BEFORE THE A.P.STATE CONSUMER DISPUTES REDRESSAL COMMISSION:HYDERABAD.
FA.NO.1718 OF 2005 AGAINST C.D.NO.47 OF 2004 District Forum-I, KRISHNA AT MACHILIPATNAM
Between:
Sri Rama Raw & Par Boiled Rice Mill
Rep. by its Managing Partner, D.No.4,
Peyyeru, Mudinepalli Mandal. Appellant/
Complainant
And
The Branch Manager,
National Insurance Company Limited,
Branch Office,
Ravindranath Tagore Road,
Machilipatnam. Respondent/
Opp.party
Counsel for the Appellant: M/s.S.Ramachandra Prasad
Counsel for the Respondent:Mr.K.Venkat Rao
QUORUM:THE HON’BLE JUSTICE SRI D.APPA RAO, PRESIDENT
AND
SMT.M.SHREESHA, MEMBER
WEDNESDAY, THE TWENTY EIGHTH DAY OF JANUARY
TWO THOUSAND NINE.
Oral Order : (Per Smt.M.Shreesha, Hon’ble Member)
***
Aggrieved by the order in C.D.No.47/2004 on the file of District Forum-I, Krishna at Machilipatnam, the complainant preferred this appeal.
The brief facts as set out in the complaint are that the complainant insured his rice mill building, plant and accessories and also stock of paddy, rice and brokens with opposite party under Standard Fire and Special Perils policy No.551502/11/02/310251 covering the period from 28-3-2003 to midnight of 27-3-2004 for total risk of Rs.38,00,000/-. The stock of paddy, rice and rice brokens are insured for Rs.15,00,000/-. The complainant submitted that there was a cyclonic storm on 15-12-2003 and 16-12-2003, the paddy and rice of the complainant which were stored in the rice mill premises were completed damaged. The complainant submitted that there was heavy rain and no scope to take steps to protect the paddy and rice which were kept outside the rice mill premises. On 16-12-2003 itself the complainant addressed a letter to the opposite party informing the damage caused and made a claim to opposite party. Opposite party appointed a surveyor to estimate the loss. On 31-3-2004, opposite party sent a letter stating that the damage caused due to cyclone and assessed by the surveyor was Rs.59,801/- as the stocks were lying in open in the rice mill premises. The complainant submitted that the amount of loss assessed by the surveyor is not legal and valid and therefore addressed a letter dated 21-4-2004 for reconsideration of the claim but there was no response. Hence the complaint for a direction to the opposite party to pay Rs.14,00,000/- with 15% interest from 31-3-2004 together with damages of Rs.50,000/- and costs.
Opposite party filed counter contending that the damage has been caused to the stocks of paddy that were kept outside the mill premises only but not to the stock or paddy kept within the mill premises. The coverage of insurance pertains to stock of paddy, rice and brokens kept in the premises of rice mill only viz. in the rice mill process blocks or in godowns but not to the stock of paddy kept outside the rice mill
premises. The policy in question does not cover any risk caused to the stock of paddy kept outside the mill premises. Whenever stocks of paddy are kept in open in loose or in bags, the complainant used to take short term insurance policies for the coverage of such stocks, which he did not do in respect of the policy in question. The surveyor assessed the loss of damage caused to the stock of paddy that was kept outside the mill premises without observing whether the stock of paddy was kept inside the mill or not and estimated the loss of damage at Rs.59,801/-. They further submitted that a comparison between the claim form wherein the complainant complained the loss caused is Rs.3,86,000/- and thereafter claimed Rs.14,00,000/- in the main C.D. shows a wide discrepancy. They contend that there is no need to appoint a second surveyor and failure to appoint a second surveyor does not amount to deficiency of service and prayed for dismissal of the complaint.
