Sri.D.Krishnappa,<br /> President<br /> <br /> 1. The Complainant has come up with this Complaint under section 12 of the Consumer Protection Act, 1986 against the Opposite parties alleging that she is running a business in the name of M/s Shawn Distributors for her livelihood as stockists and distribution of Ice-creams, for that she had borrowed a sum of Rs.3,95,000/- as term loan from the 1st Opposite party and put up a cold storage unit. She also availed a sum of Rs.1,00,000/- against the stock of Ice-creams in cold storage. That the 1st Opposite party as security for the loan advance by it had insured the machineries and the stock in trade with the 2nd Opposite party and was debiting the premium amount paid for insurance policies to her account. The 1st Opposite party had not brought to her notice at the time of taking insurance policies from the 2nd Opposite party. That there was a breakdown of electricity supply on 04.03.2005 which resulted in burning out of the freezer compressor and loss of Ice-cream stock totaling to Rs.2,86,000/-, accordingly she informed both the Opposite parties about the same. Then she made a claim of loss with the 2nd opposite party by furnishing all necessary particulars. But to her surprise through a letter dated 14.02.2006 the 2nd Opposite party informed her that loss of Ice-cream was not covered under the policy details and therefore it is not liable to compensate her. Further stating that the loss of Ice-cream kept in the storage was not covered under the General Exclusion Clauses and therefore refused to compensate the loss of Ice-cream. That during March 2006, the 2nd Opposite party sent a cheque for Rs.16,833/- towards full and final settlement of the claim towards the freezer equipment damage, as it was very low as against the claim for Rs.53,583/-, she refused the cheque. Thereafter, several correspondences took place and stated that the 1st Opposite party who had taken insurance policy on the stock in trade had not taken insurance to cover the stock kept in the cold storage due to the failure of electricity. Therefore, the 1st Opposite party who had not taken an insurance for the stock in trade under the appropriate clause is liable to compensate her for the loss of Ice cream. Therefore, the 1st Opposite party is liable for deficient service and 2nd Opposite party for unfair trade practice. The contention of the 2nd Opposite party that the machinery was under value is baseless and therefore has prayed for a direction to the 1st Opposite party to pay damages of Rs.5,00,000/- and to direct the 2nd Opposite party to pay a sum of Rs.1,53,583 which includes the stock to the extent of Rs.1,00,000/- with interest and also to direct the 2nd Opposite party to pay a sum of Rs.5,00,000/- with interest as damages.<br /> 2. The 1st Opposite party filed its version admitting to had advanced a loan of Rs.3,95,000/- as term loan to the Complainant. It has denied advancing of Rs.1,00,000/- against the stock of Ice-cream, but it has admitted that in order to cover the risk of lending of money to the Complainant had taken two insurance policies with 2nd Opposite party and it paid premiums debiting to the account of the Complainant. But called upon the Complainant to prove the loss suffered by her to an extent of Rs.2,86,000/- and it has stated that value of the cold storage freezer unit was only Rs.3,95,000/- when it advanced the loan and denied inadequency of the sum assured. It is also admitted that stock to an extent of Rs.1,00,000/- kept in the cold storage has been covered under the fire policy and further denying its liability and other allegations has prayed for dismissal of the Complaint.<br /> 3. The 2nd Opposite party has filed version stating that after it was informed about the break down of machineries of the Complainant they had appointed a surveyor to asses the loss who after assessing the loss submitted his report. It is further contended that the first Opposite party had taken fire insurance policies in the name of the Complainant one on the machineries and other on the stock of Ice cream as against fire. The Opposite party further referring to the report of the surveyor has contended that the cost of new equipment similar to one which break down was of Rs.6,46,875/- including all other charges, but the first Opposite party has taken a policy for Rs.3,95,000/- therefore the machinery was under insured. That the policy taken for the stock in trade is not covered under the conditions of the policies as the 1st Opposite party had taken the policy on the Ice cream stock for fire explosion, riot etc. but the melting of the Ice cream due to power failure since was not covered it is not liable to compensate the Complainant. That it on the basis of the surveyor reports taking into consideration, the under insurance depreciation etc. found itself liable to pay a sum of Rs.16,833/- to the Complainant, but the when a cheque was sent to that amount to the Complainant, she refused to receive the cheque. Therefore stated that it is not liable to pay a sum of Rs.1,53,583/- and Rs.5,00,000/- as claimed by the Complainant and has prayed for dismissal of the Complaint. <br /> 4. In the course of enquiry into the Complaint allegations, the Complainant has filed her affidavit evidence one K.M.Channabasaveswara for the 2nd Opposite party and one Arunkumar for the 1st Opposite party have filed their affidavit evidence. Both parties have produced certain documents. The Complainant has subjected the surveyor for cross-examination. Heard the counsel for both the parties and perused the records.