Anup K. ThakurThe complainant is a company incorporated under Indian Companies Act, 1956, engaged in the business of manufacturing and export of textile goods, made-ups and floor covering, having its factory premises at Shree Arihant Compound, Building No.J-3, Thane Bhiwandi Road, Koper, Bhiwandi 421 302. The complainant had taken out 4 Standard Fire and Special Peril Insurance Policies for a total amount of over Rs.21 crore, with a view to covering plant and machinery, and all stocks. During the subsistence of these policies, on 26.07.2005, heavy rains resulted in a flood like situation and from around 2 a.m. on 26/27.07.2005 water level rose upto 4 feet by 4.30 a.m.; it began to recede by 5 a.m. on 29.7.2005. This caused heavy damage to plant and machinery as well as stocks. The OPs-United Indian Insurance Co. Ltd. (OP hereafter) were immediately intimated. N. Velayutham & Company was appointed as surveyors and they inspected the premises on various dates during the period from 1.8.2005 till 19.9.2006. In the meanwhile the complainant vide letter dated 29.09.2005, lodged a claim aggregating Rs.12.95 crore (Ex. E), and also sought an interim payment of at least Rs.8 crore, citing stiff financial crisis deteriorating (our) working capital position. OP made on account payment of Rs.3 crore on 20.2.2006, Rs.1 crore qua policy no. 0217/11/05/00011 ( hereafter …011) and Rs. 2 crore against policy no. 021700/11/05/00085 (hereafter …085) (Ex. G). Per the plaint, the complainant was forced to sign these two vouchers which mention that the complainant has received the said amount (towards the) on account of their claim referred in the said vouchers (Ex.G). Subsequently, OP paid Rs.2,46,07,813/-, on 02.01.2008, Rs. 1,89,82,189/- under policy no….011 and Rs. 56,25,623/- under policy no….085, and the complainant was forced to sign and accept these payments, in full and final discharge of their claim, even though the amount fell well short of their total claim (Ex. J). Thereafter, following some meetings with the OP etc., the complainant addressed two letters, dated 23.3.2009 and 6.5.2009 : point made in these letters was that the OP had failed to carry out corrections in the policy pointed out and that on this account, the claim had not been assessed and paid (Ex. K). Finally, OP vide letter dated 8.5.2009 repudiated the claim in respect of policy no….238, on the ground that the matter was already settled and that since there were no representations from the complainant for more than one year, their request could not be considered in terms of policy condition no.6 (ii) of the insurance policy (Ex. L). Hence, a consumer complaint was filed seeking the following:“(a) That this Hon’ble Commission be pleased to hold that the Opposite parties are guilty of deficiency in service as contemplated under the provisions of Sec. 2(1) (o) of the Consumer Protection Act.(b) That this Hon’ble Commission be pleased to direct the Opposite parties to rectify the defect in it’s services as insurance company and to settle the Legitimate claim of the Complainant to the tune of Rs.5,61,33,249/- together with the interest at the @ of 18% per annum from 26th January 2006 i.e. from the expiration of 6 months from the date of the incidence totally amounting to Rs.10,91,79169/- together with further interest at @ of 18% per annum from the date of filing of the complaint till it’s actual realization of Complainant’s claim.(c) That this Hon’ble Commission be pleased to direct the Opposite parties to pay compensation to the tune of Rs.50,000/-.(d) That this Hon’ble Commission be pleased to direct the Opposite parties jointly and or severally to pay costs of Rs.1,00,000/- towards the filing of the present complaint.(e) Any other order as this Hon’ble Commission thinks fit and proper.”2. This consumer complaint was contested through a written reply filed by the OP. The ground taken was that the claim stood settled and therefore no cause of action survived. The OP had made payments on the basis of assessment made by an independent surveyor and the same had been received in full and final settlement by the complainant without any reservation, and that the disbursement vouchers were signed by the complainant’s bankers also. It was further stated that the complaint was time barred: loss took place in the last week of July 2005 and full and final settlement was made on 02.01.2008; no objection was raised by the complainant till 23.03.2009 and 6.5.2009 (supra) when letters were addressed to the OP alleging that the description printed in the policy was not proper and requesting that claim file be reopened. This could not be done and the same was duly communicated to the complainant on 08.05.2009 (supra). It was also argued that the complainant was not a consumer and the complaint itself was not maintainable.3. Both parties duly filed their affidavits by way of evidence and short synopses of arguments. Arguments were heard on 14.09.2020.4. Learned counsel for the complainant submitted that the short point in this consumer complaint was only about one of the four policies that had been availed by the complainant from the OP. In respect of three policies, amounts had been paid and the matter had been settled. Claim remained only in respect of one policy bearing no. 021500/11/04/00238 (hereafter impugned policy). After submitting basic facts of the case, counsel argued that floods were very severe and the entire premises had been affected. On 29.09.2005, initially claim for Rs.12.90 crore was filed with OP wherein a request had also been made for an interim payment of Rs.8 crore. Counsel then referred to the preliminary report of the surveyor, drawing attention to the fact that it had recorded the four policies and their respective details. He highlighted that in the impugned policy, “stock