Tamil Nadu

StateCommission

CC/170/2016

M/s. Mahaveer Sales Corporation, Rep. by its Proprietor, Ranjith Kumar Jain - Complainant(s)

Versus

M/s. United India Insurance Company Ltd., Rep by its Manager - Opp.Party(s)

L.Prabakaran

31 Oct 2022

ORDER

                                                                                                                                                                                                                                                                             IN THE TAMILNADU STATE CONSUMER DISPUTES REDRESSAL COMMISSION, CHENNAI.

 

Present:  Hon’ble THIRU. JUSTICE R. SUBBIAH  : PRESIDENT

                             Thiru R  VENKATESAPERUMAL : MEMBER

 

 

C.C.No.170 of 2016

Monday, the 31^st day of October 2022

 

M/s. Mahaveer Sales Corporation

Rep. by its Proprietor

Mr. Ranjith Kumar Jain

Factory & Office at

No.19, Radhakrishnan Salai

Near M.K.B Nagar Bridge

Chennai – 600 092.                                             .. Complainant

 

                                            

                                             - Vs –

       

United India Insurance Co. Ltd.,

Rep. by its Manager

Having Office at No.21

Raja Annamalai Road

Purasawalkam

Chennai – 600 084.                                            .. Opposite Party

       

 

Counsel for the Complainant         :  M/s. L Prabakaran

Counsel for the Opposite party      : M/s. Nageswaran & Narichania

This complaint came before us for final hearing on 12.07.2022 and on hearing the arguments of the counsel for both parties and on perusing the material records, this Commission made the following :-

O R D E R

 

 R.SUBBIAH J., PRESIDENT

             This complaint has been filed by the Complainant under Sections 17 of the Consumer Protection Act, 1986 praying for the following directions to the opposite party :

1. To pay a sum of Rs.55,00,000/- towards loss of machineries;
2. To pay a sum of Rs.10,000/- towards compensation with interest for the monetary loss and mental agony; and
3. To pay a sum of Rs.10,000/- towards the cost of litigation.

 

