BEFORE A.P STATE CONSUMER DISPUTES REDRESSAL COMMISSION AT HYDERABAD
C.C.NO.22 OF 2010
Between:
1. M/s Ushasri Enterprises,
3-1-123/4/2, BNR Complex, Behind
Narthaki Talkies, Mohan Road
Khammam-003, rep. by its
Managing Partner, B.Nageswara Rao
S/o Seshaiah
2. B.Nageswar Rao S/o Seshaiah
aged about 55 years, Occ: Managing Partner
R/o H.No.3-1-118/4, Mohan Road
Khammam Complainants
A N D
1. The Oriental Insurance Co.,Ltd.
regd. Off: Oriental House, P.B.No.7037
A-25/27, Asaf Ali Road, New Delhi-002
2. The Branch Manager
The Oriental Insurance Co.Ltd.,
D.No.11-3-100/1, 1st Floor Wyra Road
Khammam-001 Opposite parties
Counsel for the complainants M/s G.Manohar
Counsel for the opposite parties M/s M.Hari Babu
QUORUM: SRI R.LAKSHMINARASIMHA RAO, HON’BLE MEMBER
AND
SRI THOTA ASHOK KUMAR, HON’BLE MEMBER
WEDNESDAY THE TWENTY SEVENTH DAY OF JUNE
TWO THOUSAND TWELVE
Oral Order (As per Sri R.Lakshminarasimha Rao, Hon’ble Member)
***
1. The complainant filed the complaint seeking relief for payment of `40,00,000/-with interest @24%p.a. and `25,000/- towards compensation for mental agony.
2. The complainant is a partnership firm doing business in Pesticides and Fertilizers with its office at Khammam and the second complainant is the managing partner of the first complainant firm. The complainant firm used to obtain standard fire and special peril insurance policy and it obtained the insurance policy bearing number 431401/11/2008/304 for the period from 11.01.2008 to 10.01.2009 by paying premium of `8,449/- for the sum assured of `40,00,000/- covering risk of damages in case of fire, lightning, explosion/implosion, Aircraft damage, Riot, Strike and Malicious damage.
3. On the morning of 3.10.2008 at 10.30, about 5000 farmers formed into a group of whom nearly 500 farmers stormed into the godown and shop of the first complainant firm and damaged and looted fertilizers and pesticides. The police, III Town, Khammam registered a case in crime no.119 of 2008 and filed charge sheet before the Court of III Additional JMFC, stating that various brands of fertilizers and pesticides worth of `31,27,920/- and an amount of `14,53,000/- and a weighing machine worth `5,000/- and various brand of pesticides were destroyed .
4. The complainants have stated that the value of destroyed pesticides is `76,85,900/- and they have restricted the amount to `40,00,000/- in view of the terms of the policy covering only the loss caused by damage or destruction by riot. On the same day, i.e., the complainants informed about the incident and lodged claim for reimbursement of the loss and after they have issued several reminders, the opposite parties repudiated the claim on 10.11.2009 basing on Clause V(d) of the insurance policy.
5. The opposite parties resisted the claim on the premise that the terms and conditions of the policy exclude damage or loss on account of “riot, strike and malicious damage” and the terms of the policy are binding on both the parties. It is stated that the complaint lodged with the police is not proof of loss and destruction of stock. The farmers forcibly taking away the stock would not be covered by the terms of the policy. After thorough consideration, the claim was repudiated. It is stated that there was no negligence or deficiency in service on the part of the opposite parties.
6. In support of their case, the second complainant has filed his affidavit and the documents,ExA1 to A8. On behalf of the opposite parties neither affidavit nor documents have been filed.
7. The learned counsel for the complainants filed written arguments.
8. The points for consideration are:
i) Whether the complainants suffered loss to the tune of `40,00,000/-?
ii) Whether the loss due to riot is covered by the terms of the policy?
iii) To what relief?
9. POINTS NO.1 & 2: The business in sale of pesticides and fertilizers engaged by the complainants and their obtaining the standard fire and special peril insurance policy with the opposite parties for the period from 11.01.2008 to 10.01.2009 are not disputed. The loss caused due to riot is no longer in dispute. The dispute between the parties is in regard to the actual loss caused to the share of the complainants and coverage of loss due to riot. Thus, the scope of the complaint on narrower scale is the application of the terms of the insurance policy to the loss caused to the insured stock and on wider horizon the actual loss sustained by the complainants.
