Chandigarh

StateCommission

A/355/2015

The Oriental Insurance Company Ltd. - Complainant(s)

Versus

M/s Handa Brick Industries - Opp.Party(s)

Swatantar Kapoor, Adv.

31 Dec 2015

ORDER

 

STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

U.T., CHANDIGARH

                                                                 

 

Appeal No.	:	355 of 2015
Date of Institution	:	29.12.2015
Date of Decision	:	31.12.2015

 

The Oriental Insurance Company Ltd. Branch Office-Chopra Tower, IInd Floor, Above OBC, Ambala Chandigarh Road, Dera Bassi, Punjab - 140507 through Regional Manager, OIC, Surendra Building, SCO 109-111, Sector 17, Chandigarh.

.…Appellants.

Versus

M/s Handa Brick Industries Village- Joula Kallan, Tehsil-Dera Bassi, District SAS Nagar, Punjab, through its proprietor Sh. Vivek Handa.

…..Respondent.

 

Appeal under Section 15 of the Consumer Protection Act, 1986.

 

BEFORE:   JUSTICE JASBIR SINGH (RETD.), PRESIDENT.

                SH. DEV RAJ, MEMBER.

                SMT. PADMA PANDEY, MEMBER.

               

Argued by:

 

Dr. Mrs. Swatantar Kapoor, Advocate for the appellants.

 

PER DEV RAJ, MEMBER

 

              This appeal has been filed against the order dated 23.11.2015, rendered by the District Consumer Disputes Redressal Forum-II, U.T., Chandigarh (in short ‘the Forum’), vide which, consumer complaint bearing No.432 of 2014 was allowed and the Opposite Parties (now appellants) were jointly and severally directed as under:-

“13.      We are of the concerted opinion that the complaint deserves to be allowed.  Accordingly, the complaint is allowed and the Opposite Parties are jointly & severally directed as under:-

a]  To pay Rs.3,68,750/- (3,78,750/-less Rs.10,000/-(deducted under excess clause)) to the complainant as assessed by the Surveyor.

b]  To pay Rs.15,000/- as compensation for causing mental agony and physical harassment to the complainant.

c]  To pay Rs.7,000/- towards litigation expenses.

         The above said order shall be complied with by the Opposite Parties within 45 days of its receipt, failing which they shall be liable to pay interest on amount awarded at (a) @12% p.a. from the date of claim till realization and on the amount at (b) from the date of this order till it is paid, besides paying litigation expenses.” 

2.             The facts in brief are that the complainant is a unit engaged in manufacture of bricks and it had availed Insurance Policy (Annexure C-1) i.e. the Standard Fire and Special Perils Policy after paying the due premium to Opposite Party No.1 for the period from 11.12.2013 to 10.12.2014 for Rs.15 lacs against any loss caused to the brickworks including re-fractories and fire bricks.  It was stated that unfortunately on the intervening night of 12^th/13^th May, 2014, due to heavy rain, water accumulated in the premises and approximately 5 lacs moulded raw bricks of the complainant got damaged. It was further stated that Opposite Party No.2 was intimated regarding the same on 13^th May 2014. It was further stated that accordingly, a Surveyor was appointed, who conducted the survey on 14.5.2014. It was further stated that Opposite Party No.2 vide its letter dated 2.6.2014 (Exhibit C-3) repudiated the claim of the complainant on the basis of survey report and on the plea that the cause of loss i.e. rain was not covered under the Standard Fire and Perils Policy.  It was further stated that in the said letter itself, it was admitted that the said Policy covered loss due to flood and inundation. It was further stated that the Opposite Parties did not supply the Policy Document to the complainant earlier but provided the same on 16.6.2014 after a request from the complainant.  It was further stated that the complainant vide letter dated 7.7.2014 requested Opposite Party No.2 to pay the claim but to no avail. It was further stated that even if the gross loss assessment of Rs.3,78,750/- is considered to be correct, as assessed by the Surveyor, then by relying on the judgment of Hon'ble National Consumer Disputes Redressal Commission, New Delhi in New India Assurance Vs. Uni Ply Industries (RP No.342/2013), no subsequent deduction on account of average clause could be made, as no such condition was mentioned in the Policy Document (Exhibit C-1). It was further stated that on the date of loss, the stock valuing around Rs.15 lakhs only was lying in the premises and the valuation of stock as on that date as Rs.71,50,000/- by the Surveyor was unjustified. It was further stated that the deduction of Rs.10,000/- on account of excess clause could be allowed as mentioned in the Policy Document. It was further stated that even if the admitted gross loss assessed by the Surveyor was considered to be correct, then a claim of Rs.3,78,750.00 – Rs.10,000.00 = Rs.3,68,750.00 was liable to be paid to the complainant. It was further stated that the Surveyor again without any justification allowed Rs.3,750/- as debris removal charges instead of Rs.58,000/- so claimed. It was further stated that the aforesaid acts of the Opposite Parties amounted to deficiency, in rendering service, and indulgence into unfair trade practice.

