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Manager, New India Assurance Co. Ltd. v/s Chairman, Ajadi Sangram Basu, Santipur Co-Operative Cold Storage Society Ltd.

    First Appeal No. 235 of 2011
    Decided On, 06 April 2018
    At, National Consumer Disputes Redressal Commission NCDRC
    By, THE HONOURABLE DR. B.C. GUPTA
    By, PRESIDING MEMBER & THE HONOURABLE DR. S.M. KANTIKAR
    By, MEMBER
    For the Appellant: Kishore Rawat, Advocate. For the Respondent: Sanjoy Kumar Ghosh, Rupali S. Ghosh, Advocates.


Judgment Text
Dr. B.C. Gupta, Presiding Member

This first appeal has been filed under section 19 read with section 21(a)(ii) of the Consumer Protection Act, 1986, against the impugned order dated 13.04.2011, passed by the West Bengal State Consumer Disputes Redressal Commission, Kolkata (hereinafter referred to as 'the State Commission') in Consumer Complaint No. 61/o/97, vide which, the said complaint, filed by the respondent/complainant Cooperative Society, was allowed and the opposite party (OP) Insurance Company was directed to make payment of a sum of Rs. 878917 with interest @ 9% per annum from the date of the complaint for damage to the potato stocks.

2. Briefly stated, the facts of the case are that the complainant is a cooperative cold storage society, carrying on the business of cold storage of potatoes of farmers and businessmen on rental basis. They have installed the necessary plant and machinery for the purpose, consisting of two chambers for storage, in which 333335 bags can be stored in each chamber. The complainants obtained three insurance policies from the OP Insurance Company- one covering the plant and machinery and the other two covering the stocks in the two chambers. It has been stated that there was failure of electric supply (FOES) from 04.09.1995 to 09.09.1995 i.e. for 144 hours continuously, which caused damage to 13,667 bags out of the total 66,666 bags, despite the fact that the complainant used their 125 KVA generating set to maintain temperature for the protection of stocks. On intimation, the OP Insurance Company appointed a surveyor to assess the loss. However, the OP sent repudiation letter dated 09.09.1996, saying that the claim did not come under the purview of the policy conditions, because there had been no damage to plant and machinery. The complainant filed the consumer complaint in question, seeking directions to the OP Insurance Company to pay a sum of Rs. 19,94,000/- to them as compensation for damages, alongwith another sum of Rs. 5,000/-. It was stated in the consumer complaint that though the claim was for an amount of Rs. 38,13,093/-, but they had reduced it to Rs. 19,94,000/-, because they had no capacity to file the consumer complaint before the National Commission (based on the pecuniary jurisdiction to handle the cases in those days).

3. The said claim was contested before the State Commission by the OP Insurance Company on the ground that the same was barred by limitation, as under clause ‘7’ of the policy, the claim was liable to be filed within three months from the date of repudiation letter i.e. 09.09.1996. The State Commission accepted the plea of the Insurance Company and dismissed the consumer complaint. However, in appeal before this Commission, the said order was set aside on the ground that the provisions of the clause ‘7’ of the Insurance policy were violative of section 28 of the Contract Act and hence, void. The case was sent back to the State Commission for deciding the consumer complaint on merits. The State Commission allowed the consumer complaint vide impugned order dated 13.04.2011 and directed the Insurance Company to pay the claim, as per the report of the surveyor valued at Rs. 8,78,917/- alongwith interest @ 9% per annum. Being aggrieved against this order of the State Commission, the OP Insurance Company is before this Commission by way of the present first appeal.

4. During arguments before us, it was stated by the learned counsel for the OP Insurance Company that the complainant had obtained a ‘machinery breakdown policy’ in addition to two policies for ‘damage to stocks’. In the present case, the damage had taken place due to rise in temperature, following the failure of electric supply. The learned counsel stated that in the event of power being switched off, there was closure of the plant and not the shutdown of the machinery. The claim was, therefore, not payable. The learned counsel stated that although the insured had taken a FOES extension policy, which takes care of the exclusion clause under the insurance policies, but still, the claim could be paid only in the event of breakdown of plant and machinery. However, the State Commission had taken an erroneous view that if FOES extension policy was taken, the exclusion clause was not applicable.

5. Per contra, the learned counsel for the respondent/complainant argued that for the insured, who have opted for FOES extension, the exclusion clause stated in the insurance policy was not applicable and hence, the order passed by the State Commission was valid in the eyes of law. The learned counsel argued that there was no negligence on the part of the insured, who had installed generators for the protection of stocks. Further, the damage to potato stocks was of the order of Rs. 38 lakhs approximately, but the State Commission had only allowed a sum of Rs. 8,78,917 to them. The learned counsel stated that the present appeal deserved to be dismissed.

6. We have examined the entire material on record and given a thoughtful consideration to the arguments advanced before us.

7. From the facts and circumstances on record, it is made out, rather not denied anywhere, that damage to potato stocks took place due to rise in temperature, following the failure of electric supply continuously for a period of six days from 04.09.1995 to 09.09.1995. In the insurance policy relating to the deterioration of stocks, it has been provided in the exclusion clause as follows:-

'(iii) any damage to the stocks due to rise or fall in temperature caused by failure of electric supply for whatever reasons.'

8. However, it has been stated in the memo of appeal by the appellant as follows:-

'in view of the said Exception, the breakdown of the Machinery during the failure of electricity supply would not be covered. However, with the FOES extension, in case of failure of power supply, the above Exception would not be applicable. However, the other terms and conditions and Exceptions would be applicable as it is, i.e. there has to be an accident as defined under the Policy resulting in breakdown of the Plant and Machinery even during the failure of the power supply. It is submitted that the repudiation of the claim was strictly as per the operating clause of the DOS Policy in as much as there was no breakdown of the Plant and Machinery and which is a pre-condition for indemnification of the Claim under DOS Policy. As submitted above, by taking the FOES Extension, loss or damage to the Stocks in the Cold Storage only because of the power failure would not be covered under the Policy until and unless there is a breakdown of the machinery during the power cut.

9. From the above assertion of the appellant Insurance Company, it is clear that the exclusion clause (iii) will not be applicable in the present case, meaning thereby that the damage to stocks resulting from the failure of electric supply would be payable. The appellants, however, have tried to place another rider, saying that the claim would not be payable, unless there is an accident resulting in the breakdown of plant and machinery, even during the failure of the power supply. The learned counsel for the OP argued that the failure of electric supply resulted only in the closure of the operation of plant and machinery, but ‘breakdown’ had a different meaning as distinguished from ‘closure’. We, however, have no reason to agree with this line of argument. In case, there is a breakdown of plant and machinery due to

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another accident etc., the claim would be payable, even if the power supply had not been disrupted. In the present case, since FOES extension has been taken, the exclusion clause (iii) is not applicable as admitted by the appellants themselves and hence, the damage/loss due to the failure of the power supply shall be payable, whether the plant and machinery had broken down or simply closed due to the non-supply of electricity. We, therefore, tend to agree with the State Commission that claim for damage to stocks in the event of non-supply of electricity shall be payable. It is held, therefore, that there is no illegality, irregularity or jurisdictional error in the order passed by the State Commission and the same is upheld. The present appeal is held to be without any merit and the same is dismissed. There shall be no order as to costs.
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