Punjab

Ludhiana

CC/14/509

Parmeshwar Silk Mills Ltd - Complainant(s)

Versus

New India Ass.Co.Ltd - Opp.Party(s)

21 Oct 2016

ORDER

DISTRICT CONSUMER DISPUTES REDRESSAL FORUM, LUDHIANA

 

Consumer Complaint No.509 of 22.07.2014

Date of Decision        :   21.10.2016

 

M/s Parmeshwari Silk Mills Limited, having its registered office and works at village Bajra, Rahon Road, Ludhiana, through Shri Jatinder Pal Singh, Director of the company, aged 56 years.  

….. Complainant

Versus 

1.The New India Assurance Company Limited, having its registered & Head office at New India Assurance Building, 87, Mahatma Gandhi Road, Bombay-400001 through its Managing Director.

2.The New India Assurance Company Limited, Regional Office, 4^th floor, Surya Towers, 108, The Mall, Ludhiana, through its Manager, Centralized Claims Hub.

3.The New India Assurance Company Limited, Divisional Office-III, 29, Atam Nagar, Dugri Road, Ludhiana, through its Divisional Manager.

4.Punjab National Bank, Miller Ganj, Ludhiana, through its Branch Manager.

..…Opposite parties

 

(Complaint U/s 12 of the Consumer Protection Act, 1986)

 

 

QUORUM:

SH.G.K.DHIR, PRESIDENT

MRS. VINOD BALA, MEMBER

 

COUNSEL FOR THE PARTIES:

For complainant            :         Sh.S.M.Gulati, Advocate

For OP1 to OP3            :         Sh.Hemant Kalia, Advocate

For OP3                         :         Ex-parte.

 

PER G.K DHIR, PRESIDENT

 

1.                          Complainant, a public limited company carrying on business of manufacturing and trading of various types of textile fabrics, purchased one Standard Fire and Special Perils Policy including earth quake from OP3 for a sum of Rs.3.50 lacs on payment of premium of Rs.38,933/- with validity period w.e.f.14.8.2012 to 13.08.2013. That policy bears No.360300 111201 00000165 and covers the risk of entire building including boundary wall as                                well as cloth/readymade garments, manufacturing articles belonging to complainant and under lien      of Punjab National Bank, Miller Ganj, Ludhiana. That coverage provided the risk of entire building and boundary wall, subject to the designation of property clause/re-instatement clause along with furniture, fittings, fixtures and other contents. Complainant purchased another Standard Fire & Special Perils policy including earthquake for a sum of Rs.2100 lac on payment of premium of Rs.1,68,710/- with validity period from 23.4.2012 to 22.4.2013 bearing policy No.360300 111201 00000032 for coverage of risk of entire plant and machinery being used for cloth manufacturing and or insured trade including electrical, electric motors, DG sets, transformers, and/or all nature and or embroidery machines and or material being used as cloth/readymade garments etc.

2.                 Complainant even purchased a third policy known as Fire Floater Insurance Policy for a sum of Rs.1700 lac on payment of premium of Rs.1,47,586/- with validity period from 20.4.2012 to 19.4.2013. That policy bearing policy No.360300 111203 00000001 covers the risk of all kinds of Yarn/Cloth/suiting/shirting/readymade garments, raw/finished/unfinished/under process belonging to the insured, even if those articles held in trust, but lying at the above said address of village Bajra, Rahon Road, Ludhiana. This policy covers   the risk of 52 different places including the one having address of village Bajra referred above. OP2 issued policy for covering the complainant’s factory situate at village Bajra, Rahon Road, Ludhiana after submission of list of places sent through letter dated 18.4.2012. Later on OP3 issued one endorsement for clarification/rectification to the effect that factory premises situate at village Bajra, Rahon Road, Ludhiana also is covered under the policy.

