1.      Heard Mr. Sidhartha Sharma, Advocate, for the complainant, Mr. D. Varadarajan, Advocate, for opposite party-1 and Mr. Satyam Khare, Advocate, for opposite party-2. 

2.      Bake Bihari Agrotech Projects Private Limited (the Insured) has filed above complaint for setting aside repudiation letters dated 20.07.2018 and 21.07.2018 and directing Universal Sompo General Insurance Company Limited (the Insurer) to pay (i) Rs.37346250/- with interest @18% per annum from the date of loss till actual payment, as insurance claim; (ii) the cost of litigation; and (iii) any other relief which is deemed fit and proper, in the facts and circumstances of the case.

3.      The facts as stated in the complaint and emerged from the documents attached with the complaint are as follows:-

(a) Bake Bihari Agrotech Projects Private Limited (the Insured) was a company, registered under the Companies Act, 1956 and engaged in operating rice mill plants and dealing in fine quality of rice, paddy and rice bran etc. The Insured had its rice mill at village Kasturia, post office Tulshihata, P.S. Harischandrapur, district Malda. The Insured took financial assistances viz. term loan and cash credit facility from Allahabad Bank (opposite party-2) and the rice mill, plant & machinery and goods were mortgaged/hypothecated with it. Besides milling the rice from the paddy purchased from the grower/market, the Insured used to mill the rice of Food Corporation of India, Food & Civil Supply Department of State Government and other Co-operative Societies.  

(b) Universal Sompo General Insurance Company Limited (the Insurer) was a joint venture insurance company of Allahabad Bank, Indian Overseas Bank, Karnataka Bank Ltd, Dabur Investment Corporation and Sompo Japan Niponkoa Insurance Inc. and engaged in the business of providing different types of insurance services. The Insured obtained “Standard Fire and Special Perils Policy” No.2114/54642411/02/000 for the period of 24.12.2016 to 23.12.2017, from the Insurer, for sum insured of Rs.12.79/- crores, (i.e. Rs.2.22 crores, on building including plinth & foundation, Rs.3.94 crores, on plant & machinery, Rs.59 lacs, on electrical equipment/fittings, Rs.4 lacs on furniture, fixtures & fittings and Rs.6 crore, on stock of paddy, rice, husk and packing materials), lying at above location of rice mill. This was a renewal policy. The Insured also obtained Burglary Policy No.2913/54642411/02/000 for the period of 24.12.2016 to 23.12.2017, from the Insurer, for sum insured of Rs.9.94/- crores, 

(c)     Due to continuous heavy down pour, release of excess water from Negal and breach of the dam constructed on Mahanadi near Ajamnagar, Dabout, Bihar, the water level in all around of village Kasturia, post office Tulshihata, P.S. Harischandrapur, district Malda started rising from 17.08.2017 and entire area was sub-merged in the water. Flood water started entering the mill premises at about 14:00 hours and water level became about 1.5 to 2 foot in height till evening of 17.08.2017 and later on about 4 to 4.5 foot in height. The water remained accumulated in the mill premises of the Insured and surrounding area for four days and started receding from evening of 21.08.2017. Flood water damaged machinery, stock of paddy, rice, husk and packing materials stored at the mill premises of the Insured. In this flood, more than 50 villages were washed away due to erosion hitting those areas. Five blocks around the mill were inundated in flood water and roads up to mill were blocked. River Ganga was flowing at 25.34 meters level and river Fulahar was flowing at 26.08 meters level, during this period, while extreme danger level was 25.3 meters.  

(d)  The Insured informed the Insurer about incident of flood on 16.08.2017 on telephone. The Insurer appointed Mr. Kabi Das, SIB & Associate, Siliguri, as preliminary surveyor. According to Mr. Kabi Das, he contacted the director of the Insured for spot inspection but he was informed that due to inundation of water around the mill premises as well as in entire locality, the premises was not accessible. The Insured wrote a letter dated 22.08.2017 to the Insurer that the surveyor did not inspect the mill premises; the rice, paddy and rice bran flooded in the water were started decaying and had become hazardous to health; local people and administration were pressurizing to clean the place by removing decaying grains etc. The Insurer, vide letter dated 23.08.2017 did not permit removal of decaying grains etc. from the mill premises till the inspection was done by the surveyor. Mr. Kabi Das, inspected the mill premises on 27.08.2017 and asked the Insured to segregate the rotten stocks. He submitted Preliminary Survey Report.

