(PER MR. JUSTICE RAM SURAT RAM (MAURYA), PRESIDING MEMBER)

1.      Heard Mr. Rajat Sehgal, Advocate, for the complainant and Mr. Atul Nanda, Senior Advocate, assisted by Mr. Ankit Chaturvedi, Advocate, for the opposite party.

2.      M/s. Mann and Hummel Filters Private Limited (the Insured) has filed above complaint, for directing Bajaj Allianz General Insurance Company Limited (the Insurer) to pay (i) Rs.15569940/- with interest @24% per annum from 12.06.2012 till the date of payment, towards insurance claim; and (iii) any other relief which is deemed fit and proper in the facts and circumstance of the case.

3.      The facts as stated in the complaint and emerged from the documents attached with it, are as follows:-

(a)     M/s. Mann and Hummel Filters Private Limited (the Insured) was a company, registered under the Companies Act, 1956 and engaged in the business of manufacture of filters, filter elements and filtration systems for industrial and automobile applications. Bajaj Allianz General Insurance Company Limited (the Insurer) is an insurance company and used to provide insurance services to the public. The Insured was building up a plant at Plot No.19, Phase-II, Sector-5, Bawal Industrial Growth Centre, Bawal, district Rewari-123501, Haryana. The Insured obtained “Erection All Risk Insurance Policy” No.OG-12-1701-0401-00000003, for a period of 21.01.2011 to 31.12.2011, for sum insured of Rs.450000000/-, from the Insurer, for installation and commissioning of Building, Plan & Machinery. By endorsements dated 31.12.2011 and 23.05.2012, the period was extended from 21.01.2011 to 30.04.2012 and further up to 31.10.2012.

(b)     The Insured purchased two Air Handling Units from M/s. AL-KO Therm GMBH, Hauptsrasse, Jettingen-Scheppach, Germany (the supplier) vide Purchase Order No.5400943440 dated 04.01.2011 and Invoice No.2413166798. The parts of these Air Handling Units were securely packed in 18 packages, 17 bottoms in 5 containers and shipped by the supplier on 25.06.2011 from Germany and arrived at Mumbai on 24.07.2011. After paying, import duty, these packages were transported to Bawal district Rewari on 17.08.2011 and kept in a separate shed at the plant.

(c)     After construction of the building, the Insured informed the manufacturer for installation of Air Handling Units. Installation team arrived at Bawal, Rewari in March, 2012. Thereafter, the packages were shifted to site of installation and opened on 21.03.2012 by the Installation team who found that the parts were damaged. They prepared lists of damaged part and recommended for replacement of the same. The Insured informed the Insurer about the damage of the parts of Air Handling Units on 27.03.2012. The Insurer appointed M/s. Protocol Surveyors and Engineers Private Limited for survey and assessment of loss on 28.03.2012. The surveyor inspected the damaged parts, prepared inventories, took photographs and recorded statement of the employees of the Insured on 29.03.2012. As asked by the surveyor, the Insured submitted break-up of the insurance coverage, inspection reports of Installation team, estimate of repair, report of Metrological Department, claim form, salvage value and statement in writing of Managing Director on 12.06.2012. The Insured submitted claim for Rs.15569940/-. Thereafter, the surveyor again verified the damaged parts on 06.07.2012. 

(d)     The surveyor submitted Survey Report dated 26.07.2012, assessing that gross loss to Rs.7174721/- and net loss to Rs.6815985/- but treating the damages and claim to 18 packages as a separate damage and separate insurance claim and deducting Rs.1500000/- towards excess clause, assessed the liability as Nil. The Insurer, vide letter dated 21.09.2012, repudiated the claim.  

(e)     The Insured held a meeting with the officers of the Insurer on 03.10.2012 and explained that total damage was in respect of the parts of two Air Handling Units, caused during transportation at a time. Therefore, it could not be treated as separate damage and separate claim. The Insurer, vide email dated 04.10.2012 reiterated their stand. The Insured made a complaint to Grievance Redressal Unit of the Insurer on 04.01.2013 but it was rejected vide email dated 10.01.2013.

(f)      The Insured made a complaint to Insurance Regulatory and Development Authority (IRDA) on 07.02.2013, who advised to take legal recourse on telephone on 03.04.2013. The Insured then gave a legal notice dated 19.07.2013, calling upon the Insurer to make payment of insurance claim, which was replied on 31.07.2013, denying liability. Then this complaint was filed on 22.09.2014, alleging deficiency in service.

