- P. STATE CONSUMER DISPUTES REDRESSAL COMMISSION
AT HYDERABAD
F.A. 1653/2008 against C.C No. 282/2008, District Forum III, Hyderabad
Between :
1) The Oriental Insurance Co. Ltd
Rep. by its Divisional Manager
Divisional office II
Maddi Buildings, I floor,
Opp. Hari Hara Mahal
Koritepadu, Guntur -7
2) The Regional Manager
The Oriental Insurance Company Ltd
Snehalatha Building,
Opp : Blue Moon Hotel,
Begumpet, Hyderabad **** Appellants/
Opposite parties
And
M/s. R.P.P. Limited
Reg. Office : H.no.1-B ( New 618)
Arora Colony, Road No.3
Banjara hills, Hyderabad – 34
Rep. by its Managing Director
Sri Y. V. Subba Rao *** Respondent/
complainant
Counsel for the Appellants : M/s. Bhaskar Poluri
Counsel for the Respondent: M/s. S. Raj kumar.
FA 124/2009 against CC No. 282/2008 District Forum III, Hyderabad
Between :
M/s. RPP Limited
Reg. Office : H.no.1-B ( New 618)
Arora Colony, Road No.3
Banjara hills, Hyderabad – 34
Rep. by its Managing Director
Sri Y. V. Subba Rao *** Appellant/
complainant
And
1) The Divisional Manager
M/s. The Oriental Insurance Co. Ltd
Divisional office II
Maddi Buildings, I floor,
Opp. Hari Hara Mahal
Koritepadu, Guntur -7
2) The Regional Manager
M/s. The Oriental Insurance Company Ltd
Snehalatha Building,
Opp : Blue Moon Hotel,
Begumpet, Hyderabad *** . Respondents/
Opposite parties
Counsel for the Appellant : M/s. S. Raj kumar.
Counsel for the Respondent : M/s. Bhaskar Poluri
CORAM :
SRI SYED ABDULLAH *** HON’BLE MEMBER
&
SRI R. LAKSHMINARASIMHA RAO *** HON’BLE MEMBER
TUESDAY, THIS THE SEVENTEENTH DAY OF AUGUST TWO THOUSAND TEN
Oral order : ( as per Sri Syed Abdullah, Hon’ble Member )
***
1) FA 1653/2008 and FA124/20/09 are arising out of the order dated 23rd September, 2008 passed in CC 282/2008 by the District forum III, Hyderabad directing Opposite parties 1 and 2 with joint and several liability to pay to the complainant a sum of Rs. 11,97,304/- with interest @ 9% from 05.0.2007 till the date of realization and costs of Rs.2,000/- .
2) The appellants in FA 1653 are the Opposite Parties 1 and 2 in CC 282/2008 have preferred this appeal challenging the order directing them to pay the insurance amount, where as, the appellant in CC 124/2009 filed appeal seeking enhancement of rate of interest at 12% pa from 9% awarded on the insurance amount of Rs.11,97,304/-.
3) According to the complainant, it is a registered company which has set up Hydro Electric Power Project with capacity of 2.80 MW ( 1.40 X 2) and power production has been commenced from 21.11.1998 with the financial assistance taken from M/s. Indian Renewable Energy Development Agency Ltd, New Delhi which insisted to have insurance coverage for its project. So Insurance policies were obtained to cover its machinery, plant and other things including loss of profits etc. The complainant had an intention to have continuation of insurance. So he addressed a letter dated 8.8.2006 requesting the OP. 1 to issue fire policy as per schedule enclosing to it and Fire LOP for a sum insured for gross profit of Rs.3 crores w.e.f. 00.00 hours on 11.8.2006. enclosing a cheque for Rs.5,33,693/- towards premium. Thereby a policy was issued commencing from 11.8.2006 to 10.8.2007. During subsistence of the policy, the water release in Guntur branch canal was reduced on 30.10.2006 due to occurrence of breach of Vanakayalapadu Major at M 4/5 + 000 due to cyclone. After completion of repairs to canal breaches, the water was restored gradually by 11.11.2006, as a result of which, there was a loss in generation of hydro electricity. The said fact was intimated to Opposite Parties who have appointed a surveyor Sri Ch. Veera Babu who after investigating the project, verifying the breach and other record, submitted a report dated 11.04.2007 estimating the loss /net liability assessed at Rs.11,97,304/- Even then the claim was not settled. Several representations were made. The complainant was asked to submit to answers to queries. Even then by letter dt. 24.10.2007 OPs repudiated the claim on the ground alleging that there was suppression of material fact which act or omission amounts to deficiency in service.
