ORDER
(Per: Mr. D.K. Tyagi, Member):
The complainant has filed this consumer complaint before this Commission under Section 12 read with Section 18 of the Consumer Protection Act, 1986, against the opposite parties for compensation of Rs. 70,00,000/- being price of the insured amount against the manufacturing of the complainant M/s Godly Food Products alongwith interest @ 16% per annum and Rs. 10,00,000/- against the damages for mental and physical suffering of the complainant and Rs. 10,000/- towards the cost of legal notice and other expenses.
2. The complainant has pleaded in the consumer complaint that the complainant established a manufacturing unit at Server Kheda, Jaspur Road, Kashipur, Udhamsingh Nagar (Uttarakhand) named M/s Godly Food Products, for the production of mineral water in 2010 and being one of the partners in the partnership firm named M/s Godly Foods Products, he is one of the owner in this unit. The said business of the complainant was running smoothly and no problem occurred and production continued smoothly. That for securing the future of the business, the complainant insured the business named M/s Godly Food Products. In this pursuance, the complainant insured the plant and machinery and the insured amount of this was Rs. 30.00 lacs and the superstructure of the manufacturing unit was also insured and amount of this was Rs. 40.00 lacs, in this way total insured amount of the manufacturing unit of the complainant was Rs. 70.00 lacs. The insurance company, who insured the manufacturing unit of the complainant, was Reliance General Insurance Company having Branch Office at 1st Floor, HDFC Building, 8/6, Bhotia Parao, Nainital Road, Haldwani (Uttarakhand) and Head Office at 570, Naigsun Cross Road, Next to Royal Industrial Estate, Wadala (W) Mumbai. Due to heavy rains in the year 2010 in the rainy season, the river named Dhela, which started to flow near the manufacturing unit of the complainant, the stream of the river started to touch the base of manufacturing unit the same day at night before taking the precaution measures, the said unit of the complainant collapsed. The manufacturing unit was well equipped with all the security measures up to the standard fixed by the Government. The changed course of River Dhela started to wet the base of the manufacturing unit of the complainant. On 03.11.2010 due to soaking the much wet of the river’s water by the manufacturing unit, the whole structure collapsed and the whole machinery dumped in the river and after calculation of the loss, occurred in the natural calamity, it was found that the amount of total loss is less than one crore. Thereafter, the complainant made an application to S.D.M., Kashipur, narrating the loss occurred, requested to S.D.M. concerned to grant relief from Government relief fund. Immediately thereafter the complainant made the claim before the insurance company. As per the rules, the surveyor of the insurance company made a survey of the damages as prayed by the complainant and the surveyor, after conducting the survey submitted the report to the insurance company. The complainant again requested to the opposite parties to make the decision on the claim, made by the complainant, by sending the reminder dated 24.12.2010 on the customer care No. 02-39898282 with the complaint No. 1639507. Since the insurance policy covers the risk of Standard Fire and Special Perils, therefore, the loss suffered by the complainant, is of the nature of the special perils and the claim of the complainant fully covers under the policy made by the opposite parties in respect of the plant and machinery and the superstructure and the other things damaged in the incident in question. At last the opposite parties rejected the claim of the complainant on 23.02.2011 by stating the ground that “your claim of No. 2101247203 has been closed due to claim is not payable since peril is not covered”. The copy of the repudiation of the claim of the complainant by the opposite parties being annexed herewith as annexure No. 5. Thereafter the complainant sent a notice to the opposite parties by its counsel on 21.03.2011. A letter dated 01.11.2010 of the Sub-Divisional Magistrate, Kashipur to Executive Engineer, P.W.D. corroborates the claim of the complainant. A letter dated 08.11.2010 of the Executive Engineer, P.W.D., Kashipur to the S.D.M., Kashipur also fortify the claim of the complainant. The opposite parties have stated in its repudiation order dated 23.02.2011 that since peril is not covered as per the repudiation order it appears that the opposite parties do not admit that the peril under which the manufacturing unit of the complainant damaged fully, does not cover under the policy coverage of the opposite parties, thus, the opposite parties admitted the one fact that the perils occurred to the complainant’s manufacturing unit covers under their policy coverage. The opposite party No. 3 miserably failed to discharge their obligations in terms of guarantee given to the complainant at the time of insurance. The opposite parties are grossly negligent and deficient in their service by rejecting the claim of the insured amount to the complainant and have, thus, caused loss, injury and damages in monetary terms and harassment and mental agony to the complainant. This Commission has jurisdiction to entertain the consumer complaint in view of the Section 17 of the Consumer Protection Act, 1986. The cause of action having occurred at Kashipur, District Udhamsingh Nagar (Uttarakhand).