(g)     In order to run the factory, the Insured again purchased two Air Handling Units from M/s. AL-KO Therm GMBH, Hauptsrasse, Germany (the supplier) vide Purchase Order No.4501113272 dated 21.06.2012 and Invoice No.3174171 dated 18.12.2012, which were delivered in January, 2013 and installed in the factory.

4.      The Insurer filed its written reply on 11.12.2014 and contested the complaint. The facts relating to obtaining insurance policy, loss occurred to the parts of two Air Handling Units, kept in 18 packages, the appointment of the surveyor, surveyor’s report dated 26.07.2012 and repudiation letter dated 21.09.2012, have not been disputed. The Insurer stated that the Policy contained Warranties as “Deductibles: For Storage, Testing and Maintenance period claims: INR1500000/- (equivalent of EUR 25000). Section-1 provides for Material Damage. Exclusion to Section-1 provides that the company shall not however be responsible for the first amount of the loss arising out of each and every occurrence, shown as excess in the Schedule. Excess clause provides 0.5% of the sum Insured, for each and every claim subject to (i) a minimum of INR 100000 and maximum of INR 100000000/- for industrial risk; (ii) a minimum of INR 25000 and maximum of INR 1000000/- for non-industrial risk. A conjoint reading of the aforesaid clauses reveals that in case, the insured goods get damaged during policy period, the Insurer would not be liable to indemnify the loss to the extent of the amount mentioned under ‘excess clause’, which shall apply to each and every claim. Total value of the damaged machinery was Rs.7174721/-. Its salvage value was assessed as Rs.358736/-. The surveyor assessed the net loss to Rs.6815985/-. 0.5% of the sum insured is Rs.22500000/-. After deducting under excess clause for each of 18 damages/claims, the liability has been assessed as Nil. As such the claim was repudiated vide letter dated 21.09.2012. There is no deficiency in service on the part of the Insurer. The Insurer also raised preliminary issues relating to maintainability of the complaint and limitation. The complaint is liable to be dismissed.

5.      The complainant filed Rejoinder Reply, Affidavit of Evidence of Pradeep Singh Randhawa and various documentary evidence. The opposite party filed Affidavit of Evidence of Jagdish Solanki, Legal Manager and documentary evidence. The complainant filed IA/5773/2019 for filing Additional Evidence, stating that actual value of the damages parts, including custom duty etc. was Rs.11700817/-. Both the parties have filed their written synopsis.

6.      The counsel for the insured submitted that in the repudiation letter dated 21.09.2012, Rs.1500000/- as mentioned in warranty clause has been deducted. In repudiation letter dated 21.09.2012, the damage to 18 consignments were treated as 18 separate claims. The warranty clause does not use the phrase ‘each and every claim’ as used in Excess clause. There had been one purchase order and one invoice. It was for the purposes of shipment/transportation, the parts of two Air Handling Units were packed in 18 consignments. Loss occurred during one voyage/ transportation. The claim cannot be spilt in 18 claims. As such Rs.1500000/- alone had to be deducted as per warranty clause. He relied upon judgment of Court of Appeal, Idaho, U.S. dated 02.12.1986 in Appeal No.16379 of 1986 Unigard Insurance Company Vs. United States Fidelity and Guaranty Company.

7.      The counsel for the Insurer submitted that it is well settled that warranty and excess clause as contained in the insurance policy are applicable with full force at the time of consideration of the insurance claim. In the present case, warranty clause has been applied. Admittedly there were 18 consignments and parts contained in every consignment were damaged.

The Insurer has not committed any illegality in treating 18 separate claims for applying the warranty clause. Otherwise also excess clause provides 0.5% of total sum insured which amounts to Rs.22500000/-. Even according to own version of the Insured total loss was of Rs.11700817/-, which is below of the amount of excess clause. As such, nothing is payable to the Insured. He relied upon the judgment of Supreme Court in Amravati District Central Cooperative Bank Limited Vs. United India Fire and General Insurance Company Limited, (2010) 5 SCC 294, holding that in insurance parlance, the term ‘excess’ in excess clause in the policy refers that “that part of amount of loss, under each claim, which is not covered by the policy” or the “amount that the policy holder has, by agreement, to bear or contribute to each insurance claim”. In other words it limits the liability of the Insurer in regard to each claim, only to the amount of loss, in excess of the sum specified in excess clause.