of grey fabrics had been insured for Rs.5,00,00,000/- (Rs.5 crore) for the period from 14.12.2004 to 13.12.2005.” He then drew attention to para 9 of the preliminary report wherein the following remark is found: “grey cloth is insured for Rs.5 crore in J-3 Building but there was no stock of grey cloth in J-3 building at the time of flood.” This preliminary report had estimated the total loss as Rs.7.47 crore. It had also been noted in this para 9 that finished goods, packing material were not covered in the insurance policy, a point disputed by the counsel who held that finished goods were also insured. Learned counsel argued that when this preliminary report came to the complainant’s knowledge, they wrote a letter dated 17.04.2006 to the OP, to the effect that the complainants had come to learn from the surveyor that the impugned policy was not being considered for the stock in J-3 Building, and that this was not correct. In this letter, the complainant has stated that that they had provided a copy of their earlier combined fire and burglary policy taken with Royal Sundaram Co. and had requested the OP to issue fire policy on the same lines; so, if OP had not, it was not the complainant’s fault. As such, the insured items were stocks of fabrics, made-ups and other stocks, all collectively referred to as stocks. Learned counsel further submitted that the interim payments had been received in respect of only three policies, and not in respect of the impugned policy. He then referred to the final report of the surveyor, mentioning that this was in respect of claims under only two policies, viz. …085 and …011. He drew attention to the settlement intimation vouchers for Rs.56,25,623/- in respect of policy no. …085 and Rs.1,89,82,189/- in respect of policy no. …011 (supra). Both these vouchers contained a clause to the effect that the complainant agreed to accept in full and final discharge of their claim upon the OP. Counsel reiterated however that this was in respect of only the two policies mentioned in the vouchers. Clearly, therefore, claim under the impugned policy had not been settled and remained outstanding. He drew attention to letter dated 6.5.2009 (Ex. K supra) from the complainant to the Divisional Manager of the OP: referring to their previous letter dated 23.3.2009, they submitted that they had not received any reply in respect of loss under the impugned policy. It is then that the OP, vide letter dated 8.5.2009 (Ex. L supra), informed the complainant that flood claims were settled through on account payments of Rs.3,00,00,000/- on 20.02.2006 and the balance of amount of Rs.2,40,07,813/- on 02.01.2008, and that the payment vouchers had been duly discharged confirming full and final settlement of the claim. The letter further stated that after receipt of the claim on 02.01.2008, after a lapse of more than one year, request vide letter dated 23.3.2009, to reopen the claim file was no longer possible in view of the policy condition no.6 (ii) of the impugned policy. Counsel further submitted that when this complaint had been filed it was inquired at the stage of admission as to why the complainant had waited so long to file this consumer complaint and at that time, an affidavit of Mr.Hitesh Keshavji Haria, explaining the reasons had been submitted. In this affidavit, in para 4 thereof, it had been stated that between January 2008 and 23.3.2009, the complainant was repeatedly making oral representations to the OP. It was also stated therein that the preliminary report submitted on 18.8.2006 had not considered the claim under the impugned policy solely on account of misinterpretation of proposal form by the surveyor. The counsel rested his case by reiterating that out of the four policies, three had been settled and this consumer complaint was only about the impugned policy on which there was no finding in the final report of the surveyor. This was due to the fact that the proposal form had been misinterpreted by the surveyor. This was borne out by the fact that all the four policies had clearly mentioned the items to be insured and in any case, the previous insurance policies with Royal Sundaram Co. had also been given to the OP.5. Learned counsel for the OP began his arguments by drawing attention to the written reply of the OP, para 1 and 2 thereof, which he read out. Essentially, OP made payments as per assessment of loss made by the independent surveyor and loss assessor; these payments were in full and final settlement and had, in fact, been accepted by the complainant without any reservation as he had voluntary signed the disbursement vouchers. These disbursement vouchers were also signed by their bankers. He further submitted that stock of grey fabrics in building no.J-3, insured for Rs.5 crore under the impugned policy, was not considered simply because there was no stock of grey fabric at the time of flood. Therefore, he argued, it was wrong to say that the claim had not been considered under the impugned order. He also contended that this consumer complaint was time barred and liable for dismissal on this ground alone as the claims had been fully settled on 2.1.2008. The fact that no objection had been raised while accepting the amount or even thereafter till 23.3.2009 and 6.5.2009 when the complainant, for the first time, had alleged that the description printed on the impugned policy was not provided, it was yet after one year of the claim having been settled. As such, there was no ground remaining and no cause of action survived. He then drew attention to the preliminary survey report: under para 2 – “INSURANCE”, at Sl. No.2, the impugned policy has been listed and it shows that “stock of grey fabric” had been insured for Rs.5 crore; in para 4 – “PREMISES”, it has been mentioned that “Ground Floor of J-3 building