Punjab

StateCommission

FA/12/227

ICICI Lombard General Insurance Company Limited - Complainant(s)

Versus

Ricela Health Foods - Opp.Party(s)

Er. Sandeep Suri

04 Mar 2015

ORDER

2^nd Additional Bench

 

STATE CONSUMER DISPUTES REDRESSAL COMMISSION, PUNJAB

DAKSHIN MARG, SECTOR 37-A, CHANDIGARH

 

First Appeal No. 227 of 2012

                                                           

                                    Date of institution: 24.2.2012   

                             Date of Decision:    4.3.2015

 

1. ICICI Lombard General Insurance Company Ltd. through its MD, 3^rd Floor, Narain Manzil, 23 Barakhamba Road, C.P. New Delhi 110 001.

…..Appellant/Op No. 1

                                      Versus

1. M/s Ricela Health Food Ltd. (Unit No. 2) through its authorized signatory Shri Pawan Kumar Singla, Director, Jakhal Road, Sunam formerly known as M/s AP Solvex Ltd.

…..Respondent No.1/Complainant

2. Punjab and Sind Bank through its Branch Manager, Dhuri, Distt. Sangrur.
3. New India Insurance Co. Ltd. through its authorized signatory/ Branch Manager, OP Telephone Exchange, Malerkotla.

....Respondents No.2&3/OP Nos. 2 & 3

 

First Appeal against the order dated 23.11.2011 passed by the District Consumer Disputes Redressal Forum, Sangrur.

 

Quorum:-

 

              Shri Gurcharan Singh Saran, Presiding Judicial Member

              Shri Jasbir Singh Gill, Member

 

Present:-

          For the appellant             :         Sh. Sandeep Suri, Advocate

          For respondent No.1        :         Sh. Karan Nehra, Advocate

          For respondent No.2        :         None.

          For respondent No.3        :         Sh. Vinod Choudhary, Advocate

 

Gurcharan Singh Saran, Presiding Judicial Member

ORDER

The appellant/Op No.1 (hereinafter referred as “OP No.1”) has filed the present appeal against the order dated 23.11.2011 passed by the District Consumer Disputes Redressal Forum, Sangrur (hereinafter referred as “the District Forum”) in consumer complaint No.883 dated 22.12.2010 vide which the complaint filed by respondent No.1/complainant(hereinafter referred as ‘the complainant’) was accepted with a direction to OP No. 1 to make payment of a sum of Rs. 19,22,433/- alongwith interest @ 9% per annum from the date of occurrence till realization, pay compensation of Rs. 15,000/- and Rs. 7500/- towards litigation expenses.

2.                The complaint was filed by the complainant under the Consumer Protection Act, 1986 (in short ‘the Act’) against the opposite parties on the allegations that the complaint has been filed through its authorised signatory Mr. Pawan Kumar Singla, Director, Jakhal Road, Sunam (formerly known as ‘M/s A.P. Solvex Ltd.’). The complainant had obtained insurance policy from 1001/58379893/00/000 w.e.f. 8.12.2009 to 7.12.2010 from Op No. 1 and had paid the premium of Rs. 90,512/- to cover the risk in respect of Standard Fire and Special Peril Policy and stock of the Company was insured for Rs. 3.50 crores. However, on 11.8.2010 at about 6.30 p.m. De-Oiled Rice Brand (for short ‘DORB’) belonged to the complainant Company suddenly got fired. Intimation of fire was immediately given to the office of the Fire Brigade, Sangrur and the Police Control Room. The fire was controlled after massive efforts. DDR No. 9 dated 12.8.2010 was registered in P.S. City Sunam. The sample of the affected stock was sent for testing to Bali Lab, Ludhiana. The complainant had also submitted all the documents demanded by the Surveyor deputed by Op No. 1 and had suffered a loss of more than Rs. 20 lacs. However, OP vide letter dated 22.10.2010 had wrongly repudiated the claim of the complainant on the ground that affected premises is other than the insured premises and situated approximately 500 meters away from the insured premises and observations regarding breach in the warranty conditions were also denied. The Op had got insured the stock worth Rs. 3.50 crores. The official of the OP inspected the premises where the loss had occurred. Once the stock belonged to the complainant was damaged then repudiation merely on the ground that stock was lying in other premises was totally wrong. The rented premises belong to the Company and was situated at Jakhal Road. Bank statement and stock record established that the damage DORB belongs to the complainant Company. Hence, the complaint with a direction to the opposite parties to pay the claim of Rs. 19,50,000/- alongwith future interest @ 12% p.a. till realization, to pay Rs. 25,000/- on account of harassment and Rs. 22,000/- as litigation expenses.

