w w w . L a w y e r S e r v i c e s . i n


Candor Biotech Limited v/s Oriental Insurance Co. ltd. & Another

    First Appeal No. 456 of 2013
    Decided On, 30 December 2013
    At, Union Territory Consumer Disputes Redressal Commission UT Chandigarh
    By, THE HONOURABLE JUSTICE SHAM SUNDER (RETD.)
    By, PRESIDENT & THE HONOURABLE MR. DEV RAJ
    By, MEMBER
    For the Appellant: Devinder Kumar, Advocate. For the Respondents: R1, G.S. Ahluwalia, R2, R.M. Dutta, Advocates.


Judgment Text
Dev Raj, Member:

1. This appeal is directed against the order dated 19.08.2013, rendered by the District Consumer Disputes Redressal Forum-II, UT, Chandigarh (hereinafter to be called as the District Forum only) vide which it dismissed the complaint, filed by the complainant (now appellant).

2. In brief, the facts of the case are that the complainant had taken an Insurance Policy bearing No.64613, issued by the Opposite Party, which was effective for the period from 14.6.2007 to 13.7.2008 and 30.03.2007 to 29.03.2008 covering approximately Rs.3.5 crores, which included plant, machinery, stocks, pharmaceutical goods, raw material, furniture, fixtures, lab equipments, packing material and other items as mentioned in the same, lying in its unit situated at Village Khera, Tehsil Nalagarh, District Solan (H.P.) (Annexures C-1 to C-8 respectively). It was stated that the said Policy covered burglary and house breaking. It was further stated that on the night intervening 16/17.9.2007, an incident of burglary and theft took place at the factory premises of the complainant at Village Khera, by forcible entry, when sh. Hari Lal, Foreman noticed that the main door of the same (factory premises) was broken open and the flood lights installed in premises were on. It was further stated that the production in the factory was carried on 16.9.2007 and the working staff remained there upto 8 P.M. to complete the urgent production requirements. It was further stated that when Sh. Hari Lal, Foreman was looking as to what had happened, in the meantime, Himmat Singh reached there at about 8.45 AM, to join the duty on 17.9.2007. It was further stated that the incident of burglary revealed that the window-pane of the blister packing section of the factory had been found broken open, as well as the doors were found in an open condition due to forcible entry. It was further stated that 2000 Kgs of blister aluminum foils and change parts of the machinery valued at Rs.10 Lacs approximately was found missing. It was further stated that the matter was reported to the Police of Police Station Nalagarh by the Plant Incharge namely Jaswinder Singh Sodhi immediately on 17.9.2007 (Annexure C-10). It was further stated that, on the complaint of the complainant, FIR No.247 dated 22.9.2007 was registered under Section 406, 457, 380, 411 and 34 IPC.

3. It was further stated that during the investigation, it transpired that many persons were involved in the incident of burglary. In this connection, four persons were arrested and approximately one quintal blister aluminum was recovered valued at Rs.50,000/- from their possession. It was further stated that in the burglary, blister aluminum foils and changed parts of the machinery amounting to Rs.10 Lacs were found stolen, which stood proved on the arrest of the accused. It was further stated that, subsequently, information of burglary was given to Opposite Party No.1 on 17.09.2007 itself, which deputed Surveyor, who visited the factory premises and physically verified the incident of theft. It was further stated that the burglary claim was also registered with the Opposite Parties (Annexure C-12). It was further stated that after investigation made by Opposite Party No.1, nothing was done to settle and pay the claim.

