Haryana

Karnal

CC/648/2021

M/s Karan Feeds - Complainant(s)

Versus

The Division Manager, The Oriental Insurance Company Limited - Opp.Party(s)

V.K. Kapoor

26 Jul 2022

ORDER

BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION, KARNAL.

 

                                                       Complaint No. 648 of 2021

                                                        Date of instt.23.11.2021

                                                        Date of Decision:26.07.2022

 

M/s Karan Feeds plot no.38-39 Sector-3, HSIIDC, Karnal, through its proprietor Shri Ashok Kumar (Aadhaar no.6052 6203 9764)

 

                                               …….Complainant.

                                              Versus

 

The Divisional Manager, Oriental Insurance Company Ltd., Branch Office, Meera Ghati Karnal.

                                                                      …..Opposite Party.

 

Complaint Under Section 35 of Consumer Protection Act, 2019.

 

Before   Sh. Jaswant Singh……President.       

      Sh. Vineet Kaushik…….Member

      Dr. Rekha Chaudhary….Member

 

 Argued by: Shri V.K. Kapoor, counsel for the complainant.

                    Shri Ram Mehar, counsel for the opposite party.

 

                    (Jaswant Singh President)

ORDER:   

                

                The complainant has filed the present complaint Under Section 35 of Consumer Protection Act, 2019 against the opposite party (hereinafter referred to as ‘OP’) on the averments that complainant is running the business of manufacturing of cattle feeds Khal, Binolas, Finished goods, semi-finished goods, packing material and stock of all type of raw material, rice bran D.O.C. in his godown situated in plot no.38-39 Sector-3, HSIIDC, Karnal. The complainant had purchased insurance policy no.261301/11/ 2017/829, vide cover note no.AMB.386846 dated 24.09.2016 to save guard his abovesaid stock by taking Fire/STIF/Floater insurance policy, valid from 29.09.2016 to 28.09.2017 for sum insured of Rs.50,00,000/- and paid a premium of Rs.6721/-. It is further averred that the abovesaid policy got extended/endorsed for a sum of Rs.1,25,00,000/- on 17.03.2017, vide endorsement no. 261301/11/2017/829/001 for covering the risk of fire, STIF for their extra stock in their godown and further paid premium amount of Rs.5385/- for the period of 17.03.2017 to 28.09.2017. Unfortunately, on 17.04.2017 fire broke out in the godown of the complainant in the morning  hours due to electric short circuit in the godown and entire stock material which includes rice bran packed in bags and other material had been reduced into ashes. The complainant immediately intimated to the fire station office of Municipal Corporation at Sector-4, Karnal and fire man extinguished the fire with the great difficulty with the help of fire brigade reached at the spot at 13.15 hours. The fire brigade office duly endorsed the incident as well as cause of fire and loss of stock mentioned in their register vide serial no.221. The matter was reported to the police post Sector-4, Karnal on the same day, vide DDR no.28 dated 17.04.2017. The intimation was sent by the complainant to the OP regarding the said incident. On receipt of intimation, OP appointed a surveyor, who visited the spot and complainant completed all the formalities as required and the necessary documents were also supplied to the surveyor of the OP. The surveyor inspected the spot and taken necessary photographs. The complainant had suffered a loss to the tune of Rs.19,42,349/- approximately and in this regard duly supplied the bills of their respective stock to the surveyor. The premises of the complainant is having a electricity connection bearing account no.7762520000 since so many years and the electric wires fitted in the entire godown alongwith the electricity meter as shown in the photographs. The complainant visited the office of OP several times regarding his claim and OP demanded various documents such as detail of estimate of loss, copy of FIR Report, copy of fire brigade report, balance sheet, account statement and purchase bill of rice bran, sale purchase of the account from the period of 01.04.2016 to 16.04.2017, proof of ownership premises and detail statement about the occurrence of loss vide register dated 16.02.2018 by the surveyor and entire documentary evidence had been provided by the complainant to the OP as well as their surveyor. Thereafter, complainant visited the office of OP several times and requested to settle his claim but OP did not pay any heed to the request of complainant and lingered the matter on one pretext or the other and lastly repudiated the claim of the complainant on 30.11.2018 on the ground of spontaneous combustion and same is not covered under the policy as well as there was no electrical fitting inside the godown.  The complainant got shocked to receive the said letter of no claim on the filmsy ground as the dictionary meaning of the spontaneous combustion is the phenomenon in which a hydrocarbon (chemical substance) can be unexpectedly bursts into the flame without apparent cause. It is further averred that the entire stock of the complainant are not consisting of any chemical substance which can be unexpectedly bursts into the flames. This fact of the complainant is very much proved by the bills, statement of account of loss of stock duly provided to the OP. The nature of work of the complainant is manufacturing of cattle feeds, khal, binola etc. there is no chemical is required for the abovesaid material. The entire concocted and hypothetical story without any documentary evidence had been planted by the surveyor of the OP just to reject the genuine claim of the complainant. The complainant sent a legal notice dated 21.01.2019 but it also did not yield any result. In this way there is deficiency in service on the part of the OP. Hence this complaint.

