JAGANNATH BAG, MEMBER
This complaint has been filed u/S 17 of the Consumer Protection Act , 1986, against the OP Insurance Company on grounds of deficiency in service with a prayer for direction upon the OPs to pay a sum of Rs. 57,30,000/- towards indemnification of the loss suffered by the Complainant company and compensation of Rs. 10 lakh for deficiency in service on the part of the OPs apart from payment of Rs. 2,00,000/- as compensation for mental pain and agony.
The Complainant’s case is as follows:
The Complainant being a small scale industrial unit obtained one Standard Fire and Special Perils Policy from the OP / Insurance Company in respect of their building , shed , generator set , other plant and machineries including the furniture, fixtures and fitting , stocks of all kinds of core veneers , stores, heat oil in proceses and furnished products . The policy covered the sum assured of Rs. 68,00,000/- and the insurance premium was paid to the tune of Rs. 22,655/-. The policy was valid for the period from 21.12.2010 to 20.12.2011. During the currency of the policy , a fire took place at the boiler machine installed in the factory premises of the Complainant company on 12.04.2011 at about 4 p.m . The information was given to the Insurance Company immediately and it was followed by a written information on 13.04.2011. The boiler machine , dryer , shed and a part of the stocks got damaged and the Complainant company lodged its claim with the O.P. for indemnification of the losses suffered to the tune of Rs. 57,30,000/- . The Surveyor and Loss Assessor engaged by the OP Insurance Co. visited the premises of the Complainant on 19.04.2011 and all necessary papers and documents were provided to the OP Insurance Company and / or to the Surveyor, Mr. Manabendra Chatterjee, being OP No.2. The OP Insurance Company delayed the settlement of the claim . The Complainant requested by their letters dated 28.05.12 and 15.06.12 for settlement of the claim with necessary payment . The OP Insurance Company vide their letter dated 30.05.12 repudiated the claim on the ground of non-submission of fire brigade reports of the losses as on 22.11.2010 and 12.04.2011 and other documents as desired by the Surveyor and also on the ground that the loss was pre-existing in nature when the policy in question was not in force and that there was no declaration of silent risk . The Complainant requested the OP Insurance Company vide their letter dated 26.06.2012 to arrange to provide the copy of the survey report which has not been heeded to. A legal notice dated 24.07.12 was served upon the OP Insurance Company as well as upon the OP No.2 being the Surveyor, but neither of them provided any copy of the Survey Report. The OPs were found to be deficient and negligent in their duties. The production of the company could not be commenced. The damages and losses suffered by the Complainant caused mental pain and agony . As the OPs were liable to pay the claimed amount of Rs. 57.30 lakh with interest from the date of submission of the claim apart from payment of compensation of Rs. 12,00,000/- , the complaint has been filed with a prayer for direction upon the OPs to pay a total sum of Rs. 69,30,000/- with interest @ 18 % p.a on the said amount till realization.
Notices were served upon both the OPs .
Both the OPs filed their W.V. challenging the complaint.
The O.P. Insurance Company submitted in their W.V. that a licensed Surveyor and Loss Assessor was engaged to evaluate the loss and also to explore the cause as to how the said fire originated. The Surveyor having visited the factory premises of the Complainant company on 19th and 20th April, 2011, submitted final report on 27.11.2011. From the survey report it revealed that the cause of damage was gradual and pre-existing leakage of boiler oil on the burning bhusi ( fuel) which aggravated the fire generally used to run the boiler. Further, the insured failed to produce any stock of either raw, semi finished or finished product in burnt condition and also failed to produce any production register , stock register, attendance register of workers as well as the salary register which led to an inevitable conclusion that the factory was completely silent before the purported incident of fire and the earlier fire that took place on 22.11.2010 was more vicious than the fire on 12.04.2011. It was further submitted that the fire dated 22.11.10 has not been disclosed by the Complainant in the proposal form in derogation to Clause 1 of the general conditions of the subject policy. Books and accounts of the Complainant also do not show the cost of repairs of the earlier fire loss which occurred on 22.11.2010. Therefore, there was material suppression of facts. The OP No.1 denied all material allegations and claimed that there was no deficiency in service on their part. They prayed for dismissal of the complaint.
OP No. 2, being the Surveyor and Loss Assessor, submitted in his W.V. that there was no privity of contract between the insured and the Surveyor-cum-Loss Assessor. The surveyor can not be held liable for any deficiency of service and the Complainant can not be termed as consumer of the answering OP No.2. The OP No.2 is not a necessary party . Therefore, the name of the OP No.2 is liable to be expunged.
Separate examination-in-chief of Sri Surendra Kumar Goyal and Sri Suresh Kumar Agarwal on behalf of the Complainant were filed as PW-1 and PW-3 respectively . Questionnaires filed by the O.P. were replied to by the Complainant. Further, respective evidence by the Complainant and the OP were submitted and questionnaires being raised . Replies were filed by the respective parties.
