BEFORE THE CONSUMER DISPUTES REDRESSAL FORUM,

ERNAKULAM.

Date of filing : 22/04/2009

Date of Order : 29/10/1011

Present :-

Shri. A. Rajesh, President.

Shri. Paul Gomez, Member.

Smt. C.K. Lekhamma, Member.

C.C. No. 227/2009

Between

And

O R D E R

A. Rajesh, President.

1. Briefly stated, the case of the complainant is as follows :-

The complainant is a private limited company. The 2^nd and 3^rd opposite parties bank advanced loan to the complainant. The bank took an insurance policy for the period from 19-12-2005 to 18-12-2006 to protect the stock and the building against all peril by crediting the premium to be paid in the loan account of the complainant. The proposal form was submitted by the 2^nd opposite party, the complainant was not aware of the characteristics of the policy. Thus the 1^st opposite party insured the complainant's stock of bleaching power, raw materials and godown building for Rs. 20 lakhs each under a fire insurance policy. The facts while so on 17-11-2006 at about 11 P.M., a fire occurred in the go down building. Immediately, the Fire and Rescue Services, Aluva came to the scene and by pumping water they extinguished the fire. Due to the impact of the fire and the consequent pumping of water, the bleaching powder kept at the godown got damaged and decomposed. There was a stock of 46,389 Kgs. of bleaching powder in the godown. Insurance claim was submitted by the complainant claiming Rs. 8,86,029.90 towards the cost of bleaching powder @ Rs. 19.10 per Kg. And Rs. 84,477/- towards loss of raw materials and Rs. 25,000/- towards the damage of the building. Against the claims of the complainant, the 1^st opposite party granted only Rs. 9,953/- stating the reason fire was due to spontaneous combustion, which is not covered under the policy. While taking the policy, the 2^nd and 3^rd opposite parties failed to take cover for spontaneous combustion. The bank took the policy in a callous and negligent manner which excludes cover for spontaneous combustion. The conduct of the 2^nd and 3^rd opposite parties in not taking the proper policy for protecting the interest of the complainant amounts to deficiency in service. The opposite parties are liable to indemnify the loss sustained by the complainant to the tune of Rs. 9,95,507/- and Rs. 2 lakhs towards damages together with interest @ 12% p.a. This complaint hence.

2. Version of the 1^st opposite party :

The complainant has filed this complaint only after 12 calender months from the date of repudiation of the claim, since condition No. 6 (ii) of the policy envisages so. On receipt of the insurance claim of the complainant, the 1^st opposite party deputed a surveyor, he assessed the loss at Rs. 9,953/-. Even that amount is not payable, since the cause of damage was attributed by spontaneous combustion which is not covered under the terms and conditions of the policy. There is no deficiency in service on the part of the 1^st opposite party. The complainant is not entitled to get any of the reliefs as prayed for.

3. Defense of the 2^nd and 3^rd opposite parties :

The complaint is barred by limitation. Since the complainant has filed this complaint after 2 years from the date of cause of action. The complainant is not a consumer as defined in Section 2 (1) of the Consumer Protection Act. As per the loan agreement between the complainant and the bank, the complainant has to insure the chemicals produced and the building where the chemicals are kept. This responsibility is exclusively that of the complainant. Since the complainant failed to take a policy, the bank to protect their interest availed a policy of the 1^st opposite party. The complainant was aware of the nature of the policy. The 2^nd and 3^rd opposite parties request to dismiss the complaint.

4. The witnesses for the complainant were examined as PW's 1 to 4 and Exts. A1 to A18 were marked on the side of the complainant. No oral evidence was adduced by the 1^st opposite party. Exts. B1 and B2 were marked on their part. Witness for the 2^nd and 3^rd opposite parties was examined as DW1. Exts. B3 to B6 were marked on their side. Exts. X1 and X2 also were marked. Heard the counsel for the parties.

