DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-II, U.T. CHANDIGARH

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M/s SCOTT EDIL ADVANCE RESEARCH LABORATORIES AND EDUCATION LTD., Village Bhatoli Kalan, Hill Top, Baddi (Himachal Pardesh) having its registered office at 28/6 Industrial Area, Phase-II, Chandigarh – 160002, through its Authorized Signatory.

              ---Complainant

Vs

1.   Oriental Insurance Co. Limited, having its Head Office at A-25/27, Asaf Ali Road, New Delhi – 110002 through its Chairman.

2.   Oriental Insurance Company Limited, Service Centre (R.O. Chandigarh), SCO No. 109-111, Surindra Building, Sector 17-D, Chandigarh, through its authorized signatory.

3.   Sh. Anil Kumar (Agent of OP No.1 & 2), Kothi No. 371 (First Floor), Phase-9, Mohali.

4.   Sh. Gurmit Singh (Agent of OP No.1 & 2), Kothi No. 371 (First Floor), Phase-9, Mohali.

---- Opposite Parties.

BEFORE:    SH.LAKSHMAN SHARMA              PRESIDENT

MRS.MADHU MUTNEJA               MEMBER

           SH.JASWINDER SINGH SIDHU        MEMBER

Argued By:    Sh. Sharad Aggarwal, Counsel for Complainant.

Sh. G.S. Ahluwalia, Counsel for Opposite Parties No.1 & 2.

Opposite Parties No. 3 & 4 ex-parte.

PER MADHU MUTNEJA, MEMBER

1.          The Complainant had taken a Standard F.I.R. & Special Perils Policy from the Opposite Party No.1 for a sum of Rs.19.50 crore. Out of this amount Rs.6.00 crore was insurance for plant and machinery and Rs.13.50 crore was insurance for building. The policy was effective from 01.04.2010 to 31.03.2011 (Annexure C-1). After completion of the whole unit including the administrative block, on request of the Complainant the Policy was enhanced by another Rs.12.00 crore on 27.08.2010. Hence the total value of the insured property now was Rs.31.50 crore (Annexure C-2).

          On 22.10.2010 due to bad weather (storm and heavy rainfall) the building of the Complainant was badly damaged and a claim was immediately filed on 23.10.2010 (Annexure C-3). The Surveyor of the OP-Company visited the site and asked the Complainant to submit various documents pertaining to the said loss. The documents were submitted vide letter dated 25.11.2010. The Complainant has stated that though a claim was made for more than Rs.30.00 lac but the Surveyor calculated the loss at only Rs.16,73,955/-. The Complainant initially filed objections but later agreed to accept the same and also informed the Opposite Party No.2 vide letter dated 24.12.2010 about the acceptance of the amount. As the amount was not paid, the Complainant sent a reminder dated 14.02.2011 (Annexure C-7). However, instead of approving the claim, Opposite Party No.2, vide letter dated 24.03.2011 repudiated the claim of the Complainant on the grounds that the building which was damaged in the storm was under construction and was therefore not covered under the Policy (Annexure C-8). Thereafter, a number of letters were exchanged between the Parties but the claim has remained unpaid.

          The Complainant has thus filed this complaint with a prayer for payment of Rs.16,73,955/- along with interest and compensation, besides costs of litigation.  

2.          Notice of the complaint was sent to Opposite Parties seeking their version of the case. However, despite service, none appeared on behalf of OPs No.3 and 4, therefore, these were proceeded against exparte on 26.11.2012.

3.          Opposite Parties No.1 & 2 filed joint reply taking preliminary objection that there is no cause of action or deficiency in service as the Policy has been issued for Rs.19.50 crore in good faith (Rs.13.50 crore for Class-‘A’ construction Building with fittings and fixture used for manufacturing of Pharmaceutical Goods and Rs.6.00 crore for plant and machinery and allied accessories). The existing policy was enhanced for another sum of Rs.12.00 crore vide Endorsement dated 27.08.2010, making the total insurance cover to be Rs.31.50 crore. The Complainant filed a claim for a sum of Rs.30.00 lac on 23.10.2010 on account of alleged damage to the insured building as a result of bad weather on 22.10.2010.

          The answering Opposite Parties have also stated that they had deputed Vij Engineer’s Enterprise, Surveyor’s and Loss Assessors, to survey the loss. As per the Survey Report dated 25.12.2010 the loss to the property has been assessed at Rs.16,73,955/-. The said assessment pertained to the building block damaged due to storm which was an ‘under construction building’, which is Building No.3, and hence not insured. A copy of the Survey Report as well as pictures of the building have been placed on record at Annexure R-1. It is clear from the pictures contained in the Survey Report that the building which was damaged was under construction, while buildings which were complete did not suffer any damage. As the claim pertained to a building under construction, it was not tenable and thus was validly and legally repudiated. The Opposite Parties have also given details of different categories of buildings for which different rates and different terms and conditions are applicable.  

