A. P. STATE CONSUMER DISPUES REDRESSAL COMMISSION : AT HYDERABAD
C. D. 40/2006
Between :
Visakhapatnam Port Trust
Rep. by its Deputy Director
Information Technology Division
Visakhapatnam .. Complainant
And
Divisional Manager,
The Oriental Insurance Company Limited
Division – II, 3rd Floor, Pavan Towers
1st Lane, Dwarakanagar
Visakhapatnam – 530 020 … Opposite party
Counsel for the Complainant : Mr. P. Sriraghuram
Counsel for the Opposite party : Mr. Katta Laxmiprasad
Coram :
Sri Syed Abdullah … Hon’ble Member
And
Sri R. Lakshminarasimha Rao… Hon’ble Member
Wednesday, the Seventh Day of July, Two Thousand Ten
Oral Order : ( As per Sri Syed Abdullah, Hon’ble Member )
*******
The complaint is filed by the Deputy Director of Visakhapatnam Port Trust against the opposite party Insurance Company seeking reimbursement of the insurance claim amount of Rs.23,65,309/-, also for compensation of Rs.10 lakhs with interest thereon and also expenses and costs to a tune of Rs.21,000/-.
The facts of the case in brief are that the complainant had taken “ Standard Fire and Special Perils ( Material damage) Policy ” from the opposite party so as to cover the risk of damage to the electronic equipments of Information Technology Division of Visakhapatnam Port Trust. The policy was effective from 10th March, 2004 up to 23rd February, 2005. On payment of premium, policy was issued. The electronic equipment of the establishment was insured under the policy and it was kept under constant vigil and surveillance of the staff regularly. As the matter stood thus, on 7th June, 2004 and 28th June, 2004, the insured electronic equipment such as building switches, work group switches were burnt and damaged due to lightening that occurred in the port area at about 12.40 hrs. On 7th June, 2004 and 14.40 hours on 28th June, 2004 causing loss to a tune of Rs.23,65,309/-. The damage was immediately informed to the opposite party by sending fax on the same date itself and the claim was made to the opposite party on the same date furnishing all the relevant material. A surveyor was appointed to assess the damage caused to the insured equipment who in turn had submitted non-speaking report on 13.11.2004. Subsequently, a letter dated 8th December, 2004 which was received on 29th December, 2004 was sent by the opposite party after a long gap of six months informing that as per the General Exclusion No. 7 of the policy the reported loss falls out of scope of the policy and in view of the same the matter is closed as “ No claim “. While admitting that the loss caused was due to lightening, it is contended that the repudiation of the claim made by the opposite party is vague and untenable and had no nexus to the exclusion clause no. 7. The stand taken by the opposite party is totally mischievous to avoid reimbursement of the claim. Further the opposite party also has suppressed the surveyor’s report dated 13.11.2004 and that as per the Insurance Regulations and Development Authority Guidelines, the opposite party has to inform to the insured within one month from the date of receipt of the report of the surveyor. The act or omission amounts to deficiency in service.
The opposite party filed its written version denying the allegations and has taken the stand that the complaint is not maintainable. It is stated that the complainant is not a consumer on the basis of its pleadings and that no case is made out for the consumer dispute nor in respect of the alleged claim. Both the complainant and the opposite party are public undertakings so it is mandatory for the clearance of litigation to be obtained prior to the filing of the legal proceedings before any Forum or Court. The Government of India has evolved a procedure in respect of Government litigation and that permission is to be taken which is mandatory before proceeding to any court or Tribunal. First of all, it should be examined by the Committee and clearance is to be obtained for fling the litigation. The A. P. State Consumer Disputes Redressal Commission has no jurisdiction to entertain any claim or proceed with the case on hand. The responsibility is cast upon the complainant seeking clearance from the Central Government before filing the case before the State Commission. It is made clear in the decision of the Apex Court reported in M/s. Oil and Natural Gas Commission and another VS. Collector of Central Excise JT 1991 (4) SC 158. The complainant had not filed any such application before the competent authority seeking permission as such the complaint is liable to be rejected and in this regard the opposite party had filed CAIA 116/2007 for rejecting the complaint. The complainant is required to produce the copies of the papers required to be submitted , i.e., notice of claim or submission of the documents of the alleged damage caused to the insured items on 07.06.2004. So also, as to the issuance of notice of claim or submission of the documents of the alleged damage caused to the insured items on 28.06.2004. Following the procedure a surveyor was appointed who submitted a report and considering the same the claim was repudiated as per Exclusion Clause no. 7 of the terms and conditions of the policy and the repudiation was within a reasonable time. The opposite party has to attend to several claims of the Department, as such, it takes sufficient time for attending to the claims.