5. The points that emanated for consideration are :-

1. Whether the complaint is barred by limitation?

2. Whether the complainant is a consumer as per Section 2 (1)(d) of the Consumer Protection Act?

3. Whether the opposite parties are liable to pay Rs. 9,95,507/- by way of insurance claim?

4. Whether the complainant is entitled to get damages of Rs. 2 lakhs?

6. Point No. i. :- At the threshold, the 1^st opposite party filed I.A.No. 482/2009, challenging the maintainability of the complaint. According to the 1^st opposite party, the insurance claim of the complainant was repudiated on 23-04-2007 and the complainant ought to have filed the complaint within 12 calender months from the date of repudiation of the claim as per Condition No. 6 (ii) of their policy. The learned counsel relied on the decision rendered by the Hon'ble Supreme Court in Kandimalla Raghavaiah & Co. Vs. National Insurance Co. & Anr. (2009 (4) CPR 17 (SC). The 2^nd and 3^rd opposite parties took a contention that since the complainant has filed this complaint after 2 years from the date of cause of action and so the complaint is not maintainable. The learned counsel as well relied on the above decision of the Hon'ble Apex Court. The complainant is of the view that the cause of action of this complaint started from the date of repudiation of the claim and not from the date of the incident. It is stated that by way of abundant caution, the complainant filed I.A. No. 506/11 to condone the delay of 166 days in filing this complaint.

7. Admittedly as per Section 24 A of the Consumer Protection Act, the limitation period is 2 years from the date on which the cause of action has arisen. It is not in dispute that the fire occurred in the godown of the complainant on 07-11-2006 and the claim of the complainant was repudiated by the 1^st opposite party on 23-04-2007.

8. Evidently, Clause 6 (ii) of Ext. X1 policy applies where a suit in a court of law is filed, since the instant case is not a civil suit the limitation period applicable is Section 24 A of the Consumer Protection Act. It was confirmed by the Hon'ble National Consumer disputes Redressal Commission in United India Insurance Co. Ltd. Vs. Hukil and Another 2010 CTJ P. 1126 (NC). The insurance claim of the complainant in this case had been repudiated by the 1^st opposite party on 23-04-2007 and the complainant filed this complaint in this Forum on 22-04-2009 which is within the limitation period prescribed in Section 24 A of the Consumer Protection Act.

9. The Hon'ble National Consumer Disputes Redressal Commission in United India Insurance Co. Ltd. Vs. R. Piyarelall Import and Export Ltd. (2010 CTJ 139 (NC), held that the cause of action for the complaint arises from the date of repudiation of the claim.

10. We need not rely on the decision of the Hon'ble Apex Court because in that case the request of the claimant to issue a claim application was declined by the insurance company and the complainant filed complaint only after 4 years from the date of fire. So the Supreme Court held that the complaint is manifestly barred by limitation, since the cause of action began to run from the date of fire. The above case has no nexus with the instant case.

11. In the above circumstances, we are only to hold that the complainant has field this complaint well within time prescribed by the Consumer Protection Act. So the contention of the opposite parties do not hold water.

12. Point No. ii. :- The 2^nd and 3^rd opposite parties contended that advancing loan from a bank is not a service as defined under Section 2(1)(o) of the Consumer Protection Act, so the complainant is not a consumer as defined under Section 2 (1) (d) of the Act.

13. We are at a loss as to how the 2^nd and 3^rd opposite parties could have come to such a conclusion that the complainant is not a consumer especially banking is a service as defined in Section 2 (1)(o) of the consumer Protection Act. Moreover, according to the Hon'ble National Consumer Disputes Redressal Commission the service provided by bank, in connection with banking facilities would be service, as contemplated under the Consumer Protection Act (Awaz & Ors. Vs. Reserve Bank of India (III (2008) CPJ 98). So the contention do not survive.

14. Point No. iii. :- The chronological events in this complaint are as follows :

1. The complainant availed himself of a loan from the 2^nd and 3^rd opposite parties Bank for its business.

2. In order to protect the interest of the Bank at their instance, the 1^st opposite party insured the building and the chemicals vide Ext. X1 Standard Fire and Special Perils Policy.

3. The policy was valid from 19-12-2005 to 18-12-2006 evident from Ext. X1.

4. The sums insured for building and the stocks of the complainant were Rs. 20 lakhs each evident by Ext. X1.

5. During the currency of the policy, fire occurred at the go down of the complainant on 07-11-2006.

6. The surveyor deputed by the 1^st opposite party assessed the damages caused to the building and stock vide Ext. A16 survey report.

7. On 23-04-2007, the 1^st opposite party repudiated the insurance claim of the complainant stating that the loss could be reasonably attributed to spontaneous combustion, as there was no evidence for external fire.

15. Admittedly, the insurance claim of the complainant was repudiated by the 1^st opposite party stating that the cause of damage was attributed by spontaneous combustion or natural heating. At the request of the complainant, the 2^nd and 3^rd opposite parties have produced Ext. X1 policy schedule for the period from 19-12-2005 to 20-12-2006. As per Ext. X1 insurance coverage of fire, as per Clause 1 is as follows :

“Fire

Excluding destruction or damage caused to the property insured by

 

a) i) its own fermentation, natural heating or spontaneous combustion.

ii) its undergoing any heating or drying process.

b) burning of property insured by order of any Public Authority.”