3.                The complaint was contested by the Ops. OP No. 1 in its reply took the preliminary objections that the complaint was false, frivolous, vague and vexatious to the knowledge of the complainant, therefore, it be dismissed with special costs under Section 26 of the Act; the contract of insurance between the parties is governed by its policy terms and conditions. There was no exception or relaxation on the ground of equity. The claim of the complainant was beyond the policy coverage as the alleged fire took place in the rented premises, which was 500 meters away from the insured factory premises as the loss to the stock was not covered under the policy. The complainant was/is a Limited Company and was/is running its unit for commercial purpose and was/is earning huge profit, therefore, the complainant does not come within the definition of the consumer; the complainant had not approached the Forum with clean hands; the Forum did not have any jurisdiction to try and decide the complaint and that the complicated questions of law and facts were involved, which cannot be decided in summary proceedings, therefore, the matter be relegated to the Civil Court. On merits, the policy taken by the complainant has been admitted as material damage policy having sum insured of Rs. 9 Crores, which include building Rs. 1,25 crores, Machinery and Accessories Rs. 4.25 crores and stocks Rs. 3.50 crores of the premises Unit No. 2 situated at Jakhal Road, Sunam and all the terms and conditions of the said policy were duly supplied to the complainant. It was jointly issued to the complainant by the Ops and it was issued in collaboration with The New India Assurance Company Limited on a 60:40 ratio. After getting the information regarding the loss caused to the complainant, the Ops appointed Mehta and Padamesy Surveyors Pvt. Ltd. Independent Surveyors and Loss Assessors for assessing the loss to the complainant. The said Surveyor visited the premises and assessed the loss to the tune of Rs. 19,22,433.30p. The said Surveyor also found the affected loss was found in a rented godown, which was about 500 meters away from the insured factory premises and also breached the terms and conditions. After going through the report submitted by the Surveyor, the Ops vide letter dated 22.10.2010 had repudiated the claim according to the terms and conditions of the policy. It was denied that the insurance official had visited the premises where the loss was caused before issuance of the policy. Complaint was without merit and it be dismissed.

4.                Op No. 2 in its reply submitted that OP No. 2 was not a necessary party in the complaint as no relief was called for against Op No. 2. The complainant had taken a loan from this Op. The complainant had kept the goods in the premises of the Company as well as the rented premises situated at Jakhal Road, Sunam and the Company was regularly submitting the stock statement kept in the premises of the Company as well as the premises taken on rent. The officials of the Bank also inspected the premises of the Company as well as the rented premises before the grant of the loan, therefore, the complaint against Op No. 2 be dismissed.

5.                OP No. 3 in its reply submitted that this Op had issued the policy in favour of the complainant for the period 8.12.2009 to 7.12.2010 in which the share of OP No. 1 was 60% and that of OP No. 3 was to the extent of 40%. Neither the complainant nor OP No. 1 informed this OP regarding the alleged fire in the godown outside located approximately 500 meters away from the insured factory premises. However, OP No. 1 had appointed M/s Mehta & Padamsey Pvt. Ltd., Surveyors and Loss Assessors duly licensed by IRDA. The said Surveyor submitted his report dated 8.10.2010 and assessed the loss to the extent of Rs. 19,22,433/- and also observed that the insured breached warranty clauses as under:-

(i)      Warranted that the stock is stored atleast 1 feet above the grounds;

(ii)      Power supply to the Godowns be cut-off during non-business hours.

