Before the District Consumer Dispute Redressal Commission [Central], 5th Floor ISBT Building, Kashmere Gate, Delhi
Complaint Case No.05/dated 08.01.2019
Arya Bag Industry through its Proprietor
Sh. S. P. Bhatia s/o late Hans Raj Bhatia
at Plot no 200, Sector-2 Pocket-J, DSIIDC
Bawana Delhi-110039 ...Complainant
Versus
United India Insurance Co. Ltd through its
Branch Manager at 10203, Jamuna House,
Padam Singh Road, Karol Bagh Delhi-110005 ...Opposite Party
Senior Citizen Case Order Reserved on: 04.02.2023
Date of Order: 11.04.2023
Coram: Shri Inder Jeet Singh, President
Shri Vyas Muni Rai, Member
Ms. Shahina, Member -Female
Inder Jeet Singh
ORDER
1.1. (Introduction to case of parties) : The complainant is Insured in respect of subject matter of building, stocks, plant and machinery against perils of fire etc. by virtue of insurance policy taken from the OP/Insurer. The complainant alleges the huge monetary loss, hardship, harassment, difficulties, mental pain and agony suffered by him due to the defective and deficient services of the OP for want of reimbursement of his valid fire loss claim of episode of 18.01.2017, which was initially recommended by surveyor but later rejected by OP vide communication received on 28.03.2018 by the complainant.
But OP has reservations thereto that neither there is any deficiency of services nor any valid claim to be reimbursed. The complainant had violated and breached the policy conditions, apart from obtaining the policy covering the risk "of manufacturing of polythene bags and all plastic goods" but he was engaged in manufacturing of 'wires', which was not covered under the policy. He took the policy by misrepresentation and also breached the fundamental principles of insurance of utmost good faith.
1.2 There is voluminous record of pleading and documents. Many aspect have been repeated by the parties either to put forth their own case or emphasise its stand as well to persuade them in argumentatively. Besides, documentary record is also scattered.
However, an effort is being made in this Order and care is taken to put the entire case of one party at one place with relevant documents for the sake brevity and clarity.
2.1 (Matrix of case of complainant ) : The complainant is senior citizen aged 74 years. He is the proprietor of M/s Arya Bag Industry and is operating his establishment at Bawana. The complainant is engaged in the manufacture of polythene bags and allied plastic goods, thus for covering the risks, he took insurance policy "Standard Fire and Special Policy bearing No. 0407001116P104679495 in the name of M/s Arya Bag Industry at Bawana for period 08.07.2016 to 07.07.2017 (policy is at pages 27-35 of his paper book) from OP, the policy also describes the risk covered by mentioning as, manufacturing of Polythene bags, allied product, goods, manufacturing warrantee attached and also building, stock of all kind raw materials; semi, finished, unfinished goods relating to making of polythene bags plant and machinery use as cutting, punching etc. and also there was and on cover of earthquake and STFI.
2.2. On 18.01.2017 at about 4.30-5.30 PM, the complainant was telephonically informed by his factory workers that due to short circuit of the electricity, the fire broke out in the factory and as a result of which there has been an estimated fire loss of Rs.6 lakhs to Rs.7 lakhs, then it was reported by e-mail dated 19.01.2017 to OP by the complainant's son Sh. Sanjeev Bhatia (since complaint is not acquainted with e-mail operations). Information was also given to Police as well as to Fire Services about the fire accident took place.
2.3: Then
physical survey of the accident site was conducted by OP's appointed Surveyor Shri Ajay Kumar Aggarwal, who took statement of the
complainant with estimated loss apart from photographs of the affected site. The complainant had satisfied surveyor Sh. Ajay Kumar Aggarwal regarding the
tenability of the claim and an e-mail dated
16.03.2017 between the surveyor and OP's officer Ms. Renu
Khateria also reveals that an amount of Rs. 3,27,530/- was provisioned for insurance claim. On 09.05.2017, the complainant received a communication from the surveyor, admitting the receipt of
documents, estimated loss
but he demanded few more documents for the purpose of
assessment of the loss, then settlement of fire claim went for another three months and remained pending till August, 2017. The Surveyor in his fire survey report No. AKA/2017/18/0559 dated 02.08.2017 (at pages 203-211 and also at 307-315) enumerates documents received from complainant such as copy of subject insurance policy, endorsement schedule , copy of other insurance policy for shop, original statement of insured, original claim form, original claim bill, copy of fire incident report, copy of intimation letter to police, copy of estimated repair of building, copy of repair/replacement invoice, copy of purchase invoice of stock items, copy of provisional trading account as on date of loss/18.01.2017, copy of IT, Audit Report, Audited Financial Statement (FY) of 2013-2014, 2014-2015, 2015-2016, original letter, reply of insured, copy of appointment bill dated 19.01.2017, photographs and survey fee bill (page no.70-197 & 234-306).
The surveyor in its report, without prejudice, specifically stated that the fire loss has occurred and assessed the loss of Rs.1,28,528/- and the liability of the insurer is also limited to Rs. 1,28,528/-. The surveyor's report clearly reveals items-wise claimed amount of Rs.3,27,530/-of goods-stocks, machinery, electric cables, fire cylinder and removal of Debris (Malba) but nothing was considered nor there was disbursal of the such claim amount.
2.4. The complainant submitted all other requisite documents i.e. balance sheet audited and description of fixed assets for the previous years ending March, 2016 and other account duly audited by the Chartered Accountant and the supporting bills of purchase of the raw material from various traders showing bona-fide purchase next before the date of the accident, apart from the estimate of repair and renovation from the registered architect and approved Valuer for an amount of Rs.30,500/- on account of damage to building by fire but the same was neither acknowledged nor taken into consideration by the opposite party.
