1.        The present case is filed under Section-21 of the Consumer Protection Act, 1986.

2.        The case of the Complainant is that it is engaged in manufacturing of drugs at Units 14 & 15, KHB Industrial Area, Yelahanka, Bengaluru. The Complainant obtained Standard Fire & Special Peril Policy (SFSP) from the Opposite Party, vide Policy No.421500/11/2010/151, for the period 23.11.2009 to 22.11.2010 for Rs.8,77,66,000/- covering the said manufacturing units. The Policy was got renewed from 23.11.2010 to 22.11.2011, vide Policy No. 421500/11/ 2011/149, for sum insured Rs.13,11,34,962/-. The Complainant further got the Policy renewed from 23.11.2011 to 22.11.2012 for sum insured Rs.17,77,97,189/-, vide Policy No. 421500/11/2012/139. On 23.02.2012 distillation was being carried out by taking 600L Toluene in the reactor and distilled Toluene was collected in the receiver. While draining, fire took place due to static current produced during distillation causing massive damage to the premises. The Complainant immediately informed the Opposite Party, vide e-mail dated 24.02.2012, who appointed Shri B. Gopalakrishnan as Preliminary Surveyor. He visited the premises and submitted inspection report dated 07.03.2012. In the Preliminary Report Shri B. Gopalakrishnan opined that this type of peril is generally inclusive in Standard Fire & Special Peril Policy. The Opposite Party thereafter appointed M/s Flourish Insurance Surveyor and Loss Adjuster Pvt. Ltd. as final Surveyor. He visited the premises and submitted Final Survey Report, dated 22.09.2012. The Opposite Party, vide letter dated 10.10.2012, informed the Complainant that they received the Final Survey Report and on scrutiny of the report, prima facie the Insurance Claim was not tenable as per Clauses 1 and 3 of the General Conditions of the Policy. Complainant was, therefore, called to submit its explanation before final decision on the Claim of the Complainant. The Complainant sent his reply, vide letter dated 09.11.2012, pointing out that there were no change in the trade or occupation or other circumstances affecting the building insured under the Policy. Opposite Party, vide letter dated 23.11.2012 intimated the Complainant that the risk associated with the fire due to erection and testing were not covered under the Policy. Since the fire had occurred during testing, as confirmed in the Survey Report, it fell outside the scope of the operational cover. Complainant was also informed that at the time of renewal of the Policy, the Complainant did not disclose that new machinery/equipments were being erected/installed. The Opposite Party, therefore, repudiated the claim on 23.11.2012 on the ground that risk associated with erection and testing was not covered under the Policy, for which a separate Policy ought to have been taken. Aggrieved by the Repudiation and alleging deficiency in service, the present Complaint was filed before this Commission with the following prayer:-

“(a)  to pass orders directing Opposite PartyNo.1 to pay a sum of Rs.1,14,50,617.00 (Rupees one crore fourteen lacs fifty thousand six hundred and seventeen only) to the Complainant being the amount of the Insurance claim along with interest Thereon till the date of filling of the complaint;

(b)    to award pendente lite and future interest on the amount awarded as per prayer clause(a) above @18% per annum from the date of filling of the suit till realization of the amount awarded;

1. to award cost of the proceeding in favour of the Complainant and against the Respondents ;and

2. to pass such other or direction as deemed fir and proper in the facts and circumstances of the present case.”

3.       The Complaint was contested by the Opposite Party by filing Written Statement in which it was stated that this Commission had no pecuniary jurisdiction, as the total claim assessed by the Surveyor was below Rupees One Crore. It was contended that the Complaint was not maintainable, as it violated Condition 6 (ii) of the Policy, which provided that if a claim is made and rejected and no action is commenced within 12 calendar months, the benefit flowing from the Policy shall stand extinguished and any subsequent action would not be maintainable. It was also stated that the Complainant was a Corporate entity and had taken the Insurance Policy to protect its property meant for business and profit making. The services of the Opposite Party, therefore, were availed by the Complainant purely for “Commercial purpose”. The Complainant was thus not a Consumer qua the Consumer Protection Act, 1986. Learned Counsel also submitted that the Complaint on the face of it was false, frivolous and replete with baseless assumptions. This was a classic case of abuse of process of law by the Complainant and hence the Complaint was liable to be dismissed with exemplary costs on the Complainant.