4) The Opposite Parties filed their version taking the objection that the complaint is liable for dismissal for want of jurisdiction. Further as per the settled law enforcement an interpretation of contractual obligation, the Consumer Forum has no jurisdiction since no part of cause of action arose at Hyderabad. However, admitted that the Standard Fire and Perils Policy was issued by OP No. 1 having its office at Guntur and it was repudiated there. The OP 2 is a Regional office having its office at Hyderabad so the territorial jurisdiction cannot be invoked. As per the policy, the coverage was given for Fire as well as loss of profit. The complainants Hydel project is located at Guntur Branch canal. The policy was issued under good faith that the complainant had furnished true facts in the application form. It is not correct to state that the bank proposal form was signed by the complainant. In the proposal form in column no. 9, it contains a query – whether any claim was preferred for loss by fire or for loss of profit for which the complainant had answered an emphatic ‘ No’ As per condition no. 8, the policy shall be avoidable in the event of misrepresentation, mis-description or non-disclosure of any material facts and according to condition no. 8 if any false declaration be made, all the benefits under the policy shall be forfeited. On a verification after the claim has been made by the complainant it has come to the knowledge that in fact the complainant claimed and was paid with an amount of Rs. 4, 81,802/- on an earlier occasion by the ICICI Lombard General Insurance. The non disclosure of above fact amounts to suppression of material facts which deprived the OPs an opportunity to evaluate the risks properly and whether to accept the insurance of decline the risk or accept with additional conditions therein. The complainant made a claim for loss to a tune of Rs.25,15,000/- which was evaluated by the surveyor at Rs.11,97,307/- Lodging of excess claim would indicate the fraudulent nature of the claim wherein the complainant inflated the claim. The survey report indicate only the quantum of loss. But it is not binding document on the Opposite parties to settle the claim. The Insurer is necessarily to look at the other factors including the report of the surveyor. Having detected that there is breach of terms and conditions of the policy with regard to the non disclosure of previous claims the Opposite parties have rightly rejected the claim lodged by the complainant. With regard to previous settled by the ICICI Lombard Insurance to wriggle out of the situation the complainant taking a peculiar stand that that the proposal form might have been obtained in blank and obtained by the Opposite parties. The complainant failed to submit any relevant document or document that the irrigation Department of Govt. of A. P. agreed to ensure adequate water supply to the Guntur Branch Canal to generate Electricity and in the absence of such a document and adverse inference has to be drawn that there is no agreement with the Government of A. P.
5) The offer for renewal for the year 2006-07 cannot be construed as acceptance to condone the suppression of the material facts in the proposal for the year 2006-07. Condition no. 8 of the policy is very applicable and the same cannot be termed as the flimsiest ground to repudiate the claim on the ground of suppression of material facts.
6) To substantiate the claim, the complainant had filed Ex. A1 to 24 along with affidavit, where as the Opposite parties have filed Ex. B1 to B3 and evidence affidavit in support of their contentions/
7) After going though the evidence on record and respective contentions the District Forum held that the objection raised by the Ops that the District Forum has no territorial jurisdiction is not sustainable since the OP 3 is having its office situated at Hyderabad and more particularly when the insurance policy was issued by the OP 2 office. Basing on the report of the surveyor, estimation of the loss valuating at Rs.1197304/- covered by Ex. A11 has allowed the claim by relying on the General Rules and Regulations of Insurance Tariff Advisory Committee.
8) The appellants/Opposite parties in FA 1653/2008 have taken the stand that the appellants have established that as per regulations of IRDA Act 1999 and protection of policy holders Interest Regulations 2002 the complainant had suppressed material information which disentitles to make any claim. Ex B3 proposal form is very much pointed out that in column no. 9 the complainant has categorically stated ‘ no with regard to a query, whether any claim was made in respect of the loss. It is also raised a point that the respondent complainant has failed to produce relevant record of the Government to show that there was adequate supply of water to Hydel project to generate electrical power during relevant dates.
9) The learned counsel for the respondent/complainant in FA 124/2009, has raised the contention that when Ex. A4 letter was sent to OPs that supply of water to Guntur branch canal was reduced which had affected the power generation no objections are raised by the OPs or make any verification whether the said information was true or not and on the contrary the surveyor after satisfaction of the correctness of the information has estimated the loss in his report. So the surveyors report cannot be rejected unless it is arbitrary. It is also contended that the insurance Company has knowledge that generation of Hydel power depends on the flow of water and diminishing of supply would cause damage and it cannot repudiate the claim when the claim is to be settled. At a belated stage it cannot raise objection that there is breach of policy conditions. Reliance is placed upon a decision of the Hon’ble National Commission in Landmarks Judgments on Insurance by the Hon’ ble National Commission, New Delhi in V.V. Rama Raju Vs. United India Insurance Company Ltd . it is also contended that when there is no proposal before issuance of policy, the insurance company is estopped to deny the insurance claim on he ground of suppression of material facts. Reliance is placed upon King’s Bench Division dated Feb 9,15, 1909 reported in Pearl Life Assurance Company Vs. Johnson, the Same Vs. Greenhalgh. Also placed reliance upon Insurance Regulatory and Development Authority ( Protection of Policy-holders’ interest 0 Regulations, 2002. Appendix of 21 in which Guidelines are given there under that in the event of non-settlement of the claim the insured is liable to pay interest at a rate which is 2% above the bank rate prevalent at the beginning of the financial year in which the claim is reviewed by it. The complainant has disputed Ex. B-2 proposal form on the ground that it is not at all signed by the insured at all and it is not proved by the insurance company that it was signed and submitted by suppressing the information. It is contended that it is only on the basis of Ex. A-1 letter dated. 08.08.2006 requesting for issuance of policy, the policy was issued w.e.f. 11.08.2006 renewing the earlier policy ( Ex. A2 and Ex. B1).
