State Consumer Disputes Redressal Commission
Square Automation Pvt Ltd vs The New India Assurance Company Limited on 15 March, 2016
CC/13/386 1/16
BEFORE THE HON'BLE STATE CONSUMER DISPUTES REDRESSAL
COMMISSION, MAHARASHTRA, MUMBAI
Complaint Case No. CC/13/386
Square Automotive Pvt.Ltd.
Plot No.152, Western Express Highway,
Opp.Dara Dhaba, Kashimira, Mira Road
East, Thane 401 104.
Through the Director. ...........Complainant(s)
Versus
The New India Assurance Co.Ltd.
New India Centre
12th floor, 17-A, Cooperage, Mumbai.
Through Manager. ............Opp.Party(s)
BEFORE:
Usha S. Thakare, PRESIDING JUDICIAL MEMBER
Dhanraj Khamatkar, MEMBER
For the
Complainant: Adv.Suvarna Joshi
For the Opp. Party:
None
ORDER
Per Mrs.Usha S. Thakare, Presiding Judicial Member [1] Complainant, Square Automation Pvt.Ltd. has filed consumer complaint under Sec.17(a) of the Consumer Protection Act, 1986 by alleging deficiency on the part of The New India Assurance Company Limited, i.e. the opponent.
[2] The complainant is a limited company incorporated under the Companies Act 1956 which is situated at Plot No.152, Western Express Highway, Opp.Dara Dhaba, Kashimira, Mira Road (East), Thane-401104. The complainant is a manufacturer of electrical components such as control panels, switchboards, relays, MCCB switches, breakers, furses and other electrical items etc. The complainant company is well established engineering company CC/13/386 2/16 engaged in and experienced in the field of Turnkey Electrical Project execution like designing, manufacturing, supply, installation, testing and commissioning of all types of electrical panels.
[3] License under Shop and Establishment Act is obtained by the complainant company which bears address as Plot No.152, Western Express Highway, Opp.Dara Dhaba, Kashimira, Mira Road (East), Thane-401104. Same address is printed on official stationery such letterheads, visiting cards etc. On 15/07/2011, a letter was issued to the insurance company in which said address is mentioned. The complainant company enjoyed the credit facilities extended by State Bank of India, SME City Credit Centre and the address recorded with the said bank is Plot No.152, Western Express Highway, Opp.Dara Dhaba, Kashimira, Mira Road (East), Thane-401104. So also entry in the Entrepereneurs Memorandum Acknowledgement issued as per Mira Bhayander Corporation NOC by the General Manager, District Industries Centre also bears the same address. Same address is registered with various authorities.
[4] It is submitted that to safeguard itself from any unforeseen risk, the complainant had obtained following two insurance policies from the opponent by paying necessary insurance premium.
Period Sum assured Risk address Risk cover {A} Policy No. 131000/36/09/32/0000246 - Public Liability Policy 09/12/2009 to Rs.3 lacs 3, Navi Public Liability 07/12/2010 Industrial Insurance Estate, non-industrial Opp.Mahkali risks.
Caves, Andheri
East,
CC/13/386 3/16
Dist.Greater
Mumbai 400
093.
{B} Policy No. 13100011100200119 - Standard Fire and Special 08/09/2010 to Rs.70 lacs Plot No.152, 1st Stock -
07/09/2011 floor, Western Vacuum
Express cleaners,
Highway, Panel Boards,
Opp.Dara electrical wire,
Dhaba, electrical
Kashimira, materials etc.
Mira Road
(East), Thane
401 104.