3.             When the grievance of the complainant, was not redressed, left with no alternative, a complaint under Section 12 of the Consumer Protection Act, 1986 (hereinafter to be called as the Act only) was filed seeking directions to the Opposite Parties to pay Rs.5,08,000/- on account of loss suffered; Rs.4,000/- spent on making repeated visits and phone calls to the Opposite Parties; Rs.2,00,000/- as compensation for deficiency in service leading to tremendous harassment and mental agony and Rs.31,000/- as legal expenses.

4.             The Opposite Parties in their written statement stated that Standard Fire & Special Perils Policy was issued to the complainant vide Policy No.231303/11/2014/194, valid for the period from 11.12.2013 to 10.12.2014 and the said Policy was subject to certain terms and conditions, which were duly conveyed to the complainant prior to issuance of the Policy and after understanding the same, premium was paid by the complainant and Policy was issued. It was further stated that after receiving intimation regarding the loss, the Opposite Parties immediately deputed the Surveyor, who submitted his report on 19.5.2014. It was further stated that while going through the claim file and papers, the Opposite Parties observed that loss was caused to bricks due to the rain and the said bricks were lying outside in the open fields and hence, got damaged and no flood was reported on that very day. It was further stated that Standard Fire Perils Insurance Policy is a named Perils Policy and all the Perils covered under the SFP Policy are defined and since rain is not a peril covered under the Policy, hence, claim was not admissible as the same was outside the scope of terms and conditions of the Insurance Policy. It was further stated that the loss was thoroughly assessed by the Surveyor to the tune of Rs.72,425/- after applying the excess clause and depreciation value but the assessment was just done to ascertain the maximum liability of the Opposite Parties for the quantification purpose only, as the claim was outside the scope of terms and conditions of the Insurance Policy. It was further stated that the Policy, in question, only covered flood and inundation and the said rain on the date of loss, had not resulted into flood or inundation. It was further stated that as such, the claim of the complainant was rightly repudiated.  It was further stated that complainant was duly supplied terms and conditions alongwith Policy. It was further stated that as the second page of the Policy clearly stated that whether same were supplied or not, the complainant intentionally did not place the same on record. It was further stated that neither there was any deficiency, in rendering service, on the part of the Opposite Parties, nor they indulged into unfair trade practice. The remaining averments, were denied, being wrong.

5.             The complainant filed rejoinder wherein it reiterated all the averments contained in the complaint and repudiated those as contained in the written statement of the Opposite Parties.

6.          The parties led evidence, in support of their case.

7.           After hearing the Counsel for the parties and, on going through the evidence, and record of the case, the District Forum, allowed the complaint, vide the impugned order, as stated above.

8.           Feeling aggrieved, the Opposite Parties have filed the instant appeal.

9.             We have heard the Counsel for the appellants, at the preliminary stage, and have gone through the evidence and record of the case, carefully.

10.           The Counsel for the appellants submitted that the terms of contract of insurance had to be strictly construed and no exception could be made on the ground of equity. She further submitted that because of under insurance, in terms of Clause 10 of the Policy, the Surveyor correctly assessed the loss to the tune of Rs.72,425/- but the District Forum erred in granting relief of Rs.3,68,750/- i.e. (Rs.3,78,750/- less Rs.10,000/- deducted under excess clause) besides Rs.15,000/- as compensation for causing mental agony and physical harassment and Rs.7,000/- towards litigation expenses.  She submitted that at best, the respondent was entitled to loss assessed by the Surveyor.

11.           After giving our thoughtful consideration, to the contentions, raised by the Counsel for the appellants and the evidence, on record, we are of the considered opinion, that the appeal is liable to be dismissed, at the preliminary stage, for the reasons, to be recorded hereinafter.