2.             On notice, OP appeared and filed its written version raising preliminary objections with regard to maintainability and concealment of true and material facts. On merits, it is pleaded that the policy bearing no. 261301/11/2017/829 dated 17.03.2017  was issued by the OP to the complainant and same was also extended for the sum assured but it is denied that the spontaneous combustion is covered under the policy and no premium for this peril has been paid by the complainant. It is further pleaded that the information was received by the OP and immediately investigator and the surveyor was deputed to assess the loss and cause of fire alongwith the other formalities. As per the report, there was no electrical connection in the godown. It is further pleaded that complainant has provided all the requisite documents and completed the required formalities but the claim of the complainant declared as No Claim by the concerned authority of the company after recommendation from the surveyor and the investigator on the ground that the present fire case is a case of spontaneous combustion is not covered under the policy. Thus, the claim of the complainant has rightly been repudiated by the OP. There is no deficiency in service on the part of the OP. The other allegations made in the complaint have been denied by the OP and prayed for dismissal of the complaint.

3.             Parties then led their respective evidence.

4.             Learned counsel for complainant has tendered into evidence affidavit of Ashok Kumar proprietor Ex.CW1/A, copy of orders dated 25.10.2021 and 28.10.2021 Ex.C1 and Ex.C2, copy of order/permission dated 28.10.2021 Ex.C3, copy of cover note Ex.C4 and Ex.C5, Provisional Covernote Ex.C6, copy of insurance policy Ex.C7 and Ex.C8, copy of receipt Ex.C9, copy of report of fire station Ex.C10, copy of DDR Ex.C11, copy of statement of account Ex.C12, copies of bills Ex.C13 to Ex.C39, copy of receipt no.96534 Ex.C40, copy of provision trading account Ex.C41 to Ex.C43, copy of letter dated 16.02.2018 Ex.C44, copy of repudiation letter Ex.C45, copy of legal notice Ex.C46, postal receipt Ex.C47, acknowledgement Ex.C48, reply to legal notice Ex.C49, copies/original of electricity bills Ex.C50 to Ex.C55, copy of sale deed Ex.C56 and closed the evidence on 07.03.2022 by suffering separate statement.

5.             On the other hand, learned counsel for the complainant has tendered into evidence affidavit of Sanjeev Madan, Senior Divisional Manager Ex.OP1/A, affidavit of Gurmeet Singh approved Insurance Investigator Ex.OP1/C, affidavit of CA N.S. Sidhu, Director Ex.OP1/B, copy of insurance policy Ex.OP1 and Ex.OP2, copy of terms and conditions of the insurance policy Ex.OP3, copy of survey and assessment report Ex.OP4, copy of investigation report Ex.OP5, copy of pre-repudiation letter dated 29.10.2018 Ex.OP6, copy of repudiation letter dated 30.11.2018 Ex.OP7 and closed the evidence on 10.06.2022 by suffering separate statement.

6.             We have heard the learned counsel for the parties and perused the case file carefully and have also gone through the evidence led by the parties.