             2.     In brief, the case of the complainant as projected in the Complaint is as follows: 

     The complainant, along with his two sons, is in the business of manufacturing and selling polythene covers and sheets under self employment.  The complainant availed Standard Fire and Special Risks Policy bearing Policy No.0103031115P105712841 from the opposite party, covering the period from 06.08.2015 to 05.08.2016, for their factory and office premises, against the risk of damage by floods and other natural calamities like storm, cyclone, typhoon, tempest etc.  During November 2015, heavy rains lashed Chennai, leading to inundation of several parts of Chennai.  Due to which, on 16.11.2015, water percolated into the factory premises of the complainant.  As a result, a Kolsite Machine set (Extruder, Blower, Compressor, Penal Board, Winder, Starter and motor -65mm screw & 54” roller), which was kept in the premises was completely immersed in water, ruined and rendered useless.  The cost of the said machine (with attachments) is     Rs.17 lakhs.  Immediately, the complainant sent an email to the opposite party, narrating the said facts.  The complainant also went in person to the office of the opposite party and handed over a letter and the claim form.  Hence, on 21.11.2015 and 23.11.2015, one Surveyor- Loss Assessor, inspected the factory premises in the presence of the complainant and took photos of the same.  However, no surveyor report was furnished by the opposite party to the complainant.  Thereafter, torrential rains continued to lash several parts of Tamil Nadu and wreaked havoc to the factory premises of the complainant.  Hence, on 30.11.2015 at 9.00 pm, the complainant closed his factory premises.  From 01.12.2015 rainfall was very severe that devastated life in Chennai.  The factory premises of the complainant were completely engulfed by water, rising to more than 5 feet.  The Government of Tamil Nadu had evacuated persons living in the said area to safer places and the entire area was cordoned off, for 3 days.  Even on 03.12.2015, the factory of the complainant was inundated with water and all the machinery and stock available in the premises were completely damaged.  Therefore, on 04.12.2015, the complainant intimated the situation to the opposite party by email as well as in person and furnished a list of machinery and stock that was damaged by water and claimed a loss amount of Rs.60,00,000/- towards the cost of machinery and Rs.7,00,000/- towards loss due to damage to stock.  But, no reply was received from the opposite party, for the letters dated 16.11.2015 and 04.12.2015.  However, on 17.12.2015, one Mr.C.Venkata Subramanian, Surveyor- Loss Assessor sent a letter to the complainant insisting for documents pertaining to the installation of machinery and stocks (Asset and Stock Register) and the estimate to clean and restore the machinery, within 7 days.  The complainant sent a reply dated 23.12.2015 requesting for three weeks time to reconstruct the records, since most of the papers were either damaged or washed away in floods.  In the said letter, the complainant further requested to sanction part of the insured amount to retrieve his business since he had suffered huge loss due to floods.  Since there was no reply to his letter, the complainant sent reminders, which was also not replied by the opposite party.  Thereafter, the complainant re-constructed the records regarding the stock available in his premises to an estimated value of Rs.17,18,951.91.  However, he could not reconstruct records pertaining to installation of his machinery, since the same was purchased in the year 2010.  The complainant obtained an estimate for repair of machines that can be repaired from M/s. Continental Engineering Works.  Three highly expensive machines could not be repaired since it was fully damaged.  With regard to the other machines, the repair cost was estimated to a sum of Rs.7,70,000/-.  All the said letters along with the documents supporting the availability of stock, report from M/s.Continental Engineering Works, quotations for purchase of new machinery were all submitted to the opposite parties.  Since no reply was forthcoming from the opposite party, the complainant was constrained to issue a legal notice dated 05.03.2016, seeking to release the claim amount of Rs.67,00,000/- and Rs.5,00,000/- towards the loss suffered by the complainant on account of non- sanctioning the claim amount even after a lapse of several months.  To this legal notice a reply dated 16.03.2016 was sent by the Surveyor - Loss Assessor, stating that the claim has been made without producing any documents that are required for assessing the loss and hence he had no option other than to recommend closure of the claim by the opposite party. On 23.04.2016, the complainant sent a rejoinder, enclosing all the relevant documents for the purpose of substantiating his claim.  But, the opposite party failed to consider the claim of the complainant and even the surveyor report was not provided to the complainant.  Infact, the Insurance Regulatory and Development Authority had issued a Circular dated 07.12.2015 under the head “Guidelines on Insurance Claims for losses due to flood in the State of Tamil Nadu, Puducherry and neighbouring Districts of Andhra Pradesh” wherein it has emphasized that all claims ought to be surveyed within 72 hours and claim payments/ on account payments  are disbursed within 15 days.  Despite the same, the opposite party made the complainant to run from pillar to post, to process their claim.  The complainant has been running the Plastic Unit of his own, for his livelihood by registering his firm under Small Scale Industrial Development Corporation (SIDCO), by obtaining loan from various nationalised banks under the said scheme, which has come to a stand-still.  Due to the negligent attitude and unfair trade practice of the opposite party, the complainant had suffered monitory loss and mental agony and thus the opposite party had committed deficiency of service.  Hence, the present complaint has been filed against the opposite party, for the reliefs as aforementioned.

 

