Sri Shyamal Gupta, Member

Present Appeal is directed against the Order dated 28-05-2015 passed by the Ld. District Forum, North 24 Parganas in C.C. No. 634/2014.

In a short compass, case of the Complainant is that on 21-06-2014, a fire broke out at the Rice Mill of the Complainant resulting which he suffered huge loss.  The Complainant communicated due information in this regard to all concerned, including the OP Insurance Company.  Thereafter, the OP Insurance Company deputed a Surveyor to assess the loss.  Allegedly, the OP Insurance Company most arbitrarily rejected the Complainant’s claim vide its letter dated 10-10-2014.  So, the complaint.

OP Nos. 1&2 contested the case by filing WV.  They stated that immediately after receipt of information, they deputed IRDA licenced Surveyor to inspect and assess the loss.  The Surveyor reported that the godown was a kuccha construction.  Since the scope of indemnity under the policy did not include kuccha construction, the instant claim of the Complainant was repudiated.

Decision with reasons

We have heard the Ld. Advocates of the Appellants and the Respondent No. 1 in the matter.  We have also perused the documents on record, including the citations referred to by the Appellants.

The Appellants have primarily picked hole with the subject claim of the Respondent on the grounds that (1) there was a delay of more than 37 days in giving intimation to the Appellant about the incident of fire; (2) absence of conclusive evidence to show that the incident of fire broke out due to short circuit; and (3) the building was a ‘Kutcha construction’.

The incident of fire reportedly took place on 21-06-2014 at about 3.30/4.00 a.m. and the Complainant lodged insurance claim with the OP Nos. 1&2 vide letter dated 28-07-2014.  However, at the same time, it is also a fact that the Respondent reported the matter to local Police Station and OP No. 3 financier on 21-06-2014 and 23-06-2014, respectively.  It is also significant to note that the Divisional Fire Officer, North 24 Parganas, ‘D’ Division, West Bengal Fire & Emergency Services submitted its report to the Presidency Magistrate, North 24 Parganas, Barasat, North 24 Parganas on 14-08-2014 to inform the origin and cause of fire.  The said Officer also sent a letter dated 23-06-2014 to the Respondent with a demand of charges for attending fire at the Rice Mill of the Respondent.  That apart, the Surveyor also reported the incident of fire as genuine.

Taking into consideration all these facts, we have no hesitation holding that an incident of fire indeed took place at the Rice Mill of the Respondent and the Surveyor did not make any adverse comment in his report stating that such delayed intimation posed any hindrance for him to carry out due inspection at the affected site. 

It appears from the Fire Brigade report dated 14-08-2014 that they could not ascertain the cause of fire.  However, it appears from the report of the Surveyor that, in unequivocal term he stated that the fire incident took place due to short-circuit.  Relevant portion of the observation of the Surveyor is appended below.

“Probable Cause of Damage

The cause of damage is clearly established as out of fire.  Copy of Fire Brigade Report enclosed as Annexure-15 for perusal, which states the cause of FIRE could not be ascertained.

However, as per our observation, the cause of fire could be electrical fire inside the said godown out of short circuit from electrical switchboard. 

This particular cause of Damage is well covered under the Policy issued to the Insured and thus the claim stands as admissible as per cause of damage, subject to the other terms and conditions of policy of insurance”.

Now, let us decide whether the instant claim of the Respondent was justifiably repudiated on account of the fact that the building fell under the category of ‘Kutcha construction’. 

On one hand, it is reported in the survey report that the paddy stock godown was made of tin shed roof and side walls with bamboo made sheets (chatai).  On the other, it is stated in the Fire Brigade Report that ‘wall plaster of the pucca room measuring about 30’ x 15’ partially damaged’.

Whatever be the case, given the fact that the fire broke out due to electrical short-circuit, to our mind, it was totally immaterial in this case whether it was a pucca construction or a kutcha one, the policy stipulation notwithstanding.  It is always desirable that as long as a claim is otherwise admissible, the same should not be repudiated straightway citing technacilities.  In this regard, we are inclined to quote the relevant portion from a circular issued by the IRDA in this regard (Circular No. IRDA/HLTH/MISC/CIR/216/09/2011 dated 20-09-2011). 

“The insurers’ decision to reject a claim shall be based on sound logic and valid grounds.  It may be noted that such limitation clause does not work in isolation and is not absolute.  One needs to see the merits and good spirit of the clause, without compromising on bad claims.  Rejection of claims on purely technical grounds in a mechanical fashion will result in policyholders losing confidence in the insurance industry, giving rise to excessive litigation”.

Although the said circular was issued in the context of delayed intimation/document submission, there is no reason as to why the spirit of this circular should not be stretched/extended to other factors as well, like the present one, where the Appellants repudiated a bona fide claim citing the exclusion clause. 

We, thus find no jurisdictional error with the impugned order.  However, in the facts and circumstances of the case, we deem it fit and proper to absolve the Appellants of due liability of paying punitive damage for non-compliance of the impugned order within the stipulated period.

Appeal, thus, succeeds in part.

Hence,

O R D E R E D

That the Appeal stands allowed on contest in part.  The impugned order is modified to the extent that the Appellants need not pay the punitive damage being ordered by the Ld. District Forum.  Save and except this, the impugned order shall remain unaltered.