7.             Learned counsel for complainant, while reiterating the contents of the complaint has vehemently argued that the complainant is running the factory under the name and style of M/s Karan Feeds at plot no.38-39 Sector-3, HSIIDC, Karnal and was engaged manufacturing of cattle feeds Khal, Binolas, Finished goods, semi-finished goods, packing material and stock of all type of raw material, rice bran D.O.C. in his godown. Complainant got insured his aforesaid factory from the OP for the sum insured of Rs.1.25 crores for any kind of loss and paid premium to the tune of Rs.12106/- (Rs.6721+5385). During subsistence of the insurance policy, unfortunately on 17.04.2017, fire broke out in the godown in the morning hours due to electrical short circuit and entire stock material had been reduced into ashes. In this regard, complainant immediately informed the fire station, Karnal and fireman extinguished the fire. On the same day the matter was reported to the police post Sector-4, Karnal. The complainant also informed the OP regarding the said incident. The surveyor was appointed by the OP, who has visited the spot and complainant provided all the required documents. The surveyor inspected the spot and taken necessary photographs. The complainant had suffered a loss to the tune of Rs.19,42,349/-. The premises of the complainant having a electricity connection since so many years and electric wires fitted in the entire godown. Complainant has received a repudiation letter dated 30.11.2018 from the OP being No Claim, on the ground of spontaneous combustion and same is not covered under the policy as well as there was no electrical fitting inside the godown whereas complainant is having electricity connection and the entire godown was fitted with the electric wires. The stand of the OP is totally nullify just to make the excuse for rejecting the genuine claim of the complainant and lastly prayed for allowing the complaint.

8.             Per contra, learned counsel for the OP, while reiterating the contents of written version, has vehemently argued that premises of the complainant was not covered under the policy as the present case was of spontaneous combustion and same is not covered under the policy and no premium for this peril was paid by the complainant. As per the surveyor and the investigation reports, there was no electrical connection in the godown so the claim of the complainant has rightly repudiated by the OP and lastly prayed for dismissal of the complaint. Learned counsel for OP relied upon the authority of Hon’ble National Commission in case titled as Rohtash & Anr. Versus United India Insurance Company Ltd. in appeal no.47/2007, decided on 01.11.2017.

9.             We have duly considered the rival contentions of the parties.

10.           There is no dispute that factory of the complainant which is the manufacturer of cattle feeds Khal, Binolas, Finished goods, semi-finished goods etc. was insured with the OP. Admittedly, the incident of fire took place during the subsistence of insurance policy. It is also admitted that the intimation was given to the OP without any delay. It is also admitted that total stock lying in the godown had been burnt in the said incident. The claim of the complainant has been repudiated by the OP, vide repudiation letter Ex.OP7/Ex.C45 dated 30.11.2018 on the ground that loss occurs due to the peril spontaneous combustion which is not covered under the policy.

11.           The first question, which falls for consideration is that whether the incident occurred due to spontaneous combustion or electric short circuit?

12.           The surveyor as well as the investigator of the OP came to the conclusion that incident took place due to spontaneous combustion and there was no electricity fitting in the godown of the complainant. Onus to prove this is relied upon the OP, but OP has miserably failed to prove the same by leading any cogent and convincing evidence. It has been specifically mentioned in the survey report Ex.OP4, that surveyor of the OP had taken the photographs of the incident but OP has failed to place on file the alleged photographs to prove its version. It has also been mentioned in said report that the stock of the rice bran was badly burnt and damaged by the fire. In clause 4.5 of survey report it has been specifically mentioned that insured is financially sound and enjoys a good reputation in the market and annual turnover of the insured firm during the financial year 2016-2017 was Rs.12.13 crores. Further, in clause 5.3 of the said report has also mentioned that the construction of the godown is ‘A’ class i.e. walls built of burnt building bricks set in cement mortar duly plastered and has RCC slab roof. In that situation, it is unbelievable that the said godown was/is without having any electricity facility. It is also admitted facts that the complainant was/is doing the business of manufacturing of the cattle feeds Khal, Binolas, Finished goods, semi-finished goods, packing material and stock of all type of raw material, rice bran etc. at a large scale. Possibility of raw material comes in the godown premises at late night which requires light to unload the material is not ruled out and it is impossible to unload the same without light. It is also admitted by the surveyor of the OP that the construction of the godown is ‘A’ class and then as to why there would be no facility of electricity. It is also admitted fact that the material lying in the godown has become totally damaged and converted into ashes. Furthermore, possibility to burn the electric wires in the said incident could not be ruled out.  In view of the above, the version of the OP is not believable. Rather, complainant has proved on record by placing the electricity bills Ex.50 to Ex.C55 that the premises of the complainant was having electricity connection since long. Further, it is also proved from the report of fire station Ex.C10 and from the DDR Ex.C11 that incident took place due to electric short circuit. Admittedly, the incident took place on 17.04.2018 and the investigator of the OP visited the spot on 17.10.2018 after the gap of six months. The investigator has given his findings on the same lines as given by the surveyor. Hence, the report of the investigator is also having no weightage. In view of the above discussion, we are of the considered view that incident took place due to electric short circuit and not due to spontaneous combustion as allege by the OP.