The complainant had taken the insurance policy in respect of the stock lying in the Mill situated at Jakhal Road, Sunam whereas the stock damaged was stored at distance of 500 meters away from the insured premises. After examining the entire record, OP No. 1 had legally repudiated the claim of the complainant of which the information was given to the complainant vide letter dated 22.10.2010. Complaint against this OP was without merit and it be dismissed.

6.                The parties were allowed by the learned District Forum to lead their evidence.

7.                In support of his allegations, the complainant had tendered into evidence Resolution Ex. C-1, copy of policy Exs. C-2&3, affidavit of Pawan Kumar Singla Ex. C-4, certificate Ex. C-5, policy Ex. C-6, Vat form Ex. C-7, affidavit Ex. C-8, stock statement of Pb. & Sind Bank Exs. C-9 to 17, DDR Ex. C-18, Fire report Ex. C-19. 

On the other hand, opposite party No. 3 had tendered into evidence affidavit of R.S. Aulakh, Dy. Manager Ex. R-1 and OP No. 1 had tendered into evidence proposal form Ex. R-2, repudiation letter Ex. R-3, surveyor report Ex. R-4, policy terms and conditions Ex. R-5, affidavit Ex. R-6.

8.                After going through the allegations in the complaint, written replies filed by the OPs, evidence and documents brought on the record, the learned District Forum allowed the complaint after observing that as per the policy the designation of the property clause is as per the property entered into insured books. The copy of the VAT Form Ex. C-7 shows that as per entry dated 1.10.2009, the godown No. 3, 4 and 5 were taken on lease from Ajay Gupta and others and the written statement filed by Op No. 2 showed that the complainant Company had kept the goods in the premises of the Company as well as in rented premises. Both the premises are situated at Jakhal Road, Sunam and during the assessment, the Surveyor had verified the stock lying in the stock of the factory and correlates it with the storage register to the extent possible. Therefore, once the property clause has been mentioned as property entered in the insured book and stock then OP No. 1 cannot take the plea that the affected goods was in a rented premises at a distance of 500 meters away from the insured factory premises. As per the proposal form, the name and address of the risk property is AP Solvex, Unit No. 2 and the godown also situated at Jakhal Road. It was also pleaded that OP had inspected the premises before issuing the policy. It was also prudent as the value of the goods was to be taken before issuing the policy and this property was entered in the insured books and the loss was within the insured stock. The calculation sheet contained in the stock lying in the factory premises or in the rented premises has not been produced by OP No. 1. To cover all the objections raised by the Surveyor in his report, he has not filed any affidavit so that there would be any chance to the complainant to cross-examine the Surveyor on the point with regard to the insured stock as well as insured stock premises and violation of Warranty terms.

9.                In the appeal, the counsel for the appellant has drawn our attention towards the factum that this policy was taken by A.P. Solvex Limited, Unit No. 2 whereas this complaint has been filed by M/s Ricela Health Food Limited.

10.              In case we go through the report of the Surveyor placed on the record by the Ops Ex. R-4 under Column No. 2, a note has been given that insured name was changed from M/s A.P. Solvex Ltd. to M/s Ricela Health Food Ltd. from 7.7.2010 as per the Memorandum and Article of Association approved by Registrar of Companies, Punjab and copy was attached by him with his report, which has not been placed on the record by the Ops, therefore, in case it is a change of name, duly approved by the Registrar of Companies then the complainant has a right to file this complaint under the changed name and resolution to file this complaint through Sh. Pawan Kumar Singla, Director of the Company has been placed on the record as Ex. C-1, therefore, the complaint has been filed by Authorised Person of the Company. Moreover, no objection has been taken by OP No. 1 in his written reply that the complaint has not been filed by an Authorised Officer of the Company.