10) Point for consideration is, whether the repudiation made by the opposite party is justified ?
11) Issuance of policy on the basis of Ex. A-1 letter dated 08.08.2006 is not at all in dispute, so also, Ex. A-4 letter of intimation sent by the complainant to opposite parties, in which, Ops were informed of the breach caused to the canal, as a result of which, there was diminished supply of water to the Guntur Canal which had affected the Electricity generation from 30.10.2006. So also, about the appointment of the surveyor by Ops who had verified all the relevant documents and submitted his report Ex. A-11.
12) The strong contention of the opposite parties with reference to Ex.B3 is that the insured had not mentioned about the preferring of claims and receiving of the amounts from the ICICI Lombard Insurance Company in respect of the loss suffered for the Hydel project and not furnishing the details of policies or payments made would amounts to suppression of material facts. The next contention of the opposite parties is that during the period 2005-06 M/s.Tirumala Hydel projects (P) Ltd and M/s. PMC Power Ltd which are engaged in the same business, in the same place and made a claim with the opposite parties and the said information was not furnished. When the opposite parties aware of the earlier claim they could have made necessary enquiries before renewing EX. A-1 policy. As per Regulations of IRDA Act 1999 vide Protection of policy holders interest Regulations, 2002, the onus of the proof shall rest with the insurer in respect of any information where the insurer claims that the proposer suppressed any material information or provided mis-leading information or any matter material to the claim. The object of insurance coverage for indemnifying the contemplated peril as such the object cannot be defeated. Perusal of Ex. A-3 proposal form shows that it is not at all signed by the complainant or his agent. . The opposite party has failed to substantiate that it was signed by the very complainant represented by one SK. Vali. The identity of the said person is not clear to link with the complainant’s company. The policy was renewed on the basis of Ex. A-1 letter itself. The opposite parties ought to have verified and issued policy. As such, the opposite parties cannot get over its liability on the ground that there was suppression of material facts. Ex B-3 proposal form cannot be relied on as to is not proved that it was signed and submitted by the complainant or agent. When the offer was made on the basis of Ex. A-1 letter the Ops should have obtained proposal form duly signed by the authorized person of the company. The opposite parties cannot say that the complainant had suppressed material information required to be stated. We are of the opinion that Ex. B-3 is not a proposal form submitted by the complainant. There is no basis to accept that any false statement was made for getting renewal of the policy. As per Insurance Regulatory and Development Authority ( Protection Policy Holders’ Interest ) Regulations, 2002, Sub-rule 5 of Regulation 8 it is clear that where there is a delay on the part of the insurer in processing a claim for a reason other than the one covered by sub-regulation (4), the life insurance company shall pay interest on the claim amount at the rate which is 2% above the bank rate prevalent at the beginning of the financial year in which the claim is reviewed by it.
13) The appellant/complainant in FA 124/2009 has produced a letter issued by Axis bank to show that Prime Lending Rate w.e.f. 14.06.2010 is fixed at 14.75%.
14) The Claim pertains to November, 2007 : During the period 2006-07 the banking lending rate of interest on the loan was at 9%. So interest at 14.75% on the claim amount at 2% above the bank rate prevalent at the beginning of the financial year is not justified. However the appellant/complainant in FA 124/2009 is justified to claim enhancement of interest at 11% pa on the settled claim amount. The surveyor’s report cannot be easily brushed aside unless it is arbitrary or not basis on material facts. Surveyor’s report is a valuable document and it should be give credence III 2009 CPJ 194 NC.
15) Thus, On an over all consideration of factual aspects and evidence on record read with the regulations, we hold that the appeal filed by the Insurance Company is not sustainable.
16) In the result, FA 1653/2008 is dismissed confirming the order dated 23.09.2008 passed by the District Forum III, Hyderabad. FA 124/2009 is allowed ordering enhancement of the rate of interest at 11% pa from 9% PA on the insurance claim. There is no order as to costs in the appeals. Time for compliance four weeks.
