BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM VAZHUTHACAUD : THIRUVANANTHAPURAM
PRESENT:
SHRI. G. SIVAPRASAD : PRESIDENT SMT. BEENA KUMARI .A : MEMBER SMT. S.K. SREELA : MEMBER
O.P.No. 418/2003 Filed on 16/10/2003
Dated: 15..09..2009 Complainant: M. Viswambaran, Vayalvaram, Anandeeswaram Road, Aryanadu-P.O., Nedumangad, Thiruvananthapuram. (By Adv.V.C. Anil Kumar) Opposite parties: The Oriental Insurance Co.Ltd., Rohini Buildings, Thakaraparambu Road. Thiruvananthapuram. (By Sri. B. Ravi Kumar) The Branch Manager, Canara Bank, Parandode, Aryanadu-P.O., Nedumangad, Thiruvananthapuram. (By Adv. S. Rajeev) The Director, Khadi & Village Industries Commission, State Office, Thiruvananthapuram.
This complaint is disposed of after the period so specified under the Consumer Protection Act, 1986. Though the case was taken up for orders by the predecessors of this Forum on 23/02/2006, the order was not prepared accordingly. This Forum assumed office on 08..02..2008 and re-heard the complaint. This O.P having been heard on 17..08..2009, the Forum on 15.09..2009 delivered the following: ORDER
SHRI.G. SIVAPRASAD, PRESIDENT:
The facts leading to the filing of the complaint are that the complainant started a Kiln (Bricks Unit) with the approval of the 3rd opposite party, Director, Khadi & Village Industries Commission and with the financial assistance of the 2nd opposite party, Canara Bank, Parandode, that the said Bricks unit was insured with the 1st opposite party, the Oriental Insurance Co. Ltd vide policy No.1309/02, that as per the terms and conditions of the loan agreement the 2nd opposite party was liable to remit the insurance premium, that on 8/4/2002 at 7 P.M the said Bricks Unit caught fire, the whole Kiln including the bricks which were under the manufacturing process (around 1 ½ lakhs bricks) were over burnt, and materials stocked for production of bricks such as poles, wooden materials, fire wood amounting to Rs. 1 lakh were burnt into ashes, and that the unexpected disaster caused huge amount of financial loss valued at Rs. 4,00,000/-, that immediately after the said incident, the complainant informed the same to 2nd opposite party, and that the Local Police and Fire Force rushed to the spot and made all arrangements for controlling the fire. It is submitted that the Village Officer of the village concerned visited the spot and estimated a total loss at Rs. 4 lakhs, that since the insurance premium is remitted by the 2nd opposite party, it is their duty to inform the 1st opposite party regarding the incident in order to get the benefit of insurance claim, and that the 2nd opposite party failed to communicate the same to the 1st opposite party thereby 2nd opposite party committed clear negligence in performing their duty. It is submitted further that the failure of 2nd opposite party to inform the accident to the 1st opposite party and thereby not allowing the insurance claim amounts to deficiency in service on the part of the 2nd opposite party, and that although the complainant had informed the 1st opposite party about the incident, 1st opposite party denied the claim. Hence this complaint to direct the 1st opposite party to release the insurance claim of Rs.4,00,000/- along with Rs.25,000/- towards compensation and Rs.5,000/- towards cost to the complainant. 2. 1st opposite party filed version contending that the complaint is not maintainable either in law or on facts, that there is no deficiency in service on the part of 1st opposite party, that the complainant or the 2nd opposite party did not intimate the 1st opposite party about the alleged fire accident in time, that the complainant intimated the 1st opposite party about the fire occurrence on 22nd May 2003 ie.after the lapse of 13 months from the date of occurrence, that on 22/05/2003 the complainant requested to issue a claim form and the same was issued, a licenced surveyor and loss assessor was authorised to conduct a detailed survey to assess the alleged loss, but he found the bricks unit in a running condition, that as per the policy condition, intimation regarding the alleged occurrence is to be given to the 1st opposite party immdiately after the alleged accident, but the complainant violated the policy condition. Because of this inordinate delay the surveyor was unable to assess any loss alleged to have sustained by the complainant, that this situation was brought into existence solely due to the laches and negligence on the part of the complainant. Complainant has not sustained any loss as alleged. There is no mental agony or irreparable damage as alleged, that he has not suffered any financial loss, that the complainant is not entitled to get any claim from the 1st opposite party. Hence 1st opposite party prayed for dismissal of the complaint.