The District Forum based on the evidence adduced i.e. Exs.A1 to A5 and B1 to B4 and the pleadings put forward, allowed the complaint in part directing the opposite party to pay an amount of Rs.59,801/- to the complainant together with costs of Rs.1,000/-.
Aggrieved by the said order, the complainant preferred this appeal.
We have perused the material on record. The issuance of Standard Fire and Special Perils Policy covering the period between 28-
3-2003 to 27-3-2004 for a total sum of Rs.38,00,000/- out of which covering the stocks of paddy, rice and rice brokens were insured for Rs.15,00,000/- and a premium of Rs.12,130/- was also paid. It is the case of the appellant/complainant that the rice mill along with the stock was being insured for the last 15 years and on 15-12-2003 there was a cyclonic storm and the entire paddy and rice of the complainant which was stored in the rice mill premises was completely damaged. Thereafter the complainant made a claim to the opposite party and expected that the surveyor will assess the loss to atleast Rs.14,00,000/- but on 31-3-2004 he received a letter from the opposite party that the surveyor assessed the loss at Rs.59,801/- observing that the stocks were damaged since they were lying open in the rice mill premises. The learned counsel for the appellant/complainant submitted that the policy will cover the entire stocks whether it is kept in the rice mill or in open condition and that the paddy bags were covered with plastic tarpaulins but they could not protect the paddy since there was continuous and heavy down pour for two days.
It is the opposite party’s case that the coverage of insurance pertains to stock of paddy, rice and brokens kept in the premises of rice mill only but not to the stocks kept outside the mill premises and that the complainant had earlier complained that his loss was Rs.3,86,000/- whereas he claimed Rs.14,00,000/- in the complaint filed before the District Forum. The learned counsel for the respondent submitted that merely because they did not accept to appoint a second surveyor to re-ass the loss, it cannot be termed as deficiency in service. On perusal of Ex.B1, Policy, shows that the policy covers stock of paddy, rice brokens for an amount of Rs.15,00,000/- apart from the plant and machinery and building totalling to Rs.38,00,000/- for the period 28-3-2003 to 27-3-2004. There is no condition in Ex.B1 policy that the stock kept outside the godown is not covered. Ex.B3 in its description filed by the opposite party pertains to policy No.551502/11/02/3108537 for the policy period from 22-5-2002 to midnight of 21-9-2002 and has nothing to do with the policy No.551502/11/02/3101251 issued for the period from 28-3-2003 to 27-3-2004. The contention of the opposite parties that the stocks should be in a closed condition only with the mill premises is not substantiated by any documentary evidence. The complainant vide Ex.B1 policy has taken a comprehensive policy for Rs.38,00,000/- covering the stock of paddy, rice brokens etc. for Rs.15,00,000/-, plant and machinery building also the wall for the balance amount. It is no where mentioned that the stock should only be in a closed condition. Neither the ‘description’ in the policy nor the attached conditions speak of this exclusion. The policy shows category I stocks i.e. paddy, rice brokens is covered and the Description of Risk shows ‘rice mill’. The case of the opposite paddy is that some of the paddy bags were stored in the godown and some paddy bags on Kallam which is located on the eastern side and northern side of the mill. From the surveyor’s report itself, it can be seen that the paddy was only stocked in the mill premises and it cannot be construed that the paddy was stocked outside the mill. Merely because some paddy bags were in the godown and some paddy lots on the Kallam. The surveyor himself stated on page 2 of his report as follows:
‘They stocked some paddy bags in the godown and kept some paddy
lots on the Kallam. They covered the open stocks with tarpaulins
and tied with ropes’.
From the above, it can be ascertained that the paddy bags were indeed within the mill premises and there was damage caused to them due to inundation of water by the cyclone.