4. It was further stated that Opposite Party No.1 deputed another investigator to verify the claim about the incident of burglary and theft by forcible entry etc. by visiting the Police Station, recording statements of the witnesses etc. It was further stated that the second investigation also confirmed about the incident of burglary and loss of goods. It was further stated that despite deputing the investigators twice, the Opposite parties vide letter dated 30.6.2010 (Annexure C-14), received by the complainant on 25.7.2010, closed the claim as ‘Not admissible' on false and flimsy grounds without looking into the genuineness thereof. It was further stated that the Opposite Parties were deficient, in rendering service, as also, indulged into unfair trade practice. When the grievance of the complainant was not redressed, left with no alternative, a complaint under Section 12 of the Consumer Protection Act, 1986 (hereinafter to be called as the 'Act' only), was filed seeking direction to the Opposite Parties to pay Rs.8 Lacs towards theft of blister aluminum foil approximately 2000 Kgs alongwith interest @24% per annum from 16.9.2007; Rs.2 Lacs towards the theft of changed parts of the machinery (6 sets); Rs.1 Lac as compensation for mental agony and physical harassment besides Rs.25,000/- towards cost of litigation.

5. Opposite Party No.1, in its written version, admitted the factum of issuance of Policies in question in favour of the complainant. It was stated that the claim of the complainant was hit by Exclusion Clause 2 of Burglary and Housebreaking Policy. It was further stated that in the instant case, the Opposite Party deputed Mr D. S. Chadha to investigate the incident dated 16.9.2007, who vide his report dated 15.3.2008 (Annexure R-2) reported that on 16.9.2007, Security Guard, namely Sh.Gulab Singh was performing duty from 8 PM to 8 AM and on the same night some unknown persons made an entry into the factory, broke window glass, in backside, and stole blister foils and changed parts of the machine and left the site. It was further stated that the theft was detected by another security guard on the following day, when his duty commenced. It was further stated that the matter was reported to the Police and FIR was registered. It was further stated that during investigation, the Police recovered the stolen material from few local Kabaris. It was further stated that the unknown persons were allowed to enter the factory premises in connivance with the security guard (Mr. Gulab Singh) on duty in the premises at the time of incident. It was further stated that since the claim of the complainant was hit by the exclusion clause 2 of the Policy, it was not payable. It was further stated that the claim of the complainant was rightly repudiated by Opposite Party No.1. It was further stated that, neither there was any deficiency, in rendering service, on the part of Opposite Party No.1, nor did it indulge into unfair trade practice. The remaining averments, were denied, being wrong.

6. Opposite Party No.2, in its written version, stated that there was no privity of contract, between the complainant and Opposite party No.2. It was further stated that there was no relation of any kind between Opposite Party no.2 and the complainant or alleged Gulab Chauhan. It was further stated that the business and job of Opposite Party No.2 was only to provide the labour as per need, on commission basis. It was further stated that since Gulab Chauhan came in search of job and the complainant was in need of some person, he settled his terms of work. It was further stated that said Gulab Chauhan was nobody to Opposite Party no.2 and otherwise also, it (Opposite Party No.2) closed its business as it could not do it due to the dearth of customers and a Police case, in this matter, was made out against Gulab Chauhan. The remaining averments, were denied, being wrong.

7. The Parties led evidence, in support of their case.

8. After hearing the Counsel for the parties, and, on going through the evidence and record of the case, the District Forum, dismissed the complaint.

9. Feeling aggrieved, the instant appeal, has been filed by the appellant/complainant.

10. We have heard the Counsel for the parties, and have gone through the evidence, and record of the case, carefully.

11. The Counsel for the appellant/complainant submitted that there was delay of 03 years in repudiating the claim. It was further submitted that the claim was repudiated on the ground of exclusion clause 2 of the Policy. It was further submitted that the terms and conditions of the Policy, placed vide Annexure R-1, were never supplied alongwith the Policy and Annexure R-1 did not indicate that it was a part of the Policy. It was further submitted that the appellant/complainant, in Para 11 of the complaint, had specifically stated that exclusion clause, referred to in the letter dated 30.6.2010, neither formed part of the terms of the Policy, nor the same were communicated to it. It was further submitted that the Policy was effective from 14.6.2007 to 13.6.2008. It was further submitted that Opposite Party No.1, in its written statement, in reply to Para 11 of the complaint, did not specifically aver that the terms and conditions were supplied. It was further submitted that in view of the law laid down by the Hon’ble Supreme Court, Opposite Party No.1 could not rely upon exclusion clause 2, which was never communicated. It was further submitted that as per investigation (Annexure R-2), the conclusion was that the commitment of burglary by the employee of Security Agency (Sh. Gulab Chauhan), Security Guard by making forcible entry paving the way to the blister section of the insured factory by breaking the window panes had been proved as correct. It was further submitted that, as per the investigation, the total loss was Rs.9.68 Lacs. It was further submitted that FIR against the Security Guard was lodged. It was further submitted that the order of the District Forum, being illegal and perverse is liable to be set aside.