The surveyor not only protracted the process of disbursal of the claim despite having requisite documents but on one pretext or the other deliberately tried to create and dig out the discrepancies in the documents which were already with him and as such caused grave harassment to old aged complainant. The Surveyor asked, without any rhyme and reason, the photocopy of the lease deed and the documents related to the property, municipal license of the factory, whereas letter dated 27.10.2017 written by the complainant clearly shows that all documents were already submitted by the complainant, besides the complainant was also directed to furnish other documents related to another insurance policy took for his shop situated at Sadar Bazar, however, the complainant furnished the same to the Surveyor without any hesitation. The complainant was continued to be harassed by the surveyor and OP's Assistant Manager, Ms. Renu Kathuria despite the fact that the complete documentation furnished to them and the Email dated 15.11.2017 & 20.12.2017, reveals the episode of the harassment. The agony of the complainant did not even end here, as time and again the complainant was asked to submit the documents which have already filed by him.
The accident was of 18.01.2017 but the processing of the claim went on for more than 12 months and which continued till 30.01.2018 when the complainant received an email from the Surveyor asking further information despite the fact that requisite documents and other peripheral obligations to their satisfaction was done by the complainant in full spirit and sense. The complainant was shocked to see the e-mail was sent being harassment caused at the hands of the surveyor as well as the Assistant Manager Ms. Renu Kathuria, since many personal visits mere made at the office and requested her to dispose off the claim as the money was needed. The complainant was handling the matter single handed despite his old age and avoided to discuss it with his only son, an Advocate, under the hope that good sense will prevail upon OP and the claim may be released.
2.5. There is one email dated 08.12.2017 (on page 58 or 252) shows that complainant's claim was found reasonable on all counts, however, no claim was released to him. The complainant went to the office of the surveyor as well at the
branch office, time and again, to ascertain the delay in releasing claim amount and requesting them to release the claim on priority basis. But on 30.01.2018 again the Branch Manager of
OP Ms Renu Kathuria and the Surveyor started asking the documents afresh, which were already with them on
record and this was being asked to harass the complainant. The complainant is 75 year old person, he does not know how to operate the emails and is not a tech-savvy, he takes help of his son for communication and accessing the emails etc. and his son
operates the email on behalf of complainant, when sparing time from his profession. Then complainant discussed his agony to his son, it was unbelievable for him after pursuing details of the documents furnished, the correspondences exchanged to fathom his bona-fide valid claim but his claim was still pending, just an artificial requirement was created by
the Surveyor. However, complainant's son is an Advocate by profession was helping his father just in using the e-mails only and he was not totally oblivious to process of the production line and the flow chart etc. Complainant's son categorically replied to each and every query on 07.04.2018 at 01:12am (mid-night) and also attached a flow chart of the production line with it.
On the night of 06.01.2018, the complainant asked his son Sanjeev Bhatia that documents were asked by the surveyor and complainant asked his son to make reply on his behalf accordingly. The complainant gave him a pen drive containing two files
having identical flow charts and one being part and parcel of
the other i.e; (1) one file containing flow chart of production line of
poly-bags and (2) another flow chart of production line of plastic
wire material (being used as raw material for the production of
polythene bags). It was 01.12am (mid-night) being night between 06-01.2018/07.01.2018, complainant's son was working to upload the file, thus really be impractical to wake up his old father for such
purpose and inadvertently uploaded only first one file containing flow chart containing production line for plastic-wire for making poly-bags
and by oversight he omitted to upload the other file under the impression that first one file will only suffice the purpose of reply or being also unsure of the fact which file to upload out of two, but did all in good faith. He also wrote some strong words with regard to harassment being caused to the
complainant for want of disbursal of claim. The complainant awaited for a period of one month since all the documentation work was completed on his behalf and the complainant even personally visited the branch office and also met OP's Officer Ms
Renu Kathuria. The complainant was fed up with the nuances and delay, then he lodged
complaint on 08.03.2018 against the surveyor as well
the concerned official at the grievance portal. On 28.03.2018, the complainant received a letter dated 16.03.2018 (under posting date of 27.03.2018, i.e. the
letter was made on date 27.03.2018 but ante-date as 16.03.2018). informing the complainant that his claim had been rejected. The complainant was taken aback, he fell ill by knowing rejection of his valid claim, as firstly there was accident of fire, secondly he was pursuing the claim for period of 13 good
months and then the rejection of the claim on flimsy plea of violation of condition of policy despite
giving true account of events and relevant documents in
support thereof.
2.6 Then, complainant mustered the courage and decided to go into the roots of the problem and in order to ascertain factual things, on 17.04.2018, he applied for records of file under RTI at the branch office of OP [vide postal receipts bearing no ED427721532IN and RD 959666005IN and send two postal order for Rs10/-each and awaited for their reply]. But the branch neither cared to inform the complainant nor sent the any communication in that regard within in 30 days of the period. The complainant fed up with the such delay, then complainant's son called up the branch office and spoke to the
Manager over the landline phone no. 28751296 and the
manager informed him that they have sent the complete
record to their Regional Office. That complainant even intended to approach OP but because of health issue, he could not approach them and finally on 19.07.2018 he sent another communication to the CMD at Chennai as well to the Regional
Office of opposite party. The complainant was informed by the Regional Office, that file is ready and finally on 03.08.2018, the complainant was able to get the certified copy of the file.