             3. Resisting the complaint, the opposite party has filed a version stating that the complainant is not a consumer as defined under Section 2(d)(ii) of the Consumer Protection Act, 1986.  The service from the opposite parties was availed by the complainant for commercial purpose.  The complainant is in the business of manufacturing and selling polythene covers and sheets.  The complainant and his two sons manage the said industry.  Therefore, it is clear that the business of the complainant was production, which is a commercial act under trade and commerce, resulting in distribution for sale and for profit. Therefore, the complainant will not come under the definition of the term ‘Consumer’ in as much as they availed the services provided by the opposite parties, for commercial purpose.  Further, “Trade” is defined under Section 2(q) of the Consumer Protection Act, 1986, as per which a Trader in relation to any goods means a person who sells or distributes any goods for sale, which includes polythene covers and sheets.  Hence, the complainant is not at liberty to avail the alternate remedy available under Section 3 of the Consumer Protection Act, 1986.  Without prejudice to the contentions of the opposite party regarding maintainability of the complaint, it is true that the complainant had availed Standard Fire & Special Perils Policy bearing No.0103031115P105712841 for a period between 06.08.2015 to 05.08.2016 and had insured various stocks for   Rs.55 lakhs, [Plant & Machinery for Rs.50 lakhs and plastic raw materials for Rs.5 lakhs].  The policy is strictly governed by various policy terms and conditions.  The complainant informed the opposite party about entry of water into his business premises, due to heavy rain on 15.11.2015 and 16.11.2015.  The opposite party appointed a surveyor to evaluate the loss, if any, suffered by the complainant.  No proper claim was lodged by the complainant regarding the damage to stocks and machinery suffered by them, due to immersion in water.  Though it is stated by the complainant that the cost of machinery was Rs.17,00,000/-, no particulars have been furnished regarding the loss suffered by them, due to damage to the machinery.  No letter or claim form was handed over by the complainant to the opposite party.  In the letter dated 16.03.2016, the surveyor had clearly stated that the complainant is refusing to cooperate in the assessment process, by submitting the documents which are absolutely necessary.  The entire list of machinery and the estimate towards repairs to the affected machinery duly supported by Engineer’s report, as required by the surveyor, were not given by the complainant.  Inspite of the surveyor’s instructions to reconstruct the stock records with bills, balance sheet statements etc., the complainant did not comply with the same.  Since the complainant had not substantiated the loss as required by the opposite party, the surveyor recommended for closure of the claim.  Thus, the opposite party vehemently denies the allegation of deficiency of service and sought for dismissal of the complaint. 

 

             4.  In order to prove the case, the complainant, along with proof affidavit, has filed 17 documents and the same have been marked as Ex.A1 to A17.   On the side of the opposite party, proof affidavit has been filed but no documents were marked.

             5.  When the matter was taken up for consideration, the counsel for the complainant made a detailed submission adverting to the averments made in the complaint.  It is the contention of the counsel for the complainant that the complainant along with his two sons, is running a plastic unit of his own, for his livelihood.  He had suffered loss of machinery and commodities stored in his premises due to the flood occurred in the year 2015 on account of heavy rainfall.  Therefore, the complainant is entitled to make a claim for the loss suffered by him since there was an insurance coverage.  In this regard, counsel for the complainant relied on the judgment of Hon’ble Supreme Court in Cheema Engineering vs. Rajan Singh reported in 1997(1) SCC 131, wherein it is held that the complainant along with his family members could carry on work for livelihood and still it would not amount to commercial purpose and the burden to show that it was for commercial purpose is on the respondent. In the present case, the complainant has let in evidence regarding the nature of the complainant’s firm but there is absolutely no contra evidence let in by the opposite party except for bare denial. Though the complainant is entitled to a copy of the surveyor report, the same was not provided to him.   Further, all the relevant documents which were available with the complainant were furnished to the Surveyor.   If at all there is any delay in submitting the documents the same was due to the reasons beyond the control of the complainant, since he had to reconstruct the records which were lost in floods.  Further, the complainant informed the surveyor that they need time to reconstruct the documents but the same was not considered by the surveyor.  The learned counsel had also cited the judgement of the Apex Court in  the case of Gurmel Singh Vs. Branch Manager, National Insurance Company, in Civil Appeal   No.4071/2021 dt.20.05.2022 and The Oriental Insurance Co.,Vs. K.Narasimha Reddy in Civil Appeal No.7694 of 2013 dt.09.06.2022, to fortify his submission that the insured should not be denied the claim amount for non-production of documents beyond the control of the insured and in such circumstances the efforts taken by the insured to reconstruct the documents should be considered and the claim should be considered based on the reconstructed documents.  On 23.04.2016, along with the legal notice, the complainant had enclosed all the relevant documents for the purpose of substantiating the claim.  The same was also acknowledged by the surveyor except the Service Engineer’s report, which he claims as not received.   Inspite of producing the relevant documents, the surveyor evaded from his responsibility, stating that he cannot reopen the case without the explicit permission of the opposite party.  Thus, the complainant submitted that there is no justification in rejecting the claim made by them.  Thus, there is deficiency of service on the part of the opposite party and hence prayed for allowing the complaint.  