The complainant filed evidence affidavits and got marked Ex. A-1 to A-7. The opposite party had filed evidence affidavits. Before filing of the counter/version the opposite party had filed CCIA 116/2008 praying to reject the complaint filed in CC 40/2006 on the ground that it is mandatory that the Public Sector Undertakings/Central Government Organizations are required to clearance for litigation from the Committee set up by the Government of India.
The points that arises for adjudication are :
(1) Whether the complainant is a consumer and the complaint is maintainable ?
(2) whether the repudiation of the Insurance Claim made by the opposite party under clause 7 of the terms and conditions of the Insurance Policy is justified and tenable ?
(3) Whether the complaint is liable to be rejected or dismissed on the ground that that the dispute between the Public Sector Undertakings and Union of India have to be settled amicably only after obtaining clearance obtained from the Committee set up by the Government of India ?
The complainant filed counter in CDIA 116/2008 in which it is stated that as per Sec. 13,18 and 22 of Consumer Protection Act, 1986 that after receiving the complaint the District Fora/ State Commission/National Commission shall decide the maintainability of a complaint on the basis of four aspects
(i) whether the complainant is a consumer ?
(ii) whether a complaint is a consumer dispute as explained in the Act ?
(iii) whether the complaint filed is within the stipulated period of limitation ?
(iv) whether the Forum or Commission before whch the complaint is filed is having territorial as well as pecuniary jurisdiction ?
In the present complaint, the procedure was duly observed by the Hon’ble Commission and then only the complaint was ordered to be registered and numbered. Apart from it, the Consumer Protection Act is very conspicuous and clear regarding filing of complaints by State Government or Central Government right from inception and also by means of amended section 12 ( d ) by substituting the words such as , Central or State Government, as the case may be, either in its individual capacity or as representative of interests of consumers in general’. As such the objections raised by the opposite party regarding the maintainability of the present complaint and requirements of permission or clearance from any Statutory Committee does not arise at all in view of the above submissions.
Reiterating the stand taken in the written version, the learned counsel for the opposite party had emphasized the fact that the complainant is not a consumer and the complaint is not maintainable as it is a condition precedent that any Public Sector Undertaking of Union of India should obtain necessary permission from the Committee set up by the Bureau of Public Enterprises and the Ministry of Law to monitor the dispute between Ministry and Ministry to Government of India, Ministry and Public Sector Undertaking of Government of India and Public Sector Undertakings in between themselves to ensure that no legal litigation shall come to a Court or a Tribunal without the matter having been first examined by the Committee and its clearance for the litigation. It is also contended that in light of the decision of the Apex Court reported in M/s. Oil and Natural Gas Commission and another Vs. Collector of Central Excise JT 1991 (4) SC 158 it is obligatory for every Court or Tribunal where such dispute is raised it is necessary to insist for clearance from the committee and In the absence of such clearance, proceedings cannot be proceeded with.
The learned counsel for the complainant submits that the citation referred to the by the opposite party, i.e., JT 1991 (4) SCC page 158 has no application to the present case and he placed reliance upon the following decisions.
