BEFORE THE TELANGANA STATE CONSUMER DISPUTES REDRESSAL COMMISSION: AT HYDERABAD.
C.C. No.251 of 2013
Between:
The Indian Hume Pipe Co.Ltd.,
Flat No.502-C, 5th Floor,
Lingapur House, 3-6-237
Himayathnagar, Hyderabad
Rep. by its Authorized Signatory
Shri G.Pundareekam
*** Complainant
A N D
Cholamandalam MS General Insurance Co.Ltd.,
Rep. by its Branch Manager
Dr.No.6-3-698/3, Punjagutta,
Hyderabad-500082
*** Opposite party
Counsel for the Complainant: M/s Equi Legal
Counsel for the Opposite Party M/s A.Ramakrishna Reddy
QUORUM :
HON’BLE SRI JUSTICE B.N.RAO NALLA, PRESIDENT
&
SRI PATIL VITHAL RAO, MEMBER
THURSDAY THE FOURTEENTH DAYOF DECEMBER
TWO THOUSAND SEVENTEEN
Oral Order : (per Hon’ble Sri Justice B.N.Rao Nalla, Hon’ble President)
***
This is a complaint filed under section 17(1)(a)(i) of the Consumer Protection Act, 1986 by the Complainant to direct the opposite party to pay Rs.37,86,531/- towards loss suffered by the complainant along with interest @ 18% per annum from 01.08.2011 till the date of realization; to pay a sum of Rs.5,00,000/- for mental agony and hardship suffered by the complainant’ to pay Rs.3,00,000/- for wrongful and illegal repudiation of the claim and to pay Rs.25,000/- towards costs.
2. The brief facts of the case as seen from the complaint that the Complainant is a Limited Company engaged in the manufacturing of a wide range of pipes and also engaged in manufacturing, supply and erection of pipeline related to water lines on turnkey basis and/or supply of other pipes not being manufactured by the complainant and execution of pipeline related to water line on turnkey basis. The Complainant was allotted a contract of package 7 of CPWS Scheme at Medak District by the Superintending Engineer, RWS&S, Sanga Reddy, Medak District including CPWS Scheme to Zaheerabad and other habitations. The Complainant in compliance of the conditions of the contract, obtained an Erection All Risk Insurance Policy bearing No. EER-00002215-000-00 dated 16.11.2010 from the opposite party insurance company for the period from 04.11.2010 to 16.10.2013.
3. While so, on 01.08.2011, the watchman at Hugally village site, Mr.Laxmaiah noticed that the stacked HDPE-315MM Dia pipes were stolen and he immediately informed the site supervisor who in turn lodged a police complaint on 10.08.2011 with Zaheerabad Rural PS vide FIR No.96 of 2011 u/s 379 of IPC. The police, Zaheerabad Rural PS conducted a Panchanama on 11.08.2011 at the site and found that 192 were stolen. The complainant on 06.08.2011 made a claim of Rs.37,86,531/- with the opposite party by submitting all the relevant documents and the opposite party in turn appointed MR.M.V.Subba Rao, Surveyor to assess the loss suffered by the complainant. The Surveyor gave his report dated 08.01.2012 stating that the Pipes were stolen by some unknown persons prior to 02.08.2011 and assessed the net loss as Rs.33,13,156/-. The Surveyor has further opined that the complainant breached the warranties of the policy terms and conditions and advised the opposite party to investigate the matter.
4. On 07.09.2012 M/s Stellar, Insurance Management Services Pvt.Ltd., was appointed to investigate into the matter and it submitted their interim report on 22.09.2012 to the opposite party opining that the matter requires further probe to confirm a) When the fencing was made, b) Whether Watchman was on the rolls of the Insured/complainant and c) whether there is any chance of recovery of stolen pipes. On 12.12.2011 M/s Stellar, Insurance Management Services Pvt Ltd., submitted its final report to the opposite party and opined that the “alleged loss of the pipes has not been specific, single, unique incident… the lack of adequate care and can also be construed as inventory losses. That they would submit a Compact Disc Drive containing the recordings with various personnel at various locations”. The opposite party despite several requests by the complainant has not supplied a copy of the alleged Compact Disc Drive. Therefore, the complainant was denied of an opportunity of clarifying the objections of the Investigator, and as such the conduct of the opposite party amounts to deficiency of service. Thereafter, the opposite party on 11.05.2012 repudiated the claim of the complainant on the premise that the storage site was neither secured by a properly constructed fence nor there was any watch and ward provided round the clock which was a serious breach of the terms and conditions of the policy and warranties stipulated. However, the complainant alleged that the repudiation of the opposite party was improper, unlawful and illegal relying on the baseless, preposterous report of the Surveyor and Investigator which amounts to deficiency of service. Hence, the complaint with reliefs as stated in paragraph no.1 supra.
