National Consumer Disputes Redressal
New India Assurance Co.Ltd. vs M/S Dani Mourdhwaj Cold Storage ... on 10 February, 2012
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI REVISION PETITION NO.4113 OF 2007 (From the order dated 21.08.2007/31.08.2007 in Appeal No.894 & 895/2006 of the State Commission, Patna) New India Assurance Co.Ltd. Petitioners(s) Versus M/s Dani Mourdhwaj Cold Storage Pvt. Ltd. Respondent(s) BEFORE : HONBLE MR.JUSTICE ASHOK BHAN, PRESIDENT HONBLE MRS. VINEETA RAI, MEMBER For the Petitioners(s) : Mr.Kishore Rawat, Advocate For the Respondent(s) : Mr.Sanjeev Nirwani, Advocate Pronounced on 10th February, 2012 ORDER
PER VINEETA RAI, MEMBER The New India Assurance Co. Ltd. has filed this revision petition being aggrieved by the order of the State Consumer Disputes Redressal Commission, Patna (hereinafter referred to as the State Commission) in Appeal Nos.894/2006 & 895/2006 in favour of M/s Dani Mourdhwaj Cold Storage Pvt. Ltd. (hereinafter referred to as the Respondent).
In his complaint before the District Forum, Respondent had contended that he had taken two insurance policies in respect of his Cold Storage and Machinery from the Petitioner/Insurance Company for Rs.32 lakhs and for Potatoes stored in the cold storage for an agreed value of Rs.90 lakhs. Both these were inter alia insured against loss due to destruction or damage directly caused by storm, cyclone, typhoon, tempest, hurricane, tornado, flood or inundation etc. On the midnight of 18.03.2003, because of a sudden storm there was a flood in the Ganges which was so severe that water entered into the cold storage of the Respondent due to which the insulation system broke down causing extensive damage to the temperature controlling system which stopped working and as a result of which potatoes worth over Rs.15 lakhs stored in the cold storage were destroyed. The Petitioner/Insurance Company was informed about these incidents on telephone on 18.03.2003 itself after which a Surveyor was appointed who assessed the loss.
After inspection the Petitioner/Insurance Company advised the Respondents to sell the potatoes but did not respond to the Respondents request to determine the rate of sale for the potatoes as a result of which, potatoes could not be sold and were totally destroyed. Respondent sent a number of letters to the Petitioner/Insurance Company for payment of loss worth Rs.15,22,000/- in respect of potatoes and Rs.12,40,000/- for the cold storage but received no response. Respondent, therefore, filed complaint before the District Forum claiming the above amounts alongwith interest and litigation costs.
The above contentions were denied by the Petitioner/Insurance Company who stated that the insulation system of the cold storage had broken down due to seepage and not because of the entry of flood waters in the cold storage destroying both the insulation system and the potatoes.
This fact was confirmed by the report of Surveyor and since there was no provision in the insurance policy for allowing claim covering seepage, the claim was not entertained.
The District Forum after hearing both parties and considering the evidence on record allowed the complaint and directed the Petitioner/Insurance Company to pay Rs.10 lakhs towards the claim for insulation system and Rs.13 lakhs in respect of the loss of potatoes along with interest @ 8% per annum from the date of filing of the complaint i.e. 13.12.2003 till realization and Rs.1,000/- as litigation cost in each case.
Aggrieved by this order, Petitioner/Insurance Company filed an appeal before the State Commission which dismissed the same by observing as under:
When there were two separate policies, one for the machinery and the other for the stock of potatoes in the Cold Storage, the report of the surveyor in both the cases indicating deductions on the assessed net loss on the ground of Under Insurance does not appear proper or acceptable especially when the appellants have not challenged the occurrence of flood in that area and that they had pointed out the shortcomings in the construction of the Cold Storage before the policies were accepted.
Further when the copies of the complaint petitions have not been filed nor it has been stated in the appeal petition as to what were the claimed amount in both cases and whether they were below the insured amount or more cannot be ascertained.