[5] There was absolutely no reason for the insurance company to add the words "1st floor" in the risk address pertaining to Standard Fire and Special Perils Policy since the address of the complainant recorded and registered with various authorities was - Plot No.152, Western Express Highway, Opp.Dara Dhaba, Kashimira, Mira Road (East) Thane 401 104 and not Plot No.152, 1st floor, Western Express Highway, Opp.Dara Dhaba, Kashimira, Mira Road (East) Thane 401 104. Upon noticing the mistake made by the insurance company, the complainant wrote two letters for two policies for correction of address on 04/12/2010. Both the letters were simultaneously hand delivered and the insurance company acknowledged the letter pertaining to Public Liability Policy. Thereafter, the complainant decided to enhance the risk cover in respect of Standard Fire and Special Perils Policy from Rs.70 lacs to Rs.1 crores. Accordingly, a request was given by the complainant to the insurance company and in response to that the insurance company issued a confirmation letter to the complainant company confirming upward revision in the risk coverage from Rs.70 lacs to Rs.1 crore. The said letter also bore a correct risk address of the complainant company. There was clear indication CC/13/386 4/16 that the opponent had worked on the change of address request letter dated 04/12/2010 given by the complainant and had updated the risk address accordingly.
[6] It is further submitted that due to incessant rains on 13/07/2011, the factory of the complainant was flooded causing damage to the stock kept at the factory premises. Immediately, by letter dated 15/07/2011, the opponent was informed about damage sustained by the complainant. A surveyor was appointed by the opponent who called the complainant on 18/07/2011. The surveyor conducted thorough survey of the premises and took photographs too. The surveyor physically verified the stock and also tested and checked the damaged quantity of stock and found that the water damaged control panels and components were circuited/non-functional/dead/conked off/faulty and damaged/distorted and did not perform the desired operation. The surveyor also checked the purchase bills, monthly stock statements and balance-sheet of the complainant and accordingly gave his report to the opponent. The complainant submitted the claim form to the opponent estimating their loss of Rs.64 lacs. In the meantime, the complainant received a renewal notice from the opponent for renewal of policy for a period of 08/09/2011 to 07/09/2011. Said renewal notice bore handwritten changes effected by the opponent on the previous policy issued for the period 08/09/2010 to 07/09/2011. It can be seen therefrom that insurance company had stuck off the words "1st floor" from the said notice. The complainant also received a letter dated 05/09/2011 from the State Bank of India directing the complainant to get the insurance policy renewed. Said letter also bears the address of the complainant company. The complainant paid the requisite premium. Policy for the period from 08/09/2011 to 07/09/2012 came to be issued. The complainant followed up the matter with CC/13/386 5/16 the insurance company for settlement of their claim by letter dated 13/07/2012. The complainant did not receive any favourable reply from the opponent. During the intervening period, the opponent sought details of what was located on the ground floor and what was located on the first floor at the risk address of the complainant. Since the factory was located at the ground floor and office premises were located at the first floor, necessary clarification was provided by the complainant to the opponent vide letter dated 15/09/2012. However, the complainant was shocked to receive a letter dated 25/09/2012 from the opponent repudiating the claim of the complainant. The claim of the complainant was repudiated on following reasons:-
a) That the damaged stock was not inspected by an independent agency but by the complainant co. itself; and that no test report has been furnished.
b) That, stock lying on first floor is covered and not the stock lying elsewhere.
[7] The complainant states that both the reasons are untenable. The complainant itself has the proper testing machinery in their premises and the damaged stock was subjected to these tests in presence of the surveyor. The surveyor had certified non- functionality of the damaged stock. The complainant then protested against repudiation of claim by writing a letter dated 12/11/2012 furnishing therewith the test report sought by the opponent, although the same was already handed over to the surveyor. The complainant reminded the opponent by a letter dated 15/01/2013, but there was no response from the opponent. Copy of the survey report was furnished to the complainant company. Said report was obtained by moving the application under Right to Information Act. The surveyor had assessed the claim and came to conclusion that the damaged stock could not be CC/13/386 6/16 used. Cause of action arose on 25/09/2012 when the opponent repudiated the insurance claim filed by the complainant. The complainant has filed present consumer complaint with a request to declare that the opponent is guilty of deficiency in service and opponent be directed to settle the insurance claim of the complainant estimating loss of Rs.63,98,251/-along with interest thereon @15% from 01/09/2011 till the amount is actually paid by the opponent. Complainant has also claimed an amount of Rs.1 lac towards costs of litigation.