PRESIDING MEMBER
Dt. 17.08.2010
Dissent Order : (per Sri R.Lakshminarsimha Rao, Hon’ble Member)
1) I have gone through the draft prepared by my learned brother and with due respect I express my opinion deviating from that of my learned brother.
2) The opposite parties no.1 and 2 have filed the appeal F.A.No.1653 of 2008 assailing the impugned order whereas the complainant has filed F.A.No.124 of 2009 seeking for enhancement of the rate of interest to 12% on the amount awarded by the District forum. For convenience sake, I referred to the parties as they arrayed in the complaint. F.A.No.1653 of 2008 is taken as the lead case.
3) The points for consideration are:
i. Whether the District Forum-III, Hyderabad has jurisdiction to entertain the matter?
ii. Whether the complainant is entitled to the relief sought for?
iii. To what relief?
4) Preliminary objection in regard to the territorial jurisdiction was raised by the opposite parties before the District Forum. The complainant is a registered company with its administrative office at Hyderabad and project office at Muppala Guntur and engaged in the business of generation, transmission and sale of electric power. The complainant had obtained fire insurance policy from the opposite party no.1 for a sum of `3 crores for a period of six months commencing from 11.8.2006 and expired on 10.8.2007 with a special condition incorporated therein for the project office located at Guntur. Admittedly, the first opposite party had been carrying its business at Guntur. The insurance policy was issued by the first opposite party in respect of the Project Office located at Guntur The complainant has lodged claim with the opposite party no.1 that its Guntur office sustained loss on account of loss of generation of hydro electricity due to the reduction in the water releases as a result of breach on Vankayalapadu Major at M 4/5+000 due to cyclone. The opposite parties repudiated the claim on the ground that there was suppression of fact by the complainant company at the time of obtaining the insurance policy.
5) At the cost of repetition it can be said that the insurance policy was issued by the opposite party at Guntur. The branch office in respect of whom the insurance policy was obtained by the complainant company is located at Guntur. The reduction in the water level due to cyclone which resulted in the alleged loss had also occurred at Guntur. The proposal which is the basis for the issuing of the insurance policy was issued at Guntur. As such, the entering of agreement and conclusion of the contract as also the cause of action had all taken place at Guntur. Therefore, the District Forum-III, Hyderabad ought not to have entertained the complaint.
6) The Hon’ble Supreme Court in Sonic Surgical Vs. National Insurance Co., Ltd. reported in 2009 (7) Supreme 101(1). held that the complaint could be filed in the District forum in whose jurisdiction the branch office of the insurance company is situated and the cause of action had arisen. It was held thus,
In our opinion, no part of the cause of action arose at Chandigarh. It is well settled that the expression 'cause of action' means that bundle of facts which gives rise to a right or liability. In the present case admittedly the fire broke out in the godown of the appellant at Ambala. The insurance policy was also taken at Ambala and the claim for compensation was also made at Ambala. Thus no part of the cause of action arose in Chandigarh.
Further, the Hon’ble Supreme Court held
If the contention of the learned counsel for the appellant is accepted, it will mean that even if a cause of action has arisen in Ambala, then too the complainant can file a claim petition even in Tamil Nadu or Gauhati or anywhere in India where a branch office of the insurance company is situated. We cannot agree with this contention. It will lead to absurd consequences and lead to bench hunting. In our opinion, the expression 'branch office' in the amended Section 17(2) would mean the branch office where the cause of action has arisen. No doubt this would be departing from the plain and literal words of Section 17(2)(b) of the Act but such departure is sometimes necessary (as it is in this case) to avoid absurdity. [vide G.P. Singh's Principles of Statutory Interpretation, Ninth Edition, 2004 P. 79] In the present case, since the cause of action arose at Ambala, the State Consumer Redressal Commission, Haryana alone will have jurisdiction to entertain the complaint. For the reasons stated hereinabove, we do not see any reason to interfere with the impugned order of the NCDRC. Accordingly, this appeal is dismissed. No order as to the costs.
7) In the policy schedule it is specifically stated that the policy was issued at Guntur on 11.8.2006 in respect of the premises, Guntur Branch canal, near Muppala Vilalge and Mandal Guntur District. Therefore, no part of cause of action for the complainant had arisen in Hyderabad. Mere communication of letters does not create a ground for cause of action for the complainant to file complaint before the District Forum-III Hyderabad. The District Forum-III, Hyderabad has exercised the jurisdiction not vested in it. The District Forum has committed error in law and proceeded to entertain the complaint. The point is answered against the complaint company.
