DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION, PALAKKAD
Dated this the 2nd day of May, 2023
Present : Sri. Vinay Menon V., President
: Smt. Vidya A., Member
: Sri. Krishnankutty N.K., Member Date of Filing: 01/10/2020
CC/122/2020
Prasad K. Abraham,
S/o. K. K. Abraham,
Proprietor,
M/s. United Paper Products,
II/833, Malampuzha Road,
Kanjikkode, Palakkad – 678 623. - Complainant
(By Adv. Athira S.)
Vs
- Corporation Bank,
GKS Complex,
Kanjikkode, Palakkad – 678 623
Rep. by its Manager.
- The New India Insurance Company,
CL Complex, Nethaji Nagar,
Kanjikkode, Palakkad – 678 623
Rep. by its Manager. - Opposite parties
(O.P. 1 by Adv. M/s. M. Ramesh & Muhammed Azarudeen
O.P.2 by Adv. T.P.George)
O R D E R
By Sri. Vinay Menon V., President
- Brief pleadings in the memorandum of complainant necessary to adjudicate the dispute are that the complainant is the owner of a proprietary concern which had availed financial assistance from the first opposite party bank. As condition precedent for availing the financial assistance, the raw materials and stock in trade in the factory of the complainant was insured with second opposite party insurance company by way of availing a Standard Fire And Special Perils Policy. Under the said policy one of the eventualities that were covered was damage to the stock in trade by way of flood. On 18/10/2019, consequent upon a heavy rain, factory of the complainant was flooded and heavy losses were caused by flooding of the factory. Claim filed by the complainant before the 2nd opposite party was repudiated on the ground that no flood was experienced on that particular date and site. Aggrieved by repudiation of his claim, this complaint is filed.
- The 1st opposite party filed version denying the complaint allegations and detailing the transactions as between the complainant and first opposite party. They also denied the complaint allegations that choice of O.P.2 as insurer was on their insistence and that they had delayed payment of premium.
- The 2nd opposite party filed version admitting issuance of policy, but rejected the allegations of flooding and consequent losses stating that as per surveyor’s report, cause of damage was due to normal flow of rain water which entered into the building through a gap under the rolling shutter provided at the rear side of the building, an event which is not covered under the policy. Further the policy condition had 15 days waiting period and the flooding occurred two days after the inception of the policy. During August 2018, when torrential rain / flood afflicted Kerala, the unit of the complainant also suffered flood damages. On that occasion, this opposite party had indemnified the losses suffered by the complainant and hence complainant was well aware of the policy terms and conditions. Justifying their conduct thus, they sought for dismissal of the complaint.
- Issues that arise for consideration are as herein below:
- Whether the grounds for repudiation of claims are valid and sustainable?
- Whether there is any other deficiency in service or unfair trade practice on the part of the O.P.1?
- Whether there is any other deficiency in service or unfair trade practice on the part of the O.P.2?
4. Whether the complainant is entitled to any reliefs sought for?
5. Any other Reliefs?
5. (i) Evidence on the part of complainant comprised of Exts. A1 to A11. Marking of all the documents were objected to by the counsel for OP1 on the ground that they were photostat copies.
Since this Commission is not bound by Indian Evidence Act and in the absence of any allegation that the documents marked on the side of complainant were forged or concocted, we find no merits in the said objections.
(ii) OPs also filed proof affidavit. Documents filed by opposite parties were marked as Ext.B1 to B8. There was no objection in marking of the documents.
Issue No.1
6. Claim was repudiated on two grounds:
1. There was no flood as contemplated under the Policy terms and conditions.
2. There was a waiting period of 15 days from the inception of policy period and flood occurred within 2 days of inception of policy period.
7. Validity of the grounds for repudiation can be assayed hereunder
1. There was no flood as contemplated under the Policy terms and conditions.
8. One of the grounds for repudiation of the claim is that there was no flood. As per complainant, the stock in trade were damaged due to flooding caused by way of heavy rains (paragraph 8, line 1 of the memorandum of the complaint). Complainant relied on Ext. A11 discharge voucher issued by a third party Insurance Company to some other business concern in the same locality as that of the complainant to show that there was a flood in the locality and that the said Insurance company had approved the claim of the claimant therein.
Opposite party 2 marked the report filed by the surveyor as Ext.B4. Contents of the said report under the headings “Nature And Extent of Damage” and “Cause of Damage” (Page 2 of Ext. B4) shows that the complainant suffered damage owing to redirecting of rain water through a gap under the rolling shutter of the godown due to improper drainage system.
9. In order to understand the nature of Flood in the Policy document, we can rely on the other calamities that accompany “Flood” in Clause VI of Ext. A2 Policy terms and conditions. The other events are Storm, Cyclone, Typhoon, Tempest, Hurricane, Tornado and Inundation. The nature of the accompanying natural phenomena shows that they are of the category ‘Act of God’ and not merely a flooding arising out of heavy rainfall or events that can be avoided by human diligence and timely action. Since “Flood” accompany these Acts of God, it can only be presumed “Flood” to be of the same class and dimensions akin to Act of God.
10. In order to prove the nature of Flood, Ext. A11 cannot be considered as a valid document. The complainant ought to have produced documents issued by the IMD to prove his case. It is true that Ext. A11 is on all fours with the case of the complainant. But the context and circumstances under which it was issued is not beyond reasonable doubt in view of the contents of Ext. B4 report. It is to be noted that Ext. B4 was not disproved during evidence.
11. Hence we hold that Ext.B4 report dated 19/3/2020 correctly reflects the cause of damage suffered by the complainant.
2. There was a waiting period of 15 days from the inception of policy period and even occurred within 2 days of inception of policy period.