(e)     In the meantime, the Insurer appointed Adarsh Associates, Insurance Surveyors, New Delhi, as the surveyor. The surveyor inspected the mill premises on 03.09.2017, made inventory and took photographs. The Insured supplied the papers as demanded by the surveyor/Insurer time to time. The surveyor submitted Final Survey Report dated 15.03.2018, observing that signs of water level in the mill premises up to the height of 4 to 5 foot were traced. Most of the machineries installed at the ground floor were damages due to inundation. Most of the stocks of paddy, rice, bran & packing materials were damaged, which were not suitable for consumption either for the human or for the cattle feed. The stocks in upper layer of various stacks were not affected with flood water. Open field in all the three sides of the mill premises were still submerged in water at the time of inspection. The surveyor assessed the loss of Plant & Machinery to Rs.218079/- and Stock & Stock in process to Rs.18875811.22. After deducting for excess clause, net adjustable loss of Rs.17932021/- was assessed. But he observed that warranties were breached.

(f)      After receiving Final Survey Report, the competent authority of the Insurer examined the papers. The Insurer made queries from the surveyor about the consequences of breach of warranties. The surveyor vide email dated 29.03.2018, informed that for the breach of each warranty, 25% of assessed loss had to be deducted. After deducting 50% from assessed loss, he assessed the loss to Rs.8966010/-. Thereafter, a meeting was held on 10.05.2018 at Zonal Office of Allahabad Bank with the Zonal Claims Manager of the Insurer and the Directors of the Insured. The Insured was asked to submit certificates from Food & Civil Supply Department of State Government that no delivery of rice from 01.10.2016 to 30.09.2017 was pending with the Insured. The Insured obtained the required certificate dated 11.05.2018 and supplied to the Insurer through letter dated 12.05.2018. The Insured complained to Insurance Regulatory and Development Authority, for delay in settlement of the claim. The Insurer, vide letter dated 20.07.2018, repudiated the claim on the grounds of breach of warranties namely (i) surrounding public road was at higher location than the location of mill premises and (ii) Stocks were not kept on an elevation of two foot from the ground floor. Then this complaint was filed, claiming deficiency in service.    

4.      The Insurer filed its written reply on 29.10.2018, and contested the case. The Insurer stated that as soon as the Insured informed regarding inundation of its mill premises, the Insurer appointed Mr. Kabi Das, SIB & Associate, Siliguri as preliminary surveyor, who inspected the mill premises of the Insured, on 27.08.2017 and submitted his preliminary survey report. The Insurer appointed Adarsh Associates, Insurance Surveyors, New Delhi, as the surveyor, who inspected the mill premises on 03.09.2017 and on subsequent dates for conducting survey and assessing loss. The surveyor submitted Final Survey Report dated 15.03.2018, in which he observed breach of warranties and left it open for the Insurer to decide its implication. The Insurer, vide email dated 29.03.2018, made query from the surveyor as to what was effect of the breach of the warranties. The surveyor vide email dated 29.03.2018, replied that for breach of the warranty, 25% of the claim for every breach could  be deducted. The Insurer also deliberated with the director of the Insured in this respect. Plinth of the mill of the Insured was 1.5 to 2 foot lower than the adjoining road. Second warranty, which was breached, requires to keep stock on an elevation of two foot from the ground floor. Total inundation of 4 foot in height from ground level of mill was noticed by the surveyor. The compliance of these warranties could have avoided the loss. The opinion of surveyor was not acceptable. The Insurer, therefore, repudiated the claim, vide letter dated 20.07.2018. Delay has occurred as the surveyor took time in submitting his report and thereafter, the Insured was heard. There was no deficiency in service on its part.

