Before the District Forum:Kurnool
Present: Sri K.V.H. Prasad, B.A., LL.B., President
Smt C.Preethi, M.A., LL.B., Member
Sri R.Ramachandra Reddy, B.Com., LL.B., Member
Wednesday the 15th day of December, 2004
C.D.No.155/2003
The Proprietor,
Y. Vasu Babu,
S/o. Rathaiah,
Sri Sai Seed Proceessing Unit,
D.No.1/636, M.G.Dairy Form,
Yemmiganur,
Kurnool Dist. . . . Complainant represented by his counsel
Sri M.L. Sreenivasa Reddy.
-Vs-
1.The Branch Manager,
M/s. United India Insurance Co. Ltd,
Adoni.
2. The Divisional Manager,
M/s United India Insurance Co. Ltd.,
Kurnool.
3. The Divisional Manager,
M/s. United India Insurance Co. Ltd,
Anantapur. . . . Opposite parties 1 to 3 represented by their
Counsel Sri Ms. C .M. K. Ranjani
O R D E R
(As per Smt C. Preethi, Member)
1. This CD complaint of the complainant is filed under section 12 of C.P. Act, 1986, seeking a direction on the opposite parties to pay Rs.5.00 lakhs towards damages of the stock held by the complainant, Rs.50,000/- towards compensation for mental agony, Rs.10,000/- towards costs of this complaint and any other relief or reliefs which the complainant is entitled in the circumstances of this case.
2. The gist of the complainant’s case is that the complainant is having a Ginning Unit under certificate No.550-B issued by A.P. State Seed Certification Agency, situated at D.No.1/636, M.G. Dairy Form, Yemmiganur. The nature of the unit is to process the seed cotton and collect the Ginning and delinted charges from the said seed cotton growers i.e farmers, who delivers seed cotton for the said ginning and processing purpose. The opposite parties knowing fully the business in the said unit of the complainant that the seed cotton (stock) of the farmers will be stored in the premises of the complainant and thus will get insurable interest on the stocks during the said processing period and informing the same to the complainant i.e the processing purpose will be covered under the policy and issued Standard Fire and Special Peril Policy bearing No. 051005/11/01/02765 and the said policy was in force from 6.11.2001 to 5.3.2002 describing the relevant coloums of the policy in the following way:-
S.No. Description Some insured in Rs.
1. Stocks in open (cotton in loose) 5,00,000/-
2. Stock in process (cotton in loose and seed) 2,00,000/- ___________
Total sum insured 7, 00,000/-
3. As per the policy conditions during the said policy period if any damage or loss up to Rs . 7 lakhs is caused to the stock held in the said premises of the complainant due to fire the opposite party No.1 has to pay the same to insured / complainant.
4. On 24.12.2001 at about 3.P.M the fire accident took place in the unit of the complainant and stock worth Rs.5,00,000/- was damaged and the same was intimated to the opposite parties and spot survey was conducted and loss was assessed to Rs.4,56,144/- and the said report was submitted to opposite parties for settlement of the claim. But to the dismay of the complainant the opposite parties repudiated the claim of the complainant through its communication dt 22.7.2003, on ground that the complainant has no insurable interest on damaged cotton stock held in his unit. As such the conduct of opposite parties in improperly repudiating the claim amounts to deficiency of service and the opposite parties are liable to pay insured amount for the loss suffered in the complainant’s unit.
5. In support of his case the complainant filed the following documents Viz (1) policy bearing No. 051005/00/01/02765 issued by opposite party No.1 to the complainant’s unit and (2) repudiation letter dt 22.7.2003 addressed by opposite party No.3 to the complainant besides to his sworn affidavit in reiteration of his complaint avernments and the above documents are marked as Ex A.1 & A.2 for its appreciation in this case.
6. In pursuance of the receipt of the notice of this Forum as to this case of the complainant the opposite parties appeared through their standing counsel and contested the case by filing denial separate written versions questioning the maintainability of the complainant’s case either in law or on facts.