3. The opposite parties have filed their written statement/preliminary objections and have pleaded that the consumer complaint is not maintainable and is liable to be dismissed. The loss does not fall under the purview of the risks covered in the policy. That immediately upon receipt of intimation, an independent IRDA Authorised Category “A” surveyor was deputed for survey and assessment of loss and thereafter an independent investigator was also deputed to bringforth the circumstances of the alleged loss. Both the agencies have categorically stated that the loss has occurred due to normal settlement/bedding down of the structure over a long period of time since the building is situated on the sandy river bank. There is a material concealment of facts at the time of obtaining the insurance cover making the policy void ab-initio as per policy condition No. 1. That there were prior major cracks in the building and the structure was in a very bad shape on account of moving of river path and the river was eating away the soils, which lead to the alleged loss. It is pertinent to mention here that the policy inception date is 08.10.2010 and the loss allegedly happened on 04.11.2010. The surveyor as well as investigator, in their findings, has stated that the policy has been taken after coming to knowledge of the impending loss. The policy was issued based upon the principle of utmost good faith and the policy would not have been issued, had these facts been brought to light at the time of issuance of cover. No documents have been produced to prove that the building had been constructed after obtaining the approval from the concerned Government authorities. In the absence of any documents, it can be concluded that the building was illegal. That the insurable interest of the insured on the property is not substantiated. The land of the building was purchased by three parties and thereafter the building was constructed upon the land. None of these three parties are part of the insurance contract. There is no proof or evidence to show that the building was let out to the partnership business. No rent has been shown in the balance sheet of the insured. In the claim form submitted by the insured, the cause of damage to the building has been recorded due to the plant being situated near a river named Dhela, which widened gradually and internal corrosion of soil occurred resulting in collapse of premises. This loss is not covered by the policy. The damage to the building is a slow and gradual process and in no way accidental. Moreover, the peril is not covered under the Fire and Allied Peril policy. Without admission of liability, it is stated that the estimate of loss was found to be highly exaggerated in comparison to the prevailing rates of construction. The insured had capitalized the building for Rs. 10,34,721/- in the balance sheet for the year ending on 31.03.2010. The balance sheet has been prepared on 18.11.2010, i.e. after the date of loss and the same was not filed with the Income Tax Department. However, the surveyor has considered the capitalized cost of building in order to the balance sheet and based upon the policy terms and conditions and has assessed the loss at Rs. 9,57,985/- (Rs. 10,34,721– Rs. 51,736 (5% depreciation)) and Rs. 25.000/- as salvage. Without admission of liability, it is further stated that the estimated loss of plant and machinery, as given by the insured, was Rs. 12,04,570/- but the surveyor, based upon the physical inspection and policy terms and conditions, assessed the actual loss at Rs. 11,905/-. The total loss assessed including building is Rs. 9,21,395/-. The assessment, made by the surveyor, was independent of the liability of the policy, as the peril was not covered by the policy. As per the policy schedule, the risk covered is only for Standard Fire & Special Perils & Earthquake (Fire & Shock) is the add-on peril. Thus, the loss claimed is not covered by the policy and the Reliance General Insurance Company cannot be held liable for indemnification of the loss. The claim was legally and rightfully repudiated vide letter dated 23.02.2011, as the same was found to be beyond the scope of the policy opted by the insured. The Standard Fire & Special Peril policy covers sudden unforeseen incidents only and the present loss occurred due to the gradual, internal soil erosion. There has been no deficiency in service on the part of the answering opposite parties. Repudiation in accordance with the terms and conditions of the policy does not amount to deficiency in service. It is incorrect to state that the unit collapsed suddenly, as wrongly alleged. The erosion was gradual and the loss stated is exaggerated. The insurance cover issued subject to certain terms and conditions, the copy of which was supplied alongwith the policy to the insured. The claim has been rightly repudiated based upon the terms and conditions of the policy.