Both the Complainant and the O-1 have been heard through their Advocates.
Ld. Advocate appearing for the Complainant submitted that the fact of fire in the premises of the Complainant Company on 12.04.2011 has not been disputed . The grounds of repudiation taken by the Insurance Company are all imaginary in so far as though the factory was in running condition , it has been stated in the repudiation letter that the factory was under silent risk. There was again no suppression of any material fact in the proposal form though alleged as such in the letter of repudiation. All documents as asked for by the Surveyor vide his letter dated 05.08.2011 were supplied with replies/clarification vide their letter dated 24.08.11. The grounds for repudiation of the claim that fire brigade report of both the losses of 22.11.2010 and 12.04.2010 were not submitted are irrelevant in so far as there is no policy condition that such reports are mandatory for settlement of claim. In this connection Ld. Advocate referred to the decision of the Hon’ble Orissa State Consumer Disputes Redressal Commission as reported in II (2008) CPJ 217 wherein it has been held that repudiation on the ground of non submission of Fire Brigade report is untenable . Again the observation of the Surveyor that the loss was aggravated due to gradual and pre-existing leakage of boiler is not supported with any evidence on the part of the OP. No question of silent risk arises as the factory was in operation at the time of the incident of fire . The electric bills paid to the electricity authority showing consumption of power by the factory have been furnished to the surveyor who failed to take note of such bills paid. Further, the photographs of the burnt areas have been alleged to have been not fresh fire damage but those photographs as produced by the Surveyor were never shown to the Complainant, even those were not signed by the Complainant. It is again immaterial whether the fire that took place on 22.11.2010 was more vicious than the fire which occurred on 12.04.2011. In this connection Ld. Advocate referred to the observation of the Hon’ble Supreme Court as reported in IV (2009) CPJ 19 (SC) emphasising that the duration of fire was not relevant . The Complainant has not placed any demand for the damage suffered on 22.11.2010 . The claim relates to the damage caused on 12.04.2011 only. The Surveyor’s report is, therefore, not reliable as the surveyor failed to appreciate the papers and documents supplied to him as per his requirement. That the factory was in operation and production was in progress could be evident from the documents supplied, i.e. the Tax-cum-Excise Invoice dated 24.12.2010 , 02.02.2011 , 09.03.2011 , 28.05.2011 and electricity bills for the months of November 2010 , December 2010 , January 2011 , February 2011 , March 2011 and the labour payment records for October 2010 , November 2010 , December 2010 , January 2011 , February 2011 , March 2011 and April 2011. It is therefore an established fact that the factory was in operation while the fire took place . There was no misrepresentation, mis-descripition or non-disclosure of any material fact .
Ld. Advocate appearing for the OP-1/Insurance Company submitted that the Standard Fire and Special Peril Policy was issued on the basis of the proposal form filed by the Complainant who submitted the information from their own source. Surveyor appointed by the Insurance Company gave a detailed report from which it appears that the cause of damage was gradual and pre-existing leakage of boiler oil on the burning bhushi which aggravated the fire that used to run the boiler . The fire occurred because of negligence on the part of the Complainant to get the boiler repaired after the previous fire on 22.11.12010 and such fire has been admitted by the Complainant . Thus there was a suppression of material fact that the factory of the Complainant remained closed from 20.11.2010 to 12.04.2011 when the purported fire incident took place . This fact hits the warranty No. 5 i.e., silent risk of the subject policy. The Complainant failed to produce any expert opinion reverting the observation of the Surveyor and in such situation repudiation of the claim of the Complainant was very much within the scope and ambit of the subject policy . The failure of the Complainant to file necessary documents as asked for by the Surveyor including the fire brigade reports of both the fire incidents of 22.11.2010 and 12.04.2011 establishes the fact that there was suppression of material fact by the Complainant. It was again, not mandatory on the part of the OP Insurance Company to collect the fire brigade report from the concerned department as it was the Complainant’s duty to produce any document having evidentiary value before the OP Insurance Company in support of their claim. The Surveyor’s report could not be countered by the Complainant in any manner and on that basis the claim was repudiated , there being no deficiency in service on the part of the OP Insurance Company.
Decision with Reasons:
The points for consideration before us are :
Is the Complainant a consumer?
Was there any deficiency in service on the part of the OP(s)?
Is the Complainant entitled to the relief as prayed for?
It is a fact that the Complainant is engaged in a commercial venture but the insurance policy taken by the Complainant is for reimbursement or indemnification of the loss which has been suffered on account of the peril of fire. The question of trading or carrying on commerce in insurance policy in the present case does not arise. Hence, the hiring of service of insurance company by the present Complainant, as held by the Hon’ble National Consumer Disputes Redressal Commission reported in 1 (2005) CPJ 27 (NC), cannot be treated as a commercial activity. The Complainant is a consumer and the present case is maintainable under the provisions of the Consumer Protection Act.