 

             6.  Countering the submission of the complainant, counsel for the opposite party submitted that the complainant is not a consumer as defined under Section 2(d)(ii) of the Consumer Protection Act, 1986.  The service from the opposite parties was availed by the complainant for commercial purpose.  The complainant and his two sons, are in the business of manufacturing and selling polythene covers and sheets.    Therefore, it is clear that the business of the complainant was production, which is a commercial act under trade and commerce, resulting in distribution for sale and for profit. Therefore, the complainant will not come under the definition of the term ‘Consumer’ in as much as they availed the services provided by the opposite parties, for commercial purpose.  Further, “Trade” is defined under Section 2(q) of the Consumer Protection Act, 1986, as per which a Trader in relation to any goods means a person who sells or distributes any goods for sale, which includes polythene covers and sheets.  Hence, the complaint is not maintainable before this Consumer Commission. 

 

             7.  So far as merit of the case is concerned, it is the submission of the opposite party that when the complainant had informed the opposite party about the entry of water into the factory due to rain on 15^th and 16^th of November 2015 they have appointed a surveyor to evaluate the loss if any suffered by the complainant but no proper claim was lodged by the complainant regarding damage to stocks and machinery suffered by them due to immersion in the water.  Though the complainant had stated in the complaint that the cost of machinery was Rs.17,00,000/- no document was furnished with regard to the particulars of the loss suffered by them due to damage to the machinery.  No letter or claim form as stated in the complaint was handed over by the complainant to the opposite party.  The complainant did not co-operate with the surveyor appointed by the opposite party, which is evident from the reply of the surveyor dated 16.03.2016 marked as Ex.A11.  The surveyor has clearly recorded that the complainant despite repeated requests has not presented the actual damage to machinery and stocks as claimed.  The entire list of machinery was not given by the complainant.  Similarly, the estimate towards repairs to the damaged machinery duly supported by Engineer’s report was also not furnished.  In fact the surveyor has clearly mentioned in the report that merely saying that the stock records have been washed away in the flood will not help the cause of the complaint.  The surveyor has specifically called upon the complainant to reconstruct the same with bills and balance sheet, statements etc., which was brought to the attention of the complainant but was not complied with.  Therefore, the surveyor has concluded that the complainant has not substantiated the loss as required by the opposite party and hence recommended closure of the claim.  Hence, absolutely there is no deficiency of service on the part of the opposite parties.  Thus, the counsel for the opposite party sought for dismissal of the complaint.

 

             9. In view of the above submissions, the following questions fall for consideration:

1. Whether the complainant has availed the service of the opposite party for commercial purpose?
2. Whether the complainant is a consumer as defined under Section 2(1)(d) of Consumer Protection Act, 1986?
3. Whether the complainant has made out a case for awarding compensation by this Commission?

Since the questions 1 & 2 are inter related to each other, the same are dealt with, in common, as follows:

             It is the case of the opposite party that the complainant is not a Consumer as defined under Section 2(d)(ii) of the Consumer Protection Act, 1986, since the complainant along with his two sons is running an Industry, which involve in manufacturing and selling polythene covers and sheets, which is a commercial Act.  Hence, based on the policy taken by the complainant, he is not at liberty to avail the alternate remedy available under Section 3 of the Consumer Protection Act.  Hence, the complaint is liable to be dismissed, as not maintainable. 