10. After receiving the claim from the opposite parties, the opposite parties ought to have deputed a surveyor to assess the loss. The opposite parties and the complainants are silent as to state whether any surveyor was appointed to verify the stock registers and other relevant documents and assess the actual loss caused to the stock. The opposite parties contend that the amount mentioned in the complaint lodged with the police and the charge sheet filed by the police does not reflect actual loss caused. There is no denying the fact that surveyor is considered as an independent loss assessor and being appointed by the IRDA, he is expected to make accurate assessment of loss caused to the person and property of the insured.
11. The contents of the written version would show that the opposite parties have straight away repudiated the claim basing their decision on the terms and conditions of the insurance policy. In absence of filing of the surveyor’s report the other evidence which indicates the actual loss caused to the insured stock is the repudiation letter which does not mention about the appointment of surveyor and the assessment of the loss of the stock. The repudiation letter dated 10.11.2009 deals with the disentitlement of the first complainant to the claim in the light of Clause (v)(d) of the Insurance Policy . The repudiation letter reads as under:
The standard FIRE & SPECIAL PERILS POLICY under its item v(d) of the policy coverage, excludes loss of insured stocks. The exclusion reads as under:
(VI) RIOT, STRIKE AND MALICIOUS DAMAGE
Loss of or visible physical damage or destruction by external violent means directly caused to the property insured but excluding those caused by
(d) Burglary, housebreaking, theft, larceny or any such attempt or any omission of any kind of any person (whether or not such act is committed in the course of a disturbance of public peace ) in any malicious act.
Hence the claim stands repudiated. Further no correspondence will be entertained in this matter.
12. The complainants claims the loss to the tune of Rs.76,85,980/-of which the details mentioned in the FIR are that fertilizers and pesticides worth of `31,27,920/-and cash of `14,53,000/- were looted and weighing machine worth of `5,000/- and various brands of pesticides were destroyed and the same details have been mentioned in the charge sheet. It is not known on what basis the police came to the figures mentioned in the charge sheet as to the actual loss either due to looting or on account of destruction of the stocks and what loss of stock is mentioned in the charge sheet is the replica of the figures that was mentioned in the FIR. The documents are not of any help to come to the conclusion as to the accurate loss caused to the stocks and the cash due to riot that had taken place in the shop and godown of the first complainant-firm.
13. The claim was repudiated in terms of Clause (v)(d) of the Insurance Policy that risk for loss of the insured stock due to riot is not covered . The learned counsel for the complainants has submitted that the loss caused due to riot is covered by the terms of the insurance policy. He has relied upon the judgment of the Hon’ble Supreme Court in”Generla Assurance Society Ltd vs Chandmull Jain” AIR 1966 SC to contend that “in case of ambiguity in a contract of insurance, the ambiguity should be resolved in faour of the claimant and against the Insurance Company”.
14. The learned counsel for the complainants submitted that in the instant case there is no ambiguity in the contract of insurance except that the opposite parties’ attempt to read something into the policy which is non-existent. As there is no ambiguity in the terms and conditions of the insurance policy the application of the ratio in the above mentioned decision is not required anymore.
15. The learned counsel for the complainants referred to the decision of the TAC which held in FT/5/2002 that the riot is covered by the conditions of the insurance policy which was approved by the IRDA in the following terms:
“Riot, strike, malicious damage and terrorism cover is an integral part of the fire policy. Only recently the terrorism part has been de-linked and separately priced. In other words, we still have the riot, strike and malicious damage claims covered by a fire policy. It is true that section II clause V of the policy documents covers the riots except the four situations which have been mentioned therein. Burglary, house breaking etc. occurring as part of a malicious act where such an act was committed in the course of a disturbance or public peace is listed as an exclusion. The exclusion does not specifically mention looting. However, to my mind, this does not make any material difference because the term can be considered to be similar to those used in the clause.
The relevant clause that one should look to would be clause II under general exclusions of the fire policy. This clearly supports the view that any claim under a RSMD cover will not be excluded under the general exceptions provision.