While going through the record received under RTI, it came to notice of complainant that one of file was not uploaded inadvertently and only one file was loaded on 06/07.01.2018 by his son, which happened under bona-fide but it was taken as a sole reason for rejection of claim. Whereas, the surveyor as well as OP were furnished all the material record by the complainant, the claim cannot be denied or negated just for want of flow chart. OP was written again on 28.8.2018 to Regional Office of OP to reconsider the claim but no reply was given by them. That is why the complaint against OP for Rs. 4,00,000/- with 18% simple interest on account of delayed release/ rejection of claim since the date of the accident of fire in the factory of complainant and Rs. 5,00,000/- as compensation for financial losses, mental torture, agony, harassment and physical pain. & apart from cost of the litigation
2.7. After filing of reply by the OP, the complainant reaffirmed the complaint as correct and also asserted that the complainant has not flouted or violated any conditions of the policy and the claim of the complainant is based on true accident and is legitimate. The OP has wrongly alleged that complainant was engaged in manufacturing of wires or there is misrepresentation, since the complainant has obtained risk cover of 'manufacturing of polythene bags and all plastic goods', and policy is for 'all goods, which means it is for all plastic goods, which comes in the course of making the said goods and it cover a wide area of things. The photographs made available under RTI clearly reveals site as well as recommendation of passing of claim'.
The complainant is claiming the loss which is very much within the parameters of the insurance policy and it becomes more imperative and incumbent on the
OP to adhere to the terms so the agreement and stick to it and do not do any fault finding in the assessment of its own surveyor. The loss of the
complainant is genuine and bona-fide. The contract of insurance is different from
commercial activity and it is settled law that the insurance
contract is a contract of indemnity for indemnifying the
loss suffered by the insured and such indemnity has
nothing to do with the commercial activity, if any, of the insured as held in Satnam Singh vs. National Insurance Company. OP played deliberate fraud upon the Forum and
depict a different picture all together of things but the
same is in itself a contradiction to its own stance already
taken in w.r.t report dated 02.08.2017 which mentions estimated loss is Rs
1,28,528/- and in such report dated 02.08.2017 nothing is mentioned regarding production process chart or items are not covered under the policy as alleged in para 3 of written statement. OP has picked up stray incidents of different dates 02.08.2017 and 08.02.2018 and thereby have tried to rope in them in one chain and mislead this Forum for their advantage.
OP, through its surveyor, quantified the loss of merely at Rs 1.28,528/-, that too, after physical survey of the site of incident, verification and assessment of damage, documents and policy documents but the whole drama of fault finding began just to deny legitimate claim of the complainant and not to release the amount. The surveyor is on the panel of the Insurer and the complainant doubts on independence of the survey and its integrity towards impartial assessment. The general exclusion clause of clause A(7) and B(1) have no relevance since there is genuine claim of fire accident and the same is being corroborated from the reports dated 02.08.2017 (being file obtained by RTI) and complainant's claim is within the parameters of the policy vis-a-vis OP's letter dated received on 28.03.2018 (at page 24) but bearing date 16.03.2018 is an after-through of Ms Reenu Kathuria as well as it has been forged and generated just to deny the complaint dated 08.03.2018. The letter it motivated and made on the wrongful considerations. of the facts.
From date of the accident, the complainant submitted documents number of times on requisition again and again and
when finding no fault in the documents and claim, the
OP/insurer deliberately delayed the disbursal of
the claim and awaited to the point that the complainant
may omit or commit some mistake and then to exploit
chance to reject his claim. OP has illegally rejected the legitimate claim of the complainant just on slight omission on
the part of complainant to partially uploaded file "flow chart" as shield to negate the contention of the claim of the complainant despite the fact that affected site has been physically inspected by the surveyor and thereafter the assessments of claim was made. No discrepancy of any kind was found in photographs of the site, physical inspection of site from each and every corner of the premises, measurements of the stock along with the damaged products including motors and other peripheral things and thereafter loss of Rs 1,28,528/- was assessed in his report dated 02.08.2017.
2.8. The complaint is accompanying the record, which was obtained by the complainant under RTI and majority of them are also referred by the OP in its reply without any opposition.
3.1 (Matrix of case of OP) : A fire took place in the factory premises of the complainant because of short-circuit. The claim was lodged with the OP. OP had appointed an independent, Government approved
and licensed Surveyor & loss Assessor, who after thorough survey submitted his report with the OP. The OP, after processing the
claim, found the claim is not admissible as per the terms and conditions of the policy and then decline
the claim. The complainant came before this Hon'ble Forum without clean hands, by concealing true and material facts and on this ground alone, the complaint is not
maintainable and is liable to be dismissed with heavy costs.
3.2. The OP had issued Standard Fire and Special Perils Policy in favour of M/s Arya Bag Industry bearing Policy No.
0407001116P104679495 valid for the period from 08.07.2016 to 07.07.2017 with its terms and conditions, but complainant has violated and breached the policy conditions, since policy covers risks of "manufacturing of polythene bags and all plastic goods", whereas he had engaged in 'manufacturing of wires' which is not covered under the policy. The complainant has obtained the policy by misrepresentation, apart from breached the fundamental principles of insurance of utmost good faith.
3.3: The OP claims that true facts of the case are that on 18.01.2017, fire took place in the factory of complainant due to short circuit and accordingly, the complainant informed the police vide DD Entry No.8B dated 19.01.2017. He also informed Fire episode to OP and furnished Claim Form dated 20.01.2017 stating cause of fire as electric short circuit. Thus, OP appointed an independent, Government approved and licensed Surveyor namely Ajay Kumar Aggarwal to survey and to assess the loss [u/s 64 UM of Insurance Act]. He found that the probable cause of Fire is electric short circuit in the wiring connecting to motors and assessed the total loss for a sum of Rs. 1,28.528/- and recommended to settle the claim, subject to terms and conditions of policy vide its report dated 02.08.2017.