16. According to the complainant, bleaching powder is not a combustible material and it only decomposes above 177° C. It is also stated that since bleaching powder is not combustible, the 1^st opposite party is liable to pay the insurance claim amount for the damages sustained due to fire.

17. The 1^st opposite party vehemently contended that Ext. A13 report of the fire force dated 07-11-2006 and Ext. A16 surveyor's report go to show that the incident has been occurred not due to fire instead due to spontaneous combustion is not covered under the insurance policy, and therefore, the rejection of the claim was legal.

18. The 2^nd and 3^rd opposite parties maintain that as per Clause 6 in Exts. B3 to B6 loan agreements between the complainant and the 2^nd opposite party in case the complainant does not take steps for insuring the goods the bank can insure the same at the cost of the complainant. It is further stated that since the complainant failed to do so, the bank insured the stock and premises of the complainant. The above contention of the bank was not controverted by the complainant. It is pertinent to note that the complainant has raised the hue and cry against the bank only after the rejection of the insurance claim by the 1^st opposite party. Had the complainant taken necessary interest in insuring their own premises and stock this complaint could not have arisen. The Hon'ble National Consumer Disputes Redressal Commission in A.G. Prasanna Kumari Vs. Federal Bank of India Ltd. R.P. No. 2900/2008 decided on 29-04-2010 (cited by the 2^nd and 3^rd opposite parties), held as follows :

“These provisions made in clause 8 of agreement makes it evidentiary explicit in no uncertian terms that primary duty to pay premium and keep the vehicle insured was on the borrower and in case the borrower fails to insure the vehicle, the bank may had its option to pay the premium etc. and cure the defect of borrower at their cost. It is quite patent that no duty is cast on the bank to insure the vehicle and it is only option of the bank if it so desires to get vehicle insured and pay the premium, which shall be debited to the account of the borrower.”

19. In view of the above, in the instant case we cannot fasten the liability on the bank, since the complaint is at fault in having not availed the policy itself on their choice. Therefore, we are of the view that the 2^nd and 3^rd opposite parties can be exonerated from any liability. Ordered accordingly.

20. Now, the question arises whether damage has been caused due to fire or spontaneous combustion. PW3, the station officer of the Fire and Rescue Service deposed that the finding regarding the cause of damage of the stock and premises as per Ext. A13 is only a hearsay knowledge. Further, he deposed that it is the duty of the investigating agency to detect the actual cause of the damage. PW2 the insurance surveyor, who prepared Ext. A16 survey report deposed that he is only holding diploma in Mechanical Engineering and he has no expertise to depose about chemicals and its reaction. Evidently, PW2 has no authoritative knowledge about the chemicals and chemical reactions. Neither oral nor documentary evidence is on record to show that the damage has been caused due to spontaneous combustion. The investigation officer, the SHO Binanipuram Police station went to state in Ext. A15 that the damages have been caused due to fire, though he is not an authority and his opinion is not conclusive legally. Now, the only possible inference is that the damages could have been caused only due to fire as contended by the complainant and circumvented by the 1^st opposite party.

21. For the aforesaid reasons, we are of the opinion that the 1^st opposite party is liable to pay the insurance claim of the complainant. Though, the complainant contended that they had to suffer a loss to the tune of Rs. 9,95,507/- as claimed in the complaint, nothing is forthcoming to quantify the same. Hence the complainant is entitled to get the insurance claim quantified by PW2 the insurance surveyor in Ext. A16 survey report (ie. Rs. 19,953/- towards the building and Rs. 7,08,823.92 towards the stock). That having been sustained, the 1^st opposite party is liable to pay the above amount with interest to the complainant.

22. Point No. iv. :- Since, the primary grievance of the complainant has met adequately no order as to damages.

23. In the result, we partly allow this complaint and direct that the 1^st opposite party shall pay Rs. 7,28,777/- to the complainant being the insurance claim together with interest @ 9% p.a. from the date of complaint till the date of payment.

The order shall be complied with, within a period of one month from the date of receipt of a copy of this order.

Pronounced in open Forum on this the 29^th day of October 2011.

Sd/- A. Rajesh,President.

Sd/- Paul Gomez, Member.

Sd/- C.K. Lekhamma, Member.

Forwarded/By Order,

Senior Superintendent.

A P P E N D I X

Complainant's Exhibits :-

Opposite party's Exhibits :-