The question whether looting is a part of the riot cover is not the issue now. The question to be considered confines itself to considering whether looting arising out of or following a riot is payable in terms of a fire policy. It is not disputed that the looting has followed the riots in these cases. The issue would be whether we should not take into account the proximate cause for the looting. If loss arises on account of looting in a riot where the riot peril itself is an insured peril, there should not be any difficulty in meeting the claim under the policy. As things stands at present, the tariff as well as the precedents that the industry has followed so far together with the authoritative literature on the subject support the payment for claim under the riot clause provided all other conditions of the policy have been satisfied.
16. In the case of “Shobhika Attire Vs New India Assurance Company Ltd “ 2006(4) CPJ3, the Supreme Court allowed the claim for loss caused due to looting and destruction of property in the riot. In that case, the stock of the insured-firm was looted and set fire by a group of armed rioters. The official of the insurance company took possession of the salvaged stock and kept it in the custody of their nominated surveyors. The insurance company got investigated the matter and appointed surveyors who filed their reports on 15.08.1998 and 11.09.1998 respectively. The insurance company basing on the surveyor’s report approved the claim of the insured to the extent of Rs.1,02,38,738/-. The insured –firm filed complaint for settlement of her whole claim and the matter reached the Supreme Court which upheld the decision of the insurance company and allowed the appeal to the extent of the amount towards loss as assessed by the surveyor. The Supreme Court held as follows:
12. As will be evident from the above, it will appear that the aforesaid conclusion was arrived at by adopting a negative approach. The investigators reached the aforesaid conclusion merely by stating that the appellants had no material to strengthen their claim by providing unassailable evidence of looting. Such an approach cannot be supported since apart from claiming that the goods in the showroom had been looted and the attendant circumstances, the appellants were not in a position to supply any further evidence
14. In our view, the appellants had discharged the initial burden regarding destruction, damage of the showroom and the stocks therein by fire and riot in support of the claim under the insurance policy and it was for the insurance company to disprove such claim with evidence, if any. In our view, the insurance company, despite the report of the investigator, failed to establish that the claim of the appellants was not justified and was not covered by the policy of insurance. Inasmuch as, the insurance company was within its rights to cause an inquiry into the incident and it approved the appellants' claim of Rs.1,02,38,738/- based on the report of the investigator, we are unable to agree with the submission made on behalf of the appellants that apart from the actual claim, the appellants are also entitled to payment of compensation towards hardship, mental agony and harassment.
15. We, therefore, allow the appeal and direct the respondent-insurance company to pay to the appellants the balance amount of Rs.97,83,827/- together with interest at the rate of 9% per annum from the date of the claim till payment. Such payment is to be made within a month from date.
17. In the aforementioned decision, the principle laid that the loss to the insured stock due to fire and riot is covered by the terms of the insuranc policy. It is also held that the loss of the insured stock has to be approved by the insurance company basing on the investigator and surveyor’s report. In the instant case, the investigation cannot be called for in view of the acceptance of the incident by the opposite party-insurance company. In the light of the ratio mentioned in the aforesaid decision, the insurance company has to settle the claim based on the surveyor’s report. As it is not the case of either party that any surveyor was deputed, we deem it fit a case to direct the opposite parties to depute a surveyor to assess the loss caused to the stock and settle the claim basing on the surveyor’s report.
18. In the result the complaint is allowed directing the opposite parties to depute a surveyor to assess the loss caused to the insured stock and settle the claim basing on the surveyor’s report. The costs of the proceedings quantified at `5,000/-. Time for compliance four weeks.
MEMBER
MEMBER
Dt.27.6.2012
KMK*
APPENDIX OF EVIDENCE
WITNESSES EXAMINED
NIL
EXHIBITS MARKED
For complainant
Ex.A1 Copy of insurance policy
Ex.A2 Copy of repudiation letter dt.10.11.2009
Ex.A3 Copy of charge Sheet
Ex.A4 Copy of Statement of Stocks
Ex.A5 Copy of partnership deed.
Ex.A6 Copy of Amendment
Ex.A7 Copy of Standard Fire and Special Perils Policy
Ex.A8 Copy of Acknowledgement of Registration of Firm
For opposite parties
NIL
MEMBER
MEMBER