7. The written version of opposite party No.1 admits the complainant has taken a Fire and Special Peril policy for covering the loss to cotton seed of the complainant which were stored in the factory premises but not for the stocks belonging to various growers (farmers) even under “Goods held in trust or commission” provision. As per the policy issued to the complainant, risk is not covered for the loss occurred to various cotton seed growers who kept their stock in the premises of the complainant’s unit. Therefore, the opposite party No.1 is not liable for the loss of cotton stock in the alleged fire accident which occurred on 24.12.2001 in the premises of the complainant’s unit. After receiving information from the complainant with regard to fire accident, the opposite party No.1 deputed a surveyor to find out the stocks to assess the loss etc. After verification of all relevant records the opposite party No.1 learned that the stock that was affected in the fire accident belongs to various growers and they have kept their stocks in the premises of the complainant for ginning, linting and delinting purposes. The complainant’s stock has not suffered any loss due to fire accident and the complainant has no insurable interest to the stocks damaged, hence, the opposite parties rightly repudiated the claim of the complainant.
8. The written version of opposite party No.2 submits that it has noting to do with the claim of the complainant, as policy was not issued by them and the same was not repudiated by them with regard to the alleged fire accident in the premises of the complainant’s unit and there is no cause of action for the complainant against the opposite party No. 2, hence, seeks for the dismissal of complaint in limine against the opposite party No.2 with costs.
9. The written version of opposite party No.3 denies the allegations made by the complainant in his complaint averments and admits the complainant has taken a Fire and Special Peril Policy for covering the loss to the cotton stocks belonging to the complainant which were stored in the factory premises but not for stocks belonging to various growers (farmers) who stored their stocks in the factory premises of the complainant. The complainant did not cover growers stock which was kept in the factory premises even under the special clause of ‘Goods held in trust or commission’ provision, as there is no insurable interest on the part of the complainant to consider his claim, as risk is not covered to the stocks belonging to various growers (farmers), as per the policy issued to the complainant. Hence, the opposite parties are not liable for the loss of cotton stock in the alleged fire accident which occurred on 24.12.2001. It further submits that after receipt of information from the complainant with regard to the fire accident opposite party No.1 deputed a surveyor to find out the stocks and to assess the loss etc. After verification of all the relevant records the opposite party No.1 learnt that the stocks that were effected in the fire accident belongs to various growers and they have kept their stock in the premises of the complainant for ginning, linting and delinting purpose. The records also reveal that the complainant has not suffered any loss to his stock and the stock that was damaged in the fire accident belongs to various growers and the complainant has no insurable interest in the above said stocks. Therefore, the complainant’s claim has been rightly repudiated by the opposite parties as there is no merit in the complainant’s claim. The opposite party No.3 finally alleges that the complainant was engaged in commercial activity and there is no jurisdiction for this Forum to entertain the complaint of the complainant and Civil Court is proper jurisdiction for the complainant to seek relief and seeks for the dismissal of complaint.
10. In support of its case the opposite parties filed the following documents Viz (1)Fire Survey Report dt 8.4.2002 issued by Peddaiah T, Insurance Surveyor, (2) Xerox copy Ginning unit renewal certificate dt 1.1.2000 issued by A.P. State Seed Certification Agency, (3) Xerox copy of Certificate of Registration by Commercial Taxes Department to the complainant’s unit (4) Annexure to Growerwise damaged loose lint particulars (effected due to fire) relating to M/s Sri Sai Seed Processing Unit, Yemmiganur (5) Abstract of effected lint of M/s Sri Sai Seed Processing Unit, Yemmigaur, (Growerwise) (6) Abstract of lint stock as on 24.12.2001 of M/s Sri Sai Seed Processing Unit, Yemmiganur (7) Annexure 1 extract from Ginning Book of Seed Cotton Receipts/ process as on 24.12.2001 of the complainant’s unit and (8) Ginning particulars abstract from 29.10.2001 to 13.2.2001 of the complainant’s unit, besides to its sworn affidavit in reiteration of its written version as defence and the above documents are marked as Ex B.1 to B.8 for its appreciation in this case.