12.           It is evident on record that ‘Standard Fire and Special Perils’ Policy bearing No.231303/11/2014/194, valid for the period from 11.12.2013 to 10.12.2014 (Exhibit C-1) was issued by the appellants to the respondent, covering risk of Brickworks (including refractories and fire bricks) and the sum assured was Rs.15 Lacs. It is also a fact that on the intervening night of 12^th/13^th May, 2014, due to heavy rain, water accumulated in the premises and approximately 5 lacs moulded raw bricks of the respondent got damaged. The respondent filed claim with the appellants, which was repudiated vide letter dated 02.06.2014 (Exhibit C-3) stating that as per terms and conditions of Policy, the claim was not payable. The relevant contents of repudiation letter (Exhibit C-3) are extracted hereunder:-

“……On closed scrutiny of the papers submitted by you in support of your claim, we regret to inform you that your claim is not tenable on the following grounds:

Immediately, on receipt of the claim intimation an independent surveyor Mr. PUKRAJ SINGH was deputed by us for final survey. Survey was done in the presence of your representative. We are to inform you that as per surveyor report that the cause of loss i.e. Rain is not covered under the standard Fire & special Perils Policy. The policy covers Flood & inundation. As the rain has not resulted into flood or inundation & policy covers Flood & inundation. As above claim does not fall within the purview of the policy. Please note that as per term and condition of policy. Hence, claim is not payable…..”

13.           Apparently, the Insurance Cover in the sum of Rs.15 Lacs was against any loss caused to the brick works. The same by no stretch of imagination was with respect to finished bricks and coal etc. In the instant case, the claim lodged by the respondent was also against damage to 5 Lac raw bricks as is evident from Para 3 of the survey report, which reads as under:-

“He informed that on night intervening 12^th and 13^th May 2014, there was heavy rain. Due to which approx. 5.00 Lakh raw bricks lying (Moulded, but yet to be burned) outside in the open fields got damaged. They have to remould these bricks and the insured claimed labour towards remoulding of 5 Lakh bricks.”

14.           The following position stated in the survey report, being relevant, is also extracted hereunder:-

“IN OUR VIEW

The contention of the insured appears to be reasonable and there is every possibility of such an event. We didn’t find any thing suspicious or contrary to the statement of the insured. In our opinion, the loss was sudden and unforeseen and could have occurred by the reason stated by the insured.

POLICY COVERAGE

This loss is sudden, unforeseen and attributed to the cause & nature of damage. However, the cause of loss i.e. rain is not covered under the policy. This policy covers Flood & Inundation. As the rain has not resulted into flood or inundation, the claim is not admissible under the policy issued.”

The above finding of the Surveyor, which apparently supports the cause of damage and the claim of the respondent, cannot be overlooked.

15.           The case of the respondent as averred in Para 3 of the complaint is that heavy rain occurred leading to inundation and accumulation of water. The Surveyor despite observing that position stated by the respondent was correct, erroneously concluded that the peril was not covered under the Policy, when the loss due to flood and inundation is included. ‘Flood’ as per Oxford Dictionary, means “Overflow of a large amount of water over dry land, an over whelming quantity or out pouring”. The Surveyor accepted the contention of the respondent that there was heavy rain and consequently damage to moulded bricks was caused. In absence of any finding by the Surveyor by way of cogent evidence from the Revenue Authorities, that such heavy rain did not result in overflow of large amount of water, the logical inference is that there was flood and inundation causing damage to the moulded bricks. In the survey report, the Surveyor also made the following assessment:-

“The damaged bricks were moulded and were lying in the open for drying. The insured informed that they have to pay Rs.700.00 per 100 bricks for moulding. Since the material can be reused, we are allowing Rs.700.00 Plus Rs.50.00 towards other misc expenses.

 

Sl.	Description	Claimed			Assessed
		Qty	Rate Rs.	Amount Rs.	Qty	Rate Rs.	Amount Rs.
1	Labour for remoulding	500,000	0.90	450,000.00	500,000	0.75	375,000.00
2	Debris removal charges			58,000.00			3,750.00
				508,000.00			378,750.00

 

The insured claimed Rs.58,000.00 towards debris removal. The same is assessed @1% of claim amount as per terms & conditions of policy issued.”

16.           It is also evident from the survey report dated 19.5.2014 (Exhibit C-2) that claim lodged by respondent for Rs.5,08,000.00 and gross loss assessed by the Surveyor in the sum of Rs.3,78,750/-, were well within the insurance cover of Rs.15 Lacs. When the damage was to the moulded bricks and claim was also in respect thereto, despite assessing the loss as Rs.3,78,750/-, the Surveyor erroneously applied average clause by taking into account stock statements for the last two months and the total value at risk despite the fact that damage was limited to moulded bricks only, value of which was Rs.4,50,000/-. Had the damage and claim been more than the sum insured viz. Rs.15 Lacs, the position would have been different.