[8] The insurance company/opponent has opposed the complaint and resisted the claim of the complainant by filing written version. It is submitted that the company is incorporated under the Companies Act and is carrying on business of General Insurance. Being in the insurance business, the company offers several types of policies to consumers and the industry under various schemes, to underwrite losses/expenses incurred by the insured subject to compliance of policy terms and conditions so undertaken by the insured. The company and all its activities are governed by the Insurance Act, as laid down by Law. The company, inter alia, has a scheme for reimbursement of loss to stock in godown/premises under policy "Standard Fire and Special Perils" policy. Policy issued to the complainant is admitted. It is submitted that the complainant in their over zealousness to avail compensation by way of legal proceedings under the blanket of being covered under the exhibited policy tends to overlook the fact that the insured i.e. the complainant has not paid any premium for covering losses of his stock in the godown/premises located at 1st floor by way of flood but only has undertaken risk coverage to the extent as exhibited in the policy so enumerated by the complainant. Pertaining to receipt of the claim from the complainant and its subsequent correspondence so touched upon CC/13/386 7/16 minutely by the complainant is to be counseled as per the terms and conditions of the policy which are extremely plain and simple to the understanding of any layman of its coverage. The policy at Exh.K which clearly speaks about the address of the insured premises as being that of Plot No.152, 1st floor, Western Express Highway, Kashi Mira, Opp.Dhara Dhaba, Dist.Thane. One cannot approbate and reprobate to its own whim and fancy in interpretation of policy terms and condition so framed under the umbrella of Govt.of India and not as per any wild imagination in personal capacity of an individual as presumably given to understand by filing of the present claim in absence of coverage by itself. This by itself calls for dismissal of the present complaint as filed under malicious version so as to absorb the losses under uncovered premium. On receiving the claim intimation the insurance company undisputedly vide their communiqué dated 15/07/2011 had made it stipulating clear that the coverage so claimed was outside the scope of the coverage of the policy so undertaken by the insured. In regard to dereliction of duty by way of negligence or in any other way cannot be attributed on the insurance company as made abundantly clear herein above being outside the scope of the policy. Repudiation was on many grounds like damages being tested by the insured themselves whereas communication in that regard was futile thus and thereby bringing to the fact that one cannot assess its own damage and accept the same until and unless the insurance company is intimated and allowed to assess the damages which in the present case was not done so and hence the repudiation.
[9] Without prejudice the insurer opponent also has to state that amongst other grounds which are without prejudice to and in alternative to one another that the assessment of the damages by the surveyors was only to the extent of Rs.22,23,438/- which CC/13/386 8/16 speaks about the intentional mis-leading attempt on the part of the complainant. The complaint is liable to be dismissed with exemplary costs as it is time-barred. Contention of the complainant is false. There is deficiency in service on the part of the opponent insurance company.
[10] To substantiate the claim on behalf of the Director of the complainant company, namely, Mr.Ramasamy Planisamy Samy hyas filed his affidavit of evidence. The complainant has relied on various documents like Shop and Establishment license, letter correspondence with the opponent, policies issued by the opponent, claim form, renewal notice, renewed policy, repudiation letter, survey report etc. To give counter blow, the opponent has relied on affidavit of Mr.S.Tarkar, Officer of insurance company and particulars of insured mentioned in the insurance policy. The complainant only has filed brief notes of arguments.
[11] On the date of final arguments, only advocate for the complainant was present. None remained present for the complainant. We heard Mrs.Suvarna Joshi-advocate for the complainant and perused the written notes of arguments filed on record. Under these circumstances, following points arise for our determination and we record our findings for the reasons given below :-
Sr.No. Points Findings
I Whether the complainant has proved Yes
deficiency in service against the opponent?