is occupied as Office, Show room and Godown cum Stores”; in para 5- “PROCESS”, it has been mentioned that “grey fabrics were stored in ground floor godown of I-1 and I-5. Process stocks were stored in ground floor of godowns I-1, I-5 and J-3 as well as the first and second floor of J-3. Finished goods were stored in ground, first and second floor of J-3. Packing materials were stored in J-5”. Counsel argued that there was no grey fabric in J-3 and that it was grey fabric which had been insured under the impugned policy. He then referred to para 7 – “NATURE AND EXTENT OF DAMAGE”, pointed out that under “Plant and Machinery”, it had been noted that “all plant and machineries were installed on the first and second floor of J-3 building and were not affected by the flood water”; finally, in para 9 – “PRELIMINARY ASSESSMENT”, it had been clearly mentioned that “grey cloth is insured for Rs.5 crore in J-3 building but there was no stock of grey cloth in J-3 building at the time of flood”.6. Learned counsel then referred to the final survey report to only make the limited submission that at various places therein there are references to the grey fabric and the loss that had been assessed. The point he made was that under the impugned policy, only grey fabric had been insured and the fact of the matter was that there was no grey fabric found in J-3 building therefore, the claim of the complainant made long after, clearly reveals it to be an afterthought and not a genuine claim. Learned counsel then drew attention to the interim loss adjustment report dated 31.10.2005, which has, in page 6, clearly noted the same thing in the following words: “ As stated in page 11 of preliminary survey report dated 18.8.2015, the policy covers specific items and as per the description of the policy items such as finished goods, packing material are not covered. Grey cloth is insured for Rs.5 crore in J-3 building but there was no stock of grey cloth in J-3 building at the time of flood.” He also drew attention to the interim recommendation of this interim report which had submitted that without taking into consideration net value of salvage, the net liability was of the order of Rs.5,59,73,692/-; it had therefore recommended, by way of interim relief, an amount not exceeding Rs.3,00,00,000/-. Learned counsel ended his argument by submitting that it was quite clear that the claim under the impugned policy was an afterthought and that there was no deficiency in service by the OP.7. In a rebuttal, counsel for the complainant submitted that though OP has been calling the claim under the impugned policy an afterthought, he has submitted no positive evidence in this regard at all. Drawing attention to letter dated 14.12.2004 (Ex. D), he pointed out that this would reveal that a request had been made to issue Fire and Special Peril policy for the location (J-3, Ground Floor) for stock of Fabric, Made-ups and other stock, for a sum assured of Rs.5 crore. He then drew attention to the impugned policy: under ‘description of property’, is shown ‘stock of grey fabric’ for Rs.5 crore ( Ex. C). Clearly, the request made on 14.12.2004 was not reflected in the impugned policy. It is this that was pointed out in letter of 17.4.2006 (Ex. F) from the complainant to the OP. He drew attention to the preliminary report, para 8 thereof to show that the complainant had, against J-3, shown process stock as damaged, and not grey fabric. He also referred to para 9 of the same report to draw attention to the fact that indeed, grey cloth was not found in J-3; however, he argued that the repudiation letter of 8.5.20o9 ( Ex. L- supra), had made no mention of stock not found, and had only taken the ground that the claim was filed late and could not be considered under policy condition 6 [ii]. Therefore, argued the learned counsel for the complainant, it was clear that claim against the impugned policy, having not been repudiated, subsisted and therefore had to be considered and allowed.8. Counsel for the OP rebutted and submitted that it was wrong to say that the complainant’s claim had been repudiated; the correct picture is that the claim had been settled.9. After hearing the learned counsels and carefully appraising the record including the synopsis of arguments, I am of the considered view that the complainant has not been able to sustain this complaint.10. The case of the complainant is that following the flood, insurance claims under 3 of the 4 insurance policies were duly surveyed, losses assessed and paid. Deficiency lay only in respect of the impugned policy for Rs.5 crore. No finding or settlement qua the impugned policy was made by the OP. The same was repudiated on 8.5.2009 on the ground that the claims could not be re-opened, having been fully and finally settled. The case of the complainant is that it only came to know about this later. Based on the available record, however, I find it difficult to accept this plea of the complainant. Para 9 of the preliminary assessment report had clearly recorded that grey fabric was insured for Rs.5 crore but that there was no stock of grey fabric in the building J-3. It has to be understood and appreciated that the preliminary report is the first inspection report, soon after the event has occurred, and is therefore, in a sense, the most important basis for ascertaining facts as they were, on the day after the event. Therefore, if the preliminary report did not find any stock of grey cloth in J-3, it is not surprising that there was no finding qua the impugned policy in the final survey report. It is obvious that if there was no stock of grey fabric, the item insured in the impugned policy, it would make little sense to make any assessment thereof and record any finding as such. So, it seems not to be the case that the impugned policy was not