5. The opposite party filed its written version denying the allegations made in the complaint and contended that the complaint is not maintainable either in law or on facts. The dispute raised by the complainant is not a consumer dispute coming within the meaning of Sec.2(d) of C.P. Act. The complainant did not make out any prima facie case to show that there is a deficiency of service as far as the opposite party is concerned.
6. The opposite party has issued Erection All Risk Policy bearing No.EER-00002215-000-00 to the complainant company covering the risks for the period commencing from 04.11.2010 to 16.10.2013 subject to certain terms, conditions, exclusions and warranties. On 06.08.2011, the opposite party received claim intimation from the complainant stating that stacked HDPE-315 Dia pipes kept at Hugally site of Medak District were stolen by unknown offenders. Immediately after receipt of the intimation of the claim, the opposite party registered claim and appointed Mr.M.V.Subba Rao who is an independent IRDA licensed surveyor for assessing the loss. The said surveyor completed his survey and filed his report on 08.01.2012 stating that the insured committed breach as to the terms and conditions of the policy i.e, the insured failed to take steps to protect the site by proper fencing and to keep watch and ward round the clock, the said surveyor further advised the opposite party company to investigate into breach of warranties.
7. The opposite party on the advice of the Surveyor appointed an investigator M/s Stellar Insurance Management Services Pvt Ltd., to investigate into the matter wherein the said investigator vide his report dated 22.09.2011 opining that the insured has committed breach of warranty as specified in terms and conditions of the policy by not fencing the site and by not keeping the watch and ward. As per the report of the surveyors and investigator, the storage site was neither secured by a properly constructed fence nor there was any watch and ward provided round the clock to safeguard the pipes inasmuch as the storage site being very close to the National Highway and hence highly vulnerable to theft which is serious breach of the terms and conditions of the policy and warranties stipulated. The complainant after the loss erected/fenced the site afresh with a view to get claim from the opposite party company which is only an afterthought. As per the observations of the surveyor, the loss did not occur in a single night and happened on multiple dates prior to 02.08.2012. As per the survey report and FIR, the loss has occurred prior to 2nd August 2012. As per exclusion in the policy, the insurance company shall not be liable for the loss discovered at the time of taking inventory. The observation about the loss on multiple dates indicates nature of loss to be inventory loss which is excluded as per terms and conditions.
8. The proceedings before the Commission are essentially summary in nature, and adjudication of issues which involve disputed factual position are to be adjudicated as the matter requires examination of voluminous documents. Hence, the matter may be agitated before proper forum/civil court. As such the opposite party justified its action of repudiation and prayed to dismiss the complaint.
9. On behalf of the complainant, Mr.A.Pundreekam, the authorized signatory has filed his evidence affidavit and got Ex.A1 to A7. On behalf of the opposite party, the Assistant General Manager filed his evidence affidavit and got Exs.B1 to B3 marked.
10. Counsel for complainant present and was heard. Both parties have filed their respective written arguments.
11. The points for consideration are as follows:
- Whether there is any deficiency in service on the part of the opposite party?
- Whether the Complainant is entitled to the reliefs as prayed for ?
12. POINT NOS.1 & 2 It is a fact that the Complainant had obtained an insurance policy titled as 'Erection All Risk Insurance Policy’ for a sum of Rs.61,22,81,424/- upon payment of premium of Rs.9,70,758/- for the period from 04.11.2010 to the midnight of 16.10.2013. The Complainant having paid consideration in the form of premium for the insurance service of the opposite party Insurance Company and there being the service provider and consumer relationship, the Complainant is a consumer and the complaint filed is a consumer complaint.
13. There is no dispute that the Complainant took a 'Erection All Risk Insurance Policy’ policy from the opposite party Insurance Company covering the risk of sudden and unforeseen physical loss of or damage to the property insured during the currency of the policy. Allegedly, there was a theft of the insured articles , i.e., 192 from the stacks as stated by the Complainant . The local police station was informed of the incident on 10.08.2011 and a case u/S 379 of Indian Penal Code under Zaheerabad Rural P.S. was registered. After being informed of the incident , the insurance company appointed a surveyor who after visit to the place of occurrence has caused necessary enquiries and submitted his report assessing the net loss as Rs.33,13,156/-. He has further opined that the complainant has breached the warranties of the policy terms and conditions and advised the opposite party to investigate the matter.