However, the surveyor Ajay Kumar Aggarwal further re-assessed the loss for just for Rs.2,962/- by his other/addendum survey report dated 08.02.2018 and recommended to settle the claim subject to terms and conditions of policy. The surveyor in his survey report dated 02.08.2017 found that "as per production process flow-chart provided by the insured, they are engaged in manufacturing of wires. However, as per copy the policy, stock related to making of polythene bags is covered. Hence this item is not covered under the policy" [it is relevant to mention here, the OP has emphasized in bold this under-line portion in para 3 of its written statement as well as in paragraph 3 of affidavit of evidence, however, no- where such underlined portion is mentioned in report dated 02.08.2017]. Moreover, claim was not admissible under exclusion clause (A)/No.7 and (B)-General Condition No.1 of the policy which reads as:
(A) -General Exclusions
(7) "Loss, destruction or damage to any electric machine, apparatus, fixture, or fitting arising from or occasioned by over-running, excessive pressure, short circuiting, arcing, self heating or leakage of electricity from whatever cause (lighting included) provided that this exclusion shall apply only to the particular electric machine, apparatus, fixture or fitting so affected and not to other machines, apparatus, fixtures or fittings which may be destroyed or damaged by fire so put".
The OP processed the claim of the complainant and found it not admissible and repudiated the claim by repudiation letter dated 16.03.2018 on the ground that "loss towards machinery is disallowed as fire originated from machine due to short circuit and as per Fire Policy Exclusion Clause No.7 and "Loss towards stock and building are disallowed as 'wire manufacturing activity', as confirmed by surveyor, is being carried out in insured premises instead of making of polythene bags as covered in policy and the changes in manufacturing activities attracts the Fire Policy Condition No.1, which reads as under:-
(B)-General Condition -
(1) -"This Policy shall be voidable in the event of misrepresentation, mis-description or non-disclosure of any material particular"
Therefore, the complaint is not maintainable and the same is liable to be dismissed with heavy costs. In "Oriental Insurance Co. Ltd. Vs. Sony Cherian" II (1999) CPJ 13 (SC) it was held that "the insurance policy between the insurer and the insured represents a contract between the parties. Since the insurer undertakes to compensate the loss suffered by the insured on account of risks covered by the insurance policy, the terms of the agreement have to be strictly construed to determine the extent of liability of the insurer. The insured cannot claim anything more than what is covered by the insurance policy. That being so, the insured has also to act strictly in accordance with the statutory limitations or terms of the policy expressly set out therein." In
Surajmal Ram Niwas Oil Mills Pvt. Ltd. Vs. United India
Insurance Co. Ltd. reported as 2010 (10) SCC 567, it was reiterated that since, the insurance between the insurer and the insured is a contract between the parties, the
terms of agreement including applicability of the provisions and also to its exclusion had to be strictly construed to determine the extent of the liability of the insurer. There is no cause of action ever arose in favour of the complainant and against the OP nor there is any deficiency of service on the part of the OP, complaint is liable to be rejected with heavy costs. The complainant is carrying on the commercial activities, thus, it is not 'a consumer' as defined under the Consumer Protection Act.
4. (Evidence) : Complainant Shri Satinder Pal Bhatia filed his detailed affidavit of evidence, which is composite of the complaint and documents filed in its support. On the other side, OP’s Shri Rajeev Kumar Gupta, Assistant Manager's detailed affidavit of evidence was filed, it is also replica of written statement and reproduction of the relevant clauses of insurance policy.
5. (Submission of Parties) : Both the parties filed their respective detailed written argument. Shri Anumay Sahay Advocate for complainant and Shri Sanjay Kumar, Advocate for OP also made oral submissions. It is relevant to mention here that the case of complainant as well as case of OP, being composite of pleadings, evidence and their arguments, have already been compiled as matrix of case of complainant in paragraph no. 2 above and similarly matrix of case of OP in paragraph no. 3 above, therefore, it does not require to refer those details again herein. However, their contentions will be dealt point-wise appropriately.
6.1 (Findings) : The contentions of both the sides are considered, some of the issues are purely legal in nature and other are mixed question of facts and terms of fire insurance policy contract; they all are being dealt one by one.
6.2: (reg- authority to file complaint) –The OP took a serious objection that complaint is not supported by any Board Resolution to file the complaint by M/s Arya Bag Industry, consequently it is liable to dismissed. However, on the other side that complainant contends that since complainant is a Proprietorship concern and as such no separate authorization is required by the complainant, being 'a consumer', to file complaint.
6.2A. There is no legal requirement of Board Resolution to file complaint. when it is a proprietorship concern since there cannot be Board (of Directors) in a proprietorship firm. The requirement of Board Resolution may be for legal entity like company incorporated under the law. The contention of OP carries no weight, particularly when complainant has clearly narrated in the complaint that it is proprietor firm. In fact, the OP could have avoided to plead such un-necessary objection in the reply.
6.3: [whether or not complainant is consumer?] – The other objections raised by OP is that complainant is not a consumer, since complainant carries commercial activities, which is not covered in the definition of 'consumer' under the consumer Law. The complaint is liable to be rejected. But, on the other side, the complainant contends that insurance policy cover was taken in the name of complainant, there is deficiency of services, apart from other practices on the part of OP, it does not matter that the insurance policy was taken to cover the risk in respect of complainant’s commercial establishment, it is source of livelihood of complainant, it is very much within the definition of the ‘consumer’.
The question raised on behalf of OP can be answered by referring the law laid down in M/s Harsolia Motors vs M/s. National Insurance Co. Ltd. (2005) 1 CPJ 27 (NC) that when any person who is found to have hired services for consideration shall be deemed to be a consumer, notwithstanding that the services were in connection with any goods or their user. The complainant got insurance policy against payment of premium to cover certain risks against perils to protect properties its proprietorship firm. Accordingly the question stands answered against the OP, it is held that complainant is a 'consumer' under consumer law.