11. Hence the point for consideration is to what relief the complainant is entitled alleging deficiency of service on the part of the opposite parties:-
12. It is not in dispute that the complainant has taken a Fire and Special Peril policy from opposite parties and the alleged fire accident on 24.12.2001 and the stock in the complainant’s unit was damaged due to the said fire accident.
13. The dispute between the parties centers round a simple question as to whether the policy issued by opposite parties to the complainant covers the stock of the complainant only or the stock of various growers kept in the complainant’s unit for Ginning, Linting and Delinting process. It is the categorical case of the complainant that he is the owner of Sri Sai Seed processing unit in question and that it was insured with opposite party No.1 covering the stocks in open (cotton in loose ) for Rs.5,00,000/- and stocks in process (cotton in loose and seed) for Rs.2,00,000/- totaling Rs.7,00,000/- and risks covered is “Ginning & Processing Unit” (cotton ginning and pressing) under policy bearing No.051005/11/01/02765 and the said policy was in force from 6.11.2001 to 5.3.2002 . On 24.12.2001 at about 3 P.M fire accident took place in the unit of the complainant and stock worth Rs.5,00,000/- was damaged. On intimation surveyor was appointed and he assessed loss to Rs.4,56,144/- the claim put forth by the complainant was repudiated on 22.7.2003 on the ground that the stocks are not of the complainant but belongs to various growers.
14. It is not disputed that fire accident took place in complainant’s unit and the stock worth Rs.5,00,000/- was damaged due to the said fire accident. The allegation of the opposite parties is that on intimation by the complainant surveyor was deputed to assess the loss and on scrutiny and verification, it was observed that the stock damaged belongs to various growers and does not belongs to the complainant. This kind of loss is covered by “Goods held in trust or commission” provision, which is not opted for. Therefore the claim was repudiated. The complainant submitted that the opposite parties fully aware of the method undertaken in the said unit, that seed cotton (stock) of the farmers will be stored in the premises of the said unit for ginning, linting and delinting purpose, issued Fire and Special Peril policy, which covers the risk to the stocks stored in the said unit for the said processing period and thus the complainant will get insurable interest on the said stocks. As there is nothing clearly mentioned in the terms and conditions of the policy sought to be relied upon by the opposite parties, and in the absence of any supporting material the said allegation of opposite parties remain as allegation for allegation sake without any basis. There is total vagueness in policy and the insurer have not incorporated the relevant clauses clarifying which risk is covered and which is not covered or exceptions there of or exclusionary clause. It is the duty of insurer and their agent to disclose and draw attention to the material facts within their knowledge, particularly that policy would cover only specified risks. The complainant placed reliance on the ruling of the Hon’ble National Consumer Disputes Redressal Commission, New Delhi, reported in 2004 (2) CPR pg 4, between M/s S.K. Exports Pvt Ltd Vs New India Assurance Co Ltd and others, held that, if there is any ambiguity with regard to the clauses in the insurance policies, it is settled Law that where two interpretations are reasonable possible one which favours policy holders is to be accepted. In the present case it is apparent that fire accident is direct cause to damage the stock stored in the complainant’s unit. The complainants contention is that he holds insurable interest to the stocks stored in his unit and that he paid required premium accordingly and the complainants unit was covered under the above said policy. As against to this, it was pointed out by the learned counsel for the opposite parties that the said policy does not cover growers stock which was kept in the complainant’s unit and covers only the complainant’s stock, but the policy did not have any endorsement as to which risks is covered and which risks is not covered. The cover note specifically provides insurance cover is for stocks in open (cotton in loose) and stocks in process (cotton in loose and seed) and risk is covered to complainants unit. Following the above mentioned ruling, when there is any ambiguity with regard to the clauses in the insurance policy, it should be interpreted in favour of the insured and against the insurance company. As such, the complainant is perfectly remaining entitled to claim the insured amount under the said policy.