12. On the other hand, the Counsel for respondent No.1/Opposite Party No.1 submitted that the terms and conditions of the Policy were duly supplied to the appellant/complainant. It was further submitted that Sh. Gulab Chauhan, Security Guard was officially deputed and there was no breakage.

13. The Counsel for respondent No.2/Opposite Party No.2 submitted that the complaint was filed on 9.8.2010 and it was made party to the same in 2013. It was further submitted that the Security Guard was not its employee. It was further submitted that there was no privity of contract between the appellant/complainant and Opposite party No.2 and, as such, the District Forum rightly dismissed the complaint of the appellant/complainant, against it.

14. Issuance of Insurance Policies valid from 14.6.2007 to 13.7.2008 and 30.3.2007 to 29.03.2008 covering sums insured to the tune of Rs.2.30 crores and Rs.1.00 crore respectively, is an admitted fact.

15. The burglary took place, on the night intervening 16.9.2007/17.9.2007 when the Insurance Policies were in operation. The Investigation Report (Annexure R-2) clearly says that Sh. Gulab Chauhan was not the employee of the complainant Company but his services were hired from HP Services Company. As per the investigation report, the loss was to the tune of Rs.9.68 Lacs i.e.(Rs.7.68 lacs for aluminum blister foil and Rs.2 lacs for six sets of changed part of blister packing machine). It is also clear from the investigation report that burglary was committed with the connivance of Security Guard Sh. Gulab Chauhan and others. The appellant/complainant Company gave intimation to the S.H.O., P.S. Nalagarh on 17.9.2007 itself as is evident from Annexure C-10. Respondent No.1/Opposite Party No.1 repudiated the claim after the lapse of three years on 30.6.2010 vide Annexure C-14.

16. The first question, which arises for consideration, is, as to whether, the terms and conditions of the Policy including the exclusions were supplied to the appellant/complainant by respondent No.1/Opposite Party No.1 or not? It was the specific case of the appellant/complainant, as averred by it, in Para 11 of the complaint, that respondent No.1/Opposite Party No.1, could not take advantage of the exclusion clause, as the same never formed part of the terms of the Policy, which were never communicated to it. In reply to this Para, respondent No.1/Opposite Party No.1 had simply denied the said averment and stated that the claim was hit by exclusion clause No.2 and hence, it was validly and legally repudiated. Respondent No.1/Opposite Party No.1 did not place, on record, any cogent evidence viz. mode through which the terms of the Policy were supplied to the appellant/complainant. It has failed to refute the averment of the complainant, regarding non-receipt of the terms of the Policy by it. Perusal of Annexure R-1, which contains terms and conditions of the Policy reportedly sent by the Opposite Party No.1, does not even indicate the name of issuing office. This fortifies the contention of the appellant/complainant, that the terms and conditions of the Policies were never supplied to it. The District Forum also failed to consider and appreciate the said important aspect. Since, terms of the Policy, in question, including the exclusions, were never supplied by respondent No.1/Opposite Party No.1, to the appellant/complainant, exclusion clause No.2, under which the claim of the appellant/complainant, was closed as 'Not admissible' vide letter dated 30.06.2010 (Annexure C-14), could not be invoked.

