Punjab

Ludhiana

CC/20/143

M/s Shree Om Rice & Gen.Mills - Complainant(s)

Versus

M/s National Insurance Co.Ltd - Opp.Party(s)

GauravSaggi

14 Feb 2024

ORDER

DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION, LUDHIANA.

                                                Complaint No:143 dated 18.08.2020.                                                         Date of decision: 14.02.2024.

 

M/s. Shree Om Rice and General Mills, Bassian Road, V.P.O. Boparai Khurd, Raikot, District Ludhiana, through its partner Sh. Manoj Bansal.                                                                                                   ..…Complainant

                                                Versus

1. M/s. National Insurance Co. Limited, through its Divisional Manager, Divisional Office No.III, Kocher Market, Model Gram, Ludhiana-141001.
2. M/s. National Insurance Co. Limited, through its Managing Director/Director/Authorized Signatory, 3, Middleton Street, Kolkata-700071.

…..Opposite parties 

Complaint Under section 35 of the Consumer Protection Act.

QUORUM:

SH. SANJEEV BATRA, PRESIDENT

MS. MONIKA BHAGAT, MEMBER

 

COUNSEL FOR THE PARTIES:

For complainant             :         Sh. Gaurav Saggi, Advocate.

For OPs                         :         Sh. D.R. Rampal, Advocate.

 

ORDER

PER SANJEEV BATRA, PRESIDENT

1.                Shorn of unnecessary details, the facts of the case are that the complainant firm is a registered partnership firm and Sh. Manoj Bansal, Sh. Sunil Bansal, Ms. Kamlesh Rani Bansal, Ms. Teena Bansal and Sh. Manoj Kumar Mangla are its partners. The complainant firm is engaged in the business of shelling of rice for earning livelihood for its members. The complainant firm obtained Standard Fire and Special Perils policy bearing policy No.404000111810000054 from the OPs w.e.f. 20.04.2018 to 19.04.2019 for a sum insured of Rs.2,60,00,000/-  having coverage of entire plant, machinery, stock of raw materials and finished goods. Out of Rs.2,60,00,000/- a sum assured in the building was Rs.1,00,00,000/-.

                   The complainant stated that on 05.06.2018 at 11.30 PM, due to blowing of high velocity wind and dust storm, the profile sheets of machinery and verandah broken. Even due to wind pressure, the base super structure  of roofing was uprooted from support wall with some angles bent including other damages i.e. a number of ACC sheets of the rice storage shed and profile sheets of machinery, paddy and verandah shed were blown apart/broken/developed cracks or holes in it. Some of the sheets were blew apart and fell in open compound of the mills as well as in surrounding fields along with broken pieces of ACC sheets. Some broken pieces of ACC sheets also fell in the rice storage shed. The incident was reported to the OPs vide letter dated 06.06.2018 by Sh. Manoj Bansal, Partner of the complainant. On 06.06.2018, Sh. Jogesh Kumar, Surveyor of the OPs visited and inspected the site. On 12.09.2018, he again visited the site and took photographs. All the demanded documents were provided to the surveyor. The complainant further stated that it had repaired the damaged part on its own cost for making the machinery operational and spent around Rs.3,46,626/- on repairs. The copies of bills, receipts of payment for repair were provided to the surveyor and the original bills, receipts and other documents including sale/purchase ledger, Sarpanch certificate etc. were handed over to the OPs in their Ludhiana office. The complainant claimed to have got the copies of said documents from the OPs by way of filing RTI. However, the OPs vide letter dated 25.03.2019, 22.04.2019 and 07.06.2019 asked the same documents from the complainant which were already provided to them as well as the surveyor. Then through letter dated 19.07.2019, the OPs closed the claim file by citing “No Claim”. Further through RTI application requested the OPs to give details of reason for closing the claim file. On 17.09.2019, the OPs provided details of file wherein Sh. Jogesh Kumar, Surveyor who came to inspect the site has specifically mentioned the reason for damage. Under RTI, the complainant also got the documents from the OPs including letters dated 25.03.2019, 22.04.2019, 07.06.2019 and 19.07.2019, bills and payments made against the said bills by the complainant firm, ledger accounts maintained by the complainant firm, report of surveyor Jogesh Kumar along with photographs, damage intimation letter dated 06.06.2018, insurance policy, pre-inspection done by Sh. J.S. Khurana before issuing the policy, GST certificate, PAN Card, Fire Claim form 15.02.2019, certificate of Sarpanch regarding incident on 05.06.2018, newspaper clipping, layout plan etc.

