and was sent to Mau for repair. Again, the 75 HP motor was used as a backup for maintaining temperature inside chamber of the cold storage. The breakdown of 100 HP motor resulted in germination and rotting of the stock of potato, which had been stored in the cold storage. A claim was lodged with the Insurance Company on account of damage to the stock. M/s. Protocol Surveyors and Engineers Pvt. Ltd. was appointed as surveyors to assess the loss to the complainants. Though the complainants had submitted a claim of 1,25,30,000/-, the surveyor assessed the loss at Rs. 7,42,884/-. The Insurance Company, however, offered only a sum of Rs. 6,47,167/- to the complainants in full and final settlement of their claim. Since the aforesaid offer was not acceptable to the complainants, they approached this Commission by way of this complaint, seeking the following reliefs:-
Respondent Nos. 1 to 4 and Nos. 5 to 7 jointly and/or severely may be directed to pay a sum of Rs. 1,25,30,000/- to the petitioners.
Respondents may be directed to pay future and pendentilite interest @ 18% per annum to the petitioners.
Cost may be awarded to and in favour of petitioners."
2. The complaint has been resisted by the Insurance Company. It is stated in the reply that as per the terms of Refrigeration Plant (Stock Policy) the sum insured for less than 12 months was required to be the value of maximum stock which could be accommodated in the cold storage and since the capacity of the cold storage of the complainants was 53989.44 qtls, the surveyor had found that the sum insured was inadequate, the under insurance factor being as much as 0.8203. Admitting that the surveyor had assessed the loss at Rs. 7,42,884.15/-, the opposite party further admitted that they had offered a sum of Rs. 6,47,167/-.
3. We have considered the report submitted by the surveyor appointed by the Insurance Company. We find from a perusal of the aforesaid report that 4750 qtls of potato had got fully rotten, whereas 12,000 qtls of potato were partially damaged. The surveyor, thereby arrived at the total damaged quantity of 10,750 qntls of potato. Applying the rate of Rs. 600/- per qntl. He assessed the current market value of the rotten potatoes to be Rs. 64,50,000/-. Since there was some delay in intimating the loss to the Insurance Company, the surveyor made a deduction of 15% from the aforesaid amount of Rs. 64,50,000/- on account of the said delay. Another deductions of Rs. 30,000/- was made on account of the cost of 100 bags which were allegedly stored after 15.04.2007.
4. We have examined the insurance policy issued to the complainants. Our attention has not been drawn to any clause of the insurance policy providing for 15% deduction in a case of delay in intimating the loss to the Insurance Company. Therefore, in our opinion, deduction of 15% of the loss on account of delay in giving intimation to the Insurance Company was not justified.
5. We are unable to understand why the surveyor deducted a sum of Rs. 30,000/- on account of cost of 100 bags stated to have been stored after 15.04.2007. The learned counsel for the Insurance Company is also not able to tell us as to what was the basis of the aforesaid deduction. We, therefore, hold that the deduction of Rs. 30,000/- was not justified.
6. The Surveyor has made deduction of 15% each on account of shrinkage and rottage. Again, we find no provision in the insurance policy for making a deduction on account of any shrinkage or rottage of the stock.
7. The main deduction made by the surveyor was on the ground that there was under insurance since the capacity of the cold storage was 53,989 qntls, whereas the insurance was taken only in respect of 30,000/- qntls. Multiplying 53,989.44 qntls by Rs. 600/- per qntls, he calculated the value at risk at Rs. 3,33,93,664/-. Since the sum insured was Rs. 60 lakhs, the under insurance factor was calculated by him at Rs. 0.8203/-. Our attention has not been drawn to any term of the insurance policy stipulating that in a policy for less than 12 months, the insured value has to be calculated in terms of the maximum capacity of the cold storage. If a person has a cold storage of higher capacity, but does not propose to use the entire capacity, and can use only a part of it either on account of non-availability of adequate stock for being kept in the cold storage or for some other reason, the Insurance company cannot make such a deduction, unless the insurance policy carries a term requiring the insured to take insurance policy in respect of the entire capacity of the cold storage. In the absence of such a term in the policy, the insured was entitled to take insurance for such quantity as deemed appropriate by him and so long as the stock actually kept in the cold storage did not exceed the quantity for which the insurance was taken by him, it cannot be said that it was a case of under insurance, on account of entire capacity of the cold storage having not reflected in the insurance policy.
8. However, we find merit in the plea that if the market value of potato was Rs. 600/- per qntl, the insurance policy ought to have been taken at the rate of Rs. 600/- per qntl and it could not have been restricted to Rs. 200/- per qntl, which was done in the case before us. If the market value of potato had increased later the insured had to pay additional premium, so as to match the insured amount, with the market value. If he fails to do so, it will be a case of under insurance. If we adopt another formula and say that considering the value disclosed in the insurance policy, the claim of the complainants has to be restricted to Rs. 200/- per qntl only the net effect would be the same.
9. The learned counsel for the complainants submits that the policy having been taken by the Bank, it was a deficiency on the part of the Bank in disclosing the value of the potato at Rs. 200/- per qntl as against the market value of Rs. 600/- per qntl and in case the liability of the Insurance Company is to be reduced on account of a lower valuation being given in the insurance policy, the Bank should be made to compensate it for the remaining loss suffered by them. We have carefully examined the complaint. There is no allegation in the complaint that the complainants had asked the Bank to take insurance policy at the rate of Rs. 600/- per qntl, but the Bank, in violation of the said direction of the complainants, took the insurance policy at the lower valuation of Rs. 200/- per qntl. Though the learned counsel for the complainants submits that since the insurance policy was not made available to them by the Bank, they were not aware that the policy had been taken at the value of Rs. 200/- per qntl, fact remains that even on coming to know that the surveyor had made deductions on account of under insurance, the complainants did not claim in the complaint that they had instructed the Bank to take the insurance policy at the rate of Rs. 600/- per qntl. Even otherwise, there could have been no reason for the Bank to take insurance policy at a lower valuation when the premium for the insurance policy was to be paid by the complainants and not by the Bank.
10. For the reasons stated hereinabove, we are of the view that in respect of 10,750 qntls of damaged potatoes, the complainants are entitled to gross compensation amounting to Rs. 21,50,000/-. Since no deduction could have been made by the Insurance Company on account of the delay intimating to them or on account of the shrinkage or rottage, the loss to the complainants after deducting the salvage amount of Rs. 60,000/- comes to Rs. 20,90,000/-. The net liability of the Insurance Company thus comes to Rs. 20,90,000/-, which they were required to pay to the complainants.
11. The Insurance Company has already made payment of Rs. 6,47,167/- to the complainants in compliance of our interim order dated 29.03.2010. We, therefore, dispose of this complaint by directing the opposite parties to pay balance amount of Rs. 14,42,833/- to the complainants alongwith interest at the rate of 10% per annum, w.e.f. 13.08.2008, when the amount of Rs. 6,47,167/- was offered to them. The interest shall be paid on the entire amount of Rs. 20,90,000/- till the date payment of Rs. 6,47,167/- was made and thereafter it shall be paid on the balance amount of Rs. 14,42,833/-.
......................J V.K. JAIN PRESIDING MEMBER ...................... DR. B.C. GUPTA MEMBER