17. In M/s Modern Insulators Ltd. Vs Oriental Insurance Co. Ltd., I (2000) CPJ 1 (SC), the principle of law, laid down, was to the effect, that it is the fundamental principle of Insurance law, that utmost good faith, must be observed by the contracting parties, and good faith forbids either party, from non-disclosure of the facts, which the parties knew. The insured has a duty to disclose all the facts, and similarly it was the duty of the Insurance Company, and its agents, to disclose all the material facts, in their knowledge, as obligation of good faith applies to both equally. It was, thus, the duty of the Insurance Company to disclose all the facts and circumstances, relating to the insurance cover, to the complainant. It was also required of it, to apprise the complainant of the benefits of insurance, exclusion clauses, contained therein, and the warranties referred to, in the same. It was, under these circumstances, the utmost duty of the insurer to supply the Insurance Policy and the terms and conditions thereof, to the insured, so as to enable it (complainant) to go through the same and understand the clauses contained therein. Not only this, it was also the duty of the Insurance Agent or Insurance Advisor to explain the terms and conditions of the Insurance Policy, including the exclusion clauses, contained therein. However, in the instant case, respondent No.1/Opposite Party No.1, as stated above, failed to prove that the terms and conditions of the Insurance Policy were supplied to the appellant/complainant. In United India Insurance Co. Ltd. & Anr. Vs S.M.S. Tele Communications & Anr., III (2009) CPJ 246 (NC), it was observed that being aware of the existence of the policy, is one thing, and being aware of the contents and meaning of the clauses of the policy, is another. The principle of law, laid down, in the aforesaid cases, is fully applicable to the facts of the instant case. Since the terms and conditions of the Insurance Policy were not supplied to the complainant, it was neither aware of the exclusions, nor was bound by the same. Thus, the repudiation/closing of the claim as 'Not admissible' vide Annexure C-14, was illegal and the same, amounted to deficiency, in rendering service and indulgence into unfair trade practice on the part of respondent No.1/Opposite Party No.1.

18. In Sikka Papers Limited Vs. National Insurance Company Limited, (2009) 7 Supreme Court Cases 777, it was held that, no doubt, the report of the Surveyor is not the last word, yet there must be legitimate reason, for departing from the same. In New India Assurance Company Ltd. Vs. Rabindra Narayan, I (2010) CPJ 80 (NC), it was held that the Surveyor’s report, being an important piece of evidence, was required to be given weight and relied upon, unless proved unreliable. In Dabirudin Cold Storage Vs. New India Assurance Company Ltd. & Ors., I (2010) CPJ 141 (NC), it was held that the Surveyor’s report, being an important document, cannot be easily brushed aside. In this view of the matter,

Please Login To View The Full Judgment!
respondent No.1/Opposite Party No.1 is liable to pay Rs.9.18 Lacs i.e.(Rs.7.68 lacs for aluminum blister foil and Rs.2 lacs for six sets of changed part of blister packing machine minus Rs.50,000/- as the stolen property worth that amount was recovered by the Police) as per the report, Annexure R-2. 19. No other point, was urged, by the Counsel for the parties. 20. For the reasons recorded above, the appeal filed by the appellant/complainant is accepted with costs qua respondent No.1/Opposite Party No.1 only. The order of the District Forum is set aside. The complaint is partly accepted qua respondent/Opposite Party No.1 only, which is directed in the following manner:- (i) to pay Rs.9.18 Lacs i.e.(Rs.7.68 lacs for aluminum blister foil and Rs.2 lacs for six sets of changed part of blister packing machine minus Rs.50000/- as the stolen property worth that amount was recovered by the Police) as per the report, Annexure R-2; (ii) to pay cost of litigation, to the tune of Rs.11,000/- to the appellant/ complainant; 21. This order shall be complied with, by respondent No.1/Opposite Party No.1, within a period of 45 days, from the date of receipt of its certified copy, failing which, it shall be liable to pay the amount mentioned in Clause (i) of Para No.20 alongwith interest @9% p.a. from the date of default, till the date of actual payment to the appellant/complainant, besides paying the litigation costs, as aforesaid. 22. The appeal, as also the complaint filed before the District Forum, is dismissed qua respondentNo.2/Opposite Party No.2. 23. Certified copies of this order, be sent to the parties, free of charge. 24. The file be consigned to Record Room, after completion.
O R