4.       Heard the Learned Counsels for the Parties and carefully perused the record. Learned Counsel for the Complainant stated that the Complainant was engaged in manufacturing of drugs under License No.KTK/25/473/2001 issued by Drugs Controller & Licensing Authority at Unit-15, KHB Industrial Area, Yelahanka, Bengaluru and which was later extended to Unit-14, duly insured by the Opposite Party. It was also submitted that both the Units were periodically renewed by the Opposite Party. On 23.02.2012, fire took place in Unit-14 due to static current causing damage to machinery in Unit-14. Complainant, vide e-mail dated 24.02.2012, informed the Opposite Party about the Fire and submitted a claim for Rs.90,43,490/-. The Opposite Party repudiated the claim on the ground of concealment of material facts before obtaining the Policy cover. Learned Counsel for the Complainant stated that the Opposite Party was duly informed, vide letter dated 21.11.2011, about the various machineries to be included in Standard Fire & Special Peril Policy. Opposite issued Policy dated 21.11.2011 after the receipt of premium, paid, vide cheque dated 18.11.2011, and hence the coverage of the peril had to be strictly considered as per terms and conditions of the Policy. Learned Counsel also submitted that the Preliminary Surveyor Report specifically provided that the occasioned peril is generally inclusive in the Standard Fire & Special Peril Policy. Final Surveyor also mentioned that the accident took place during the testing of the facility in the course of erection and commissioning, and the risk was covered in Standard Fire & Special Peril Policy. Learned Counsel for the Complainant stated that as per Contra Proferentem Rule, while interpreting the terms and conditions of the Policy, if two views are possible, the one favourable to the insured had to be adopted.

5.       Learned Counsel for the Opposite Party submitted that the Policy was obtained by the Complainant for ‘manufacturing process’ only whereas the machine/plant was under ‘erection, commissioning and trial’ when the loss occurred and at no point of time did the Complainant inform the Opposite Party about the installation, erection, commissioning and trial of the machine/plant. It was further submitted by the Learned Counsel that the Insurance cover obtained by the Complainant was Standard Fire & Special Peril Policy and it did not cover the risk for erection, commissioning, testing and trial runs ‘pre-cursor to commencement of commercial production’ and consequently there was no question of its inclusion under the said Policy. As per the Insurance contract, the Opposite Party was liable to indemnify the Complainant of the loss which was caused only by the specified perils named in the Insurance Policy, as the Policy did not cover the entire gamut of operational losses, unless specified therein. Learned Counsel relied on the judgment in General Assurance Society Ltd. Vs Chandumull Jain [AIR 1996 SC 1644], wherein Hon’ble Supreme Court observed as follows:

“Where the contract to insure or issue a Policy of fire Insurance does not specify the terms and conditions of the Policy, it is a general rule that the parties will be presumed to have contemplated a form of Policy containing such conditions and limitations as are usual in such cases......”

6.   Learned Counsel also relied on the judgment in Oriental Insurance Co. Ltd Vs Samaynallur Primary Agriculture Coop. Bank [(1999)8 SCC 543], wherein Hon’ble Supreme Court observed as follow:

“The Insurance Policy has to be construed having reference only to the stipulation contained in it and no artificial far-fetched meaning could be given to the words appearing in it .”

1. Learned Counsel for the Opposite Party stated that it is a practice that the Proposal Form is collected at the time of the inception in the first year. Subsequent renewal is done based on the instructions by the insured, received from time to time. The revised/fresh proposal form is generally obtained when there are any substantial changes which alters the terms and conditions in the risk. Hence, it was not essential to obtain a fresh Proposal Form in writing from the Complainant. Learned Counsel further stated that the Insurance contract is a different of the contract and their interpretation is governed by different principles. On a contract of Insurance, there is requirement of uberimma fides i.e. good faith on the part of the insured. It was obligatory on the part of the Complainant to disclose all the features of risk. It is trite in a contract of Insurance that the right and obligation are governed by the terms of the said contract. The terms of a contract of Insurance have to be strictly construed and no exception can be made on the ground of equity. The claim was rightly denied by them and there was no deficiency of service, negligence or unfair trade practice as alleged. The Complaint thus deserved to be dismissed with exemplary cost in favour of the Opposite Party.