4. The complainant has filed an affidavit of Sh. Uday Veer Singh (paper Nos. 52 to 58) in evidence. The complainant has also filed some annexures alongwith consumer complaint. Copy of insurance policy is annexure No. 1, photocopy of letter dated 04.11.2010 to S.D.M., Kashipur annexure No. 2, insurance claim form for Burglary and House Breaking annexure No. 3, claim form machinery insurance (paper Nos. 24 to 25) and “All Risks” insurance claim form (paper No. 26), letter of S.D.M., Kashipur to Tehsildar, Kashipur dated 09.11.2010 annexure No. 4, copy of repudiation letter dated 23.02.2011 annexure No. 5, copy of legal notice by the counsel for the complainant annexure No. 6, letter of S.D.M., Kashipur to Executive Engineer, PWD, Kashipur dated 04.11.2010 annexure No. 7, letter of Executive Engineer to S.D.M., Kashipur dated 08.11.2010 annexure No. 8.
5. The opposite parties have filed an affidavit of Sh. Rajesh Tiwari, Manager and Authorised Signatory, Reliance General Insurance Co., Lucknow (paper Nos. 60 to 63) in evidence and survey report dated 14.12.2010 (paper Nos. 64 to 72), letter dated 27.04.2011 of Reliance General Insurance Co. to Sh. Uday Veer Singh regarding claim (paper Nos. 88 to 89) and letter dated 28.06.2011 sent by Reliance General Insurance Co. to M/s Godly Food Products (paper No. 90) and copy of insurance policy (paper Nos. 91 to 98).
6. The complainant has filed its written arguments (paper Nos. 101 to 104) and the opposite parties have filed written arguments (paper Nos. 106 to 110).
7. We have heard learned counsel for the parties and perused the material placed on record.
8. Learned counsel for the complainant has submitted that the complainant established a manufacturing unit under the name and style M/s Godly Food Products for the production of mineral water in the year 2010 and the complainant obtained an insurance policy from the opposite parties-insurance company for plant and machinery for Rs. 30.00 lacs and the building for a sum of Rs. 40.00 lacs. Learned counsel has argued that due heavy rains in the year 2010, the water level in the river Dhela rose due to which the factory of the complainant was flooded. On 03.11.2010 due to the flooding, the entire building of the complainant collapsed due to which the plant and machinery and the raw material and finished products were also damaged. Thereafter, immediately the complainant lodged a claim with the opposite parties. The opposite parties appointed the surveyor, who surveyed the premises of the complainant and assessed the damage caused and submitted his report to the opposite parties. However, the opposite parties rejected the claim of the complainant on 23.02.2011 on the ground that the claim of the complainant is not payable since peril is not covered. Learned counsel has submitted that the insurance policy covers the risk of Standard Fire and Special Perils, therefore, the loss suffered by the complainant is of the nature of special perils and the claim of the complainant is fully covered under the policy issued by the opposite parties in respect of the plant and machinery and superstructure and raw material damaged in the incident. It is further submitted that some of the grounds on which the claim of the complainant was rejected has been made up in the letter dated 27.04.2011 issued by the opposite parties and one of the grounds mentioned in the said letter is that the river had gradually widened and internal corrosion of soil occurred resulting in collapse of premises. The complainant cannot be held responsible for the change of course of the river. Further in the said letter it has been stated that Standard Fire and Special Peril Policy covers unforeseen incidents only. It is submitted that flood is an unforeseen incident and cannot be held to be an incident which could be anticipated. The opposite parties have also alleged that the insurance cover was taken after the cracks had appeared in the building. The said allegations are absolutely baseless and have been made up only to cover up their wrong repudiation of the complainant’s claim. It was the duty of the opposite parties to inspect the building at the time of insurance of the premises and if there were any cracks in the building, then in that event the opposite parties should have refused to insure the building. The land was purchased by three partners of M/s Godly Food Products-complainant