Before the District Consumer Dispute Redressal Commission [Central], 5th Floor ISBT Building, Kashmere Gate, Delhi
Complaint Case No.-413/10.11.2016
Sterling Brassware
33, Nodia Special Economic Zone
Noida-201305 ...Complainant
Versus
M/s United India Insurance Company Ltd.
2216, 3rd Floor, Hardhian Singh Road,
Karol Bagh, Delhi-110005 ...Opposite Party
Order Reserved on: 17.01.2023
Date of Order: 02.05.2023
Coram: Shri Inder Jeet Singh, President
Shri Vyas Muni Rai, Member
Ms. Shahina, Member -Female
Vyas Muni Rai
FINAL ORDER
1.1. The present complaint has been filed by the complainant u/s 12 of the CP Act, 1986 against the wrongful rejection by the OP of the claim under policy of Burglary Insurance.
1.2: Complaint has been filed by complainant seeking the loss suffered & other claimed.
1.3. The complainant is a small scale unit engaged in manufacturing of bath room fittings like taps, faucets, showers etc. from its Noida units.
1.4. For the sake of security and against natural and man-made calamities, the complainant has been insuring its property through insurance policies issued by the OP. The complainant in particular was taking policies against fire, storm, earthquake and burglary risks.
1.5. In the year 2012-13, as in the past, the complainant insured its material lying at its factory premises for a further period of one year from 22.04.2012 to 21.04.2013, two separate policies were issued to the complainant; one was for fire and allied perils, whereas the other was for burglary and house breaking risks. The complainant insured its stock against the said risks to the extent of Rs. 40,00,000/- based on its stock holdings and all kinds i.e. raw material, semi-finished and finished goods.
1.6. Unfortunately, on the intervening night between 15/16.02.2013, burglary occurred in the insured premises of the complainant. Information of theft came to the knowledge of complainant in the early hours of 16.02.2013, FIR with the police was immediately registered and initially goods worth about Rs. 5,00,000/- assessed to have been stolen by the burglars, later upon taking complete inventory, it was discovered that a total of Rs. 5,40,650/- were stolen by thieves. The aforesaid incident was immediately informed to the OP.
1.7. OP appointed Mr. Parbhat Narayan Singh, as Surveyor to carry out the survey and assessment of the loss, the surveyor immediately visited the spot on 16.02.2023, all the necessary documents and information were provided to the surveyor as required by him. Surveyor also demanded closer report of the police duly approved by the court. After the police completed its investigation, the same was also provided.
1.8. However, the claim was not settled for nearly one and a half year. By letter dated 26.06.2014, OP informed the complainant that the claim has been processed and asked the complainant to provide bank account detail to send the amount directly; since no detail of the amount settled was given, the complainant wrote back to provide the amount of claim settled.
1.9 OP vide letter dated 15.09.2014 informed the complainant about settlement of the claim for Rs. 49,269/-, this was shocking for the complainant. The complainant in the body of his complaint also has reproduced the material findings of the surveyor appointed by the OP and final assessment amount payable i.e. Rs. 49,269/- which was settled by the surveyor.
1.10. Aforesaid settled amount came as a rude shock to the complainant and the settlement was taken to be totally wrong, incorrect with a mala fide intention resulting in the request of the complainant to OP to provide copy of the survey report on the basis of which, the claim was settled. Complainant also pleads about its long relationship with the OP regarding the insurance policy for several years, which was to cover the entire stock whether raw material, semi-finished or finished goods, and there was no logic or justification to not to cover all of these in view of their risk probability. It was discovered that while choosing the description to be mentioned in the policy, OP’s officials have acted unilaterally and not in accordance with the intentions of the complainant.
1.11. It is also the case of the complainant that its stock was described in the burglary policy in question as “stock of bath room fitting”; taking literal interpretation of the said phrase, surveyor disallowed a whopping part of loss suffered by the complainant and assessed finally Rs. 49,269/- instead of loss suffered by the complainant for Rs. 4,29,018/- on the ground that these did not fit in the description of “bathroom fittings”.
1.12. It is the case of the complainant that the policy was to cover its entire stock i.e. raw material, semi-finished goods and finished goods but it was arbitrarily chosen and the description has been changed of its own by the OP, the description used earlier was different and then without any authority or instructions from the complainant it was changed. The complainant has submitted copy of the old policies to show that earlier a different description was being used, from what was used in the present policies. Complainant has annexed the photocopies of the old policies with the complaint; which will be dealt at appropriate stage in this order.