2. Brief facts of the case are that Complainant was engaged in manufacturing of drugs under License No. KTK/25/473/2001 issued by Drugs Controller & Licensing Authority at Units 14 & 15, KHB Industrial Area, Yelahanka, Bengaluru. The Complainant obtained from the Opposite Party, vide Policy No.421500/11/2010/151, for period 23.11.2009 to 22.11.2010 for Rs.8,77,66,000/- covering the said manufacturing units. The Policy was got renewed from time to time. On 23.02.2012 distillation was being carried out by taking 600L Toluene in the reactor and distilled Toluene was collected in the receiver. While draining, fire took place due to static current produced during distillation causing massive damage to the premises. The Complainant immediately informed the Opposite Party, vide e-mail dated 24.02.2012, who appointed Shri B. Gopalakrishnan as Preliminary Surveyor. The Opposite Party thereafter appointed M/s Flourish Insurance Surveyor and Loss Adjuster Pvt. Ltd. as final Surveyor. He visited the premises and submitted Final Survey Report, dated 22.09.2012. The Opposite Party repudiated the claim on 23.11.2012 on the ground that risk associated with erection and testing was not covered under the Policy, for which a separate Policy ought to have been taken.

3. It is seen from record that the Claim was repudiated on 23.11.2012 when the cause of action arose and the Complainant filed this Complaint on 27.01.2014, within two years from the cause of action within the limitation period. The Complaint was filed as per section 24A of Consumer Protection Act, 1986 which reads as follows:

 (l) The District Forum, the State Commis­sion or the National Commission shall not admit a complaint unless it is filed within two years from the date on which the cause of action has arisen.(2)  Notwithstanding anything contained in sub-section (1), a complaint may be entertained after the period specified in sub-section (l), if the complainant satisfies the District Forum, the State Commission or the National Commission, as the case may be, that he had sufficient cause for not filing the complaint within such period: Provided that no such complaint shall be entertained unless the National Commission, the State Commission or the District Forum, as the case may be, records its reasons for condoning such delay.

10.      Regarding maintainability of the Complaint, it has been held by this Commission in Harsolia Motors v. National Insurance Co. Ltd. I, (2005) CPJ 27 (NC) decided on 03.12.2004 that since an Insurance Policy is taken for reimbursement or for indemnity of the loss which may be suffered on account of insured perils, the services of the insurer cannot be said to have been hired or availed for a commercial purpose.  This Commission does possess the requisite jurisdiction to entertain a Consumer Complaint wherever a defect or deficiency in the services rendered by an insurer is made out. In view of the above, the Complaint is held maintainable.

11.                 It can be seen from the record that Standard Fire & Special Peril Policy was first issued by the Opposite Party in year 2009. In 2010 Unit-14 was acquired by the Complainant and details of Unit-14 were given to the Opposite Party which was to be included while renewing the Policy issued in 2009 for Unit-15. The Opposite Party renewed the Standard Fire & Special Peril Policy for Unit-14 and Unit-15. It is admitted by the Opposite Party, vide letter dated 08.02.2013, that prior information was given by the Complainant regarding Unit-14. When any new premises is acquired and machinery is brought in, it is obvious that the machinery and equipment would be installed and after a successful trial run, the plant and machinery would go into commercial production. Opposite Party in its written statement stated that “it is a practice that the Proposal Form is collected at the time of the inception in the first year. Subsequent renewal is done based on the instructions by the insured, received from time to time. Hence, it was not essential to obtain a fresh Proposal Form in writing from the Complainant. The revised/fresh proposal form is generally obtained when there are any substantial changes which alters the terms and conditions in the risk….Complainant’s letter of 21.11.2011,which was in continuation of earlier insurance policies, was as good as the proposal form”. It is seen from the record that the Insurance Company renewed the Policy with prior knowledge of the details of machinery in premises of Unit-14 and without obtaining separate proposal form or appointing separate risk evaluator for assessing risk of Unit-14, which clearly shows that Opposite Party failed in its duty to verify and assess the risk due to addition of new premises and machinery.