(1) Hindustan Steel Works Construction Ltd V. State of Kerala
AIR 1997, Supreme Court page 2275 = 1997 (5) SCC page 1714 =
(1997) 2 LLJ page 345.
(2) Steel Authority of India Ltd Vs. Shri Ambica Mills
AIR 1998, SC page 418 = (1998) 1 SCC page 465 = (1998) 92
Comp.Cases page 120
He further submits that a Public Sector Company even if it be ‘ State’ ( within the meaning of Art. 12 of the Indian Constitution ), it is not a Government Department. It is urged that on the same legal analogy laid in the above decisions, the present case is not a litigation between two Government bodies and does not require any prior permission from any ‘ competent authority’ and there is no bar from adjudicating the dispute.
Sec. 2(B) has defined the complainant which means (1) Consumer, (2) Voluntary Consumer Organization registered under Companies Act or under any law, (3) Central or any State Government which makes complaint, (4) on one or more consumers having the same interest, (5) so also legal heir of a deceased consumer. The definition is very much clear that even a Central Government or any State Government may make a complaint before the Consumer Fora or Commission for claims which falls within the purview of the Consumer Protection Act. Apart from it, Sec. 3 of the Act is very clear that the provisions of the Consumer Protection Act shall be in addition to and not in derogation of the provisions of any other law for the time being in force. The complaint was registered and numbered as per Sec. 13,18 and 22 of the Consumer Protection Act, 1986. The complaint was filed within a period of limitation and the State Commission is having territorial and pecuniary jurisdiction to entertain the complaint. The complainant is a consumer within the meaning of Sec. 2 D .and the dispute involved is a consumer dispute so all the objections and contentions raised in CDIA 116/2008 are not sustainable.
The citation relied upon by the opposite party is not relevant to the facts of the case and it is not applicable in respect of insurance case. Basing on the policy a claim was made to indemnify the loss in respect of the insured electronics equipment. An insurance claim is a contract of insurance. The contention of the opposite party that prior clearance is to be obtained from a Public enterprises committee constituted by the Ministry of Finance before filing the insurance claim which is a far fetched contention. Several land mark judgments have been decided by the Hon’ble Supreme Court and National Commissions in respect of insurance claims and in none of the insurance claims any such objection was raised or decided that where the dispute is in between the Public Sector Undertaking and Insurance Company, the Public Sector Undertaking should at first obtain clearance from Public Enterprises Committee before filing the insurance claim. In this context, it is relevant to refer to few of the decisions rendered by the Hon’ble National Commission decided in between the Public Sector Undertakings subsequent to 1991 in which no such objection was raised nor considered. Viz., (1) Food Corporation of India VS. New India Assurance Company Ltd 125 and (2) United India Insurance Company Ltd Vs. M/s. National Textile Corporation Ltd and others, Landmark Judgments of the Insurance page 64.
Therefore, we hold that the objections raised by the opposite party by relying on the decision, the opposite parties cannot resist the insurance claim payable to the insured.
It is an undisputed fact that the complainant had taken “ Standard Fire and Special Perils ( Material damage) Insurance Policy ” which was issued by the opposite party and during the subsistence of the policy i.e. on 26.03.2004 and on 28.06.2004 there was a lightening which occurred in the port area and as a result of which it caused damage to the electronic equipment insured under the policy and the said fact was informed to the opposite party and that the opposite party had appointed an Insurance Surveyor to assess the loss or damage to the insured items. The surveyor in his report dated 13.11.2004 held that the insurance claim does not come under the ambit of the policy as it comes under the General Exclusion no. 7 of the policy. In pursuance of the said report, the opposite party sent Ex. A-6 repudiation letter dated 08.12.2004 informing that the reported loss falls out of the scope of the policy.
The O. P. has not denied that lightening had taken place on the relevant dates which resulted in loss or damage to the electronic equipment which was insured under the policy in question. In order to appreciate the claim and resistance of the parties, it is necessary to go through clause 7 of the General Exclusions which reads as follows :
General Exclusions :
It states that the policy cover ( not applicable) the following conditions under the policy.