3.                On 4.4.2013 at about 23:15 hours, a fire broke out in the factory premises of the complainant at the time when the workers were working therein. On alarm being raised by the workers, fire fighting operations were started and thereafter, the matter reported to the Municipal Fire Brigade at 11;20 P.M. In no time, fire tenders reached at the spot and fire stood extinguished. Workers of the factory also helped the fire brigade in extinguishing the fire, which was brought under control at about 1:00 A.M. Despite that entire building of stitching machine hall and washing machine hall  collapsed and most of the machinery and stocks lying there in and/or under process got extensively damaged and/or burnt in the fire. Due intimation of the fire incident was supplied to the Ops, who deputed Sh.Parveen Kumar Goyal, Surveyor and Loss Assessor for survey and assessment of the loss. Said surveyor visited the spot on 5.4.2013 and 11.4.2013 for assessing the loss and thereafter, he submitted two reports dated 12.4.2013 and 8.2.2014 to the Deputy General Manager of OP2 for further necessary action. Total loss assessed to the tune of Rs.18,35,616/- under different heads consisting of loss to the building/stocks etc. Ops On receipt of the report of surveyor, processed the same and illegally and arbitrary observed that the affected loss site is not covered under the list of locations submitted by the insured and attached with the subject policy. Ops after considering the record of the previous years, further observed that the insured is in practice of submitting detailed locations on every renewal and updating insurer for changes in the location and getting the same endorsed during the currency of the policy. In the instant case, the insured submitted request for incorporation of 13 more locations in addition to 52 originally provided at the time of insurance policy. No information of the affected loss site was provided and consequently, it was found that the same is not the covered location. So, claim was repudiated vide letter dated 2.5.2014 sent by OP2. That repudiation of the claim alleged to be illegal, unjustified and arbitrary because the complainant had duly intimated vide letter dated 18.4.2012 about the affected location site covered by the policy. That intimation was duly received by OPs before issuance of the policy documents. However, Ops inadvertently omitted to make a mention of the detail of affected locations to be covered under the policy. Complainant pointed out this error in the policy documents and requested Ops for rectification of the policy documents. After long and hot chase, the complainant succeeded in getting the policy documents rectified on 5.3.2014 with retrospective effect of 21.4.2012. Ops agreed to make endorsement in the Fire Floater Policy bearing No.360300 111203 00000001 vide endorsement No.360300 111303 82000018. In view of that endorsement, stocks of all kind including yarn/cloth/suit/shirting/readymade garment etc., lying in the premises of complainant at village Bajra, Rahon Road, Ludhiana are covered by the insurance policy along with 52 other different places. The above said endorsement was done with the permission of Regional office. That was confirmed by the surveyor also. After such endorsement, all other terms and conditions of the policy remained unchanged. As policy documents stood modified/corrected and fresh endorsement with retrospective effect of 21.4.2012 was approved by Ops prior to processing of the loss by the surveyor and loss assessor and as such, repudiation of claim is improper and illegal as well as arbitrary. Ops intentionally and willfully overlooked the approved endorsement made by them on Fire floater insurance policy, despite the fact that said endorsement duly signed by the competent authority on 5.3.2014. Complainant claims that he is entitled to receive the amount of loss processed and assessed by the surveyor i.e. Rs.18,18,000/- along with interest there on from the date of submission of report by the surveyor and loss assessor. OP4 has been made as a party to the present proceedings because all the stocks, building and machinery installed in the premises is hypothecated with it. Insurance policy in question was taken by the complainant in the name of the bank and as such, Op4 is impleaded as a proforma party. Interest @18% per annum claimed and besides compensation to the tune of Rs.1.5 lac on account of unfair trade practice and deficiency in service also claimed.