Thus, in our opinion, the Insurance Company have not been fair to the insured, especially when they have not challenged the occurrence of floods or filed any report of the local revenue authorities to the effect that there was no flood. The plea that the seepage is not covered by the terms of the policy is also not acceptable for the reason that if seepage was the real factor for rotting of the potatoes, why there was no damage in the stocks of Chamber No.1, which also had the same capacity and construction pattern. Thus in our opinion the plea of the seepage appears to be an escape route for not settling the claims according to merit.
The State Commission, however, modified the orders of the District Forum by reducing the amounts awarded in the two claims i.e. Rs.10 lakhs and Rs.13 lakhs, respectively to Rs.8,80,767.80p and Rs.11,71,785/- which was the assessed value of loss in both cases as per the Surveyors report on the grounds that no reasoning or justifications had been given by the District Forum for differing from the Surveyors assessed value of the loss. State Commission, therefore, directed that the above said amounts be paid to the Respondent along with interest @ 9% per annum from the date of filing of the complaint till realization and Rs.1,000/- as litigation cost in each case.
Hence, the present revision petition.
Counsel for both parties made oral submissions.
Counsel for Petitioner submitted that the Fora below erred in not appreciating the fact that as per the terms and conditions of the insurance policy, there was no clause pertaining to loss or damage due to seepage whereas from the report of the Surveyor, it was clear that damage to the insulation system of the cold storage and consequently to the potatoes was caused due to the seepage and not due to floods.
Counsel for Petitioner further stated that even if it is accepted that the damage was caused due to flood waters, the State Commission erred in not accepting the net assessment of the loss by the Surveyor who took into account the under insurance in respect of the cold storage, machinery and building. It was specifically pointed out that the total value of the above items was valued at Rs.1,20,00,000/- whereas the sum insured was only Rs.32 lakhs and, therefore, the under insurance factor was applicable in this case and after taking into account the under insurance factor, the net loss was only Rs.2,34,871/-.
Counsel for Respondent on the other hand brought to our notice judgments of the National Commission in United India Insurance Co.Ltd. Vs. Dipendu Ghosh & Anr. II(2009) CPJ 311 (NC) and Bajaj Allianz General Insurance Co. Ltd. Vs. Gondamal Hardyal Mal IV(2009) CPJ 165 (NC) wherein this Commission had concluded in respect of an identical insurance policy that floods also means outpouring of water and on this analogy would include both inundation and seepage. Counsel for Respondent further contended that the contention of the Counsel for Petitioner that the word directly used in the insurance policy exclude any outcome of the flood such as seepage has also been dealt with by the National Commission in Bajaj Allianz (supra) wherein the Commission has accepted the definition of Direct Cause (as per the P.Ramanatha Aiyars The Law Lexicon, Law Dictionary) as that which sets in motion a train of events which brings about result without intervention of any force, operation or working actively from new and independent source; or one without which the injury would not have happened. In the instant case the seepage was a direct result of the floods and the relevant clause in the Policy has to be interpreted accordingly. Regarding the quantum of loss assessed by the Surveyor after taking into account under insurance, Counsel for Respondent contended that no basis per se had been given by the Surveyor for concluding that the evaluation of the building etc. was Rs.1,20,00,000/- and this had been done in a whimsical manner. Further, once the Petitioner/Insurance Company had insured the building for Rs.32 lakhs and had fixed the premium accordingly after due inspection, it cannot taken now a different stand.
We have heard the learned Counsel for both parties and have carefully gone through the evidence on record. The contention of the Counsel for Petitioner that as per the terms of the insurance policy since the word seepage is not specifically covered, the repudiation of the claim was correct and justifiable, is not acceptable in view of the two judgments of the National Commission cited earlier wherein this issue had been dealt with at length and, therefore, merits reproduction.
In Bajaj Allianz (supra), this Commission had observed as under:
Ld. Counsel for the petitioner relies upon condition VI of the policy, which reads as under:-
VI. STORM, CYCLONE, TYPHOON, TEMPEST, HURRICNE, TORNADO, FLOOD & INUNDATION Loss destruction or damage directly caused by storm cyclone, typhoon, tempest, hurricane, tornado, flood and inundation excluding those resulting from earthquake volcanic eruption or other convulsions of nature.
It is his case that since this was a question of leakage of water from roof, hence, it is not covered under any of the perils covered under the Policy.