13.           In clause 13.7 of survey report Ex.OP4 it has been specifically mentioned that the damaged stock has no salvage value as the rice bran is used for cattle feed and the burnt rice bran cannot be used for the same. However, the partly damaged stock was segregated and whatever was possible has been recovered. Thus, no deduction on account of salvage has been made.  The assessment of loss is as under, subject to policy terms and conditions and amount of policy of insurance:

Particulars                                                     Amount (Rs.)

Total damaged stock (as per weighing slips)                             13.73.25 qtl.

Less:10% on a/c of water & other debris contents              137.33 qtl.

Net damaged Quantity                                                         1235.92 qtl.

Rate allowed per qtl.                                                         1433.57

Total Amount                                                                17,71,778.00

Less: Dead Stock 2.5%                                                       44,294.00

                                                                                      17,27,483.00

Less: Under Insurance 40.53%                                       7,00,149.00

                                                                                      10,27,335.00

Less: Policy Excess 5%                                                     51367.00
                                                                                      9,75,968.00

__________________________________________________________

Add:  JCB Charges                  22,500.00

Add:   Tractor Trolley                  6,000.00

Add:   Labour Charges              20,000.00

                                                48,500.00

Against Rs.48,500/- claimed by insured, debris

removal expenses has been allowed.

Add: fire fighting charges

Net Insured Loss:                                                        9,88,486.00

 

14.           The next question for consideration is that whether the deduction of 10% i.e. 137.33 quintals was rightly done by the OP or not?  In this regard, learned counsel for the complainant has submitted that act of the OP to deduct 10% on account of water and other debris content is not justified. In the present case, OP has wrongly deducted the 137.33 quintals from the damaged stock on the ground that water and other debris contents mixed with the damaged stocks. Admittedly, the stocks was become totally damaged and converted into ashes  then  weight of the ashes cannot be gone to the higher side from the weight of actual material if the water and debris contents mixed.  Hence, the deduction of the 137.33 quintals from the damaged stock is not justified.

15.           The next question for consideration is that whether the deduction of the Dead Stock of Rs.44,294/- was rightly done by the OP or not?  In this regard, learned counsel for the complainant submits that the stock of the complainant was totally burnt in the incident and deduction of the said amount is neither justified nor explained by the surveyor of the OP.  In this regard, we are not agreed with the contention of the learned counsel for the complainant. The said deduction was on account of dead, slow moving, expired, normal wastage of the stock has been made. The stock comprised of ingredients of cattle feeds. All these items are having limited self like and also prone to rate fluctuation as per the crop and availability. Hence, OP has rightly made the said deduction.

16.           The next question for consideration is that whether the deduction of Under Insurance of Rs.7,00,149/- was rightly done by the OP or not? Learned counsel for the complainant has submitted that OP has wrongly deducted the said amount without explaining any reason. OP has not shown any terms and conditions in the insurance policy to deduct the huge amount from the loss occurred in such type of incidents. The surveyor of the OP also has not explained on what basis such huge deduction was done. Furthermore, the report of the surveyor seems to be on the ground of presumption and assumption, which is not admissible in the eyes of law. Hence, the said deduction is not justified.  