6.4.1:[other issues]: From the rival plea and case of parties, on the one side complainant contends that it is bona-fide and genuine valid claim of loss by fire, which had happened in his factory, it is within the parameters of insurance policy. But on the other side, OP contends that complainant came without clean hands by suppressing the material facts, policy was obtained by way of misrepresentation and there is breach of condition of policy, apart from the claim is barred by exclusion clause. In order to appreciate these rival claims, it is appropriate to mention relevant matter from record to resolve the facts in issue.
6.4.2: Firstly, it is to be seen what is the risk covered by the insurance policy or for what peril policy cover was taken. The name of insurance policy is "Standard Fire and Special Perils Policy". The insurance policy cover gives description of risk as well as subject matter of policy extended to (being at page 28 of paper book) - 'using plastic raw material having calorific value upto 15000btu/lb'. Then, policy also gives brief description of risk as - "Mfg of Polythene bags and all plastic goods mfg" and occupancy name- "mfg of polythene bags and all" [verbatim]. It is an admitted documents. It is a contract between the parties and both the parties are bound thereto. Since General Exclusion and General Condition clauses are also referred, being part of insurance contract, they are also reproduced-
(A)General Exclusion - C(7) "Loss, destruction or damage to any electric machine, apparatus, fixture, or fitting arising from or occasioned by over-running, excessive pressure, short circuiting, arcing, self heating or leakage of electricity from whatever cause (lighting included) provided that this exclusion shall apply only to the particular electric machine, apparatus, fixture or fitting so affected and not to other machines, apparatus, fixtures or fittings which may be destroyed or damaged by fire so put".
(B)-General Condition -
(1) -"This Policy shall be voidable in the event of misrepresentation, mis-description or non-disclosure of any material particular"
6.4.3. It is also material to mention relevant facts, that the surveyor appointed by the OP had visited the site, he verified the facts at site, collected the documents apart from taking photographs of the scene seen by him at the spot and then he furnished his detailed report dated 02.08.2017 (briefly initial report), while assessing the circumstances and loss happened is covered under the terms the policy, apart from observing that there was no violation of any terms and conditions of policy. The OP had also provisioned for this claim after correspondence with surveyor. Moreover, there is also email dated 12.08.2017 (at page 58), the surveyor re-affirms his verification, observations, claim assessed in initial report dated 2.8.2017, apart from that there was no violation or breach of terms and condition of insurance policy by the insured.
However, OP issued repudiation letter dated 16.03.2018 on the ground that loss towards machinery is disallowed as fire originated from machine due to short circuit and as per fire policy exclusion clause No.7 and loss towards stock and building are disallowed as 'wire manufacturing activity, as confirmed by surveyor, is being carried out in insured premises instead of making of polythene bags as covered in policy and the changes in manufacturing activities attracts the fire policy. The letter dated 16.3.2018 was subsequent to surveyor's brief addendum report dated 08.02.2018. This letter dated 16.03.2018 was received by the complainant on 28.3.2018.
6.4.4: Now, the picture emerged is that surveyor had made a personal visit and inspected the site, he made specific observations in his report, also considering the report of Delhi Fire Services as well as letter to Police authorities and then he had furnished his report dated 02.08.2017 [initial report]. Thence, the OP had called certain documents from the complainant, who had furnished them. one of them was a flow chart in the production line and thereafter the surveyor had given addendum report dated 08.02.2018 [briefly later report, which is after six month of initial report] and on the basis of later-report, the repudiation letter of 16.03.2018 was issued, which was received by the complainant on 28.03.2018. These reports and observations recorded therein are to be analyzed, along with record furnished by the complainant, with the terms and conditions of the policy, whether it makes out a case of compliance or violation of terms and conditions of the policy or applicability and non-applicability of the exclusion clauses. In order to interpret them properly, it is to be ascertain from available record (which happens to be of contemporary period) as to what was the origin/source of fire, damages/loss happened as well as the material damaged. Then it will simplify to match them with the terms of policy and make out appropriate conclusions.
6.5 [reg- Origin/source of fire]- According to case of complainant, there was electric short circuit happened in the establishment and the fire was spread. Firstly, there is Delhi Fire Service Report dated 19.02.2017-(page 150 of paper-book), it reports "Detail of affected area as-Fire was in a factory M/s Arya Bag Industries on plastic tar {प्लास्टिक तार}, area 150 sq.m.”.
Secondly, surveyor in his report mentions that it was observed that probable cause of fire is electric short circuit in the wiring connected to motors, the surveyor also took on record letters written to police authority and Delhi Fire Service report [at page no. 203-211 of paper-book & at page no. 206-207 - Observations and steps taken].
Thirdly, the surveyor, in its email reply to Insurer/OP, writes the probable cause of loss. mentioned by complainant, was short circuit and surveyor also opined that this seems to be reasonable, apart from in the opinion of surveyor the claim is admissible under the policy as no breach of terms and conditions, warranties etc. were observed by him (at page no. 58-59 of paper-book, serial no. 1, 2 and 11). In the later/addendum report of 08.02.2018 (at page no. 38 to 42 of paper-book) there was nothing mentioned about origin of the fire to be contrary to the observation given in initial report of 02.08.2017 except that fire was from the side of machine due to short circuit. Therefore, it is abundantly clearly that an episode of fire had taken place in the establishment of complainant and the fire had happened because of electric short circuit in the wiring connected to motors.
6.6.1 [reg- what damaged in fire]- The surveyor has thoroughly inspected the spot and on the basis of his observation, the initial report dated 02.08.2017 was prepared under various heads/ categories, inclusive of heads of damages. Firstly- repairs of building as repairs of plaster, change of burnt drainage pipe, white wash on walls, repair of floor (at page no. 207 of the paper-book); secondly- loss of stock with weight and quantity of plastic dana (granule), plastic bag for packing and packing bag (page no. 208-209); and thirdly-repairing of machines items of motor bindings of two motors (page no. 209).
