BEFORE THE CONSUMER DISPUTES REDRESSAL FORUM, ERNAKULAM.

Date of filing : 15/10/2010

Date of Order : 31/01/2012

Present :-

Shri. A. Rajesh, President.

Shri. Paul Gomez, Member.

Smt. C.K. Lekhamma, Member.

C.C. No. 550/2010

Between

And

O R D E R

A. Rajesh, President.

1. The case of the complainant is as follows :

The complainant is a private limited company engaged in trading rubber process chemicals. The complainant availed a Standard Fire and Special Perils Policy from the opposite party for the period from 13-01-2009 to 12-01-2010. The policy covers the chemicals stored in the godown of the complainant. More than 50% of the chemicals stored in the godown were damaged due to the logging of water caused by heavy rain and flood on the night of 21-06-2009, which caused a loss to the tune of Rs. 8,07,016/- to the complainant. The complainant requested the opposite party for the payment of the insurance claim, but the opposite party rejected the claim for their own reasons. The complainant is entitled to get the insurance claim of Rs. 8,07,016/- with interest @ 18% p.a. from 21-06-2009 till payment together with costs of the proceedings. This complaint hence.

2. The version of the opposite party :

The opposite party admits the issuance of the policy. The opposite party's liability under the policy is subject to the terms and conditions of the policy. There is no deficiency in service on the part of the opposite party, since the opposite party deputed a qualified surveyor to report the loss if any sustained by the complainant. As per the survey report, it can be seen that the complainant was negligent in keeping the goods in the godown and it is due to the negligence only the goods became damaged. The surveyor ruled out the happening of flood on 21-06-2009 as claimed by the complainant. At the outset, the complainant approached the Hon'ble Insurance Ombudsman to get his grievances redressed. The Hon'ble Ombudsman closed the proceedings and so this complaint is barred by law of estoppal. The opposite party is not liable to pay any amount to the complainant. The opposite party requests to dismiss the complaint.

3. The witnesses for the complainant were examined as PW's 1 and 2. Exts. A1 to A11 were marked on the side of the complainant. No oral evidence was adduced by the opposite party and Ext. B1 was marked on their side. Ext. X1 was also marked. The opposite party filed argument note. Heard the counsel for the parties.

4. The points that came up for consideration are :-

1. Whether the complaint is maintainable in this Forum?

2. Whether the opposite party is liable to pay the insurance claim to the complainant?

3. Whether the opposite party is liable to pay the costs of the proceedings to the complainant?
   
    

5. Point No. i. :- The Hon'ble National Consumer Disputes Redressal Commission in Kamaleshwari Prasad Singh Vs. National Insurance Co. Ltd. I (2005) CPJ 107 (NC) held in para 12 that, “In view of the above discussions, it is held that the decision of the Ombudsman is not binding on the complainant and the decision of the Insurance Company to repudiate the claim is subject to adjudication by the Fora constituted under the Consumer Protection Act.” In view of the above authority, we are only to hold that this complaint is maintainable in this Forum.

6. Point No. ii. :- Admittedly, the complainant availed themselves of Ext. A1 Standard Fire and Special Perils Policy (material damage) from the opposite for a period from 13-01-2009 to 12-01-2010. According to the learned counsel for the complainant, the repudiation of the insurance claim by the opposite party is unsustainable in law and the complainant is entitled to get an insurance claim of Rs. 8,07,016/- from the opposite party. The learned counsel for the opposite party vehemently submitted that there was no flood or inundation on 21-06-2009 at the premises of the complainant, on the contrary, the water leaked from the upper floor is the reason for the incident which is not covered under Ext. A1 policy. It is stated that the opposite party has rejected the claim of the complainant relying on the findings of the insurance surveyor which is a valuable piece of evidence. The learned counsel relied on the following decisions rendered by the higher judiciary.