3. 2nd opposite party filed version contending that 2nd opposite party sanctioned the loan amount to the complainant strictly as per the terms and conditions stipulated in the cash credit agreement, deed of hypothecation and other security documents executed by the complainant in favour of the 2nd opposite party, that the complainant is legally bound to strictly obey the conditions stipulated in the said agreement, that the complainant was not prompt or regular in repaying the loan installment amounts, eventhough he had commentable progress in the business, that as per the terms and conditions stipulated in the cash credit agreement, the insurance policy for the complainant's business has to be taken by the complainant himself, that the bank is not liable to remit the insurance premium and the statement in the complaint that 2nd opposite party is liable to remit the insurance premium and inform the complainant about the amount paid to the insurance company is wrong and not legally sustainable. If the bank had remitted the insurance premium, if any, it is only as a free of charge which cannot at all be construed as a duty cast upon the bank by law or procedure. Further it is also the bounden duty and obligation cast upon the complainant to take all necessary steps for initiation of filing claims, furnishing all necessary information to the bank and insurance company directly for claiming insurance benefits if any as per his specific undertaking contained, and that the 2nd opposite party is not at all liable to indemnify the loss if any sustained to the complainant. The complainant has not suffered any mental agony or loss due to the act of the 2nd opposite party, that the 2nd opposite party has not committed deficiency in service. Hence 2nd opposite party prayed for dismissal of the complaint.
4. 3rd opposite party did not turn up inspite of service of notice. Hence 3rd opposite party set ex-parte.
5. The points that arise for consideration are:
(i)Whether the complainant is entitled to get insurance claim?
(ii)Whether there is deficiency in service on the part of opposite parties?
(iii)Whether the complainant is entitled to compensation and cost?
6. In support of the complaint, complainant has filed proof affidavit in lieu of examination in chief and Exts.P1 to P15 were marked. Complainant has been cross examined by opposite parties. In rebuttal, opposite parties 1 & 2 have filed affidavits and Exts. D1 to D9 were marked. Opposite parties 1 & 2 have been cross examined by the complainant.
7. Points (i) to (iii) : It has been the case of the complainant that, complainant started a Kiln (Bricks Unit) with the approval of the 3rd opposite party, Khadi & Village Industries Commission and with the financial assistance of the 2nd opposite party, Canara Bank, Parandode, that the said Bricks unit was insured with the 1st opposite party, the Oriental Insurance Co. Ltd vide policy No.1309/02, and that as per the terms and conditions of the loan agreement the 2nd opposite party was liable to remit the insurance premium. It has also been the case of the complainant that on 8/4/2002 at 7 P.M the said Bricks Unit caught fire, the whole Kiln including the bricks which were under the manufacturing process (around 1 ½ lakhs) were over burnt, and materials stocked for production of bricks such as poles, wooden materials, fire wood amounting to Rs. 1 lakh were burnt into ashes, and that the unexpected disaster caused huge amount of financial loss valued at Rs. 4,00,000/-. It has also been the case of the complainant that immediately after the said incident, the complainant informed the 2nd opposite party regarding the loss sustained by him, that the Local Police and Fire Force rushed to the spot and made all arrangements for controlling the fire. The Village Officer of the village concerned visited the spot and assessed the total loss at Rs. 4 lakhs. It is argued by the complainant that since the insurance premium is remitted by the 2nd opposite party, it is their duty to inform the 1st opposite party regarding the incident in order to get the benefit of insurance claim, that the 2nd opposite party failed to communicate the same to the 1st opposite party and thereby complainant was not allowed to get the insurance claim. It is the very case of the 1st opposite party that the complainant or the 2nd opposite party did not intimate the 1st opposite party about the alleged incident in time, that complainant intimated the same on 22/5/2003, that is, about 13 months after the alleged incident, that on request of the complainant, 1st opposite party issued him a claim form on the same date itself and a surveyor was authorised to assess the alleged loss on 24/5/2003, but the surveyor could not notice any symptoms of fire occurance, and was unable to assess any loss alleged to have sustained by the complainant. It is further argued by the 1st opposite party that as per the policy condition No.6, the intimation regarding the alleged occurance is to be given to the 1st opposite party immediately after the alleged incident and shall submit written claim to the Insurance company within 15 days of the occurance, but the complainant has violated the said condition and intimated the 1st opposite party about the alleged incident after a lapse of 13 months after the alleged incident. It is further submitted that, 1st opposite party acted and did everything possible but could not assess any loss alleged to have sustained by the complainant. It is argued by the 1st opposite party that, as per the policy, the building, sheds etc., are not insured and are not covered by the policy, that the machinery, its accessories and stocks alone are insured and covered, hence without physical inspection and verification of these, it was impossible to assess and settle the claim. 