8) POINT NO.2 The ground for repudiation of the claim as seen from the repudiation letter is the suppression of material fact relating to the preferring of claims and receipt of the amounts from ICICI Lombard Insurance Company in respect of the loss suffered by the complainant company. The complainant company had not denied that the earlier claims lodged with the ICICI Lombard insurance company were suppressed at the time of obtaining the insurance policy from the opposite party no.1. The proposal which is the basis of the insurance policy upon issuing of which the complainant company claims to be indemnified has been disputed by the complainant company. The complainant is a company registered under the Companies Act and carrying on its business of operation of mini hydel plant for generating electricity and the sale thereof. The proposal form was submitted at Guntur by S.K.Vali. The description of the property and the sum insured in respect of the machinery parts has been mentioned in the schedule annexed to the insurance policy. The complainant company attempted to disown the proposal which forms the basis of the insurance policy by contending that it has no concern with S.K.Vali who submitted the proposal at Guntur for the purpose of obtaining the insurance policy. The claim of the complainant was submitted on the basis of the insurance policy which in turn was issued on submission of the proposal.
9) The complainant is a company and not a layman. At one point of time the complainant company contended that the proposal was not at all submitted by it and at a later stage the complainant company changes its stand submit that a blank proposal could have been obtained from it by the opposite party no.1. At para 4(D) of the complaint referring to the proposal the complainant states “ while issuing the policy the opposite party might have filled the proposal which was obtained in blank”. As such the complainant is estopped from disowning the proposal while claiming to be indemnified by virtue of the issuance of the insurance policy.
10) The insurance policy is a contract between the insurer and insured and it is issued on the basis of information furnished by the insured in the proposal. The complainant company has not furnished the details of the earlier claims lodged with ICICI Lombard insurance company. The complainant company in order to escape the consequences of its statement in regard to the claims for loss of profits at column no.9 of the policy schedule, had stooped to the level of disowning the proposal. According to the opposite parties, the suppression of earlier claims which were in fact styled as inflated claims on the part of the complainant company would have effect on fixing the premium and the sum assured of the insured property. The proper evaluation of the risk would definitely constitute the basis for accepting or not accepting the proposal by the opposite party company. Had the complainant company not suppressed the fact of earlier claim, the opposite party company would have accepted or declined to accept to issue the insurance policy with the terms and conditions thereof or the opposite parties would have charged more premium or they would have sought for incorporation of additional conditions in the policy. Therefore, the contention of the complainant that suppression of the earlier claims by it at the time of submitting the proposal is not a material fact is not sustainable.
11) The complainant company has obtained the insurance policy by suppressing the material fact and approached the District Forum with unclean hands. The opposite parties had rightly repudiated the claim of the complainant company and repudiating the claim they have not committed any deficiency nor shown any negligence. Therefore, the appeal F.A.No.1653 of 2008 filed by the opposite parties deserves to be allowed.
12) In the result, F.A.No.1653 of 2008 is allowed by setting aside the order dated 23.9.2008 passed by the District Forum. Consequently the complaint is dismissed. As a sequel F.A.No.124 of 2009 is dismissed. No costs.
MEMBER
Dt.17.08.2010
DARJ ORDER CORRECTED – FROM HERE ON WARDS – O.K.
CORAM: HON’BLE SRI JUSTICE D.APPA RAO, PRESIDENT.
FRIDAY, THIS THE FIRST DAY OF OCTOBER TWO THOUSAND TEN
ORAL ORDER: (Per Hon’ble Sri Justice D. Appa Rao, President.)
1) When both the Members of this Commission had differed in their opinion by virtue of Section 14(2)(A) of the Consumer Protection Act the matter has been placed before me for adjudication.
2) These are cross-appeals. F.A. 1653/2008 is preferred by the opposite parties while F.A. No. 124/2009 is preferred by the complainant. Parties are described as arrayed in the complaint for felicity of expression and avoid confusion in describing the parties.
3) The case of the complainant in brief is that it is a company registered under the Companies Act having registered office at Hyderabad. It generates electric power. It had set up a power project at Guntur. It had obtained Fire LOP policy (FLOP) from the opposite party insurance company covering the period from 11.8.2006 to 10.8.2007 for a sum of Rs. 3 crores. While so on 30.10.2006 there was a breach in Guntur canal due to cyclone, as a result of which generation of hydro electricity could not be made up till 11.11.2006 and sustained a loss of Rs. 25.15 lakhs. When the said fact was intimated, the insurance company appointed a surveyor Sri CH. Veera Babu who visited the project and estimated the net loss at Rs. 11,97,304/-. When representations were made ultimately on 24.10.2007 the claim was repudiated on the ground that there was suppression of earlier policy taken from ICICI Lombard General Insurance Company Ltd (ICICILGIC) though the complainant had knowledge of taking it. The said repudiation was unjust and therefore claimed Rs. 11,97,304/- with interest @ 24% p.a., from 30.10.2006 till the date of realization, and costs.