          On merits, Opposite Parties have admitted the issuance of the insurance policy. It is denied that the building was complete in July 2010, as at the time of taking the Policy in April 2010 the Complainant had stated that the construction of buildings were complete. As the building which suffered loss was under construction, the claim is not payable and has thus rightly been repudiated. An insurance policy is always issued in good faith and the Complainant has claimed compensation for a damaged building which is under construction and not complete. Opposite Parties has thus, prayed for dismissal of the complaint while praying for damages for the frivolous complaint by way of exemplary costs.  

4.          Parties were permitted to place their respective evidence on record in support of their contentions.

5.          We have heard the learned counsel for the Parties and have perused the record.

6.          Before going into the merits of the case, we need to put down the exact wording on the cover note issued by the OPs at the time of issuing of the policy. It is given as under:-

“Rs.13,50,00,000/- class ‘A’ construction building with fittings and fixture used for manufacturing of Pharmaceutical goods.

Rs.6,00,00,000/- insurance of Plant and machinery and allied accessories, Lab equipments and other allied machinery used for manufacturing Pharmaceutical goods at above said address.” 

          A bare perusal of the language above brings out that the building is complete with ‘A’ class construction and fittings & fixture and Plaint & machinery have been installed therein for the process of manufacturing of Pharmaceutical goods. The Complainant has also averred in Para 3 that after completion of the building in July, 2010, the insurance cover was enhanced. It is thus safe to deduce from the averment and affidavit of the Complainant as well as the writing on the cover note that on the date of issue of policy for the building all construction of the building was complete.

7.          Now, coming to the facts of the complaint, the Complainant has stated that the insured building was badly damaged due to which the claim was filed with the OP-Insurance Company. The claim has been denied by the Opposite Party on the ground that the damaged building is not insured. On a simple look at the Survey Report (Annex.R-1) and the Pictures attached therewith it is evident that the building which is damaged is not complete i.e. it is under construction. OPs as well as Surveyor’s report bring out that roof structure was damaged due to air pressure build up inside building which caused blowing of galvanized color coated steel sheets from its position. The damages were examined and photographs were arranged from different angles to cover damaged and safe portion of building for claim record.

8.          The cause of loss and liability as given in the Survey Report in Point 11.0 is reproduced hereinbelow:-

“It appears that Storm caused the loss of under construction ware house building block.”

          The remarks in the Survey Report reads as under:-

“In the light of above, ware house building block was under construction as brick masonry & cement sand plaster on front elevation was pending. Other blocks such as Strile block, OSD block & Utility Block built up on same direction found intact. High wind velocity passed through brick masonry left on front elevation thus roof structure damaged due to air pressure. So we are assessing loss of damages for the record of underwriter and it is left to underwriter to take decision in this regard.”

          The two photographs of the loss claimed given at Pg.22 show one building under construction and two buildings fully constructed. The picture with fully constructed building has the following remarks:-

“Other blocks constructed in same direction found intact as there was no opening on front elevation.”

          The photograph of partly constructed building has the following remarks:-

“High velocity wind passed through this opening thus air pressure build up inside building which caused loss of sheets.”

          The loss has been assessed at Rs.16,73,955/- and the final decision about the payment has been left to the underwriter.

9.          The merit of the case start and finish on the simple averment of the Complainant in Para 3 and affidavit dated 25.9.2012 of Akhilesh Jha, Authorised signatory in Para 3 that the construction of the whole of the unit, including the administrative block was complete in July, 2010.

10.        It is evident to naked eye that the damaged building, photograph of which is part of the Survey Report, is definitely under construction/ not complete. This clearly brings out that this building is a later construction and apparently not part of the policy cover note. The policy has been issued for complete building only as is evident from the language on the cover note reproduced above as well as the averments of the Complainant given above. In our opinion, the Complainant cannot take advantage of an existing policy for complete building with fittings and fixtures as well as installed plant and machinery to claim insurance cover for another building under construction. The claim is unjustified and cannot be allowed. Thus, finding no merit or justification in the complaint, we dismiss it without costs.     

11.        Certified copy of this order be communicated to the parties, free of charge. After compliance file be consigned to record room.

Announced

02^nd April, 2013.                                               

Sd/-

 (LAKSHMAN SHARMA)

PRESIDENT

Sd/-

(MADHU MUTNEJA)

MEMBER

Sd/-

(JASWINDER SINGH SIDHU)

MEMBER

 “Dutt”