In the first heading of repairs of building, the amount claimed and amount of loss assessed is appended with details being reasons for assessing the damages. Similarly, loss of stock was also considered and assessed on the basis of plastic dana (granule), plastic bags for packing and plastic bags, followed by reasons as to on what basis amount assessed and it was done within the purview of policy conditions, apart from there was no salvage value of such damaged material. As regard repairing of machinery items, it also describes the amount claimed and amount of loss assessed, supplemented with reasons for assessing the amount in terms of policy. The amount claimed was mentioned by considering invoices, bills, accounts, other documents etc. in respect of materials, material manufactured, stocks, goods, machines etc furnished to surveyor and then amount assessed was computed by invoking the terms of policy as well as their verification & observations at spot. The amount assessed was found permissible by the surveyor under the policy. Moreover, in the email dated 12.08.2017 ( at page no. 58) the surveyor writes to OP (against serial no. 8, 11, 12, 13 and 14) by reaffirming the observations and amount assessed in the report dated 02.08.2017 against the amount claimed as well as plea of complainant was reasonable.
In addition, the surveyor in his later/addendum report dated 08.02.2018 also mentions the same items and damages happened in fire episode as mentioned in the initial report dated 02.08.2017, by categorizing them as repair of building, loss of stock, repairing of machinery items. Thus, it stands established that in the said fire incident, the damage was to building by fire, loss of stock by fire, damage to machinery by fire, more particularly detailed with its quantity or quantity with weight or number in appropriate columns of the report/emails.
6.6.2 [reg- extent of damage]- The initial report dated 02.08.2017 mentions about repair of building damaged in the fire incident, it also mentions the amount claimed by the complainant as Rs. 64,230/- but amount assessed was Rs. 20,250/- (at page no. 207-208). The same amounts have been mentioned in the later/ addendum report of 08.02.2018 (at page no. 39).
With regard to loss of stock, the initial report mentions the amount claimed by the complainant as Rs. 2,49,300/- but amount assessed was Rs. 1,53,253/- (at page no. 209). The amount as claimed as Rs. 2,49,300/- has been mentioned in the later/addendum report of 08.02.2018 (at page no. 40), but the claim amount assessed is ‘Nil’.
So far repairs of machinery items are concerned, the initial report mentions the amount as claimed by the complainant as Rs. 14,000/- but amount assessed was Rs. 12,000/- (at page no. 209). The amount as claimed as Rs. 14,000/- has been mentioned in the later/ addendum report of 08.02.2018 (at page no. 41). However, the amount assessed is ‘Nil’.
Now, it is apparent that in the initial report of 02.08.2017 the surveyor had considered the amount claimed as well as the amount assessed with certain remarks/ observations but in the later/ addendum report dated 08.02.2018 the earlier amount allowed was treated as disallowed by making observations in the addendum report. It is to be assessed as on what grounds there is sift in the opinion of surveyor and OP is also maintaining so in its detailed repudiation letter dated 16.03.2018 with certain more observations that surveyor opinion so. Thus, the further discussion will be appreciation of all these aspects of the rival parties.
7.1: [reg-whether or not loss towards machinery is covered] – Although, there are two reports by the surveyor, in the initial report of 02.08.2017, the surveyor has assessed the amount, subject to consideration of OP and in later/addendum report of 08.02.2018, surveyor also assessed and opined 'nil amount' in respect of loss of stock as well as of repairing of machines. Moreover, OP in its repudiation letter vehemently asserts that loss towards machinery is disallowed as fire originated from machine due to short circuit and also in terms of fire policy exclusion clause No.7.
Whereas the complainant has juxtaposition plea from the stand of OP, that the surveyor had visited and inspected that establishment personally, he had seen the affected spot and also assessed the circumstances as to how fire would have happened and then he had rendered his reasoned report. The later/ addendum report is motivated, it is without visiting the spot and without reasons just to deny the valid claim.
It needs to refer the documentary record and reports of the surveyor along with the insurance contract with regard to the machinery aspect. In the initial report (page no. 209) the surveyor has referred motor winding of two motors and fire extinguisher refilling, the claim of motor winding of two motors was assessed and it was found reasonable after appropriate inquiry. In the same report of 02.08.2017 [at page no. 207, clause B- observations (a)], the surveyor opined that probable cause of fire is short circuit in the wiring connecting to motors. Then, in email dated 12.08.2017 (at page no. 59) surveyor explains to OP that it was observed by him that fire broke out in main electricity control panel, which was having indirect connection with the main electricity supply wires from electricity board and thereafter spreading fire in the factory of the insured and the cause was short circuit, which was also found reasonable. The surveyor had reaffirmed the damage to motors in his correspondence of email to OP. However, the surveyor in his later/addendum report of 08.02.2018 (at page no. 41) remarks that the fire originated from the side of machine due to short circuit. But OP in its repudiation letter dated 16.03.2018 (at page no. 24) disallows the loss towards machinery as fire is originated from the machine due to short circuit and as per exclusion clause no. 7, item from which fire is originated is not covered.
To say, OP vehemently disallowed the claim of machinery as if the fire has been originated from the machine itself and clause 7 applies. But on the face of initial report of 02.08.2017 of surveyor, which was reported after inspection of the record personally by the surveyor as well as his own observation, there is nothing such finding by the surveyor that the fire is originated from the machine itself. Moreover, the surveyor has reaffirmed this fact in the email dated 12.08.2017 at page no. 58 of the paper-book. The later/addendum report by the surveyor does not state that fire originated from machine itself as quoted and misinterpreted by OP in repudiation letter that fire originated from the machine itself.