                   The complainant further stated that it had incurred loss of Rs.3,46,626/- as per bills/payments but the surveyor had only assessed the amount of Rs.88,692/-, which was denied by it. The surveyor has wrongly calculated the said amount despite having receipt of bills and receipts of repairs. However, the surveyor deliberately and fraudulently made Sh. Manoj Kumar, Bansal partner of the complainant to sign on blank forms  and an amount of Rs.88,692/- was filled later on. The complainant never approved the said amount. Moreover, no communication regarding preparation of report was sent to the complainant rather with malafide intention remained asking for documents already supplied to them. The complainant firm through Sh. Gaurav Saggi, Advocate sent legal notice dated 29.10.2019 for giving claim of Rs.3,46,626/- to which the OPs filed a false reply dated 14.11.2019 by demanding same documents for reassessing the claim. The complainant sent rejoinder dated 27.11.2019 to reply of the OPs but they did not settle the claim till date. Hence this complaint whereby the complainant has prayed for issuing directions to the OPs to pay Rs.3,46,626/- along with compensation of Rs.5,00,000/-.

2.                Upon notice, the opposite parties filed joint written statement and by taking preliminary objections, assailed the complaint on the ground of maintainability of the complaint; non-joinder and mis-joinder of necessary parties; complaint being not filed by competent and authorized person etc. The OPs stated that the complainant was time and again called upon to complete the required documents but it failed to provide the required documents despite number of letters and opportunities and as such, the claim was treated as no claim vide letter dated 19.07.2019. The OPs further stated that again vide reply dated 14.11.2019 through counsel they called upon the complainant to provide the documents demanded through letter dated 07.06.2019 i.e. sale purchase account with complete ledger account for the period w.e.f. 01.04.2018 to 30.06.2019, bills and receipts of payment and provisional balance sheet for 01.04.2018 to up to loss, request letter for re-opening its claim and on receipt of said request and aforesaid documents, OP1 will refer the file to its higher office for seeking permission to reopen the same and on scrutiny of documents received from the complainant and after considering the survey and assessment report dated 12.03.2019 of surveyor, OP1 will settle and decide the payable amount of complainant and will take appropriate decision for settlement of its claim. But the complainant failed to provide required documents despite this letter and is now estopped by his own act and conduct from filing the complaint.

                   On merits, the OPs reiterated the crux of averments made in the preliminary objections. However, the opposite parties admitted issuance of Standard Fire & Special Perils Policy to the complainant having validity from 20.04.2018 to 19.04.2019 for sum insured of Rs.2,60,00,000/-, occurrence of loss, visit of surveyor and repudiation of claim vide letter dated 19.07.2019. The OPs averred that on receiving intimation dated 06.06.2018 regarding incident of 05.06.2018, they deputed Er. Jogesh Kumar for survey and assessing the loss who visited the spot on 06.06.2018 and 12.09.2018 and demanded documents from the complainant. The complainant provided certain documents but had not supplied all the required and demanded documents to the surveyor and to the OPs. Vide report dated 12.03.2019, the surveyor assessed the loss of Rs.88,692/-. The complainant had not rightly got assured the building and machinery. The surveyor after consulting with the complainant and its representative had come to the conclusion that insurance is inadequate and average clause would operate and also considering the other facts and alleged damages to other parts/item, the surveyor submitted his survey report dated 12.03.2019. The complainant was apprised with regard to the loss assessed by the surveyor and Sh. Manoj Kumar Bansal, partner of the complainant had given his acceptance to the surveyor regarding agreeing with loss assessed by the surveyor as Rs.88,692/-. The OPs further stated that vide letter dated 25.03.2019 they demanded documents from the complainant followed by reminders dated 22.04.2019 and 07.06.2019 but the complainant failed to provide the required documents. The claim was duly scrutinized and due to non-supply of the documents, the claim was closed as No Claim vide letter dated 19.07.2019 which was sent to the complainant. Further vide reply dated 14.11.2019 the complainant was asked to provide documents but the complainant failed to provide the required documents. According to the OPs, the claim was rightly treated as No Claim vide letter dated 19.07.2019. The OPs have denied that there is any deficiency of service and have also prayed for dismissal of the complaint.