4) The insurance company resisted the case. While denying each and every allegation made in the complaint it alleged that the Dist. Forum has no jurisdiction as no part of cause of action has arisen at Hyderabad. The policy was issued at Guntur and the repudiation was also made by Op1 Divisional Office at Guntur. Only Regional Office is situated at Hyderabad and therefore the Dist. Forum at Hyderabad has no jurisdiction. The policy was issued in good faith, that the complainant had informed true and correct facts in the application submitted by it. Since the complainant had suppressed the earlier claim made through ICICILGIC for an amount of Rs. 4,81,802/- they had repudiated the claim due to suppression of said material fact. It had lost the opportunity to evaluate the risks properly and take informed choice whether to accept the insurance policy or not. The claim for Rs. 25,15,000/- is highly excessive which itself would show the fraudulent nature of the claim. Since the suppression of earlier policy and its settlement was material, repudiation of claim by it on 24.10.2007 was just. The delay was due to non-co-operation of the complainant. Therefore it prayed for dismissal of the complaint with costs.
5) The complainant in proof of its case filed the affidavit evidence of its Managing Director and got Exs. A1 to 24 while the insurance company filed the affidavit evidence of its Manager and got Exs. B1 to B3.
6) The Dist. Forum after considering the evidence placed on record opined that the policy having been issued from Hyderabad having received the premium amount through OP2 they have jurisdiction to entertain the complaint. The very surveyor appointed by the insurance company has assessed the net loss at Rs. 11, 97,304/- and therefore the complainant was entitled to the amount. Non-disclosure of earlier policy cannot be said to be suppression of material fact. Therefore the Dist. Forum directed the insurance company to pay Rs. 11,97,304/- with interest @ 9% p.a., from 5.5.2007 till the date of realization together with costs of Rs. 2,000/-.
7) Aggrieved by the said decision the insurance company preferred F.A. 1653/2008 contending that the Dist. Forum did not appreciate either facts or law in correct perspective. It ought to have seen that the Dist. Forum has no jurisdiction to try the case as no part of cause of action has arisen at Hyderabad. The Dist. Forum ought to have seen that there was suppression of earlier policy taken by the complainant from ICICILGIC which amounts to material suppression entails repudiation of the claim, and therefore it prayed that the complaint be dismissed.
8) One of the Members of this Commission Sri Syed Abdullah confirmed the order while the other Member Sri R. L. Narasimha Rao disagreed with the order passed by Sri Syed Abdullah by holding that the Dist. Forum has no jurisdiction besides suppression of fact in regard to previous insurance policy was bad under law and therefore set-aside the order of the Dist. Forum and consequently dismissed the complaint.
9) In the light of conflicting orders passed by both Members, the matter has been referred to me u/s Section 14(2)(A) of the Consumer Protection Act for resolving the dispute.
10) It is an undisputed fact that the opposite party insurance company had issued FLOP policy Ex. A2 covering the period from 11.8.2006 to 10.8.2007 on a letter issued by the complainant Ex. A1 dt. 8.8.2006.
11) The complainant company was formed in order to generate, transmit and supply electricity by setting up power plants . It has set up hydel power generation project on Guntur branch canal of Nagarjuna Sagar right main canal at G. Muppalapalli village between Sattenepalli and Narasaraopet in Guntur Dist. It has set up a power house with 2 units with a capacity of 1400 KWH each. While so on 30.10.2006 there was reduction of inflow of water from up-stream of Guntur branch canal. Consequently the inflow of water from up-stream of Guntur branch canal to the complainant’s power house was reduced till 18.11.2006. This fact was informed immediately to the insurance company under Ex. A4 dt. 30.10.2006. Basing on which the insurance company has appointed a surveyor Sri CH. Veera Babu who visited the project site on 4.11.2006. He observed:
“The insured has suffered loss on account of reduction in output due to reduced discharge of water by the A.P. Irrigation Department due to the damage to Vankayalapadu Major at 4/5th Mile of Guntur branch canal. Hence cause of loss is covered under the policy.
In this claim subject matter of the property is upstream and downstream canal of NSP right bank. AS per my physical inspection and also from certificate issued by the Executive Engineer, NSJC, O&M Division, Sattenpalli the damage to the property is established. Due to the damage to the subject property, there was reduced discharge of water to the insured’s power house. Hence, ‘proximate cause’ caused to reduction in production/no production and consequentially loss of the peril is covered, the claim is admissible.”
He assessed the net liability at Rs. 11,97,304/- after applying the average clause as under :
Rs. 19,16,568 x Rs. 3,00,00,000 ÷ 4,80,22,055 = Rs. 11,97,304/-
The insurance company despite the fact that it had received the report by his letter Ex. A12 dt. 11. 4. 2007 sought for information for which the complainant had given reply stating that it had not taken any insurance policy earlier. Despite repeated reminders, finally the insurance company by its letter Ex. A17 Dt. 24.10.2007 repudiated the claim on the ground that:
“You have, as per the proposal form submitted to this office, mentioned that, not claimed on any office for loss by fire or loss of profits.