4.                In joint written statement filed by OP1 to OP3, it is pleaded interalia as if the complaint is not maintainable in the present form; complainant is estopped by his own act and conduct from filing this frivolous complaint; complainant has not approached this forum with clean hands because of suppression of material facts and claim is not covered under the policy. Admittedly, the complainant is a public limited company carrying on business of textile fabrics, but it is denied that Sh.Jatinder Pal Singh, Director has been authorized to initiate the legal proceedings of this complaint. It is claimed that the complainant is not a consumer within the meaning of provisions of Consumer Protection Act, 1986. Admittedly, the complainant purchased one Standard Fire and special Perils Policy including earth quake risk from OP3 for a sum of Rs.3.50 crore on payment of premium of Rs.38,933/- with validity period from 14.8.2012 to 13.8.2013. However, coverage of the risk on entire building including boundary wall or the material lying therein is not admitted. It is also admitted that the complainant purchased another fire floater insurance policy for a sum of Rs.1700 lacs with validity period from 20.4.2012 to 19.4.2013 vide policy alleged in para no.5 of the complaint. However, it is denied that risk of all stocks of yarn/cloth/suiting/shirting etc., was covered qua the premises of village Bajra, Rahon Road, Ludhiana. Sending of letter dated 18.4.2012 by the complainant to Ops denied. Admittedly, information was provided by the complainant qua braking out of the fire at the factory premises on 4.4.2013 and even report was submitted to Fire Brigade, who extinguished the fire with the help of fire brigade. Admittedly the surveyor Sh.Parveen Kumar Goyal was appointed, who submitted two reports dated 12.4.2013 and 8.2.2014 to the Deputy General Manager of Ops for further necessary action. Admittedly, surveyor assessed the total loss of Rs.18,35,616/- under different heads, but that was not considered proper and legal because on scrutiny of the report of surveyor; police documents and papers submitted by the insured at the time of claim of insurance,  it was found that the affective loss site is not covered under the list of         locations submitted by the insured and attached with the insurance policy. Record of previous years even was summoned from U/W office and it was observed that the insured is in the practice of submitting detailed locations on every renewal and thereafter, on update getting coverage endorsed during the currency of the     policy. No information of the said site was provided and consequently, the location in question is not covered by the terms of the insurance policy. Complainant was intimated that the affected loss site is not covered location and hence, the claim is outside the policy. So, the loss of Rs.18,18,000/- as assessed by the surveyor Sh.Pawan Kumar Goyal not claimable under the policy, due to which, repudiation was recommended. However, claim under policy No.36030011120300000165 for Rs.78,183/- was passed on 28.4.2014. Ops rightly observed that the affected site of loss is not covered under the insurance policy and repudiation of the claim alleged to be justified.

5.                OP4 is ex-parte in this case.

6.                Counsel for the complainant to prove the case of complainant tendered in evidence affidavit Ex.CA of Sh.Jatinder Pal Singh, Director of complainant company along with documents Ex.C1 to Ex.C7, Ex.C4/A, Ex.C4B, Ex.C6/A and Ex.C6/B and then closed the evidence.

7.                On the other hand, counsel for the OP1 to OP3 tendered in evidence affidavit Ex.RA of Sh.Anil Chawla, Deputy Manager of New India Assurance Company Limited along with documents Ex.R1 to Ex.R4 and thereafter, closed the evidence.

8.                          Written arguments on behalf of Op1 to OP3 as well as by complainant submitted. Oral arguments even heard and records gone through minutely. 

9.                 Only bone of contention remains as to whether the site of village Bajra, Rahon Road, Ludhiana of complainant concern is covered by the terms of Fire Floater Insurance Policy Ex.C4/A= Ex.R2 or not? Undisputedly, fire broke out in the premises in question and that is why DDR No.Ex.C4/B was lodged by the complainant and thereafter, on submission of claim with Ops, Sh.Pawan         Kumar Goyal was appointed as surveyor and loss assessor, who submitted interim report Ex.C5 and the final report Ex.C6=Ex.R3 on 8.2.2014. Repudiation of claim took place on account that location of site, where the fire broke out namely village Bajra, Rahon Road, Ludhiana, does not figure in the list of locations provided by the complainant through letter dated 18.4.2012. It was found that this location is not subject of insurance policy in question. Repudiation letter Ex.R4=Ex.C7 was     sent by the Ops to the complainant. Before issue of this repudiation letter, letter Ex.C6/B was sent by the complainant to Ops for calling upon them to reopen the case for settlement of claim on the basis of surveyor report prepared by Sh.Pawan Kumar Goyal.