5.      The Insured filed Rejoinder Reply on 25.02.2018, in which, the facts stated in the complaint were reiterated. Along with Rejoinder, the Insured filed a Certificate of Mrinal Majumdar (a Licentiate of Civil Engineer) dated 03.12.2018, showing that “Height of Ground Level to Plinth Level as 0.45 meter. Height of Ground Level to Road Level as 0.45 meter. At present road height and building plinth height were equal from ground level” and letter of Allahabad Bank dated 05.09.2018, written to the Insurer to reconsider the claim of the Insured. The Insured filed Affidavit of Evidence of Bijay Kumar Modi, documentary evidence and Affidavit of Admission/Denial of Documentary Evidence of Piyush Shankar. The Insurer filed Affidavit of Evidence of Nirmal Bhattacharya, Chief Underwriter and documentary evidence. Both the parties filed their written synopsis. 

6.      We have considered the arguments of the counsel for the parties and examined the record. The claim was repudiated vide letter dated 20.07.2018, on the grounds of breach of the policy warranties, namely (i) surrounding public road was at higher location than the location of mill premises and (ii) Stocks were not kept on an elevation of two foot from the ground floor. Insurance Policy in question provides that the policy is subject to warranties that (i) the surrounding public road is not higher elevation than the risk located. (ii) Stock to be kept at least as an elevation of 2 ft from the floor.

 7.     The surveyor, in paragraph-4.9(i) of Final Survey Report dated 15.03.2018, noted that plinth level of the Insured’s mill was approx. 1.5 foot to 2 foot lower than the level of the road, passing in front of main entrance gate and general level of the fields in three sides of Insured’s mill were about 3 foot to 4 foot lower than the ground level of Insured compound. The position is verified from the photographs filed on pages-82 and 83 of the written reply of the Insurer. The Insured filed a Certificate of Mrinal Majumdar (a Licentiate of Civil Engineer) dated 03.12.2018, showing that “Height of Ground Level to Plinth Level as 0.45 meter. Height of Ground Level to Road Level as 0.45 meter. At present road height and building plinth height were equal from ground level”. This certificate has not been proved by filing Affidavit of Evidence of Mrinal Majumdar. The photographs, which were part of Final Survey Report dated 15.03.2018, clearly contradict this certificate. As such, the findings of the surveyor and the Insurer that the Insured’s mill was approx. 1.5 foot to 2 foot lower than the level of the road appears to be correct. The Insured has not challenged the other findings of the surveyor and the Insurer that stocks were not kept on an elevation of two foot from the ground floor. As such, violation of aforementioned two warranties were proved.

8.      The counsel for the Insured relied upon the judgment of Supreme Court in Amalendu Sahoo Vs. Oriental Insurance Company Limited, (2010) 4 SCC 536 and submitted that in case of breach of warranty, the claim could be settled on no-standard basis by awarding 75% of the claim. 

9.      Aforesaid case arose under the provisions of Motor Vehicles Act, 1988, where Insurance company has laid down guidelines for settlement of claim on non-standard basis. In the present case, no such guideline is brought of record. Plinth of the mill of the Insured was 1.5 to 2 foots lower than the adjoining road. Second warranty, which was breached, requires to keep stock on an elevation of two foot from the ground floor. Total inundation of 4-5 foots in height from ground level of mill was noticed by the surveyor. The loss could have been prevented by complying with these warranties. In M/s. Suraj Mal Ram Niwas Oil Mills (P) Ltd. Vs. United India Insurance Company Ltd. (2010) 10 SCC 536 held that due to breach of special condition incorporated in the cover note, the claim must fail. Supreme Court in Rajkumar & Brothers (Impex) Vs. Oriental Insurance Company Ltd., (2020) 4 SCC 364, held that the liability of the Insurer is discharged on account of breach of warranty.

O R D E R

In view of aforementioned discussion, the complaint is dismissed.