   But we are not inclined to accept this submission made by the counsel for the opposite party, in view of the dictum laid down by the National Commission in the case of M/s.Harsolia Motors Vs. M/s.National Insurance Co. Ltd., in F.A.No.159/2004 dated 03.12.2004, in which it has been held that,

             “insured who takes the insurance policy cannot trade or carry on any commercial activity with regard to the insurance policy taken by him.  Under Section 3 of the Insurance Act, 1938, no person is permitted to carry on business of Insurance unless he obtains a certificate of registration from the Insurance Recovery and Development Authority.  Further, hiring of services of the Insurance Company by taking insurance policy by complainants who are carrying on commercial activities cannot be held to be a commercial purpose.  The policy is taken for reimbursement or for indemnity for the loss which may be suffered due to various perils.  There is no question of trading or carrying on commerce in insurance policies by the insured.  May be that insurance coverage is taken for commercial activity carried out by the insured.”

 

     Hence, in view of the dictum laid down in the above judgment, we are of the opinion that the submission made by the opposite party that the complainant is not a Consumer since the policy was taken for commercial purpose, cannot be accepted.  Accordingly, we hold that the complainant is entitled to maintain this complaint. 

             10.  Coming to the 3^rd question that as to whether the complainant has made out a case for awarding compensation, we find that it is the case of the complainant that in November 2015 there was a heavy loss to the complainant’s factory and attached office premises, due to heavy rain in Chennai City.  In the said heavy rain, the complainant’s premises were totally flooded and all the machinery and stocks available in the premises were totally lost.  The complainant had availed the Standard Fire and Special Peril Policy valid from 06.08.2015 to 05.08.2016 covering their factory and office premises, against the risk of damage by floods.  The insured had made a claim for a sum of Rs.60,00,000/- towards the cost of machinery and Rs.7,00,000/- towards loss due to damage to stock.  The opposite party had deputed one Mr.C. Venkata Subramanian, Surveyor – Loss Assessor to conduct a survey and report.  According to the surveyor, the complainant did not co-operate in the assessment process, by submitting the documents which were absolutely necessary to assess the loss caused to the complainant.  Therefore, the surveyor had recommended closure of the claim. 

     But according to the complainant non-production of documents is beyond the control of the insured and in such circumstances, the efforts taken by the insured to reconstruct the documents should be considered and the claim should be considered based on the reconstructed documents.

    

     11.  In view of the above submission, we are of the opinion that there is a disputed question of facts between the parties.  When there is a disputed question of facts merely by relying upon the pleadings this Commission cannot come to a justifiable conclusion in this summary proceedings.  The issue in this can be decided only by adducing elaborate evidence on both sides by affording an opportunity to cross examine the other side.  Therefore the complainant has to work out his remedy only before appropriate civil court.

 

                     12.  Further, a reference could be placed on the  judgement of Supreme Court delivered in the case of judgment of the Supreme Court in the case of United India Insurance Co. Ltd., Vs. Kantika Colour Lab & Ors., reported in (2010) 6 SCC 449,  paragraph 19, wherein it is observed as follows :-

              “19. Contracts of Insurance are generally in the nature of contracts of indemnity. Except in the case of contracts of Life Insurance, personal accident and sickness or contracts of contingency insurance, all other contracts of insurance entitle the assured for the reimbursement of actual loss that is proved to have been suffered by him. The happening of the event against which insurance cover has been taken does not by itself entitle the assured to claim the amount stipulated in the policy. It is only upon proof of the actual loss, that the assured can claim reimbursement of the loss to the extent it is established, not exceeding the amount stipulated in the contract of Insurance which signifies the outer limit of the insurance company's liability. The amount mentioned in the policy does not signify that the insurance company guarantees payment of the said amount regardless of the actual loss suffered by the insured. The law on the subject in this country is no different from that prevalent in England; which has been summed up in Halsbury's Laws of England - 4th Edition in the following words:

"The happening of the event does not of itself entitle the assured to payment of the sum stipulated in the policy; the event must, in fact, result in a pecuniary loss to the assured, who then becomes entitled to be indemnified subject to the limitations of his contract. He cannot recover more than the sum insured for that sum is all that he has stipulated for by his premiums and it fixes the maximum liability of the insurers. Even with in that limit, however, he cannot recover more than what he establishes to be the actual amount of his loss. The contract being one of indemnity only, he can recover the actual amount of his loss and no more, whatever may have been his estimate of what his loss would be likely to be, and whatever the premiums he may have paid, calculated on the basis of that estimate."

 

The determination of the said judgment is squarely applicable to the present case.  

 

                13.  Therefore, we are of the opinion that when the complainant has made a huge claim of Rs.67 lakhs, he has to substantiate the same by producing necessary documents. In the instant case, the complainant has miserably failed to do so.  A bare claim is not legally sustainable.  The claim of the complainant should be supported by producing the necessary documents and hence he is not eligible for a claim.  Therefore, there is no deficiency of service on the part of the opposite party.

 

             14.  In the result, the Complaint deserves no merit and is liable to be dismissed.  Accordingly, the Complaint is dismissed. 

            

 

R  VENKATESAPERUMAL                                  R.SUBBIAH, J.

MEMBER                                                     PRESIDENT

 

 

 

LIST OF DOCUMENTS MARKED ON THE SIDE OF THE COMPLAINANT

 

Sl.No.       Date                 Description of Documents

 

Ex.A1        17.06.2013       Registration Certificate of the complainant

unit issued by the Government of Tamil Nadu

 

Ex.A2        26.04.2002       Insurance Regulatory and Development

Authority Notification

 

Ex.A3        06.08.2015       United India Insurance Company Limited 

Certificate

 

Ex.A4        16.11.2015       E-mail to Insurance Company

 

Ex.A5        04.12.2015       E-mail to Insurance Company

 

Ex.A6        17.12.2015       Reply from Insurance Company

 

Ex.A7        23.12.2015       Rejoinder from Competent Authority to the

Insurance Company

 

Ex.A8        10.02.2016       Reminder letter to the Insurance Company

 

Ex.A9        10.02.2016       Reminder letter to the Insurance Company,,

Senior Manager

 

Ex.A10      05.03.2016      Legal notice to the Insurance Company and

Surveyor –Loss Assessor

 

Ex.A11      16.03.2016       Reply from Surveyor – Loss Assessor to

the Advocate

 

Ex.A12      23.04.2016       Rejoinder notice to the Insurance Company

and Surveyor- Loss Assessor and Acknowledgement series

 

Ex.A13                              Photo series

 

Ex.A14    04.05.2016         Letter of the surveyor / Loss Assessor

 

Ex.A15    23.04.2016         Legal Notice with enclosures

1.  Engineer Report
2.  Bank Statement
3.  IT Returns
4.  Stock summary with entries

 

Ex.A16    07.12.2015         Guidelines issued regarding claims

                                        relating to floods               

 

Ex.A17        Nil                  Proforma Invoices relating to

machinery (series)

 

 

 

 

 

 

 

 

LIST OF DOCUMENTS MARKED ON THE SIDE OF THE OPPOSITE PARTY

 

•   NIL   -

 

 

 

 

 

R   VENKATESAPERUMAL                                       R.SUBBIAH

         MEMBER                                                      PRESIDENT

                                                                                                                                                                                                                                                                                                                             

 

Index :  Yes/ No

 

AVR/SCDRC/Chennai/Orders/October/2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

C.C.No. 170 of 2016

HON’BLE  JUSTICE

THIRU R.SUBBIAH, PRESIDENT

     In the                    gresult, the Complaint deserves no merit and is liable to be dismissed.  Accordingly, the Complaint is dismissed. 

 

 

MEMBER                    PRESIDENT              

31.10.2022                31.10.2022