17.           Perusal of Survey Report reveals that as on the date of loss, stock in brick killn (baked and yet to be removed) were of the value of Rs.45 Lacs; finished bricks outside kiln were of the value of Rs.12 Lacs; raw material bricks at pather side was of the value of Rs.7,50,000/- and coal at site was of the value of Rs.7.00 Lacs. Obviously, no damage could have occurred to the baked/finished bricks and coal at site and there was no claim qua the same. The value of raw material (moulded bricks) was well within the insurance cover of Rs.15 Lacs. The manner in which the excess clause has been applied to, in our considered opinion, is not at all correct and justified, when there was no damage to the baked/finished bricks and coal at site. Therefore, the finding of Surveyor whereby he assessed the net loss in the sum of Rs.72,425/- is apparently erroneous. The judgment relied upon by the Counsel for the appellants in case titled M/s Sri Sarbati Steel Tubes Limited Vs. The Oriental Insurance Co. Ltd., Revision Petition No.2786 of 2008, decided by the Hon’ble National Consumer Disputes Redressal Commission, New Delhi on 28.10.2013 is distinguishable on facts. In that case, the total sum insured was Rs.7,43,00,000/- at an annual premium of Rs.1,00,055/-. Two claims for Rs.50,000/- and Rs.2,50,000/- were filed by the complainant as the loss pertained to two divisions. The Surveyor estimated the loss of Rs.88,912.50Ps for the Tube Division and Rs.21,164.38Ps for the Flat Division. The Surveyor estimated that there was under insurance to the extent of 51.9% in Tube Division and 76.8% in Flat Division. However, in the instant case, there is no separate insurance cover for different divisions or different heads and, therefore, no help can be drawn from the facts of this case. In Oriental Insurance Co. Ltd. Vs. M/s R.P. Bricks, First Appeal No.782 of 2007, decided by Hon’ble National Commission on 15.05.2013, it was held in Para 8, inter-alia, as under :-

“……In a number of cases under almost identical circumstances where claims had been repudiated under the fire and Special Perils Policy on the ground that the damage caused to the insured stocks/premises had been caused because of seepage caused due to heavy rains and not due to inundation, floods etc., we had concluded that the claim was wrongly repudiated since flood/inundation also means outpouring of water. On this analogy loss caused due to seepage following heavy rains into any part of the insured premises would be covered under the definition of “flood” and “inundation” and the claim should in such circumstances be indemnified. Some specific judgments wherein we had reached the above conclusions include Bajaj Allianz  General Insurance Co. Ltd. Vs. Gondamal Hardyal Mal [IV (2009) CPJ 165 (NC)]; New India Assurance Co. Ltd. Vs. Dani Mourdhwaj Cold Storage Pvt. Ltd. (RP No.4113 decided on 10.02.2012); and Oriental Insurance Co. Ltd. vs. M/s Sathyarayana Setty & Sons (RP No.3454 of 2007) decided on 14^th March, 2012). In the instant case, since it is not in dispute that the damage was caused by heavy rains entering the premises, we are of the view that since this was the outcome of inundation around the area, it would be logically covered under the policy even though “seepage” or “heavy rains” may not per se have been listed as one of the perils in the insurance policy. Therefore, following our own judgments, we agree with the order of the State Commission, which had allowed the Respondent/Complainant’s appeal and uphold the same in toto.”

Thus, the District Forum while placing reliance on Oriental Insurance Co. Ltd. Vs. M/s R.P. Bricks’s case (supra), rightly held that claim of respondent was covered under the Policy.  The respondent was, therefore, entitled to the amount assessed by the Surveyor i.e. Rs.3,78,750/- less Rs.10,000/- under excess clause. In our considered opinion, the District Forum rightly allowed the complaint and directed the appellants (Opposite Parties), jointly and severally, to pay Rs.3,68,750/- i.e. (Rs.3,78,750/- less Rs.10,000/- deducted under excess clause) besides Rs.15,000/- as compensation for causing mental agony and physical harassment and Rs.7,000/- towards litigation expenses. 

18.           No other point, was urged, by the Counsel for the appellants.

19.           In view of the above discussion, it is held that the order passed by the District Forum, being based on the correct appreciation of evidence, and law, on the point, does not suffer from any illegality, warranting the interference of this Commission.

20.           For the reasons recorded above, the appeal, being devoid of merit, is dismissed, at the preliminary stage, with no order as to costs. The order dated 23.11.2015 passed by the District Forum is upheld.

21.           Certified copies of this order, be sent to the parties, free of charge.

22.           The file be consigned to Record Room, after completion.

Pronounced.

December  31,  2015.

Sd/-

[JUSTICE JASBIR SINGH (RETD.)]

PRESIDENT

 

 

Sd/-

[DEV RAJ]

MEMBER

 

 

Sd/-

[PADMA PANDEY]

 MEMBER

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