3.                The complainant filed replication to the amended written statement reiterated the facts mentioned in the complaint and controverted those mentioned in the written statement.

4.                In support of his claim, the partner of the complainant Sh. Manoj Bansal tendered his affidavit Ex. CA in which he reiterated the allegations and the claim of compensation as stated in the complaint. The complainant also tendered documents Ex. C1 is the copy of partnership deed, Ex. C2 is the copy of authority letter, Ex. C3 is the copy of insurance policy, Ex. C4 to Ex. C8 are the letters issued by the OPs, Ex. C9 is the copy of certificate of Sarpanch, Ex. C10 is the copy of statement dated 06.06.2018 of Manoj Kumar, Ex. C11 is the copy of newspaper, Ex. C12 is the copy of certificate of Chamkaur Singh, Ex. C13 is the copy of sale deed, Ex. C14 is the copy of Registration Certificate of complainant firm, Ex. C15 is the copy of PAN Card of the complainant firm, Ex. C16 is the copy of survey and assessment report dated 12.03.2019, Ex. C17 are the copies of photographs, Ex. C18 is the copy of fire claim form, Ex. C19 is the copy of acceptance of claim, Ex. C20  is the copy of estimation report of Jain Associates dated 24.08.2017, Ex. C21 is the copy of site plan, Ex. C22 is the copy of cover note, Ex. C23 is the copy of fire risk inspection report of Khurana Associates, Ex. C24 to Ex. C52 are the copies of receipts/bills of repair, Ex. C53 is the copy of balance sheet from 31.03.2018, Ex. C54 to Ex. 61 are the copies of ledger account w.e.f. 01.04.2018 to 25.03.2019, Ex. C62 is the copy of Form 3CB, Ex. C63 is the copy of legal notice dated 29.10.2019, Ex. C64, Ex. C65, Ex. C68 are the copies of postal receipts, Ex. C66 is the copy of reply dated 14.11.2019 to legal notice, Ex. C67 is the copy of rejoinder dated 27.11.2019 to reply to legal notice, Ex. C69 is the copy Form-A, Ex. C70 is the copy of Form-C and closed the evidence.

5.                On the other hand, counsel for the OPs tendered affidavit Ex. RA of Ms. Kanchan Bansal, Divisional Manager of National Insurance Co. Ltd., DO-III, Kochhar Market, Model Gram, Ludhiana as well as affidavit Ex. RB of Er. Jogesh Kumar along with documents Ex. R1 is copy of insurance schedule, Ex. R2 is the copy of intimation letter dated 06.06.2018, Ex. R3 to R6, Ex. R6/A are the copies of Emails, Ex. R7 is the copy of survey and assessment report dated 12.03.2019, Ex. R8 is the copy of survey fee bill, Ex. R9 to Ex. R81 are the copies of photographs, Ex. R82 is the copy of acceptance of claim, Ex. R83 is the copy of fire claim form, Ex. R84 to Ex. R86 are the copies of letters dated 25.03.2019, 22.04.2019 and 07.06.2019, Ex. R87 is the copy of repudiation letter dated 19.07.2019, Ex. R88 is the copy of reply to legal notice 14.11.2019, Ex. R89 is the copy of postal receipt and closed the evidence.

6.                We have heard the arguments of the counsel for the parties and also gone through the complaint, replication, affidavit and annexed documents and written reply along with affidavits and documents produced on record by both the parties.

7.                The complainant, a partnership firm constituted vide partnership deed Ex. C1 and registered under Section 58 (1) of Indian Partnership Act vide Form-C Ex. C70 through one of its partners namely sh. Manoj Bansal, reflected in Form-A Ex. C69 has raised a grievance against the OPs by filing the present complaint with regard to closing the claim file of the complainant firm as “No Claim”.

                   Admittedly, the complainant submitted duly filled proposal form dated 20.04.2018 along with relevant documents of the property and estimation report of cost of construction work on the premises of the firm, prepared by one Pradeep Kumar Jain of M/s. Jain Associates vide report Ex. C20 and Ex. C21.  After scrutinizing the proposal and its annexed documents, the OPs issued a Standard Fire and Special Perils insurance policy Ex. C3 = Ex. R1 w.e.f. 20.04.2018 to midnight of 19.04.2019 after accepting the premium of Rs.36,391/-. The policy covered the building, plant, machinery and stocks to the extent of respective sum assured of Rs.1,00,00,000/-, Rs.1,10,00,000/- and Rs.50,00,000/-.