11.              Otherwise insurance policy between the parties is admitted. It is a material damage policy and it covers the material stock upto Rs. 3.5 crores. After the incident, OP No. 1 had appointed the Surveyor and Surveyor had submitted his report Ex. R-4 in which he has not doubted the incident of fire. However, in the repudiation letter placed on the record as Ex. R-3, the claim was repudiated on the ground that affected premises is different than the insured premises and situated approximately 500 meters away from the insured premises i.e. Unit No. 2, Jakhal Road, Sunam, Sangrur, Punjab and that the insured approached the policy warranties as under:-

*        Warranted that the stock is stored atleast 1 feet above the ground.

*        Power Supply to the godowns be cut off during non business hours

12.              Firstly taking the point that affected premises was different then the insured premises situated approximately 500 meters away from the insured premises. In case we go through the policy document issued by the Ops Ex. C-2, it was subject to following endorsements as under:-

Clause/ Endorsement No.	Clause/Endorsement Description
FC01	Agreed Bank Clause
FC03	Designation of Property Clause
FC04	Reinstatement Value Policies
FC05	Local Authorities Clause

 

13.              The name of the insured is A.P. Solvex, Unit No. II. The name of the Financer is Punjab & Sind Bank and P.N.B. Bank. In the detail of the property insured, which is stocks worth Rs. 3.5 crore. In FC01 Agreed Bank Clause vide which it is clear how the Company is to pay to the money due to the bank. Under FC03 - Designation of Property Clause, for the purpose of determining, where necessary, the item under which the property is insured, the insured is agreed to accept the designation under which the property has been entered in the insured’s books. Therefore, the property, which was under insurance was as per the entries made in the insured Book of Unit No. II. In case this clause is read alongwith the written reply filed by Op No. 2, who had advanced the loan and had been inspecting the stock from time to time as mentioned in their reply that the complainant had taken the loan from the Op, the OP had kept the goods in the premises as well as in the rented premises situated at Jakhal Road, Sunam. The Company was regularly submitting stock statement of the entire stock kept by them in the premises of the Company as well as the premises taken on rent, both situated at Jakhal Road, therefore, the stock of the company was i.e. Unit No. II was including stock kept in rented premises and certainly, where the fire took place and stock of the Company were damaged is in the rented premises. The Surveyor was not justified to recommend the repudiation of the claim of the complainant merely on the ground to say that the godown where the fire took place is approximately 500 meters away from the insured premises till he connected the insured statement with regard to the stock. However, insured statement with regard to the stock has not been attached with the report of the Surveyor that when the policy coverage for Rs. 3.5 crores, stock was insured by OP No. 1, it does not include the premises taken on rent where the damage had taken place. Otherwise in the policy document, the extent of premises has not been defined. It has not defined whether it includes only the premises of the Company and does not include the rental premises, therefore, without correlating the property clauses as entered in the insured books, the Surveyor was not justified to recommend that the premises where the damage had taken place was not covered under the insured premises and has also not correlated with the insured stock statement. So far as the proposal form is concerned, it was filled at the time of taking the policy is Ex. R-2, in Group B Clause (vii) against additional expenses on rent for an alternate accommodation it has been filled as ‘Yes’. Against Clause 14(v) it has been mentioned as under:-

“Located outside industrial/manufacturing risk

Yes √”

Then against clause 15, it was mentioned as under:-

“Is the property being used as warehouse / godown (not located in a manufacturing unit)

Yes √”

Therefore, it is not only the manufacturing unit, the warehouse / godowns beyond the manufacturing units have also been covered. Therefore, on the basis of evidence produced on the record by the parties, we do not agree with the report given by the Surveyor, Final Survey Report that the affected premises was different than the insured premises and that we agree with the findings so recorded by the learned District Forum.

14.              Coming to the breach of warranty clauses referred above in Ex. R-3, the first breach is with regard to the fact that the stock was not stored atleast 1 feet above the ground. In case such findings are recorded by the Surveyor then it must be substantiated with some corroborating evidence alongwith the enclosures. He has attached 22 number photographs taken by them and then photographs taken by the insured. However, these photographs were withheld by the Ops. Perhaps these may not be corroborating their view point as mentioned by the Surveyor in his report, therefore, in case the evidence on the record collected by the Surveyor has been withheld by respondent No. 1 then its adverse inference will be taken against respondent No. 1. Otherwise there is no evidence with the Ops that the stocks were not stored by the complainant 1 Ft. above the ground.