II Whether the complainant is entitled for the Yes, as per
claim? If yes, to what extent.? final order.
III What order? As per final
order.
As to Point No.I :-
CC/13/386 9/16
[12] It is admitted fact that the complainant had obtained Public Liability Policy No. 131000/36/09/32/0000246 for sum of Rs.3 lacs. It was valid from 08/12/2009 to 07/12/2010. It was Public Liability Policy non-industrial risk. Policy No.13100011100200119 taken by the complainant was Standard Fire and Special Perils Policy. Sum assured was for an amount of Rs.70 lacs. Period covered under the policy was from 08/09/2010 to 07/09/2011. Subsequently, risk was enhanced from Rs.70 lacs to Rs.1 crore. Admittedly, there were incessant rains on 13/07/2011 and 14/07/2011 at Mumbai. The factory of the complainant was flooded. Because of flood water, stock kept at factory premises was damaged. The complainant gave information of damage due to flood water to the opponent by letter dated 15/07/2011. Copy of the said letter is at Exh.G. The surveyor was appointed by the opponent who called the complainant on 18/07/2011. The surveyor conducted a thorough survey and issued a report. The claim of the complainant repudiated vide letter dated 25/09/2011 [Exh.N]. The reasons given for rejection of claim are :-
a) That the damaged stock was not inspected by an independent agency but by the complainant co. itself; and that no test report has been furnished.
b) That, stock lying on first floor is covered and not the stock lying elsewhere.
[13] These above mentioned facts are not challenged. The complainant is manufacturer of electrical components. The manufacturing factory of the complainant company is situated at Plot No.152, Western Express Highway, Opp.Dara Dhaba, Kashimira, Mira Road (East), Thane 401104.
[14] The complainant has filed sufficient documents on record to put forth the correct address of the factory. License issued under CC/13/386 10/16 Shop and Establishment Act is at Ex-A wherein address of business place of the complainant is shown as Plot No.152, Western Express Highway, Opp.Dara Dhaba, Kashimira, Mira Road (East), Thane 401104. According to the complainant, said address is reproduced on the letter heads, visiting cards etc and documents pertaining to credit facilities extended by the State Bank of India. In those documents, address of the complainant is shown as Plot No.152, Western Express Highway, Opp.Dara Dhaba, Kashimira, Mira Road (East), Thane 401104. Enterpreneurs Memorandum Acknowledgement discloses the same address of the complainant.
[15] It is vehemently argued by the complainant that there was absolutely no reason for the opponent to add the word '1st floor' in the risk address pertaining to Standard Fire and Special Perils Policy. It is submitted that upon noticing the mistake made by the insurance company, the complainant sought formal correction in the risk address mentioned by the insurance company vide letter dated 4/12/2010. For correction of address in 2 policies, letters were issued as per Exh.E. Both the letters were issued simultaneously to the opponent, but the insurance company acknowledged the receipt of the letter pertaining to Public Liability Policy. The insurance company did not acknowledge the receipt of the letter pertaining to the Standard Fire and Special Perils Policy.
[16] It is admitted and proved on behalf of the complainant company that the complainant enhanced the risk cover in respect of Standard Fire and Special Perils Policy from Rs.70 lacs to Rs.1 crore. Accordingly, a request was given by the complainant to the insurance company and in response to that insurance company issued a confirmation letter which confirmed the correct and updated risk address of the complainant. Renewal of policy is at Exh.37. This letter is not denied by the opponent. Said renewal CC/13/386 11/16 shows the situation as Plot No.152, Western Express Highway, Opp.Dara Dhaba, Kashimira, Mira Road (East), Thane 401104. Risk cover is under Standard Fire and Special Perils Policy. According to the complainant, letter for correction of risk address of the complainant is dated 04/12/2010 [Exh.F]. Thereafter, no letter was issued to the insurance company for correction of the risk address. The opponent nowhere explained as to how and why correct address of risk cover place was mentioned in renewal policy. The risk address was correctly mentioned in Public Liability Policy and non-Industrial Risk.