and hence the interest is insurable. The ground that peril is not covered is not a ground for repudiating the claim of the complainant. Learned counsel has argued that the plant and machinery of the complainant were damaged on account of floods and the said fact is also confirmed by the letter dated 04.11.2010 of the S.D.M., Kashipur to Executive Engineer, P.W.D. and the letter dated 08.11.2010 of the Executive Engineer, P.W.D. to S.D.M., Kashipur. The complainant had never concealed any facts from the opposite parties at the time of taking the insurance. It is further submitted that the surveyor has assess the loss on a very low side. It is admitted fact that the covered area of the building was 3700 Sq. ft. and merely because in the balance sheet the value of the building was shown as Rs. 10,34,721/-, the surveyor cannot assess the loss after taking depreciation on the cost shown in the balance sheet. In the same way while assessing the loss of plant and machinery, the surveyor has assessed the loss at Rs. 11,905/- against the total cost of machinery insured at Rs. 30.00 lacs. It has been stated in the survey report that he did not observe any physical damage to the machinery, however, the surveyor has nowhere stated that no damage has been caused to the machinery and the same are in working order and in the absence of the same, he could not have avoided the loss to assess the damage to the machinery. Learned counsel has argued that the claim of the complainant has been repudiated wrongly and there is a clear case of deficiency in service on the part of the opposite parties.
9. On the other side, learned counsel for the opposite parties has submitted before this Commission that the instant case has been filed by the authorized signatory of M/s Godly Food Products, which is a manufacturing unit for the production of mineral water. This unit of the complainant was insured by Reliance General Insurance Co. vide policy No. 1918302111000082 for the period from 08.10.2010 to 07.10.2011. The risk covered was Standard Fire and Special Perils with add-on Earthquake (Fire & Shock). The policy did not cover the first 5% of each and every claim subject to a minimum of Rs. 10,000/- in respect of each and every loss arising out of “Act of God” perils such as lighting STFI, subsidence, land slide & rock slide covered under the policy and first Rs. 10,000/- for each and every loss arising out of other perils in respect of which the insured is indemnified by the policy. The risk covered for plant and machinery was Rs. 30.00 lacs and for superstructure was Rs. 40.00 lacs. The total premium paid was on fire Rs. 10,500/- and on earthquake Rs. 3,500/-. No premium was paid for any other risk or peril. Learned counsel has argued that according to annexure-3 of the complainant’s document column 4 clearly mentions that the “Plant was situated near a river named Dhela”. The river gradually became widening and internal corrosion of soil occurred resulting in collapse of premises on 04.11.2010 at 3:30 p.m. Even in the claim form machinery insurance filed by the insured column 5 states “Heavy moisture in land due to water come in closeby near”. Likewise column 4 “All Risks” Insurance Plan” clearly states the cause of loss or damage as due to internal corrosion of soil and “Heavy moisture in land due to water come in closely near”. Learned counsel has also argued that paper No. 27, which is annexure 4, filed by the complainant also clearly states that the loss was due to flood in the river. The claim was repudiated by the company as the peril was not covered by the policy and no premium was received by the company for covering risk. The policy of insurance is the contract between the parties which is the sole deciding factor of a claim. The notice sent by the insured which is annexure-6 also clearly indicates that “due to heavy rain a Dhela river changed its course and started to flow near the factory”. This consumer complaint is not legally maintainable. The loss does not fall under the purview of the risks covered in the policy. According to the survey report the alleged loss has occurred due to normal settlement/bedding down of the structure since the building is situated on the sandy river bank. Learned counsel also argued that in the claim form submitted by the insured, the cause of damage to the building has been recorded due to the plant