17.           The next question for consideration is that whether the deduction of 5% i.e. Rs. 51,367/- was rightly done by the OP or not? In this regard, learned counsel for complainant has submitted that it is not mandatory to deduct 5% amount from every claim amount, however, it can be deducted only in exceptional cases but in this case the OP has wrongly deducted the said amount which is not justified. Admittedly, there is an excess clause in the insurance policy and as per that clause insurance company has right to deduct 5% of the insured amount. Since, there is a clause in the insurance policy, therefore, the OP has right to deduct the said amount. Hence, plea taken by the complainant has no force.

18.           The complainant has claimed loss to the tune of Rs.19,42,349/-. As per surveyor report the stock of the complainant had totally burnt. So, we are of the considered view that deductions relating to 137.33 quintals i.e less 10% on account of water and other debris contents and Rs.7,00,149/- less under insurance @ 40.53% are not justified. The surveyor’s report in this regard is thus arbitrary, unjustified, biased, based on presumptions and assumptions and it is not last word for determination of actual loss. In this regard, we rely upon the judgment of the Hon’ble Supreme Court of India in case titled as New India Assurance Company Limited vs. Pradeep Kumar (2009 (6) SCALE, 253) wherein it was held that “The surveyor’s report is not the last and final word. It is not that sacrosanct that it cannot be debarred from, it is not conclusive. The approved surveyor’s report may be basis or foundation for settlement of a claim by the insurer in respect of the loss suffered by the insured but surely such report is neither binding upon the insurer nor insured.” This proposition of law was followed by the Hon’ble Apex Court in Sikka Papers Limited vs. National Insurance Company Ltd. & Ors. (III (2009) CPJ 90 (SC). The Hon’ble Chhatisgarh State Consumer Disputes Redressal Commission, Raipur in case titled as Oriental Insurance Co. Ltd. & Anr. Versus Pukhraj Bothra, IV (2004) CPJ 615 has held that “it is true that normally the estimate of surveyor regarding loss has to be given due consideration but it cannot be said to be the last word for determination of actual loss. The above said authorities are fully applicable to the facts and circumstances of the present case. In the present case, we are also of the considered opinion that the surveyor has assessed the loss favouring the opposite party and, therefore, same cannot be given more weightage. 

19. Further,  Hon’ble Punjab and Haryana High Court in case titled as New India Assurance Company Ltd. Versus Smt. Usha Yadav & others 2008 (3) RCR (Civil) 111, has held as under:-

                It seems that the Insurance Companies are only interested in earning the premiums which are rather too stiff now a days, but are not keen and are found to be evasive to discharge their liability. In large number of cases, the Insurance companies make the effected people to fight for getting their genuine claims. The Insurance Companies in such cases rely upon clauses of the agreements, which a person is generally made to sign on dotted lines at the time of obtaining policy. This is, thus pressed into service to either repudiate the claim or to reject the same. The Insurance Companies normally build their case on such clauses of the policy, but would adopt methods which would not be governed by the strict conditions contained in the policy.

 

20.           Keeping in view the ratio of the law laid down in the abovesaid judgments, facts and circumstances of the complaint, we are of the considered view that act of the OP amounts to deficiency in service and unfair trade practice. 

21.           The complainant has claimed Rs.19,42,349/- but as discussed upon the surveyor report the loss comes to Rs.18,72,989/-.  Hence the complainant is entitled for the amount said amount alongwith interest, compensation and litigation expenses etc.

22.           Thus, as a sequel to abovesaid discussion, we allow the present complaint and direct the OP to pay Rs.18,72,989/- (in round figure Rs.18,72,900/-) (Rs. eighteen lakhs seventy two thousand nine hundred only ) to the complainant alongwith interest @ 9% per annum from the date of repudiation of the claim till its realization. We further direct the OP to pay Rs.25,000/- to the complainant on account of mental agony and harassment and  Rs.11,000/- towards the litigation expenses. This order shall be complied with within 45 days from the receipt of copy of this order. The parties concerned be communicated of the order accordingly and the file be consigned to the record room after due compliance.

Dated:26.07.2022     

                                                               

                                                                  President,

                                                     District Consumer Disputes

                                                     Redressal Commission, Karnal.

 

(Vineet Kaushik)        (Dr. Rekha Chaudhary)                  

Member                         Member