However, you have mentioned vide your letter dt. 18.7.2007 that you have lodged a claim with ICICI Lombard General Insurance and the same was settled for Rs. 4,81,802/- which contradicts your declaration made in the proposal form column No. 9 and submitted to this office.
As per the material damage provision of the FLOP policy issued to you the liability under the standard fire policy has to be admitted or the conditions set therein be complied with or exclusions mentioned therein may operate rendering your FLOP policy void. You have by not mentioning about your preferring of claims and receiving payments thereof in the proposal form deprived us of the opportunity of proper evaluation of risk and to take an informed decision of accepting with special terms and conditions/declining the risk.
You have also suppressed the material fact of your getting payments to the claims made by you thereby made false declaration to the office.
The condition No. 1 and exclusion No. 8 of the policy under which your claim was repudiated speaks as under :
Condition No. 1 : “This policy shall be voidable in the event of mis-representation, mis-description or non-disclosure of any material particulars”
Exclusion No. 8 : “If any false declaration be made all the benefits under the policy shall be forfeited.”
This repudiation was exactly made more than a year after the incident. We may state herein that though the insurance company pleaded that there was non-co-operation from the complainant and as such delay was occasioned, at no time such an allegation was made while sending various letters for the repeated reminders issued by the complainant.
12) It may be mentioned here that the complainant had taken two policies one to cover the standard fire and special perils and another for insurance against Loss of Profits by fire and other insured risks (FLOP). Unfortunately the proposal form and policy schedule pertaining to the earlier policy viz., standard fire and special perils policy was marked while the proposal form though finds a place at page No. 149 in Dist. Forum record it was not assigned any exhibit number. Evidently the said proposal form was taken on 10.8.2007 evidenced by signature of some person by name ‘S.K. Vali’ whose designation was not known. This shows that on the date of expiry of the policy such a signature was taken. Obviously the policy was taken on issuance of a letter Ex. A1 without taking any proposal form. After receipt of claim, and when they intend to repudiate on one ground or other, obtained the signature of some third party, and contends that the complainant had suppressed the fact of earlier policy taken by it from ICICILGIC. It is unfortunate that the opposite party insurance company a public sector undertaking could resort to this type of practice, more so, when the complainant himself stated in the complaint that it does not bear his signature. Evidently when it sought for a policy under Ex. A1, it was signed by Manager (F&A) on behalf of the complainant company. However, the proposal form shows that it was signed by one ‘S.K. Vali’ whose designation was not known. Equally under Ex. B1 on the same day it had taken standard fire and special perils policy . The proposal form was signed by one ‘S.K. Vali’ on 10.8.2007. The policy could not have been issued covering the period from 11.8.2006 to 10.8.2007 after taking signature of the person on 10.8.2007 on the date on which policy was going to be expired.
13) The fact remains that the so called suppression of earlier policy which the insurance company intends to rely pertains to the policy covering the period from 11.8.2005 to 10.8.2006. Though the letter of ICICI Lombard General Insurance Company dt. 24.8.2005 is available in the record it was not assigned any exhibit number. For felicity I would assign the exhibit number as Ex. A25. It shows that the said insurance policy pertains to Standard Fire & Special Perils (Material damage). It has nothing to do with the insurance policy taken for FLOP policy. We may state herein that it is not as though the insurance company was not aware of the said policy. There was a mention of existence of with the ICICI Lombard General Insurance under policy No. 1002/0000566 as under :
“Main coverage: Consequential loss (Fire) insurance consequent upon material damage as covered under standard fire and special perils (Material damage) policy No. 509 issued by the Oriental Insurance Company Ltd. in 2005 and its renewal.”
Therefore the insurance company had itself issued Standard Fire & Special Perils (Material damage) and also renewed it. In fact the insurance company ought to have filed those documents in order to show that there was suppression. This policy would in no way alter the loss sustained by the complainant. When the insurance company alleges that the complainant has suppressed the material fact, we may state that the insurance company is equally guilty of suppressing earlier policy taken by the complainant with it. Obviously it intends to confuse the issue. In view of the fact that it had issued fire-LOP vide Ex. B3 for the period covering from 11.8.2006 to 10.8.2007, therefore we do not see how non-mention of some other policy would prejudice the insurance company to evaluate or assess the loss of profit. The surveyor who was appointed by the insurance company after thoroughly going into the matter assessed the loss and recommended the same to be paid. Obviously the insurance company intends to repudiate on one ground or the other. Belatedly repudiated the claim by its letter dt. 24.10.2007 as though it came to know about another policy that was taken from ICICILGIC and that amounts to suppression of policy. As I have earlier pointed out that the insurance company itself knew well that the complainant had taken it from ICICILGIC however pertains to some other policy. We may mention herein that Regulation-9(5) of IRDA (Protection of Policy-holders Interests) Regulations 2001 mandates the insurance company to settle the claim within 30 days from the date or receipt of survey report or the additional survey report as the case may be. The surveyor submitted his report Ex. A11 dt. 11.4.2007 while the insurance company had repudiated on 24.10.2007 six months there after. This is contrary to the stipulation mentioned in Regulation-9 of IRDA Regulations, 2001.