12. The 2nd ground is that the event occurred within 2 days of inception. Since there was 15 days waiting period, the O.P. 2 was not bound to indemnify the complainant.
13. The complainant averred that the complainant was not aware of this unilateral variance in the terms and conditions in the policy as no notice was served on the complainant. The 2nd O.P. had unilaterally, immediately on receipt of the premium, renewed policy with varied terms and conditions. In order to prove his case, the complainant had submitted Exts. A2 to A6 policies. Ext. A2 to A5 policy schedules are the policies for preceding years of the subject year. Coverage in Exts. A2 to A5 starts from the date of inception of policy in Exts. A2 to A5 policies.
But Ext. A6, in Clause 12, a new clause is added.
“Special Conditions: CLAIMS ARISING OUT OF Earth Quake…………………………………….COVERED AFTER 15 DAYS FROM THE COMMENCEMENT OF THE POLICY start date”
14. Inception of the policy was on 16/10/2019. Flooding occurred on 18/10/2019, ie. within 2 days of inception of Policy. Thus the 2nd O.P. is absolved of any liability to indemnify the complainant.
15. Thus we hold that repudiation of claim on the aforesaid two grounds by the Insurance Company is valid and legally tenable.
Issue No.2
16. Complainant pleaded that Ext. A1 contained clauses regarding standing instructions to O.P. 1 to automatically pay premium and avail insurance coverage. Premia for Exts. A2 to A6 were paid accordingly based on the standing instructions and that there was a continuance of coverage from the date of its inception (20/06/2014) as can be seen in Ext. A2.
17. Inorder to ascertain the veracity of the pleadings, periods covered under Exts. A2 to A6 policies are to be noted.
Srl. No. | Exhibit | Date of Inception | Date of Culmination | Remarks |
1 | A2 | 20/06/2014 | 19/06/2015 | Nil |
2. | A3 | 12/08/2015 | 11/08/2016 | Gap of nearly 2 months between A2 and A3 |
3. | A4 | 12/08/2016 | 11/08/2017 | Nil |
4. | A5 | 04/01/2018 | 03/01/2019 | Gap of over 4 months between A4 and A5. |
5. | A6 | 16/10/2019 | 15/10/2020 | Gap of over 9 months between A5 and A6. |
As can be seen from the schedule above, inception of Exts. A3, A5 and A6 policies occurred very much after the culmination of the preceding policies. In view of such discontinuance, we cannot hold that there was a standing instruction made by the complainant to the 1st O.P. Bank. Even considering that there was a standing instruction, we cannot hold it feasible that the complainant, a businessman, would fail to see such failures in payment of premia on the part of the O.P. Bank, resulting in loss of coverage.
18. We find that the pleading of the complainant that there was a standing instruction to the O.P.1 Bank to deduct premium highly improbable. Resultantly we hold that there is no deficiency in service or unfair trade practice on the part of the 1st O.P. Bank.
Issue No.3
19. Per discussion and conclusion in Issue no. 2, we have concluded that there were gaps in coverage periods. Gap between coverage period under Ext. A5 and Ext. A6 is over 9 months. Hence the policy issued is a fresh policy and Ext. A6 cannot be construed as a continuation of Ext. A5. The 2nd O.P. is at liberty to amend the terms and conditions. Considering the time gap, we cannot hold that the variance was unilateral.
20. Resultantly, we hold that there is no deficiency in service or unfair trade practice on the part of the 2nd O.P. Insurance Company.
Issue Nos. 4 & 5
21. Apropos the conclusion in Issue Nos.1 to 3, we hold that the complainant is not entitled to any reliefs. With this conclusion, this complaint is dismissed.
22. In the facts and circumstances of the case, the parties are directed to suffer their respective costs.
Pronounced in open court on this the 2nd day of May, 2023.
Sd/-
Vinay Menon V
President
Sd/-
Vidya.A
Member
Sd/- Krishnankutty N.K.
Member
APPENDIX
Exhibits marked on the side of the complainant :
Ext.A1 – Copy of credit sanction intimation
Ext.A2 – Copy of Standard Fire and Special Policy policy
Ext.A3 –Copy of Standard Fire and Special Policy Schedule bearing No.76110411150100000042
Ext.A4 - Copy of Standard Fire and Special Policy Schedule bearing No.76110411160100000047
Ext.A5 - Copy of Standard Fire and Special Policy Schedule bearing No.76110411170100000340
Ext.A6 - Copy of Standard Fire and Special Policy Schedule bearing No.76110411190100000313
Ext.A7 - Copy of Fire Insurance Claim Form
Ext.A8 – Copy of communication dated 20/4/2020
Ext.A9 – Copy of registration certificate
Ext.A10 – Copy of communication dated 10/1/2019
Ext.A11 – Copy of discharge voucher dated 12/3/2020
Exhibits marked on the side of the opposite party:
Ext.B1 – True copy of Ext.A6
Ext.B2 – Original of Ext.A7
Ext.B3 – Copy of Ext.A8
Ext.B4 – Original Surveyor’s report dated 19/3/2020
Ext.B5 – Same as Ext.A1
Ext.B6 – Same as Ext.A5 along with policy conditions
Ext.B7 – Same as Ext.A6
Ext.B8 – Copy of advice for re-phasing repayment schedule dated 20/12/2018
Court Exhibit: Nil
Third party documents: Nil
Witness examined on the side of the complainant: Nil
Witness examined on the side of the opposite party: Nil
Court Witness: Nil
NB : Parties are directed to take back all extra set of documents submitted in the proceedings in accordance with Regulation 20(5) of the Consumer Protection (Consumer Commission Procedure) Regulations, 2020 failing which they will be weeded out.