<br /> 5. On the above contentions, following points for determination arise.<br /> 1. Whether the Complainant proves that the offer of the 2nd Opposite party to pay a sum of Rs.16,833/- towards damage to the machineries is inadequate and therefore she is entitled to a sum of Rs.53,583/-?<br /> 2. Whether she proves that the 1st Opposite party who had taken insurance for the stock in trade was deficient in not taking appropriate policy to protect the stock in trade and therefore it has caused deficiency in service and is liable to compensate the cost of ice-cream loss in the incident?<br /> 3. Whether the Complainant is entitled for the relief sought for?<br /> 4. What order?<br /> 6. Our findings are as under:-<br /> Point no.1 : In the Affirmative in part.<br /> Point no.2 : In the affirmative.<br /> Point no.3 : In the affirmative in part.<br /> Point no.4 : See the final order.<br /> <br /> REASONS<br /> <br /> 7. Point no. 1:- There is no dispute between the Complainant and 2nd Opposite party, that 1st Opposite party who is the creditor of the Complainant had taken an insurance policy from the 2nd Opposite party on behalf of the Complainant against the loss or damage to the machineries installed in the cold storage, and that 1st Opposite party who as security to the loan advanced, insured the machineries against any loss to an extent of Rs.3,95,000/- equalent to the loan it had advanced on behalf of the Complainant and was paying the premiums by debiting it to the account of the Complainant. It is also not dispute the said policy was valid as on 04.03.2005 on which day the machineries were broke down due to interruption of electricity. The Complainant made a claim with the 2nd Opposite party contending that some parts of the machinery were broken down due to interruption of electric supply claiming a sum of Rs.53,585/- towards the cost of repair and replacement of the compressor unit of the cold storage. <br /> 8. The 2nd Opposite party after having come to know the incident of breakdown of the machinery in the cold storage of the Complainant appointed a surveyor by name R.S.Prakash to asses the damage caused to the machinery. The said surveyor after assessing the damaged parts of the machinery and replacement value submitted his report on 27.03.2004 to the 2nd Opposite party. The surveyor in his report has admitted and agreed with the Complainant regarding break down of several parts of the machinery and claim of the Complainant for replacement of those parts. The Complainant in his claim application made a claim of Rs.53,583/- towards the replacement of all the broken parts and other electric appliances which inclusive of her claim of Rs.8,500/- towards refrigerant gas. The surveyor has agreed with the claim of the Complainant in so far as the cost of replacement of all the broken parts and electrification, but has disallowed the claim of the Complainant for Rs.8,500/- which is the cost of refrigerant gas on the ground it comes under the exclusion clause. The surveyor has disagreed with the Complainant claim for Rs.3,306/- towards vacumising and gas charging, but allowed Rs.2,500/- as against the claim of the Complainant for Rs.3,306/- and thus the surveyor arrived to the total loss and assessed at Rs.43,214.88 as against the claim of the Complainant for Rs.53,583/-. Except the dispute regarding the charges of gas, the claim of the Complainant towards replacement of parts has been concurred by the surveyor except small difference of labour charges of gas charging and vacumising. <br /> 9. The learned counsel appearing for the Complainant in the course of arguments submitted that disallowing the cost of gas required to be filled to the refrigerant by the surveyor is not proper and therefore submitted that cost of the gas should also be compensated by the 2nd Opposite party. Whereas, the counsel representing the 2nd Opposite party refuting the contention of the counsel for the Complainant submitted that gas required to be filled to the refrigerator is a consumable item bound to exhaust periodically and it has to be refilled by the Complainant as and when required and therefore stated that cost of that gas cannot be compensated. We agree with the counsel for the 2nd Opposite party, that gas required to be filled to the refrigerator for its functioning being exhaustible get itself exhausted in the course of using the machinery and therefore such an item cannot be construed as a part of the machinery which was insured for the purpose of claiming reimbursement. Therefore, we hold that the gas is not part of the machinery worn out or broken down, because of the interruption of electricity. The Complainant has not even shown to us as to what was the quantity of gas that was available in the refrigerator as on the date of the incident though the quantity of gas to be filled to the refrigerator was 5 kgs. The Complainant has also not placed any material before us as to when she had filled the gas and how long that 5 kgs. of gas could give them service. Therefore, under these circumstances, we hold that the Complainant is not entitled for reimbursement of Rs.8,500/- towards the alleged loss of gas. With this, we conclude that there cannot be any dispute with regard to the total loss assessed by the surveyor at Rs.43,214.88.