15) It is not the case of the insurance company that the surveyor has assessed the loss on a higher side. It had repudiated the claim only on the ground that the complainant had suppressed the earlier policy taken from ICICILGIC. As discussed earlier that it has nothing to do with the case on hand. It does not amount to any suppression. Therefore the complainant was entitled to the amount assessed by the surveyor as rightly pointed out by Dist. Forum and confirmed by one of the members of this Commission Sri Syed Abdullah in this regard.
16) The learned counsel for the insurance company contended that the Dist. Forum at Hyderabad had no jurisdiction as no part of cause of action has arisen at Hyderabad. He contended that the project is located at Guntur and the loss was occasioned at Guntur. The policy pertains to the divisional office at Guntur. The learned counsel for the complainant contended that a request was made from Head Office by virtue of Ex. A1 basing on which the policy was issued. The opposite party insurance company is having Regional Office at Hyderabad. The claim was also made at Hyderabad, and therefore the Dist. Forum at Hyderabad has jurisdiction to try the matter.
17) The learned counsel for the insurance company relied a decision Sonic Surgical Vs. National Insurance Company Ltd. reported in 2009 (7) Supreme 101(1). The Supreme Court has categorically opined that District Forum shall have jurisdiction to entertain complaint where the opposite party carries on business or have a branch office in the light of provisions u/s 11(2)(b) of the Consumer Protection Act. It reads as follows :
11. Jurisdiction of the District Forum.—(1) Subject to the other provisions of this Act, the District Forum shall have jurisdiction to entertain complaints where the value of the goods or services and the compensation, if any, claimed ''does not exceed rupees twenty lakhs.
(2) A complaint shall be instituted in a District Forum within the local limits of whose jurisdiction,—
(a) the opposite party or each of the opposite parties, where there are more than one, at the time of the institution of the complaint, actually and voluntarily resides or carries on business or has a branch office or personally works for gain, or
(b) any of the opposite parties, where there are more than one, at the time of the institution of the complaint, actually and voluntarily resides, or carries on business or has a branch office, or personally works for gain, provided that in such case either the permission of the District Forum is given, or the opposite parties who do not reside, or carry on business or have a branch office, or personally work for gain, as the case may be, acquiesce in such institution; or
(c) the cause of action, wholly or in part, arises.
In the light of above provisions, we are of the opinion that the Dist. Forum at Hyderabad has jurisdiction to entertain the matter.
18) The learned counsel for the insurance company relying a decision of Supreme Court in Sea Lark Fisheries Vs. United India Insurance Company Ltd. reported in 2008 (1) Supreme 632 contended that suppression of material fact while submitting the proposal would entail repudiation of policy by the insurance company. We may state that the above said decision is an authority for the proposition that suppression of material fact while submitting the proposal form would undoubtedly entails repudiation of policy by the concerned insurance company.
19) Coming to the facts we have already held that there was no suppression of policy by the complainant which entails repudiation of the policy by the insurance company. I agree with the opinion expressed by the Dist. Forum as well one of the members of this Commission Sri Syed Abdullah in this regard.
12) In the result the appeal is dismissed confirming the order of the Dist. Forum together with costs of Rs. 5,000/-. Time for compliance four weeks.
1) _______________________________
PRESIDENT
Dt. 01.10.2010
1) The complainant also preferred F.A. 124/2009 for enhancement of interest on the ground that the Dist. Forum has awarded interest @ 9%. It ought to have awarded interest @ 12% p.a., in view of the judgment of the Hon’ble Supreme Court reported in 2008 AIR SCW 962.
2) We may state that the Dist. Forum has awarded interest @ 9% on Rs. 11,97,304/- from 5.5.2007 till the date of realization. The learned counsel for the complainant contended that as per Regulation-9(6) of IRDA (Protection of Policy-holders Interests) Regulations 2001 in case of delay in payment, the insurer shall be liable to pay interest at a rate which is 2% above the bank rate prevalent at the beginning of the financial year in which the claim is reviewed by it. The complainant did not file any document to show the bank rate prevalent at the beginning of the financial year in order to award 2% more than what was awarded by the Dist. Forum. The interest that was awarded by the Dist. Forum was fair and reasonable. We do not want to modify the order of the Dist. Forum in this regard.
3) In the result the appeal is dismissed. No costs.
1) _______________________________
PRESIDENT
Dt. 01.10.2010
Dated : 19.08.2010 :
As one of the Members has differed on the points, it is referred to the Hon’ble President under proviso to sub-section (2-A) of Section 14 of Consumer Protection Act, 1986.
PRESIDING MEMBER