considered by the OP; rather, it seems to be clearly the case that the impugned policy was considered in the preliminary survey wherein it was found that there was no stock of the insured item, grey fabric, at the time of flood. The subsequent claim filed in the same impugned policy was correctly reclined by the OP.11. The other strand of argument of the complainant is that the building J-3 in the impugned policy, had other stocks i.e. other than grey fabric, and that the impugned policy reflecting “stocks of grey fabric” as the item insured was not correct and itself a major deficiency in service by the OP. It was argued that the preliminary survey report had listed the insured’s claims pertaining to J-3, the building insured in the impugned polcy. This argument is as follows: the complainant had handed over their previous fire and burglary insurance policies with another insurance company to the OP with the request to issue fire policy on the same lines; therefore, it was for the OP to ensure that the item insured in the impugned policy was not only “grey fabric” but also finished goods, packing material, process stock. To appreciate this fully, it is apt to reproduce the relevant para of complainant’s letter dated 17.4.2006 ( Ex. F-supra):“ We would like to bring to your notice that while taking insurance at your office we have provided you a copy of our earlier combined fire & burglary policy taken with Royal Sundaram and had requested you to issue our fire policy for the same items covered under the above policy where it has been specifically mentioned as only “Stocks” & in our letter dated 14.12.2004 also we have specifically requested you to cover only stocks of Fabrics made ups and other stocks.”The first thing to note is that the formulation in this letter can hardly be called a crystal clear rendition of what it is that the complainant desired to insure: the word “Stocks” has been used three times, with little clarity on what it is that was sought to be conveyed. If the intent was that all stocks, be it grey fabric, made ups, packing materials et al, are to be covered, then this could have been simply articulated as such; the expression “only stocks of Fabrics made ups and other stocks” certainly does not help. Second, as if this was not confusing enough, it is added that this was what had been done in the fire and burglary policy of the previous insurer, and a copy of that had been handed over to the OP with a clear request to do the same. No evidence except this letter however has been put forth in this complaint. Even otherwise, it is doubtful whether an insurance policy under switch from one company to another can be so casually done in the manner suggested. Even if it can be, it certainly should not be so done as insurance is a serious contract. Third, it is indeed very hard to comprehend as to why the impugned policy that was issued effective 14.02.2004 and which had the defective formulation under ‘description of risk’ and ‘description of property’ viz. “STOCK OF GREY FABRICS”, could have been so issued when a letter of the same date had requested the OP to issue policy for insuring “ Stock of Fabric, Made –ups and other stock”. It is not clear which came first- the impugned defective policy or the letter? If the letter had come first, why had it come only for the impugned policy qua J-3? If it had not been incorporated in the impugned policy, why was it not immediately brought
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on record and a suitable endorsement made on the impugned policy? Such considerations suggest that the claim being argued in respect of the impugned policy stands on a somewhat shaky foundation. Fourth, insurance is a contract of utmost good faith. This good faith is to be exercised and has to be visible on the part of both the insured and the insurer. Merely saying that the intention of the insured was to have everything insured, from plant and machinery to all manner of stocks, is not enough; merely saying that they had handed over to the OP the previous policies of another insurance company with the direction to replicate the insured items is also not enough: the insured was duty bound to be diligent and to make sure that the insurance policy reflected precisely what the insured had desired. The complainant is a manufacturing and export company and should have been well aware of the nature and sanctity of the insurance contract. Indeed, it was, as reflected in the admitted fact that it had chosen to switch it’s insurer. Clearly, if it’s case is as it has been advanced, the complainant has to bear the consequences of it’s own lack of diligence. Own negligence cannot be converted to a deficiency in service on the part of the OP through a consumer complaint. It is also not the case that soon after the insurance was taken, rain and floods occurred, thus not giving sufficient time to the complainant to carefully peruse the policies and take steps to rectify mistakes, if any. To reiterate, it was very much the duty of the complainant to have inspected the policy documents and ensured that it was as per their requirement. Not having done so, they cannot rely on pleas such as have been taken in this case. In my considered view therefore, the complainant has failed to prove it’s case.12. On the other hand, there is much merit in the argument of the OP that they relied on the report of the surveyor and assessor and decided the reimbursement of claims accordingly. No fault or deficiency in service lies in this. Further, admittedly, three of the four claims were settled, establishing the fact that the OP acted within the domain of it’s policies and on the recommendations of the surveyor.13. In view of the discussion above, this consumer complaint is dismissed after consideration. No order as to costs.