14. Ex.B2 is the Final Survey Report of Sri M.V.Subba Rao, Surveyor who conducted survey and gave his report to the opposite party stated that considering the physical evidences and their local enquires, he opined that the subject pipes were stolen away by some unknown persons, prior to 02.08.2011. He further stated that the storage site was abruptly NH-9 near KM Stone 448/0 was provided with a barbed wire fencing and a small tent like structure was provided on the rear side of the site area, within the compound, at Centre. The surveyor enquired the Watchman by name Lakshmiah who is from Huggaly Village and the watchman stated that he has been working there since four months and he is only a Watchman, performing his duties round the clock, he will be visiting his house on and off for a break. That on 31.07.2011 he had not attended the duty, as he was not well. On 01.08.2011 he visited the site between 0900 & 1000 Hrs and noted that there was a theft. Immediately, he contacted Mr.Narasimha Chary and informed him about the loss. The surveyor further stated that during his visit the watchman was not present at the site and also that there is no Watch & Ward continuously during the day and replacement watchman was not provided to relive the person on-duty. The watchman informed the Surveyor that the GI Wire on the North Wall, from the North-East corner was cut at the Centre and the wooden posts (4Nos.) were pulled out and thrown away on the East side. By this, the burglars reportedly made an opening on the North-east half for taking out the material. The Surveyor observed that the fencing was found to be fresh in nature. The pipes were re-stacked after counting by the police on 11.0-8.2011 and the fencing could have been provided subsequently. However, we could not obtain any written statements form the villagers nor the Police and accordingly we have suggested the insurers to investigate the matter. The insured had originally indicated a loss of 138/139 pipes vide their e-mail dated 06.08.2011. During the survey, based on the Stock Register and the Physical count of the remaining stock, it was noted that 192 numbers were missing. The Police FIR and the Panchanaama also state that 192 numbers were missing. The FIR also state that the loss had occurred before 02.08.2011 and noticed during the regular visit by the Site Supervisor on 01.08.2011. The Surveyor also stated that the FIR indirectly indicates that there was no Watchman posted at the site and the stock point is verified at regular intervals. By investigating all the probabilities the Surveyor came to the conclusion that the existence of barbed wire fencing, at the time of loss was not proved and also that the loss had happened on multiple dates prior to 02.08.2011 and this indicates that there was no Watchman at site.
15. Finally, the surveyor was of the opining that the Insured’s stock of HDPE Pipes were stolen from the Huggally Stock Point, by some unknown persons. The loss was worked out to Rs.33,13,156/- As there was a Breach of Warranty, the insurers may take a final call on the liability, considering the inputs of the Investigator.
16. The insurance company appears to have acted upon the Survey report and appointed M/s Stellar, Insurance Management Services Pvt. Ltd., on 07.09.2012 to investigate into the matter. After enquiry the said Investigator submitted interim report on 22.09.2012 marked as Ex.A5 opining that the matter requires further probe to confirm: a) When the fencing was made, b) Whether Watchman was on the rolls of the Insured/Complainant and c) Whether there is any chance of recovery of stolen pipes. Thereafter the said Investigator submitted its final report on 12.12.2011 to the opposite party opining as follows:
Our Conclusion:
The alleged loss of the pipes has not been in a specific, single, unique incident. The complaints and the records in the FIR would clearly indicate that these losses could have occurred over a period.
The categorical evidence of lack of fencing as well as absence of watch and ward would provide indication that the alleged losses (over a time period) would prove the lack of adequate care and can also be construed as Inventory observation losses.
- Whether these losses could have occurred in a single instance or multiple
As would be clearly evidenced by the Date of Occurrence listing in the FIR (Kowdipally) and the complaint itself-it would be clear that these alleged losses have only been observed when a specific activity was undertaken.
As would be evident from the petition as well as the case lodging by the police to the Judiciary-the alleged loss (as per complaint) was only during “recent inspection”.
The complaint to Zaheerabad by the supervisor IHP also clear states that the miss was found only during “recent inspection”
This would clearly corroborate the fact that the alleged losses would definitely have occurred in more than a single instance.
We would provide a succinct detail to your queries also-as below:
- To obtain crime documents and conduct enquires form all the 3 police stations (We would enclose the same0
- Whether the other 5 accused have been arrested (No)
- If possible to meet the arrested persons to ascertain the actual facts. (This was not possible)
- Who is the receiver of the stolen pipes (This was/can only be visualised/conjectured). We were not able to obtain any corroborative information from our enquires
- Any Possibility of recovery of the pipes. (From the investigations and police documents-as well as our enquires-the possibility looks bleak)
- Whether watch and ward/fencing available at the sites where theft occurred. (There is absolutely no fencing/watch/ward at two PS Case locations (Kowdipally and Alladurg). We have photographs fo the same as well as Audio Records.