1. United India Insurance Co. Ltd. and Others Vs. Roshan Lal Oils Mills Ltd. and Others 2000 KHC 1566 (Supreme Court).

2. Jaisri Mines Products Pvt. Ltd. Vs. New India Assurance Co. Ltd. and Another (2009) CJ 1108 (N.C.).

3. National Insurance Co. Ltd. and Others Vs. Srinivasa Cotton Traders (2010) CJ 663 (N.C.)

7. The opposite party repudiated the insurance claim of the complainant by Ext. A6 letter dated 03-09-2010. The reasons as per Ext. A6 reads as under :

“1. On perusal of the documents contained in the claim file it is observed that the cause of damage cannot be attributed to any of the named perils with the policy.

2. It is understood from the surveyors report the building is located in a slope and any raise of water would have submerged the entire neighborhood and no incident was reported in that area, under these circumstances the cause of damage due to flood is ruled out.

3. On scrutiny of the purchase of the particulars of the claimed items furnished by the insured the date of purchase of the items are from the year 2004 to 2008: the chemicals being predominantly accelerators and those might have lost its properties due to long storage.

Considering to the contents stated above we are not in a position to settle the claim as the same is treated as NO CLAIM.”

8. The relevant clause which is applicable in this case as per Ext. A1 policy is Clause No. VI which is as under :

“Storm, Cyclone, Typhoon, Tempest, Hurricane, Tornado, Flood and Inundation.

Loss, destruction or damage directly caused by storm, Cyclone, Typhoon, Tempest, Hurricane, Tornado, Flood or Inundation excluding those resulting from earthquake, Volcanic eruption or other convulsions of nature. (Wherever earthquake cover is given an as “add on cover” the words “excluding those resulting from earthquake,s volcanic eruption or other convulsions of nature” shall stand deleted).”

9. The survey report was marked as Ext. X1 and the surveyor was examined as PW2. The report of the surveyor as per Ext. X1 is as follows :

0. “Observation of the damages.

    

1. On verification of the damages at the premises of the insured it was noted that the bags containing the chemicals were stacked on pallets and kept close to the walls.

    

2. The walls were found damp due seepage of water from the floor above.

    

3. The plaster of the walls indicated indications of dampness which could have occurred much earlier. The growth of moss on the walls indicates the seepage of water from the upper floors might have occurred earlier.

    

4. Some of the bags of the stocks were found collapsed due to the breakage of the pallet.

    

5. Water seeped from the top floor was found collected on the ground floor but only below the height of the pallet.

    

6. The unfinished rooms on the second floor of the building were found with indications of water accumulation and those marks of accumulated water were found upto a level of 20 centimeters from the floor.

    

7. At the time of survey the water was being drained out from the second floor and clearance was being carried out.

    

8. A lot of waste materials were found accumulated on the second floor these included waste of building materials plastic covers pet bottles etc.

    

9. The building is located at a slope and possibility of flooding is ruled out.

    

10. The claim for the major portion of the stock held in the godown was found to be due to seepage of water through the walls from the upper floor.

0. Cause of the incident.

    

1. Presumably due to seepage of water from the upper floors of the godown through the walls. This seepage is presumed to have caused to moisten or wet the stock. The cause of the claim does not qualify as flood or inundation.

J.0	Assessment of the claim
J.1.0	Item claimed	Quantity		Claim	Assessment
J.1.1	Stock of Rubber processing chemicals	1		798016.10	762682.07
J.1.12	Total			798016.10	762682.07
J.2.0	Deductions
J.2.1	Profit		0%		0.00
J.2.2	Depreciation		0%		0.00
J.2.3	Salvage		5%		38134.10
J.2.4					38134.10
J.3.0	Total claim less deductions				724547.97
J.2.0	Under Insurance
J.2.1	Sum insured			4800000.00
J.2.2	Present average stock			1772136.27
J.2.3	Apply clause				0.00
J.3.0	Excess		5%		38134.10
J.4.0	Assessed loss indicative subject to statements of this report				686413.86
	Rupees Six lakhs Eighty six thousand Four hundred and Thirteen paise Eighty Six

0. Remarks on the Claim/Assessment.

    

1. Policy schedule, conditions and limitations were verified.

    

2. Survey was conducted at the premises of the insured only.

    

3. Salvage value has been proposed and is only indicative.

    

4. The stock claimed by the insured are those intended for sale or trade and hence depreciation has not been applied; however since the stock is very old deduction may be applied based on the shelf life of the chemicals.