The later report is after asking the complainant to furnish certain information and thence such report was furnished by the surveyor, whereas there was no information as such by the complainant that fire originated from the machine itself vis-à-vis surveyor has not explained or gave any explanation as to what material came into his knowledge or in his observation that the later report is prepared, which is different from the initial report. What appears, the first report is in its natural course and events, which clearly mentions that fire is of electric short circuit in the wiring connecting to the motors but the later/ addendum report of 08.02.2018 is neither appearing to be in the natural course nor it is supported by any material to believe that the later report is correct. Otherwise, the surveyor has not given any finding in the later report of 08.02.2018 that his observation and finding in the initial report of 02.08.2017 or his confirmation in email dated 12.08.2017 (at page no 58) was not correct. Thus, complainant has succeeded that the later report of 08.02.2018 is procured and motivated, [which is subsequent to email dated 12.08.2017 in which the initial report was confirmed by the surveyor to the OP], OP had then wrote letter dated 16.03.2018. In addition, it has already been held in paragraph 6.5 that the source of fire was electric short circuit. Thus, when the fire has not been originated from the machine itself or its source in the machine, consequently general exclusion clause no. 7 will not be applicable. The complainant is entitled for amount assessed of Rs. 12,000/- under the category of repairing of machine items (at page no. 209).
7.2: [reg- nature of stock, loss towards stocks & building; whether or not they are covered under the policy?] – There are same set of contentions on behalf of parties with regard to this category of loss issue. The OP emphasizes that the complainant had obtained the insurance policy by concealing and suppressing nature of manufacturing of wire items as well as it was revealed the complainant was indulging in manufacturing activities of wire, which insurance cover was not issued. That is why, under general conditions clause no. 1 applies as the policy will be avoidable in the event of misrepresentation, mis-description or non-disclosure of any material particulars. OP in its repudiation letter dated 16.03.2018 emphasized that loss towards stock and building are disallowed as 'wire manufacturing activity was being carried out in insured premises, instead of making of polythene bags as covered in policy and the changes in manufacturing activities attracts the fire policy condition no. 1. On the other side, the complainant denies allegations completely as the policy was taken by disclosing all the material facts, after incident of fire the affected area was inspected by the surveyor and the complainant was found operating the establishment in respect of covered items. The complainant had also furnished documentary record/ invoices/bills of raw material apart-from balance sheets, audit report, ITR etc. and none of them was pertaining to manufacturing of 'wire' as alleged by the OP. Otherwise, surveyor had also not found anything like manufacturing of 'wire' and that is why, no such observation was in his report. The complainant had provide a flow chart of one segment, which is just a demonstration to show production line that plastic dana & plastic rope are also used as raw material for manufacturing poly-bags, so that poly bags of appropriate think/size are manufactured. It was wrongly and with mala-fide considered as 'wire' by the OP to deny the valid claim.
Since an issue has been raised with regard to kind of manufacturing activities in the factory and by taking into account the documentary record and reports, on such basis, it is held that the complainant has succeeded to prove complainant was purely engaged in the manufacturing of poly-bags and allied plastic/poly material and there was no (metal) wire manufacturing activities were happening in the premises/building for the following reasons:-.
(i) in paragraph no 3 of written statement the OP alleges, on the basis of initial report dated 02.08.2017 that as per production process flow-chart provided by the insured, they are engaged in manufacturing of 'wires'. However, as per the policy, stock related to making of polythene bags is covered. Hence this item is not covered under the policy". Whereas there is nothing such facts or expression in the initial report dated 02.08.2017 as differently alleged by OP in paragraph no. 3 of its written statement,
(ii) the OP is an Insurer, it is in the business of Insurance, it is author of insurance policy being unilateral document and it is well acquainted with terms and conditions as well as appropriate terminology. The OP in its repudiation letter as well as in written statement is giving an impression that the complainant is indulging in manufacturing of ‘wire’, this word ‘wire’ is not qualified by any prefix or suffix or adverb or adjective. Then what does wire mean?
(iii) during the course of submissions on behalf of OP, a general/colloquial impression was given that ‘wire’ mean ‘wire { तार}’. The OP opposes the claim that complainant on same ground that it had indulged in manufacturing activities of 'wire', which are other than 'plastic product or polythene bags',
Thus, it needs to refer to the dictionary meaning in English as well as in Hindi, particularly term 'wire' is not defined in this insurance policy contract vis a vis OP construes 'wire' other than plastic product. The ordinary dictionary meaning of 'wire' { तार} is metal wire, [e.g. cooper wire, electric wire, silver wire, violin string].
(iv) there is not a single invoice on record nor any finding by the surveyor that record of invoices or bills furnished was of wires or electric wires. The bills filed with complaint and evidence are in respect of 'plastic dana (granule)', which is raw material for manufacturing of polythene and plastic products, such invoices & bills of 'plastic dana (granule)'were also considered by surveyor. There is not a single bill of 'metal wire',
(v) the complainant's case is it is engaged in the manufacturing of polythene products etc. throughout and there are various process of manufacturing the polythene, being dependent upon the nature or thickness of polythene required and one of the method is from plastic dana to plastic wire to polythene bags and that is why fire policy was taken for covering risks building, machine, perils to manufacturing of polythene bags and all types plastic goods. The complainant had also furnished a flow chart to the effect that polythene bags are manufactured from plastic wire, just to demonstrate but it was taken adversely by the OP by misinterpreting it as a 'wire'. There is substance in the case and plea of complainant in its favour. There is another dictionary word ‘rope’ or ‘string’ {रस्सी}. The dictionary word 'wire or metal wire' is not synonymous for word 'rope or sting', because of its constituent or nature of materials for which they are used. Although colloquial it may be so referred but it cannot be treated so by an Insurer, who is in business of insurance as well as knowing 'wire' is 'not rope', it is bound by the terms and conditions of the contract.