being situated near a river named Dhela which widened gradually and internal corrosion of soil occurred resulting in collapse of premises. This loss is not covered by the policy. The damage to the building is a slow and gradual process and in no way accidental. Moreover, the peril is not covered under the fire and allied peril policy. The surveyor has assessed the loss of building at Rs. 9,57,985/- and estimated loss of plant and machinery was assessed at Rs. 11,905/-. Learned counsel has argued that the assessment made by the surveyor was independent of the liability of the policy, as the peril was not covered by the policy. As per the policy schedule, the risk covered is only for Standard Fire and Special Perils & Earthquake (Fire and Shock) is the add-on peril. Thus, the loss claimed is not covered by the policy and the opposite parties cannot be held liable for indemnification of the loss. The claim was legally and rightfully repudiated vide letter dated 23.02.2011, as the same was found to be beyond the scope of the policy opted by the insured. The Standard Fire & Special Peril policy covers sudden unforeseen incidents only and the present loss occurred due to the gradual, internal soil erosion. Therefore, there is no deficiency in service on the part of the opposite parties. Repudiation in accordance with the terms and conditions of the policy does not amount to the deficiency of service.
10. There is no dispute with the fact that the complainant-M/s Godly Food Products for which Sh. Uday Veer Singh is one of the owner has bought an insurance policy from the opposite parties for the period from 08.10.2010 to 07.10.2011. There is also no dispute that the risk covered was Standard Fire and Special Perils with add-on Earthquake (Fire & Shock). There is also no dispute that the insured, i.e. M/s Godly Food Products has paid a premium for fire as well as earthquake only, as shown in the insurance policy annexure-1. The complainant is a manufacturing unit and running a business for the production of mineral water.
11. From the perusal of the evidence available on record and from the submissions of both the parties’ counsel, we are of the view that the insurance policy-annexure-1 filed by the complainant alongwith the consumer complaint indicates that the complainant-M/s Godly Food Products had obtained the policy named Standard Fire and Special Perils policy and had paid premium for fire and earthquake only. The insurance policy has been issued by the opposite parties based upon the principle of utmost good faith. From the perusal of claim form annexure-3 filed by the complainant, the complainant has expressed about brief details of how exactly loss occurred. That the plant was situated at near river named Dhela. The river gradually became widening and internal corrosion of soil occurred, resulting in collapse of premises on 04.11.2010 at 3:30 p.m. In other claim form for machinery insurance, the complainant has filled column-5 in which he has stated the cause of the damage as heavy moisture in land due to water come in closely near. Similarly, in other “All Risks” insurance claim form in column-4, the complainant has again expressed cause of loss or damage as heavy moisture in land due to water come in closely near bank. Letters available on record by S.D.M. Kashipur to Executive Engineer and letter by S.D.M. Kashipur to Tehsildar, Kashipur also indicate that due to flood and moisture of the water of river Dhela building of M/s Godly Food Products collapsed. The floor settled and bedded down and cracks are made in the building. The legal notice sent by Sh. Brij Bhushan Dwivedi, Advocate on behalf of M/s Godly Food Products to the opposite parties has filed on the record, which also indicates that due to heavy rain, river Dhela changed its course and started to flow near the factory in question and consequently the structure of the factory soaked the wet which led to the destruction of the structure and plants and machinery dumped in the debris of the factory. The complainant has pleaded in its consumer complaint that due to heavy rain in the year 2010 in the rainy season, the river named Dhela which started to flow near the manufacturing unit, the stream of the river started to touch the base of manufacturing unit and the same day at night before taking the precaution measures, the said unit of the complainant collapsed. The