We take up the other two points together for the sake of brevity of discussion and decision.
The case of the Complainant is that they obtained an Insurance Policy from the OP and during the currency of the policy a fire occurred on 12.04.11 in the boiler installed in the factory premises of the Complainant and there was , as per assessment of the Complainant , a huge loss amounting to Rs. 57,30,000/-.
On the other hand it was the case of the OP Insurance Company that the fire that took place in the factory of the Complainant on 22.11.2010 was not disclosed at the time of taking the policy in question. Again , non-submission of the Fire Brigade Reports in relation to the incidents of fire on 22.11.10 and 12.04.11 were not furnished before the Insurance Company and that the fire on 12.04.11 was an after effect of the fire on 22.11.2010.
The Surveyor’s report in the present case is an important document produced by the OP Insurance Company which shows , inter alia, that there was a fire in the factory on 22.11.2010 and the factory remained closed from that date. In this connection the Surveyor relied on a report published in a newspaper on 13.04.2011 wherein it was noted that the factory unit had a massive fire on 23.11.10 and since then the factory remained closed. As such the factory was on silent risk which was not declared by the insured in his proposal form. It is indeed unusual to note that no statement whatsoever was obtained from the Complainant or insisted upon by the Surveyor . A look at item No. 18 of the proposal form shows that no statement was recorded as to whether the factory was working or silent at the time of submitting the proposal form. The Insurance Company accepted such proposal form which was not filled in with necessary information. That evidently is not a fault on the part of the proposer . It is obviously the fault / lapse /negligence on the part of the Insurance Company that the proposal form was accepted without least scrutiny of information having material value in connection with issue of insurance policy. It was rather a presumption that the factory of the Complainant was in silent condition after the fire on 22.11.2010 . It is also found that the Insurance Company or the surveyor appointed by them never tried to ascertain from the Complainant the exact nature and extent of losses due to the fire on 22.11.2010. The surveyor determined the cause of fire to be gradual and pre-existing leakage of boiler oil on the burning bushi ( fuel) which aggravated the fire generally used to run the boiler, while the Complainant in their claim form submitted that due to leakage of oil from the radiation coil above the furnace , the oil aggravated the fire in furnace which again leaked and spread to other properties . The Surveyor’s presumption about the cause of fire is not , however , supported by any cogent evidence.
The OP Insurance Company appears to have relied heavily on the report of the Surveyor who in turn relied on a news item appearing in the newspaper about the working condition of the factory . Ld. Advocate appearing for the Complainant asserted that Hon’ble Supreme Court, as reported in AIR 1984 SC 1161 held that it is very difficult for a court to rely on news item published on the information given by the correspondent because they may not represent the true state of affairs . A news item without any further proof of what had actually happened through witnesses is of no value. It is at best a second hand secondary evidence. No other evidence being relied upon by the Surveyor for deciding about non-functioning status of the factory we decline to go with the presumption of the Surveyor that the factory was not working and all the losses were due to the fire dated 22.11.2010. There being two separate incidents of fire i.e., on 22.11.10 and 12.04.2011, the losses should have been assessed separately by the Surveyor but instead of such assessment , the entire loss has been said to be a pre-existing one which however, does not stand substantiated. At the same time, the Complainant even after admitting that there was a fire in the factory on 22.11.10 did not provide any statement as to how much losses took place on account of the fire on 22.11.10 and how much as a result of the fire on 12.04.2011. In the present case, the Complainant Company produced in support of working of the factory immediately before the reported fire electricity bills, attendance sheet of workers and payment voucher etc, before the Surveyor, but such documents have not been considered and no reason for that has been recorded in the survey report which appears to be in derogation to the actual state of affairs of the factory. There is, therefore, reason to presume that the Surveyor either negligently or wilfully ignored the documents produced by the Complainant .
It is again not mandatory that without fire brigade report the fact of incident of fire shall be disbelieved, as rightly pointed out by the Ld. Advocate appearing for the Complainant and referring to the decisions of the Hon’ble National Consumer Disputes Redressal Commission as reported in IV (2011) CPJ 390 (NC) and III (1993) CPJ 313 (NC) . The photographs which the Surveyor took and filed along with the survey report do not appear to have been shown to the Complainant for their signature and as such the evidentiary value of such photographs can not be taken into consideration.
Going by the above discussion we are of the considered view that the Complainant may be paid the sum of Rs. 16,32,248/- being the net loss assessed by the Surveyor with interest. The complaint succeeds in part.
Hence,
Ordered
That the complaint be and the same is allowed in part. The OP Insurance Company is directed to pay a sum of Rs. 16,32,248/- to the Complainant Company along with interest @ 8% p.a on the said sum w.e.f. the date of filing the claim form before the OP Insurance Company till full realisation. There shall be no order as to cost.