10.              After going through Ex.C7, it is made out that repudiation took place because the place where fire took place i.e. village Bajra, Rahon Road, Ludhiana does not figure in the list of locations provided by the complainant vide letter dated 18.4.2012 at the time of taking insurance policy.This location was not incorporated in the policy at the time of its issuance. Further, it was observed that during currency of the policy, the complainant had not got the above location incorporated,      although he had got other locations incorporated by way of endorsement. In view of non coverage of the affected loss location, the loss to the stocks was found to   be not covered under the policy. However, endorsement documents Ex.C3 and Ex.C4 there on record to establish that site in question included in the locations covered by the Fire Floater Insurance policy because of the endorsement with retrospective effect. That retrospective effect, for covering location in question under the insurance policy given with effect from 20.4.2012 to 19.4.2013 after observing that other terms and conditions of the fire floater insurance policy will remain the same. In Ex.C3 and Ex.C4 each, it is mentioned that endorsement on policy in question for covering the site in question will be w.e.f.21.4.2012. If that be the position, then virtually the site in question covered by the location qua which insurance policy in question issued w.e.f.21.4.2012 itself. It is not the case of Ops that this endorsement with retrospective effect got done under coercion or by playing fraud or by mis-representation and as such, Ops cannot escape from the terms of contract of insurance in question and contents of Ex.C3 and Ex.C4. As through Ex.C3 and Ex.C4 itself, Ops themselves undertook to provide insurance coverage qua the location in question w.,e.f.20.4.2012 to 19.4.2013 and as such, now they cannot wriggle out from their acknowledgement endorsed through documents Ex.C3 and Ex.C4 each. So, even if in the initial list of covered locations as supplied by the complainant, the site in question may not have been covered, but the subsequent endorsement of covering the site in question though Ex.C3 and Ex.C4 debars the Ops from denying liability. Even Ex.R8 and Ex.R9 are the same documents as are Ex.C3 and Ex.C4 produced by the complainant. In view of these endorsement produced by Op1 to OP3 themselves, it is obvious that Op1 to OP3 are well aware of the facts that risk of loss qua site in question has been covered with retrospective effect. That aspect of mater not taken into consideration by the Ops while issuing the repudiation letter in question and as such, repudiation of the claim is illegal, being against the terms and conditions of the insurance policy in question. So, Op1 to OP3 by keeping in view the endorsement on Ex.C3 and Ex.C4 or Ex.R8 and Ex.R9 must settle the claim of the complainant within the specified period and in case, any amount on such settlement found due, then the same must be paid within 30 days with interest @8% per annum from the date of complaint namely 22.7.2014 till payment. Complainant stood harassed due to wrong rejection of the claim and as such, compensation for mental harassment of Rs.5000/- more allowed along with litigation expenses of Rs.5000/- additionally. As insurance claim is maintainable against OP1 and OP3 only and as such, complaint against OP4 merits dismissal because the claim is not stacked against OP4.

11.              Therefore, as a sequel of the above discussion, complaint allowed in terms that Op1 to OP3 will settle the claim of complainant within 60 days from the date of receipt of copy of this order by treating as if the premises, in which, fire occurred covered by the insurance policy. After such settlement, payment be made within 30 days from such settlement, but with interest @8% p.a. from the date of complaint namely 22.7.2014 till payment. Compensation for mental harassment of Rs.5000/- (Rupees Five Thousand only) and litigation expenses of Rs.5,000/- (Rupees Five Thousand only) more allowed in favour of complainant and against Op1 to OP3. However, complaint against OP4 is dismissed. Payment of awarded compensation and litigation expenses be made by the OP1 to OP3 to the complainant within 30 days from the date of receipt of copy of this order. Copies of order be supplied to parties free of costs as per rules.

12.                        File be indexed and consigned to record room.

 

 

                                      (Vinod Bala)                               (G.K.Dhir)

                                   Member                                            President

Announced in Open Forum

Dated:21.10.2016

Gobind Sharma.