contentions of the complainant clearly indicates that this collapsed of building of manufacturing unit was not an accident rather building was collapsed by the change of course of river Dhela, which was gradually became widening and due to internal corrosion of soil. The complainant has never pleaded in the consumer complaint that the building of manufacturing unit was collapsed by the heavy rains on 04.11.2010 rather he has pleaded in the consumer complaint that in the rainy season of the year 2010 a river Dhela started to flow near manufacturing unit. This shows that at the time of buying the insurance policy from the opposite parties, the Dhela river had been already flowing nearby manufacturing unit of the complainant, which gradually became widened and due to internal corrosion of sandy soil, the building of manufacturing unit collapsed. The policy was issued by the opposite parties was based upon the principle of utmost good faith and the surveyor as well as investigator, in their findings, has stated that the policy has been taken after coming to knowledge of the impending loss. In the claim form submitted by the insured, the cause of damage to the building has been recorded due to the plant being situated near the river named Dhela which widened gradually and internal corrosion of soil occurred resulting in collapse of premises. Learned counsel for the opposite parties has categorically argued that loss is not covered by the policy. The damage to the building is a slow and gradual process and in no way accidental. Therefore, this is not a peril and such peril is not covered under the Fire and Allied Peril policy. As per the policy schedule, the risk covered is only for Standard Fire and Special Perils & Earthquake (Fire and Shock) is the add-on peril, therefore, the loss claimed is not covered by the policy. The Standard Fire & Special Peril policy covers sudden unforeseen incidents only and the present loss occurred due to the gradual, internal soil erosion. The claim was repudiated by the opposite parties, as the peril was not covered by the policy and no premium was received by the insurance company for covering risk. The policy of insurance is the contract between the parties which is the sole deciding factor of a claim.
12. In the case of IV (2010) CPJ 38 (SC); Suraj Mal Ram Niwas Oil Mills (P) Ltd. vs. United India Insurance Co. Ltd. & Anr., the Hon’ble Apex Court has observed that the terms of a contract of insurance have to be strictly construed and no exception can be made on the ground of equity. In the case of III (2014) CPJ 182 (NC); V.K. Kariyana Store vs. Oriental Insurance Co. Ltd. & Anr., the Hon’ble National Commission has observed that the terms of the policy have to be strictly construed to determine the extent of liability of the insurer. Therefore, the endeavor of the Court should always be to interpret the words in which the contract is expressed by the parties. These citations are also applicable in the instant case. The terms and conditions written on the policy of contract of insurance are to be seen in strict sense. This Standard Fire and Special Peril Policy covers the unforeseen and sudden accidental and physical damage to insured machinery, plant and equipment. The complainant has paid a premium for fire and earthquake only. Damage of building or plant or machinery is not covered by this policy for such damages by gradually widened the river and change of course of river resulting collapsed of building.
13. From the perusal of the consumer complaint, it is also clear that the complainant has running the business of mineral water in the manufacturing unit and production of mineral water by the manufacturing unit is commercial activity. Section 2(1)(d) of the Consumer Protection Act, 1986, which reads as under:-
2 (1)(d) "consumer" means any person who—
buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose”.
14. As the complainant has established a manufacturing unit for production of mineral water, which is a commercial activity, therefore, the complainant does not come within the purview of the Section 2(1)(d) of the Consumer Protection Act, 1986 and is not a “consumer”.
15. In the above circumstances, we are of the view that the complainant has failed to prove its case, therefore, this consumer complaint is liable to be dismissed.
16. Accordingly, the consumer complaint is dismissed.