1.13. It was in the above scenario, the complainant declined to accept amount of Rs. 49,269/- offered wrongly in the settlement by the OP, though, the complainant claims Rs. 4,29,018/- as losses assessed by the surveyor as per the contract of insurance between the parties.
1.14. The complainant, in view of the aforesaid pleadings, has alleged unfair trade practices, non- observance of its liability after collecting full premium and of the treatment of grave unfairness and injustice by rejection of various articles of the stock on flimsy grounds by the OP.
1.15. In view of the foregoing submissions, complainant has prayed for the relief against OP for a sum of Rs. 4,29,018/- being the amount of loss assessed by the surveyor along with 18% p.a. interest from the date of loss till realization, Rs. 20,000/- litigation cost, apart from Rs. 30,000/- towards mental agony, pain, harassment etc.
2. OP has denied that the stock in the insured premises consisted of raw materials and semi-finished products and also denied that the said premises had machinery installed in it. But OP has admitted, to the extent that OP had issued two separate policies to the complainant insuring the stock of bath room fittings towards burglary and house breaking and another policy covering fire and allied perils. It has been further pleaded that, as per the statement of guards and contents of the survey report five bags were recovered, while the guard was chasing the burglars, whereas, the details of materials recovered were never given by the claimants. It is also the stand of OP that claim was and could be settled after the receipt of all documents namely the final closure report, which was supplied only in April 2015. The settled amount, arrived for the purpose of loss, was after thorough investigation and based on the survey report. The amount arrived/ settled was solely on the basis of the cover provided to the finished products, which is bathroom fitting in the present case, at no point of time complainant conveyed/ intimated to OP to give cover for other stock and has denied that the complainant is entitled to any amount whatsoever, and deficiency in service on the part of OP has also been denied.
3. Complainant in its detailed rejoinder took objection that OP has not filed documents with its written statement, so, it shall not be entitled under Order VIII Rule 1A of CPC to file supporting documents; OP has of its own changed the description of items to be covered; when this policy began in 2009, the earlier policy was also being taken from another office of the same company; the broker had given to the OP instructions to issue policy on the same basis, but OP has issued policy by truncating the description; it is denied that any terms or conditions were supplied to the complainant along with insurance policy ; OP is mis-representing the statement given by the guard; there is no chasing of the burglars (statement of the guard is already at page no. 24 of the complaint); filing of the closure report of case is in the hands of the police. Whenever it was filed, the same was provided to the OP; there is no question about the intimation of cover of stock; it is already mentioned in the policy, rest of submissions are the replica of complaint.
4. Complainant has filed the affidavit of evidence signed by Sh. Pawan Kumar Gupta a partner of the complainant; complainant in his affidavit states that it has been obtaining insurance policy in ordinary course of business from 23.04.2009 from OP for the stocks consisting of Bath fittings, finished and semi-finished and raw material, D.G. set, plant and machinery for the period from 23.04.2009 to 22.04.2010, 23.04.2010 to 22.04.2011, 22.04.2011 to 21.04.2012 and from 22.04.2012 to 21.04.2013 (copies of insurance policies are Exh. CW-1/1 to Exh. CW 1/4 (colly.) after receiving survey report, complainant sent fresh request and reminder to OP to appoint another surveyor to reassess the loss after considering the viewpoint of earlier claim of complainant’s sister concern M/s Delta Faucets for the burglary stock including raw material, semi-finished products and same were duly settled by the surveyor. Complainant has tendered record of letters dated 26.11.2014, 03.12.2014, 05.01.2015, 09.01.2015, 10.02.2016 and 29.05.2016 sent to OP have been placed on record as Exh. CW-1/23 to Exh. CW-1/28. Affidavit is on the line of complaint.
5. On behalf of OP, Sh. Subodh Sharma, Senior Divisional Manager has filed the affidavit of evidence; based on survey report that as per survey report only the stock of bathroom fittings are covered under the policy; as per the surveyor’s report only three items which are shower of cum cast, single lever wall mixed body and diverter and cast blank K.G. are admissible under the policy; as per survey report; raw material and semi-finished items are not falling under the coverage of policy; complainant at no point of time sent any letter to protest any change made with regard to stock insured; statement of the guard that the five bags had been recovered; whereas details of the materials recovered were not given by the claimant; rest of the contents of affidavits are as narration of facts given in reply.
6. Both the parties have filed their written arguments. Complainant and OP have placed on record judgments/ citations in support of their respective case, which will be discussed hereinafter. Ld. Counsels for parties also made oral submissions.
7. We have considered and rival contentions of parties; analysed them. and have assessed their submissions & perused the records. At the outset, it is relevant to mention that there was an application u/s 19 of CP Act by complainant to condone the delay in filing complaint, it has been allowed by separate detailed reasoned order.