<br /> 10. The surveyor after having so assessed the gross loss has allowed salvage cost of Rs.500/- and depreciation at 10% and after deducting them has arrived to the total cost of repair at Rs.34,502.38. The surveyor has been subjected to cross-examination by the counsel for the Complainant. The surveyor in his cross-examination has admitted that depreciation of the value is not permitted under the terms of the policy and the depreciation is shown in his report as against the conditions of the policy. With this admission of the surveyor, if he refer to sub clause (a) of clause 2 of the policy under the head sum insured as found in the policy, it is stated that no deduction shall be made for depreciation in respect of parts replaced except those with limited life but the value of any salvage will be taken into account if the cost of repairs as detailed herein above equals or exceeds the actual value of the machinery insured immediately before the occurrence of the damage. Therefore, the parts of the machinery broke down were not of limited life. Therefore, the surveyor ought to have not worked out the depreciation of the parts replaced, as it is not permissible under the conditions of the policy. Therefore, if the depreciation is disallowed the gross repair cost would come to Rs.42,514.38 as per the surveyor reports itself. But the problem cropped up thereafter when the surveyor took the present replacement value of the machine into consideration and when held that sum insured Rs.3,95,000/- as per the policy is not adequate and therefore stated that there is under average insurance to the machinery and thereby taking the present value of the machinery as Rs.6,46,875/- worked out the proportionate loss of parts at Rs.21,068/- and further deducting a sum of Rs.3,950/- towards less policy excess has arrived to net claim payable to the Complainant by 2nd Opposite party as Rs.17,118/-. The 2nd Opposite party appears to had offered this amount as the cost of replacement of parts to the Complainant, wherein the Complainant refused to receive the same.<br /> 11. On perusal of the report of the surveyor regarding his observation of under insurance in our view is baseless and unscientific. Admittedly, the machinery that the Complainant installed in the cold storage is nothing, but a refrigerator is a storage equipment called freezer 2 HP model SF 002 was manufactured in the year 2002 as could be seen this from the report of the surveyor itself. There is no dispute that this equipment was fixed in the cold storage of the Complainant and insurance came to be made and renewed, but surveyor during the course of his assessment of the loss got the quotations of the said machinery to know the cost of new equipment of similar capacity and model and received a quotation from M/s ARIES Corporation Mysore dated 07.03.2006 under which the same model machine cost is shown as Rs.5,15,000/-. The surveyor has not bothered to ascertain the value of the machinery, which was prevailing during the year 2002, when the Complainant purchased it. Admittedly, the rates of all the items including machinery is increasing year by year because of several reasons. Therefore, the act of the surveyor in taking into consideration the value of machinery prevailing in the year 2006 and comparing to the cost of 2002 is impermissible and therefore on that basis the surveyor cannot say that the machineries is under insured. Further, the surveyor committed the same mistake in working out the installation expenditure and the add VAT prevailing in the year 2006 for getting that installation was made long back and thereby assessed the replacement value of the machinery as on 27.03.2006. Therefore, if we compare the insured amount of Rs.3,95,000/- to this amount undoubtedly the amount of Rs.3,95,000/- can be said as under insured. But the question is, the method adopted by the surveyor in our view being not a scientific and practical we do not agree with him to hold that the Complainant has under insured the machinery. The 1st Opposite party which is the bank which advanced the loan to the Complainant for purchase of machinery must have paid that amount to the suppliers of those machinery. Therefore, when the bank itself took the insurance to safeguard the machineries against perils got the insurance to the amount, which was the cost of the machinery prevailing at that time. The surveyor in our view ought to have ascertained the cost of the machinery as on the date of purchase and installation and also the amount for which it was insured and should have arrived whether the machinery was under insured or not. The surveyor further after holding that the machinery was under insured has awarded a pro-rata compensation of rs.17,118/- as the amount payable to the Complainant towards replacement of the broke down parts. <br /> 12. It is to be seen that the entire machinery was insured and not the parts. The surveyor having accepted the value of the replaced parts as furnished by the Complainant should have also seen whether the broken down parts were the major parts of the machinery costing more value then the amount for which the machinery was insured. Therefore, the surveyor having agreed with the cost of replacement of the broken out parts should have recommended the payment of the actual cost of parts replaced. The 2nd Opposite party has not disputed the report of the surveyor. Therefore, on considering all these aspects of the matter, we hold that the Complainant is entitled to a sum of Rs.42,714.38 towards the cost of replacement of broken parts and the 2nd Opposite party is liable to compensate it. With this, we answer point no.1 in the affirmative.