Now we address ourselves to the claim of the complainant. It is the case of the opposite party that the complainant had initially claimed Rs.3,86,000/- but thereafter in the complaint mentioned the amount as Rs.14,00,000/-. We find force in this contention and on perusal of Ex.B2, which is a Fire Claim Form shows that the articles destroyed or damaged is 2258.40 quintals and the amount claimed i.e. actual loss after deduction of salvage value is Rs.3,86,000/-. Hence we address ourselves to the question whether the complainant is entitled to this amount or what has been assessed by the surveyor. A perusal of the survey report shows that the surveyor has admitted that the bottom layer bags were badly wet due to flow of water and deducted 75.65% towards salvage and 79.63% towards salvage from the upper layer wet paddy. The loss assessment as given by the surveyor is as follows:
LOSS ASSESSMENT
Assessment for Upper layer bags:
Total quantity of paddy damaged/wet affected in the upper layer due to Cyclone rains=(2071 bags x 50 kg) + (493 bags x 70 Kg)
= 1380.60 Qtls.
Value of the paddy wet in the upper layer bags
=1380.60 x 560 =7,73,136.00
Less:Salvage value realized from the upper
Wet bags=79.63%x7,73,136/- =6,15,648.00
Loss Assessed for the Upper Layer wet paddy =1,57,488.00
Assessment for Lower layer bags:
Total quantity of paddy damaged/wet affected in the bottom layer due to inundation =(540 bags x 50 kg) + (84 bags x 70 Kg)
= 328.80 Qtls.
Value of the paddy wet in the lower bottom bags
=328.80 x 50 bags =1,84,128.00
Less:Salvage value realized from the bottom
Wet bags=75.65%x1,84,120/- =1,39,293.00
Loss Assessed for the bottom lower wet paddy = 44,835.00
Summery of Loss Assessment:
1. Loss Assessed for the Upper Layer wet Paddy =1,57,488.00
2. Loss Assessed for the bottom Layer wet Paddy = 44,835.00
Total Loss Assessment for the Wet Paddy =2,02,323.00
After applying Under Insurance factor (0.345) 69,323.00
Less: Policy Excess 5% on Claim amount 10,000.00
Adjusted Loss = 59,801.00
==========
From the aforementioned, it is clear that the surveyor has deducted almost 80% towards salvage value of upper layer bags and 75.65% towards salvage value of bottom layer bags which is clearly excessive. When it is an admitted fact that the paddy itself is wet and damaged deducting almost 80% and 76% towards salvage value is unreasonable and excessive. Taking into consideration that the subject in question is wet paddy, the salvage value can be reasonably arrived at
60% and the loss assessment is calculated as follows:
Assessment for Upper Layer Bags
Assessed by the surveyor =7,73,136.00
4,63,881.00
3,09,255.00
Assessment for Lower Layer Bags
Assessed by the Surveyor =1,84,128.00
1,10,476.80
73,651.20
Total Loss Assessment for the Wet Paddy = 3,82,906.20
The under insurance factor is at 0.345 and as per policy condition No.10 is as follows:
“According to the survey report, i.e. Ex.B4, the value of the stocks
in the Insured rice mill on the day of loss occurrence was Rs.43,48,926/-
against the sum of insured of Rs.15,00,000/-. Hence there is under
insurance. As per the policy condition No.10 “if the Property hereby
insured shall at the breaking out of any fire or at the commencement of any
destruction of or damage to the property by any other peril hereby insured
against be collectively or greater value than the sum insured thereon, then
the insured shall be considered as being his own insured for the difference
and shall bear a ratable proportion of the loss accordingly”.
Rs.3,82,906.20
Applying Under Insurance factor (0.345) (-) Rs. 69,323.00
Less: Policy Excess 5% on claim amount Rs. 10,000.00
Adjusted Loss = Rs.3,03,583.20
==========
In the result this appeal is allowed in part directing opposite party to pay this amount of Rs.3,03,583.20 with interest at 9% p.a. from the date of repudiation till the date of realization together with costs of Rs.5,000/-. Time for compliance four weeks.
PRESIDENT. LADY MEMBER.
Dt. 28-1-2009.