[17] The opponent has not produced a copy of proposal form to show that the word 'first floor' was written by the complainant. The proposal form was in custody of the opponent. It is a material document which will throw light on the ground raised by the opponent while repudiating the claim of the complainant. Material document withheld by the opponent. It is necessary to draw adverse inference.
[18] It is evident that due to incessant rains on 13/07/2011 and 14/07/2011, factory of the complainant was flooded and caused damages to the stock kept at the factory premises. Information was given to the insurance company dated 15/07/2011 and surveyor was appointed by the insurance company to conduct the survey and to submit thorough report. Admittedly, surveyor was appointed on 18/07/2012 who conducted the survey of the premises and took photographs too. Survey report finds placed on record. The complainant has filed at Exh.N, a letter dated 25/09/2012. It is addressed to the complainant. It was issued by the Manager of the opponent. In the said repudiation letter, it is clearly mentioned that on receipt of intimation dated 15/07/2011, the insurance company deputed surveyors, M/s.K.M.Kapadi & Co.
CC/13/386 12/16to survey the premises and assessed the loss. Final report dated 30/11/2011 was received and the surveyor has assed the loss at Rs.22,23,438/-only. The Manager of the opponent company had carefully gone through the final report. It is alleged that the damaged items were not inspected by an independent agency, but it was inspected by the complainant company itself. The damaged items were inspected by the complainant company as it had additional required machinery to carryout the tests. However, test report was not submitted to the insurance company.
[19] Learned counsel Ms.Suvarna Joshi has drawn our attention to the report of surveyor at Exh.S [Continuous page no.95]. Said document was received by the complainant by moving application under Right to Information Act. It is revealed from the said survey report that address of location inspected by the surveyor is plot no.152, Western-Express Highway, Opp.Dara's, Dhaba, Kashimira, Dist.Thane 401 104. Stock of electrical material like Panel Boards, Relays, MCCB, Switches, Breaker, Fuses etc. were inspected. The surveyor visited the factory at plot no.152, Western-Express Highway, Opp.Dara's, Dhaba, Kashimira, Dist.Thane and conducted the survey on 18/07/2011. The surveyor inspected "the stock comprising of various Electric Control Panels/Compondents/Fittings/Equipments comprising of Raw Materials Viz.Relays, Digital Meters, Circuit Breakers, Transformers, Capacitors, Contactors etc., Electrical Parts and Components/Fittings of the Semi-finished and Finished Goods Stock of Electric Control Panels and Machinery/Testing Instruments in the Factory of the Insured which were reportedly water-soaked/stained/soiled/mutilated/rusted/corroded/deal/ faulty and damaged due to flood/inundation in the insured's factory following heavy rainfall in the morning on 14/07/2011.
CC/13/386 13/16[20] During visit, the surveyor noticed that the flood water in the factory premises and compound of the insured had receded and bailed/pumped out of the factory by the insured. On query, the insured had given to understand that the flood-water accumulated in the factory was in excess of 6 ft. height. However, upon inspection, surveyor had seen the tell-tale marks of the flood water ingress into the insured's factory found to be seen on the walls, floor, stock, machinery etc. in the factory and the height/level of flood water logging into the factory/workshop of the insured was about 5 feet from the ground level. The surveyor found that the factory of the insured was submerged in flood water and thereby the stock was lying in wet/damp and drenched/faulty condition in the Insured's factory. The surveyor advised the insured to segregate the damaged stock of electric control panels/components/fitting/equipments. After segregation, the surveyor visited the insured factory on 20th and 23rd July, 2011 for the detailed inspection of the damaged stock of Raw materials, stock in process and finished electric control panels apart from the machinery and testing instruments in the factory of the insured due to being submerged in the flood water. The surveyor made it clear that they had inspected and physically verified, tested, checked the damaged quantity of all the stock, comprising of raw material and it was found that subject water damaged control panels and components. Photographs were also taken. The surveyor has also scrutinized, purchase bills, monthly stock statements, balance sheets and physically verified balance stock in the insured's factory. It is opined that damage was due to flood/inundation in the insured's factory following heavy rainfall on 14/07/2011. The surveyor assessed the loss to Rs.22,23,438/-. It is opined that an amount of Rs.22,23,438/- would be fair and reasonable towards loss due to heavy rainfall.