15. The next aspect to be considered is whether the complainant was engaged in commercial activity or not, the complainant placed reliance on the following citation of National Consumer Disputes Redressal Commission, New Delhi, reported in 2004 (1) CPR 7(NC) between M/s Gulab Industries Pvt Ltd VS M/s RNG Suiting Limited. Where in, it was held that rendering of service even for commercial purpose would not oust jurisdiction of Consumer Forum. The complainant might have engaged in commercial activity, but the transaction between the parties must be commercial, in nature rendering of service even for commercial activity had not been ousted from the jurisdiction of this Forum, and it was only in respect of goods such a bar on jurisdiction existed.
16. The next allegation of the opposite parties is that Civil Court is proper Court for the complainant to file his complaint. The complainant relied on the following citation Supreme Court, reported in 2003 SAR, (Civil) Pg 835, where in, it was held that Foras have been constituted with the object of providing summary and speedy remedy, merely because recording evidence is required and some questions of fact and law arise which would need to be investigated and determined, cannot be a ground for shutting the doors of any Forum. Hence, the above said allegation is not accepted.
17. The other decision relied by the complainant is of A National Commission reported in 2004 (4) ALT Pg 10 CPA, between Ashoka Tyre House Vs Oriental Insurance Company Limited, where in it was held that insurance company issued policy to the complainant knowing fully well the method of account keeping by the complainant. Therefore insurance company is liable to pay insured amount. Hence, the above said allegations of the opposite parties are rejected.
18. From the discussion made above, it is apparent that the stock stored by the complainant in his unit was damaged due to fire accident and the policy is issued knowing fully aware of the process of complainant’s unit and the policy is silent to the risks which are covered and which are not covered, and if there is any ambiguity with regard to clauses, it is settled law that it should be interpreted infavour of the insured. Therefore, the opposite parties illegally repudiated the claim of the complainant to which the complainant is perfectly remaining entitled.
19. The next questions which require determination is what should be the quantification of the loss suffered by the complainant.
20. The surveyor’s report in Ex B.1 assessed the loss to Rs.4, 46,144/- only. There is nothing in the affidavits filed by opposite parties that the said assessment was in any way erroneous. In this view of the matter, on the basis of surveyor’s report, the complainant is entitled to have at least the said amount of Rs.4,46,144/-
21. In the result, the complaint is allowed directing the opposite party No.1& 3 to pay insured amount of Rs.4,46,144/- to the complainant with 9% interest per annum from the date of the fire accident till realization, along with Rs.10,000/- each towards costs and compensation within a month of the receipt of this order.
Dictated to the Stenographer, Typed to the dictation corrected by us, pronounced in the Open Court this the 15th day of December, 2004.
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PRESIDENT
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MEMBER MEMBER
APPENDIX OF EVIDENCE
Witnesses examined
For the Complainant: Nil For the opposite parties:Nil
Exhibits marked for the Complainant:
Ex.A1 Policy No.051005/11/01/02765 issued by the opposite party No.1 to the
complainants firm
Ex.A2 Letter dated 22-7-2002 addressed by opposite party No3 to the complainant.
Exhibits marked for the Opposite parties:
Ex.B1 Fire survey report dated 8-4-2002 issued by Peddaiah. T Insurance
Surveyor
Ex.B2 Ginning unit renewal certificate dated 1-1-2000 issued by A.P. State Seed
Certification Agency (Xerox)
Ex.B3 Xerox copy of certificate of Registration by commedical taxes to the
complainants unit
Ex.B4 Annexure –II grower wise damaged loose lint particulars (affected due to
fire) relating to M/s Sri Sai Seed Processing Unit, Yemmiganur
Ex.B5 Abstract of affected lint of M/S. Sri Sai Seeds Processing Unit,
Yemmiganur (Grower wise)
Ex.B6 Abstract of lint stock as on 24-12-2001 of M/s Sri Sai Seed Processing
Unit, Yemmiganur
Ex.B7 Annexure –I extract form ginning book of send cotton receipts /process as
on 24-12-2001 of complainant’s unit
Ex.B8 Ginning particulars abstract from 29-10-2001 to 13-12-2001 of
complainant’s unit.
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PRESIDENT
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MEMBER MEMBER