    

5. The adequacy of sum insured has been verified and found satisfactory as per the stock statements.

    

6. The building located in a slope and any raise of water would have submerged the entire neighborhood and no incident was reported in that area under these circumstances the cause of damage due to flood is ruled out.

    

7. The possibility of raise of level of water and it's accumulation within the godown upto the entire height of the stack is ruled out since the accumulated water can escape through the rolling shutter at the front of the premises. This eliminates the cause of damage due to inundation.

    

8. The accumulated water on the godown floor can moisten or wet the bottom layer of bags on the pallets however the dampness cannot be transmitted to the upper layers since the chemicals are suitably packed.

    

9. On scrutiny of the purchase particulars of the claimed items furnished by the insured the date of purchase of the items are from year 2004 to 2008; the chemicals being predominantly accelerators and those might have lost its properties due to long storage.

    

10. Detailed chemical analysis of the claimed items are not conducted considering the heavy cost which shall incur; and also due to the non admissibility of the claim.

     

11. The assessment of loss is only indicative of the loss incurred by the insured and does not admit or recommend any liability to the insurer.

0. Remarks on the Claim/Assessment.

    

1. Insurer may repudiate the claim subject to the terms conditions and limitations of the policy of insurance issued to the insured.”

10. The surveyor has ruled out the possibility of flood or inundation on 21-06-2009, the date on which the stock of the complainant was said to be damaged. According to the surveyor, water was accumulated in the godown due to the seepage of rain water from upstairs. Further, he stated that he could not find flood or inundation on the date of incident. The opposite party has produced. Ext. B1 series 4 photographs of the incident eventhough he admitted that he had taken 19 photographs. It is pertinent to note that at the instance of the complainant, this Forum directed the opposite party to produce the survey report prepared by the surveyor. But they have failed to do so for reasons of their own. The report of the surveyor, subsequently marked as Ext. X1 later why they have decided to produce the photographs at the fag end of the proceedings is still unanswerable. Be that as it may, we are not to delve into the matter further. Now, we will consider the meaning of 'flood' and 'inundation' the perils stated in Ext. A1 policy.

Oxfored, Advanced Learner's Dictionary :

Flood : A large amount of water covering an area that is

usually dry.

Inundation : to cover an area of land with a large amount

of water.

New Webster's Dictionary of the English Language :

Flood : a great flow of water , a body of water rising and

overflowing the land.

Inundation : to overflow.

11. The explanation given above goes to show that inundation cannot be ruled out on 21-06-2009 the date of occurrence. The seepage of water from the upstairs of the building and accumulation of the same at the basement is inundation. Since inundation is uncontroverted, the opposite party is liable to indemnify the loss sustained by the complainant by law.

12. The Hon'ble Supreme Court and the Hon'ble National Commission held in the above referred cases that the report of the surveyor is a valuable piece of evidence. Indisputably, in the instant case as well the report of the insurance surveyor is the only evidence to resolve the rival contentions of the parties. Since inundation is concerned under the policy the findings of the surveyor with regard to the cause or reason for the incident is unsustainable substantially.

13. However, nothing is on record to discard the findings of the surveyor with regard to the loss sustained by the complainant which is unsubstantiated still in spite of his findings. As per the survey report, the total loss sustained by the complainant is Rs. 6,86,413.86. The complainant is entitled to get the above amount from the opposite party with future interest.

14. Point No. iii. :- Since the primary grievance of the complainant having been met squarely and adequately, order for cost of the proceedings is not called for.

15. In the result, we partly allow the complaint and direct that the opposite party shall pay to the complainant a sum of Rs. 6,86,413.86 towards the insurance claim with 12% p.a. from the date fixed for compliance of this order till realisation.

The order shall be complied with, within a period of one month from the date of receipt of a copy of this order.

Pronounced in open Forum on this the 31^st day of January 2012

Sd/- A. Rajesh, President.

Sd/- Paul Gomez, Member.

Sd/- C.K. Lekhamma, Member.

Forwarded/By Order,

Senior Superintendent.

A P P E N D I X

Complainant's Exhibits :-

Opposite party's Exhibits :-

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