1st opposite party's opinion is that since there is no deficiency on their part, they are not liable to pay any compensation to the complainant. It has been the case of the 2nd opposite party that 2nd opposite party sanctioned a term loan of Rs.1,00,000/- on 4/7/2000, and working capital limit of Rs.3,00,000/- was sanctioned simultaneously to the complainant, as per the terms and conditions stipulated in the cash-credit agreement, deed of hypothecation and other documents executed by the complainant in favour of the 2nd opposite party. It is further argued by the 2nd opposite party that the complainant was not prompt or regular in repaying the loan installment amounts, that as per the aforesaid agreement the Bank is not liable to remit the insurance premium and inform the complainant about the amount paid to Insurance Company. It is stated by the 2nd opposite party that 2nd opposite party remitted the insurance premium by debiting the complainant's MLSSI Account on 15/2/2002 and that complainant was well aware of the existence of the insurance policy on 15/2/2002 itself. It is argued by the 2nd opposite party that the certificate issued by the Village Officer would go to show that it is to be produced before the Insurance Company, and the complainant is well aware of the existence of the insurance policy even at the time of alleged fire incident. Submission by the 2nd opposite party is that the complainant informed the 2nd opposite party regarding the alleged incident belatedly only on 17/4/2002, eventhough, the incident happened on 8/4/2002, that complainant is legally bound to prefer claim before the 1st opposite party for getting compensation and that if the complainant has not preferred any claim application in time, 2nd opposite party is not at all liable to compensate the complainant. Ext.P1 is the copy of the letter dated 17/4/2002 addressed to 2nd opposite party by the complainant informing him about the alleged fire incident. Ext.P2 is the copy of the reply dated 6/5/2002 sent by the 2nd opposite party to the complainant inviting him for a discussion on the matter stated in Ext.P1. It is pertinent to note that in Ext.P1 letter addressed to the 2nd opposite party, complainant is seen requested him to sanction the balance of Rs.3,00,000/- immediately for starting and continuing the business besides taking appropriate steps for lessening his burden of remitting amount loan waiving steps etc., nowhere in Ext.P1 is it mentioned about the policy and its benefits nor is it requested the 2nd opposite party to initiate steps to get policy claims. Ext.P3 is the copy of the letter dated 6/11/2002 addressed to the 2nd opposite party by the complainant informing him of his readiness to settle the amount under 'one time settlement' and requesting him to renew the said loan after the settlement. Exts. P3 & P4 is the copy of the letter dated 15/2/2003 addressed to 2nd opposite party informing him of the insurance policy with 1st opposite party and requesting him to initiate steps to get compensation from the 1st opposite party. Ext.P5 is the copy of the letter dated 17/4/2002 addressed to 3rd opposite party requesting him to waive at least a part of the loan. Even in Ext.P5 there is no mention regarding the insurance policy with the 1st opposite party. Ext.P7 is the report of the Fire Force No.151/2002. In the said Ext.P7 it is seen reported that the nature of alleged fire is under medium categoy and the Fire Force officials worked only for 16 minutes only and regarding the details of loss it is seen certified by Fire Station Officer that "the confirmation is only in respect of Data as furnished to the Department, not necessarily full and accurate on any matter conferred therein which can be determined only after due investigation by the appropriate agency". Ext.P8 is the copy of the certificate dated 24/5/2003 issued by the Village Officer, Aryanadu, stating that there was a loss of Rs.4 lakhs in the fire incident dated 8/4/2002. Ext.P10 is the copy of the GD Extract dated 9/4/2002 of the Police Station, Aryanadu. In the said GD Extract, it is seen revealed that only the roof of the Kiln (Bricks Unit) is destroyed but no loss happened to the bricks therein. It is further stated that the said extract is given only for production before the Village Officer, Aryanadu. Ext.P11 