CC/13/386 14/16[21] In view of the survey report given by the surveyor appointed by the insurance company, the ground that the stock was not inspected by the independent agency cannot be accepted. The complainant protested the repudiation letter by writing letter dated 12/11/2012 furnishing therewith the test report sought by opponent although the same was already handed over to the surveyor.
[22] The opponent has not explained satisfactorily as to why report of the surveyor was not accepted and denied the claim of the complainant. Evidence on record is sufficient to prove that due to heavy rainfall, stock in the factory of the complainant was damaged. The complainant suffered loss. In view of Standard Fire and Special Peril Policy bearing no. 13100011100200119, the opponent was duty bound to indemnify the complainant for the loss suffered. The policy was in force when damage was occurred. Instead of granting claim, the opponent repudiated the same on the grounds which cannot be accepted. The opponent has violated the Insurance Regulatory and Development Authority (Protection of Policyholders' Interests) Regulations, 2002. The opponent has committed error while rejecting the claim of the complainant covered under insurance policy. As such, the opponent is deficient in rendering the service to the complainant. With this view, we answer Point no.I for determination in affirmative.
As to Point No.II :-
[23] In view of answer to the Point no.I, the complainant is entitled to claim the loss by way of compensation under Standard Fire and Special Peril Policy no. 13100011100200119. The opponent is liable to indemnify the complainant in case of loss. Now, the material question is about the compensation for which the complainant is entitled. The complainant had estimated the CC/13/386 15/16 loss at Rs.63,98,251/-. On said amount, interest is claimed @15% p.a. from 01/09/2011 till realization. An amount of Rs.1 lac is claimed towards costs of litigation.
[24] The survey report is an important document. Finding of the surveyor appointed by the opponent insurance company cannot be overlooked and neglected. The surveyor calculated the amount of Rs.22,23,438/- as a fair and reasonable compensation for loss. The complainant is entitled to get the amount of Rs.22,23,438/- towards compensation with interest @9% p.a. from the date of repudiation of claim i.e.25/09/2012 till realization of the amount. The complainant is required to file legal proceedings by appointing an advocate and to fight for justice. There was exchange of correspondence. As such, the complainant is entitled to Rs.50,000/- towards costs of litigation. Accordingly, we answer this point for determination in affirmative. In the interest of justice, following order will meet the ends of justice.
ORDER (1) Consumer complaint is partly allowed.
(2) The opponent do pay an amount of Rs.22,23,438/-
[Rs.Twenty Two Lacs Twenty Three Thousand Four Hundred Thirty Eight only] with interest @9% p.a. from the date of repudiation i.e. 25/09/2012 till its realization.
(3) The opponent is directed to pay an amount of Rs.50,000/- to the complainant towards costs of litigation.
(4) The opponent to comply with this order within 45 days from the date of this order. Otherwise an amount of Rs.22,23,438/- will carry interest @12% p.a. from the CC/13/386 16/16 date of repudiation i.e.25/09/2012 till its realization.
(5) One set of the complaint compilation be retained and rest of the sets be returned to the complainant.
(6) Copies of the order be furnished to the parties free of cost forthwith.
Pronounced Dated 15th March, 2016.
[Usha S. Thakare] PRESIDING JUDICIAL MEMBER [Dhanraj Khamatkar] MEMBER pg