                   On 05.06.2018, at about 11.30 PM, due to sudden blowing of high velocity winds and dust storm, extensive damage was caused to the building, sheds, plant and machinery of the insured premises while the milling was in operation. On receipt of intimation, Mr. Jogesh Kumar, Mechanical Engineer, Surveyor and Loss Assessor was appointed by the OPs to survey the damages and assess the loss occurred at the premises of the complainant firm. The surveyor visited the spot on 06.06.2018 and gave his interim report and approximately assessed the loss to be Rs.1,25,000/-. After about three months on 12.09.2018,  the surveyor again visited the premises and finally gave his report on 12.03.2019 vide report Ex. C16 = Ex. R7. The surveyor applied the average clause and assessed the net loss to be Rs.88,692/- out of  the gross loss of Rs.1,08,797/- .

8.                On the receipt of surveyor report, the OPs vide deficiency letters dated 25.03.2014 Ex. C4 = Ex. R84, dated 22.04.2019 Ex. C5 = Ex. R85, dated 07.06.2019 Ex. C6 = Ex. R86 asked the complainant to submit certain documents as detailed in these letters. Due to non-submission of documents, on 19.07.2019 vide letter Ex. R87, the OPs closed the file as “No Claim”. The operative part of letter Ex. R87 is as under:-

“Please refer to our earlier letters on dated 25.03.2019, 22.04.2019 and 07.06.2019, on the above subject. Inspite of our repeated request to you through our above letters, to submit the required documents, you have not complied with the formalities as per requirement.

In view of the inordinate delay and non-interest showing by you inspite of our repeated reminders, it is not possible for us to keep the file pending any more longer. We are therefore closing the file as ‘NO CLAIM’ which please note.”

9.                The complainant challenged the action of the OPs through legal notice dated 29.10.2019 Ex. C63 stating therein that all the relevant documents were supplied to the surveyor and the OPs are intentionally withholding the genuine claim of the complainant. The OPs through their counsel replied the notice vide Ex. C66 = Ex. R88 and again reiterated their version with regard to non-submission of the documents and called upon the complainant for submission of the same so that claim file may be reopened and settled.

10.              Now the first and foremost issue for consideration arises whether the OPs were justified in closing the file of the complainant due to non-submission of the documents.

11.              Perusal of report of surveyor Ex. C16 = Ex. R7 shows that the surveyor has appended a list of enclosures which practically includes all the documents which were demanded by the OPs through deficiency letters Ex. C4 = Ex. R84 to Ex. C6 Ex. R86. In his affidavit Ex. RB as well the Surveyor Er. Jogesh Kumar has referred to Emails dated 03.07.2018, 10.08.2018, 07.09.2018 and 26.09.2018 sent to the complainant for supplying the required documents. It is nowhere mentioned that the complainant did not supply the required documents. On the other hand, the complainant had been maintaining very consistent stand that all the necessary documents were supplied as and when demanded. Even he had obtained the information under RTI Act from the OPs with regard to supply of the documents. It is apparent that the officials of the OPs had been raising the demand of submission of documents, which in fact, were in their power and possession being integral part of report of surveyor and loss assessor.   As such, closing of the claim file of the complainant as ‘No Claim’ is arbitrary and unjustified. The claim of the complainant was required to be settled and reimbursed within the statutory period and failure on the part of the OPs amounts to deficiency in service. Moreover, non-submission of the documents cannot be made a sole ground to close the claim of the complainant. The insurance companies are required to be more liberal in their approach without being too technical.

12.              In this regard, reference can be made to 2022(2) Apex Court Judgment 281 (SC) in case title Gurmel Singh Vs Branch Manager National Insurance Company Ltd. whereby it has been held by the Hon’ble Supreme Court of India that the insurance company has become too technical while settling the claim and has acted arbitrarily. The appellant has been asked to furnish the documents which were beyond the control of the appellant to procure and furnish. Once, there was a valid insurance on payment of huge sum by way of premium and the Truck was stolen, the insurance company ought not to have become too technical and ought not to have refused to settle the claim on non­submission of the duplicate certified copy of certificate of registration, which the appellant could not produce due to the circumstances beyond his control. In many cases, it is found that the insurance companies are refusing the claim on flimsy grounds and/or technical grounds. While settling the claims, the insurance company should not be too technical and ask for the documents, which the insured is not in a position to produce due to circumstances beyond his control.