- As for the Zaheerabad PS case-we have obtained a statement from Shri Ayudhala Lakshmiah and Shri Rajendra Prasad0-these, together with the photographs of a fresh fence and the clear delineation in the Audio Records would corroborate the fact that even this site does /did not have provision for Fencing/Watch/Ward.
We would enclose the crime documents obtained form all the three Police Stations. It was not possible for us; in spite of repeated efforts to meet the persons arrested. NO further arrests of accused have been made and there is also no clarity(From the police Investigations) that there would be any recovery.
We would enclose a Compact Disc Drive containing the Recordings with various personnel at various locations. These would provide an alternate base to the conclusions drawn above.
17. After the investigation the Investigator also opined the same view as was given by the Surveyor in the earlier report. Not only that there are discrepancies such as the insured had originally indicated a loss of 138/139 pipes vide their email dated 06.08.2011 but as seen from the Stock Register and the physical count of the remaining stock and also from FIR and the Panchanaama it was noted as 192 numbers were missing. The complainant in its complaint or in affidavit, written arguments never stated that there was a Watchman when the theft took place. From the photographs also it is to be seen that the fencing was found to be fresh in nature. It means the complainant after occurrence of the theft they arranged fencing to prove that there was fencing at the storage site. Now the question arises that if the insurance company was of the opinion that there is no fencing, then they should not have insured the same. As to taking care of the insured property by the complainant is concerned, we find force in the submission of the insurance company that the complainant has failed to take proper and reasonable care of the insured property. Mr.Lakshmaiah, the watchman engaged by the complainant, has stated that he is working with the complainant since four months, he has specifically averred that on 31.07.2011, theft took place in the insured premises and during that period, he did not come to work because of ill health. Thus, it is quite clear that on the date of the incident, nobody was deputed by the complainant to safeguard the insured property and the goods lying therein. If the watchman of the complainant was on leave and did not come to work because of ill health, it was the duty of the complainant to make some alternative arrangement and to depute some other person to safeguard the insured property, which he failed to do. The policy clearly stipulates that the insured shall take all reasonable steps to safeguard the property insured against accident, loss or damage. In view of the above facts, it is quite clear that the complainant - insured has not taken reasonable steps to safeguard the insured property and the goods lying therein, which is a clear-cut breach of the terms and conditions of the policy on the part of the complainant.
18. The complainant relied on the decision of Hon’ble Supreme Court in Venkateswara Syndicate Vs Oriental Insurance Co., Ltd., reported in 2009 LawSuit(SC) 1356 wherein the Supreme Court held that the option to accept or not to accept the report is with the insurer but however, if the rejection of the report is arbitrary and based on no acceptable reasons, the courts or other forums can definitely step in and correct the error committed by the insurer while repudiating the claim of the insured. If the reports were prepared in good faith due application of mind and in the absence of any error or ill motive, the insurance company is not expected to reject the report of the Surveyor. The said decision submitted by the complainant is not applicable to the present case.
18. In view of the above discussion, the repudiation of the claim lodged by the complainant by the insurance company is justified, the insurance company has not committed deficiency in service. The points No.1 and 2 are answered in favour of the opposite party and against the complainant.
In the result the complaint is dismissed without costs.
PRESIDENT MEMBER
. 14.12.2017
APPENDIX OF EVIDENCE
WITNESSES EXAMINED
NIL
EXHIBITS MARKED
For complainant
Ex.A1 Policy Terms and Conditions
Ex.A2 Copy of FIR dated 10.08.2011
Ex.A3 Copy of Panchanama dated 11.08.2011
Ex.A4 Copy of Surveyor report of Mr.MV Subba Rao
Dt.08.01.2012
Ex.A5 Copy of Final Report of M/s Stellar Insurance
Management Service Ltd., dt.22.09.2011
Ex.A6 Copy of repudiation letter dated 11.05.2012
For opposite party
Ex.B1 Certified Copy of Policy with terms and conditions
Ex.B2 Survey report dated 22.09.2011
Ex.B3 Survey Report submitted by Mr.Subba Rao dt.08.01.2012
Ex.B4 Copy of Repudiation letter dt.11.05.2012
PRESIDENT MEMBER