is the copy of the receipt dated 7/2/2003 issued by the 1st opposite party to M/s. Vayalvaram Brick, towards the remittance of Rs.830/- towards the policy. Ext.P12 is the photocopy of Mathrubhoomi Daily dated 10/4/2002 showing the report of the alleged fire incident. Ext.P13 is the copy of the renewal notice dated 22/1/2003 issued by the 1st opposite party to M/s. Vayalvaram Brick Industries. In the said notice it is seen informed about renewal of Fire - Standard Fire and Special Perils Policy. Ext.D2 is the policy schedule. As per the policy schedule, the policy period is from 19/2/2002 to 18/2/2003 and name of the insured is M/s. Vayalvaram Brick and total sum insured is Rs. 7 lakhs only, the policy type is Standard Fire and Special Perils Policy. As per clause 6 of the General Conditions of the Standard Fire and Special Perils Policy (i) On the happening of any loss or damage, the insured shall forthwith give notice thereof to the Company and shall within 15 days after the loss or damage or such further time as the Company may in writing allow in that behalf, deliver to the Company. (a) A claim in writing for the loss or damage containing as particular an account as may be reasonably practicable of all the several articles or items or property damaged or destroyed, and of the amount of the loss or damage thereto respectively, having regard to their value at the time of the loss or damage not including profit of any kind (b) particulars of all other insurances, if any. Further, no claim under this policy shall be payable unless the terms of this condition have been complied with. (ii) In no case whatsoever shall the Company be liable for any loss or damage after the expiry of 12 months from the happening of the loss or damage unless the claim is the subject of pending action or arbitration; it being expressly agreed and declared that if the Company shall disclaim liability for any claim hereunder and such claim shall not within 12 calendar months from the date of the disclaimer have been made the subject matter of a suit in a court of law then the claim shall for all purposes be deemed to have been abandoned and shall not thereafter be recoverable hereunder". In this case the alleged incident was on 8/4/2002, and intimation regarding the same was admittedly given to 1st opposite party on 22/5/2003 (that is after a lapse of 13 months). In view of the above we find evidently complainant has violated the policy condition 6 of the General Conditions. It is pertinent to point out that, 1st opposite party, even after the lapse of 13 months, deputed a Surveyor and loss assessor to assess the alleged loss, but the surveyor could not assess the loss due to inordinate delay in intimating the matter to 1st opposite party. Ext.D9 is the Survey Report. As per Ext.D9 report, it is stated that, since no evidence existed physically, Fire Force report is taken into account for assessing the loss on randam basis. As per the Fire Force Report, the extent of damage recorded is medium amounting to Rs.35,000/- towards building and Rs.15,000/-, towards the stocks and accessories, but the stocks and accessories only covered under the Fire Policy and therefore the maximum liability of the insurer is limited to Rs.15,000/- out of which 10% depreciation (Rs.15,000/-) towards accessories is seen deducted and hence the total assessed loss recommended is Rs.13,500/-. As per policy condition Rs.10,000/- is the policy excess. After deduction the said policy excess, the Surveyor assessed the maximum liability of the insurer regarding the reported the loss/damage due to natural calamity would be around Rs.3,500/-. Ext.D3 is the copy of the cash credit agreement executed by the complainant in favour of the 2nd opposite party Bank. Clause 8 of the said cash credit agreement would read as under: "That the said goods and the said debts shall be kept at the Borrower's risk and the Borrower shall at their own expense during the continuance of the security keep the said goods in good and marketable condition and in proper working order and shall likewise at its own expense insure and keep insured the said goods against loss or damage by fire, riot, civil commotion and all such other risks as the Bank shall require for the full market/replacement value thereof in an insurance office or offices to be approved by the Bank and shall deliver the policies of insurance to the Bank, and shall deliver the receipt for the last premium paid to every such policy of insurance and shall assign to the Bank every such policy of insurance and shall pay to the Bank all proceeds of any policy received by the Borrower during the continuance of this security and deliver to the Bank the renewal receipts and policies. In default, the Bank may (but shall not be bound to) keep in good condition and render marketable and in good working order the said goods or effect or renew such insurance. Any premium paid by the Bank and any costs charges and expenses incurred by the Bank shall be repaid by the Borrower on demand forthwith and shall until repayment with