1. Learned Counsel for the Opposite Party further stated that peril/loss was not covered by the Opposite Party as there was erection, commissioning and trial of machinery rather than normal manufacturing. He further stated that in such case two different policies are issued i.e. one covering the existing factory in operation under the Standard Fire and Special Policies and another under Erection Policy to cover the machinery under installation/commissioning. Once the commissioning and testing etc. of this part of factory is over, it is added to SFSP as enhancement of the sum insured. That erecting and testing were excluded in the Standard Fire & Special Peril Policy, was never informed to the Complainant and was made known to the Complaint for the first time only while repudiating claim of the Complainant. The onus of informing about the exclusion clause of Policy to the insured was on the Insurance Company and this onus cannot be transferred to the Insured. Hon’ble Supreme court in Bharat Watch Company vs National Insurance Co. Ltd [Civil Appeal No(S). 3912 Of 2019] observed that “The basic issue which has been canvassed on behalf of the appellant before this Court is that the conditions of exclusion under the Policy document were not handed over to the appellant by the insurer and in the absence of the appellant being made aware of the terms of the exclusion, it is not open to the insurer to rely upon the exclusionary clauses. Hence, it was urged that the decision in Harchand Rai (supra) will have no application since there was no dispute in that case that the Policy document was issued to the insured.

“We clarify that in a situation where the terms of exclusion as noted earlier apply, the law laid down by this Court in Harchand Rai (supra) would undoubtedly stand attracted. This case is, however, distinguishable on facts, since the terms of exclusion were not communicated.”

13.    It was also alleged by the Complainant that the terms and conditions of the Policy were not supplied to the Complainant, while issuing and renewing the Standard Fire and Special Peril Policies. Though it was denied, the Learned Counsel for the Opposite Party failed to produce any evidence on record showing denial of the above allegation. While renewing the Policy, the Opposite Party did not seek any information relating to the status or stage of manufacturing in Unit-14 and it was only after the fire accident that the Opposite Party spoke of a separate Policy for erection, commissioning and trial. It was for the Insurance Company to mention it clearly as to what was included and what was excluded under the Insurance Policy. The provisions of the Policy must be read and interpreted in such a manner so as to give effect to the reasonable expectations of all the Parties including the insured and the beneficiaries.  It is also well settled that coverage provisions should be interpreted broadly and if there is any ambiguity, the same should be resolved in favour of the insured.  On the other hand, the exclusion clauses must be read narrowly. Further, even in cases where two reasonable interpretations of the terms of the Policy are possible, the Apex Court in the case of Shashi Gupta (Smt.) Vs. Life Insurance Corporation & Anr., (1995) Suppl. 1 SCC 754, held that we would accept the one which favours the Policy-holder, as the same advances the purpose for which the Policy is taken and would be in consonance with the object to be achieved for getting the lives assured .To the same effect law on the subject is succinctly stated in Skandia Insurance Co. Ltd. vs. Kokilaben Chandravadan & Ors. (1987) 2 SCC 654, wherein the Apex Court observed:

“It is the statutory provision defining the conditions of exemption which is being interpreted. These must therefore be interpreted in the spirit in which the same have been enacted accompanied by an anxiety to ensure that the protection is not nullified by the backward looking interpretation which serves to defeat the provision rather than to fulfil its life-aim. To do otherwise would amount to nullifying the benevolent provision by reading it with a non-benevolent eye and with a mind not turned to the purpose and philosophy of the legislation without being informed of the true goals sought to be achieved.”

14.   From the above observation and settled principle of law it can be concluded that when Unit-14 was acquired in 2010, it was obligatory for the Insurance Company to assess the additional risk involved and obtain fresh proposal form before issuing the Policy for both the units. After taking the premium and renewing the Policy, the Insurance Company cannot transfer the onus of disclosing material fact on insured. Once the Insurance Company itself fails to fulfil its obligations, before issuing and renewing the Policy, it cannot shy from honouring the claim of insured. It is also settled position in law that if there is any ambiguity or a term is capable of two possible interpretations, one beneficial to the insured should be accepted, consistent with the purpose for which the Policy is taken, namely, to cover the risk on the happening of a certain event. In view of the above discussion and case laws, I hold that the Insurance Company failed to assess the risk in Unit-14 and issued the Policy without obtaining proposal form for Unit-14. Repudiation of claim on grounds of exclusion not expressly conveyed to the insured, amounts to deficiency in service and unfair trade practice.

1. In view of the above, this Complaint is allowed. The Opposite Party is directed to reimburse the Complainant on the basis of assessment made by the second Surveyor, namely, M/s Flourish Insurance Surveyor and Loss Adjuster Pvt. Ltd, and pay a sum of Rs.29,84,006/- with interest @ 9% per annum from the date of filing of this Complaint to date of this order . The Opposite Party is directed to pay the above referred amounts to the Complainant within a period of eight weeks from the date of receipt of a copy of this order.