It has been further held that to indemnify each act of embezzlement by Lodaya in regard to each account, as loss on account of each embezzlement, forms a separate claim.

8.      We have considered the arguments of the counsel for the parties and examined the record.

9.      The Policy contained warranty as follows:-

“Warranties as “Deductibles: For Storage, Testing and Maintenance period claims: INR1500000/- (equivalent of EUR 25000)”.

Excess clause provides 0.5% of the sum Insured, for each and every claim subject to (i) a minimum of INR 100000 and maximum of INR 100000000/- for industrial risk. (ii) a minimum of INR 25000 and maximum of INR 1000000/- for non-industrial risk.

Section-1 provides for material damage as under:-

“SECTION 1-MATERIAL DAMAGE

The Company hereby agrees with the Insured (subject to the exclusions and conditions contained herein or endorsed hereon) that if, at any time during the period of insurance stated in the said Schedule, or during any further period of extension thereof the property (except packing materials of any kind) or any part thereof described in the said Schedule be lost, damaged or destroyed by any cause, other than those specifically excluded hereunder, in at manner necessitating replacement or repair the Company will pay or make good all such loss or damage up to an amount not exceeding in respect of each of the items specified in the Schedule the sum set opposite thereto and not exceeding in the whole the total sum insured hereby.

The Company will also reimburse the Insured for the cost of clearance and removal of debris following upon any event giving rise to an admissible claim under this policy but not exceeding in all the sum (if any) set opposite thereto in the Schedule.”

EXCLUSION TO SECTION I

“The Company, shall not, however, be liable for

a. The first amount of the loss arising out of each✓ and every occurrence shown as Excess in the Schedule”

          So far as warranty clause is concerned, in the repudiation letter the warranty has not been applied, rather excess clause has been applied. However, while taking for excess clause, the amount mentioned in the warranty has been taken into consideration. Since the insurance company has applied the excess clause and not the warranty, therefore this Commission is not required to go into the applicability of warranty.

10.    Section 1 provides that the company will pay or make good all such losses or damages upto an amount no exceeding in respect of each items specified in the schedule, the sum set opposite thereto and not exceeding in the whole the total sum insured thereby. Therefore, on the damage of an insured article the damage has to be reimbursed by the insurance company. In the present case the damage has occurred to two air handling units. In the list of the insurance air handling unit has been insured and not its parts. One air handling unit shall be considered as one insured item and not 9 items as its parts have been separated in 9 consignments in order to export/carriage. Therefore, the excess clause will be considered on the basis of the list of insured items i.e. on total insured value.

11.    In the repudiation letter 18 consignments have been treated as a separate occurrence. The excess clause provides the first amount of loss arising out of each and every occurrence shown as excess in the schedule. The damage was caused during handling the items, therefore the handling itself could not be bifurcated in separate occurrence. For example, if there was a fire incident in which building, machinery & plant all has damaged then the reimbursement of the insurance would be according to the insured value of the building, machinery & plant separately. Simply because there was a separate amount to be assessed as per insurance, it cannot be said that occurrence was different. One insured item was damaged while handling then its damage can be treated as one occurrence, as such reasons given by the insurance company for applying the excess clause treating the damage as separate consignment as per separate incident, does not appear to be proper.

12.    Regarding the assessment of quantum of loss, the surveyor has taken into account the invoice of the value of imported good but at the same time it has ignored the excess excise duty paid on it, transportation charges, loading-unloading charges and handling charges. At the time of occurrence all these expenses have already been incurred by the insured, as such these charges have to be taken into consideration while deciding the gross loss. Therefore, the gross loss comes to as follows: -

13.    So far as excess clause is concerned, ‘0.5% of the sum insured’ means the sum for which a particular machinery was insured and not the total sum insured as mentioned in the policy, which is clear from minimum limit of Rs.100000/-, as mentioned in it. In the repudiation letter excess clause has been wrongly applied.

                                                  O R D E R

In view of the aforesaid discussion, the complaint is partly allowed. Bajaj Allianz General Insurance Company Limited (opposite party) is directed to pay the aforesaid amount after deducting 0.5% of its insured value as excess clause according to the list of the insurance with interest @9% p.a. from October, 2012 till the date of payment, within a period of two months.