interest at the aforesaid be a charge on the said goods and the said debts and assets hereby hypothecated........". The aforesaid clause 6 would further read as under : If the bank does not lodge any claim under the policy within the time limit prescribed under such policy, the bank shall not be liable to the borrower for not filing any claim or suit for recovery of the insured amount against the insurance company or any other person. Provide that the Bank may at their own absolute discretion waive any of the requirements as to insurance, to such extent and in such manner as they may deem fit". Ext.D4 is the deed of hypothecation executed by the complainant in favour of 2nd opposite party. It would thus clearly appear that there was no contract of condition of service of taking insurance for the hypothecated goods in respect of which the claim was preferred by the complainant against the 2nd opposite party Bank. If that be so, the complainant can neither be said to be a consumer vis-a-vis opponent Bank in respect of the service regarding taking of insurance and lodging of claim nor can the service alleged be said to be consumer service such as has been alleged by the complainant against 2nd opposite party. The learned counsel appearing on behalf of 2nd opposite party, would however refer to decisions of the Gujarat State Commission in the case of Atul Plastic Industries Vs. Surendra Nagar People's Co-operative Bank Ltd, IV (2004) CPJ 340 and in the case of Commercial Co-operative Bank Ltd and Kalyani Ayurvedic Pharmacy 1 (2005) CPJ 219. In view of the above, the basic dispute centre around whether the 2nd opposite party was obliged take insurance and if yes, to have also the cover of Fire risks. In this case the facts referable to the aforesaid agreement between the parties will lead only to the conclusion that there was no service of taking of insurance to be rendered by the bank in favour of the complainant. In view of the matter and in the light of evidence available on records we find the complainant will not be entitled to claim award of compensation on the allegations of deficiency in service from 2nd opposite party Bank. Evidently, complainant had violated the clause 6 of the General Conditions of the policy such facts prima facie would indicate no deficiency on the part of 1st opposite party. Still 1st opposite party deputed surveyor to assess the loss who filed Ext.D9 report showing a loss of Rs.3,500/-. Taking into consideration of the totality of circumstances we are of the considered opinion that justice will be well met if complainant is granted the loss of Rs.3,500/- as assessed by the surveyor in Ext.D9 Report.
In the result, complaint is partly allowed. 1st opposite party shall pay the complainant a sum of Rs.3,500/- within two months from the date of receipt of this order. Both parties shall bear and suffer their costs.
A copy of this order as per the statutory requirements be forwarded to the parties free of charge and thereafter the file be consigned to the record room. Dictated to the Confidential Assistant, transcribed by her, corrected by me and pronounced in the open Forum, this the 15th day of September, 2009.
G. SIVAPRASAD PRESIDENT.
BEENA KUMARI. A : MEMBER
S.K. SREELA : MEMBER
ad.
O.P.No.418/2003 I. Complainant's witness PW1 : Viswambharan II. Complainant's documents: P1 : Photocopy of letter dated 17/4/2002 issued by the complainant to 2nd opposite party. P2 : " dated 6/5/2002 issued by the 2nd opp. Party to the complainant. P3 : " dated 6/11/02 issued by the complainant to 2nd opp. Party. P4 : " dated 15/2/2003 issued by the complainant to 2nd opp. Party. P5 : " dated 17/4/2002 issued to the Director, Khadi and Village Industries Commission. P6 : " dated 28/2/2003 issued by complainant to Manager, Canara Bank. P7 : " Fire Force Report dated 8/4/2002.
P8 : Copy of certificate dtedc 24/5/2003 issued by Village Officer. P9 : Photocopy of complaint given to the Aryanadu Police on 9/4/2002 by the complainant. P10 : Photocopy of GD Abstract. P11 : " receipt of Insurance Policy No.1309/02. P12 : Copy of Newspaper Report in Mathrubhoomi dated 10/4/2002. P13 : Renewal notice from Oriental Insurance Co.Ltd dated 22/1/2003. P14 : Letter from Loss Assessor, Safi U.M dated 2/6/2003 P15 : Letter from complainant to Loss Assessor, Safi U.M dated 29/7/03.
III. Opposite parties' witness:
DW1 : Radhakrishnan. T.S DW2 : R. Natarajan DW3 : K.S. John.
IV. Opposite parties' documents:
D1 : 9 photos with negative D2 : Policy schedule of policy No.441200 and endorsement No.1309/02. D3 : Cash credit agreement dated 27/6/2002. D4 : Copy of deed of Hypothecation D5 : Copy of accounting entries sheet. D6 : Copy of Fire Insurance Claim Form dated 17/4/2002 D7 : Copy of letter issued to the Director, Khadi & Village Industries Commission by the complainant. D8 : Copy of letter dated 28/2/2003 issued to the Manager, Canara Bank, Parassala. D9 : Pass sheet of Folio – 0987700 of Canara Bank.
D10 : Survey Report (Fire) dated 19/9/2003.
PRESIDENT.
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