15.              The next breach of the warranty clauses is that the Power Supply of the Godown should be cut off during the non-business hours. The fire had taken place at 6.30 p.m. In case we go to Clause 6 of the Final Surveyor Report, it has been mentioned that DORB is normally stored in used old gunny bags. Looking at the extent of damage, it appears that fire had caught due to spontaneous combustion, which was duly covered under the policy, after paying additional premium for it and there are no findings that there was any power short-circuit, therefore, supply and non-supply of the electricity at the time of fire is not material when cause of fire was not electricity short circuit but due to spontaneous combustion. Therefore, the claim cannot be repudiated on that ground also.

16.              It has been stated by the counsel for the appellant that as per the order passed by the learned District Forum, interest @ 9% per annum has been allowed from the date of occurrence, which is 11.8.2010 whereas the complaint was filed on 22.12.2010 and in case the interest is calculated at that rate then the total amount sought by the complainant may exceed the pecuniary jurisdiction of the District Forum. The pecuniary jurisdiction of the complaint is to be determined on the basis of relief claimed by the complainant and not the relief granted by the District Forum in which the relief was claimed to the extent of Rs. 19.50 lacs alongwith future interest, Rs. 25,000/- on account of harassment and Rs. 22,000/- as litigation costs and certainly, it is less than Rs. 20 lacs and falls within the pecuniary jurisdiction of the District Forum. In case the learned District Forum has allowed the interest on the date of occurrence, which can be modified but we are of the opinion that it will not take away the pecuniary jurisdiction of the District Forum of the claim of the complainant lies within the pecuniary jurisdiction of the District Forum.

17.              Another point argued by the counsel for the appellant is that as per the policy, liability of OP No. 1 was upto 60% and OP No. 3 was 40%. The ratio of the liability between both the insurance companies have not been denied but the objection of the counsel for OP No. 3 is that after the incident, no intimation of the fire incident was given to Op No. 3. The Surveyor was appointed by OP No. 1 at their instance and they had repudiated the claim of the complainant on the basis of report of the Surveyor without giving any intimation to OP No. 3. In case we go through the policy document Ex. C-6, it was issued by OP No. 1 in which the name of the co-sharer has been mentioned and New India Insurance Co. Ltd. was liable to the extent of 40%. Otherwise there is no privity of contract directly between the complainant and New India Insurance Co. Ltd. and moreover, in case OP No. 1 had not given any intimation to OP No. 3 appointed the Surveyor of its own and repudiated the claim of the complainant on its own, then in no circumstances, OP No. 1 can lodge its claim of 40% to OP No. 3, who will adjudicate the claim of OP No. 1 in accordance with terms and conditions of the policy.

18.              No other point has been argued.

19.              In view of the above discussion, the appeal is disposed of with minor modification that the interest will be admissible to the complainant from the date of filing the complaint and not from the date of occurrence. OP No. 1 is at liberty to lodge his claim with Op No. 3 to the extent of their liability. No order as to costs of the appeal.

20.              The appellant had deposited an amount of Rs. 25,000/- with this Commission at the time of filing the appeal and Rs. 5,00,000/- in compliance with the order dated 9.3.2012. These amounts with interest accrued thereon, if any, be remitted by the registry to respondent No. 1 by way of a crossed cheque/demand draft after the expiry of 45 days, subject to stay, if any, by the higher Fora/Court.

21.              Remaining amount shall be paid by the appellant to respondent No. 1 within 30 days from the receipt of the copy of the order.

22.              The arguments in this appeal were heard on 25.2.2015 and the order was reserved. Now the order be communicated to the parties as per rules.

23.              The appeal could not be decided within the statutory period due to heavy pendency of Court cases.

 

 (Gurcharan Singh Saran)

Presiding Judicial Member

 

March 4, 2015.                                                            (Jasbir Singh Gill)

as                                                                                                Member