8. From perusal of the records, written submissions coupled with oral submissions of the parties, it is manifestly clear that complainant had been obtaining the insurance policy for its business from 23.04.2009 from OP continuously till the last policy (22.04.2012 to 21.04.2013) which is the subject matter of contest between the parties. The complainant has been taking policies against fire, storm, earthquake and burglary risks; in the policy wef 23.04.2009 to 22.04.2010 (exh. CW1/1) the description of insured items (stock in trade) are mentioned as on stock of manufacturing of bath fittings, finished and semi-finished and raw materials, D.G. set, plant and machinery; in the letter dated 29.04.2010 (Ex. CW-1/2) from broker to OP having the subject- “placement slip for renewal of fire and allied perils and burglary insurance policies” having different details, at serial no. 5 in column ‘policy type’ it is mentioned ‘standard fire and special perils policy for stock (SI Rs. 3,50,000/-) & earthquake (Rs. 3,50,000/-) and burglary policy (full details as per previous policy attached)- for stock (SI Rs. 3,50,000/-) and accordingly premium was advised.. Likewise, in the policy of 22.04.2010 to 21.04.2011 (Ex. CW-1/18); same description of insured items are mentioned.
9. However, in the policies for the period 22.04.2011 to 21.04.2012 (Ex. CW-1/3) and in policy 22.04.2012- 21.04.2013(Ex. CW-1/4); under the head of description of items “stock of bathroom fittings” are mentioned; it is not understood by common prudence that in what circumstances, OP changed the insured item to this extent despite no request of complainant. If it was on behest of complainant; insurer/ OP failed to submit any document on record; nor such extant of insured items on the part of OP have been proved. On perusal of the policies for the period 22.04.2010-21.04.2011, 22.04.2011- 21.04.2012 and for 22.04.2012-21.04.2013; sum insured/ risk covered were to the tune of Rs. 1,00,00,000/- Rs. 3,50,00,000/- and Rs. 4,00,00,000/- respectively; if that is so, why a consumer/ insured would get risk increased to the higher side and pay the higher amount of premium to but for limited risk cover for the perils at its disadvantage. In common parlance, any person placed in the circumstances of the complainant, would only be under the impression and bona fide belief that policy would have certainly been renewed by the insurer in accordance with terms of the original and earlier policies and not otherwise. It appears, OP of its own limited the cover of risk, without any such request or instruction or proposal from the complainant/ insured.
10. OP has also taken the stand that as per the statement of guards and survey report five bags were recovered and details of the recovered materials were not given by the complainant; to rebut this, complainant has emphatically submitted that recovered materials have not been included in the claim. Complainant vide letter dated 21.02.2014 to surveyor of OP, submitted claim form, balance sheet of company, statement of watchman dated 16.02.2013 and details of items lost of Rs. 5,40,650/- [which are exhibited as CW-1/7 to CW-1/11]; however, complainant has restricted & conceded to lower side claim of Rs. 4,29,018/- based on the loss assessed by the surveyor.
OP’s plea that closure report of police was not submitted by the complainant does not carry credence as the investigation & its report are not in the domain report was not in possession of complainant; it was submitted to the OP on filing of the report by the police.
The complainant has denied receipt of any terms and conditions along with the policy, which is serious default on the part of the OP; since non-supply of the copy of terms and conditions of policy by OP to the complainant is violation of the terms of the insurance contract and OP could not establish of providing terms and conditions of policy to complainant.
11. OP has cited the case of M/s New Ankur Jewellers vs United India Insurance Co. Ltd. RP No. 2778/2016(NC) dod 19.10.2016 that papers were not provided to insurer and incident was not covered under the policy being barred by condition, however, facts and circumstances of at case are distinguishable from the instant case.