1. Not applicable
2. Not applicable
3. Not applicable
4. Not applicable
5. Not applicable
6. Not applicable
7. Loss, destruction or damage to any electrical machine, apparatus, fixture, or fitting atising from or occasioned by over running, excessive pressure, short circuiting, arcing, self hearting or leakage of electricity from whatever cause ( lightening included) provided that this exclusion shall apply only to the particular electrical machine apparatus fixture for fitting so affected and not to other machines, apparatus, fixtgures or fittings which may be destroyed or damaged by fire so set up.
In Ex. A-1 policy schedule the insured items are described as infrastructure of I. T. Division. The equipment that is noted in the schedule is not an electrical equipment at all. There is any amount of distinction between electrical machinery or electronic equipment as described. The ‘electronics’ equipment is not covered by the exclusion clause 7 referred to above. The complainant sent Ex. A-2 and A-4 on 07.06.2004 and 28.04.2004 informing the opposite party that the electronic equipment worth Rs.14,63,372/- and Rs.1,60,000/- respectively were damaged due to lightening in the Port Area where equipment was kept for its day to day usage. The surveyor has also referred to all the equipments that are mentioned in the Ex. A1 and A2. The surveyor has not disputed that the electronic equipment that was insured under the policy was not damaged due to lightening . In para 12 of Ex. A-5 surveyor’s report the surveyor himself admitted that the expert opinion of the Service Engineer from M/s. HCL Comnet Limited was also examined. He simply stated that the insurance claim will not come under the ambit of policy in view of General exclusion clause and he has not distinguished how the electronics equipment is identical with the electrical machinery or apparatus to reject the claim. The report is not based on proper reasoning or scientific analysis. The opposite party has simply guided by the surveyor’s report has repudiated the claim. The repudiation amounts to deficiency in service. The complainant is entitled for the insurance claim with interest from the date of claim till payment. If the electronic equipment falls in the category of electrical equipment covered by the general exclusion no. 7, it is surprising how the opposite party had issued a policy covering the risk to such equipment. If a policy is issued without any clarification or unfair method for the purpose of promoting business it amounts to unfair trade practice as defined U/s. 2 ( r ) of Consumer Protection Act, 1986.
In the result, the complaint is allowed directing the opposite party to reimburse the loss or damage as estimated in Ex.A-2 and Ex. A-3 to a tune of Rs.22,05,309/- with interest there on at 9 % P. A. from the date of insurance claim till realization. Further directed to pay costs of Rs.5000/- within four weeks from the date of the receipt of the order
Sd/-MEMBER
Sd/-MEMBER
Dated : 07.07.2010.
Appendix of Evidence
Witnesses Examined
For the complainant : none
For the Respondent : none
Documents Marked
For the complainant :
Ex. A-1 : 24.02.2004 : Policy – schedule
Ex. A-2 : 07.06.2004 : Letter from Chief Materials Manager,
VPT, Visakhapatnam informing the damage of insured equipment to the OP.
Ex. A-3 : 07.06.2004 : Letter from Chief Materials Manager,
VPT, Visakhapatnam informing the damage of insured equipment to the OP.
Ex. A-4 : 28.06.2004 : Letter from Chief Materials Manager,
VPT, Visakhapatnam informing the damage of insured equipment to the OP.
Ex. A-5 : 13.11.2004 : Survey Report
Ex. A-6 : 08.12.2004 : OP to the Chief Materials Manager,
VPT, Visakhapatnam repudiating the claim.
Ex. A-7 :17.04.2006 : Lr. From Director ( r & P ) I/c & NODAl
officer ( IT ) to OP.
Ex. A-8 : 20.04.2006 : Lr. From the surveyor to the
Visakhapatnam Port Trust.
For opposite party : nil
Sd/-MEMBER
Sd/-MEMBER
Dated : 07.07.2010