<br /> 13. Points no. 2 & 3:- The 2nd Opposite party though has also issued an insurance policy for Rs.1,00,000/- towards the ice-cream stock, stocked in the godown, but has contended that the 1st Opposite party had only taken a fire policy for the ice-cream stock on behalf of the Complainant and the intervention of electricity and deterioration of the ice-cream is not covered under the conditions of the policy, therefore it is not liable to compensate the Complainant. The Complainant and the 1st Opposite party have not disputed that the 1st Opposite party had only insured the stock in trade for storm, cyclone, typhoon, tempest, hurricane, tornado, flood and or-inundation but had not taken the policy for protection of the ice-cream stock from electrical interruption. Therefore, we hold that the 2nd Opposite party is not liable for compensating the Complainant towards the loss of ice-cream.<br /> 14. The 1st Opposite party as we have already stated above has not disputed that it had not taken insurance for the stock of ice-cream kept in the godown for covering the risk from electric intervention, but only taken insurance under the fire policy. The 1st Opposite party who itself took the policy from 2nd Opposite party on behalf of the Complainant and deducted the premium amount from the account of the Complainant by way of debiting, ought to have taken care to take a policy which could have covered the risk due to intervention of electricity. The 1st Opposite party in this regard has not come forward with any explanation for its failure to take an appropriate insurance for the ice-cream stock. As such, we find deficiency on the part of the 1st Opposite party in not covering the ice-cream stock with an appropriate insurance policy.<br /> 15. The counsel for the Complainant in the course of arguments submitted that the Complainant had stocked ice-cream worth Rs.2,86,216.80/- and produced some statements in support of his claim, but it is not an authenticated one as it is prepared at the instance of the Complainant and that too produced after the arguments was heard. Apart from this, the Complainant has not produced any piece of paper to show that she had stock of ice-cream worth Rs.2,86,216.80 as on the date of the incident. Even coming to her claim application submitted to the 2nd Opposite party after incident in the coloumn of the application against the particulars of damage sustained she has stated as Rs.2,86,000/- stock of ice-cream damaged and freezer compressor burn out. With this claim of the Complainant, it is manifest that the Complainant herself had shown total damage sustained as Rs.2,86,000/- which is inclusive of loss of ice-cream and damage to freezer compressor. Coming to the Complaint of the Complainant in para – 7 of the Complaint has stated as under:-<br /> <br /> “On March 2006, the 2nd Opposite party sent a cheque for Rs.16,833/- in full and final settlement of the claim towards the freezer equipment damage. As the sum was substantially below the claim of Rs.1,00,000/- towards the stock of ice-creams and Rs.53,583/- towards the cost of repair and replacement of the compressor unit and other electrical items for the cold room freezer”. <br /> <br /> This statement of the Complainant do indicate that she sustained loss of Rs.1,00,000/- towards the loss of ice-cream stocked in the godown. Even otherwise, the Complainant had only got the ice-cream insured to an extent of Rs.1,00,000/- only, this has not been controverted or rebutted by the 1st Opposite party the Bank. Therefore, we find no reasons to disbelieve the claim of the Complainant for awarding compensation of Rs.1,00,000/- towards loss of ice-cream against the 1st Opposite party. With the result, we answer the points no.1 & 2 accordingly and pass the following order:- <br /> ORDER<br /> <br /> 1. The Complaint is allowed.<br /> 2. The 1st Opposite party is held as liable to pay a sum of Rs.1,00,000/- to the Complainant being the cost of the ice-cream stocked in the cold storage.<br /> 3. The 2nd Opposite party is held as liable to pay a sum of Rs.42,714.38 being the cost of replacement of the broken parts of the machinery.<br /> 4. 1st & 2nd Opposite parties are directed to pay the compensation award to the Complainant within two months from the date of this order, failing which they are directed to pay interest at 12% p.a. from the date of this order till the date of payment.<br /> 5. The 1st & 2nd Opposite parties are also directed to pay Rs.1,000/- each towards the cost of this Complaint.<br /> 6. Give a copy of this order to each party according to Rules.<br />