In fact, in the repudiation letter use of expression ‘wire manufacturing activity’, is intentionally written and emphasized to communicate and demonstrate that there was 'metal wire manufacturing activity' in the premises, otherwise if it was not so, then it was to be treated for 'plastic rope manufacturing activities' and OP was knowing that the insurance policy was taken in respect of manufacturing of polythene and other plastic goods, which includes plastic ropes but that would be falling in the parameter of insurance policy. But again OP is restricting it to just polythene manufacturing, but the policy itself mentions that policy cover is for "Mfg of Polythene bags and all plastic goods mfg" and occupancy name- "mfg of polythene bags and all" [verbatim],
(vii) It is relevant and important to mention about Fire Service Report dated 19.02.2017- (page 150), which was immediately after episode of fire in the premises. The Fire service department reports as “fire was in factory M/s Arya Bag Industries on plastic tar {प्लास्टिक तार} area 150 sq.m.” (the expression{प्लास्टिक तार} in Hindi is mentioned to emphasis. This clearly shows that it was manufacturing unit of plastic tar {प्लास्टिक तार} or 'plastic rope' and not 'metal wire' being misinterpreted by the OP,
(viii) Nowhere in the surveyor report, it is mentioned that stock of 'metal wire' was seen or observed or found by him nor any bill or invoices of metal wire; had there been metal wire, the same would have been found. Moreover, there was also no residual/burnt metal wire material nor salvage was found nor observed by the surveyor nor mentioned in the initial report or in later report, because there cannot be residue of metal wire, since it was not being manufactured there,
(ix) since the material and stock burnt was of polythene bags, raw material and other such material, apart from burnt damage to building, vis-à-vis there was no activity of manufacturing the metal wires in the premises proved by the OP, thus general condition no.1 would not be applicable. The damage building, stocks, raw material was because of fire, it is covered by the policy,
(x) The damage happened to building and loss of stock, as assessed by the surveyor (in his report at page no. 207-209) proves the case of complainant, the repair of building was assessed as Rs. 20,250/- and loss of stock was assessed as Rs. 1,53,253/- and
(xi) the total net loss assessed was Rs. 1,28,528/- in the surveyor report dated 02.08.2017, which in fact confirms the case of complainant, apart from the documentary record of invoices etc. proves it was a valid claim of complainant but it was declined by the opposite side. However, in the report (at page no.209), there is an item of 'plastic bag for packing' for Rs.13,500/-, its corresponding bill at page 177 of paper book, this packing bags were purchased for packing purpose, they were not manufactured in the factory, that material is not covered in the policy, the amount of Rs.13,500/- is to be reduced from the amount of Rs.1,28,528/-, then net amount comes to Rs.1,15,028/-. The second report (page 40 of paper book) also reduces that amount.
7.3: Accordingly, it is held that complainant has proved his case of damage caused by fire on 18.01.2017 which had originated from the short circuit in wiring connecting to the motors and damage happened to stock, machinery and building. However, the net claim assessed was Rs.1,15,028/- for which complainant is entitled.
7.4: The complainant has asked interest at the rate of 18% pa, although it has not been established as to how 18% pa interest is made out vis-à-vis the circumstances are convincing a lot that in order to secure valid claim, the complainant had to made a lot of efforts and he was deprived of partly assessed claim, thus interest at the rate of 8% pa will meet both ends and it will be payable on the amount Rs.1,15,028/- as determined in sub-paragraph 7.3 above. The complainant was asked repeatedly to furnish the documents, which he complied with, inclusive of documents of his other shop, thus in terms of laid down in Karmavati Vemeers P Ltd. Vs. New India Assurance Co. Ltd. AIR 2023 SC 987 [para 10], the interest will be from the date of surveyor's first report dated 02.08.2017 till realization of the amount.
8. The complainant has also claimed compensation of Rs. 5,00,000/- for mental agony, torture, harassment, physical pain and other financial losses. The detailed narration of matrix of the case, especially the complainant's claim was settled but not paid. Thence again the complaint was asked documentary record repeatedly, without being case of OP or its Branch Manager or Surveyor that previous records provided repeatedly was misplaced or lost vis-à-vis there was initial reasoned report dated 02.08.2017 prepared in a natural course of events was diverted to a total different unreasoned report of 08.02.2018 by the same surveyor, without revisiting at spot or re-verifying the facts by the surveyor, which was also not communicated to Insured (who had to obtain the record under RTI), clearly make out not only a case of compensation but also punitive damages, so that the trust and delicate relation of an insurer and insured is not lost apart from to solace the complainant. The other reasons for punitive damages is that Officer of profession insurance company/OP is also intentionally misinterpreting the simple language of surveyor's report to devise it as a way to deny valid claim of complainant. Thus, compensation of Rs.25,000/- is allowed in favour of complainant and against the OP apart from punitive damages of Rs.10,000/- in favour of complainant and against the OP. In addition, the complainant is also allowed costs of litigation of Rs.10,000/- It will be in the discretion of OP that punitive damages, being awarded against it, may be separately recovered from faulting officer/person as per its norms.
9. Accordingly, the complaint is allowed in favour of complainant and against the OP to return/pay a sum of Rs.1,15,028/-. /- along-with simple interest of 8% p.a. from date of surveyor's report dated 02.08.2017 till realization of amount, apart from damages of Rs.25,000/-, punitive damages of Rs.10,000/- & costs of Rs.10,000/- payable within 30 days from the date of receipt of this order.
10. Copy of this Order be sent/provided forthwith to the parties free of cost as per rules for necessary compliance.
11: Announced on this 11th April, 2023 [चैत्र 21, साका 1945]
[Vyas Muni Rai] [ Shahina] [Inder Jeet Singh]
Member Member (Female) President