12. Per contra, the complainant has filed on record judgment dated 26.11.2007 passed by the Hon’ble High Court of Delhi in case- The New India Assurance Co. Ltd. vs Sh. Akshay Kumar Paul and Anr. LPA no. 1335/2017 dod 26.11.2007; in which Hon’ble High Court of Delhi has dealt in detail about the renewal of Medi-claim insurance policy and its effect thereof; wherein it is held that:-
“5. Xxx the respondents had obtained mediclaim insurance policy for the first time on 11th August, 1999 without any restriction. The policy was also renewed for three consecutive years thereafter till 2003 again without any restriction. In February, 2003, the respondent No. 1 suffered a heart attack and thereafter the appellant insurance company refused to renew the old policy and put up a clause insisting that cardiac ailment of respondent no. 1 will henceforth not be covered. Such condition imposed by insurance company has already been deprecated and held to be illegal by the Supreme Court in Biman Krishna Bose vs United India Insurance Co. Ltd. and others (2001) 6 SCC 477, wherein it was observed as under:
“5. A renewal of an insurance policy means repetition of the original policy. When renewed, the policy is extended and the renewed policy in identical terms from a different date of its expiration comes into force. In common parlance, by renewal, the old policy is revived and it is sort of a substitution of obligations under the old policy unless such policy provides otherwise. It may be that on renewal, a new contract comes into being, but the said contract is on the same terms and conditions as that of the original policy. Where an insurance company which has exclusive privilege to carry on insurance business has refused to renew the mediclaim policy of an insured on extraneous and irrelevant considerations, any disease which an insured had contacted during the period when the policy was not renewed, such disease cannot be covered under a fresh insurance policy in view of the exclusion clause. The exclusion clause provides that the pre-existing diseases would not be covered under the fresh insurance policy. If we take the view that the mediclaim policy cannot be renewed with retrospective effect, it would give handle to the Insurance Company to refuse the renewal of the policy on extraneous consideration thereby deprive the claim of the insured for treatment of diseases which have appeared during the relevant time and further deprive the insured for all time to come to cover those diseases under an insurance policy by virtue of the exclusion clause. This being the disastrous effect of wrongful refusal of renewal of the insurance policy, the mischief and harm done to the insured must be remedied. We are, therefore, of the view that once it is found that the act of an insurance company was arbitrary in refusing to renew the policy, the policy is required to be renewed with effect from the date when it fell due for its renewal.”
6. xxxx in this case the Hon’ble High Court of Delhi has also referred a Divisional Bench Judgment of Gujarat High Court in United India Insurance Company Ltd. & Anr. Vs Mohanlal Aggarwal reported as AIR 2004 Gujarat 191 that an insurance company must renew the mediclaim insurance policy and cover all diseases which had been contracted by the insured during continuation of the cover from the first date when the insurance cover was taken.”
13. Complainant, relied on an another case titled Jacob Punnen & Anr. vs United India Insurance Co. Ltd. Civil Appeal No. 6778 of 2013 (SC), wherein it is held that:-
“6. However, I am in agreement with my learned brother that the claim under the Consumer Protection Act must allowed on the ground that there has been a deficiency on the part of the Insurer. The Insurer brought about a change in the policy. This change introduced a cumbersome limitation. It kept the Insured in the dark about the limitation at the time when the renewal notice was issued, and what is more, the premium was accepted. The insurer had a duty to inform the appellants that a change regarding the limitation on its liability was being introduced.
This duty to take the insured into confidence was breached. This was the deficiency in service. Even proceeding on the basis that the policy incorporates the terms of the contract, insofar as the respondent insurer unilaterally purported to incorporate a clearly cumbersome limitation involving a breach of the duty to take the appellants into confidence, the court would not be powerless to undo the wrong. Be it that the policy purported to incorporate the substantive limitation, the appellant can be relieved of the result of the deficiency in service by the insured. This can be done by resorting the position, the appellants would occupy if there was no breach. I would, therefore, agree with my learned Brother that the appeal be allowed on the basis that there was unjustifiable non-disclosure by the Insurer about the introduction of clause of limitation and, in this case, it constituted a deficiency in service and resultantly the appellants are entitled to relief. I, therefore, agree that the appeal be allowed.”
14. In another case, titled New India Assurance Co. Ltd vs Pradeep Kumar (2009) 7 SCC 787, Hon’ble Supreme Court, inter alia, has held that:-
“in other words although the assessment of loss by the approved surveyor is a pre-requisite for payment or settlement of claim of twenty thousand rupees is not the last and final word. It is not the sacrosanct that it cannot be departed 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.”
15. Based on above discussions, deliberations and citations; we conclude that there has been deficiency in service on the part of the OP and we allow the complaint and direct the OP as under:-
(a) to pay the complainant a sum of Rs. 4,29,018/- being the amount of loss assessed by the surveyor, apart from Rs. 15,000/- for mental agony, pain and damages and also Rs. 10,000/- as litigation cost.
(b) We further hold that if OP fails to pay to the complainant aforesaid amount within 30 days from the date of receipt of this order; OP shall pay interest at the rate of 6% pa on the assessed amount Rs. 4,29,018/- from the date of filing of the complaint till its realization.
16. Copy of this Order be sent/provided forthwith to the parties free of cost as per rules for necessary compliance.
17: Announced on this 02nd May 2023.
[Vyas Muni Rai] [ Shahina] [Inder Jeet Singh]
Member Member (Female) President