In support of this contention, Counsel for the petitioner has produced before us the definition of inundation as obtained from the website.
After hearing the Counsel for the petitioner and material on record, we find that this Commission had occasion to deal with a similar type of case in the case of M/s. National Insurance Co. Ltd. Vs. Marthi Crystal Salt Co. Ltd. [1986-2002 Consumer 6043 (NS)] and United India Insurance Co. Ltd. Vs. Dipendu Ghosh & Anr. [II (2009) CPJ 311(NC)], wherein this Commission has interpreted the word Direct Cause as appears in the terms of the Policy and had recorded as under:-
Learned Counsel for the respondent brought on record the copy of P. Ramanatha Aiyars The Law Lexicon, Law Dictionary. As per this dictionary, the word direct cause as well as Direct and proximate cause has been defined as under:
Direct Cause that which sets in motion train of events which brings about result without intervention of any force operating or working actively from new and independent source; or , one without which the injury would not have happened. Norbeck v. Mutual of Omaha Ins. Co., 3 Wash. App 582, 476 p 2d, 546, 547 (Blacks Law Dictionary) (Emphasis supplied) This Commission had also occasion to go into this question again in the case of United India Insurance Co. Ltd. Vs. Imperial Gift House & Anr. [I (2007) CPJ 6 (NC)], in which it was held that as per Oxford Concise Dictionary, relied upon by the State Commission, the word Flood also mean, an outpouring of water.. and tornado, beside other means, ..a great down pour of rain.. Nothing to the contrary has been shown to challenge the finding recorded by this Commission in the two Judgements (supra), meaning thereby that tornado, will also mean, ..a great down pour of rain.
It is not disputed, as per facts brought on record, by the Counsel for the petitioner, that on account of rain, the rainwater poured into the godown through the holes from the roof of the godown, thus, inundating or wetting the stock in the godown.
In view of the Judgements (supra) in which we have extensively dealt with the meaning of risk covered by the Policy, we are unable to sustain the arguments advanced by the Counsel for the petitioner that the word inundation would invariably associate with the flood, as he understands. As already described above, as per Oxford Concise Dictionary, Flood also means, .An outpouring of water. Thus, in view of the law settled by this Commission on these points, we see no merit in the arguments advanced by the Counsel for the petitioner.
Thus, in consonance with and following our own findings on the subject, we are of the view that in the instant case the seepage which was caused directly by the flood was covered by the insurance policy and the claim was wrongly repudiated by the Petitioner/Insurance Company. So far as the issue of quantum of compensation awarded is concerned, we note from the report of the Surveyor that he had assessed the value of the cold storage to be Rs.1,20,00,000/- whereas it was insured for Rs.32 lakhs. Thus, after taking into account the under insurance factor assessed the net loss as being Rs.2,34,871/- whereas the actual loss assessed by the Surveyor was Rs.8,80,767.80p. The Surveyor has not recorded any reasons on the basis of which he has assessed the total value of the cold storage as Rs.1,20,00,000/-. The contention of the Counsel for Petitioner that this was done after taking into account the quotations obtained from three contractors which form a part of the Surveyors report does not inspire much confidence because the quotations were only in respect of the insulation system wherein the contractors assessed its cost to be between Rs.12,11,000/- to 13,11,082/- while the Surveyor has assessed it to be Rs.17,61,534/- without assigning any reasons. In the same way, we are unable to accept the other valuations in the absence of any reason whatsoever for recording these findings.
In view of these facts, we agree with the finding of the State Commission regarding the loss in respect of the cold storage and potatoes on the basis of Surveyors report without taking into account the deductions made for under insurance and uphold the same.
The Petitioner/Insurance Company is directed to pay the Respondent Rs.8,80,767.80p and Rs.11,71,785/- in respect of the two claims as ordered by the State Commission along with interest @ 9% from the date of filing of the claim till its realization and Rs.1,000/- in each case as litigation cost. Counsel for Petitioner states that he has already deposited the entire awarded amount along with interest before this Commission. If that be so, after due verification this amount may be released in favour of the Respondent.
The revision petition is disposed of on the above terms.
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(ASHOK BHAN J.) PRESIDENT Sd/-
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(VINEETA RAI) MEMBER /sks/