13.              The complainant firm at the time of availing the policy had declared the valuation of premises along with its fixtures, plinths and foundation etc. to be Rs.1,00,00,000/- on the reinstatement basis. The cost of construction was also assessed to be Rs.35,27,000/- without plant and foundation etc. These inputs were also provided to Sh. Jogesh Kumar, but the surveyor worked out his own valuation to the tune of Rs.1,10,23,880/-. Treating it to be case of under insurance, he went on to assess the loss by invoking the average clause and excess clause and assessed the net loss to be Rs.88,692/- out of the total submitted claim of Rs.3,24,726/-. The surveyor applied the average formula as under:-

Apply average clause =

Rs.1098797 x Rs.1,00,00,000/Rs.1,10,23,880     = Rs.98692/-

                                      Less excess clause          = Rs.10,000/-

                                                                             = Rs.88,692/-

The net assessment is not conformity of legal principles. Reference can be made to 1998(3) C.P.J. 671 in Sanjeev Sood Vs Oriental Insurance Co. Ltd. and another whereby the Hon’ble Himachal Pradesh State Consumer Disputes Redressal Commission, Shimla has held that the clause of rateable proportion of loss is not applicable as the loss is less than the insured amount and as such, the Insurance Company is directed to pay Rs.73,696/- with 12% interest per annum. In the present case, the surveyor has ass4ssed the total value of the building as Rs.1,10,00,000/- which is more than sum insured of Rs.1,00,00,000/- but the gross loss has been assessed only Rs.1,08,797/- which is less than sum insured and as such, the surveyor was wholly erroneous in applying the average clause. Therefore, applying the ratio of Sanjeev Sood Vs Oriental Insurance Co. Ltd. and another (Supra) the complainant is entitled for the net loss of Rs.98,692/- without applying average clause. However, the applicability of Excess Clause and its deduction of Rs.10,000/- is legal and valid.

14.              Even considering the case from another angle, the policy was issued on the basis of Evaluation Report Ex. C20 and Ex. C21 and now the OPs are estopped from claiming that the property was undervalued. In 2022 LiveLaw (SC) 937 in M/s. Texco Marketing Pvt. Ltd. Vs TATA AIG GIC Ltd. and others passed by the Hon’ble Supreme Court of India, appellant secured a Standard Fire & Special Perils policy which was meant to cover a shop situated in the basement of the building. However, exclusion clause of the contract specifies that it does not cover the basement. The appellant continued to pay the premium promptly. The shop met with fire accident for which the appellant raised a claim. The claim was repudiated by respondent No.1  taking the umbrage under the exclusion clause. The Hon’ble Supreme Court partly allowed the appeal and observed in para No.37 of the judgment:-

 “37.Once it is proved that there is a deficiency in service and that respondent No. 1 knowingly entered into a contract, notwithstanding the exclusion clause, the consequence would flow out of it. We have already discussed the scope and ambit of the provisions under the Indian Contract Act, 1872. Even as per the common law principle of acquiescence and estoppel, respondent No. 1 cannot be allowed to take advantage of its own wrong, if any. It is a conscious waiver of the exclusion clause by respondent No. 1.”

Therefore, the complainant is entitled to reimbursement of claim of Rs.98,692/- without application of average clause. In the above facts and circumstances, it would be just and appropriate if the OPs are directed to reimburse Rs.98,692/- to the complaint along with interest @8% per annum from the date of filing of complaint till the date of actual payment and also to pay composite compensation of Rs.10,000/- to the complainant.

15.              As a result of above discussion, the complaint is partly allowed with direction to the opposite parties to reimburse the amount of Rs.98,692/- to the complaint along with interest @8% per annum from the date of filing of complaint till the date of actual payment within 30 days from the date of receipt of copy of order. The opposite parties shall further pay composite cost of Rs.10,000/- (Rupees Ten Thousand only) to the complainant within 30 days from the date of receipt of copy of order. Copies of the order be supplied to the parties free of costs as per rules. File be indexed and consigned to record room.

16.              Due to huge pendency of cases, the complaint could not be decided within statutory period.

 

(Monika Bhagat)                                       (Sanjeev Batra)

Member                                                     President    

 

Announced in Open Commission.

Dated:14.02.2024.

Gobind Ram.